Today, Amazon announced the Amazon Cloud Drive. I think it is the first salvo in a series of steps that will lead Amazon to compete directly for the primary computing platform for individuals, as an online platform, as a device operating system, and as a maker of branded tablets.
Much of the attention is going to the Amazon Cloud Player, announced at the same time, which enables customers to stream music stored in Cloud Drive – Forrester’s Mark Mulligan blogged about that for Consumer Product Strategists (Amazon Beats Apple and Google to the Locker Room). But the general purpose design of Cloud Drive, combined with the long-term opportunities for personal cloud services, lead to a really interesting set of possibilities and insights into Amazon’s long-term strategy for Vendor Strategists trying to sort out the technologies and players of next-generation personal computing platforms.
Amazon has just beaten Apple and Google to market with a cloud-based music locker service. As with the anticipated Apple and Google services, the Amazon cloud music product enables users to upload and stream their music on multiple devices (in this instance, on PCs, Macs, and Android phones and tablets – though not iPhones nor iPads). All US Amazon customers start with 5GB free and can then upgrade for $20 a year to 20GB, but buying an MP3 album at Amazon will automatically give the extra 20GB for free.
There are, of course, rights controversies around locker services. Digital music stalwart Michael Robertson is currently locked in legal combat with EMI over his cloud locker service MP3Tunes. The important factor with this service is that Amazon requires customers to upload their music file by file and store them rather than matching them against a cloud-based central repository of music, much in the same way that Carphone Warehouse currently does in the UK with its Catch Media-powered cloud locker service. (Which can be a pretty painful process for users. Remember the first time you ripped all of your CD collection? Now imagine doing that over the Internet . . .)
The rights issues, though of course important, aren’t the really interesting points here. What is interesting is why Amazon has done this, and what this means for the wider digital music marketplace.
Many of today’s financial services websites seem increasingly outdated. Why? More and more people are using the web as their primary banking channel and firms like Amazon, Apple, and Google are raising the bar on what customers — especially the younger generation — expect from their banks.
Despite the fact that the online channel is more than a decade old, most retail financial services companies have yet to make full use of its potential. Many banks still don’t make it easy for customers to achieve their goals online, they struggle to provide compelling cross-channel experiences, fail to tailor content and functionality to individual needs, and don’t enable customers sufficiently to take action by themselves.
We believe that a new generation of digital financial services is required — one that provides a fundamentally improved digital experience. To be successful, these next-generation digital financial services should be SUPER — simple, ubiquitous, personal, empowering, and reassuring.
This framework presents Forrester's vision of the of future of digital financial services and describes the technologies, processes, and organizational aspects that will enable it. It also provides examples of leading financial services firms that provide next-generation experiences today.
A key enabler of the Next-Generation is Agile Commerce which means optimizing people, processes, and technology to serve today's empowered, ever-connected customers across a rapidly evolving set of customer touchpoints.
Tablets are a red hot topic since the launch of Apple’s iPad more than a year ago. Tablets are the most visible aspect of a broader topic on the minds of vendor strategists – the consumerization of IT. Consumerization is defined variously as using personal devices for work, pay-per-use payment models, spending personal money for work-related cloud services, and employee self-provisioning of IT capacity outside the oversight of IT. In our annual Forrsights Hardware Survey, Q3 2010, we asked IT infrastructure buyers responsible for supporting end user computing about a variety of topics related to consumerization of IT and learned that:
The IT organizations in 26% of enterprises (firms with 1000 employees or more) were planning to implement or had implemented general purpose touchscreen tablets such as the Apple iPad. Of that total, 4% reported they’d already implemented, and 17% were already piloting by Q3, 2010, approximately 6 months after the launch of this brand new category. SMBs, firms with 999 employees or less, were lower at 18% planning or implemented.
Only 2% of firms, large and small, reported implementing or piloting bring-your-own-PC models, despite several years of hype among the desktop virtualization software vendors about this model. We expect this PC deployment model to grow, but it’s not a broad trend yet.
Firms are using more consumer-style Web applications on PCs, with 84% firms increasing their use of Web applications. But they’re not abandoning locally installed applications. 55% of firms are increasing or staying the same on their use of installed applications, while only 4% are seriously reducing use.
At yesterday’s HP Summit 2011, CEO Leo Apotheker made a public case for personal cloud — online services that work together to orchestrate and deliver work and personal information across personal digital devices (such as PCs, smartphones, and tablets). For people planning strategy at vendors, what are the implications of personal cloud? End users will need help getting access to their information across their devices seamlessly.
One type of information ripe for help from personal cloud services is contacts or address books. Every person using a mobile phone (251 million in the US, most of which can do email) confronts the issue of how to get all their work and personal contacts into a new mobile phone. Can they simply sync with an existing source? Do they have to export? Or <shudder> re-key them?
We’ve been researching how many people are actually using a sync service or would be interested in using one. The market for contact or calendar sync is vastly underserved today: Only 4% of North American and European information worker respondents (those using a computer 1 hour or more per day) report that they used a website or Internet service that required a login for contact and calendar synchronization, integration, or enhancement for work (Source: Forrsights Workforce Employee Survey, Q3 2010).
Yet, when Forrester asked US consumers whether they identified with the statement, “I have several electronic address books and can't always find the contact I want when I want it,” only 4% chose that as a frustration or concern that they experience with the information they’ve stored in their PCs, devices, online services, or mobile phones (Source: North American Technographics® Omnibus Online Survey, Q4 2010 [US]).
Forrester published a new report today making the call that the iPad challengers that have been announced so far—Android Honeycomb tablets from Motorola, Toshiba, and others, as well as the BlackBerry PlayBook and HP TouchPad—are solid products with fatally flawed product strategies.
In short, competing tablets are too expensive, and can’t match the Apple Store as a channel. These two claims are related: Forrester’s research has shown that consumers attribute more value to Apple products because of the in-store service. Consumers are not only comparing feeds and speeds; there’s also a human factor. The humans working in the Apple Store will have a huge impact teaching consumers about the iPad and how to use it. Compare the experience of walking into an Apple Store, where the iPad is front and center, to walking into a Verizon store where the Samsung Galaxy Tab is collecting dust at the back of the store and the sales reps don’t quite know what to make of it. Or walking into a Best Buy store, whose shelves will soon be lined with similar-looking tablets with similar functionality.
At first blush, the decision by Warner Bros to rent movies on Facebook seems a little out of place. Sure, people watch a lot of video (mostly YouTube) on Facebook, but they don't go there to watch two hour movies, right? Well, for now they don't, but with some tweaks, they could start doing so very soon.
As my colleague Nick Thomas said yesterday in his blog post about Facebook's potential as a premium content platform, the future of traditional and social media are likely to be intertwined. Most of us, myself included, have been imagining them blending in the living room, where viewers can access Facebook on any number of devices while watching a movie on the TV. But would people be interested in exactly the reverse? When I checked in on Facebook I found the first evidence that the answer is yes.
You see here that within 11 hours of being posted, 1,914 people liked the idea of watching The Dark Knight on Facebook. This is compared to the 1,433 people who have liked the App Edition of Dark Knight that was announced nearly a month ago. (Don't try this at home; for some reason, the post announcing Facebook viewing has since been removed and I can't check for more recent numbers.)
When Jeff Bezos announced to his Amazon staff his concept for the Amazon Marketplace in November 2000, many people — inside and outside Amazon — thought he was crazy. Amazon was inviting in other sellers — individuals and merchants — to compete against Amazon’s owned inventory on Amazon.com. As full price merchants were added in categories such as consumer electronics, apparel, and baby products in the early 2000s, the head shaking continued. To paraphrase, Jeff Bezos claimed this was about “the world of perfect information.” Customers are going to find the lowest price online if they really want to, and they should be trained to find it on Amazon. Maybe Amazon could grab a piece of the pie along the way.
Of course, what was once seen as crazy is now viewed with envy, as the marketplace now represents approximately 35% of Amazon’s revenues and 30% of total units sold in Q4 2010.* Amazon charges anywhere from a 5% to a 25% revenue share on a sale through its marketplace, roughly determined by dividing the expected margins in a category in half — to be shared with the merchant. With only limited incremental technology and category management costs, the profitability of this for Amazon is easy to see. And as a result, it has also solidified Amazon’s role as the leading product search site. This success is already breeding imitators in Buy.com, Sears, Walmart, NewEgg, and soon a whole host of large UK retailers. And let’s not ignore Apple’s iTunes, clearly a very successful marketplace, though of a somewhat different flavor.
Apple understands desire. The first thing consumers will notice about the iPad 2 is how it feels: Lighter (by a crucial 2 ounces) and thinner (at 8.8mm, thinner than an iPhone 4). Color triggers emotion: iPad 2 comes in not just black but white, with multiple colors in the thin "smart covers" that snap into place with "auto-aligning magnets" and clean those unsightly fingerprints off your screen. The rest is important but more cerebral. Dual-core processor, HDMI video-out converter for the 30-pin connector, etc. Emotion enters back into the equation when consumers see what they can do with the device--see their loved ones through FaceTime, touch-edit videos in iMovie, improvise on touch-instruments in GarageBand and actually sound good doing it.
In a post-PC world, consumers have a more intimate relationship with their devices. They use them on the couch and in bed and not just at their desk. They show their devices to other people (40% of iPad owners in Forrester's surveys report regularly sharing their iPad with other people). Fostering that desire is a smart way to differentiate your piece of glass from other pieces of glass that perform essentially the same functions.
Beyond the device itself, Apple's product strategy cultivates an emotional connection with consumers through:
Content. Apple's unrivaled app ecosystem adds value to its product. With 65,000 apps, the iPad has the edge in custom-built content. For consumers shopping for tablets, the number of apps isn’t as important as the price of the device, battery life, and 3G service flexibility, but it does matter: 23% of consumers considering buying a tablet rank “number of available apps” in their top-three important features, according to a Forrester survey fielded in January 2011.
Most of the hype in advance of today’s Apple media event is rightly about a new iPad. Sarah Rotman Epps will post on her blog about the new iPad for consumer product strategists after the announcement. I’m focused on the published reports that Apple’s Mobile Me service will be upgraded. I cited Mobile Me as an example of emerging personal cloud services in a July 2009 report, and I’m working on a follow-on report now. Mobile Me is Apple’s horse in a contest with Facebook, Google, Microsoft, and others, to shift personal computing from being device-centric to user-centric, so that you and I don’t need to think about which gadget has the apps or data that we want. The vision of personal cloud is that a combination of local apps, cached data, and cloud-based services will put the right information in the right device at the right time, whether on personal or work devices. The strengths of Mobile Me today are:
Synced contacts, calendar, Safari bookmarks, and email account settings, as well as IMAP-based Mobile Me email accounts, for Web, Mac, Windows, and iOS devices.
Synced Mac preferences, including app and system preferences.
Mobile Me Gallery for easy uploading and sharing of photos and videos.