Dell Encounters a Changing Era, As Did IBM, Microsoft: Will Apple be Next?

There's a good reason for eras of computing and the scary fact that no leader in one era has lead in the next era. Firms survive the shifts--IBM is the best example so far--but they do not lead in the same way they once did. 

Historically, what it has taken to succeed in each era has required different architectures, has had firms engaging with different customers, or in different ways with customers, and has had different amounts of integration with other parts of life. 

Some would say we have been though four eras, and are entering the fifth of five eras of computing, including mainframes, PCs and Web, while we now are entering the "Device" era, which will be followed by something Robert Grossman calls the "Data" era.

Others might say we have been through four eras, including mainframes, minicomputers, PCs and now are in an era where cloud or mobile might better characterize the new era. 

The point is that, historically, these eras correspond to business leadership. It is therefore no knock on executive skill that firms such as Dell, HP, IBM and perhaps now even Apple have run into problems when eras change. 

Most technology historians would agree there was a mainframe era of computing, followed by the mini-computer and then PC or client-server era. Most would agree that each era of computing has been lead by different companies.

IBM in the mainframe era; Digital Equipment Corp. in the mini-computer era and Microsoft and Intel in the PC (or Cisco in the client-server era, as one might also refer to the PC era) are examples. Apple has been among the brightest names in the current era, however one wishes to describe it. But judging by market valuation, Apple has hit a bit of an air pocket.

But there is no doubt there has been a change over the past decade or so. Where in the late 1990s one might have said EMC, Oracle, Cisco and Sun Microsystems were the four horsemen of the Internet, leading the business, nobody would say that in 2013. 

These days, it is application firms such as Google, Amazon, Facebook, plus Apple, that fit into the typology. 

There has been a trend towards computing pervasiveness, as each era has succeeded the earlier era. Computing used to be in a "glass room." Then it could be done in a closet. With PCs computing moved to the desktop. Now, computing is in a purse or pocket. 

The role of software obviously has become more important over time. But, to this point, computing eras have never been defined by the key applications enabled. Perhaps we will one day see matters differently, but it would be a change to shift from "how" computing is done to "what computing does" to define the eras. 

We all sense that a new era is coming, and that the Internet, mobile devices and applications will be more important. But there is not any agreement on whether we have "arrived" or are still only approaching the new era. 
We certainly are leaving the PC era. That's why former Apple CEO Steve Jobs always insisted the iPad was not a PC. In fact, many would insist that it is the tablet's optimization for content consumption that makes it distinctive. 

We can't yet say that the next era of computing is defined by mobile devices, tablets, the Internet or cloud computing or even the fact that leadership is shifting more in the direction of applications and activities than computing appliances. But all of that hints at the shape of what might be coming. 

If history holds, someday even Google, Apple, Facebook and Amazon will be seen as "former leaders." Despite the success those firms have enjoyed, there is still no precedent for a firm that leads in one era to lead in the next. 

And IBM has shown one way of surviving in an era a former leader cannot dominate. Dell wants to go the same route. But it might be fair to say that "surprise" is one common element when eras start to change. 

Michael Dell, about to execute a deal to take Dell private  said the "rise of tablets had been unexpected."  

"I didn't completely see that coming," he said.

Dell would be in good company. Bill Gates did not "get" the Internet, either. 

What Era of Computing are We In? What Comes Next?

Most technology historians would agree there was a mainframe era of computing, followed by the mini-computer and then PC or client-server era. Most would agree that each era of computing has been lead by different companies.


IBM in the mainframe era; Digital Equipment Corp. in the mini-computer era and Microsoft and Intel in the PC (or Cisco in the client-server era, as one might also refer to the PC era) are examples. 


But here's the thing: we don't yet know whether the new era is here, or only coming. There has been a trend towards computing pervasiveness, as each era has succeeded the earlier era. Computing used to be in a "glass room." Then it could be done in a closet. With PCs computing moved to the desktop. 


Certainly computing in a mobile period (we can't say yet whether it is a "mobile era") is moving beyond the desktop and into pockets and purses. We already can predict that computing has begun to become pervasive in all sorts of machinery as well. 


Nor is is easy to describe even the present era. The role of software obviously has become more important over time. But, to this point, computing eras have never been defined by the key applications enabled. Perhaps we will one day see matters differently, but it would be a change to shift from "how" computing is done to "what computing does" to define the eras. 


The Internet is more important, but not necessarily always because that is where the "computing" is done. Cloud computing is becoming more important, and does shift the locus of computing activities. 


We all sense that a new era is coming, and that the Internet, mobile devices and applications will be more important. But there is not any agreement on whether we have "arrived" or are still only approaching the new era. 


Most would agree that a new era--one we cannot yet even name--is coming. Most think the Internet and mobile devices will have something to do with that new era, but we can't be completely sure yet whether that is the right way to look at what is coming. 


But there are signs. Apple's market capitalization topped $500 billion for the first time in February 2012. Apple's valuation is notable in other ways as well.


Apple is in a class by itself, both financially and in terms of its leadership of the technology industry. In some ways, that is a return to the older pattern, where IBM made computers, as did DEC. In the PC era, neither Microsoft nor Intel did so. 


That isn't to say Apple is now the dominant firm in tomorrow's era, but simply to note that, if there are epochs within eras, then right now Apple best exemplifies leadership of computing. Paradoxically, Apple has dropped the word "Computer" from its name, which further indicates change. 


We certainly are leaving the PC era. That's why former Apple CEO Steve Jobs always insisted the iPad was not a PC. In fact, many would insist that it is the tablet's optimization for content consumption that makes it distinctive. 


We can't yet say that the next era of computing is defined by mobile devices, tablets, the Internet or cloud computing or even the fact that leadership is shifting more in the direction of applications and activities than computing appliances. But all of that hints at the shape of what might be coming. 


But there are other signs. Google is the first really-big technology company with an advertising revenue model. In the past, it has been software or hardware sales that were the revenue driver. 


Nor is it so easy to clearly separate dominant firms that are built on the existence of the Internet (which might be an epoch within the PC era, or a name for the next era, or a way of creating and using applications that could span eras) from the actual era itself. 


Some might say that among the changes is that the mode of computing matters less than the applications enabled by computing. Though "a machine" has been the exemplar of past computing eras, maybe that will not be the case next time, or in eras to follow. Perhaps something else will be the defining element. 


It would be reasonable to say that, although the PC is the dominant device, mobile phones and tablets are being added to the device mix. Nor would it be incorrect to say that the Internet has become the key network used by all the devices. 


But neither is it easy to sort out the relationship between Internet as network, devices and applications. People do all sorts of things on the Internet, but it wouldn't make sense to say we are in the era of Internet-enabled shopping, searching, viewing, listening, game playing or communicating. We do all those things, and more, but the activities themselves do not seem to make sense as a way of describing the era. 

Perhaps we now are entering a phase of such pervasive computing, embedded widely in so many areas of everyday life, that we will not be able to describe an era by the dominant way computing is done, but only by some other indicator. 


Consider that Amazon and Barnes & Noble now appear on rankings of tablet market share, for example. That itself hints at a shift. And Apple is something of an anomaly. Though it began life in the PC era, it never "lead" that era. Only now, as it has dropped the word "computer" from its name, and only as devices other than computers have driven its business (iPods), and now drive its business (mobile phones, tablets), has Apple become perhaps the dominant force in "computing." It's a paradox. 

Consider that Apple represents a 3.8 percent weighting in the Standard & Poors 500 Index. 

In the fourth quarter of 2011, S&P 500 firms grew earnings 6.6 percent. But remove only Apple from the index and S&P 500 and the index grew at only a 2.8 percent rate. In other words, Apple performs so much better than most other firms that it distorts perceptions of the market. 


Also, some would note, Apple, in terms of market valuation is bigger than that of Google and Microsoft combined. Microsoft is valued at about $257 billion and Google at about $197 billion.


In the product area, though many firms "compete" against Apple, few can approach it. In very real terms, there is not yet so much a "tablet" market as there is an "iPad" market, as Apple holds a 62-percent share of unit sales.

In smart phones, the story is not so much unit shipments as profit. In the third quarter of 2011 Apple earned about 61 percent of total smart phone profits, globally, all by itself. 

Although soaring sales of Amazon’s Kindle Fire and other low-priced tablets trimmed Apple Inc.’s media tablet market share in the fourth-quarter, it was Apple’s own newly introduced iPhone 4S that proved to be the strongest competitor for the iPad during the final three months of 2011. 

In other words, Apple's biggest competition, in some ways, is itself. 

Perhaps the reason for our current perplexity is that, in the future, we won't be able to define eras by devices at all. That itself would be a huge change. 

 

Era of Pervasive Computing Shapes Communications Revenue Drivers

Eras of computing matter for telecom professionals and the broader telecom industry for any number of reasons, but chief among the implications is that computing eras create, shape and form demand for communications.

The era of pervasive computing, which is likely to supplant the era of mobile computing, provides an example. At one level, the idea that computing devices will be embedded all around people implies communication as well. And since sensors and pervasive computing devices (things) will vastly outnumber people, that suggests a lot more communication connections.

But computing eras also shape other parts of life, such as who and what needs to communicate, over what distances, in what manner, how often and with what bandwidth requirements. Those issues in turn create potential demand for revenue-generating services, features and apps.

There are many ways to characterize eras of computing, but it is safe to say that the present era is the second of perhaps five eras where communications is essential for computing, since computing is largely accomplished remotely.

In other words, “everything” is networked and connected.

source: Paul Veillard

In the era of personal computing and use of the web, that mostly meant connecting PCs with remote computing facilities. In the cloud era, we reach a new stage where “most” applied computing tasks are partially, substantially or nearly-completely conducted remotely, making communications a necessary part of computing.

In the present era, demand for communications to support computing has been driven by global adoption of mobility, plus mobile data, plus video and other internet apps.

source: Cisco

In the next era, communications demand will be driven by internet of things sensors and other forms of pervasive computing.  For communications providers, that is the good news.

The bad news is that in the era of pervasive computing, not every instance of communications necessarily generates incremental revenue. We already see that with Wi-Fi, Bluetooth and other forms of local and short-distance communications.

Nor, in the pervasive era, is it possible for any access provider to directly profit from most of the applications that use a network. Potential revenue exists in increased demand for wide area communications and therefore local connections to such networks.

But the relationships are far from linear. Basically, incremental revenue grows less robustly than increased data usage, and threatens to grow far more slowly than network capital investment.

source: http://commsoft.blogspot.com/

That is among the key challenges for the “dumb pipe” internet access function. That is not to say the only revenue drivers are dumb pipe internet access. Access providers do provide owned applications (messaging, voice, video). But those legacy sources are either declining or morphing, with new suppliers providing effective substitutes.

That is why surviving retail suppliers must “move up the stack” into owned apps, platforms and services.

What Device Sales Indicate About Next Era of Computing

If in fact we are moving towards the next era of computing after the “PC era,” it should not come as a surprise that the types of computing devices also are changing. Tablets, which derive much of their value from cloud apps, content and storage, provide one example.

But the best example is a Chromebook, a device that relies nearly exclusively on cloud-based computing to provide value. To a growing extent, smartphones provide value by use of cloud-based content and apps as well.

Virtually everyone might agree that something important in computing architecture is happening, namely the transition from an older ear to a newer era.

Some of us prefer to call the earlier eras of computing “mainframe, minicomputer, PC,” followed by the current era, which seems not to have a universal appellation.

Others might say the eras are “mainframe, personal computer, web era, device era.” Some might specify the eras as corporate, personal, ambient.

Yet others might differentiate computing eras by computing architecture. IBM has spoken of “mainframe, departmental, PC, Internet and Social as earmarks of how enterprises use computing.

The point is that the signature devices in each era are different. Mainframes and minicomputers were used by only a few enterprises. PCs were adopted by consumers. Then came the Internet, and phones became computers. Recently tablets have gotten traction.

So we should not be surprised that devices optimized for the coming era of computing are grabbing more share of computer sales.

The issue is pinning down precisely the main characteristic of the next era of computing, which might be said to include attributes such as ambient usage, based on highly personal devices and relying on cloud resources to provide computing utility.

That would include tablets, smartphones and Chromebooks, to various degrees. Phones are most uniquely personal and ambient, while tablets and especially Chromebooks rely on cloud computing for core functionality.

So whether we emphasize “mobile or ambient,” types of devices or architectures, the elements of ambient and cloud-based would seem central to any description of the coming era.

So sales of cloud-based appliances should grow smartly. NPD Group reports that Chromebooks to commercial customers (not consumers) accounted for 21 percent of all notebook sales, for example, up from negligible share in the prior year, and eight percent of all computer and tablet sales through November 2013. Chromebooks represented just one tenth of a percent of notebook sales in 2012.

By definition, a Chromebook uses a cloud-based computing architecture to provide value.

Tablet sales likewise are an instance of reliance on cloud computing. Tablets represented more than 22 percent of all personal computing device sales sold through the commercial channel through November 2013.

For some of us, the important observation about business customer device sales is the uptick in devices that rely centrally on cloud computing for value. 

What Defines an "Era of Computing" Anymore?

In the past, it has been possible to describe computing eras strictly in terms of hardware: mainframe, mini-computer, personal computer. Sometime in the 2000s that framework began to fray, as computing moved from “business or enterprise” use cases to consumer content, commerce, education, information gathering and entertainment. 

These days, computing leadership often includes large app providers as well as hardware or software suppliers. 

Decade	Leaders	Area of Impact	Transition to Content/Social Media/Commerce
1960s to 70s	IBM	Enterprise computing	Not yet
Early 1980s	DEC, Wang Labs, HP	Mid-market computing	Not yet
Later 1980s	Microsoft, Intel	Personal computers, operating systems, semiconductor technology	Laid the foundation for widespread adoption of computing, enabling future digital content and communication.
1990s	Google, Netscape, Chrome, Amazon	Web browsers, search engines, e-commerce platforms	Facilitated access to information and commerce online, paving the way for content sharing and social interaction.
2000s	Social Media including Twitter, Facebook, YouTube, Instagram, Wordpress	Social networking platforms, microblogging platforms	Created platforms for user-generated content, real-time communication, and community building.
2010s	Apple, Samsung, Google, AWS, Azure, Google Cloud, Netflix, Google Maps	Smartphones, mobile operating systems, cloud computing, mobile apps	Expanded access to the internet and digital services through mobile devices, driving content consumption and social interaction on the go.
2020s	Nvidia, Microsoft, AWS, Google,  AMD (and others coming)	Artificial intelligence, cloud infrastructure, edge computing	Enabling personalized content experiences, intelligent applications, and seamless integration of computing into various aspects of life.

Among other implications, it is likely the older models of “computing eras” will have to be redefined, as leadership now can come from software or content firms as easily as from hardware firms. Apple redefined its role when it switched from being a niche provider of personal computers to a major supplier of mobile devices and now services and content. 

Microsoft evolved from an operating system provider to a leader in cloud computing, enterprise and consumer applications, gaming, communications and so forth.

And today’s computing leaders mostly are dominant as providers of computing-enabled applications and services, ranging from search to social media to commerce and cloud computing “as a service.”

Hardware still matters, of course (Nvidia, for example). But eras of computing are unlikely to continue to be defined by hardware. Instead, platforms, devices and use cases seem to be what matters.

What Comes Next Will Reshape Mobile Marketing, the Issue is "How?"

While delivering a speech at the San Diego Social Media Symposium, hosted by Nuffer, Smith, Tucker, the question of “what comes next,” or “who comes next,” in terms of computing industry leadership, came up.  

The reason for the question is that technology enables new forms of marketing at the same time technology changes the potential effectiveness of existing channels. Among the best examples is use of social networks for marketing.

Facebook finally has figured out how to use display marketing in a PC context. It is just now exploring how to do advertising and marketing in a mobile device context. Twitter has developed the promoted tweet, a new form of marketing messaging.

At least 40 percent of all Facebook activity, for example, now occurs on mobile devices. And though all channels used in a PC context can, in principle, also be used on tablets and smart phones, there are key contextual challenges.

The substitution of a touch and swipe user interface rather than keyboard and mouse are examples. The amount of screen real estate are other key issues.

Beyond that, the use case for each device tends to be distinct. Smart phones are the “best” device for “on the go” apps and messaging. Smart phones are best suited to location apps and communications.

Tablets are less “mobile,” and suited to content consumption activities, though the setting is more “couch” than “on the go.” It is nevertheless true that smart phones get used at home or at the office more than “in transit.”

PCs increasingly are being “relegated” to work or desktop settings.

The truthful answer is that nobody knows yet how computing, and marketing possibillity will change in the next era. Part of the indeterminacy is that it is hard to figure out what era, epoch or age is coming. We all sense that mobile and Internet will be foundational, as will the pervasiveness of computing.

But that doesn’t help refine one’s search for the “next big thing” or the characteristics of firms or enabling technologies that might lead the next era, epoch or age. It seems clear, in retrospect, that virtually nobody, or almost nobody, could have foreseen the power of “search” or “social networking.”

Few seem to have recognized the importance of the “browser” or visual computing. Many would be surprised that Apple could be called the most important technology firm on the planet, or that a technology firm as large as Google could be funded by advertising.

Asked to speak about mobile marketing, one has to acknowledge the immediate difficulty. Mobile is many things, including discrete devices ranging from notebook PCs to tablets to smart phones to game players to music players. In principle, any current form of digital or online marketing can be applied to any Internet-connected device with a screen.

So email, text messaging, display advertising, promoted tweets, promoted stories, content marketing, social networks, blogs and websites all are channels that can be used across all screens, whether mobile or stationary. So too are tactics including earned media, paid media and owned media.

What isn’t yet so clear is which approaches will ultimately emerge as ideally suited to each category of screen, type of user interface or application setting. Mobile is a bunch of things, marketing is a bunch of things and so is “digital” or “online.”

A 2008 Microsoft paper described eras largely in terms of the relationship between computers and people. In the mainframe era, one computer served many people. In the PC era (for analytical purposes, Microsoft apparently did not see the mini-computer era as qualitatively significant) there was one PC per person. In the 2000s, which Microsoft describes as the mobility era, there are several devices per user. In the coming ubiquity era there will be thousands of computing devices for every user.
You might therefore represent the change quantitatively. But it is the notion of pervasiveness that probably gets to the heart of the matter. In any era where computing is literally embedded widely into the fabric of life, “computing” itself fails to stand out. It becomes something like electricity, an underpinning more than a discrete pursuit.
Nobody would call the present era the “era of electricity,” as one might have spoken of the “age of the automobile.
In fact, geologic time is the polar opposite of computing or Internet time, where the taxonomy of eonothem (eons) , erathem (eras), system (period), series (epoch), and stage (age) are used to refer to the layers of rock that correspond to these periods of geologic time. On a scale where the most-granular measure of time is “millions” of years, the entire history of computing occurs on a time scale too short to measure. 

To the extent that one can apply the geologic taxonomy, the Internet eon and pre-Internet eon might make sense, as use of the Internet spans multiple computing eras.

Perhaps we are have mistaken eras for ages or epochs, though. Mainframe, PC and mobile “eras” might be better seen, from a longer time frame as ages, epochs or periods within the broader framework of tool use.

The point is that people might instinctively sense that Internet, broadband, web and apps have some significance in the history of computing that we’ve not had time to digest and put into perspective. Clearly something important has happened with the Internet, and clearly something important is coming in terms of mobility and mobile devices. Precisely how that fits with the taxonomy of computing is not so clear.