This week, the New York Times ran a series of articles about data center power use (and abuse) “Power, Pollution and the Internet” (http://nyti.ms/Ojd9BV) and “Data Barns in a Farm Town, Gobbling Power and Flexing Muscle” (http://nyti.ms/RQDb0a). Among the claims made in the articles were that data centers were “only using 6 to 12 % of the energy powering their servers to deliver useful computation. Like a lot of media broadsides, the reality is more complex than the dramatic claims made in these articles. Technically they are correct in claiming that of the electricity going to a server, only a very small fraction is used to perform useful work, but this dramatic claim is not a fair representation of the overall efficiency picture. The Times analysis fails to take into consideration that not all of the power in the data center goes to servers, so the claim of 6% efficiency of the servers is not representative of the real operational efficiency of the complete data center.
On the other hand, while I think the Times chooses drama over even-keeled reporting, the actual picture for even a well-run data center is not as good as its proponents would claim. Consider:
A new data center with a PUE of 1.2 (very efficient), with 83% of the power going to IT workloads.
Then assume that 60% of the remaining power goes to servers (storage and network get the rest), for a net of almost 50% of the power going into servers. If the servers are running at an average utilization of 10%, then only 10% of 50%, or 5% of the power is actually going to real IT processing. Of course, the real "IT number" is the server + plus storage + network, so depending on how you account for them, the IT usage could be as high as 38% (.83*.4 + .05).
Apple's new iPhone 5 is a case study in incremental improvement. Nearly every aspect of the product -- the CPU, display, cameras, radio modem, size, weight, etc. -- are all improved over the iPhone 4S and at the same $199 price point. No doubt, the iPhone 5 and iOS 6 will sell millions of units, preserve Apple's momentum, and hold off the competition, but significant threats are mounting that Apple cannot afford to ignore:
Nokia is delivering Apple-quality innovation. As Nokia demonstrated last week at its Lumia 920 event, Nokia's innovation engine is firing on all cylinders. When the Lumia 920 launches (rumored for November 2), it will outclass the iPhone 5 in key areas such as imaging (PureView imaging, Cinemagraph) and location (Maps, City Lens, Transit) as well as bring wireless charging and NFC into the mainstream. While the breadth of accessories will be nowhere near what the iPhone offers, Nokia gets strong marks for showing Apple how NFC can enhance the accessory experience.
Last year Netflix attempted to shift its business strategy to focus mainly on streaming video. Although I wasn’t present in the boardroom discussions, it’s a reasonable bet that Reed Hastings and his team had decided the future was online streaming and that physical discs were a dinosaur. Since the war for content would be fought over streaming, Netflix would focus on adding value to its streaming customers and spin off the disc customers. On the surface this seemed to many a reasonable strategy, especially since Netflix reported that its digital streaming customers and the disc-in-the-mail customers were mostly not one and the same. So Netflix execs crunched the numbers and decided this was the right move for them. Perhaps they had hoped to spin off the disc side of the business to raise some capital. Whatever their thinking, their strategy choices left some gaping unanswered questions for observers like me:
Recently, my colleagues Brian Walker and Sucharita Mulpuru released a great overview of Amazon and its role in retail. What’s clear from this report is that Amazon is affecting everyone, both retailers and consumers. In fact, it shows that for many shoppers, Amazon is increasingly their first stop on the retail path: Thirty percent of US online buyers said that they began researching their most recent online purchase on Amazon.
In Europe, we asked online Europeans about the websites that they used to research products/services in the past three months. In the UK, France, and Germany, Amazon was mentioned most often. While some local retailers hold their own, such as Argos in the UK and fnac in France, eBay is the runner-up in most of these markets.
The poorly kept secret that is the Google Nexus 7 tablet was just announced amid much developer applause and excitement. The device is everything it was rumored to be and the specs — something that only developers care about, of course — were impressive, including the 12 core GPU that will make the Nexus 7 a gaming haven. True, it's just another in a long line of tablets, albeit a $199 one that competes directly with Amazon's Kindle Fire and undercuts the secondary market for the iPad.
But as a competitor to the iPad, Nexus 7 isn't worth the digital ink I'm consuming right now.
But Google isn't just selling a device. Instead, the company wants to create a content platform strategy that ties together all of its ragtag content and app experiences into a single customer relationship. Because the power of the platform is the only power that will matter (see my recent post for more information on platform power). It's unfortunate that consumers barely know what Google Play is because it was originally called Android Market, but the shift to the Google Play name a few months back and the debut of a device that is, according to its designers, "made for Google Play," show that Google understands what will matter in the future. Not connections, not devices. But experiences. The newly announced Nexus 7, as a device, is from its inception subservient to the experiences — some of them truly awesome — that Google's Play platform can provide through it.
Tablets aren’t the most powerful computing gadgets. But they are the most convenient.
They’re bigger than the tiny screen of a smartphone, even the big ones sporting nearly 5-inch screens.
They have longer battery life and always-on capabilities better than any PC — and will continue to be better at that than any ultrathin/book/Air laptop. That makes them very handy for carrying around and using frequently, casually, and intermittently even where there isn’t a flat surface or a chair on which to use a laptop.
And tablets are very good for information consumption, an activity that many of us do a lot of. Content creation apps are appearing on tablets. They’ll get a lot better as developers get used to building for touch-first interfaces, taking advantage of voice input, and adding motion gestures.
They’re even better for sharing and working in groups. There’s no barrier of a vertical screen, no distracting keyboard clatter, and it just feels natural to pass over a tablet, like a piece of paper, compared to spinning around a laptop.
We talk to product strategists in a wide variety of industries. Regardless of the vertical industry of their companies, they tell us that the release of new, disruptive products -- like Apple's iPad -- changes their relationships with their customers. Oftentimes, nearly overnight.
Whether their product comes in the form of “bits” (content, like media, software, or games) or “atoms” (physical products, like shoes, consumer packaged goods, or hardware), consumer product strategists must navigate a world filled with a dizzying array of new devices (like mobile phones, tablet computers, connected TVs, game consoles, eBook readers, and of course PCs). We call this proliferation of devices the Splinternet, a world in which consumers access the digital world across a diverse and growing number of hardware and platforms. And product strategists have to react by developing new apps, by crafting digital product experiences, and by rethinking their product marketing.
Delivering digital products across the Splinternet isn’t easy: It requires understanding -- and acting upon -- an ever-changing landscape of consumer preferences and behaviors. It also requires reapportioning scarce resources -- for example, from web development to iPad or Android development. Yet product strategists who fail to contend with newly disruptive devices (like the iPad or Xbox Kinect) will find themselves in danger of being left behind -- no matter what industry they’re in.
We'd like to invite product strategists to take our super-quick, two-minute survey to help us better understand how you are reacting to disruptions caused by the Splinternet:
That's right, I said eReaders. True, it looks like a tablet, runs like a tablet, and delivers a lot of the value that tablets deliver, but the Nook Color's 1.2 upgrade (which is actually a step up to Android 2.2; don't let the numbers confuse you too much) is really a foreshadowing of the future of eReaders, not the future of tablets.
First, the facts. With the new upgrade that will be gradually pushed out to all existing Nook Color devices for free over the next few weeks (or you can download now at www.nookcolor.com/update), the folks at B&N have added some very useful features: an integrated email client, Flash 10.1 support, a curated Android app store (see sidebar), and an improved user experience through a myriad of tweaks. These upgrades make the Nook Color look more and more like a tablet, with a very attractive $249 price point to boot.
Must the iPad now cower in fear? No, not really. Because even at this price point, the Nook Color remains a smaller, less powerful tablet than the iPad. And as we've seen, the range of competitors coming in after the iPad's territory are coming in at higher prices with more powerful features (for example, last week I dropped $529 for an LG G-Slate from T-Mobile with 3D video camera and 4G data plan). The tablet market is gradually moving into higher-power features, not lower-power experiences.
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.
The most important outcome of this week’s emerging tussle between Apple and Google is that we are about to have an intense and financially difficult conversation about what a fair price is for delivering customers to developers, publishers, and producers. Economically, this is one of the most critical issues that has to be resolved for the future of electronic content. Very soon, a majority of consumer experiences (that which we used to refer to as the media) will be digital. But not until the people who will develop those experiences have unambiguous, market-clearing rules for how they can expect to profit from those experiences.
The question comes down to this: Is 30% a fair price for Apple to charge? I must be clear about my intentions here. I do not employ the word “fair” the way my children often do. I am not whining about Apple’s right to charge whatever it wants. Apple may do whatever is best for shareholders in the short- and long-run. I argued yesterday that Apple’s recent decision does not serve its shareholders in the long run. Google announced One Pass yesterday – hastily, I might add – in order to signal to Apple and its shareholders that monopoly power rarely lasts forever. But none of that questions the ultimate morality of Apple’s decision or its rights.
I use the word “fair” to refer to a state of economic efficiency. A fair price is one that maximizes not just individual revenue, but total revenue across all players. Such revenue maximization cannot be achieved without simultaneously satisfying the largest possible number of consumers with the greatest possible amount of innovation.