Thursday, September 20, 2012

Hardware is dead


Hardware is dead

http://venturebeat.com/2012/09/15/hardware-is-dead/


September 15, 2012 7:55 AM
Jay Goldberg

  
I go to China every four or five months for work. I have to visit all the corporate headquarters in Beijing and Shanghai, but the highlight of every trip is the day I spend at Hua Qiang Road North in Shenzhen. Pretty much every piece of electronics we use today is sourced and manufactured within 100 miles of Shenzhen, and Hua Qiang is the city's electronics shopping district.
On my last trip, in July, I met a 'procurement' consultant, and he told me which of the 50 mega malls in the area to visit to buy tablets.
In the US, when we talk about tablets we usually mean the iPad and increasingly the Kindle devices, but beyond that there is not much else in the market. I had heard that tablets in China had already reached low price points. You can buy a reasonable Android phone for $100 retail, and I wanted to see if I could find a $150 tablet. This consultant pointed me to a mall filled with hundreds of stalls selling nothing but tablets. I walked into the middle of the scrum to a random stall. I pointed to one of the devices on display and asked, "How much for this one?" 300 kuai. My Mandarin is a bit rusty, so I had to ask again. Slowly, the stall owner repeated renminbi 300 yuan.
If this were a movie, the lights would have dimmed and all the activity in the room frozen. 300 renminbi is US $ 45. And that was the initial offer price given to a bewildered foreigner in China, no haggling. I felt a literal shock.
I bought the device and did some more research. This was a 7-inch tablet, Wi-Fi only with all the attributes of a good tablet. Capacitive touchscreen. Snappy processor. Front facing camera. 4GB of internal memory and an expandable memory slot.
I later found out that these devices are now all over the supply chain in Shenzhen. At volume, say 20,000 units, you can get them for $35 apiece. My device ran full Android 4.0 Ice Cream Sandwich and had access to the full Google API, including Gmail, Maps, YouTube and Google Play (not quite sure how that works either).
Once my heart started beating again, the first thing I thought was, "I thought the screen alone would cost more than $45." My next thought was, "This is really bad news for anyone who makes computing hardware."
At these levels there is almost no profit margin left in the hardware business. A $45 tablet is cheap enough to be an impulse purchase at the check-out line in Best Buy. A $45 price puts tablets within reach of a whole host of other activities not traditionally associated with computers. Tablets could be used by waiters in restaurants. By mechanics in auto body shops. By every nurse in a hospital. By pretty much any category of work that today needs a computer but where PCs are too expensive to be deployed. These are also devices built entirely for commercial reasons, no government backing, no academic sponsor, no proof-of-concept.
This trend is not entirely surprising. Vivek Wadhwa wrote about the potential for these devices just last week here on VentureBeat. In my own research, I've been writing about the impact of low-cost devices from China for several years. But I think we have been dancing around some of the implications.
The truth is that if your company sells hardware today, your business model is essentially over. No one can make money selling hardware when faced with the cold hard truth of a $45 computer that is already shipping in volume.
My contacts in the supply chain tell me they expect these devices to ship 20 million to 40 million units this year. Most of these designs are powered by a processor from a company that is not known outside China — All Winner. As a result, we have heard the tablets referred to as "A-Pads."
When I show this tablet to people in the industry, they have universally shared my shock. And then they always ask "Who made it?." My stock answer is "Who cares?" But the truth of it is that I do not know. There was no brand on the box or on the device. I have combed some of the internal documentation and cannot find an answer. This is how far the Shenzhen electronics complex has evolved. The hardware maker literally does not matter. Contract manufacturers can download a reference design from the chip maker and build to suit customer orders. If I had 20,000 friends and an easy way to import these into the US, I would put my own name on it and hand them out as a business cards or Chanukah gifts.
I think this leads to an important conclusion: No one can make money selling hardware anymore. The only way to make money with hardware is to sell something else and get consumers to pay for the whole device and experience.
Obviously, Apple sells more than just hardware. It sells iOS. It sells the Apple Brand. It sells the ability to give someone over 60 an iPad and not require nightly IT support calls from that person. It sells a bit of magic. And people will pay $400+ for that.
Amazon is also clearly way ahead on this model. At the Kindle launch event last week, Jeff Bezos highlighted that Amazon does not make money on the Kindle, it makes money on the content it sells on top of the Kindle. There is a growing awareness of this model in the web. For instance, I think Jon Gruber hit the nail on the head in this post on Apple's business model versus Amazon's. Consultancy Vision Mobile also wrote recently about this trend.
The next step is for more companies to enter the fray, and by companies I mean people not usually associated with electronics.
I expect to see more retailers step in. Toys 'R Us entered the market this week with its tablet for kids. I imagine Walmart with all its investment in Walmart Labs and Walmart.com is thinking about launching a tablet. In fact, I'm a bit surprised it hasn't launched one already. And if Walmart, why not Target?
At $45 retail, we will probably start to see tablets become giveaways. Open a checking account and get a tablet with your bank's app preloaded. Sign up for an insurance policy or a stock-trading account, get a tablet to submit claims or day-trade. To be clear, I do not think we are moving to a world of single-purpose devices. Quite the opposite. But I do think the market will now support a lot of experimentation around services built on top of cheap tablets.
In the PC world 10 years ago we encountered similar trends. It was very hard to make money selling hardware, so HP and Dell ended up making most of their money selling pre-loads for AOL and other online services, or through marketing funds from their suppliers. This time around, the gains will be even further dispersed. HP and Dell could hide behind their PC distribution models and brands. This latest wave of A-Pads will strip away even those minor barriers.
Offsetting the declines I expect from the hardware OEMs (or branded manufacturers), there is some good news for component suppliers. Companies with innovative features in silicon or very tight cost structures will benefit. As product cycles tighten (and we had quotes for 40-day turnaround times), the supplier with the right technology, available right now will benefit. Companies like Broadcom, Qualcomm, and Skyworks, which make the various Wi-Fi radio components, should see steady growth in volume demand, which could more than offset declines seen at some of their larger customers.
We are much closer than most people realize to a major tipping point in the industry. It is time for many to find a new business model.
Postscript
I thought discovering the A-Pad was pretty exciting. So I was dismayed to find that the week after I got back from China, a device that looks a lot like my A-Pad was on sale at Fry's Electronics for $79. No brand listed. The process has already begun.

Jay Goldberg is a financial analyst with an investment bank. He has been working with tech companies for ten years. Prior to that he lived and worked in China for almost 10 years.





Monday, August 20, 2012

ONE.MOTORING - Road Safety at Private Estates




Friday, August 17, 2012

8 Ways to Find More Time in the Day




[See 10 Questions That Will Help You Earn More Money.]

Their motivation? Often, it's for the money. In today's uncertain job environment, finding more than one source of income can be the best way to guarantee a paycheck. "No job is secure. If you've created multiple streams of income, at least you aren't left with no income, even if it's just to supplement unemployment insurance," says Glinda Bridgforth, financial coach and author of Girl, Get Your Money Straight.

In order to make it work, multiple job holders figure out ways to find more time in their days. Here are eight of their strategies:

1. Organize your workspace. Bridgforth says that when she was writing her first book, she faced major writer's block. Then, a friend gave her a book on feng shui. After staying up until 2 a.m. reading it, she woke up early the next morning to start decluttering. Her office area, she realized, was filled with library books and magazines.

"Once I cleaned up the office, I finished the book. Having a clutter-free environment keeps your mind clear and helps you stop wasting time," she says. That allows her to juggle her writing, financial coaching, and speaking commitments.

2. Make a to-do list instead of watching television at night. Martin Cody juggles two full-time jobs: He's vice president of sales for a medical software company as well as founder of Cellar Angels, an online wine retailer than also supports charities. In the evenings, he avoids television, which he estimates saves him at least 30 minutes a day, or 180 hours a year. Instead, he makes time to write down five things he absolutely must do each day for each of his businesses.

Cody also keeps a notepad by his bed in case other ideas come to him throughout the night. "If anything pops into your head that's causing you anxiety, write it down, and then you can sleep," he says. That way, he starts each day with a game plan--and he wakes up half an hour early to get started on it.

[See 20 Hot Money Moves for Summer.]

3. Live by a day planner. While the proliferation of apps and mobile devices make it easy to get organized electronically, Ford R. Myers, career coach and author of Get the Job You Want, Even When No One's Hiring, swears by the more traditional paper methods. "When you write something with your hand in ink, it has a deeper commitment," he says, adding that he likes to be able to see his entire week at once without having to scroll on a screen.

Myers has used the same week-at-glance calendar for 25 years, which helps him keep up with his multiple commitments as an author, career coach, and consultant. "It runs my life. Once something is on my calendar, it gets done," he adds.

4. Wake up with the birds. Jennifer Teates works 30 to 35 hours a week as the manager of a law firm and she also spends an hour or two each day writing for her local paper, the Examiner.com, and other websites, on personal-finance issues. She's also the mom of a one-year-old. She does it all because she loves it all, and her law-firm work often gives her ideas for article topics.

She gets everything done by waking up an hour or two before her son so she can get in some writing time first thing in the morning, when she's most productive. "If I have something I want to really concentrate on, I try to do that in the morning, when I'm at my best," Teates says. Then, in the evening, she unwinds and gets in bed in time to squeeze in six to seven hours of sleep, which she says is enough for her.

5. Take a sabbatical. Ebony Utley, author of Rap and Religion: Understanding The Gangsta's God and associate professor of communication studies at California State University--Long Beach, discovered an unexpected upside to the two-day a month furlough experienced by all California State University faculty that began 2009. Since she had extra time and needed to make up for the lost cash, she ratcheted up her speaking and writing careers, as well as her website, theutleyexperience.com.

"I sent an email to everyone I knew and said, 'I have free days, can I come and speak?'" says Utley. Soon, she was making the rounds on the university speaking circuit, talking about rap music, racial stereotypes, and the hip-hop generation. Now, Utley is starting a year-long sabbatical, which will allow her to start her next book on infidelity in pop culture and real life, and continue her speaking tour.

[See 50 Ways to Improve Your Finances.]

6. Take advantage of weekends. During the work week, Stephanie Theodore is busy with her full-time job as a department manager at a financial firm. But on the weekends, she has another identity altogether: art studio owner. She runs her own Brooklyn gallery, Theodore: Art, which is open from 1 p.m. to 6 p.m. every Friday, Saturday, and Sunday. (Theodore is there on Saturdays and Sundays.)

"I do everything in my off-time. A lot of what goes on in the gallery is not about the gallery hours but about meeting people, organization, and installations," says Theodore. In addition to her weekends, she usually dedicates one or two evenings a week to the gallery, as well. Like Cody, she avoids zoning out in front of the television. "It's a mind-melting time suck," she says.

7. Take up contract work. When Dana Lisa Young launched her wellness business, Atlanta-based Dragonfly Reiki, in 2008, she also held down a 40-hour-a-week content management job. That meant building her wellness business, which includes Reiki, reflexology, and life coaching, entirely in the evenings and the weekends. That mostly worked out fine, since most of her clients preferred to meet in off-hours as well, but it left Young, who is also a mother, with very little down time.

Young eventually left her full-time job and replaced it with contract work, which means she can work from home on a more flexible schedule. She manages all of her commitments on Google Calendar as well as a family wall calendar. "I'm very conscious of scheduling things and blocking out periods so I know I have those times to work," she says. She often gets back on the computer to finish up contract work after her children go to bed, for example.

8. Dedicate certain time periods to your second job. As a full-time criminal justice student at Marymount University in Arlington, Va., Nicholas Ignacio is busy--and he recently became even busier after launching his student-run lawn care business. After starting Strong Students Lawn Care (www.strongstudentslawncare.com) three months ago, he started spreading word through Craigslist, and soon found that his services were in great demand. Homeowners and businesses are especially happy to support local college students by hiring them, he says.

Now, he dedicates three to four days a week to working on his business and the other days to class and studying. That way, he's able to keep up with his college work--while also earning enough to pay for his living expenses.