Content Matters

The New York Times today has gotten lots of attention for a ridiculous headline on a poorly written story:

Top 1% of Mobile Users Consume Half of World’s Bandwidth, and Gap Is Growing

The story itself is kind of silly. Yes, it's a fact that a minority of users utilize significant amounts of bandwidth on mobile devices. That's not new - in fact, it's why AT&T, Verizon and others have put caps on what were previously unlimited data plans.

Yet in the story, the writer compares consumption of bandwidth to consumption of oil:

The United States, with less than 5 percent of the world’s population, consumes about 23 percent of the world’s daily oil production, according to American government figures. Japan, Germany and Italy, whose populations together make up less than 4 percent of the world’s total, accounted for 31 percent of global natural gas imports in 2010, according to the International Energy Agency.

Yes, that's factually true. But where there is a finite supply of oil in the world, bandwidth is potentially infinite, depending upon the capital investment that telecoms are willing to make.

Showing even more ignorance of the issue, the author quotes an analyst suggesting that some of the imbalance may be based upon the use of SIRI in new iPhone 4S devices:

Arieso researchers, in their latest survey, found that users of Apple’s iPhone 4S downloaded 276 percent more data from an operator’s network than did people with the Apple 3G, which has been on the market since June 2008.

Part of the reason for the increase in download volumes may be Apple’s Siri voice feature on the iPhone 4S, Mr. Flanagan said. Siri allows consumers to dictate to the phone and enter more text and data into the network in an easier way.

Really? The reason iPhone 4S users consume more bandwidth than iPhone 3G users is due to their use of SIRI? That's absolutely ridiculous. There are multiple reasons iPhone 4S users are probably using more bandwidth:

• They are early adopters - so they're much more likely to be consuming video and using other bandwidth-intensive applications
• Performance on the iPhone 4S is much, much faster than on the 3G. Those who are still using a 3G are unlikely to use bandwidth-intensive services as the performance will be unacceptable.

The story, which is based on a survey done of European mobile users, also lumps together mobile phone, tablet and laptop use. The drivers of bandwidth on laptops is likely different than it is on smartphones, but there's no effort to dig into that.

Even the accompanying photo makes little sense. The image shows users reading their smartphones while coming out of the subway tunnels to travel over the Manhattan Bridge. But I doubt these users are watching video or doing other bandwidth-intensive work during this 3-minute period where they can access the web. Instead, they're probably checking email or reading text-based news, since they'll be back in the tunnel shortly.

But what bugs me most of all is the silliness of the title, an effort to equate this to the 1% vs 99% of the Occupy movement. While smartphone adoption is certainly most prevalent among the top 25% of wage-earners, it's not a 1% issue. The checkout clerk at my local Stop & Shop has an iPhone 4S; the Associate at Lens Crafters who helped me with my reading glasses a few weeks ago has an iPad 2 and previously had the first iPad. She told me that when the iPad 3 comes out, she'll upgrade to that one "I have to have it". So bandwidth consumption cannot easily be mapped to a socioeconomic scale. In fact, I'd argue that the wealthiest (who are often older) are somewhat less likely than a younger, middle class audience to use their smartphones and tablets for video and other heavy bandwidth applications.

This kind of linkbait headline and sloppy journalism is what I'd expect from a B-rate blog. The New York Times should do better.

There have been no shortage of studies of how Bill Hewlett and David Packard, working out of a garage, built a great company that helped make Silicon Valley what it is today. And in the years to come, there will be no shortage of studies of how former HP (HPQ) CEO Mark Hurd destroyed shareholder value and ripped apart that once-great company.

Today's news that HP would look to spin off its PC business, while shuttering its Palm and tablet division was predictable. Yet the sad part is that HP was positioned to succeed in tablets, but they followed the wrong strategy.

It's clear that HP totally misunderstood the market. They looked at the iPad from a technical perspective - features and capabilities - without understanding the emotional response that Apple products generate. No one will buy an iPad wannabe that's priced $100 less than the original.It's why you don't see *skips* priced $5 less than a pair of Nike Air Jordans. In reviewing their marketing site, the biggest advantage they pitch is better multitasking than the iPad. Seriously?

There were three ways to get tablet market share, and HP chose to follow none of them. As I see it, the options were:

1) Be super-low cost. This is a tough one, as it costs HP (and anyone else) more to create a tablet than Apple pays, due to the volume Apple is selling and that it has locked up agreements with the big suppliers. Yet, if HP really wanted to go after the consumer market, they could have subsidized the purchases by pricing their tablets at $249, half the price of an iPad. They might have lost $250m per year for a few years, but they could have bought their way into the market. This would not have been my preferred approach, but it would have worked and been less costly than the current writedowns.

2) Innovate. Another way to gain market share is to do something truly innovative. This would be a big challenge, in that much of the innovation around the iPad comes from the ecosystem of developers. There's a big iOS development community and a growing one for Android, but nothing there for WebOS. But, there are always things you could do. What if HP struck a deal with a movie studio to push releases out to the Touchpad before they were on DVD? I think this would have been the toughest course for them to take, as it would have to be a game-changer to draw an audience away from Apple.

3) Focus on a different market segment. This is the strategy that I believe HP should have pursued. There are a number of b2b opportunities for tablets that are not being fulfilled by Apple or Android devices. In particular, I'd start with the medical community. I've no doubt that in a few years, all nurses and doctors will use tablets to capture and maintain patient data. But with HIPAA privacy laws, an open platform like the iPad wouldn't work. HP, meanwhile, has deep relationships with hospitals and health care organizations who use its servers and software for various applications. It would have been easy for HP to go after that segment. Other interesting segments could be legal, government, aerospace, etc, where specialized needs and high security are critical. HP was better positioned than any other vendor to take that market and they instead tried to beat Apple head-to-head.

Building great products is important. But more important is understanding your markets and choosing to go after segments you can win. HP has clearly failed.