Is the PC going extinct?

New numbers tell a dark story for PC manufacturers, except perhaps Apple. New Gartner stats are unequivocal: worldwide sales are down 8.3%.


Source: Gartner

Apple is the only brand bucking the tide, with growth of 2.8% and market share of 6.7% at this point.
The economic downdraft is likely having a large impact, and even Microsoft’s Windows 10 might not be able to counter that trend.
The elephant in the room is tablets: are they now at the point where they can replace PCs, even for the most hardbitten PC users? I know that I am not ready to make the shift, although I do travel with an iPad, and use it frequently. I’ll have to take another look at the new iPad Pro and the Surface Pro 4, because that’s where we are all heading.

Quarterly Numbers Lend Credence To Whitman’s Plan for HP Breakup

The numbers suggest that Meg Whitman may be getting the bigger half of the wishbone with Hewlett Packard Enterprise, and also lend support to the basic idea of splitting the company in half.

HP has announced its final quarterly results prior to the break up into Hewlett Packard Enterprise — which will be led by current CEO Meg Whitman — and HP Inc. — to be headed up by Dion Weisler. The numbers suggest that Meg Whitman may be getting the bigger half of the wishbone with Hewlett Packard Enterprise, and also lend support to the basic idea of splitting the company in half.
Of course the new HPE needs a new look, logo, and narrative:
Meg Whitman made an observation about the new logo back in April:

Maybe you noticed it, but take a look at the name “Hewlett” in the new design.  This is the first time in our history that the two t’s in Hewlett connect. That connection is symbolic of the partnership we will forge with our customers, partners, and our employees – what we will do together to help drive your business forward.

Ok, I am willing to take that with a grain of salt. We’ll have to see what actually comes from the new HPE, but the numbers tell us something.
First of all, HP’s net income dropped to $900 million, or 47 cents a share, down from $1 billion, or 52 cents a share from the previous year.  But they beat expectations on profit slightly — after restructuring and acquisition charges were excluded — leading to the share price rising in after hours trading. Wall Street seems happy, so far.
And the best news, or perhaps the only good news, is the 2% increase in revenue for the HP enterprise group — the soon to be Hewlett Packard Enterprise — reflecting market uptake of the company’s servers, storage, and networking products.
The negative buzz at the earnings call is all about the other end of the soon-to-be-broken-apart HP: the printer and PC business of HP Inc. Or perhaps we can call it Red Inc. PC sales were down 13%, and the printer business is down by 9 percent.
I can’t find a post with a logo for the new HP Inc., but in a recent interview Weisler seemed to be saying that he’s bullish about 3-D printing as a future for HP Inc., although he veers between wonky details and historical analogies so much it’s hard to tell:

Weisler: If we go way back in time, you had a blacksmith who would make a unique horseshoe for your horse, as an example.  That would be the manufacturing process. With the industrial revolution, the assembly line was created, and over the years we got better at pressing the supply chain, and making that assembly line more efficient. Manufacturing was still in the hands of a few. The internet comes along, and we can collapse and make that supply chain even more efficient and close it. It still was not really a dramatic change. With 3-D printing, you actually get to democratize manufacturing again because anybody can do it.
Now, where does that start? In our view, the greatest amount of value actually starts in the commercial marketplace. Ultimately as these technologies mature, it will make its way into the consumer realm, as well. Some have another strategy to grow from consumer up. I think the reason it has not taken off either in consumer or commercial, is as an industry we have not solved the problem of speed, quality, and cost. If you really want to be instructive to traditional manufacturing processes, you have to have it operate at the right speed, you have to have the right kind of quality, and you have to have an economic model that makes sense. So with multi-jet fusion, we believe we have made a really big breakthrough here.
Those who actually understand the industry well, and understand what we have done, recognize that we are printing copy ten times faster than the fastest printer on the market today.  We can do it with minute accuracy down to 21 microns–  about a tenth of a size of a human hair.  We can do very intricate parts that still have really strong mechanical properties.  Then because of the technique we use to print the part – we do it on a big flat bed – we can do highly economical parts that begin to make a difference. I think initially it will lend itself more towards commercial markets in the near-term.

I admit, I got lost in there. But I do believe that there is an enormous opportunity in 3-D printing, and HP Inc. is well-positioned to attack that.
But I think that Meg Whitman has cleared her decks for the upcoming battle for enterprise infrastructure, and handed off her worst headaches to Dion Weisler. It’s looking like a better idea all the time.

What is Satya Nadella up to?

The ripples are spreading from Satya Nadella’s recent email describing plans to eliminate 7,800 jobs, especially focused on Windows Phone hardware (see Microsoft plans more layoffs). This specifically means cuts of up to 2,300 workers in Finland, most of whom came over in the Nokia acquisition.
The question today — now that the initial shock has worn off — is obvious: what is Satya Nadella’s back story, here? What is the vision of Microsoft and its future that he is steering the company by?
Well, it’s a future without Windows running on mobile phones.
Let’s parse some of what Nadella wrote in the email (hat tip to Paul Thurrott):

In the near term, we will run a more effective phone portfolio, with better products and speed to market given the recently formed Windows and Devices Group. We plan to narrow our focus to three customer segments where we can make unique contributions and where we can differentiate through the combination of our hardware and software. We’ll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love.
In the longer term, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly. Our reinvention will be centered on creating mobility of experiences across the entire device family including phones.

So, a ‘phone portfolio’ is in the near term for Microsoft, but in the longer term, Microsoft ‘devices’ are the key to a Windows ecosystem, relying on others to play. This sounds like Nadella is in a strategic withdrawal from the phone business. Note that the company took a $7.6 billion writedown on the Nokia acquisition made last year, basically zeroing it out.
But is the company is still planning on other devices, like tablets, Xbox, and Hololens? It remains to be seen if Microsoft can make a dent in the tablet world, but Surface is more of a in-betweener: half tablet, half laptop. There’s still opportunity there, between Apple and Android competitors.
Xbox still feels like an outlier that should be spun off, allowing Microsoft to focus on business. Depending on whether Hololens is headed toward next generation gaming or next generation augmented work (like Google Glass’ trajectory), it could fall into either camp.
But new numbers about the collapse of the PC market are likely to add more urgency to Nadella’s efforts to reposition the company around productivity and to distance it from Windows. As reported in the Wall Street Journal, PC shipments dropped around 10% in the second quarter of 2015 (Gartner says 9.5%, and IDC says 11.8%). That’s the largest decline in the nearly two years. Basically, consumers are migrating from PCs to tablets or hybrids. Nadella is reading the tea leaves, and devices aren’t where Microsoft will be playing.
The recent spin out of part of the Bing mapping infrastructure to Uber and ad network software to AOL are also indications of Nadella’s willingness to trim at the edges aggressively.
So, expect to see a resized Microsoft jettisoning Ballmer’s failed bet on phones, refocusing on becoming a productivity and ‘mobility of experience’ powerhouse, and zeroing in on the enterprise.

Verizon starts killing off 3G networks to make room for LTE

Verizon has already launched two distinct LTE networks since it first turned on 4G in 2010, but now it’s started paving the way for the third. Unlike the first two, however, this new network won’t tap virgin airwaves. Instead Verizon has started cannibalizing its old CDMA EV-DO systems for PCS spectrum, marking the beginning of what will likely be a very slow death for 3G.

Gigaom’s favorite network spotter Milan Milanovic discovered signs of [company]Verizon[/company]’s new LTE network in Manhattan when he connected to it with a Nexus 5 (a device Verizon traditionally hasn’t supported because it doesn’t work over its primary 4G network) and a Galaxy S4. The 1980MHz/1990MHz chunk of frequencies has traditionally been part Verizon’s 3G EV-DO network, or it was until last month when Milanovic noticed it was turned off (Milanovic happens to be kind of guy who totes around an industrial spectrum analyzer.)

A spectrum analyzer shows LTE signals in portion of the 1900 MHz PCS band that formerly contained CDMA EV-DO.

A spectrum analyzer shows LTE signals in portion of the 1900 MHz PCS band that formerly contained CDMA EV-DO.

This week, though, Milanovic noticed that those empty airwaves had once again jumped back to life, but with LTE instead of CDMA signals. Milanovic said that he’s found Verizon LTE in the PCS band at cell sites all over Manhattan, but so far nothing in Brooklyn and Queens. The transmit power of the network is still very low and the internet speeds he’s getting are still very slow, he said, indicating that Verizon is still in the early stages of testing. There have also been reports on network-tracking site SG4U of LTE popping up on Verizon’s PCS band in Cleveland.

I pinged Verizon, and spokeswoman Debra Lewis confirmed that Verizon is indeed testing LTE on the PCS band, though she said Verizon wouldn’t go into any specifics on locations or timing for a commercial launch. Lewis also made the point that this should hardly come as surprise since Verizon has said it would begin repurposing a portion of its 3G bandwidth for LTE in 2015. In fact, as early as 2011, Verizon CTO Tony Melone told me Verizon would likely shut down 3G completely as all of Verizon’s data traffic moved over to 4G networks.

That day is still a long time coming, though. About 80 percent of Verizon’s mobile data traffic now rides over LTE, but some 40 million (41 percent) of the total devices on Verizon’s networks only have 2G and 3G radios. That means for the foreseeable future, Verizon will have to keep a modicum of EV-DO capacity online at every cell site to support those devices. That’s what we’re starting to see in NYC at least: Verizon appears to have shut off half of its upper-band 3G capacity across Manhattan.

As for 2G, it will be around even longer than 3G since it’s still Verizon’s primary voice network, but eventually Verizon will begin the bulk of its voice traffic onto its new voice-over-LTE service. What we’re witnessing is the very beginning of a long, slow march toward death for Verizon 3G and the gradual transformation of Verizon into a carrier providing all its voice and data services over a single network technology.

Lackluster FCC spectrum auction hits its reserve price and then ends

Like an eBay(s ebay) listing for a vintage Def Leppard concert T-Shirt, the Federal Communications Commission’s first spectrum auction in six years reached its reserve price of $1.56 billion and then promptly came to a halt with no further bids. Given the lack of carrier interest in Auction 96 and the 10 MHz of PCS spectrum it offered, the lackluster result is hardly a shock. Nor are we likely going to be surprised by the winners when the FCC announces them next month. Dish Network(s dish) had promised to bid the reserve price for this spectrum, and barring any surprises, it likely ran away with these airwaves.