Tablets, Clouds, and Spending

The ever-changing focus of the consumer electronics folks is now shifting from Google/MMI to the upcoming Amazon tablet, which could be introduced in as little as a month.  The details of the technology aren’t known, but they’re probably less important than the price point.  If Amazon brings out an iPad-sized unit for under $300 they could create a whole new dynamic for the tablet space.

I noted in an earlier blog that the big asset that Amazon has in the tablet world is a follow-on revenue source that could be used to partially subsidize the devices.  Not only would that let Amazon field tablets at a lower price, it would put pressure on Apple by forcing them to either lower their own price with cross-subsidies from iTunes and/or App Store or let themselves be trapped as a high-end lower-volume play.  Neither would be a fun choice for the new CEO to make.

The other thing that an Amazon launch could bring is more impetus for both Apple and Google to look hard at MVNO status.  Amazon already has a 3G version of Kindle, and while that sort of thing won’t be automatically transferred to a tablet (which would presumably have a lot more online utility) it does seem likely that Amazon would want to link its own tablet up with its own streaming service.  They could rely purely on WiFi, or they could push into 3G/4G, and that might even make Amazon an MVNO candidate.

For now, it’s pretty likely that the big winner in the tablet space will be hospitality WiFi and the supporting equipment.  Even if tablets are equipped with cellular services, heavy entertainment use will surely drive users’ bills up unless they can unload the traffic.  Sitting in a comfortable coffee shop while viewing is safer than trying to drive or walk during the process in any event.  It’s the tablet’s linkage to entertainment video that’s also sparking the renewed debate over just what network licenses to cable and satellite companies really include in terms of non-broadcast use.  TV Everywhere is a model for making the right to view more independent of the delivery mechanism, and on one hand that can raise ad revenues and help profitability in an age of constricting profits for broadband.  On the other hand it aggravates the networks who believe they should have additional revenue from these new sources.

Tablets are also a clear path to increased reliance on network-hosted functionality, which is at least somewhat a definition of “the cloud”.  In the enterprise world, the VMware conference has become a convenient launch point for a lot of stories and not much news.  I think the biggest thing to come out of it is the fact that VMware is explicitly committing to the notion of the hybrid cloud, a move that some pundits are criticizing as being too conservative.  The problem is that this isn’t about promoting technology, it’s about promoting technology benefits.  I’ve said from the very first that our surveys consistently show a maximum of about 24% of enterprise IT spending migrating to the cloud, and that maximum can be met only if the public cloud and the data center don’t end up as IT-resource-ships in the night.  You can’t disintermediate your critical information tidbits from each other or from the workers who need them to drive productivity gains.

We are seeing things that enhance cloud hybridization, ranging from VMware’s stuff to new offerings for hybridization management from IBM.  All of them help administer a hybrid environment but they won’t make the business case for users who are still having a problem getting their arms around the whole paradigm.  My research shows that over the last decade we’ve lost hundreds of billions of dollars in global IT spending simply because we’ve been unable to connect spending to benefits in the convincing way we did in the past.  The people who get that particular problem figured out will be the people who lead the next technology charge.


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