Home » Posts tagged 'OEMs'
Tag Archives: OEMs
A year of healthy progress along Microsoft strategic ambitions
Microsoft Stock Price for the last 5 years — July 22, 2016:
My earlier posts related specifically to this 3 years overall transition history:
– Microsoft partners empowered with ‘cloud first’, high-value and next-gen experiences for big data, enterprise social, and mobility on wide variety of Windows devices and Windows Server + Windows Azure + Visual Studio as the platform as of July 10, 2013
– Microsoft reorg for delivering/supporting high-value experiences/activities as of July 11, 2013
– An ARM-focussed Microsoft spin-off could be the only solution to save Microsoft in the crucial next 3-years period as of August 24, 2013
– Opinion Leaders and Lead Opinions: Reflections on Steven Sinofsky’s “Era of Continuous Productivity” vision as of September 1, 2013
– The question mark over Wintel’s future will hang in the air for two more years as of September 15, 2013
– Microsoft could be acquired in years to come by Amazon? The joke of the day, or a certain possibility (among other ones)? as of September 16, 2013
– Sinofsky’s ‘continuous productivity’ idea to be realised first in Box Notes as of September 21, 2013
– Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
– Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft as of July 23, 2014
– Steve Ballmer on leaving Microsoft, relationship with Bill Gates: “We’ve dusted-up many times”, on His Biggest Regret: “doing hardware earlier [for being] more effective in phone business” AND on Amazon: “They Make No Money.” as October 25, 2014
– The Empire Reboots — Can C.E.O. Satya Nadella Save Microsoft? | Vanity Fair, Oct 27, 2014
WPC Day 1: The Digital Transformation Opportunity from Microsoft Partner Network UK Blog as of July 11, 2016:
“Empower every person and every
organisation on the planet to achieve more”
The Microsoft MissionAt the core of today’s opening Worldwide Partner Conference keynote was ‘Digital Transformation’ aka the desire of CEO’s to use technology to change business outcomes – whether it be how they:
- Engage their customers,
- Empower employees to make better decisions,
- Optimise their operations,
- Build up the predictive power within their organisations so that every operation is intelligent,
- Transform their products and services.
Digital Transformation = An Unprecedented Partner Opportunity
Every customer of every size business (startup to Enterprise) is not only looking to use digital technology, but to build digital technology for their own.
Businesses are looking to drive greater efficiency – automating processes and enhancing productivity, particularly in those areas where there are operating expenses. This poses an unprecedented opportunity for you no matter what partner type you are.
Microsoft Ambitions to Drive Digital Transformation
Microsoft has three core ambitions which play a fundamental part in digitally transforming businesses:
- Re-inventing Productivity and Business process
- Building the Intelligent Cloud
- Create more Personal Computing
These will be covered in more detail over the next two days keynotes, however, Satya provided some great examples of what these 3 ambitions entail.
1) Re-inventing Productivity and Business Process
This is all about removing the barriers between productivity tools and business applications. Satya focused on two key areas:
Connected Cloud & Data: In essence striving for connected cloud data SaaS solutions such as Office 365 and Dynamics 365 to simplify information/data sharing, removing what he terms the productivity friction in businesses. See how EcoLab are transforming their business. (Watch the demo 36 minutes into the Day 1 Keynote). Also read Satya’s LinkedIn post on Reinventing Business Processes.
- ‘Conversations as a Platform’: Using human language understanding personal assistants and Bots (conversational interfaces) which augment our connection with technologies. (Watch the demo 48 minutes into Day 1 Keynote)
2) Building out the intelligent Cloud
To showcase how intelligent cloud is helping transformation, Satya invited General Electric CEO, Jeff Immelt, on stage to discuss how he has digitally transformed the GE business.
Considering GE is over 140 years old, it’s a company that has embraced transformation and digital transformation. You can read more about their story and find out about Microsoft’s new partnership with GE to bring Predix to Azure, accelerating digital transformation for industrial customers.
Satya then went on to talk about ‘The next phase of building the Intelligent cloud’ with ‘Cognitive services’. We’re seeing the beginnings of a new platform for cognitive services. Microsoft has taken decades of research from Microsoft Research encapsulating speech, computer vision, natural language text understanding, and made these available as API’s. These API’s are being used to infuse perception into apps – the ability for Apps/Bots to understand speech and see i.e. computer vision. These cognitive capabilities are capable of transforming business by bringing productivity gains. A great example of this is how Macdonalds are creating efficiency in their Drive Thru’s with speech/order recognition (Watch the demo 1 hour 10 minutes into the Day 1 keynote).
3) Create More Personal Computing
Create more personal computing was the third and final ambition covered. Satya discussed Windows 10 – an OS system spanning multiple devices from Raspberry PI to Hololens and bringing centralised infrastructure benefits and cost savings to business.
It was on the topic of Hololens, he discussed how personal computing is shaped by category creation moments. Moments where input and output change. ‘Mixed Reality’ is that moment. With Hololens its created an interface changing moment – Mixing real with virtual, enabling us to be anywhere and everywhere – fully untethered and mobile.
What followed was a great demo showcasing how Japan Airlines are using Microsoft HoloLens to change how they train flight crews and mechanics (Watch the demo 1 hour 17 minutes into the Day 1 keynote)
Mixed reality offers huge opportunities for partners with so many applications across so many sectors.
Expect more details on Digital Transformation and Microsoft’s three ambitions in WPC Day 2 and 3 keynotes.
News From WPC2016 Day 1
![Digital-transformatoin-all-partner-types1-1024x530[1]](https://lazure2.wordpress.com/wp-content/uploads/2016/07/digital-transformatoin-all-partner-types1-1024x5301.png)
![Cn3vy4QXEAAMQO_[1]](https://lazure2.wordpress.com/wp-content/uploads/2016/07/cn3vy4qxeaamqo_1.jpg)
The three ambitions announced a year ago and the proof-points of healthy progress along them in FY16:
- Office 365, Dynamics 365, AppSource, and LinkedIn as all being part of one overarching strategy in Productivity and Business Process:
– core part of an overarching strategy
– digital transformation both for us and our partnerships with customers - Significant differentiation vs. Amazon AWS in Intelligent Cloud:
– enterprise cloud leadership
– every customer is also an ISV
– hyperscale-plus-hybrid approach with annuity focus enabling cloud lead conversation with customers
– meeting cloud needs of customers where they are - Windows strategy to achieve progress in More Personal Computing:
– deliver more value and innovation, particularly for enterprise customers
– grow new monetization through services across our unified Windows platform
– innovate in new device categories in partnership with our OEMs
The Q1FY16 progress was presented in my Microsoft is ready to become a dominant force in cloud computing with superior cloud offerings, a Windows ecosystem under complete renewal, first signs of Surface-Lumia-Xbox successes on the market, and strong interest in technology partnerships by other industry leaders as of October 24, 2015.
“Reinvent Productivity and Business Processes“, “Build the Intelligent Cloud” and “Create More Personal Computing” were the original 3 “interlocking ambitions” the Microsoft CEO talked about at Microsoft Iginite held on May 4-8, 2015 in Chicago. The proof-points of FY16 progress are shown along that list, and explained in detail by remarks from Microsoft (MSFT) Satya Nadella on Q4 2016 Results – Earnings Call Transcript as of July 18, 2016.
For more information see also: Q4 2015 Earning Call Transcript, the 2015 Annual Report or—even better—my earlier posts indicated here under each ambition. For a deeper strategic intent underlying these ambilitions see my earlier post Julia Liuson: “Microsoft must transform from a company that throws a box with software into the market … into a company that offers pure services” published on October 25, 2015. These ambitions also became reporting segments in FY16. See Earnings Release FY16 Q1 as of October 22, 2015. The major corporate groups were also organised along these line: ASG = Application & Services Group for “Reinvent productivity and business processes” ambition, C&E = Cloud & Enterprise for “Build the intelligent cloud platform” ambition, and OSG= Operating Systems Group for “Create more personal computing” ambition.
Note that the overall strategic approach was developed 2 years ago and it was described in my post Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft of July 23, 2014:
Here are the remarks from Microsoft (MSFT) Satya Nadella on Q4 2016 Results – Earnings Call Transcript as of July 18, 2016. for details
1. Office 365, Dynamics 365, AppSource, and LinkedIn as all being part of one overarching strategy in Productivity and Business Process:
For initial and additional details available earlier see my earlier posts:
– The first “post-Ballmer” offering launched: with Power BI for Office 365 everyone can analyze, visualize and share data in the cloud as of February 10, 2014
– OneNote is available now on every platform (+free!!) and supported by cloud services API for application and device builders as of March 18, 2014
– An upcoming new era: personalised, pro-active search and discovery experiences for Office 365 (Oslo) as of April 2, 2014
– Microsoft Azure: Marketable machine learning components capability for “a new data science economy”, and real-time analytics for Azure HDInsight service as of October 22, 2014
In fact, this last quarter, some of the most strategic announcements were all around our application platform. At our partner conference, there was a significant amount of excitement with the tools that we announced like PowerApps and Power BI, Azure functions and Flow. These are tools that our developers and system integrators and solution partners will use in order to be able to customize applications around Azure. And so to me that’s another huge advantage and a competitive differentiation for us.
1.1 Core part of an overarching strategy
The move to the cloud for our customers and for us is not just about a new way of delivering the same value just as a SaaS service. It’s really the transformation from having applications that are silos to becoming more services in the cloud where you can reason about the activity and the data underneath these services to benefit the customers who are using these services. So that’s what this notion of a graph [by Microsoft Graph] represents.
So when somebody moves to Office 365, their graph [by Microsoft Graph], their people, their relationships with other people inside the organization, their work artifacts all move to the cloud. You can connect them with all the business process data that’s in Dynamics 365, but not just in Dynamics 365 but all the applications in AppSource because business process will always be a much more fragmented market as opposed to just one market share leader by industry, by vertical, by country. And so that’s our strategy there.
And now the professional cloud or the professional network helps usage across all of that professional usage. Whether it’s in Office 365 or whether you’re a salesperson using any application related to sales, you want your professional network there. Of course, it’s relevant in recruiting, it’s relevant in training, it’s relevant in marketing. So that’s really our strategy with LinkedIn as the professional network meeting the professional cloud. And these are all part of one overarching strategy, and ultimately it’s about adding value to customers.
1.2 Digital transformation both for us and our partnerships with customers
This past year was a pivotal one in both our transformation and in our partnerships with customers who are also driving their own digital transformation. Our progress is best captured in the results of our three ambitions, starting with Productivity and Business Process. In a world of infinite information but finite attention and time, we aim to change the nature of work with digital technology. In pursuit of this ambition, we continue to add value to our products, grow usage, and increase our addressable market. Along these lines, let me start with Office 365 and then move to Dynamics 365.
In the last quarter, we advanced our collaboration tools. We launched Microsoft Planner, which helps teams manage operations, as well as Skype Meetings, which is aimed at helping small businesses collaborate. In June, we further strengthened our security value proposition with the release of Advanced Security Management.
Lastly, we continue to add intelligence in machine learning to Office to help people automate their tasks and glean insights from data. These advancements helped to drive increased usage across enterprises, small and medium businesses, and consumers. In the enterprise, Office 365 Commercial seats grew 45% year over year, and revenue grew 59% in constant currency. Also 70% of our Office Enterprise agreement renewals are in the cloud. Innovative companies like Facebook, Hershey’s, Discovery Communications, Cushman Wakefield all adopted Office 365 and now see how transformative this service can be for their own business.
We are enthusiastic about the early feedback and growth opportunity from companies using our newly released Office 365 E5, which includes powerful security controls, advanced analytics, and cloud voice. These customers tell us that they love the simplification that comes with standardizing across all of our productivity workloads.
We will continue to grow our install base and drive premium mix through offers like Office 365 E5, but they’re very, very early days of E5. And E5 value proposition across all three of the areas, whether it’s cloud voice or analytics or security are all three massive areas for us. And I would say if anything, the initial data from our customers around security is gaining a lot of traction. But at the same time, one of the things that customers are looking for is making an enterprise-wide architectural decision across all of the workloads.
We see momentum in small and medium businesses, with a growing number of partners selling Office 365, now up to nearly 90,000, a 25% increase year over year. We continue to grab share and adding over 50,000 customers each month for 28 consecutive months.
We also see momentum amongst consumers, with now more than 23 million Office 365 subscribers. Across segments, customers increasingly experience the power of Office on their iOS and Android mobile devices. In fact, we now have more than 50 million iOS and Android monthly active devices, up more than four times over last year.
Now let’s talk about progress with the other pillar of this ambition, Dynamics 365. We are removing any impedance that exists between productivity, collaboration, and business process. This month we took a major step forward with the introduction of Microsoft Dynamics 365 and Microsoft AppSource. Dynamics 365 provides business users with purpose-built SaaS applications. These applications have intelligence built in. They integrate deeply with communications and collaboration capabilities of Office 365.
Dynamics 365 along with AppSource and our rich application platform introduces a disruptive and customer-centric business model so customers can build what they want and use just the capabilities they need. The launch of Dynamics 365 builds on the momentum we’re already seeing in this business. Customers around the globe are harnessing the power of Dynamics in their own transformation, including 24 Hour Fitness and AccuWeather. Overall, Dynamics now has nearly 10 million monthly paid seats, up more than 20% year over year, and Q4 billings grew more than 20% year over year.
Overall, Business Processes represent an enormous addressable market, projected to be more than $100 billion by 2020. It’s a market we are increasingly focused on, and I believe we are poised with both Dynamics 365 and Microsoft AppSource to grow and drive opportunity for our partners.
Across Office 365 and Dynamics 365, developers increasingly see the opportunity to build innovative apps and experiences with the Microsoft Graph, and we now have over 27,000 apps connected to it. Microsoft AppSource will be a new way for developers to offer their services and reach customers worldwide.
Lastly, with Office 365 and Dynamics 365, we have the opportunity to connect the world’s professional cloud and the world’s professional network with our pending LinkedIn deal. Overall, the Microsoft Cloud is winning significant customer support. With more than $12 billion in Commercial Cloud annualized revenue run rate, we are on track to achieve our goal of $20 billion in fiscal year 2018. Also, nearly 60% of the Fortune 500 companies have at least three of our cloud offerings. And we continue to grow our annuity mix of our business. In fact, commercial annuity mix increased year over year to 83%.
2. Significant differentiation vs. Amazon AWS in Intelligent Cloud
For initial and additional details available earlier see my earlier posts:
– Windows Azure becoming an unbeatable offering on the cloud computing market as of June 28, 2013
– Microsoft partners empowered with ‘cloud first’, high-value and next-gen experiences for big data, enterprise social, and mobility on wide variety of Windows devices and Windows Server + Windows Azure + Visual Studio as the platform as of July 10, 2013
– 4. Microsoft products for the Cloud OS [‘Experiencing the Cloud’, as of Dec 18, 2013, but published only on Feb 14, 2014] (was separated from the next “half bakedness” post because of its length)
– 4.5. Microsoft talking about Cloud OS and private clouds: starting with Ray Ozzie in November, 2009[‘Experiencing the Cloud’, as of Dec 18, 2013, but published only on Feb 14, 2014] (was separated from the next “half bakedness” post because of its length)
– Microsoft’s half-baked cloud computing strategy (H1’FY14) as of February 17, 2014 Note that this “half bakedness” ended by the facts published in Microsoft is ready to become a dominant force in cloud computing with superior cloud offerings, a Windows ecosystem under complete renewal, first signs of Surface-Lumia-Xbox successes on the market, and strong interest in technology partnerships by other industry leaders as of October 24, 2014
– Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
– Microsoft BUILD 2014 Day 2: “rebranding” to Microsoft Azure and moving toward a comprehensive set of fully-integrated backend services as of April 27, 2014
– Scott Guthrie about changes under Nadella, the competition with Amazon, and what differentiates Microsoft’s cloud products as of October 2, 2014
– Sam Guckenheimer on Microsoft Developer Division’s Journey to Cloud Cadence as of October 19, 2014
– Microsoft Azure: Marketable machine learning components capability for “a new data science economy”, and real-time analytics for Azure HDInsight service as of October 22, 2014
– Microsoft Cloud state-of-the-art: Hyper-scale Azure with host SDN — IaaS 2.0 — Hybrid flexibility and freedom as of July 11, 2015
– Microsoft’s first quarter proving its ability to become a dominant force in cloud computing with superior cloud offerings as of Januar 27, 2015
– DataStax: a fully distributed and highly secure transactional database platform that is “always on” as of February 3, 2016
– Microsoft chairman: The transition to a subscription-based cloud business isn’t fast enough. Revamp the sales force for cloud-based selling as of June 6, 2016
Cloud Growth Helps Microsoft Beat Street in Q4 from TheStreet as of July 19, 2016
… [0:34] and Microsoft’s Enterprise Mobility [Suite]
customers nearly doubled YoY to 33,000. [0:40] …
Note that the Q1FY16 report was that “Enterprise Mobility [Suite] customers more than doubled year-over-year to over 20,000, and the installed base grew nearly 6x year-over-year“. Enterprise Mobility Suite (EMS) is a service available in the CSP (Cloud Solution Partner program) along with Windows Intune, Office 365, Azure and CRM Online. The reason for that very impressive growth was given by Satya Nadella in the much earlier Q2FY15 report as:
Microsoft Enterprise Mobility Suite is one key of product innovation that I would like to highlight given the growth and uniqueness of our offering. Microsoft offers a comprehensive solution that brings together mobile device management, mobile application management, hybrid identity management and data protection into a unified offering via EMS.
Office 365 now includes new app experiences on all phones and tablets for mobile productivity. Further, we have released completely new scenarios. This includes Office Sway for visualizing and sharing ideas; Delve, to help search and discover content; Office 365 Groups to make it easier to collaborate; andOffice 365 Video for secure media streaming for businesses.
Finally, we continue to invest in enterprise value by integrating MDM and the Enterprise Mobility Suite into Office 365; new encryption technologies and compliance certifications; and new eDiscovery capabilities in Exchange.
…
Overall at the highest level, our strategy here is to make sure that the Microsoft Services i.e. cloud services be it Azure, Office 365, CRM Online or Enterprise Mobility Suite are covering all the devices out there in the marketplace. So that, that way we maximize the opportunity we have for each of these subscription and capacity based services.
2.1 Enterprise cloud leadership
Now let’s get into the specifics of the Intelligent Cloud, an area of massive opportunity, as we are clearly one of the two enterprise cloud leaders. Companies looking to digitally transform need a trusted cloud partner and turn to Microsoft. As a result, Azure revenue and usage again grew by more than 100% this quarter. We see customers choose Microsoft for three reasons. They want a cloud provider that offers solutions that reflect the realities of today’s world and their enterprise-grade needs. They want higher level services to drive digital transformation, and they want a cloud open to developers of all types. Let me expand on each.
To start, a wide variety of customers turn to Azure because of their specific real-world needs. Multinationals choose us because we are the only hybrid and hyperscale cloud spanning multiple jurisdictions. We cover more countries and regions than any other cloud provider, from North America to Asia to Europe to Latin America. Our cloud respects data sovereignty and makes it possible for an enterprise application to work across these regions and jurisdictions. More than 80% of the world’s largest banks are Azure customers because of our leadership support for regulatory requirements, advanced security, and commitment to privacy. Large ISVs like SAP and Citrix as well as startups like Sprinklr also choose Azure because of our global reach and a broad set of platform services. Last week GE announced it will adopt our cloud for its IoT approach.
Next, Azure customers also value our unique higher-level services. Now at 33,000, we nearly doubled in one year the number of companies worldwide that have selected our Enterprise Mobility Solutions. The Dow Chemical Company leverages EMS along with Azure, Office 365, and Dynamics to give its thousands of employees secure real-time access to data and apps from anywhere.
Just yesterday, we announced Boeing will use Azure, our IoT suite, and Cortana Intelligence to drive digital transformation in commercial aviation, with connected airline systems optimization, predictive maintenance, and much more. This builds on great momentum in IoT, including our work with Rolls-Royce, Schneider Electric, and others.
This is great progress, but our ambitions are set even higher. Our Intelligent Cloud also enables cognitive services. Cortana Intelligence Suite offers machine learning capabilities and advanced predictive analytics. Customers like Jabil Circuit, Fruit of the Loom, Land O’Lakes, LIBER already realize the benefits of these new capabilities.
Lastly, central to our Intelligent Cloud ambition is providing developers with the tools and capabilities they need to build apps and services for the platforms and devices of their choice. We have the best support for what I would say is the most open platform for all developers. Not only is .NET first class but Linux is first class, Java is first class. The new Azure Container service cuts across both containers running on Windows, running across Linux. So again, it speaks to the enterprise reality. .NET Core 1.0 for open source and our ongoing work with companies such as Red Hat, Docker, and Mesosphere also reflects significant progress on this front. We continue to see traction from open source, with nearly a third of customer virtual machines on Azure running Linux.
So those would be the places where we are fairly differentiated, and that’s what you see us gaining both for enterprise customers and ISVs.
On the server side, premium server revenue grew double digits in constant currency year over year. New SQL Server 2016 helps us expand into new markets with built-in advanced analytics and unparalleled performance. More than 15,000 customers, including over 50% of the Fortune 500, have registered for the private preview of SQL Server for Linux. And we’re not slowing down. We will launch Windows Server 2016 and System Server 2016 later this year.
2.2 Every customer is also an ISV
One of the phenomena now is that pretty much anyone who is a customer of Azure is also in some form an ISV, and that’s no longer just limited to people who are “in the classic tech industry” or the software business. So every customer who starts off consuming Azure is also turning what is their IP in most cases into an ISV solution, which ultimately will even participate in AppSource. So at least the vision that we have is that every customer is a digital company that will have a digital IP component to it, and that we want to be able to partner with them in pretty unique ways.
That’s the same case with GE. It’s the same case with Boeing. It’s the same case with Schneider Electric or ABB or any one of the customers we are working with because they all are taking some of their assets and converting them into SaaS applications on Azure. And that’s something that we will in fact have distribution agreements with.
And AppSource is a pretty major announcement for us because we essentially created for SaaS applications and infrastructure applications a way to distribute their applications through us and our channel. And I think it makes in fact our cloud more attractive to many of them because of that. So we look – I think going forward, you’ll look to see – or you’ll see us do much more of this with many other customers of ours.
2.3 Hyperscale-plus-hybrid approach with annuity focus enabling cloud lead conversation with customers
The focus for us is in what I describe as this hyperscale-plus-hybrid approach when you think about the current approach, which is pretty unique to us. Overall, I believe this hyperscale plus hybrid architecturally helps us a lot with enterprise customers because we meet them where their realities are today and also the digital transformation needs going forward, so that’s one massive advantage we have.
And the way we track progress is to see how is our annuity growth of our server business, and how is our cloud growth. And if you look at this last quarter, our annuity grew double digits and our cloud grew triple digits. And that’s a pretty healthy growth rate, and that’s something that by design both in terms of the technical architecture as well as the traction we have in the marketplace and our sales efforts and so on are playing out well, and we are very bullish about that going forward.
The Transactional business is much more volatile because of the macro environment, IT budgets, and also the secular shift to the cloud. The question again that gets asked is about the cannibalization. But if you look at Boeing or you look at any of the other examples that I talk about when it comes to the cloud, our servers never did what these customers are now doing in our cloud. So at a fundamental long-term secular basis, we have new growth, new workloads, and that’s what we are focused on, and that’s a much bigger addressable market than anything our Transactional Server business had in the past.
[Amy E. Hood – Chief Financial Officer & Executive Vice President:]
The first thing really that I think Satya and I both focus on every quarter, every month, is how much of our business are we continuing to shift to annuity and specifically to the cloud. We structure all of our motions at this company, from how we engineer to how we do our go-to-markets to how we think about sales engagement to how we do our investments, fundamentally toward that long-term structural transition in the market.In terms of server products and services, I tend to think of it as the all-up growth. It’s really about growing the cloud, growing the hybrid, and then whatever happens in the Transactional business happens.
And so to your question on Transactional performance, there were some deals that didn’t get done in Q3 that got done in Q4, and there were some deals done in Q4 on the Office side with large companies that I’m thrilled by. But at the same time, we still will focus on those deals moving to the cloud over time. And so this volatility that we are going to see because of macro and because of budget constraints, especially on Transactional, we will focus on because we expect excellent execution and have accountability to do that in the field. But our first priority, every time, is to make sure we are focused on annuity growth and digital transformation at our company, which is best done through that motion.
In terms of the sales motion they are absolutely incented more towards cloud versus Transactional going into this year.
I do believe that every conversation that we’re having with customers is cloud-led. That cloud-led conversation and making a plan for customers to best change and transform their own business certainly is a far more in-depth one than on occasion is required by long-time Transactional purchasers, especially in Office, as an example, because what we’re talking about now is really pivoting your business for the long term.
And so I’m sure there are examples where that has elongated the sales cycle, for good reason. But I would generally point back and say most of these are driven at the structural level, which is – structurally over time, on-premises Transactional business will move to the cloud or to a hybrid structure through an annuity revenue stream.
[END BY Amy E. Hood]
2.4 Meeting cloud needs of customers where they are
The position that we have taken is that we want to serve customers where they are and not assume very simplistically that the digital sovereignty needs of customers can be met out of a fewer data center approach. Because right now, given the secular trend to move to the cloud across all of the regulated industries across the globe, we think it’s wiser for us and our investors long term to be able to meet them where they are. And that’s what you see us. We are the only cloud that operates in China under Chinese law, the only cloud that operates in Germany under German law. And these are very critical competitive advantages to us.
And so we will track that, and we will be very demand driven. So in this case we’re not taking these positions of which regions to open and where to open them well in advance of our demand. If anything, I think our cycle times have significantly come down. So it will be demand-driven, but I don’t want to essentially put a cap because if the opportunity arises, and for us it’s a high ROI decision to open a new region, we will do so.
3. Windows strategy to achieve progress in More Personal Computing
For initial and additional details available earlier see my earlier posts:
– Windows Embedded is an enterprise business now, like the whole Windows business, with Handheld and Compact versions to lead in the overall Internet of Things market as well as of June 8, 2013
– How the device play will unfold in the new Microsoft organization? as of July 14, 2013
– With Android and forked Android smartphones as the industry standard Nokia relegated to a niche market status while Apple should radically alter its previous premium strategy for long term as of August 17, 2013
– Windows [inc. Phone] 8.x chances of becoming the alternative platform to iOS and Android: VERY SLIM as it is even more difficult for Microsoft now than any time before as of August 20, 2013
– Leading PC vendors of the past: Go enterprise or die! as of November 7, 2013
– Xamarin: C# developers of native “business” and “mobile workforce” applications now can easily work cross-platform, for Android and iOS clients as well as of November 15, 2013
– Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
– Microsoft Surface Pro 3 is the ultimate tablet product from Microsoft. What the market response will be? as of May 21, 2014
– Windows 10 Technical Preview: Terry Myerson and Joe Belfiore on the future of Windows as of October 1, 2014
– The Era Of Sub-$90 Windows 8.1 Phones in U.S. as of October 3, 2014
– Windows 10 is here to help regain Microsoft’s leading position in ICT as of July 31, 2015
– Microsoft and partners to capitalize on Continuum for Phones instead of the exited Microsoft phone business as of June 5, 2016
We have increased Windows 10 monthly active devices and are now at more than 350 million. This is the fastest adoption rate of any prior Windows release. While we are proud of these results, given changes to our phone plan, we changed how we will assess progress. Going forward, we will track progress by regularly reporting the growth of Windows 10 monthly active devices in addition to progress on three aspects of our Windows strategy:
3.1 Deliver more value and innovation, particularly for enterprise customers
We continue to pursue our goal of moving people from needing Windows to choosing Windows to loving Windows. In two weeks, we will launch Windows 10 Anniversary Update, which takes a significant step forward in security. We are also extending Windows Hello to support apps and websites and delivering a range of new features like Windows Ink and updates to Microsoft Edge. We expect these advances will drive increased adoption of Windows 10, particularly in the enterprise, in the coming year. We already have strong traction, with over 96% of our enterprise customers piloting Windows 10.
3.2 Grow new monetization through services across our unified Windows platform
As we grow our install base and engagement, we generate more opportunity for Microsoft and our ecosystem. Bing profitability continues to grow, with greater than 40% of the search revenue in June from Windows 10 devices. Bing PC query share in the United States approached 22% this quarter, not including volume from AOL and Yahoo!. The Cortana search box has over 100 million monthly active users, with 8 billion questions asked to date.
We continue to drive growth in gaming by connecting fans on Xbox Live across Windows 10, iOS, and Android. Just this quarter we launched our Minecraft Realm subscription on Android and iOS. Overall engagement on Xbox Live is at record levels, with more than 49 million monthly active users, up 33% year over year. At E3 we announced our biggest lineup of exclusive games ever for Xbox One and Windows 10 PCs. And we announced Xbox Play Anywhere titles, where gamers can buy a game once and play it on both their Windows 10 PC and Xbox One. We also announced two new members of the Xbox One console family, the Xbox One S and Project Scorpio.
The Windows Store continues to grow, with new universal Windows apps like Bank of America, Roku, SiriusXM, Instagram, Facebook, Wine, Hulu, and popular PC games like Quantum Break.
3.3 Innovate in new device categories in partnership with our OEMs
Our hardware partners are embracing the new personal computing vision, with over 1,500 new devices designed to take advantage of Windows 10 innovations like Touch, Pen, Hello, and better performance and power efficiency.
Microsoft’s family of Surface devices continues to drive category growth, and we are reaching more commercial customers of all sizes with the support of our channel partners. We recently announced new Surface enterprise initiatives with IBM and Booz Allen Hamilton to enable more customer segments. Also in the past year, we grew our commercial Surface partner channel from over 150 to over 10,000.
Lastly this quarter, more and more developers and enterprise customers got to experience two entirely new device categories from Microsoft Surface Hub and Microsoft HoloLens. While we are still in the early days of both of these devices, we are seeing great traction with both enterprise customers and developers, making us optimistic about future growth.
Android 6.0 Marshmallow (Android M) and its route to OEMs such as Xiaomi
Sept 29, 2015: Android 6.0 Marshmallow – Official Announcement of all features (Nexus Event 2015) – GIGA TECH in 8 minutes
Oct 6, 2015: The Top 3 new features highlighted for the Android 6.0 Marshmallow on the android.com/history
Now On Tap
Get assistance without having to leave what you’re doing—whether you’re in an app or on a website. Just tap and hold the home button.
Permissions
Define what you want to share with apps on your device and when. Turn permissions off at any time, too.
Battery
Enjoy a battery that works smarter, not garder. Marshmallow optimizes your juice for what matters most with features like Doze and App Standby.
Sept 29, 2015: All Features of Android 6.0 Marshmallow from the official Android – Marshmallow page
All about Android 6.0, Marshmallow
Sept 29, 2015: A developer’s overview of Android 6.0 Marshmallow by Android Developers
Sept 29, 2015: Android 6.0 Marshmallow based lead devices information from S’more to love across all your screens from the Official Google Blog
New Nexus phones
We made Android to be an open platform that anyone can build on, and today there are 4,000+ Android devices in all shapes and sizes. Android’s diversity is why it’s become the most popular mobile platform in the world, and the latest version, Marshmallow, takes Android to a new level of performance.While we love all the Android devices out there, every year we build Nexus devices to show off the latest and greatest, directly from the people who built Android. Today we’re introducing the latest Nexus treats, both running Marshmallow, sweetened by amazing apps and sandwiched by some cutting-edge hardware (see what we did there?):
- Nexus 6P is the first all-metal-body Nexus phone. Built in collaboration with Huawei, this 5.7” phone is crafted from aeronautical-grade aluminum, with a USB Type-C port for fast charging, a powerful 64-bit processor, and a 12.3 MP camera sensor with massive 1.55µm pixels (hello, better photos!). The Nexus 6P starts at $499.
- You’re not the only one who misses your Nexus 5. We’ve joined forces with LG to bring it back with the new Nexus 5X, which gives you great performance in a compact and light package, with a beautiful 5.2” screen and the same 12.3 MP camera and Type-C port as the Nexus 6P. Nexus 5X starts at $379.
Both phones include a new fingerprint sensor, Nexus Imprint, which gives you quick and secure access to your phone, as well as use of Android Pay (in the U.S.). They are available for pre-order on the Google Store from a number of countries, including the U.S., U.K., Ireland and Japan, and come with a free 90-day subscription to Google Play Music. In the U.S., pre-orders include a $50 Play credit to help you stock up your favorite music, apps, games and shows. And, finally, for you Project Fi fans out there, you’ll be happy to know Nexus 6P and Nexus 5X will work on your favorite network. Request an invite to our Early Access Program at fi.google.com.
![AN_BH_Groupshot_JH-150908+_Alt_Crop[1]](https://lazure2.wordpress.com/wp-content/uploads/2015/10/an_bh_groupshot_jh-150908_alt_crop1.png)
Oct 5, 2015: Official Android 6.0 Marshmallow Review by Tim Schofield
Oct 15, 2015: Answer to the question “Will Xiaomi finally step to the conventional way of upgrading to Android?” put to Hugo Barra in Hangout with Mi – Episode 2 from Xiaomi India
…
The official release of Android M has just happened. That means that people like us only now have been given what they need to be able to start the porting process. Of course Google has been working with M for the new Nexus devices for a while. That’s exactly the reason why Nexus exists. So we’ve just started the porting work, and it takes some time to make sure that it all super well optimised.By the way I should mention, if you look a little bit about the process for doing an upgrade. It’s not like just get some code from Google, like start moving into our code base. Actually it’s at least a two-step process. In fact I would argue that it’s a three-step process.
The first thing to happen is: Whoever makes the chipset, the SoC that powers that particular phone. Maybe let’s talk about Mi4i. Mi4i is on Qualcomm MSM8939, Snapdragon 615 v2 [rather Snapdragon 616 MSM8939v2, see Snapdragon 616 on Qualcomm site], it means it’s powered by Qualcomm. So Google Android team provides the build to Qualcomm. Qualcomm—beginning of now, just like happened—then will take a few months to do the work of making sure that the kernel level stuff is optimised, and correctly able to support then the layers above, the BSP [?Board Support Package?] framework, the so one and so forth.
Then Qualcomm takes that codebase, let’s assume it will be ready in January—to give you a hypothetical date here—and then provide that to the different smartphone brands like Xiaomi for example. Then our BSP team, which stands for basement processor—it’s the low level part of the operating system that includes everything under the framework—they will take that codebase from Qualcomm and then putting the extra work [needed to ensure] that it’s very optimised for battery consumption, for performance, so on and so forth, for Mi4i. They have to do the same work for every other device.
Then the System UI team—concerning that most OEMs have done some amount of System UI work—has to do a little bit of work of optimisation obviously to make sure that all the features are there.
At least these 3 steps that have to be taken by not only Xiomi, but every OEM to be able to bring devices to a new version of the operating system. Make sure that it’s optimised. It’ll be unacceptable for us to launch Android M on Mi4i in a way that doesn’t perform at least as well, if not obviously, ideally better, then it performed on [Android 5.0] Lollipop. So it’s like quite a long process.
…
Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft
Update: Gates Says He’s Very Happy With Microsoft’s Nadella [Bloomberg TV, Oct 2, 2014] + Bill Gates is trying to make Microsoft Office ‘dramatically better’ [The Verge, Oct 3, 2014]
This is the essence of Microsoft Fiscal Year 2014 Fourth Quarter Earnings Conference Call(see also the Press Release and Download Files) for me, as the new, extremely encouraging, overall setup of Microsoft in strategic terms (the below table is mine based on what Satya Nadella told on the conference call):
These are extremely encouraging strategic advancements vis–à–vis previously publicized ones here in the following, Microsoft related posts of mine:
- Microsoft Surface Pro 3 is the ultimate tablet product from Microsoft. What the market response will be? [this same blog, May 21, 2014]
- What Microsoft will do with the Nokia Devices and Services now taken over, but currently producing a yearly loss rate of as much as $1.5 billion? [this same blog, April 29, 2014]
- Microsoft BUILD 2014 Day 2: “rebranding” to Microsoft Azure and moving toward a comprehensive set of fully-integrated backend services [this same blog, April 27, 2014]
- Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers [this same blog, April 25, 2014]
- Intel’s desperate attempt to establish a sizeable foothold on the tablet market until its 14nm manufacturing leadership could provide a profitable position for the company in 2016 [this same blog, April 27, 2014]
- Intel CTE initiative: Bay Trail-Entry V0 (Z3735E and Z3735D) SoCs are shipping next week in $129 Onda (昂达) V819i Android tablets—Bay Trail-Entry V2.1 (Z3735G and Z3735F) SoCs might ship in $60+ Windows 8.1 tablets from Emdoor Digital (亿道) in the 3d quarter [this same blog, April 11, 2014]
- Enhanced cloud-based content delivery services to anyone, on any device – from Microsoft (Microsoft Azure Media Services) and its solution partners [this same blog, April 8, 2014]
- Microsoft BUILD 2014 Day 1: new and exciting stuff for MS developers [this same blog, April 5, 2014]
- IDF14 Shenzhen: Intel is levelling the Wintel playing field with Android-ARM by introducing new competitive Windows tablet price points from $99 – $129 [this same blog, April 4, 2014]
- Microsoft BUILD 2014 Day 1: consistency and superiority accross the whole Windows family extended now to TVs and IoT devices as well—$0 royalty licensing program for OEM and ODM partners in sub 9” phone and tablet space [this same blog, April 2, 2014]
- An upcoming new era: personalised, pro-active search and discovery experiences for Office 365 (Oslo) [this same blog, April 2, 2014]
- OneNote is available now on every platform (+free!!) and supported by cloud services API for application and device builders [this same blog, March 18, 2014]
- View from Redmond via Tim O’Brien, GM, Platform Strategy at Microsoft [this same blog, Feb 21, 2014]
- “Cloud first”: the origins and the current meaning [this same blog, Feb 18, 2014]
- “Mobile first”: the origins and the current meaning [this same blog, Feb 18, 2014]
- Microsoft’s half-baked cloud computing strategy (H1’FY14) [this same blog, Feb 17, 2014]
- The first “post-Ballmer” offering launched: with Power BI for Office 365 everyone can analyze, visualize and share data in the cloud [this same blog, Feb 10, 2014]
- John W. Thompson, Chairman of the Board of Microsoft: the least recognized person in the radical two-men shakeup of the uppermost leadership [this same blog, Feb 6, 2014]
- The extraordinary attempt by Nokia/Microsoft to crack the U.S. market in terms of volumes with Nokia Lumia 521 (with 4G/LTE) and Nokia Lumia 520 [this same blog, Jan 18, 2014]
- 2014 will be the last year of making sufficient changes for Microsoft’s smartphone and tablet strategies, and those changes should be radical if the company wants to succeed with its devices and services strategy [this same blog, Jan 17, 2014]
- Will, with disappearing old guard, Satya Nadella break up the Microsoft behemoth soon enough, if any? [this same blog, Feb 5, 2014]
- Microsoft products for the Cloud OS [this same blog, Dec 18, 2013]
- Satya Nadella’s (?the next Microsoft CEO?) next ten years’ vision of “digitizing everything”, Microsoft opportunities and challenges seen by him with that, and the case of Big Data [this same blog, Dec 13, 2013]
- Leading PC vendors of the past: Go enterprise or die! [this same blog, Nov 7, 2013]
- Microsoft could be acquired in years to come by Amazon? The joke of the day, or a certain possibility (among other ones)? [this same blog, Sept 16, 2013]
- The question mark over Wintel’s future will hang in the air for two more years [this same blog, Sept 15, 2013]
- The long awaited Windows 8.1 breakthrough opportunity with the new Intel “Bay Trail-T”, “Bay Trail-M” and “Bay Trail-D” SoCs? [this same blog, Sept 14, 2013]
- How the device play will unfold in the new Microsoft organization? [this same blog, July 14, 2013]
- Microsoft reorg for delivering/supporting high-value experiences/activities [this same blog, July 11, 2013]
- Microsoft partners empowered with ‘cloud first’, high-value and next-gen experiences for big data, enterprise social, and mobility on wide variety of Windows devices and Windows Server + Windows Azure + Visual Studio as the platform [this same blog, July 10, 2013]
- Windows Azure becoming an unbeatable offering on the cloud computing market [this same blog, June 28, 2013]
- Proper Oracle Java, Database and WebLogic support in Windows Azure including pay-per-use licensing via Microsoft + the same Oracle software supported on Microsoft Hyper-V as well [this same blog, June 25, 2013]
- “Cloud first” from Microsoft is ready to change enterprise computing in all of its facets [this same blog, June 4, 2013]
I see, however, particularly challenging the continuation of the Lumia story with the above strategy, as with the previous, combined Ballmer/Elop(Nokia) strategy the results were extremely weak:
Worthwhile to include here the videos Bloomberg was publishing simultaneously with Microsoft Fourth Quarter Earnings Conference Call:
Inside Microsoft’s Secret Surface Labs [Bloomberg News, July 22, 2014]
Will Microsoft Kinect Be a Medical Game-Changer? [Bloomberg News, July 22, 2014]
Why Microsoft Puts GPS In Meat For Alligators [Bloomberg News, July 22, 2014]
To this it is important to add: How Pier 1 is using the Microsoft Cloud to build a better relationship with their customers [Microsoft Server and Cloud YouTube channel, July 21, 2014]
as well as:
Microsoft Surface Pro 3 vs. MacBook Air 13″ 2014 [CNET YouTube channel, July 21, 2014]
Surface Pro 3 vs. MacBook Air (2014) [CTNtechnologynews YouTube channel, July 1, 2014]
In addition here are some explanatory quotes (for the new overall setup of Microsoft) worth to include here from the Q&A part of Microsoft’s (MSFT) CEO Satya Nadella on Q4 2014 Results – Earnings Call Transcript [Seeking Alpha, Jul. 22, 2014 10:59 PM ET]
…
Mark Moerdler – Sanford Bernstein
Thank you. And Amy one quick question, we saw a significant acceleration this quarter in cloud revenue, or I guess Amy or Satya. You saw acceleration in cloud revenue year-over-year what’s – is this Office for the iPad, is this Azure, what’s driving the acceleration and how long do you think we can keep this going?
Mark, I will take it and if Satya wants to add, obviously, he should do that. In general, I wouldn’t point to one product area. It was across Office 365, Azure and even CRM online. I think some of the important dynamics that you could point to particularly in Office 365; I really think over the course of the year, we saw an acceleration in moving the product down the market into increasing what we would call the mid-market and even small business at a pace. That’s a particular place I would tie back to some of the things Satya mentioned in the answer to your first question.
Improvements to analytics, improvements to understanding the use scenarios, improving the product in real-time, understanding trial ease of use, ease of sign-up all of these things actually can afford us the ability to go to different categories, go to different geos into different segments. And in addition, I think what you will see more as we initially moved many of our customers to Office 365, it came on one workload. And I think what we’ve increasingly seen is our ability to add more workloads and sell the entirety of the suite through that process. I also mentioned in Azure, our increased ability to sell some of these higher value services. So while, I can speak broadly but all of them, I think I would generally think about the strength of being both completion of our product suite ability to enter new segments and ability to sell new workloads.
The only thing I would add is it’s the combination of our SaaS like Dynamics in Office 365, a public cloud offering in Azure. But also our private and hybrid cloud infrastructure which also benefits, because they run on our servers, cloud runs on our servers. So it’s that combination which makes us both unique and reinforcing. And the best example is what we are doing with Azure active directory, the fact that somebody gets on-boarded to Office 365 means that tenant information is in Azure AD that fact that the tenant information is in Azure AD is what makes EMS or our Enterprise Mobility Suite more attractive to a customer manager iOS, Android or Windows devices. That network effect is really now helping us a lot across all of our cloud efforts.
…
Keith Weiss – Morgan Stanley
Excellent, thank you for the question and a very nice quarter. First, I think to talk a little bit about the growth strategy of Nokia, you guys look to cut expenses pretty aggressively there, but this is – particularly smartphones is a very competitive marketplace, can you tell us a little bit about sort of the strategy to how you actually start to gain share with Lumia on a going forward basis? And may be give us an idea of what levels of share or what levels of kind unit volumes are you going to need to hit to get to that breakeven in FY16?
Let me start and Amy you can even add. So overall, we are very focused on I would say thinking about mobility share across the entire Windows family. I already talked about in my remarks about how mobility for us even goes beyond devices, but for this specific question I would even say that, we want to think about mobility not just one form factor of a mobile device because I think that’s where the ultimate price is.
But that said, we are even year-over-year basis seen increased volume for Lumia, it’s coming at the low end in the entry smartphone market and we are pleased with it. It’s come in many markets we now have over 10% that’s the first market I would sort of say that we need to track country-by-country. And the key places where we are going to differentiate is looking at productivity scenarios or the digital work and life scenario that we can light up on our phone in unique ways.
When I can take my Office Lens App use the camera on the phone take a picture of anything and have it automatically OCR recognized and into OneNote in searchable fashion that’s the unique scenario. What we have done with Surface and PPI shows us the way that there is a lot more we can do with phones by broadly thinking about productivity. So this is not about just a Word or Excel on your phone, it is about thinking about Cortana and Office Lens and those kinds of scenarios in compelling ways. And that’s what at the end of the day is going to drive our differentiation and higher end Lumia phones.
And Keith to answer your specific question, regarding FY16, I think we’ve made the difficult choices to get the cost base to a place where we can deliver, on the exact scenario Satya as outlined, and we do assume that we continue to grow our units through the year and into 2016 in order to get to breakeven.
…
Rick Sherlund – Nomura
Thanks. I’m wondering if you could talk about the Office for a moment. I’m curious whether you think we’ve seen the worst for Office here with the consumer fall off. In Office 365 growth in margins expanding their – just sort of if you can look through the dynamics and give us a sense, do you think you are actually turned the corner there and we may be seeing the worse in terms of Office growth and margins?
Rick, let me just start qualitatively in terms of how I view Office, the category and how it relates to productivity broadly and then I’ll have Amy even specifically talk about margins and what we are seeing in terms of I’m assuming Office renewals is that probably the question. First of all, I believe the category that Office is in, which is productivity broadly for people, the group as well as organization is something that we are investing significantly and seeing significant growth in.
On one end you have new things that we are doing like Cortana. This is for individuals on new form factors like the phones where it’s not about anything that application, but an intelligent agent that knows everything about my calendar, everything about my life and tries to help me with my everyday task.
On the other end, it’s something like Delve which is a completely new tool that’s taking some – what is enterprise search and making it more like the Facebook news feed where it has a graph of all my artifacts, all my people, all my group and uses that graph to give me relevant information and discover. Same thing with Power Q&A and Power BI, it’s a part of Office 365. So we have a pretty expansive view of how we look at Office and what it can do. So that’s the growth strategy and now specifically on Office renewals.
And I would say in general, let me make two comments. In terms of Office on the consumer side between what we sold on prem as well as the Home and Personal we feel quite good with attach continuing to grow and increasing the value prop. So I think that’s to address the consumer portion.
On the commercial portion, we actually saw Office grow as you said this quarter; I think the broader definition that Satya spoke to the Office value prop and we continued to see Office renewed in our enterprise agreement. So in general, I think I feel like we’re in a growth phase for that franchise.
…
Walter Pritchard – Citigroup
Hi, thanks. Satya, I wanted to ask you about two statements that you made, one around responsibly making the market for Windows Phone, just kind of following on Keith’s question here. And that’s a – it’s a really competitive market it feels like ultimately you need to be a very, very meaningful share player in that market to have value for developer to leverage the universal apps that you’re talking about in terms of presentations you’ve given and build in and so forth.
And I’m trying to understand how you can do both of those things once and in terms of responsibly making the market for Windows Phone, it feels difficult given your nearest competitors there are doing things that you might argue or irresponsible in terms of making their market given that they monetize it in different ways?
Yes. One of beauties of universal Windows app is, it aggregates for the first time for us all of our Windows volume. The fact that even what is an app that runs with a mouse and keyboard on the desktop can be in the store and you can have the same app run in the touch-first on a mobile-first way gives developers the entire volume of Windows which is 300 plus million units as opposed to just our 4% share of mobile in the U.S. or 10% in some country.
So that’s really the reason why we are actively making sure that universal Windows apps is available and developers are taking advantage of it, we have great tooling. Because that’s the way we are going to be able to create the broadest opportunity to your very point about developers getting an ROI for building to Windows. For that’s how I think we will do it in a responsible way.
Heather Bellini – Goldman Sachs
Great. Thank you so much for your time. I wanted to ask a question about – Satya your comments about combining the next version of Windows and to one for all devices and just wondering if you look out, I mean you’ve got kind of different SKU segmentations right now, you’ve got enterprise, you’ve got consumer less than 9 inches for free, the offering that you mentioned earlier that you recently announced. How do we think about when you come out with this one version for all devices, how do you see this changing kind of the go-to-market and also kind of a traditional SKU segmentation and pricing that we’ve seen in the past?
Yes. My statement Heather was more to do with just even the engineering approach. The reality is that we actually did not have one Windows; we had multiple Windows operating systems inside of Microsoft. We had one for phone, one for tablets and PCs, one for Xbox, one for even embedded. So we had many, many of these efforts. So now we have one team with the layered architecture that enables us to in fact one for developers bring that collective opportunity with one store, one commerce system, one discoverability mechanism. It also allows us to scale the UI across all screen sizes; it allows us to create this notion of universal Windows apps and being coherent there.
So that’s what more I was referencing and our SKU strategy will remain by segment, we will have multiple SKUs for enterprises, we will have for OEM, we will have for end-users. And so we will – be disclosing and talking about our SKUs as we get further along, but this my statement was more to do with how we are bringing teams together to approach Windows as one ecosystem very differently than we ourselves have done in the past.
Ed Maguire – CLSA
Hi, good afternoon. Satya you made some comments about harmonizing some of the different products across consumer and enterprise and I was curious what your approach is to viewing your different hardware offerings both in phone and with Surface, how you’re go-to-market may change around that and also since you decided to make the operating system for sub 9-inch devices free, how you see the value proposition and your ability to monetize that user base evolving over time?
Yes. The statement I made about bringing together our productivity applications across work and life is to really reflect the notion of dual use because when I think about productivity it doesn’t separate out what I use as a tool for communication with my family and what I use to collaborate at work. So that’s why having this one team that thinks about outlook.com as well as Exchange helps us think about those dual use. Same thing with files and OneDrive and OneDrive for business because we want to have the software have the smart about separating out the state carrying about IT control and data protection while me as an end user get to have the experiences that I want. That’s how we are thinking about harmonizing those digital life and work experiences.
On the hardware side, we would continue to build hardware that fits with these experiences if I understand your question right, which is how will be differentiate our first party hardware, we will build first party hardware that’s creating category, a good example is what we have done with Surface Pro 3. And in other places where we have really changed the Windows business model to encourage a plethora of OEMs to build great hardware and we are seeing that in fact in this holiday season, I think you will see a lot of value notebooks, you will see clamshells. So we will have the full price range of our hardware offering enabled by this new windows business model.
And I think the last part was how will we monetize? Of course, we will again have a combination, we will have our OEM monetization and some of these new business models are about monetizing on the backend with Bing integration as well as our services attached and that’s the reason fundamentally why we have these zero-priced Windows SKUs today.
…
Intel CTE initiative: Bay Trail-Entry V0 (Z3735E and Z3735D) SoCs are shipping next week in $129 Onda (昂达) V819i Android tablets—Bay Trail-Entry V2.1 (Z3735G and Z3735F) SoCs might ship in $60+ Windows 8.1 tablets from Emdoor Digital (亿道) in the 3d quarter
Update: At 19:40 on April 14 from the 昂达微博 Onda microblogging
[Detailed background information on Onda you can can can find on the ONDA page of my other, ‘USD 99 Allwinner’ blog. Note as well the neostra ODM/OEM brand which is owned by Onda as it’s manufacturing base.]
# Onda Tablet PC & Intel 64 # [notice] April 21, Onda first Intel 64 Bay Trail-T quad-core tablet quad-core # # Onda V975i , 1099 yuan [$177] / 32GB! 50 can be stored in advance and are now starting to use arrived 100 yuan purchase! 9.7 inches iPad Air retina screen, 64 1.83GHz quad-core CPU, the strongest 64-bit tablet bunker! Starting snapped → Onda V975i “special” double 50 yuan deposit payment in exchange for 100 yuan photographed determine coupon @ Intel China @ Intel Core Collection of
Details about the Onda V975i shipping from April 21st see after the Onda V819i (shipping from April 14th) details given much below! End of update
Existing local tablet brands working with Intel were BYD, Ramos and Teclast so far. With CTE (China Technical Ecosystem) initiative now they have 14 partners, not only local brands but local IDHs (Independent Design Houses) and OEMs/ODMs as well, as will be presented very soon below (other subjects following that correspond to the other terms that you find in title of the post):
From 英特尔的中国白牌平板之路 (Chinese white-box tablet roadmap by Intel) [中国经济网深圳频道 (China Economic Net Shenzhen Channel), April 3, 2014]
…
Intel and low-cost Android [and Windows] tablet reference design roadmap (Source Intel)
- Clover Trail+, Dual Core, Android: Z2580 2GHz, Z2520 1.2GHz, LPDDR2, 8L1 HDI2
(Note that Intel was pressed to use the Clover Trail+ for tablets instead of smartphones as it was originally envisaged. See in Saving Intel: next-gen Intel ultrabooks for enterprise and professional markets from $500; next-gen Intel notebooks, other value devices and tablets for entry level computing and consumer markets from $300 [‘Experiencing the Cloud’, April 17, 2013].) - BayTrail-T, Quad Core, Windows: Z3745D 1.83 GHz, 19×12 LCD, DDR3L, 8L1 HDI2
(3d party AM? Dual Boot solution available) - BayTrail-Entry V0, Quad Core, Android:
Z3735D (1.83GHz, <=2GB, <=19×12 LCD),
Z3735E (1.83GHz, 1GB, <=12×8)
DDR3L, 8L1 HDI2 - BayTrail-Entry V2.1, Quad Core, Android:
Z3735F (1.83GHz, <=2GB, <=19×12 LCD),
Z3735G (1.83GHz, 1GB, <=12×8)
DDR3L, 6L1 type 3 PCB - BayTrail-Entry V2.1, Quad Core, Windows
[note that the Windows-based SoC version started sampling in beginning of April vs. the Android based one in mid February]:
Z3735F (1.83GHz, <=2GB, <=19×12 LCD),
Z3735G (1.83GHz, 1GB, <=12×8)
DDR3L, 6L1 type 3 PCB
1 8L PCB = 8-layer PCB; 6L PCB = 6-layer PCB
2 HDI—High Density Interconnects (aka Type 4) PCBs are defined as PCBs utilizing blind, buried or microvia technologies. A blind via is drilled from the surface layer with an end target on an internal layer while a buried via is only drilled on internal layers and does not exist on the surface layers. A microvia is commonly referred to as a via with a hole diameter of 0.005’ or less. (Source: PCB Stack-up Overview for Intel® Architecture Platforms Layout and Signal Integrity Considerations, Intel Thainland, December 2008)
In 2013 Intel launched the CTE program, where “the CTE acronym stands for China
TechniqueTechnical Ecosystem, which can be understood as Chinese technology ecosystem environment and Chinese white-box industry chain”, an alliance of fourteen local tablet manufacturers in Shenzhen including 比亚迪-BYD (Build Your Dreams), 实义德-THD (Thread Technology Co. Ltd.), 创智成-CZC, 汉普-Hampoo, 亿道-Emdoor [Digital] (Emdoor Digital Technology Co. Ltd.), 德天-Techvision (德天信息技术有限公司-Techvision Information Technology Co., Ltd.), 蓝魔–Ramos, 台电–Teclast (Teclast Electronics Co, Ltd), 广和通–Fibocom (Fibocom Wireless Inc.), 微步–Wibtek3 (Weibu) (Weibu Electronics Co., Ltd), 天智伟业–Wisky (Shenzhen Wisky Technology Co Ltd), 炜疆–Range (炜疆信息技术有限公司-Range Information Technology Co., Ltd.), and so on.
3 Wibtek (Weibu) is a Top 1 design house, dedicated in DIY solution products over 13 years with 10 million units MB shipment per year.
– Founded: 2001
– Group Employees: over 1000
– HQ: Shenzhen China
– R&D Force: 500+ engineers
Because of a global brand need, Wibtek is established by TAIWANESE people who were working for A BRAND in the past. Wibtek is currently producing All In One, Mini PC and Motherboards at this moment. As because our profession is motherboard design we easily can claim that Wibtek: “AIO by ITX professionals”.
The below table (taken from Z3600 and Z3700 Series Datasheet as of April 2014 when Type 3 SoC related information was added) is giving the rest of the specific information:
In Brian M. Krzanich IDF14 Shenzhen keynote
[April 2, 2014]
- Demonstrates Intel SoFIA for the first time just months after adding the new family of integrated Intel® Atom™-based mobile SoCs for entry and value smartphones and tablets to its roadmap.
From Intel CEO Outlines New Computing Opportunities, Investments and Collaborations with Burgeoning China Technology Ecosystem [press release, April 2, 2014]
As 4G LTE service expands in China, Intel is well-positioned to provide a growing share of LTE chipsets. Intel’s 2014 LTE platform, the Intel® XMM™ 7260, meets the five-mode requirement of China Mobile* today, including support for TD-LTE, and TD-SCDMA protocols required in China.
Intel is actively engaged in China for certification of the Intel XMM 7260, paving the way for commercial availability in the second half of 2014 for performance and mainstream device market segments. Krzanich demonstrated the Intel XMM 7260 by conducting the first public, live call using China Mobile’s TD-LTE network, and spoke to strong ecosystem demand for a competitive LTE alternative.
Intel is also developing its SoFIA family of integrated mobile SoCs for entry and value smartphones and tablets. Krzanich demonstrated the family’s first silicon, booting up the new integrated Intel® Atom™ platform just months after adding the product to its ultra-mobile roadmap. He also noted the strategic opportunity these market segments present for Intel and the China technology ecosystems. Intel’s SoFIA 3G platform is on track to ship to OEMs in the fourth-quarter of 2014.
Krzanich also said that Intel is on track to ship 40 million tablets this year, and showcased a variety of innovative designs developed in China by OEMs and ODMs.
From Mobile Innovation With Intel Inside by Hermann Eul [IDF14 Shenzhen, April 3, 2014]
The general tablet roadmap was presemted as follows:
Intel reportedly places 28nm chip orders with TSMC, Globalfoundries and UMC [DIGITIMES, Jan 9, 2014]
Intel has contracted Taiwan Semiconductor Manufacturing Company (TSMC) to manufacture its forthcoming Atom mobile processor series codenamed SoFIA, and also placed orders for entry-level baseband chips with Globalfoundries and United Microelectronics (UMC), according to industry sources.
The contract chipmakers declined to comment on customer orders.
Intel’s SoFIA SoCs designed for entry-level smartphones and tablets will be built using TSMC’s 28nm HKMG process technology, said the sources. As for the other series of Atom SoCs codenamed Broxton, Intel will use its 14nm FinFET process to make the chips targeting high-end mobile devices.
Intel has also placed orders for entry-level baseband chips with Globalfoundries and UMC, using their respective 28nm PolySiON process nodes, the sources indicated. Initial shipments required by Intel are estimated at 7,000-8,000 wafers monthly.
Globalfoundries will first be the primary contract chipmaker for Intel’s 28nm baseband chips, the sources noted. Nevertheless, Intel is likely to release more orders to UMC later in 2014 when the Taiwan foundry improves its 28nm production yield rates, the sources said.
More information:
– IDF14 Shenzhen: Intel is levelling the Wintel playing field with Android-ARM by introducing new competitive Windows tablet price points from $99 – $129 [‘Experiencing the Cloud’, April 4, 2014]
– The long awaited Windows 8.1 breakthrough opportunity with the new Intel “Bay Trail-T”, “Bay Trail-M” and “Bay Trail-D” SoCs? [‘Experiencing the Cloud’, Sept 14, 2013]
– Form Factor and Average Power Innovations for Ultrabooks™
[April 10, 2013 presentation by Intel at the IDF Beijing] with the following abstract:
Intended Audience: OEMs and ODMs – Motherboard Layout Designers, Power Delivery, and Power Management Architects
In this session we propose methods to improve, form factor, battery capacity, and power consumption for Ultrabook™ devices. We show how High Density Interconnects (HDI) Printed Circuit Boards could free up considerable space for more battery and other features, especially in thinner Ultrabooks. We show current practices with HDI and propose better ways to achieve higher mother board area reduction to close the cost gap between type 3 and type 4 (HDI) designs. For power consumption, we also show design methods to reduce average power, especially by reducing platform idle power.
and agenda:
- What is HDI?
- Benefits of HDI in Form Factor Constrained Systems
- Reducing the Cost of HDI
- Reducing Platform Power
- Thermal management an Power Configurability
From Designing Entry and Value Tablets Based on the Intel Platform, Bay Trail – Entry [IDF14 TABS002 session, April 3, 2014] downloadable presentation (PDF)
- Stella Huang – Product Marketing Manager, Intel Corporation
- James Sheng – Planning Manager for Component Catalog, Intel Corporation
- Danny Zhang – Senior Engineering Manager, Intel Corporation
This session includes an in-depth review of the status and plans for the Intel® platform, Bay Trail – Entry, Intel’s first platform focused entirely on Entry and Value Tablets.
Topics include:
- Master Reference Design, component catalog and hardware and software differentiation
- Development and manufacturing tools
- Schedule and Original Device Manufacturers (ODMs) support model
1 MRD7 and MRD8/10 are Android* only. Windows is for selected ODMs with committed volume.
Imperatives for Master Reference Design (MRD) Development and Scaling
- Master reference design for simultaneous scaling @ multiple ODMs with fast time to market
- Tailor-made to enable flexible and fast changes with CTE friendly component catalogue
- Enable differentiation to drive value beyond low cost
- Manufacturing tools to ensure easy mass production process
Intel Platform, Bay Trail–Entry Component Catalogue Goal
- Strengthen Intel Architecture partnership with CTE hardware ecosystem
- Improve platform competitiveness, demonstrate performance and flexibility
- Shorten time to market and enable product variety
- Reduce project and supply chain risk
- Enable partners to support customer design directly
Intel software ecosystem enabling efforts
< from slide #22 to slide #36>
Intel tools for development and manufacturing
< from slide #38 to slide #41>
今天 17:59 Today [2014-04–11] 17:59
昂达微博 Onda microblogging
[Detailed background information on Onda you can can can find on the ONDA page of my other, ‘USD 99 Allwinner’ blog. Note as well the neostra ODM/OEM brand which is owned by Onda as it’s manufacturing base.]
# 64 Onda first Android tablet # [first] New Intel Bay Trail-T’s first quad-core tablet # # Onda V819i quad-core will soon at @ Jingdong
@ Jingdong computer digital sale! 16GB is only 799 yuan [$129]! 8.0-inch 1280 × 800 IPS screen ultra-clear, 64 of Bay Trail-T 22nm quad-core CPU, PC-class 7th generation GPU, 64-Bit Flat Panel “core” era! Starting snapped → http://t.cn/8sCvvnD @ Intel China
@ Intel Core Collection of
Onda V819i Intel Bay Trail-T 8 Inch IPS Screen Quad Core Android Tablet PC
[Onda Tablet – Buy Products, April 4, 2014]
SKU:820026
Regular Price:$189.90
Special Price: $159.90Quick Overview
Onda V819i Intel Tablet pre-installed with Quad Core 64-bit 22nm Bay Trail-T 1.83GHz Processor [3735E Bay Trail-Entry V0], with 1280*800 IPS Screen, Dual Camera.
…
Qty: … Pre-order
Shipping within 1-2 Weeks
…
From Boris at 4/2/14 11:44 AM
- Can I be notified when Onda V819i will be in stock?
Thanks.- Onda Tablet:
Thank you for your mail.
Onda V819i Intel Tablet will be in stock at the end of April.…
Details
Onda V819i Intel Tablet pre-installed with Quad Core 64-bit 22nm Bay Trail-T 1.83GHz Processor [3735E Bay Trail-Entry V0], with
1024*7681280*800 IPS Screen, Dual Camera.
Onda V819i Quad Core features Intel Bay Trail-T Z3735 processor, 1.83GHz.
DDR3 L RAM, eMMC up to 150MB/s
8.0 Inch HD IPS Gorilla Glass Touch Screen
189PPI IPS Screen with 1280*800 resolution
Onda ROM
Onda V819i Intel Tablet Features:
OS: Android 4.2
CPU: Intel 3735E [Bay Trail-Entry V0] Quad Core 64-bit Bay Trail-T, 22nm, 1.86GHz, support Burst Technology 2.0
GPU: Intel HD Graphics for BayTrail
RAM 1GB 64bit DDR3L
Storage 16GB eMMC
Bluetooth: Support
Shell Material Metal
Screen: Capacitive Touchscreen, 1280*800 High-resolution Screen
Size: 8 inch
Resolution: 1280*800 Pixels (16:10)
Display: IPS Screen
Dual Camera: 2.0MP Front + 5.0MP Back with AutoFocus (OV Camera)Onda V819i Intel Tablet Details:
Speakers: Dual AAC Speaker
TF Card: Support up to 128GB
Video: 4K HD Videp Play with formats of MP4/3GP/3G2/RM/RMVB/ASF/FLAC/APE/MOV etc.
Gravity Sensor Yes
Skype Yes
Multi-Touch Yes, 10 points touch
OTG: Yes
HDMI: Yes, Mini HDMI
Play Store: Yes, built in
Extend Card Support TF card up to 128GB extended
Email and Browser: Yes, built in
WIFI: Yes, 802.11 b/g/n
Earphone Interface 3.5mm
Video 1080P, AVI/MOV/MP4/RMVB/FLV/MKV…
Music MP3/WMA/WAV/APE/AAC/FLAC/OGG
Ebook UMD, TXT, PDF, HTML, RTF, FB2…
Battery : Li-ion 4200mAHOnda V819i Intel Tablet contain:
1 x Onda V819i Intel Tablet
1 x USB cable
1 x ChargerOnda V819i Intel Tablet Weight: 354g
Onda V819i Intel Tablet Size: 207*122.5*8.5mm
Update: At 19:40 on April 14 from the 昂达微博 Onda microblogging
# Onda Tablet PC & Intel 64 # [notice] April 21, Onda first Intel 64 Bay Trail-T quad-core tablet quad-core # # Onda V975i , 1099 yuan [$177] / 32GB! 50 can be stored in advance and are now starting to use arrived 100 yuan purchase! 9.7 inches iPad Air retina screen, 64 1.83GHz quad-core CPU, the strongest 64-bit tablet bunker! Starting snapped → Onda V975i “special” double 50 yuan deposit payment in exchange for 100 yuan photographed determine coupon @ Intel China @ Intel Core Collection of
Onda V975i Quad Core Intel Bay Trail-T 9.7 Inch Retina Screen RAM 2GB Tablet PC [Onda Tablet – Buy Products, April 14, 2014]
SKU:820027
Regular Price:$219.90
Special Price: $209.90Quick Overview
Onda V975i Quad Core pre-installed with Intel Bay Trail-T 61-bit Processor [3735D Bay Trail-Entry V0], with 22nm and 1.83GHz, 2GB RAM DDR3L and 32GB eMMC ROM,9.7 Inch Retina Screen 2048*1536 resolution 264 Screen PPI. Onda V975i come with Front 2.0M and Back 5.0M Dual Camera.
…
Qty: … Pre-orderShipping within 1-2 Weeks
…Details
Onda V975i Quad Core pre-installed with Intel Bay Trail-T 61-bit Processor [3735D Bay Trail-Entry V0], with 22nm and 1.83GHz, 2GB RAM DDR3L and 32GB eMMC ROM, 9.7 Inch Retina Screen 2048*1536 resolution 264 Screen PPI.Onda V975i come with Front 2.0M and Back 5.0M Dual Camera.
Intel Z3735 Quad Core 64 bit 1.83GHz
8.5mm Ultra-thin
9.7 Inch Retina Screen Android Tablet with 495g
HD OV Camera with Auto Focus
Front 2.0M and Back 5.0M HD Camera
Top 9.7 Inch Retina Screen
9.7 Inch iPad Air Retina Screen with 267 Screen PPi, Gorilla Glass Touch Screen
Onda V975i Quad Core Tablet Features:
OS: Android 4.2
CPU: 64-bit Bay Trail-T Z3735D [Bay Trail-Entry V0], 22nm,1.83GHz, support Burst Technology 2.0
GPU: Gen7,support DirectX 11
RAM 2GB DDR3L
Storage 32GB eMMC
Bluetooth: Support
Shell Material Metal
Screen: Capacitive Touchscreen, 2048*1536 High-resolution Screen
Size: 9.7 inch
Resolution: 2048*1536 Pixels
Visible Angle: 178°
Screen PPI: 264
Display: Retina IPS Screen
Daul Camera: Front 2.0 Megapixels, Back 5.0 Megapixels Auto FoucusOnda V975i Quad Core Tablet Details:
Speakers: Dual AAC Speaker
Video: hd Video Play with formats of MP4/3GP/3G2/RM/RMVB/ASF/FLAC/APE/MOV etc.
Gravity Sensor Yes
Skype Yes
Multi-Touch Yes, 10 points touch
OTG: Yes
Play Store: Yes, built in
Extend Card Support TF card up to 32GB extended
Email and Browser: Yes, built in
WIFI: Yes, 802.11 b/g/n
Earphone Interface 3.5mm
Video 1080P, AVI/MOV/MP4/RMVB/FLV/MKV…
Music MP3/WMA/WAV/APE/AAC/FLAC/OGG
Ebook UMD, TXT, PDF, HTML, RTF, FB2…
Battery : 7800 mAhOnda V975i Quad Core Tablet contain:
1 x Onda V975i Quad Core Intel Tablet
1 x USB cable
1 x ChargerOnda V975i Quad Core Weight: 495g
Onda V975i Quad Core Size: 241*169*8.5mm
End of update
From 亿道将推低于399元的Windows平板 (Emdoor will be pushing Windows tablet down to 399 yuan [$60]) [平板新闻 (PadNews), April 8, 2014] one can see the following roadmap from the company for 2014:
Currently its three 8-inch Windows 8.1 based tablets: EM-I8080-A, EM-I8080-C, EM-I8180 are already in mass production. And now Microsoft Windows system with tablets of 9-inch and less size has started free, which makes its three 8-inch Windows tablets more competitive.
In addition Emdoor will launch in the second quarter of this year a 10.1-inch Windows Tablet program supporting 3G/4G network, and a 10.1 inch 3G/4G tablet based on BayTrail-T CR [Cost Reduced] V0 version. In the second quarter it will also launch an 8-inch BayTrail-T CR V0 quad-core 3G tablet, the whole[sale] price will be around $ 139. In the end of the second quarter it will launch an 8-inch BayTrail-T CR V2 3G quad-core tablet, when prices will be further reduced to between $ 99-119. More awesome is that in the third quarter Emdoor will launch a 7 -inch BayTrail-T CR V2 quad-core 3G tablet, and the price will be lower than $99. Obviously in the WiFi-only version of the above scenario the price will be lower.
The current 50K shipment of Emdoor isn’t much, but for the company it is simply a starting point. At the launch party Emdoor also announced this year’s goal: 1KK, namely the 2014 Intel tablet shipments program to reach 1 million units, becoming the market leading Intel tablet IDH. Obviously, this is not small, in order to achieve it is really difficult. How Emdoor will be achieving this?
Emdoor’s approach can be summarized in three points: 1, constantly updated product technology and creating more product forms; 2, the establishment of a sound quality system, providing customers with better product quality; 3, for the continuous optimization of product cost it will introduce a $60 tablet this year. Here the US $60 tablet PC should be referring to that of Emdoor launching in the third quarter a 7-inch BayTrail-T CR V2 quad-core tablet, as the 3G version priced at only $99, then the price of the WiFi only version should be at around $ 60. Here we must add that BayTrail-T CR supports Windows System.
The $60 Tablet PC means that for less than 399 yuan you can buy a Windows tablet, the price really is a little scary. If it really can do at this price, then it will be able completely compete with an ARM-based Android tablet head-on. And an Android tablet does not have the advantage of full compatibility with PC programs. Plus the Intel and Microsoft brands, I believe, will attract a large number of consumers. And with this it will probably be possible to change the current ARM tablet market, a dominant pattern. But before the product is actually listed it’s hard to say, because the outcome will also depend on the specific market feedback.
Intel pre-CTE background in China:
As of 2013
From China tablet/smartphone chain: Leaders emerge but plenty to play for [Supply Chain Research by Credit Suisse, Oct 15, 2013]
… The China tablet market is also seeing Intel engage more on building reference designs with local players, with several solution houses and local brands rolling out Windows+Android 7-10” tablets for $150-250 factory price for tablets and $300-$350 for tablet + keyboard Win8 + Android models. …
…
Intel engaging local tablet suppliers more closely. Intel is putting more energy on penetrating the low-cost tablet market and now has reference models from design houses such as Emdoor and smaller branded companies including Ramos and Vido. The company is offering a thin and light reference design based on Clover Trail now with Bay Trail rolling out in the next 3 months. Factory price for 10” with keyboard ranges from $250-300 for Android and $300-$350 for Android + Wintel. 7.85” tablets are from Intel are now appearing at US$150 factory price, the high-end of the US$50-135 range for tablets based on Mediatek or the Chinese chipset suppliers. We are seeing more effort from Intel to penetrate several of these design houses on tablets, though presence is still very limited at the local smartphone suppliers.
Emdoor Digital background:
As of 2013
Emdoor Digital participates China Sourcing Fair in Hong Kong with multi-platform solutions [press release, Oct 12, 2013]
Emdoor Digital participated China Sourcing Fair in Hong Kong on October 12-15, 2013 with multi-platform solutions. Emdoor Digital unveiled the latest Intel X86 architecture -based tablet solution, ARM Rockchips 3026 and 3168 -based architecture solution. There is also more mature amlogic tablet solution which is already in high-volume production, Marvell 3G call tablet solution, more tablet solutions targeted at different industries, Miracast, TV boxes, TV stick and other products.
《Scene photos I》
《Scene photos II》
Intel Dual System Tablet solution is undoubtedly the major popular model during this exhibition, X86-based Intel Baytrail-T quad-core tablet solution, 1.8GHz, support windows8.1 & android4.2.2 dual system, 10.1 inch, 8 inch two models, this is the world’s first prototype based on Intel Baytrail-T, the mature sampling will be available in the end of October and Mass production in November.
《Intel tablet solution》[based on Z3740D]
Intel leaders from different regions and countries visit and guide at Emdoor Digital Booth.
《 Intel Leaders’visit》ARM architecture-based RK3026 is the latest models target at lower-end market, RK3168 for higher-end market, both are undoubtedly the models lead the dual-core market.
《EM-R3170&EM-R6270》For the higher end market, Emdoor Digital has RK3188, M802, large size, thinner and lighter is the characteristics of these models.
《8”、9.7”、 10.1”》For Mass production and most stable performance, Emdoor Digital has full-size models of amlogic AML8726-MXS/MXL chip solution; all 7 inch, 8 inch, 9 inch, 10.1-inch types pass the GMS certification.
《 Amlogic series models》For 3G and calling market, Emdoor Digital has Marvell PXA986 dual-core, PXA1088 quad-core tablet solutions, Phablet, narrow flat border is a major highlight which is also the future market trends.
《3G Phablet》We can see some special tablets customized for different industries on Emdoor Digital booth, POS machines has intelligent cash system, supports NFC, mobile phone , bank card and magnetic card payments manner. And other industrial applications tablets of RFID, Zigbee / Z-wave, etc.
《Industry Solution》There are also TV box, TV dongle , Miracast, etc.
《 Other products》During this Hong Kong exhibition, Emdoor Digital presents multi-platform solutions with numerous product forms, which is undoubtedly one of the booths with rich content, different products for different markets, which is attraction for all buyers on site.
About Emdoor Digital:
Emdoor Digital is in charge of R&D of Emdoor. Officially founded in 2010, Emdoor Digital symbolizes the important start for Emdoor to increase research investment and focus on consumer product development and standard operation. Emdoor Digital is one of the earliest teams engaging in tablet PC research, which targets at consumer digital product and solution research and production. At present, it is one of the largest tablet PC main board and ODM/OEM suppliers in Shenzhen.
MID solution of Emdoor Digital uses international famous chip processor and intel X86 architecture, the latest ARM architecture with strong CPU function.
– The latest Android system is adopted, support powerful third-party software.
– It employs full-touch screen design with resolution covering 800*480 to 1280*800 capacitive multi-touch screen.
– Built-in WIFI and 3G module (WCDMA/EVDO/TDSCDMA) and GPS module are available.
– Browsing websites, checking email, QQ/MSN/SKYPK online chatting, online games, online TV, stocks, funds and futures, real-time stock market monitoring, real-time transaction and so on.
– It is supportive to more office software such as WORD, EXCEL, PPT, PDF, TXT etc.
– It is supportive to various mainstream audio, video, picture, Flash plug-ins and multiple game clusters.
– It supports 48 languages and 3G parameters from 28 countries.
– All solutions adopt ultra-low power consumption but strong power management design, which have stable performance, high yield, fast delivery and good service.
About Emdoor Group:
One of the top 10 embedded system enterprises of the top 100 IOT enterprises in China in 2010;
One of the top 10 embedded system enterprises in China in 2010;
One of the earliest companies in the world that are engaged in research, development and design of MID tablet PCs;
Member of IOT Expert Committee of Chinese Institute of Electronics;
Golden partner of Microsoft
Partner of ARM chip design tool, development tool, ATC training and education
Domestic agent of ARM for development tools and chip-level development board.
Designated supplier of ARM hardware platform for 2006 National Undergraduate Electronic Design Contest; won “Special Contribution Award” of Ministry of Education and Ministry of Information
Its software/hardware co-design system of R&D management system EmTeam won “EDN China” innovation award for 2010;
Emdoor possesses three subsidiaries: Emdoor Electronics, Emdoor Digital and Emdoor Information, which engage in R&D tool, tablet PC and industrial terminal R&D and sales respectively. Emdoor has attached great importance to R&D management, embedment, mobile Internet and Internet of Things for a long time and been devoted to embedment industrial chain in China, providing professional and individualized service and support to customers in chip development tool, EDA development tool, embedment development tool, embedded platform and solution, embedded software test tool, ODM/OEM, embedment training and so on, thus helping customers and global partners to achieve success.
Emdoor has increased investment in independent R&D though making great achievement in independent tablet PC R&D. With the great support of Fudan Technology Venture Park, Emdoor has established Internet of Things R&D Center, Android System R&D Center (Relocated to Shenzhen with a new name Shenzhen Emdoor Information Technology Co., Ltd.) in Shanghai by the end of 2010.
Emdoor Shanghai Internet of Things R&D Center is the new development of Emdoor’s 5-year research in Internet of Things, making wireless sensor networking technology and practical new sensor technology commercialized.
Relying on mature tablet PC R&D platform of Emdoor Digital, Shenzhen Emdoor Information Technology Co., Ltd. has furthered developed a series of industrial tablet solution, such as Zigbee tablet, NFC tablet, RFID tablet, Z-Wave tablet, one dimensional barcode, two dimensional barcode, Infrared Spectroscopy, custom-made industrial tablet, and multiple Internet of Things solutions. It realizes standardized module production based on mature product architecture, enabling itself to create custom-made functions with simple module configuration according to the demand of the project.
As of 2012
http://www.emdoor.com/ Emdoor Electronics 亿道电子
Emdoor Zigbee Z Wave Tablet Introduction [qing shi YouTube channel, Sept 5, 2012]
Emdoor NFC Tablet Peer To Peer Introduction [qing shi YouTube channel, Sept 5, 2012]
Emdoor shows $140 9.7″ and $85 7″ Telechips 8803 ARM Cortex-A8 ICS Tablets [Charbax YouTube channel, Jan 13, 2012]
Emdoor Digital Company Brief: [as of August 2012]
Emdoor Digital subordinate to Emdoor Group is responsible for R&D of Emdoor Group. Emdoor Digital was established in 2010, which symbolized the start that Emdoor Group increased the investment in R&D and its long-term devotion to R&D and standardized operation of the consumer goods. It is positioned for the R&D and production of the digital consumer goods and solutions, with the aim to becoming one of the largest tablet personal computer mainboard and ODM/OEM suppliers in Shenzhen.
Emdoor Digital takes up the R&D team and quintessence of tablet personal computer since 2004, particularly since 2008, having had a specialized R&D team with perfect technology and rich experience since its very start. During the past six years, this team has designed the high-speed ARM embedded processors of Intel/Marvell Xscale PXA255/PXA270/PXA272/PXA310/PXA320 series based on high-speed ARM processors, and it is the largest third-party design team in China for the previous Intel embedded processor with Xscale ARM architecture, good at the substrate design of the software such as Linux, Android, WinCE5.0/6.0 and Windows Mobile operating systems, and having completed the design of multiple customized product solutions.
It is noteworthy that since 2004, Emdoor all the time supported Intel University Program covering the laboratories in Category-A schools of higher education, such as Tsinghua University, Peking University, Xidian University, University of Electronic Science and Technology of China, Tongji University, Fudan University, Zhejiang University, Nankai University, Nanjing University and South China University of Technology, till Intel sold this business to Marvell in 2006. During nearly 8 years from 2003 till 2011, Emdoor education platform and teaching scheme has been purchased by National-level Electrotechnic and Electronic Experiment Demonstration Center of Xidian University, and the embedded laboratories or electrotechnic and electronic experiment centers in almost all schools of higher education (including higher vocational and training colleges).
Emdoor Digital MID Solution Brief:
- The Emdoor Digital MID Solution mainly uses Amlogic AML8726-MX, AML8726-M3 processor, with the core of Cortex-A9, clocked at 1.5G and featuring strong capacity.
- The latest Android 4.1 system is adopted, able to support Flash11 and powerful third-party software.
- All-touch design is adopted, with all levels of resolution covering 800*480-1280*800.
- Built-in WIFI wireless network can support 3G modules (Optional), WCDMA / EVDO / TDSCDMA, as well as optional built-in GPS modules.
- It can support web surfing, e-mail sending and receiving, QQ / MSN / SKYPK online chat, online games, Internet TV, stock + funds + futures, real-time pricing, real-time transactions and more other office software, as well as browsing and editing of WORD, EXCEL, PPT, PDF, TXT and other document formats.
- Able to support all major audio, video, photos, FLASH plug-ins and a number of game sets, as well as 38 countries’ languages and 28 countries’ 3G parameters, all programs use ultra-low power consumption and robust power management design, boasting stable performance, high productivity, fast delivery and excellent service.
Products Development:
- Feb. 2008 Tablet R &D team was under preparation.
- Dec. 2008 1st tablet solution which was based on Marvell PXA303 was developed successfully.
- Mar. 2009 Selected as the key cooperative Design House of Marvell in Great China.
- Apr. 2009 Tablet with 4.3” touch screen and based on Android 1.1 was 1st published in China.
- Jun. 2009 Series of Android Netbook were released.
- Sep. 2009 Tablet with 7” touch screen and based on Android1.5 was 1st published in the industry.
- Jan. 2010 Tablets with 7” touch screen and built-in WCDMA based on Android forayed into Japanese market.
- Mar. 2010 7” Tablets with built-in WCDMA based on Android forayed into Germany Vodafone Telecom.
- Apr. 2010 Changed the chips solution supplier from Marvell to Telechips.
- Oct. 2010 Mass production started, the PCBA sales volume in Q4 was over 250,000 pieces.
- Jan. 2011 Tablet solutions based on Android2.3, Telechips 8803, Cortex, 1.2GHz was 1st published in the industry.
- Apr. 2011 Tablet solutions from 5” to 10” based on Android 2.3.3, Telechips8803 were keeping steady mass production.
- Jul. 2011 Be the supplier of well known educational enterprises in China for teaching platforms.
- Sep. 2011 Successively released diversified new tablet solutions such as EM76, EM78, EM89, EM101 and EM102.
- Oct. 2011 Emdoor Digital was participated in the China Sourcing Fair (Electronics & Components), which was hosted by Global Sources in Asia World-Expo, Hong Kong.
- Dec. 2011 Tablet solutions from 7” to10” based on Android 4.0, Telechips 8923, Cortex new generation (Cortex-A5) were developed successfully.
- Jan. 2012 Emdoor Digital was participated in the International Consumer Electronics Show (CES) in L.V.
- Feb. 2012 Tablet solutions from 7” to10” based on Android 4.0.3, Amlogic 8726, Cortex-A9 were developed successfully.
- Mar. 2012 Emdoor Digital was participated in the International CeBIT in Hannover Germany.
- Apr. 2012 Emdoor tablet solutions based on Amlogic AML8726-MX Dual Cortex-A9 were first appeared in China Sourcing Fair (Electronics & Components) in Hong Kong.
- May. 2012 Emdoor published mass production solution of Dual-core Tablet PC which based on Amlogic AML8726-MX Dual Cortex-A9 in new products release conference.
- Aug. 2012 Tablet solutions based on Android 4.0.4, Amlogic 8726-MX, Dual core Cortex-A9 appeared successfully at the first China Sourcing Fair-Sao Paulo in Brazil.
2014 will be the last year of “free ride” in the smartphone and tablet spaces for ARM-based competitors of Intel – at least what Intel is insisting again
With 2013 performance of only 10 million tablet chip sets (for Windows mostly) Intel is still confident in its ability to deliver 40 million of those (with increased Android portion) in 2014. To achieve this they will be doing a lot of enabling across the industry to take the Bay Trail-based tablet BOM cost down to an equivalent level. They expect that the company’s overall margin will be hit just by 1.5% because of this required in 2014 effort. They are saying that Intel will be safe from 2015 on as moving to 14nm process technology with next-generation (even in terms of micro-architecture) Broxton and SOFIA SoCs for tablet and smartphone devices. They are basing this statement on their inherent “transistor density” advantage against TSMC from that point in time on, despite some analysts’ opinion of the economy of scale advantage of TSMC in terms of the number of wafers produced.
Meanwhile the possible direction of leading OEMs got a hint with New Acer CEO introduced to the media [Formosa EnglishNews, Jan 14, 2014]
With media generally reporting that Acer’s biggest mistake was its too early and too heavy bet on ultrabooks it is clear that OEMs will take a very cautious approach with Intel’s efforts to decrease the Bay-Trail based tablet costs down on the BOM level, as it is exactly what happened with ultrabooks. Instead the will try to solidify their tablet market position with ARM-based tablets in all segments of the tablet market, from the lowest cost upto the premium. Moreover, Jason Chen’s appointment to the CEO position of Acer is also showing that even for ongoing efforts OEMs need a very detailed and deep understanding of the SoC manufacturing and even the process technologies. Take note of Jason Chen’s history of employment in order to understand that:
- TSMC: 2005-2013
- Intel: 1991-2005
- IBM: 1991-1998
In other regards we only know that Acer to start new operation strategy in April to focus on BYOC (Build Your Own Cloud) [DIGITIMES, Jan 13, 2014] and that “In the future, all of Acer’s businesses including desktop, notebook and tablet will involve the BYOC platform and it is hoping to strengthen its product lines through the services.” It will be interesting to watch what that means as my previous conclusion was Leading PC vendors of the past: Go enterprise or die! [‘Experiencing the Cloud’, Nov 7, 2013].
Now back to the Intel related information in terms of details in their earnings call. Note before that the correlation of Intel and Microsoft stock prices (as well that the stock market was absolutely not happy with Intel results and especially with the “flat 2014” outlook):
The company’s stance for 2014 is indeed not rosy as Intel to reduce global workforce by five percent in 2014 [Reuters, Jan 17, 2014].
From: Intel’s CEO Discusses Q4 2013 Results – Earnings Call Transcript [Seeking Alpha, Jan 16, 2014]
Inserted slides are from Investor Meeting – Stacy Smith (CFO) [Nov 21, 2013] while the acompanying text is from Intel Shares Mobile Progress, Priorities and Product Pipeline at Annual Investor Day [Technology@Intel, Nov 25, 2013] if reference is not put underneath
[On transistor density and wafer cost]
Mark Lipacis – Jefferies
Thanks for taking my question. At the Analyst Day, you addressed your view on transistor density and your expectation for leadership on that vector, but I have to say this discussing that idea with investors is a consensus view that seems to be that Intel has an inherent wafer cost disadvantage that relative to TSMC that neutralizes or more than neutralizes your transistor density advantage and the argument is that TSMC ships more wafers and therefore has more better purchasing power than you and its lower labor cost, so net-net, they have just a big huge advantage of wafer cost that you should have a hard to, too hard of a time to overcome. So my question is do you think that’s a fair view. Can you help us talk to the relative elements of the wafer cost and how you think you can compare? Any kind of help that you give us on the cost dimension would be extremely helpful. Thank you.
From: CES: Process Will Still Win in Mobile, Says Intel’s Eul [Barrons.com, Jan 9, 2014]
Eul points out that Qualcomm, and other competitors such as Nvidia (NVDA) and Broadcom (BRCM), all of whom are dependent on Taiwan Semiconductor Manufacturing Company to actually make the chips they design, will run into a problem as Taiwan Semi’s technology stops scaling.
Intel had made the point at the analyst day presentation, and Eul repeated it: As TSMC moves from 28 nanometer to 20 nanometer, it will run into a problem at the subsequent step, 16 nanometer, where TSMC will not add any real reduction in transistor size. That, says Eul, means that 16-nanometer parts a few years from now will be stuck at a 20-nanometer feature size while intel presumably zooms ahead to 10 nanometer by that time.
And what that means is that, unable to scale the density of a chip as Intel can, Qualcomm and Nvidia and Broadcom and the others will not be able to integrate as many parts as Intel on a single semiconductor die.
And so to those who point out that Intel hasn’t yet released its integrated baseband chip, Sofia, mentioned above, Eul contends the company will have the last laugh in a few years’ time as Qualcomm and the rest hitting a scaling wall.
Brian Krzanich – Chief Executive Officer
You know I think the first thing to remember is that what really counts in all of this is transistor cost and what we really talk about in our Moore’s Law of Curves and when we talk about transistor density is driving a consistent cost reduction of the transistors and so wafer cost is one segment of that. I’m not going to comment on you know TSMC’s wafer cost versus our wafer cost but we feel confident that our relative level of scaling and our internal wafer cost are such that we believe we have a leadership position in transistor cost.
When you’re talking about any product whatever it is, a logic product that’s a low-end microprocessor for wearable or internet of things or high-end Xeon server. You’re talking about the number of case and hence the number of transistors required to put that logic device together, it doesn’t matter whose technology it’s on to some extent. It doesn’t matter what node and so the more cost effective those transistors are whether it’s 500 million or 3 billion the lower the product cost there is and that’s really what we focus on and why we focus on transistor cost. So I think we stand by our what we said at the investor meeting.
[On tablets]
Brian Krzanich: Our disclosure in November of a new smartphone and tablet road map that will include SoFIA our first IA SSD with integrated comps later this year is further evident that we’re innovating and bringing products to market at faster pace. Looking ahead 2014 will be an exciting year as we build further on this new foundation. We have established a goal to grow our tablet volumes to more than 40 million units. Within an emphasis on the value segment. As we’re finishing 2013 with more than 10 million units and a strong book of design wins we’re off to a good start.
Stacy Smith: In the tablet market, we launched the Bay Trail SoC and have started to expand our footprint and market signature in this growing market.
The 4X Tablet Campaign: This year, Intel increased its focus on tablets with key design wins and the introduction of Bay Trail. Next year, Intel plans to increase tablet volumes by 4X! Eul signaled a rich pipeline of tablet and phablet design wins for Bay Trail including Android and Windows devices spanning price points from premium to sub $99 products from leading OEMs and the China tech ecosystem. He also said industry leading performance, competitive battery life, cost-reduced SOCs and unique features like 64 bit will help drive growth. Intel gave a first-time demo of the performance gains achieved with a 64 bit Bay Trail system running Windows and showed a 64 bit kernel running on an Android tablet.
Note the details about the 2014 tablet market of ~289+ million units in the 2014 will be the last year of making sufficient changes for Microsoft’s smartphone and tablet strategies, and those changes should be radical if the company wants to suceed with its devices and services strategy [‘Experiencing the Cloud’, Jan 17, 2014] post of mine. The 40 million target of Intel is therefore less than 14% of that.
[regarding: So on the tablet strategy to get the 40 million you’re saying it’s going to be a 1.5 percentage hit.
CFO Commentary on Fourth-Quarter and Full Year 2013 Results
2014 Outlook
Gross Margin Reconciliation: 2013 to 2014 Outlook (59.8% to 60% +/- a few points)
– 1.5 points: Tablet impact
Let’s say you guys get into the second half of the year and you’re not quite to the 40 million if it’s a pretty significant short fall. Would you consider canning that strategy I guess I’m just wondering what the commitment is if the volumes aren’t there but the cost is there by the end of the year?]
Brian Krzanich: This isn’t a price reduction as normal price reduction would be; it’s not where you are just simply reducing. It’s truly a BOM cost equalizer and remember a lot of our 40 million tablets in ’14 will be based on Bay Trail. Bay Trail was originally designed for Avoton-based PC segments and the upper end tablet [and all Windows]. And so it’s what we are doing here is doing a BOM cast delta relative to the, what the mid and lower end tablets require. And so those are things like Bay Trail may require more layers of a printed circuit board for the board itself, more components on the board and tighter power management controls and things like that. We have a whole program to reduce those throughout the year. So that gives us confidence that as we go through the year, the BOM cast delta will shrink, but if the volume didn’t show up for some reason and I am not going to say that, that’s what’s going to happen, but I am confident it will, but if it didn’t it’s on a per unit basis. And so the spending on that contra would be reduced equivalently.
Stacy Smith: And I would just add as Brian said we are doing a lot of enabling across the industry to take the BOM cast out in equivalent. These are costs at the system level not at our chip level and it will vary a lot by SKU, but to give you a sense for a Bay Trail platform from the beginning of the year to the end of the year we think that, that BOM penalty drops by more than half. And so it kind of gets better out in time. And then when we get to the Broxton generation we think it’s de minimis.
Brian Krzanich: Both Broxton and SoFIA are just specifically designed to eliminate that delta.
Say “hello” to SoFIA: By the end of 2014, Intel will deliver a new integrated Atom processor + communications solution for entry and value smartphones and tablets, code-named SoFIA. In his presentation, Eul highlighted that Intel’s Infineon wireless assets make the company an “incumbent” in the mobile phone market, shipping more than 360M mobile platforms a year spanning 2G and 3G solutions. He said SoFIA builds on the proven 3G communications platform to deliver a competitive and highly integrated, IA-based mobile solution aimed at the fast-growing market for entry smartphones and tablets. The 3G version of SoFIA is expected by the end of 2014, and Eul said an LTE version would follow in the first half of 2015.
Accelerated Mobile Roadmap: While specific product details will be saved for a later date, Eul signaled a robust pipeline of new Atom processors and multi-comms solutions for 2014 and beyond to address devices spanning market segments from entry to performance smartphones and tablets, an approach he called “market-oriented pragmatism.” In addition to SoFIA, Eul noted:
…
-
Broxton – in 2015 Intel plans to deliver a 14nm, 64 bit SOC based on a new, next generation Atom architecture (Goldmont) targeted for hero devices. Broxton is being designed for pairing with Intel’s next generation LTE solutions.
[regarding: If we look at tablets and smartphone, what type of units do you need to reach for that business to stop having a material impact in gross margin from is 10 points higher utilization rates and excluding the contra revenue impact and that’s it? So just looking at the 40 million units target for this year, what type of volume do you need to get in order for gross margin to start appreciating from the west of the business if you exclude the contra revenue impact?]
Brian Krzanich: Yes, it’s hard to say. I mean, I will bridge back to our strategy here. Our strategy is that we are going to use our process technology leads. We will have leadership products that also are competitive or maybe even leadership in terms of cost and I showed some data at the investor meeting that just kind of showed the die size as we progress from Bay Trail to Broxton to SoFIA and so you can get a sense of the kinds of cost structure that we are going to have on a per unit basis. I don’t think it causes on a percentage basis. Yes, I can’t – I am not envisioning if this causes the gross margin percentage to go up, but you can definitely get to a space once we get through these contra enabling dollars where every unit we sell is accretive on a gross margin dollars per unit. It’s utilizing factories that we have in place for PCs. And so it’s a nice adder of that gross margin dollar per unit standpoint.
[regarding: Bay Trail Android tablets]
Brian Krzanich: Most of the Bay Trail Android tablets really start showing up more in Q2 than in Q1 and that’s again purely you know remember we made a shift, an original program for Bay Trail was all Windows. As we came into the midpoint of the year we sandbox [ph] shift and make it Windows and Android and so you know our OEM partners as well are targeting more towards Q2 and it’s just when you do you go and start putting back in that back to school event which is a next seasonal place where upside usually occur.
[regarding: On the smartphone or on tablet space, I think it is true that Intel has a manufacturing lead, but do you think your cost reduction efforts and then the Moore’s Law advantages ever progressed faster than the ASP declines in the space. In other words, do you think Intel can be sustainably profitable in the mobile space which is maturing?]
Brian Krzanich: Yes, we absolutely do. You saw at the investor meeting products like SoFIA, which really are going to be put on to 14-nanometer are fully integrated all the way through with the 3G option or an LTE option and that LTE is with carrier aggregation. Those kinds of products we believe are very, very cost competitive in fact leading from a cost position. In addition, we don’t talk a lot about, but we are already in that low cost Asia market. We are inch and then we are working with ODMs there. That’s actually where a lot of the innovations coming out of for some of these cost reductions on tablets and where we are getting the cost reduction ideas. So we are in that market now. We sold out of that Shenzhen low cost market in Q4. We will continue through it – through 2014 and with products like SoFIA on leading edge technology, we are very comfortable that we can get into those very low price points.
Microsoft answers to the questions about Nokia devices and services acquisition: tablets, Windows downscaling, reorg effects, Windows Phone OEMs, cost rationalization, ‘One Microsoft’ empowerment, and supporting developers for an aggressive growth in market share
Preceding analysis of the announcement materials on this blog:
Unique Nokia assets (from factories to global device distribution & sales, and the Asha sub $100 smartphone platform etc.) will now empower the One Microsoft devices and services strategy [‘Experiencing the Cloud’, Sept 3, 2013]
Other views are given here as well, after the Q&A excerpts coming immediately below. From a Reuters’ editor, an IHS senior analyst, an investment bank executive, and a business news presenter on France24 – in the form of 4 embedded videos. Those views could be summarized as “Nokia did a good deal while the success of Microsoft with this acqusition is uncertain and needs a lot of further investment”.
Let’s see how much the answers to the questions on the Microsoft Nokia Transaction Conference Call (Sept 3, 2013 ) were able to clarify the analyses and critical views:
Tablets?
STEVE BALLMER: Tablets is an area where we absolutely have our own first-party hardware, as you know, and see opportunities to continue to build and strengthen. And it’s an area where we have very strong programs in place with our OEMs, particularly on the Intel Atom-processor-based product lines that people will really get a lot of value on, and you’ll see a range of new products coming for the holiday season.
Scaling Windows down?
TERRY MYERSON: It’s definitely a priority for us to bring Windows to as many customers as we can around the world. Lower-price phones is a strategic initiative for the next Windows Phone release, but we have nothing more really to say now.
Acquisition effect on the reorg?
STEVE BALLMER: No [effect], the reorg is absolutely intact. Obviously, the devices business has a broader scale and new capability. Julie Larson-Green, who is running devices and studios is flat out. We’ve got a lot of work we’re doing here over the next several months. And Julie and her team will work on a planning and integration phase. Julie will continue. She’s excited about working on devices, but absolutely, the critical mass of the group with that acquisition is in the phone space, and Stephen Elop will run the group and will take the appropriate steps with Julie working with Stephen to figure out appropriate integrations.
Windows Phones coming from OEMs in the future?
STEVE BALLMER: Today, Nokia, as I said, is well over 80 percent of all of our phones, and I don’t foresee that changing dramatically in the short run, but as the market grows, I expect to see additional percentages, if you will, go to our OEMs, but it’s premature to predict today. We definitely have interest from OEMs in the Windows Phone opportunity given that people understand we’re going to blaze the trails here with our own first-party hardware.
Cost rationalization over time?
STEVE BALLMER: Amy will take it. I do want to highlight that in many hardware companies, manufacturing labor is primarily outsourced. And Amy can remind us the numbers, but in Nokia, there is more in-sourced manufacturing. Nokia has had a strategy about that that, obviously, they’ve executed very well. But you kind of have apples and oranges a little bit between the 32,000 and our almost 100,000. But Amy, why don’t you provide some context and detail?
AMY HOOD: Sure. Thanks, Brent. About 18,000 of those 32,000 employees are really directly a part of the manufacturing business. And so I think a better way as you think about the scale and opportunity is to really focus on the percentage of Nokia outside of that.
I think both Steve and Stephen did a thoughtful job in the execution slide about talking about the philosophy we’re using as we go through the integration process around the benefits of the incremental sales force that we’re getting with Chris and his team, as well as really going through and being thoughtful about the rationalization so that we get to one voice, one brand, one team that can best execute and be efficient.
What was not possible that the acquisition enables now, or is it only ensuring a presence in the smartphone market for a long-term basis, i.e. ‘One Microsoft’ empowerment?
STEVE BALLMER: Well, the latter is certainly true. We see at least three distinct opportunities to do better as one company than as two.
Number one, we talk about one brand and the unified voice to the market. I will say that I think we can probably do better for consumer name than the Nokia Lumia Windows Phone 1020. And yet, because of where both companies are and the independent nature of the businesses, we haven’t been able to shorten that. Just take that as a proxy for a range of improvements that we feel we can make, we can simplify, the way in which we work with operators and the overall consumer branding and messaging gets much simpler. That is an efficiency of being one company.
On the innovation front, we’ve done a lot of great work together, and yet as two companies, there’s always some lines along which it’s hard to innovate. The Lumia 1020 is awesome in terms of what it has for camera and imaging, and yet I think as one company we would have doubled down on that bet and made an even greater range of software and services investments around the core hardware platform.
Third, I think we get business agility. As two companies, we’re making two independent sets of decisions about where and when and how to invest by country, by operator, by price point, and there is, let me say, an inefficiency financially as well as a lack of agility that comes with that.
So in all three of those areas, despite the fact that I think we’ve done a really good job, we can improve and accelerate quite noticeably.
How the much needed developer support for the fairly aggressive market share assumption will be ensured?
Note: the “fairly aggressive market share assumption” was presented by Microsoft as:
To which I added the following calculation and judgment in my analysis post:
15% of the 1.7B units in 2018 is 255M units. The ~$45 billion estimated revenue at that time means ~$176 ASP. Considering the latest Q2’13 EUR 157 [$207] ASP of Lumia it seems feasible, but in 5 years timeframe it needs a strong premium strategy to achieve that. … NPV – Net Present Value.
TERRY MYERSON: Well, for developers today, Windows offers an incredible opportunity with the installed base of PCs, phones, and tablets, and soon the new Xbox One. We want to offer them this opportunity to build either HTML5 applications or native applications that span all of those devices, enabling them to reach segments of users on those devices, users in an enterprise, users on a gaming console, and just provide them very unique opportunities to monetize their application investments.
So we’re pretty excited about the platforms we’re bringing to market. Developer reception in some areas is certainly better than others, but overall we’re making progress, and we know we’ve got a lot more work to do.
STEVE BALLMER: One of the keys, of course, is driving volume. We think we have differentiated products. We can tell the story a little bit better. We can get the volume up, and we have over 160,000 applications in the store. We know we have a long way to go, and the key is really offering with our own first-party applications and first-party hardware, enough reasons to buy to drive volumes and then attract the broader developer ecosystem.
Obviously, HTML5 would be kind of a neutral thing. I would expect all the major platforms to embrace it to some extent. And in some senses, it takes away a little bit of the apps barrier to entry, which we know we need to work hard on right now.
See also Microsoft Nokia Transaction Conference Call with slides from Microsoft Strategic Rationale inserted- ebook – 3-Sept-2013
edited by Sándor Nacsa from those two sources into an ebook format PDF
The real question around the web is: Can Microsoft do a better job as in Breakingviews: Nokia’s smart to take money & run [Reuters TV YouTube channel, Sept 3, 2013]
The view of an expert from IHS, a big business analysis firm, for comparison:
Microsoft & Nokia still face huge ‘brand and cool’ challenge – Gleeson [4-traders.com, 09/03/2013 | 12:30pm US/Eastern]
Microsoft buys Nokia’s handset business for $7.2 bln. Both companies will be hoping it heralds a new era, but overcoming brand weakness will be a huge challenge. For them both, says IHS Senior Mobile Analyst, Daniel Gleeson.
SHOWS: LONDON, ENGLAND, UK (REUTERS – ACCESS ALL) (SEPTEMBER 3, 2013)
1. IHS, SENIOR MOBILE ANALYST, DANIEL GLEESON, SAYING:
JOURNALIST ASKING DANIEL GLEESON: ‘Well is this a good deal for Nokia and is it enough to drag it into the 21st century?’
DANIEL GLEESON: ‘It is a big deal. Whether it’s not- I don’t think it is enough really. You’ve got two titans of the past really kind of clashing together. It does provide Microsoft with the ability to merge the handset and the software side of the mobile businesses together which gives it a better chance of breaking through. However I think Microsoft are probably being overambitious. Microsoft has stated that they’re aiming to get 15% of the smartphone market by 2018 which will be equivalent to somewhere in the region of more than 200 million smartphones. Given that the current Nokia smartphone run rate is somewhere in the region of 30 million units, that’s quite a lot of growth that they’re looking for and practically I don’t think that’s possible.
JOURNALIST: ‘So you don’t think that Apple and Samsung and the like will be quaking in their boots?’
DANIEL GLEESON: ‘Not at the moment. Microsoft had been very slow in developing the Windows Phone platform over the past few years. There’s been very little development on the software side. Most of the innovation on it has actually come from Nokia. So obviously the hope is that Nokia will be able to bring this innovation to Microsoft and spur on the software development. However, with the current reorganization that Microsoft is going through and the fact that Ballmer is going to be stepping aside at the end of the year or within the next 12 months, that is very uncertain. So it remains to be seen about how Microsoft can evolve and adapt to taking in the hardware unit.’
JOURNALIST: ‘Sorry, just going to say, Nokia’s shares rose almost 50% this morning. But the company as we all know is still a shadow of its former self.’
DANIEL GLEESON: ‘Yeah, it very much is. It used- obviously a couple of years ago Nokia was the largest smartphone and handset vendor in the world. It is now I think like behind the many Chinese, smaller Chinese companies in terms of smartphone shipments and dropping rapidly in terms of the handset market. What we see though is that Nokia does have a good future with its NSN business, its network vendoring business. That’s after going through major turnaround over the past while and then past four quarters it’s managed to turn a profit on that. So that’s going to be the future that Nokia’s looking at and that part of the business is looking bright.’
JOURNALIST: ‘Does this deal do anything to address I suppose what is fundamental certainly in the public’s perception of both companies, the fundamental premise that neither brand is cool in anyway whatsoever. I mean the brands are very, very weak. Does this do anything to address that?’
DANIEL GLEESON: ‘Fundamentally it doesn’t because as you said this is just simply the uniting of two uncool brands. This doesn’t make it any better. It’s going to take a lot of investment from Microsoft to try to turn that brand around. Of course the upside of it is Microsoft has much deeper pockets to do this than Nokia on its own would have. So you are in the situation where Microsoft was funneling a lot of cash into Nokia anyway to try to support the smartphone unit. So Microsoft presumably just by taking it in-house is just absorbing that cost and it’s going to be able to push even more money into it to try to build that brand and to make it better in the future.’
And here is a similar view of an executive from a Danish online investment bank, Saxo Bank: The Nokia deal: What’s Microsoft thinking? [TradingFloorCom YouTube channel, Sept 3, 2013]
Why has Microsoft agreed to buy Nokia’s moible phone business for more than five billion euros? It’s somewhat perplexing to Saxo Bank’s Head of Equity Strategy, Peter Garnry. It’s a great deal for the struggling Finish handset maker, he says. But he has real concerns about how good it will be for Microsoft, one of the world’s leading technology players. Nokia shares rose by around 45% on the open on Tuesday. Peter says it’s also really good news for the company’s bond holders as the company was hemorrhaging cash. However, Peter says Microsoft have paid a lot of money in this deal, which is due to be finalised next year. He says they’re still not as good a hardware company as Samsung or Apple and he adds that nine out of ten acquisitions do not fulfill synergy expectations. He says it’ll be very difficult for Microsoft to integrate Nokia into its business and move it foreward. So where does this leave rival Blackberry, which is already struggling to compete on the smartphone market? Peter says the company should start focusing on what they are good; mobile security and increase shareholder value that way. Nokia’s phone business marks the exit of a 150-year-old company that once dominated the global cellphone market.
The stock market reaction is discussed further in Investors cautious over Microsoft move on Nokia and how one man got his lost bags delivered [FRANCE 24 English YouTube channel, Sept 4, 2013]
Full text of Q&A part of the
Transcript of Microsoft Nokia Transaction Conference Call: Steve Ballmer, Stephen Elop, Brad Smith, Terry Myerson, Amy Hood; September 3, 2013 [Microsoft, Sept 3, 2013] to have the full Q&A context
OPERATOR: Walter Pritchard, Citigroup, your line is open.
WALTER PRITCHARD: Great. Thanks for taking the question. Steve Ballmer, on the tablet side, obviously, we could say many of the same things as you’ve put into this slide deck as rationale for doing an acquisition on the phone side as we could say about the tablet side including picking up more gross margin.
I’m wondering how this transaction impacts the strategy going forward in tablets and whether or not you need to, in a sense, double down further on first-party hardware in the tablet market. And then just have one follow up.
STEVE BALLMER: Okay. Terry, do you want to talk a little bit about that? That would be great.
TERRY MYERSON: Well, phones and tablets are definitely a continuum. You know, we see the phone products growing up, the screen sizes and the user experience we have on the phones. We’ve now made that available in our Windows tablets, our application platform spans from phone to tablet. And I think it’s fair to say that our customers are expecting us to offer great tablets that look and feel and act in every way like our phones. We’ll be pursuing a strategy along those lines.
STEVE BALLMER: Tablets is an area where we absolutely have our own first-party hardware, as you know, and see opportunities to continue to build and strengthen. And it’s an area where we have very strong programs in place with our OEMs, particularly on the Intel Atom-processor-based product lines that people will really get a lot of value on, and you’ll see a range of new products coming for the holiday season.
WALTER PRITCHARD: And then, Terry, can you talk about just the ability to scale Windows down? Obviously, Nokia has a large base of very low-price feature phones. That base may be sort of dwindling over time, but you’ve been cost-reducing Windows, the specs and so forth, to be able to get Windows down to low-price devices. Can you talk about any efforts to accelerate that process given potentially access to a much bigger pool of low-cost phones that are out there already?
TERRY MYERSON: It’s definitely a priority for us to bring Windows to as many customers as we can around the world. Lower-price phones is a strategic initiative for the next Windows Phone release, but we have nothing more really to say now.
STEVE BALLMER: Operator, we’ll move to the next question please, thanks, Walter.
(Break for direction.)
OPERATOR: Our next question is from Mark Moerdler from Sanford Bernstein, your line is open.
MARK MOERDLER: Thank you. Steve Ballmer, two questions: The first one is how does this affect the reorg? Given hardware was in one group and operating systems in another, software in another, does the Nokia device — does the merger affect that? Does it merge into the hardware business, and hardware/content device group? Or does this now change that? And then I have a follow up.
STEVE BALLMER: No, the reorg is absolutely intact. Obviously, the devices business has a broader scale and new capability. Julie Larson-Green, who is running devices and studios is flat out. We’ve got a lot of work we’re doing here over the next several months. And Julie and her team will work on a planning and integration phase. Julie will continue. She’s excited about working on devices, but absolutely, the critical mass of the group with that acquisition is in the phone space, and Stephen Elop will run the group and will take the appropriate steps with Julie working with Stephen to figure out appropriate integrations.
MARK MOERDLER: Excellent. And then as follow up on it, what’s your expectation going forward in terms of — I just want to clarify this — the percentage of Windows Phones that will be from OEMs?
STEVE BALLMER: Today, Nokia, as I said, is well over 80 percent of all of our phones, and I don’t foresee that changing dramatically in the short run, but as the market grows, I expect to see additional percentages, if you will, go to our OEMs, but it’s premature to predict today. We definitely have interest from OEMs in the Windows Phone opportunity given that people understand we’re going to blaze the trails here with our own first-party hardware.
MARK MOERDLER: Thank you very much, appreciate it.
CHRIS SUH: Thanks, Mark. I just want to remind you, we do want to get to as many questions from as many of you as we can. So I do ask that you please just stick to one question and avoid long, or multi-part questions, please. Operator, next question, please.
OPERATOR: Brent Thill, UBS, your line is open.
BRENT THILL: Thanks. Just on the cost rationalization. Nokia has 32,000 employees versus Microsoft at 99,000. A considerable bulk of employees. Can you just talk about the rationalization over time and your view how that plays out?
STEVE BALLMER: Amy will take it. I do want to highlight that in many hardware companies, manufacturing labor is primarily outsourced. And Amy can remind us the numbers, but in Nokia, there is more in-sourced manufacturing. Nokia has had a strategy about that that, obviously, they’ve executed very well. But you kind of have apples and oranges a little bit between the 32,000 and our almost 100,000. But Amy, why don’t you provide some context and detail?
AMY HOOD: Sure. Thanks, Brent. About 18,000 of those 32,000 employees are really directly a part of the manufacturing business. And so I think a better way as you think about the scale and opportunity is to really focus on the percentage of Nokia outside of that.
I think both Steve and Stephen did a thoughtful job in the execution slide about talking about the philosophy we’re using as we go through the integration process around the benefits of the incremental sales force that we’re getting with Chris and his team, as well as really going through and being thoughtful about the rationalization so that we get to one voice, one brand, one team that can best execute and be efficient.
CHRIS SUH: Thanks, Amy. Next question, please, operator.
OPERATOR: Keith Weiss, Morgan Stanley, your line is open.
KEITH WEISS: Thank you guys for taking the question. You guys have talked about the success and the partnership to date in putting out some really good products. I was wondering, Steve, perhaps you could give us some concrete example of what does the acquisition enable you to do that you guys couldn’t do through the partnership? And maybe give us some more concrete examples there. Or is that maybe not the point? Maybe the point is more so that this really solidifies Microsoft’s presence in the smart phone market, and this is more about ensuring that you guys are going to be a presence here for a long-term basis.
STEVE BALLMER: Well, the latter is certainly true. We see at least three distinct opportunities to do better as one company than as two.
Number one, we talk about one brand and the unified voice to the market. I will say that I think we can probably do better for consumer name than the Nokia Lumia Windows Phone 1020. And yet, because of where both companies are and the independent nature of the businesses, we haven’t been able to shorten that. Just take that as a proxy for a range of improvements that we feel we can make, we can simplify, the way in which we work with operators and the overall consumer branding and messaging gets much simpler. That is an efficiency of being one company.
On the innovation front, we’ve done a lot of great work together, and yet as two companies, there’s always some lines along which it’s hard to innovate. The Lumia 1020 is awesome in terms of what it has for camera and imaging, and yet I think as one company we would have doubled down on that bet and made an even greater range of software and services investments around the core hardware platform.
Third, I think we get business agility. As two companies, we’re making two independent sets of decisions about where and when and how to invest by country, by operator, by price point, and there is, let me say, an inefficiency financially as well as a lack of agility that comes with that.
So in all three of those areas, despite the fact that I think we’ve done a really good job, we can improve and accelerate quite noticeably.
KEITH WEISS: Excellent, thank you.
CHRIS SUH: Thanks, Keith. Operator, I think we have time for two more questions, next question, please.
OPERATOR: Rolfe Winkler, Wall Street Journal, your line is open.
ROLFE WINKLER: Hi, you guys have 15 percent, a fairly aggressive market share assumption for where you guys are going to go in a few years. I guess I’m wondering, to get there, one thing you’re going to need is a lot of developer support. Developers already have IOS, Android — you can make an argument that HTML5 over the next few years will grow, that will give them a third development platform. How will you guys convince them to develop for Windows Phone?
STEVE BALLMER: Terry, why don’t you talk a little bit about developers, if you don’t mind?
TERRY MYERSON: Well, for developers today, Windows offers an incredible opportunity with the installed base of PCs, phones, and tablets, and soon the new Xbox One. We want to offer them this opportunity to build either HTML5 applications or native applications that span all of those devices, enabling them to reach segments of users on those devices, users in an enterprise, users on a gaming console, and just provide them very unique opportunities to monetize their application investments.
So we’re pretty excited about the platforms we’re bringing to market. Developer reception in some areas is certainly better than others, but overall we’re making progress, and we know we’ve got a lot more work to do.
STEVE BALLMER: One of the keys, of course, is driving volume. We think we have differentiated products. We can tell the story a little bit better. We can get the volume up, and we have over 160,000 applications in the store. We know we have a long way to go, and the key is really offering with our own first-party applications and first-party hardware, enough reasons to buy to drive volumes and then attract the broader developer ecosystem.
Obviously, HTML5 would be kind of a neutral thing. I would expect all the major platforms to embrace it to some extent. And in some senses, it takes away a little bit of the apps barrier to entry, which we know we need to work hard on right now.
CHRIS SUH: Thanks. Operator, let’s move to the last question, please.
OPERATOR: Our last question comes from Rick Sherlund.
RICK SHERLUND: Thanks. I wonder if you could just share with us whether ValueAct was made aware of this before they entered their cooperation and standstill agreement.
STEVE BALLMER: Brad, do you want to take that?
BRAD SMITH: The answer is no. You would not expect the company to disclose material, non-public information to an entity that doesn’t have an appropriate non-disclosure agreement. So the answer is no.
RICK SHERLUND: Okay, thank you.
CHRIS SUH: Okay, so that will wrap up our call today. Thank you, again, for joining us. We look forward to seeing many of you at our financial analyst meeting, which will be held on September 19th. Thanks again.
END
How the device play will unfold in the new Microsoft organization?
After the Microsoft reorg for delivering/supporting high-value experiences/activities the Devices and Studios Engineering Group lead by Julie Larson-Green will have undoubtable the far biggest challenge of all hardware development and supply chain from the smallest to the largest devices Microsoft builds. What I found below is that the conceptual structure developed by Microsoft might have much greater chance of success in general, and Julie Larson-Green is much better in meeting that challenge, in particular, than what I thought previously about her.
In Steve Ballmer and Microsoft Senior Leadership Team: One Microsoft Conference Call [Microsoft News Center, July 11, 2013] the internal part of the challenge was briefly described as:
ADRIANNE JEFFRIES, The Verge: Hi, thanks so much. My question is, Steve, with Julie and Terry leading separate software and hardware teams, how do you feel you can bring devices to the market in a way that Apple and other competitors do? Will they work closely enough and collaboratively enough to compete with Apple?
JULIE LARSON-GREEN: I think it’s a perfect way for us to approach it. Terry [Myerson leading the Operating Systems Engineering Group] and I have worked together for a long time. We both have worked on the operating system side. I’ve worked on the hardware side [as well since joined the Windows division in H2 2006 as CVP of program management for the Windows Experience], and it’s a good blending of our skills and our teams to deliver things together.
So the structure that we’re putting in place for the whole company is about working across the different disciplines and having product champions.
So Terry and I will be working to lead delivery to market of our first-party and third-party devices.
STEVE BALLMER: Yes, and maybe just also have Tony Bates [leading Business Development and Evangelism Group with dotted line management of the OEM business in the COO/SMSG] add a little bit. Tony is going to have a critical role running business development evangelism, our role with our hardware innovation partners, our OEMs.
TONY BATES: Yes, I would just add to that. Julie alluded to this — first party, there’s also a third party — and I think having a single interface to our key innovation partners [which is one of the roles of his group], but two bringing together the way we think about offers with our partners is going to be absolutely critical. So when we think about how we work together, I think of going back to one strategy, one team. So we’re all going to be part of that. It’s going to be critical that we have that interface going forward.
ADRIANNE JEFFRIES: And is Terry there?
TERRY MYERSON: Yes. I thought Julie and Tony had it very well said. We’ve got innovative ideas coming from our OEM partners, and Julie’s team has some very innovative ideas. And the platform [engineered by his group] needs to span from the PPI whiteboard that Tony talked about to Xbox, to our phone, and beyond. So it’s exciting to have all these hardware partners in the Windows ecosystem, or in the Microsoft ecosystem, and all the innovative ideas and to bring it to market together.
Regarding the product and high-value scenario champions’ role:
From: One Microsoft: Company realigns to enable innovation at greater speed, efficiency
One Strategy, One Microsoft
We are rallying behind a single strategy as one company — not a collection of divisional strategies. Although we will deliver multiple devices and services to execute and monetize the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands. We will allocate resources and build devices and services that provide compelling, integrated experiences across the many screens in our lives, with maximum return to shareholders. All parts of the company will share and contribute to the success of core offerings, like Windows, Windows Phone, Xbox, Surface, Office 365 and our EA offer, Bing, Skype, Dynamics, Azure and our servers. All parts of the company will contribute to activating high-value experiences for our customers.
We will reshape how we interact with our customers, developers and key innovation partners, delivering a more coherent message and family of product offerings. The evangelism and business development team will drive partners across our integrated strategy and its execution. Our marketing, advertising and all our customer interaction will be designed to reflect one company with integrated approaches to our consumer and business marketplaces.
How we organize our engineering efforts will also change to reflect this strategy. We will pull together disparate engineering efforts today into a coherent set of our high-value activities. This will enable us to deliver the most capability — and be most efficient in development and operations — with the greatest coherence to all our key customers. We will plan across the company, so we can better deliver compelling integrated devices and services for the high-value experiences and core technologies around which we organize. This new planning approach will look at both the short-term deliverables and long-term initiatives needed to meet the shipment cadences of both Microsoft and third-party devices and our services.
…
How We Work
The final piece of the puzzle is how we work together and what characteristics this new Microsoft must embody. There is a process element and a culture element to discuss.
Process wise, each major initiative of the company (product or high-value scenario) will have a team that spans groups to ensure we succeed against our goals. Our strategy will drive what initiatives we agree and commit to at my staff meetings. Most disciplines and product groups will have a core that delivers key technology or services and then a piece that lines up with the initiatives. Each major initiative will have a champion who will be a direct report to me or one of my direct reports. The champion will organize to drive a cross-company team for success, but my whole staff will have commitment to the initiative’s success. We will also have outgrowths on those major initiatives that may involve only a single product group. Certainly, succeeding with mobile devices, Windows, Office 365 and Azure will be foundational. Xbox and Bing will also be key future contributors to financial success. Our focus on high-value activities — serious fun, meetings, tasks, research, information assurance and IT/Dev workloads — also will get top-level championship.
Culturally, our core values don’t change, but how we express them and act day to day must evolve so we work together to win. The keys are the following:
Nimble
In a world of continuous services, the timeframe for product releases, customer interaction and competitive response is dramatically shorter. As a company, we need to make the right decisions, and make them more quickly, balancing all the customer and business imperatives. Each employee must be able to solve problems more quickly and with more real-time data than in the past.
Communicative
In the new, rapid-turn world, we need to communicate in ways that don’t just exchange information but drive agility, action, ownership and accountability.
Collaborative
Collaborative doesn’t just mean “easy to get along with.” Collaboration means the ability to coordinate effectively, within and among teams, to get results, build better products faster, and drive customer and shareholder value.
Decisive
As a global company with literally billions of diverse customers in an accelerating business environment, we must have a clear strategic direction but also empower employees closest to the customer to make decisions in service of the larger mission. This is tricky in a big company, but it is the key to higher levels of productivity, growth and customer satisfaction.
Motivated
In our industry, every day brings more challenges and more opportunities than the day before. But we have a unique chance to make the lives of billions of people better in fundamental ways. This should inspire all of us — those who love making products and services, those who love engaging with customers, and those who love planning and running our company in the most effective way possible. We want people who get up each morning excited to make Microsoft better — that’s how we come closer to fulfilling the potential of all people around the globe.
Our leadership team has discussed these cultural aspects a lot and is committed. In my own staff meetings, we are modeling these new characteristics yet also find ourselves occasionally slipping back. One strategy, united together, with great communication, decisiveness and positive energy is the only way to fly.
From Steve Ballmer and Microsoft Senior Leadership Team: One Microsoft Conference Call [Microsoft News Center, July 11, 2013]
In order to execute then on this one Microsoft strategy, we’re organizing by discipline and by engineering area.
Of course, at the end of the day, we have to deliver great products, a great family of devices and services and experiences that help people realize high-value activities.
So we will have teams that function across the company and across engineering areas to deliver on a high-value experience or device type like Windows, which literally has engineering content already today from our entire company, and involvement from a variety of innovation partners.
So we have the notion today that teams work across the company. That’s fundamental. But we’ll formalize, we’ll organize by discipline, and we’ll have product champions who bring together our cross-company teams to deliver our core products and high-value scenarios.
…
RICHARD WATERS, Financial Times: Thank you. Hello. Does this mean that senior managers won’t have direct profit/loss account responsibility that they might have had before? And, if so, how are you going to hold people accountable, and what kind of measures are you going to use; what kind of incentives and measures are actually going to make this new senior management team work?
STEVE BALLMER: Suffice it to say, the level of accountability we all feel for the success of the company rises when we all have to look at the company’s integrated profitability. I’ll let Amy talk a little bit about sort of the concepts. I don’t know that we’ll go into the specifics, but the concepts in terms of how we’re thinking. And there are pieces, obviously, that will have to have attention.
When it comes time to how we’re doing with our consulting business, which is a multibillion dollar business that doesn’t get discussed much, I think we’re all pretty clear. Kevin is on point. He thinks about it. He lives it. He eats it. He breathes it. He sleeps it every day. And I sleep well knowing that. There will be pieces, but I think the problem we’ve had in a sense — not the problem, but the opportunity we have — is if you subdivide the thing into too fine a set of parts you don’t think about your R&D investments as a general corporate resource that should be repurposed and used very broadly. It’s my resources, my business, and so this notion even from a P&L and resourcing perspective of getting to a one Microsoft strategy is very important, and yet we need to have strong financial accountability, and maybe Amy can talk about that.
AMY HOOD: Yes, I would not say that I wouldn’t necessarily associate this new org chart to any reduction in accountability from a financial perspective. I think we have always thought about personal accountability around this table to product success. And I think that will not change in the new organizational structure. Steve’s used words like that already. I think whether we call it accountability or a P&L or financial accountability, it will still remain just as it has in the past.
In such a setup Julie Larson-Green’s group will have an absolutely critical place to succeed with Microsoft powered or pure Microsoft devices on the market. Would Larsen-Green up to that task? What follows below is all the necessary evidence to judge for yourself:
Interview: Windows President Julie Larson-Green [ABC News, Nov 13, 2012]
From Operating Segments of the 2012 [FY12] Annual Report:
Windows & Windows Live Division (“Windows Division”) develops and markets PC operating systems, related software and online services, and PC hardware products. … approximately 75% of total Windows Division revenue comes from Windows operating system software purchased by original equipment manufacturers (“OEMs”), which they pre-install on equipment they sell. In addition to PC market volume changes …
Principal Products and Services: Windows 7 operating system; Windows Live suite of applications and web services; and PC hardware products. …
From Note 21 – Segment Information and Geographic Data of the Notes to Financial Statements of the 2012 Annual Report:
(In millions) FY12 FY11 FY10 Revenue: $ 18,818 $ 18,787 $ 18,789 Operating Income: $ 11,908 $ 11,971 $ 12,193
Windows 8 Charms Developers with New Touch Experiences [WindowsVideos YouTube channel, Sept 13, 2011]
More to view from Julie Larson-Green: Microsoft Reimagines Windows, Presents Windows 8 Developer Preview [WindowsVideos YouTube channel, Sept 13, 2011]
Interview with Julie Larson-Green about Office 2007 and Windows 7 [BryZad YouTube channel, Nov 21, 2009]
D6 Conference Windows 7 Multi Touch Keynote Demo [AllTingsD, May 28, 2008]
Julie Larson-Green [Microsoft TCN –Awards and Recognitions, Feb 28, 2010]
2008 Outstanding Technical Leadership
In revamping the interface of Microsoft Office 2007, Larson-Green effected a paradigm shift in one of the company’s most successful products.
“At first, no one wanted to change Office dramatically,” says Julie Larson-Green, who was tasked with overseeing a reimagining of the product’s end-user interaction and overall experience in the fall of 2003. Larson-Green’s leadership of Microsoft Office 2007’s redesign, the most radical revamp in the product’s history, required immense courage and conviction, to which this award attests.
A specialist in user-interface design, Larson-Green began working with Office in 1997, when she program-managed FrontPage. She subsequently helmed UI design for Office XP and Office 2003, which had evolved into a large organization of carefully negotiated compromises among the application suite’s various programs. Although Office’s great success was based on customer familiarity, the Customer Experience Improvement Program was indicating that users, while basically happy with the product, were increasingly either unaware of (possibly redundant) functions among Office’s different programs or frustrated by the amount of training necessary to use an astonishingly complex set of commands, dialogs, and interaction modes.
After deciding that Office needed to be made easier to use, Larson-Green’s team arrived at the elegant solution of the browsable Ribbon (or Office Fluent user interface) and its contextual cousins that united the product’s common capabilities and ease of experimentation. “The breakthrough,” Larson-Green says, “arrived with contextualizing the user interface and realizing that all of the product’s features didn’t have to be present all the time.”
SELLING THE REDESIGN
As development of Office 2007 proceeded, Larson-Green was confronted with the equally formidable task of selling the redesign across Office’s various programs. “Our biggest challenge,” she says, “was convincing people that we had an idea that would work.” Heavily invested in the earlier version, the Word, Excel, Outlook, and other organizations were initially reluctant to relegate control to an umbrella design team. Even more significant, Larson-Green had decided not to compromise the integrity of Office 2007 with the safety net of a “classic mode.”
It’s difficult to change the direction of a large organization at the best of times. It’s even more difficult when the goal is still incomplete. Larson-Green’s ability to argue her vision without necessarily being able to address myriad objections in detail is a remarkable trait in a data-driven culture such as Microsoft’s. One by one, however, the suite’s principals bought into the design as it was being tested and fleshed out.
Office 2007 shipped to nearly universal critical acclaim in January 2007, and Larson-Green was promoted to corporate vice president of program management for the Windows Experience. As with Office 2007, she plans to identify and solve customer problems, which will in turn drive a new design and its subsequent engineering. “In the old world,” she notes, “coding would start and design would kind of evolve with the coding.”
COLLABORATIVE EFFORTS
Flattered by her nomination for the Outstanding Technical Leadership Award, Larson-Green admits to shock at winning. “I was very pleased,” she says, “but also kind of embarrassed. I may have been the ringleader, but I couldn’t have done it without a lot of help from a lot of people.” She cites principal Office User Experience Team Program Manager Jensen Harris, Product Design Manager Brad Weed, General Manager Dave Barthol, and Test Manager Sean Adridge as key collaborators.
As for the prize, Larson-Green will treat its dispensation as a family affair. “Unless we all agree on one, we’re going to split the award and each pick a charity,” she says. “My seven-year-old son has already decided he wants to do something with animals. My fifteen-year-old daughter wants to do something with children. And my economist husband is doing all the research on how much money goes to programs versus administration.”
The Ribbon in Microsoft Office 2007 New Features & Upgrades [mydigitalworks YouTube channel, March 18, 2008]
- Q&A: Microsoft Showcases New User Interface for Office “12” Core Applications [Microsoft feature story, Sept 13, 2005] PressPass spoke with Julie Larson-Green, group program manager for the Office User Experience at Microsoft.
- HIGHLY RECOMMENDED: Microsoft Office 2007: The Story of the Ribbon [10 videos, each 10” long on the creativecrewchannel YouTube channel, Jan 11, 2009]
From Julie Larson Green BIO [Microsoft, Oct 25, 2012]
Larson-Green joined Microsoft in 1993 and has focused on technical design and development throughout her career. As a program manager in Development Tools and Languages, she was instrumental in several releases of Visual C++ for 32-bit operating systems and led the development of Microsoft’s first customizable integrated development environment for Windows. Moving to the Windows team, she was responsible for the Internet Explorer 3.0 and Internet Explorer 4.0 user experiences, including features related to the Web-integrated Windows desktop.
Continuing her focus on end-user software, Larson-Green joined the Office team in 1997 and led program management for Microsoft SharePoint and Microsoft FrontPage, including the early work in information worker servers. More recently, she has been responsible for leading the user interface design for Microsoft Office XP, Microsoft Office 2003 and the 2007 Microsoft Office system, which was lauded for its innovative reinvention of the user experience for productivity software.
…
Before joining Microsoft, Larson-Green was a senior development engineer at a Seattle-based company [Aldus] that created leading desktop publishing software. She has a master’s degree in software engineering from Seattle University and a bachelor’s degree in business administration from Western Washington University. A native of Washington state, she lives there with her husband, who is a university professor, and her two children.
From The Rise of Julie Larson-Green, the Heir Apparent at Microsoft [Wired, July 11, 2013]
Today’s promotion is just the latest leap for Larson-Green. Most recently, she replaced her longtime boss and mentor, Steven Sinofsky, to become engineering head of Windows this past November, jumping two rungs up the ladder. Unlike the notoriously prickly Sinofsky, Larson-Green is known for her communication skills and ability to work well with others, uniting people, including those outside her own purview, around a common goal.
But if you step back a bit, her biography has been a story of tenacity and persistence in pursuit of a closely-held personal mission to reshape how the world uses computers, according to various press reports, public appearances by Larson-Green, and Microsoft in-house media.
…
[When applying for a Microsoft position in 1993, being a development lead in Aldus] Larson-Green found herself in the potentially embarrassing situation of giving a frank assessment of the weaknesses and strengths of software code compilers made by Microsoft, along with those made by Microsoft rival Borland, to a room that turned out to be dotted with Microsoft staffers. But the Microsofties were impressed, and soon roped Larson-Green into a gig helping to oversee the development of Microsoft’s Visual C++ — just the sort of software development tool she had critiqued.
…
It’s hard not to wonder whether Larson-Green will end up replacing a controversial boss once again, if and when Ballmer leaves the company. The longtime Microsoft sales executive has been rightly criticized for allowing once-catatonic rival Apple to surpass Microsoft in driving the growth of personal computing, first through music players and now via smartphones and tablets.
And it’s interesting that when asked about replacing Ballmer at Wired’s business conference this past May (see video below), Larson-Green was uncharacteristically blunt. “I wouldn’t rule it out, but I’m not in a hurry,” Larson Green said. “Give me a year and ask me again.”
[you can reach the video here]
From Bodyslams at Microsoft Prepared Larson-Green for Overhaul [Bloomberg, July 12, 2013]
Julie Larson-Green body-slammed a 6-foot-6 colleague who was blocking her exit one day in 2001 when the largest earthquake to hit Washington state in a half century rattled her office.
“When I have a direction I want to go, it doesn’t matter who’s in my way,” said Larson-Green, 51, who started at Microsoft 20 years ago and is the company’s highest-ranking female engineering executive.
…
Jensen Harris, the Microsoft software designer who Larson-Green shoved out of the way during the 2001 earthquake — even though she’s about a foot shorter than he is — said she makes quick work of any obstacle. The temblor “was my first experience with Julie,” said Harris, who has worked for her for the past 10 years overhauling Office and Windows. “Julie has this immediate ability to cut through things.”
…
Rene Haas, vice president and general manager of computing products at Nvidia Corp. (NVDA), which makes the chip for one of the Surface tablet’s two models, said while Larson-Green is capable, “It’s not a small task for anybody.”
Maria Klawe, a Microsoft board member and president of Harvey Mudd College, said Larson-Green will do fine. “Software-hardware integration is one of the really exciting things going on in the world right now and you really need people who can cross that boundary,” said Klawe.
…
Ballmer praised Larson-Green’s ability to play well with others, a skill he said was critical to Microsoft’s future success.
Larson-Green put that skill into practice last fall when she convened design and program management executives from various products and plied them with pricey wine. Then she pitched teams like those overseeing the Bing search engine on putting their other priorities on hold to build for Windows.
With a 15-minute conversation, she won over Derrick Connell, a Bing vice president who had never met her before. He gave Larson-Green 20 percent of his staff for six months to build the new search app in Windows 8.1. It was a big project on a short time frame.
“I trust that you will do it,” Connell said she told him. “We’ve worked harder to make sure we delivered on that trust.”
Microsoft will now have to move even faster and get things right the first time, Larson-Green said. She said she “hates that stereotype” that has trailed Microsoft for decades — that the company only gets it right on version 3.0.
“You really only get to sell something one time,” she said. “We shouldn’t do it unless we think it’s great.”
Then the functionally separate COO/SMSG under Kevin Turner will play a crucial role in the devices success, and not only because of its internal OEM part. Here is the background information on that functional organization in order to assess its importance for yourself:
Sales, Marketing and Services Group (SMSG): – SMSG employs more than 45,000 people and is responsible for Microsoft sales, marketing, and service initiatives; customer and partner programs; and product support and consulting services worldwide [2009]
– SMSG is one of the core groups at Microsoft and stands for “Sales, Marketing, Services, IT & Operations Group”. Shortened you can get Sales Marketing and Services Group (IT & Operations are actually part of the Services division). [2011]
– As Microsoft’s chief operating officer (COO), Kevin Turner leads the company’s global sales, marketing and services organization of more than 47,000 employees in more than 190 countries. Under his leadership, the sales and marketing group delivered more than $77 billion in revenue in fiscal 2012. Turner oversees worldwide sales, field marketing, services, support and partner channels as well Microsoft Stores and corporate support functions including Information Technology, Worldwide Licensing & Pricing and [Commercial] Operations. The sales and marketing organization is focused on delivering Microsoft’s family of devices and services to customers and partners all over the world. [2013]
- Enterprise and Partner Group (EPG)
- Small and Midmarket Solutions & Partners (SMS&P), see also Microsoft Small and Midsize Business Pressroom
- Public Sector Groups (PSG): Education, Public Safety & National Security, Government, Health, International Organizations see also Worldwide Public Sector Virtual Presskit
- Communications Sector
- Enterprise Services (Services)
- Original Equipment Manufacturer (OEM)
- Worldwide Licensing and Pricing (WWLP)
- Marketing and Operation (M&O)
- Consumer & Online (C&O)
According to [Microsoft] Worldwide Marketing & Operations as of July 14, 2013: How exciting would it be to have a global view of the largest software company in the world, and help optimize go-to-market strategy and operations execution? The WW M&O organization does just that by integrating business, marketing, and operational leadership globally. We combine our consumer and commercial marketing into a single organization, and serve as the center of gravity for subsidiary marketing and operations. We align our corporate assets and talent to spark innovation, drive growth, win share and improve the customer and partner experience.
According to Sales Jobs at Microsoft as of July 14, 2013, with added overall/marketing descriptions when available:
- Microsoft Enterprise [and] Partner Group (EPG), Sales: Our enterprise customers call our Worldwide Enterprise and Partner Group their trusted advisors. We help these customers strengthen their own customer relationships, lower their costs, and build a strategic advantage.
- Microsoft Enterprise Services, Sales: We solve problems. What could be better than helping a customer discover a technology or service that solves a pressing business problem? Or that makes a life easier, richer, or more rewarding? Those are a winning scenarios for everyone—for the customer you satisfy, for our company, and for you—the person who solves the problem and makes the sale. That’s Enterprise Services Sales at Microsoft.
- Microsoft Enterprise Services, Overall: We are the consulting and enterprise support division of Microsoft. We help businesses around the world get a maximized return on their investment in Microsoft products and technologies. This means not only helping with deploying and optimizing IT, but also helping businesses move forward with IT initiatives that deliver the most business value. We have a global team of more than 9,720 professionals in 88 countries, we help a large number of customers worldwide achieve their business objectives each year. Why do so many businesses and individuals trust us to help them save money and improve their profitability? Because we are the experts at accelerating the adoption and productive use of Microsoft products and technologies. Our goal is to empower our customers to succeed. We help our customers get the most out of existing IT assets, saving them money and delivering real business results. We are committed to the transfer of knowledge so that our customers can drive the success of projects through best practices, intellectual property, and key insights from thousands of Microsoft Services engagements worldwide. When it comes to support, we never forget that our customers’ business and their success comes first.
- Microsoft Original Equipment Manufacturer (OEM), Sales: We solve problems and engage with strategic Original Equipment Manufacturers (OEM) to identify and drive efficiencies, best practices, product improvements and consumer loyalty.
- Microsoft Original Equipment Manufacturers (OEM), Overall: Tablets, Smartphones, Laptops, Netbooks, Desktops, Smart TVs…the device business is exciting, fast-paced & rapidly changing. We help Microsoft partners to design & sell the latest hardware solutions featuring Win7, Win8, Windows Phone, Server, Office & Bing. If you’re passionate about impacting the global ecosystem of partners, and influencing the experience on the 100’s of millions of devices that ship every year, then this is the team for you. Check out exciting opportunities in engineering, marketing, business development and policy.
- Microsoft Public Sector, Sales1: The Worldwide Public Sector team focuses on truly partnering with customers and partners in Government, Health and Education industries in new and innovative ways. This effort includes not only working on projects and programs important to them, but also staying focused on establishing Framework Agreements that are all-encompassing.
- Microsoft Public Sector, Sales2: For more than 30 years Microsoft has provided technology solutions for Public Sector organizations globally. Microsoft, along with our partner ecosystem, addresses the most complex, mission-critical technology issues for the government (federal, state and local), education (K-12 and universities) and healthcare (hospitals, physicians’ offices and other Health & Life Sciences organizations). The global Public Sector has made huge investments in our products to create practical, cost-effective solutions.
- Microsoft Small and Midmarket Solutions & Partners (SMSP / SMS&P), Sales: Our Small & Mid-market Solutions and Partners team ensures that we and our ecosystem of partners deliver technology solutions that meet the unique needs of small and medium businesses and home consumers.
- Microsoft Small and Midmarket Solutions & Partners (SMSP / SMS&P), Overall: Small & Mid-market Solutions and Partners works with our ecosystem of partners, including system integrators, resellers, distributors, hosters, managed service providers and readiness partners, to deliver technology solutions that meet the unique needs of our customers. The SMS&P team is responsible for selling the broad spectrum of Microsoft products and cloud services, an exciting growth area for both Microsoft.
- Microsoft Worldwide Licensing and Pricing (WWLP), Sales and Overall: World Wide Licensing and Pricing Group (WWLP) is accountable for leading and orchestrating the business groups, segments and field in global development and implementation of licensing business models that make it easy for customers to acquire, use, and manage Volume Licensing products while maximizing synergy among all business groups across Microsoft.
- Microsoft Communications Sector, Sales: The Communications Sector is responsible for driving the sales and marketing of Microsoft services and innovative software-based solutions to telecommunications, hosting, media and entertainment companies.
- Microsoft Consumer & Online (C&O), Sales = Marketing: Each day, more people are spending more time online—always connected, using multiple devices. The goal of Consumer & Online (C&O) is to build consumer loyalty and enable a seamless consumer experience across Windows, mobile devices, and online properties. We couldn’t do this without close cooperation of a broad network of retail and online partners, PC and device manufacturers, advertisers, and publishers. You’ll find all kinds of talent in C&O: content development, marketing, advertising sales, business development, operations, and technical. We offer world-class advertising sales, consumer marketing, and creative services to our partners and advertisers. We help them build consumer loyalty by targeting their unique styles and needs. Our consumer marketing team is also responsible for evangelizing the breadth and value of Microsoft’s consumer offerings including Windows, Windows Mobile, MSN, Windows Live (which includes Hotmail and Messenger), Bing, and other advertising-supported services. Our business is to help consumers experience a “Life without Walls,” and we hire outstanding people to do so.
Microsoft: With cloud services investments starting to pay off Windows 8 and Windows Blue will bring more competitive devices particularly in new smaller form factors targeting the tablet market
This statement is the essential summary of Microsoft current performance according to the results in the first 3 months of 2013 and the near term actions the company declared now to further improve its stance, particularly in the market which Microsoft critics are calling “PC market”, but not Microsoft, as its Earnings Call discussion was started with the following:
Before I dive into more details on our progress …, I want to address what’s top of mind for many of you, which is our Windows business.
There is no doubt that the device market is evolving. Consumers and businesses are increasingly shifting their focus to touch and mobility, and as a result, they want touch-enabled computing devices that are ultrathin, lightweight, and have long battery life. While Windows revenue has been impacted by the transition from the traditional PC to a new era of computing devices, the overall addressable markets are growing, and we are excited by the opportunities ahead of us.
We built Windows 8 with touch and mobility at the center of the experience, which positions us well in this new era. However, the transition is complicated, given the size of our hardware and software ecosystem. We still have an immense amount of work to do, yet we feel good about the foundation we have laid and are optimistic about the long term success of Windows.
I want to take some time now to be clear about where we are in this journey, and what we are doing to help drive this change. With Windows 8, we are setting a new, accelerated pace for updates and innovations, as we focus on making the Windows experience richer and better.
Since launch we have delivered several important updates to improve our mail, storage, search, music, and video services. During the quarter, we also added to the Surface family of devices with Surface Pro, which combines the performance capabilities of a PC with a modern tablet design.
This means that Microsoft is showing clear signs of staying relevant unlike some recent conclusions just stemming from the initial market difficulties of the new Windows 8 platform:
When Gartner issued its “Forecast: Devices by Operating System and User Type, Worldwide, 2010-2017, 1Q13 Update.” on April 4 and stated in its related press release that:
Traditional PC Market Predicted to Decline 7.6 Percent as Change in Consumers’ Behavior Drives Transition to Tablets and Ultramobiles
…
The proliferation of lower-priced tablets and their growing capability is accelerating the shift from PCs to tablets. “While there will be some individuals who retain both a personal PC and a tablet, especially those who use either or both for work and play, most will be satisfied with the experience they get from a tablet as their main computing device,” said Carolina Milanesi, research vice president at Gartner. “As consumers shift their time away from their PC to tablets and smartphones, they will no longer see their PC as a device that they need to replace on a regular basis.”
the Daily Ticker of Yahoo! Finance came to conclusion that Microsoft Could Be Obsolete By 2017: Gartner Report.
So let’s examine all this in detail:
Microsoft Reports Third-Quarter Results [press release, April 18, 2013], the sales revenue historic diagram is from qz.com while that of the Online Services Division operating income from businessinsider.com
Microsoft Corp. today announced quarterly revenue of $20.49 billion for the quarter ended March 31, 2013. Operating income, net income, and diluted earnings per share for the quarter were $7.61 billion, $6.06 billion, and $0.72 per share.
…
“The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox LIVE, and Skype,” said Steve Ballmer, chief executive officer at Microsoft. “While there is still work to do, we are optimistic that the bets we’ve made on Windows devices position us well for the long-term.”
The Microsoft Business Division posted $6.32 billion of revenue, an 8% increase from the prior year period. Adjusting for the net recognition of revenue related to the Office Upgrade Offer and Pre-Sales, Microsoft Business Division non-GAAP revenue increased 5%. During the quarter, we launched the new Office, enhancing productivity and the user experience through new mobility, social, and cloud features.
The Server & Tools business reported $5.04 billion of revenue, an 11% increase from the prior year period, driven by double-digit percentage revenue growth in SQL Server and System Center.
“Our enterprise business continues to thrive,” said Kevin Turner, chief operating officer at Microsoft. “Enterprise customers are increasingly turning to Microsoft for their IT solutions and as a result, we continue to take share from our competitors in key areas including hybrid cloud, data platform, and virtualization.”
The Windows Division posted revenue of $5.70 billion, a 23% increase from the prior year period. Adjusting for the recognition of revenue related to the Windows Upgrade Offer [see: How Microsoft got Windows revenue to go up despite PC sales going down [The Guardian, Feb 19, 2013]], Windows Division non-GAAP revenue was flat. During the quarter, we added to the Surface family of devices with Surface Pro.
The Online Services Division reported revenue of $832 million, an 18% increase from the prior year period. Online advertising revenue grew 22% driven by an increase in revenue per search.
The Entertainment and Devices Division posted revenue of $2.53 billion, an increase of 56% from the prior year period. Adjusting for the recognition of revenue related to the Video Game Deferral, the division’s non-GAAP revenue increased 33% for the third quarter. Xbox LIVE now has over 46 million members worldwide, an 18% increase from the prior year period.
“Our diverse business continues to deliver solid financial results, even as we navigate the evolving device market,” said Peter Klein, chief financial officer at Microsoft. “Looking ahead, we will continue to invest in long-term growth opportunities to drive our devices and services strategy forward and deliver ongoing value to shareholders.”
Microsoft’s Management Discusses F3Q 2013 Results – Earnings Call Transcript [Seeking Alpha, April 18, 2013] from which I extracted the following excerpts as the most notable ones:
Peter Klein – Chief Financial Officer
… I think one of the main takeaways for me is in particularly some of our cloud services, we’re really starting to get scale. Bing continues to improve, their margins. And Office 365 is really starting to get to scale. So those things are really encouraging.
Ed Maguire – CLSA
You just launched your Azure infrastructure as a service. Just went generally available this week. And I’d love to get some color on how much that’s figuring in the growth in long term contracts, and what your expectations might be for more traditional infrastructure as a service uptake over the next several quarters.
Peter Klein – Chief Financial Officer
Great question. It’s clearly a key enabler of our [unintelligible] cloud OS story, and how we’re driving what we’re doing with enterprise in the data center. We have infrastructure as a service, we have now the most complete end-to-end offering through platform, and software, identity, and access.
But having the infrastructure is a key enabler, and I think a real accelerator for the Windows Azure strategy, and really more broadly the cloud OS strategy. We now have a complete end-to-end story through the data center, from private, to hosted, to public, from infrastructure to platform, so I think it’s, again, a key enabler of that [all up] strategy, and an accelerator.
Gregg Moskowitz – Cowen & Company
In recent periods, we’ve seen your MBD [Microsoft Business Division]growth significantly outpace PC unit growth, although we now have a dynamic where your Office subscription is really resonating with customers. So the question is, just looking at it on a directional basis, is MBD revenue outperformance relative to PC units something that you think is sustainable going forward?
Peter Klein – Chief Financial Officer
The answer is that it will depend, and certainly an offset between attach gains we’re making against the market, offset against some deferrals as revenue moves to a subscription. And so it will kind of depend each quarter. Long term, it’s a great trend, because we’re building up a banked book of business on the subscription side, which will become less and less connected to the PC market.
Then I focused on four subjects for which made further extracts from the Earnings Call:
- The Windows and Office (productivity) markets
- Q3 FY13 performance for that
- Q4 FY13 outlook for that
- PC market
1. The Windows and Office (productivity) markets: Peter Klein – Chief Financial Officer
Looking ahead, we will release the next version of Windows, codenamed Windows Blue, which further advances the vision of Windows 8 as well as responds to customer feedback. The assortment of touch-enabled devices that are built for Windows 8 by our OEM partners is also improving.
Over the last couple of months, we’ve started seeing devices that take full advantage of Windows 8, and we expect to see more devices across more attractive price points over the coming months. As part of this, we are also working closely with OEMs on a new suite of small touch devices powered by Windows. These devices will have competitive price points, partly enabled by our latest OEM offerings designed specifically for these smaller devices, and will be available in the coming months.
In the upcoming back to school selling season, we expect to see devices that incorporate advances from throughout the supply chain, including chipsets. As well, Intel’s fourth generation Core processor will help enable new devices that combine performance benefits with power savings. Later in the year, we expect to see devices based on Intel’s upcoming Bay Trail Atom processor, which promises to deliver tablets and hybrid PCs with extended battery life at competitive prices.
Today in the Windows Store, there are six times as many apps since launch, and we expect more to be added as we gain traction with Windows 8 adoption. In June, we will host Build, our developer conference, where we will provide more tools and information for developers to build great Windows 8 apps.
In retail, we are working to improve the consumer purchasing experience. Our initiatives include focused efforts to further educate and incentivize retail sales professionals and to have better in-store product differentiation.
In summary, Windows is transforming to the new era of computing. As I said on our last earnings call, growth in Windows depends on our ability to give customers the exciting hardware they want at the price points they demand, and a wider range of apps and services to meet their diverse need. We are hard at work with our partners to meet these goals, and we’re confident we are moving in the right direction.
Now, switching gears to productivity, this quarter we launched the latest version of Office, which brings mobility, social, and cloud features to the world’s most popular productivity app. Importantly, the new Office represents a fundamental shift in our model. Now both businesses and consumers can access Office through subscription.
With this shift, we expect to grow our customer base, increase customer satisfaction via continuous updates, and reduce piracy. As our enterprise customers modernize their productivity infrastructures, we are confident that they will continue to deploy Office 365. We also expect our transactional customers to increasingly transition to the cloud with Office 365.
It’s been a while now that we’ve been talking about our investments in the cloud, and I’m pleased to share that we are starting to realize the benefits of those investments in a meaningful way.
Office 365 lights up with this latest release, as evidenced by our growing customer adoption. This quarter was our strongest ever, with net seat additions up 5 times of the prior year. One in four of our enterprise customers now has Office 365, and the business is on a $1 billion annual revenue run rate.
2. Q3 FY13 performance: Chris Suh – General Manager of Investor Relations
In the Windows Division, revenue was flat this quarter. Within that, OEM revenue performance was in line with the underlying x86 PC market, which continues to be challenged as the PC market evolves beyond the traditional PC to touch and mobile devices. This quarter, inventory levels were drawn down as the channel awaits new Windows 8 devices.
Non-OEM revenue grew 40% this quarter, driven by sales in Surface and continued double digit growth in volume licensing. Businesses continue to value the Windows platform, and volume licensing of Windows is on track to deliver almost $4 billion in revenue this year, and nearly three-quarters of enterprise agreements that we signed this year include Windows.
Additionally, this quarter we saw continued progress in the transition of Windows XP to Windows 7, and now two-thirds of enterprise desktops are running Windows 7.
…
Now, I’ll move on to the Microsoft Business Division, where revenue grew 5%. Within that, business revenue grew 10%, driven by 16% growth in multiyear licensing. In January, we launched the new Office for consumers. The new Office introduces touch, social, and mobile scenarios as well as tight integration with SkyDrive, enabling access to documents from any device.
The new Office is also available as a subscription, which benefits customers as they are always using the most modern version of Office. As Peter stated, we expect the shift to grow our customer base, and we saw strong early adoption of the subscription service.
I would like to remind you that with subscription, the revenue is earned ratably over the length of the subscription, rather than at the initial purchase. All up, consumer revenue was roughly in line with the consumer PC market, influenced by the shift to subscription and strong [attach] gain.
…
Peter Klein – Chief Financial Officer
We are seeing [near term impact from going to subscription revenues on our revenues], particularly in our transactional business, in MBD [Microsoft Business Division], as people move from what may have been a transactional to a perpetual license, where the revenue is recognized up front, to a subscription service, where it’s recognized ratably. So you’re basically deferring the rest of the term of the subscription. So in the short term, you’ll be deferring revenues that were not in a subscription, and would have been recognized immediately.
And as the subscription business is growing, you’ll see that impact growing, but over time, what you’ll get is what looks like an annuity revenue stream, that’s more predictable and has higher customer satisfaction and probably higher retention rates going forward. But in the short term, that will impact mostly in the transactional side of the MBD business.
…
It is a fact that we are starting to get scale in our cloud services, and so the growth that we’re seeing in Office 365 is really coming at an improved margin as we scale that out.
3. Q4 FY13 outlook: Peter Klein – Chief Financial Officer
In the Windows Division, similar to this quarter, revenue will continue to reflect sales of Surface and strong volume licensing, while OEM revenue will be impacted by the declining traditional PC market as we work to increase our share in tablets.
…
In the Microsoft Business Division, multiyear licensing revenue, which is approximately 60% of the division’s total, should grow low double digits. Excluding the recognition of revenue from the Office upgrade offer, transactional revenue, which is the remaining 40% of the division total, should be in line with the x86 PC market.
As a reminder, when updating your Q4 models, we expect to recognize approximately $780 million of revenue related to the Office upgrade offer.
…
… we are expanding both the product set and distribution, and that is broadly, all devices, inclusive of Surface. We are expanding distribution of Surface. We are now in 22 countries, 70 retailers. And we’ll continue to look to expand that. Not only just expanding, but improving the experience. And that’s true not just for Surface, but for broadly Windows 8 devices. And so we’ll be investing against that for both Surface and a broader array of Windows 8 devices at multiple price points, including lower price points going forward.
4. PC market: Peter Klein – Chief Financial Officer
On the PC market, I would look to some of the third parties, IDC and Gartner. They’re sort of in the 12-13-14 [%] down range this quarter. And in terms of the chipsets, we’ve always felt that with Windows 8, it was a process of the ecosystem of innovating across the board, and really starting to see that on the chips. And we’re very encouraged by both Haswell and some of the Atom processors to really improve the overall user experience that Windows 8 delivers. And over the coming selling season, I think that’s very encouraging and we’re optimistic about that.
…
I think broadly, in improving our position in tablets, and generally in devices, there’s five or six dimensions ranging from what we’re doing with OEMs on the devices and the range of devices, and how they can have a range of price points. What the chips can do, because I think that’s a part of it. Both first party and third-party apps, and we’ve seen improvements across the board there. The user interface, and how we’re innovating across the user experience. And then distribution
So if you start sort of from the bottom up, all the way to when you buy the product, we’re working across all those dimensions. And on the device side, we are working closely with the OEMs to help them take Windows 8 and show it off in all its glory, across different form factors. I talked about new smaller form factors and how Windows 8 can innovate to improve that experience.
So I think the biggest thing we’re doing is helping them develop new and improved user experiences across the board, across size, across price point, and deliver a really compelling Windows 8 experience. And it’s not just the devices, like I said, it’s chips, it’s the apps, it’s the buying experience, it’s the user interface. So we’re really focused on all five or six of those dimensions going forward.
Saving Intel: next-gen Intel ultrabooks for enterprise and professional markets from $500; next-gen Intel notebooks, other value devices and tablets for entry level computing and consumer markets from $300
OR “2 for 1” (or “two-for-one”) touch and voice enabled ultrabooks of convertible and detachable form factors with Haswell / 4th generation Intel Core processor family (shipping now and on track for Q2’13 launch) starting as low as $500.
Touch-enabled notebooks [other value devices and tablets]
with Bay Trail down to the $300 to $400 range
in Q4’13, and as low as $200 later.
OR after Intel’s biggest flop: at least 3-month delay in delivering the power management solution for its first tablet SoC [‘Experiencing the Cloud’, Dec 20, 2012] AND Urgent search for an Intel savior [‘Experiencing the Cloud’, Nov 21 – Dec 11, 2012] Intel is finally ready to drop entry level prices to competitive levels in both enterprise/professional and entry level computing /consumer markets
Updates: a young Seeking Alpha investment research contributor reflected on it as Intel Just Made A Huge Decision [April 14, 2013] with the following reasoning to close his article which I wholeheartedly agree with:
…
Intel’s “Atom” chips command margins roughly in line with the corporate average. This makes sense given that Nvidia recently disclosed that its “Tegra” mobile SoC business carried roughly 50% gross margins. Given that Intel owns its own fabs (and doesn’t pay royalties to ARM), gross margins in the 60%+ range are completely plausible. The problem is that raw ASPs for the chips are much lower than that of the traditional notebook and desktop chips.
Selling a $25 – $30 processor isn’t going to give you the raw margin dollars that a $100 processor will, even if the gross margin percentage is the same. If we start seeing a trend where people are simply going with the Atom based solutions rather than the Core solutions, then this will of course be a problem for Intel at the top and bottom lines. But if we see the “Core” solutions staying mostly flat with the rejuvenated Atom helping to gain back market share from the ARM vendors, then this is pure upside for Intel.
My guess is that the “truth” is going to be somewhere in the middle. The people who need performance, will always need performance, and the people who generally bought low cost, would have bought the cheaper “Celeron” and “Pentium” products (these aren’t too much more expensive than an Atom/ARM SoC) anyway. I expect that the difference is that while today’s “Celeron” and “Pentium” products generally end up in crappy systems with bad screens, slow hard disks, and lousy battery life, the “Atom” products will end up in much more compelling systems, as the PC OEMs/Intel can’t really afford to keep the good stuff confined to expensive systems that people may not be buying anyway.
Conclusion
Intel made the right move to unleash Atom and to grin and bear the potential blended ASP erosion that is sure to happen. The key, then, is to focus not on blended ASPs, but to keep an eye on total revenue and gross margin dollars. If these grow as a result of Atom, then great – Intel gets rewarded with a higher multiple as it will have proven its viability going forward, and increased revenues/earnings will only further serve to amplify the share price. If revenues stagnate, then Intel still made the right decision (because it is likely that without Atom being competitive, ARM based chips would have caused continued negative growth), but will need to really focus on increasing the total # of devices that it serves.
In no way is making Atom more competitive a “mistake”, and Intel would rather cannibalize itself than let the other chip vendors do it. The big question mark is how total sales are going to be, and whether a competitive Atom at the low end PC + tablet spaces is going to be enough. My bet is “yes”, but nothing is ever sure when it comes to business.
Don’t forget meawhile that Intel promotes Android convertible notebooks, say vendors [DIGITIMES, April 19, 2013]
Viewing that Windows 8 has been unable to stimulate global demand for notebooks, and global sales of Android tablets have been increasing, Intel has begun to promote Android tablet-convertible notebooks, and China-based vendor Lenovo has taken the initiative to launch initial models in May while Hewlett-Packard (HP), Toshiba, Acer and Asustek Computer will launch models in the third quarter, according to sources from notebook vendors.
Lenovo’s Android-based Yoga notebook [see: Lenovo Yoga 11S ultrabook tablet-convertible [Notebookitalia YouTube channel, Jan 7, 2013] and the IDF Bejing slide inserted on the left in a smaller format, both embedded much below in this post], set for release in May, is expected to feature an 11-inch display, the sources noted.
Intel has estimated that the price sweet spot of Android-based notebooks is around US$500, and the machines will also need to feature detachable keyboard designs to allow transformation into a tablet, the sources said.
Since most consumers are familiar with Android, with the addition of document processing applications, the sources believe Android-based notebooks should be able to attract strong demand.
At the same time Some China-based white-box vendors plan to develop Windows 8 tablets [DIGITIMES, April 17, 2013]
Viewing that Android tablets, especially 7-inch models, have been under intense price competition and therefore profitability is thinning, some China-based white-box vendors are considering developing Windows 8 tablets equipped with Intel processors for market segmentation, according to industry sources at the 2013 China Sourcing Fair: Electronics and Components taking place in Hong Kong during April 12-15.
The products are expected to show up at the beginning of the third quarter, at the soonest.
The sources believe that since the volume of tablets using a Windows operating system is still low, if they are able to enter the market ahead of others, there may be a chance of gaining profits.
Although related costs are expected to increase by using Intel’s platform and Microsoft’s operating system, the sources pointed out that the advantage as an early mover will allow them to achieve better gross margins than for Android-based models. The fees from the operating system are not really a huge concern, the sources added.
End of updates
Sections of this post:
- Touch-enabled notebooks [other value devices and tablets] with Bay Trail down to the $300 to $400 range in Q4’13, and as low as $200 later.
- “2 for 1” (or “two-for-one”) touch and voice enabled ultrabooks of convertible and detachable form factors with Haswell/4th generation Intel Core processor family (shipping now and on track for Q2’13 launch) starting as low as $500.
- Intel’s CEO Discusses Q1 2013 Results – Earnings Call Transcript [Seeking Alpha, April 16, 2013]
- Earlier information from Intel
1. Touch-enabled notebooks [other value devices and tablets] with Bay Trail
down to the $300 to $400 range in Q4’13, and as low as $200 later.
Note that on this slide demoed on the screen of Bay Trail prototype (see the video embedded below) the targeted launch is set for “HR’13”, meaning “Holiday Revenue 2013”. Note as well that the Bail Trail SoC is both for entry desktop (i.e. Celeron) and entry notebook (i.e. current Atom) replacement. This why in the video below both an entry desktop motherboard prototype (from Gigabyte) and an entry notebook (from ASUS) is demoed. The range of devices with Bay Trail SoC is going to be however much wider than that, as is communicated already by Intel in the below excerpts. More exact information will be available later.
From: Intel’s CEO Discusses Q1 2013 Results – Earnings Call Transcript [Seeking Alpha, April 16, 2013]
… as we get into the Christmas selling season … we’ll see, because of Bay Trail coming into the marketplace, you’ll see touch-enabled thin notebooks with really good performance that are hitting kind of $300 price points. And then with our Android tablets, you’ll see things that are significantly …
… If you look at touch-enabled Intel based notebooks that are ultrathin and light using non-Core processors, those prices are going to be down to as low as $200 probably. …
Intel Bay Trail Prototype Hands On & HD Video Demo [minipcpro YouTube channel, April 9, 2013]
From: Intel Developer Forum: Transforming Computing Experiences from the Device to the Cloud [press release, April 10, 2013] Images are inserted from:
– Reinventing the Computing Experience presentation at IDF 2013 by Kirk Skaugen, Intel senior vice president and general manager of the PC Client Group
– Mobile Inside at IDF 2013 by Tan Weng Kuan, vice president and general manager of the Mobile Communications Group, Intel China
– Developing on Innovative Intel® Atom™ Processor Based Tablet Platforms [April 11, 2013 presentation by Intel at the IDF Beijing]
Augmenting the company’s offerings for computing at a variety of price points, Skaugen announced plans for new market variants of its “Bay Trail” 22nm SoC with PC feature sets specifically designed for value convertibles, clamshell laptops, desktops and value all-in-one computers to ship later this year.
…
Taking full advantage of the broad spectrum of capabilities enabled by Intel® architecture, processor technology leadership, manufacturing and multi OS support across Windows* 8 and Android*, Tan discussed the company’s forthcoming smartphone and tablet products based on Intel’s leading-edge 22nm process and an entirely new Atom microarchitecture. Intel’s quad-core Atom SoC (“Bay Trail“) will be the most powerful Atom processor to-date, doubling the computing performance of Intel’s current-generation tablet offering1. Scheduled for holiday 2013 tablets [in market Q4’13], “Bay Trail” will help enable new experiences and designs as thin as 8mm that have all-day battery life and weeks of standby.
What’s New in Tablets? Intel Powers Android & Windows 8 [channelintel YouTube channel, Feb 27, 2013]
2. “2 for 1” (or “two-for-one”) touch and voice enabled ultrabooks of convertible and detachable form factors with Haswell / 4th generation Intel Core processor family (shipping now and on track for Q2’13 launch) starting as low as $500.
From: Intel’s CEO Discusses Q1 2013 Results – Earnings Call Transcript [Seeking Alpha, April 16, 2013]
… as we get into the Christmas selling season, your expectation is you will see touch-enabled ultrabooks that are $499 and $599 pretty commonly out there. $599 commonly, and $499 as kind of special SKUs.
From: Intel Developer Forum: Transforming Computing Experiences from the Device to the Cloud [press release, April 10, 2013]
Images are inserted from Reinventing the Computing Experience presentation at IDF2013 by Kirk Skaugen, Intel senior vice president and general manager of the PC Client Group
Reinventing the Computing Experience
During his keynote, Kirk Skaugen, Intel senior vice president and general manager of the PC Client Group, provided a deeper look at the forthcoming 4th generation Intel Core processor family, which he said is now shipping to OEM customers and will launch later this quarter.
“Ultrabooks based on the 4th generation Intel Core processor family will enable exciting, new computing experiences and all-day battery life delivering the most significant battery life capability improvement in Intel’s history,” said Skaugen. “It will also bring to consumers a new wave of ‘two-for-one‘ convertible and detachable systems that combine the best of a full PC experience with the best of a tablet in amazing new form factors.”
NEW Architecture on 22nm Tri Gate
NEW Intel Power Optimizer: 20x Power Reduction
vs. 2nd gen Intel® Core™ ProcessorsNEW Integrated on package PCH [Platform Controller Hub]
for amazing form factorsNEW Integrated Audio DSP: more battery life, higher quality
Shipping Now and On Track for Q2 2013 Launch
The new Intel Core microarchitecture will allow the company to deliver up to double the graphics performance over the previous generation. In addition, the new graphics solution will have high levels of integration to enable new form factors and designs with excellent visual quality built in. Skaugen demonstrated these graphics improvements on the 4th generation Intel Core processor-based Ultrabook reference design called “Harris Beach.” The demo featured Dirt 3*, a popular gaming title, showing the same visual experience and game play as a discrete graphics card that users would otherwise have to add separately. He also showed the 4th generation Intel Core processor-based concept, codenamed “Niagara,” a premium notebook with the ability to play the unreleased enthusiast title Grid 2* from CodeMasters* without the aid of a discrete graphics card.
Along with touch capability, Intel® Wireless Display (Intel WiDi) will be enabled on all 4th generation Intel Core processor-based Ultrabook devices to allow people to quickly and securely stream content and apps from devices to the big screen, free from the burden of cables. Skaugen said the China ecosystem is taking the lead on integrating Intel WiDi into systems, and announced that the leading television manufacturer in China, TCL*, has a new model with the Intel WiDi technology built in. He also announced new receivers certified for Intel WiDi from QVOD* and Lenovo* and a set-top box from Gehua*.
Where the idea of “2 for 1” (or “two-for-one”) was already demonstrated in
Convertible Ultrabook™ Features [channelintel YouTube channel, Feb 7, 2013]
and here is The Best of Both Worlds, a Convertible Ultrabook™ Story (Long Version) [channelintel YouTube channel, Feb 27, 2013] live–action video for that
Shown first at CES 2013 for May’13 delivery: Lenovo Yoga 11S ultrabook tablet-convertible [Notebookitalia YouTube channel, Jan 7, 2013]
As well as a detachable form factor ultrabook reference design: IDF Beijing 2013 Keynote Demo – North Cape [channelintel YouTube channel, April 17, 2013]
Kirk Skaugen:
[0:17] This is a full 17 mm clamshell ultrabook. In this configuration it actually has 13 hours of battery life, and it is a full Core i5 computer. But what I can do here, as I can just very simply push in an electronic eject button, and lift it out very simply with one hand. About 3 hours of battery life comes from a battery that sits under the keyboard. But here then I have an amazing notebook that gives me a less than 3 pound tablet with 10 hours of battery life. [0:51]
At CeBIT 2013 in Hannover, Germany (March 5-9) North Cape was demonstrated as:
Haswell Ultrabook – North Cape Reference Design Hands-On [Steve Chippy Paine YouTube channel, March 5, 2013]
and in the companion article it was reported:
In a chat with one of the marketing managers I confirmed that there will be COnnected Standby and non-Connected Standby Ultrabooks on Haswell. The CS Ultrabooks are likely to be the cream of the crop and will be more expensive but will have lower power profiles. Clearly the hybrid designs are the perfect fit for CS-capable Ultrabooks but I’ wouldn’t be surprised to see Samsung have a CS-capable Series 9. Remember, CS is not just about being up-to-date with emails, it means apps can run when the Ultrabook is in your bag, without a fan, on an SSD, for days. It’s the mark of extreme battery life, it’s very exciting technology and likely to be exclusive to Ultrabooks.
then immediately before IDF the same source delivered the news that Haswell Ultrabooks could achieve Tablet-like 100mW Connected-Idle [April 9, 2013]
In a presentation due to go out at the Intel Developer Forum over the next two days Intel will outline best practices for low-power idle on Ultrabooks. Today you’ll be lucky to see an Ultrabook idle to less than 3000mW (3 Watts) which is a background drain that’s always there. On Haswell, Intel says that you could get to a screen-off idle state of 100mW.
By effectively removing nearly 3W of background drain, all operations are going to benefit, not just idle. Where Internet browsing was a 9W operation, expect to see that go down to around 6W for a big increase in battery life.
The 100mW target requires both system designers and software engineers to build to the best standards but when it comes to laptops, it’s the Ultrabooks that have the best chance of getting the best engineers working on them. Low-power DDR3 memory, SSD storage, high-quality power components and tight board design mean the best systems won’t be cheap systems but all the ingredients and skills are now available to make laptops that idle like tablets.
Intel also want’s to see engineers using configurable TDP and other features to create systems in the 10W (fanless) range. High Density Interconnects on motherboards could also bring advantages. By reducing the mainboard size, space is created for more battery. Intel says there’s a chance to fit 20-45% more battery inside when motherboard sizes are reduced using HDI techniques.
While the ingredients and techniques might be on the shelf, it’s up to the OEMS to decide how they use them. Pricing pressures often lead to compromises so don’t expect all of the new engineering techniques to appear on anything but the high-end Ultrabooks.
More information: Form Factor and Average Power Innovations for Ultrabooks™
[April 10, 2013 presentation by Intel at the IDF Beijing] with the following abstract:
Intended Audience: OEMs and ODMs – Motherboard Layout Designers, Power Delivery, and Power Management Architects
In this session we propose methods to improve, form factor, battery capacity, and power consumption for Ultrabook™ devices. We show how High Density Interconnects (HDI) Printed Circuit Boards could free up considerable space for more battery and other features, especially in thinner Ultrabooks. We show current practices with HDI and propose better ways to achieve higher mother board area reduction to close the cost gap between type 3 and type 4 (HDI) designs. For power consumption, we also show design methods to reduce average power, especially by reducing platform idle power.
and agenda:
- What is HDI?
- Benefits of HDI in Form Factor Constrained Systems
- Reducing the Cost of HDI
- Reducing Platform Power
- Thermal management an Power Configurability
North Cape was first shown at CES 2013, so OEMs had pretty much time to work on Haswell based offerings to be unveiled in Q2’13:
Intel Delivers Broad Range of New Mobile Experiences [press release, Jan 7, 2013]
- 4th generation Intel® Core™ processor family (formerly codenamed “Haswell“) will enable a broad new range of Ultrabook convertibles, detachables and tablets with all-day battery life; the biggest battery life gain over a previous generation in company’s history3.
3 4th Generation Intel Core processors provide 3-5 hours of additional battery life when compared to 3rd Generation Intel Core processors, based on measurement of 1080p HD video playback.
Low Power Fuels Ultrabook Innovation
Since mid-2011, Intel has led the industry in enabling Ultrabook devices aimed at providing new, richer mobile computing experiences in thin, elegant and increasingly convertible and detachable designs. To enable these innovative designs, Intel announced last September that it added a new line of processors to its forthcoming 4th generation Intel Core processor family targeted at about 10 watt design power, while still delivering the excellent performance people want and need.
Skaugen announced today that the company is bringing the low-power line of processors into its existing 3rd generation Intel Core processor family. Available now, these chips will operate as low as 7 watts, allowing manufacturers greater flexibility in thinner, lighter convertible designs. Currently there are more than a dozen designs in development based on this new low-power offering and they are expected to enable a full PC experience in innovative mobile form factors including tablets and Ultrabook convertibles. The Lenovo IdeaPad Yoga* 11S Ultrabook and a future Ultrabook detachable from Acer will be among the first to market this spring based on the new Intel processors and were demonstrated by Skaugen on stage.
The 4th generation Intel Core processor family enables true all-day battery life — representing the most significant battery life capability improvement in Intel history. Skaugen disclosed that new systems are expected to deliver up to 9 hours of continuous battery life, freeing people from some of the wires and bulky power bricks typically toted around.
“The 4th generation Core processors are the first Intel chips built from the ground up with the Ultrabook in mind,” Skaugen said. “We expect the tremendous advancements in lower-power Core processors, and the significant ramp of touch-based systems will lead to a significant new wave of convertible Ultrabooks and tablets that are thinner, lighter and, at the same time, have the performance required for more human-like interaction such as touch, voice and gesture controls.”
To demonstrate the impact of the 4th generation Intel Core processor family, Skaugen showed a new form factor Ultrabook detachable reference design (codenamed “North Cape“) that converts into a 10mm tablet and can run on battery for up to 13 hours while docked.
Advancements made in the way consumers will interact with their computing devices were also demonstrated, including natural and more immersive interaction experiences using a 3-D depth camera. Intel showed applications running on an Ultrabook in which objects can be manipulated naturally with free movements of the hands, fingers, face and voice. One application that was demonstrated can be used for enabling new and immersive video collaboration and blogging experiences. These were all enabled using the Intel® Perceptual Computing SDK Beta. This year, Intel expects more Ultrabooks and all-in-one (AIO) systems to offer applications for voice control (Dragon Assistant*) and facial recognition (Fast Access*) for convenience and freedom from passwords.
So this was first shown at CES 2013 as well: IDF Beijing 2013 Keynote Demo — Perceptual Computing SDK [channelintel YouTube channel, April 17, 2013]
which was used in the IDF Beijing 2013 Keynote Demo – Personified Chat [channelintel YouTube channel, April 17, 2013]
IDF 2013 Beijing Highlights Day One [channelintel YouTube channel, April 16, 2013]
Intel® Ultrabook™ Convertible SBA v1 [channelintel YouTube channel, April 2, 2013]
Intel® Ultrabook™ Performance SBA v2 [channelintel YouTube channel, April 2, 2013]
3. Intel’s CEO Discusses Q1 2013 Results – Earnings Call Transcript [Seeking Alpha, April 16, 2013]
Paul Otellini for the second half of the year for sales:
… as the OEMs start looking at new form factors that they can design around our new chips, Haswell in particular, and maybe Bay Trail, and Windows 8, enabling touch, the explosion in form factors and the competitiveness of that platform is going to be substantially different, at price points down into the $300 to $400 range enabling touch. We didn’t have that last year. So you go into the prime selling season with new products, new technologies, new form factors, and new capabilities that, up to now, were unapproachable price points.
Paul Otellini regarding his current view on Haswell’s potential to revitalize the PC market with Windows 8:
With Haswell, there’s a number of things. First of all, the overall performance goes up, graphics performance goes up, as well as the integer performance. So it’s a better punch in the package than we’ve had with Ivy Bridge. Point one. Point two, the power envelope, or the batter life for that level of performance, is exceptionally better than Ivy Bridge.
Third, it gets into the form factor innovation and the integration with touch as I spoke about earlier, which I think is really part of the recipe required for Win 8 adoption. I’ve recently converted personally to Windows 8 with touch, and it is a better Windows than Windows 7 in the desktop mode, when you implement the touch and the touch-based applications and operating environment. It’s just a lot easier to use.
There is an adoption curve, and once you get over that adoption curve, I don’t think you go back. And we didn’t quite have that same kind of adoption curve in Windows 7 versus XP before it. This requires a little bit of training. And I think people are attracted to touch, and the touch price points today are still fairly high, and they’re coming down very rapidly over the next couple of quarters.
Paul Otellini about technology transitions:
We’ve also got the technology transition to the 14 nanometers. [unintelligible] a first order, all of our spending is focused on 14 nanometers , which gives us a fairly significant ramp capability. If demand for older products exceeds what we could build on 14, we could still build 22 for quite some time. So I really think it depends on whatever demand scenario you see out there. In any event, the most important thing for us is to make that transition to 14 and continue to have the leading edge.
Lenovo Talks Tablets [detachable ultrabooks] at HIMSS 13 [channelintel YouTube channel, April 16, 2013]
Paul Ottelini on what Intel can do to help the PC ecosystem to become healthy again:
I think continue to give them the tools to innovate. And I wouldn’t paint the entire customer base with the same brush that you just did. Certainly if you looked at the last quarter, even inside the PC space, Lenovo outperformed everybody else, and actually had a very good year on year set of numbers, in a down year. Apple continues to do well.
Subsets of customers in different segments are also doing very well in terms of, say, those. Those providing products into the internet data centers. What I see when we look out is a tremendous amount of innovation, particularly at the ODM and Taiwanese OEM side, where the ability to miniaturize and bring things into extremely thin form factors is as revolutionary as the amount of changes I’ve seen in my time in this industry.
And so I think what we can do is give them the products, like Haswell and Bay Trail to innovate around. We can help them with other feature sets like voice and speech that go around them, and just help them build better products.
Paul Ottelini on Intel efforts to invest in things outside of what could called core PC, such as the set top box or in the foundry efforts or other areas of revenue that the company is seeking:
I don’t look at things with quite that level of granularity. The foundry thing, the investment is really going to be taking advantage, at least near term, with the current customer base, of capacity that we’re already putting in place. That doesn’t mean that at some point we won’t have to actually build extra capacity for a foundry customer or a foundry business, but today, up to this point, it’s certainly within our ability to absorb.
The set top box spending, or the stuff we’re doing in Intel Media, in the grand scheme of things, is not a lot of spending. So the real issue is inside of our core microprocessor and platform development, and we’re at the point now where roughly half of our spending is focused on System on Chip, inside the microprocessor world.
And the System on Chip environment is really a lot of the ultramobile products. It’s the phones, it’s the tablets. It’s embedded systems. It’s automotive, etc. Where we have fairly strong growth opportunities. So it’s not the same monolithic Tick-Tock model that we put in place eight years ago.
Paul Otellini on the proper interpretation of the new price points mentioned earlier in the earnings call:
We have a certain spec for ultrabooks, and that is the product that Stacy said is going to be centered at as low as $599 with some [diverse] SKUs to $499. If you look at touch-enabled Intel based notebooks that are ultrathin and light using non-Core processors, those prices are going to be down to as low as $200 probably.
Re: Stacy Smith (Chief Financial Officer, Executive Vice President) about the sources of increased confidence now in versus where Intel was three months ago talking earlier in the earnings call as follows:
First of all, just to make sure I’m not oversoaking things here, you really just need seasonal from where we are in order to achieve the low single digit revenue growth. So I don’t think we have a hugely high bar out there, and I went through a dissection of where I think the revenue comes from.
In terms of the things that give me confidence, or at least I personally believe it could be better than seasonal, it’s the things we talked about, improving macroeconomic environment, the fact that we now are participating across a range of compute devices, and so the mix between those don’t impact us nearly as much.
And then third, as Paul said, you have innovative form factors coming out in ultrabooks, in convertibles, and in detachables, that are hitting these really compelling mainstream price points that are touch enabled. And as we get into the Christmas selling season, your expectation is you will see touch-enabled ultrabooks that are $499 and $599 pretty commonly out there. $599 commonly, and $499 as kind of special SKUs.
And then we’ll see, because of Bay Trail coming into the marketplace, you’ll see touch-enabled thin notebooks with really good performance that are hitting kind of $300 price points. And then with our Android tablets, you’ll see things that are significantly, [hey, I have that]. So we’ll be participating across a broad range of compute devices as we get into the back half of this year.
4. Earlier information from Intel:
Intel Accelerates Mobile Computing Push [press release, Feb 24, 2012]
NEWS HIGHLIGHTS
- Launches dual-core Intel® Atom™ Processor-based platform (formerly “Clover Trail+”) aimed at performance and mainstream smartphone market segments, and providing double the compute performance and 3x graphics capabilities1 with competitive battery life. Product to also debut in Android* tablets.
- Reveals one of the world’s smallest2 and lowest-power multimode-multiband LTE solutions for global roaming in one SKU with envelope tracking and antenna tuning. Shipping single mode now with multimode shipments beginning first half of 2013.
- Demonstrates continued momentum in emerging markets with Intel® Atom™ Z2420 processor, including new smartphone engagement with Etisalat* in Egypt. ASUS* to also debut a new Android* tablet based on the Atom Z2420 processor.
- Announces support from leading ODMs for next-generation quad-core Atom SoC (“Bay Trail”), scheduled to be available for holiday 2013.
- Extends mobile device enabling efforts to tablets, followed by phones.
MOBILE WORLD CONGRESS, Barcelona, Spain, Feb. 25, 2013 – Intel Corporation today announced a range of new products, ecosystem and enabling efforts that will further accelerate the company’s presence in mobile and help usher in new devices and richer experiences with Intel Inside®.
The announcements include a new dual-core Atom™ SoC (“Clover Trail+“) platform for smartphones and Android* tablets, and the company’s first global, multimode-multiband LTE solution that will ship in the first half of this year. Other disclosures included “Bay Trail” momentum, mobile device enabling efforts, and continued smartphone momentum in emerging markets with the Intel® Atom™ Z2420 processor-based platform.
“Today’s announcements build on Intel’s growing device portfolio across a range of mobile market segments,” said Hermann Eul, Intel vice president and co-general manager of the Mobile and Communications Group. “In less than a year’s time we have worked closely with our customers to bring Intel-based smartphones to market in more than 20 countries around the world, and have also delivered an industry-leading low-power Atom™ SoC tablet solution running Windows* 8, and shipping with leading OEM customers today. Looking forward, we will build upon this foundation and work closely with our ecosystem partners, across operating systems, to deliver the best mobile products and experiences for consumers with Intel Inside.”
New, Efficient Atom™ SoC Platform
Intel’s new Atom™ processor platform (“Clover Trail+“) and smartphone reference design delivers industry-leading performance with low-power and long battery life that rivals today’s most popular Android* phones. The product brings Intel’s classic product strengths, including high performance that lets you enjoy smooth Web browsing, vibrant, glitch-free, full HD movies, and an Android* applications experience that launches fast and runs great.
The platform’s 32nm dual core Intel® Atom™ Processors — Z2580, Z2560, Z2520 — are available in speeds up to 2.0 GHz, 1.6 GHz and 1.2GHz, respectively. The processor also features support for Intel® Hyper-Threading Technology, supporting four simultaneous application threads and further enhancing the overall efficiency of the Atom cores.
The integrated platform also includes an Intel® Graphics Media Accelerator engine with a graphics core supporting up to 533MHz with boost mode, and delivering up to three times the graphics performance1 for rich 3-D visuals, lifelike gaming and smooth, full 1080P hardware-accelerated video encode and decode at 30fps.
“Our second-generation product delivers double the compute performance and up to three times the graphics capabilities1, all while maintaining competitive low power,” Eul said. “As we transition to 22nm Atom SoCs later this year, we will take full advantage of the broad spectrum of capabilities enabled by our design, architecture, 22nm tri-gate transistor technology, and leading-edge manufacturing to further accelerate our position.”
The new Atom platform also brings advanced imaging capabilities, including support for two cameras, with a primary camera sensor up to 16 megapixels. The imaging system also enables panorama capture, a 15 frame-per-second burst mode for 8 megapixel photos, real-time facial detection and recognition, and mobile HDR image capture with de-ghosting for clearer pictures in flight.
The platform is also equipped with Intel® Identity Protection Technology (Intel IPT), helping to enable strong, two-factor authentication for protecting cloud services such as remote banking, e-commerce, online gaming and social networking from unauthorized access. Since Intel IPT is embedded at chip-level, unlike hardware or phone-based tokens, it can enable more secure, yet user-friendly cloud access protection. Intel is working with partners including Feitian*, Garanti Bank*, MasterCard*, McAfee*, SecureKey* Technologies Inc., Symantec*, Vasco Data Security International* Inc. and Visa* Inc. to incorporate this technology into their services.
With WUXGA display support of 1920×12003, the platform will also enable larger-screen Android* tablet designs. It also includes support for Android* 4.2 (Jelly Bean), Intel Wireless Display Technology, HSPA+ at 42Mbps with the Intel® XMM 6360 slim modem solution, and the new industry-standard UltraViolet™ Common File Format.
Customers announcing support for “Clover Trail+” platform for phones and tablets include ASUS*, Lenovo*, and ZTE*.
Debuting at CES last month, the Lenovo* IdeaPhone K900* is based on the Intel® Atom™ processor Z2580 and delivers rich video, graphics and Web content at fantastic speeds. The IdeaPhone is 6.9mm thin and also features the world’s first 5.5-inch full high-definition 400+ PPI screen for increased clarity of text and images. The K900 will be the first product to market based on the Atom processor Z2580. Lenovo plans to introduce the smartphone in the second quarter of 2013 in China, followed soon by select international markets.
Building on the Atom processor platform (“Clover Trail+”), Intel also highlighted its forthcoming 22nm smartphone Atom™ SoC (“Merrifield“). The product is based on Intel’s leading-edge 22nm process and an entirely new Atom microarchitecture that will help enable increased smartphone performance, power efficiency and battery life.
Long-Term Evolution (4G LTE)
Intel’s strategy is to deliver a leading low-power, global modem solution that works across multiple bands, modes, regions and devices.
The Intel XMM 7160 is one of the world’s smallest2 and lowest-power multimode-multiband LTE solutions (LTE / DC-HSPA+ / EDGE), supporting multiple devices including smartphones, tablets and Ultrabooks™. The 7160 global modem supports 15 LTE bands simultaneously, more than any other in-market solution. It also includes a highly configurable RF architecture running real time algorithms for envelope tracking and antenna tuning that enables cost-efficient multiband configurations, extended battery life, and global roaming in a single SKU.
“The 7160 is a well-timed and highly competitive 4G LTE solution that we expect will meet the growing needs of the emerging global 4G market,” Eul said. “Independent analysts have shown our solution to be world class and I’m confident that our offerings will lead Intel into new multi-comm solutions. With LTE connections projected to double over the next 12 months to more than 120 million connections, we believe our solution will give developers and service providers a single competitive offering while delivering to consumers the best global 4G experience. Building on this, Intel will also accelerate the delivery of new advanced features to be timed with future advanced 4G network deployments.”
Intel is currently shipping its single mode 4G LTE data solution and will begin multimode shipments later in the first half of this year. The company is also optimizing its LTE solutions concurrently with its SoC roadmap to ensure the delivery of leading-edge low-power combined solutions to the marketplace.
Intel® Atom™ Platform Z2420
As Intel expands its geographic presence, the company sees tremendous opportunity in delivering rich Intel-based mobile experiences to consumers across emerging markets.
As part of its strategy to take advantage of the fast growing market for value smartphones in emerging markets, which some analysts expect to reach 500 million units by 2015, Intel highlighted continuing momentum with the Intel Atom Processor Z2420 platform (formerly “Lexington“). Since it was first announced at CES, Acer* (Thailand, Malaysia), Lava* (India) and Safaricom* (Kenya) have all announced new handsets.
Etisalat Misr*, a leading telco operator based in Egypt and a subsidiary of Etisalat group UAE, in collaboration with Intel today announced plans for the Etisalat E-20 Smartphone with Intel Inside®. Set to debut in Egypt in April, the Intel-based handset will be the first in the Middle East and North Africa region, and the second introduction in Africa to-date, building on the recent launch of Safaricom* in Kenya.
Demonstrating the flexibility of the Atom SoC platform to accommodate a range of device and market segment needs, ASUS* later today will announce a new Android* tablet based on the Intel® Atom™ Processor Z2420.
Tablets with Intel Inside®
Building on the device momentum and industry-leading power-efficiency of the award-winning Atom processor Z2760, Intel’s first quad-core Atom SoC (“Bay Trail“), will be the most powerful Atom processor to-date — doubling the computing performance of Intel’s current- generation tablet offering and providing the ecosystem with a strong technology foundation and feature set from which to innovate. The “Bay Trail” platform, scheduled to be available for holiday 2013, is already up and running on Windows* and Android* and will help enable new experiences in designs as thin as 8mm that have all-day battery life and weeks of standby.
Intel is currently working with Compal*, ECS*, Pegatron*, Quanta* and Wistron* to accelerate “Bay Trail” tablets to the market. Intel is also extending its work with leading OEM partners globally, building on the strong foundation of Intel Atom processor Z2760-based tablet designs in market from Acer*, ASUS*, Dell*, Fujitsu*, HP*, Lenovo*, LG Electronics and Samsung*.
Enabling Mobile Devices with Intel Inside®
Intel today announced an expansion of its ecosystem enabling efforts to deliver new device and market innovations across a range of Windows*- and Android*-based mobile devices.
Intel platform and enabling programs have been the foundation of OEM and ODM innovation for decades. The new program will focus on accelerating time to market for leading-edge mobile devices based on Intel® architecture with top OEMs and ODMs. The program will focus first on tablets, followed by phones, providing pre-qualified solutions with simplified building blocks to scale designs quickly for mature and emerging markets. The Atom Processor Z2760 and the company’s forthcoming 22nm Atom SoC, codenamed “Bay Trail,” will be the starting foundation for the effort.
1 Compared to the Intel Atom Processor Z2460 platform; Graphics clock will vary based on SKU: Z2580, Z2560, Z2520.
2 Compared with competitive solutions shipping in market today.
3 Corrected from misprinted ‘1900×1200’ to ‘1920×1200’ – Feb. 27,21013
Intel Developer Forum: Transforming Computing Experiences from the Device to the Cloud [press release, April 10, 2013]
Images are inserted from Reinventing the Computing Experience presentation at IDF2013 by Kirk Skaugen, Intel senior vice president and general manager of the PC Client Group
Company Accelerates Expansion of 22nm Data Center Processor Families; Graphics Innovations, Intel® Wireless Display Coming to Next-Generation Ultrabooks
NEWS HIGHLIGHTS
- Accelerates expansion of offerings across the data center processor product lines based on Intel’s innovative 22nm manufacturing technology.
- Aims to revolutionize the server rack design by delivering an Intel rack scale architecture for increased flexibility, density and utilization of servers leading to lower total cost of ownership.
- Next-generation, 64-bit Intel® Atom™ processor for microservers, codenamed “Avoton,” is being sampled to customers with broad availability expected in the second half of this year.
- 4th generation Intel® Core™ processors are now shipping to customers and will launch later this quarter.
INTEL DEVELOPER FORUM, Beijing, April 10, 2013 – During Intel Corporation’s annual developer forum this week, company executives announced new technologies and partnerships aimed at transforming how people experience technology from the device to the cloud. The announcements included details on new data center product lines based on the 22-nanometer (nm) process technology and the new Intel rack scale architecture, along with details on the forthcoming 4th generation Intel® Core™ processor family.
During her keynote, Diane Bryant, Intel senior vice president and general manager of the Datacenter and Connected Systems Group, underscored the importance of the data center in enabling amazing personal computing experiences to deliver real-time information and services. She also outlined the steps Intel is taking to provide the hardware and software needed for data analytics to improve the capabilities of intelligent devices and data center infrastructure.
“People are increasingly demanding more from their devices through applications and services whether at home, at work or wherever they may be,” Bryant said. “Intel is delivering a powerful portfolio of hardware and software computing technologies from the device to the data center that can improve experiences and enable new services.”
Bryant outlined plans to accelerate the expansion of Intel’s offerings across the data center processor product lines based on its innovative 22nm manufacturing technology before the end of the year, thereby enabling a more cost-effective and efficient data center infrastructure. Intel’s broad portfolio of data center intellectual property enables Intel to quickly integrate features into new products and bring them to market. For example, Intel is launching the new Intel® Atom™ S12x9 processor family customized for storage today, just four months after the debut of the Intel Atom S1200 processor for microservers.
Intel plans to deliver two more Intel Atom processor-based products this year that promise to deliver new architectures, improved performance-per-watt and an expanded feature set. Bryant demonstrated for the first time the next-generation Intel Atom processor family for microservers, codenamed “Avoton,” and confirmed it is currently shipping samples to customers for evaluation. Avoton will feature an integrated Ethernet controller and is expected to deliver industry-leading energy efficiency and performance-per-watt for microservers and scale out workloads.
Re-Architecting the Data Center
Bryant also revealed details on Intel’s plans to develop a reference design for rack scale architecture that uses a suite of Intel technologies optimized for deployment as a full rack. Hyper-scale data centers run by companies that maintain thousands of servers and store vast amounts of data require continued advancements in rack designs that make it easier and more cost effective to deal with major growth in users, data and devices. Traditional rack systems are designed to handle a wide variety of application workloads and may not always achieve the highest efficiency under all hyper-scale usages. The reference design will help re-architect a rack level solution that is modular at the subsystem level (storage, CPU, memory, network) while providing the ability to provision and refresh or logically allocate resources based on application specific workload requirements. Benefits include increased flexibility, higher density and higher utilization leading to a lower total cost of ownership.
Additional information on these announcements as well as the new Intel Atom processor S12x9 product family for storage servers, Intel® Xeon® processor E3v3 product family, Intel Xeon processor E7v2 product family and Intel Atom processor for communication and networking devices codenamed “Rangeley” is available in the news fact sheet.
Reinventing the Computing Experience
During his keynote, Kirk Skaugen, Intel senior vice president and general manager of the PC Client Group, provided a deeper look at the forthcoming 4th generation Intel Core processor family, which he said is now shipping to OEM customers and will launch later this quarter.
“Ultrabooks based on the 4th generation Intel Core processor family will enable exciting, new computing experiences and all-day battery life delivering the most significant battery life capability improvement in Intel’s history,” said Skaugen. “It will also bring to consumers a new wave of ‘two-for-one‘ convertible and detachable systems that combine the best of a full PC experience with the best of a tablet in amazing new form factors.”
NEW Architecture on 22nm Tri Gate
NEW Intel Power Optimizer: 20x Power Reduction
vs. 2nd gen Intel® Core™ ProcessorsNEW Integrated on package PCH [Platform Controller Hub]
for amazing form factorsNEW Integrated Audio DSP: more battery life, higher quality
Shipping Now and On Track for Q2 2013 Launch
The new Intel Core microarchitecture will allow the company to deliver up to double the graphics performance over the previous generation. In addition, the new graphics solution will have high levels of integration to enable new form factors and designs with excellent visual quality built in. Skaugen demonstrated these graphics improvements on the 4th generation Intel Core processor-based Ultrabook reference design called “Harris Beach.” The demo featured Dirt 3*, a popular gaming title, showing the same visual experience and game play as a discrete graphics card that users would otherwise have to add separately. He also showed the 4th generation Intel Core processor-based concept, codenamed “Niagara,” a premium notebook with the ability to play the unreleased enthusiast title Grid 2* from CodeMasters* without the aid of a discrete graphics card.
Along with touch capability, Intel® Wireless Display (Intel WiDi) will be enabled on all 4th generation Intel Core processor-based Ultrabook devices to allow people to quickly and securely stream content and apps from devices to the big screen, free from the burden of cables. Skaugen said the China ecosystem is taking the lead on integrating Intel WiDi into systems, and announced that the leading television manufacturer in China, TCL*, has a new model with the Intel WiDi technology built in. He also announced new receivers certified for Intel WiDi from QVOD* and Lenovo* and a set-top box from Gehua*.
Illustrating the low-power advances in Ultrabook devices, Skaugen showed off the new Toshiba Portege* Ultrabook detachable, based on the new low-power line of the 3rd generation Intel® Core™ processors.
Furthermore, Skaugen revealed that voice interaction in Mandarin is now available on Ultrabook devices from Intel through Nuance*.
Augmenting the company’s offerings for computing at a variety of price points, Skaugen announced plans for new market variants of its “Bay Trail” 22nm SoC with PC feature sets specifically designed for value convertibles, clamshell laptops, desktops and value all-in-one computers to ship later this year.
Mobile Inside
Tan Weng Kuan, vice president and general manager of the Mobile Communications Group, Intel China, highlighted how the company is working with ecosystem partners to deliver the best smartphone and tablet experiences with Intel inside. Tan discussed the company’s progress with the new Intel® Atom™ processor Z2580 (“Clover Trail+“) for smartphones and the Intel Atom Processor Z2760 (“Clover Trail“) for tablets, both of which are helping to usher in a range of new devices and user experiences.
Taking full advantage of the broad spectrum of capabilities enabled by Intel® architecture, processor technology leadership, manufacturing and multi OS support across Windows* 8 and Android*, Tan discussed the company’s forthcoming smartphone and tablet products based on Intel’s leading-edge 22nm process and an entirely new Atom microarchitecture. Intel’s quad-core Atom SoC (“Bay Trail“) will be the most powerful Atom processor to-date, doubling the computing performance of Intel’s current-generation tablet offering1. Scheduled for holiday 2013 tablets [in market Q4’13], “Bay Trail” will help enable new experiences and designs as thin as 8mm that have all-day battery life and weeks of standby.
Tan also highlighted Intel’s Atom SoC, codenamed “Merrifield,” which is scheduled to ship to customers by the end of this year [in market Q1’14]. The product will deliver increased smartphone performance, power efficiency and battery life over the current-generation offering.
Tan closed his remarks by calling upon China developers for collective innovation in helping to accelerate and grow the mobile market together. He announced the creation of a China-specific expansion of the company’s platform and ecosystem enabling efforts, focused initially on Atom processor-based tablets running Android*, and designed to speed time-to-market of leading-edge mobile devices based on Intel technology. He added that China developers are instrumental to this effort and will bring speed, scale and ingenuity that will drive new innovation globally.
Day 2 IDF Preview
Doug Fisher, vice president and general manager of Intel’s System Software Division, will open the second day of IDF, addressing several myths surrounding the industry and providing a vision on the vast opportunities that await developers. Specifically, he will showcase Intel’s transformation of the PC experience and advances in device segments, support of multiple operating environments and efforts to help developers scale and modernize computing with new hardware features and software advancements for more compelling user experiences. He will discuss how developers can utilize HTML5 to help lower total costs and improve time-to-market for cross-platform applications development and deployment, incorporate touch and sensor interfaces to modernize applications, and use perceptual compute technologies to enable consumers to interact with PCs via voice control, gesture recognition and more.
Intel Chief Technology Officer Justin Rattner will also take the stage to discuss how Intel Labs is drawing up plans for a bright future. He will reveal a vision for connected and sustainable cities where information technology helps to address challenges of clean air, clean water, better health and improved safety. He will also explain how today’s mobile, urban lifestyle is demanding faster and cheaper wireless broadband communications. Forecasting a move beyond the information age, Rattner will describe a new era coined “the data society” and show how information in the cloud will work on everyone’s behalf, collaboratively and safely, by analyzing and relating different data to deliver new value to individuals, enterprises and society as a whole. Rattner plans to surprise the audience with an exclusive first look at Intel® Silicon Photonics Technology.
This was summarized by Intel in a New Ultrabook™ experiences unveiled at IDF Beijing 2013 [Intel Developer Zone blog, April 16, 2013] post as follows:
Last week at the Intel® Developer Forum held April 10-11, 2013 in Beijing, China, Ultrabooks™ were in the spotlight as new experiences based on the 4th generation Intel® Core™ processor family were announced:
“Ultrabooks based on the 4th generation Intel Core processor family will enable exciting, new computing experiences and all-day battery life delivering the most significant battery life capability improvement in Intel’s history,” said Skaugen. “It will also bring to consumers a new wave of ‘two-for-one’ convertible and detachable systems that combine the best of a full PC experience with the best of a tablet in amazing new form factors.” – Kirk Skaugen, Intel senior vice president and general manager of the PC Client Group
There are three major factors in this new announcement: amazing graphics, even more Ultrabook form factor designs, and low-power advances creating longer battery life. Touch capability will also be part of this new generation of devices, along with Intel® Wireless Display (Intel WiDi) enabled on all on all 4th generation Intel Core processor-based Ultrabook devices to allow people to quickly and securely stream content and apps from devices to the big screen.
4th generation Intel® Core™ processors
The Ultrabook computing category was first introduced in 2011 with a 2nd generation Intel® Core™ processor. This was ramped up greatly in 2012 with the addition of touch and mainstream price points, along with the 3rdgeneration Intel core processor. In 2013, we get to experience a 4th generation Intel Core processor and the concept of “2 for 1” computing; basically, we get to experience a table and a PC experience in one machine:
“The new Intel Core microarchitecture will allow the company to deliver up to double the graphics performance over the previous generation. In addition, the new graphics solution will have high levels of integration to enable new form factors and designs with excellent visual quality built in. Skaugen demonstrated these graphics improvements on the 4th generation Intel Core processor-based Ultrabook reference design called “Harris Beach.” The demo featured Dirt 3*, a popular gaming title, showing the same visual experience and game play as a discrete graphics card that users would otherwise have to add separately. He also showed the 4th generation Intel Core processor-based concept, codenamed “Niagara,” a premium notebook with the ability to play the unreleased enthusiast title Grid 2* from CodeMasters* without the aid of a discrete graphics card.” –Intel Newsroom
These new processors will include:
- new architecture on 22nm Tri Gate
- Intel Power Optimizer: 20x power reduction vs. 2nd gen Intel Core Processors
- integrated on package PCH for amazing form factors
- integrated audio DSP which means more battery life and higher quality
Graphics
With this new generation of processors comes increasingly higher level graphics support, including:
- 3D graphics with up to 2x performance
- integrated on-package EDRAM memory
- API support
- Display with new 3-screen collage display
- enhanced 4k x 2k support
- 2x bandwidth with display port 1.2
- Media with new faster Intel Quick Sync Video
- faster JPEG and MPEG decode
- new OpenCL 1.2 support
(Source: IDF Keynote)
Touch
Touch is becoming more mainstream, and more consumers than ever before are expecting touch as a standard addition to their devices. In an Intel study of touch carried out in December of 2011, users chose touch nearly 80% of the time when given the choice between touch, keyboard, mouse, and track pad. These findings were echoed in another touch study by UX Innovation Manager Daria Loi:
“With touch capability becoming available in more and more Ultrabook devices, Intel undertook a research program to better understand if and how people might use touch capabilities in more traditional, notebook form-factor devices…… To spoil the ending, the results were positive-very positive, in fact. Users who were presented with a way to interact with their computers via touch, keyboard, and mouse found it an extremely natural and fluid way of working. One user described it using the Italian word simpatico-literally, that her computer was in tune with her and sympathetic to her demands.” – “The Human Touch: Building Ultrabook™ Applications in a Post-PC Age” [Intel Developer Zone blog, July 11, 2012]
Touch designs in Ultrabook form factors continue to ramp up, especially with the October 2012 launch of Windows*8, and this trend is expected to continue.
Power
One of the most intriguing announcements to come out of Beijing was the idea of heightened power consumption for the Ultrabook. Chips for notebooks, phones, and tablets are going to be greatly enhanced, boosting both runtime and standby power:
“By effectively removing nearly 3W of background drain, all operations are going to benefit, not just idle. Where Internet browsing was a 9W operation, expect to see that go down to around 6W for a big increase in battery life….. By reducing the mainboard size, space is created for more battery. Intel says there’s a chance to fit 20-45% more battery inside when motherboard sizes are reduced using HDI techniques.” – Ultrabooknews.com
Higher power expectations ties in with the announcement of 4th generation Intel Core processor Ultrabook systems that are coming out as early as June 2013 and on track for Q2 2013 launch.
Ultrabooks: just getting started
The experience you can expect from an Ultrabook with the new 4th generation core processor is, in a word, superior. These are extremely responsive machines that offer amazing performance, a natural UI with touch and voice, and AOAC (always on always connected) as a given. You also get to take advantage of Intel Identity Protection, anti-virus, facial log-in, vPro, and Small Business Advantage so your data is always safe. The machine itself is meant to be mobile, with all-day battery life, thinner lighter designs, and Intel Wireless Display. And let’s not forget that it just looks cool; great visuals, 2 in 1 convertibles and detachable form factors, not to mention a high res display.
Ultrabook as a PC category is continuing to drive market innovation; we’re seeing thinner form factors, intriguing designs (convertibles, detachable, etc.), and more natural human/computer interaction, such as voice control integration. Ultrabooks are able to deliver what is essentially a mobile computing experience; we’re looking at consumption usages similar to that of a smartphone or a tablet, with the productivity potential and sheer computing power of that of a full-blown PC. Is it a notebook or is it a tablet? The beauty of an Ultrabook is that it’s both.
Experiencing the Cloud 