More Confusion in the MarketMore Confusion in the Market

Google buying Motorola; HP shedding PC and tablet businesses...does this sound like an orderly market to you?

We were just getting over Google/Motorola when HP announced it was shedding not only the PC business but the tablet business as well. Then Cisco came along and said it would be offering a WebEx package that would compete more directly with Skype's low-end videoconference tools, which you'll recall were acquired by Microsoft when they bought Skype. Does this sound like an orderly market to you? More like Brownian movement.

The central factor in all of this, I think, is the Google/Motorola Mobility deal. Google in a swoop gets to be a handset and tablet company and not just a provider of Android. That puts it into direct competition with Apple and virtually assures that we'll see a flood of new models and also new applications for mobile OSs, ranging from cars and appliances to TVs and even (some say) advanced toys. Robots bringing you coffee in the morning? Don't rule that out either.

What did get ruled out was profit in the client device space, at least as HP saw the matter. PCs have been harder to make a buck on for years because the consumer doesn't have much brand loyalty. The prettiest skin, nicest display, and lowest price on the retail shelf wins, and that's been problematic for HP. They hoped to create a WebOS ecosystem that included phones, tablets, and PCs, but when Google did the deed it was clear there was little hope for HP's success and a very large risk that losses on PCs and tablets would mount. So HP did what they had to do.

The shootout between Apple and Google is now unavoidable, and it's going to be an interesting one because of the long-standing trend among enterprises to cut the cost of PC support. Remember thin clients and virtual desktops? For years now we've seen enterprises working harder to make PC support cheaper, recognizing that more and more workers were really using the PC as a browser platform to get on to company apps. The tablet is the logical end game in that quest. Why support general-purpose computers as a browser platform? Apple has to see the tablet as their way to take the lead from Microsoft, a lead Microsoft took originally with MS-DOS and Windows. Google sees Android and tablets validating the Google Docs cloud solution. The common element here is that the client device gets dumber and the applications move cloud-ward. Instead of selling an office suite for a hundred bucks, sell office apps and cloud access for 20 bucks a month.

Cloudward migration of applications may have been the biggest factor in the Cisco decision to go after Skype in the small-company-or-team collaboration space. I've noted before that UC buyers really think the Skype model is the right one, and one thing they like about it is that it's a cloud model. The fact that there's a Skype client doesn't bother them; the features are nested in the cloud. That implies that a hosted collaboration model is already winning, and it seems obvious that having the client devices become tablet- or even handset-centric would only accelerate that victory. If Cisco loses in collaboration, it also loses in telepresence, so it has to counter the move. Are browser-based WebEx or app-based Skype both just faces on a cloud-UC future? It seems inevitable now.

Another truth is that the more portable the device, the more ubiquitous the use of the device, and the more integrated the device then can be to our everyday behavior. A war of tablet/smartphone giants will surely create things like larger form factors in smartphones. All of this will make social communications more useful, and the desire by Apple and Google to build an ecosystem around their gadgets will promote things like switching videoconferences from phone to tablet to PC and even to TV.

We can expect to see a true avalanche of innovation here. And remember that Apple announced PC clients to its iCloud, so we can assume that both Apple and Google will embrace the notion of adding a competitor's device to their cloud. The result of this is a vastly more capable social communications framework that will become the de-facto phone system of the future. It will become the baseline for unified communications and collaboration, the thing that sets the bar.

And finally, there's the other point that HP's PC/tablet exit is teaching us: The importance of brand. Apple is the only tablet or smartphone brand that people know of by name; the whole of the Android space is known as "Android" and not by the names of the phone or tablet vendors. HP ran from the PC and tablet market in part because even with WebOS, it didn't think it could create a brand there. Well, what does that say about UC? Cloud or hosted UC doesn't have to create the largest competitor to be a winning concept, it only has to create a flood of solutions that become collectively known as "cloud UC" and there's no single brand--not even Avaya--that could stand against it.

How will the giants in UC respond? Well, I understand there's a PC and tablet business available for purchase...cheap!