• Content isn't king July 16, 2017 10:30 am
    People in tech and media have been saying that ‘content is king’ for a long time - perhaps since the VHS/Betamax battle of the early 1980s, and perhaps longer. Content and access to content was a strategic lever for technology. I’m not sure how much this is true anymore.  Music and books don’t matter much to tech anymore, and TV probably won’t matter much either. Most obviously, subscription streaming has more or less ended the strategic importance of music to tech companies. In the past, any music you bought for your iPod had DRM and could only be played on Apple devices, and the same was true in reverse for music from any other service. Even if you’d just encoded your own CDs (or downloaded pirated tracks, but in either case without DRM), physically transferring them to a different device with different software was a barrier. Your music library kept you on a device. With streaming these issues mostly go away. All the major services are cross-device (even Apple’s), and if you do switch to a different service you’re not giving up tracks you’ve paid money for, just a list of your favourites. Switching became easy. Since music no longer stops people from switching between platforms, it’s gone from being a moat (especially for Apple, the one platform company that actually had a strong position) to a low-margin check-box feature. That doesn’t mean that these services are exactly commodities - each builds its own recommendation tools, some experiment with routes to market (with mobile operators, for example), and some try exclusive early access to new pop songs. But they all have roughly the same underlying library of tens of millions of tracks, and the differences between them are fundamentally tactics, not strategies, just as music itself is a tactic: it is now merely marketing, not a moat. A Taylor Swift exclusive for Apple Music might drive some iPhone sales, just as a cool new ad campaign might, but there’s no strategic lever here - no lock-in. Something similar applies to ebooks. Like Spotify, the Kindle app is on any platform, so it doesn’t stop you switching devices. Unlike music, your books are still bought (mostly: there are some subscription services but they don’t cover mainstream titles), and locked with DRM, so it’s harder to switch away from Kindle than from Spotify, but that only locks you into Kindle, not any other part of Amazon’s platform: using a Kindle app or physical Kindle e-ink device doesn’t compel you to use any other Amazon products. Apple’s iBooks is not cross-platform, but has under a third of the US ebook market and much less in the UK, and I suspect that it was created only in case Amazon did not make a Kindle app for the iPad (I also suspect that, with hindsight, Apple might not have bothered to do it at all.) Ebooks, like music, do not seem to create any moat for any broader platform strategy. Meanwhile, whenever I talk to music people or book people, very quickly the conversation becomes a music industry conversation or a book industry conversation. What matters for music are artists and touring and labels and so on, and what matters for books are writers and publishers and rights and Amazon’s bargaining power in books and so on. These aren’t tech conversations. The big tech platform companies rolled into these industries and changed everything, but then moved on to bigger things. Sometimes they left a business unit behind, but books and recorded music aren’t part of their strategic thinking anymore: Amazon has a big ebooks business, but Prime and perhaps Alexa are the strategic levers. Tech needed content to make their devices viable, but having got the content (by any means necessary), and with it of course completely resetting the dynamics of the industry, tech outgrew music and books and moved on to bigger opportunities. All of this of course takes us to TV, the industry that’s next on the tech industry’s content journey. Just as new technology unlocked massive change in music and (rather less so) in books, it is now about to break apart the bundled, linear channel model of the TV industry (this is especially the case in the USA, which has a hugely over-served pay TV market). As this happens, there are all sorts of questions that follow on: what happens to channels that might be able to make more going direct to consumer (HBO, perhaps); what happens to channels that might benefit from being in a bundle and lose from having to go direct (ESPN, perhaps), where the syndication model goes, and so on, and so on. One thing that does seem very likely, deterministically, is that the curve of viewing distribution will get steeper: the shows that are watched mainly because they’re broadcast at 8pm on Saturday will suffer, and so will the channels that are watched because they’re high up on the program guide. Channel brands, shows and episodes are unbundled. We’ve been talking about this in theory for over a decade, but finally, praxis is here. Just as for music or books, though, these are all fundamentally TV industry questions. What viewing distribution, what rights structure, what exploitation chain, what relationship between creatives, financiers, aggregators and distributors - these are all southern California questions, not northern California questions. So, what are the northern California questions, and will this end up being any more strategic than books or music?Clearly, it won’t be identical. Though ‘TV’ everywhere has the same subscription streaming model as music, the content is fragmented. This is partly because of media companies (like books and music companies before them) trying to go direct to consumer, and partly because the value of TV content seem to vary more (and might vary too much for a single bundle that doesn’t just replicate the cable bundle), but also because (and this quite new), Amazon and Netflix have entered TV content creation and ownership in ways and on a scale that no-one from tech ever did for music or books. Amazon did try to get into book publishing and has a significant self-publishing arm, but it had little success recruiting existing mainstream authors; neither Apple nor Spotify created a record label. In TV, though, Amazon and Netflix are already spending more on commissioning original and exclusive content than many traditional channel brands. Netflix, of course, is a TV company, in the context of this conversation - it isn’t using content for leverage for some other platform (Spotify is the same, without the commissioning). But Amazon clearly is using content for platform leverage - as something else to speed up the Prime flywheel. Prime has become a third pillar to Amazon’s business, next to logistics and the ecommerce platform, and Amazon is always looking for ways to add more perceived value to it, preferably with no marginal cost - TV content that it owns outright is exactly that. Unlike a Taylor Swift or Kanye West exclusive, this is more than just marketing - it’s something you lose altogether if you give up something else that’s not directed related. Cancel the subscription delivery service and you lose access to all Amazon TV shows. For Amazon, then, one could say that content is king - that content has strategic leverage. The puzzle is whether any of the other tech platform companies (all of which are experimenting with commissioning original TV) have a similar opportunity. For Google and Facebook, there’s no subscription to cancel - there’s no binary (renew/don’t renew, cancel/don’t cancel) decision you might take that would cut off your access to that great TV show. You don't close your Facebook account - you just go there less. You might stop paying for the Youtube TV service, but that won’t cut off your access to any other part of Google - nor would anyone want it to - the purpose of these businesses is reach. Nor, really, will you fundamentally change your search behaviour if Google discovers the next Game of Thrones. That is, cancel Prime and you'd lose Amazon, but what do Google & FB have to cancel? Without some platform decision to lock you into, content is marketing, and revenue, but not a lever. Conversely, one can certainly argue that selling smartphones is a subscription business, and though Google does not itself sell phones (to any significant degree), Apple certainly does. You pay an average of $700 or so every two years (i.e. $30/month) and Apple gives you a phone. Buy an Android instead and you lose access to the (hypothetical) great Apple television service. This is why people argue that Apple should buy Netflix. From a pure M&A perspective, buying Netflix and immediately limiting its business to Apple devices would halve its value - why buy a business and fire half the customers? Buying it without such a restriction would have no strategic value - Apple would just be buying marketing and revenue. But as Amazon has shown, you don’t have to buy Netflix - they’re not the only people who can buy and commission great TV shows. A question here, though, is how well a TV service, perhaps with a stand-alone monthly subscription, as for Apple Music, maps to an 18-30 month handset replacement cycle. Suppose Apple created the next huge hit show next spring and made it exclusive to its devices: very well, but how many smartphone users will be making an upgrade decision in the middle of watching the show, and how many will be deciding between an iPhone and Android 3 or 7 or 10 or 11 months later? How much does the archive matter? Perhaps a deeper question, setting aside the purely strategic calculations, is that Apple has always preferred a very asset-light approach to things that are outside its core skills. It didn’t create a record label, or an MVNO, and it didn’t create a credit card for Apple Pay - it works with partners on the existing rails as much as possible (even the upcoming Apple Pay P2P service uses a partner bank). So, Apple has hired some star producers and will presumably be commissioning some shows, with what counts as play money when you have a few hundred billion of cash. But I’m not sure Apple would want to take on what it would mean to have a complete bouquet of hundreds of its own shows. That would be a different company. If and when Apple does go back to southern California, meanwhile, it does so with nothing like the kind of negotiating power that it had in iPod days - Amazon and Netflix (if not also Google and Facebook) have seen to that. But that doesn’t mean that content companies have much more power either. Part of ‘content is king’ was the idea that (at least in theory) content companies can withhold access to their libraries entirely, and in the past one might have presumed that that meant they had the power to kill any new service at birth. In reality, rights-holders have always had too strong a need for short-term revenue to forgo broad distribution, and few of them individually had a strong enough brand to extract a fee that was high enough to justify exclusivity. They always have to take the cheques - individually to meet their bonus targets, and collectively to meet their earnings estimates. And, of course, for a media company to give a tech platform exclusivity is immediately to build up that platform’s power over the media companies. Similar problems apply to the somewhat chimerical idea that content companies should go direct to consumer - few of them have the skills, fewer have the brand and content, and fewer still, again, have a shareholder structure to allow the short-term revenue hit. So, exclusivity is a power you can’t use even if you can afford it: it works for marketing, but not as strategy. This is a multi-sided market place with too many players on both sides for anyone to exert dominance: Apple dominated purchased music and Amazon dominates ebooks (thanks to the DoJ), but there is no such dominance on the buy or sell side for TV, for now. Taking a step back, though, it’s not clear how much all of this really matters to tech. The tech industry has been trying to get onto the TV and into the living room since before the consumer internet - the ‘information superhighway’ of the early 1990s was really about interactive TV, not the web. Yet after a couple of decades of trying, the tech industry now dominates the living room, and is transforming what ‘video’ means, but with the phone, not the TV. The reason Apple TV, Chromecast, FireTV and everything else feel so anti-climactic is that getting onto the TV was a red herring - the device is the phone and the network is the internet. The smartphone is the sun and everything else orbits it. Internet advertising will be bigger than TV advertising this year, and Apple’s revenue is larger than the entire global pay TV industry. This is also why tech companies are even thinking about commissioning their own premium shows today - they are now so big that the budgets involved in buying or creating TV look a lot less daunting than they once did. A recurring story in the past was for a leading tech company to go to Hollywood, announce its intention to buy lots of stuff, and then turn pale at the first rate card it was shown and say “wow - that’s really expensive!”. They have the money now, not from conquering TV but from creating something bigger. 
    Benedict Evans
  • Creation and consumption July 14, 2017 9:49 pm
    There's a pretty common argument in tech that though of course there are billions more smartphones than PCs, and will be many more still, smartphones are not really the next computing platform, just a computing platform, because smartphones (and the tablets that derive from them) are only used for consumption where PCs are used for creation. You might look at your smartphone a lot, but once you need to create, you'll go back to a PC. There are two pretty basic problems with this line of thinking. First, the idea that you cannot create on a smartphone or tablet assumes both that the software on the new device doesn't change and that the nature of the work won't change. Neither are good assumptions. You begin by making the new tool fit the old way of working, but then the tool changes how you work. More importantly though, I think the whole idea that people create on PCs today, with today's tools and tasks, is flawed, and, so, I think, is the idea that people aren't already creating on mobile. It's the other way around. People don't create on PCs - they create on mobile. There are around 1.5bn PCs on earth today (using the term 'PC in the broad sense covering Wintel, Mac and Linux). Maybe as many as 100m PCs are being used for some kind of embedded product: elevators, points of sale, ATMs, machine tools, security systems etc. Setting those aside, the rest are split roughly evenly between corporate and consumer, and many of these (especially the consumer ones) are shared, such that there are over 3bn people online. But what are all those PCs being used for?It's pretty clear that only a small proportion are actually being used for professional applications. Perhaps 50m people are using everything from Adobe to Autodesk to software development tools; adding in Office users is more complex, since there are notionally a billion installed copies, but ‘power’ Office users probably number a further 25-50m. So, there are perhaps 100m people who today engage in some form of complex creation using what one might call 'sophisticated professional software' on a windows + mouse + keyboard-based personal computer. (I’ve outlined my workings and sources for this at the bottom). If less than 10% of PCs are actually doing professional, precise, complex creation, what are the other 90% being used for, if not creation?Well, they do email, and the web. Some of the consumer ones also play games - there are over 125m 90-day active Steam accounts (which would be under 20% of consumer PCs - one could look at this as an analogue of the professional creation app users, except that there's probably a substantial overlap in the two sets). They do Facebook and buy groceries. The corporate ones perhaps do accounts payable and customer support, and SAP or Salesforce or Success Factors or dozens of other vertical business process applications. Many of those applications will still be around in a decade or two (if they’ve not been replaced by machine learning) - they might move to SaaS web apps if they're not there already, and might be accessed on Chromebooks or Android tablets or iPads or just on $250 Windows boxes, but it doesn’t really matter. They don't need a filing clerk and they don't need a 'precision pointer', a complex multi-window interface and all the other things that separate ‘real computers’ from the new generation, any more than email or a web browser do. Quite a lot of them just need a Gmail box. They probably need a biggish screen and perhaps a keyboard, but that’s not what makes a ‘PC’. Conversely, what is being done on ‘phones’ - or rather, on these small touch-screen computers that we all carry around with us? We write - people have been writing more on phones than on PCs since the days of SMS - and we share, take pictures, create videos, play games and talk to our friends. That is, we do most of things that those 90% of PCs are used for, but we also do everything that you can do with a touch screen and internet-connected image sensor, and GPS, and all the other things a PC doesn't have, plus everything you can do with all of the billions of app downloads.  The big difference on mobile is that now people know how to do this. In my first term at Cambridge, in 1995, I explained to a future president of the Union that though he had been told to ‘download Netscape’, clicking on the ‘download’ graphic on Netscape’s site had merely put 15 copies of the installer file onto his desktop, and he would also have to 'double-click' on one of them. That was pretty typical - installing software by yourself, that added capabilities to your computer, or edited video (something every ten-year-old now does all day), was something for experts. More recently, I’ve seen data suggesting that a large proportion of people who owned digital cameras never loaded the pictures onto a computer (even if they owned one). They looked at the pictures on the camera screen, or got them printed at a kiosk - but didn't print them until the card was full, as they often thought that you couldn’t add more pictures to the card after you’d ‘developed’ it in this way. My father-in-law prints things out by taking a photo of the computer screen and then taking his camera to the kiosk in the supermarket.  This piece from NNG last year provides some handy quantification of what computer literacy really looks like. These kinds of questions start to go away with mobile.Anything that you can't do on mobile/tablet and can do on a PC is something that 90%+ of people couldn't actually do on a PC either.— Benedict Evans (@BenedictEvans) July 14, 2017 It seems to me that when people talk about what you ‘can’t’ do on a device, there are actually two different meanings of ‘can’t’ in computing. There is ‘can’t’ as meaning the feature doesn’t exist, and there is ‘can’t’ as meaning you don’t know how to do it. If you don’t know how to do it, the feature might as well not be there. So, there is what an expert can’t do on a smartphone or tablet that they could do on a PC. But then there are all of the things that a normal person (the other 90% or 95%) can’t do on a PC but can do on a smartphone, because the step change in user interface abstraction and simplicity means that they know how to do it on a phone and didn’t know how to do it on a PC. That is, the step change in user interface models that comes with the shift from Windows and Mac to iOS and Android is really a shift in the accessibility of capability. A small proportion of people might temporarily go from can to can’t, but vastly more go from can’t to can. Meanwhile, while there are 1.5bn PCs, many of them shared, there are today around 3bn smartphones, and this will rise to 5bn or more in the next few years, out of 5.5bn people on Earth aged over 14. There is a meaningful grey area around what some of these people pay for connectivity and pay to charge their phones, but the price and distribution of smartphones means that billions more people will use smartphones for something than ever used a PC for anything at all. So, 100m or so people are doing things on PCs now that can't be done on tablets or smartphones. Some portion of those tasks will change and become possible on mobile, and some portion of them will remain restricted to PCs for a long time. But there are another 3bn people who were using PCs (but mostly sharing them) but who weren't doing any of those things with them, and are now doing on mobile almost all of the stuff that they actually did do on PCs, plus a lot more. And, there's another 2bn or so people whose first computer of any kind is or will be a smartphone. 'Creation on PC, consumption on mobile' seems like a singularly bad way to describe this: vastly more is being created on mobile now by vastly more people than was ever created on PCs. NotesAdobe reported 4.25m Creative Cloud subscribers a year ago, and has a roughly equivalent base of legacy non-subscribing usersAutodesk has 2.5m subscriptions and 2.6m non-subscribersMatlab has 'millions' of usersIn 2014 Apple said it has "more than 1m installs of Final Cut Pro"Stack Overflow estimates 16m ‘English-consuming’ developers and 40m people who look at code, but on the other hand the USA Department of labour says 1.1m in the uSA, which suggests Stack Overflow's estimate is a (very) upper limit Apple has 13m registered developersSome of these numbers are a little old or fuzzy, while some user bases will overlap and some won't, and obviously people use other applications that aren't on this list. But taken together, they suggest that the number of people who use professional, complex PC-based applications to do 'real work' is something around 50m. Meanwhile, Apple said recently that around 15m Macs are used at least weekly for 'high-performance' applications (software development, video editing, 3D graphics etc) and 30m used occasionally for those tasks, which tends to confirm this number. (Note that though Macs have a very small share of the overall PC market they have a much higher share in creative industries and software development.)The outlier is Office, for which Microsoft has reported an installed base of around 1bn. However, as we all know, OEM bundles and corporate deals mean that Office is on an awful lot of computers on which it isn't really used ( when a university with 20k people or company with 250k employees takes out a license, those people are all counted as Office users), and more importantly, a huge number of Office users actually use it in pretty limited ways, which is why things like Google Docs exist. Microsoft doesn't release the telemetry that would tell us how many people could be called power users, but we can take a proxy by looking at some of the professions that imply power use:There are 660k CPAs in the USA and perhaps 150k ACAs in the UK. 100k MBAs are awarded in the USA each year - so one might propose something over 1m people in the USA have an MBA and at most several times that globally (this is of course a good MBA interview question itself)16k people passed the CFA Level III last yearThere are only 1.3m lawyers in the USA (actually, this is often a disguised MBA) and 120k solicitors in the UKThis gets us to millions, or low tens of millions at most, of people who actually know how to make a chart in Excel without touching the mouse, or who understand how track changes works.Meanwhile, there are all sorts of PCs being used for embedded applications of various kinds. Some of these are very visible but actually quite small as a percentage of the total PC base: PCs are inside pretty much any ATM or elevator, but there are only about 5m ATMs on earth, and perhaps 10m elevators (there are 1m in the USA). Points of sale are a much bigger use-case: 45m merchants accept VISA cards and the top decile of these (Wal-Mart etc) have tens or hundreds of thousands of units, mostly PCs, though the tail often has only a terminal. Adding all of these use cases together might get you to 50-100m units. These are neither creation nor consumption, and over time a lot of them will convert to Android.  
    Benedict Evans
  • Not even wrong - ways to dismiss technology May 26, 2017 6:32 pm
    How do we get beyond 'that's a toy!' and 'but everything looked like a toy!', and try actually to understand whether a new technology might matter? What are valid lines of reasoning, and what statements are 'not even wrong'?
    Benedict Evans
  • Ten Year Futures April 25, 2017 10:29 pm
    Looking forward 10 years, there are three primary technology that will change everything - cars, augmented reality and machine learning. But in the meantime, there ere huge changes around advertising, TV and retail that come from consumer behavior and industry dynamics, not tech, but will change just as much. 
    Benedict Evans
  • The first decade of augmented reality April 11, 2017 10:21 pm
    If augmented reality is the next multitouch - the next universal platform - what would that look like? What might we build?
    Benedict Evans
  • Cars and second order consequences March 30, 2017 5:37 am
    Electric and autonomy are rolling through the car industry, changing everything about it. But though they transform gasoline and car accidents, they could change a lot more besides - everything from cigarettes to parking. It's the second-order consequences that are hardest to see, but most interesting.
    Benedict Evans
  • The end of smartphone innovation March 23, 2017 3:45 pm
    Smartphones are still evolving, but we're on the upper slopes of the S-Curve. This means innovation is slowing, but also that iOS and Android are now unassailable. It's time to focus on what's next - voice, machine learning and, especially, augmented reality. 
    Benedict Evans
  • Voice and the uncanny valley of AI March 9, 2017 10:26 pm
    The trap that some voice UIs fall into is that you pretend the users are talking to HAL 9000 when actually, you've just built a better IVR, and have no idea how to get from the IVR to HAL. How can we find the mental models for this to work - to bring less rather than more friction? 
    Benedict Evans
  • Facebook and Snapchat: metrics versus creation February 17, 2017 8:56 pm
    Where Facebook is surfing user behaviour, Snapchat is trying to create entirely new experiences all the time, around camera, touch and mobile - around what makes mobile different to the PC.
    Benedict Evans
  • Mobile 2.0 January 31, 2017 10:00 pm
    Ten years after the iPhone, what assumptions can we leave behind? What do we build if we assume a billion people have a high-end smartphone, and forget about PCs?
    Benedict Evans
  • Asking the wrong questions January 12, 2017 2:35 am
    With fundamental technology change, we don't so much get our predictions wrong as make predictions about the wrong things.
    Benedict Evans
  • Cars as feature-phones January 11, 2017 4:50 pm
    Cars today are much like phones in 2007 - overloaded by features and badly in need of a new interface model, even as we move slowly towards autonomous cars, which will have no interfaces at all. 
    Benedict Evans
  • Mobile is eating the world December 9, 2016 4:00 pm
    As we pass 2.5bn smartphones on earth and head towards 5bn, and mobile moves from creation to deployment, the questions change. What's the state of the smartphone, machine learning and 'GAFA', and what can we build as we stand on the shoulders of giants?
    Benedict Evans
  • Cameras, ecommerce and machine learning November 20, 2016 8:46 pm
    Machine learning means every image ever taken can be searched or analyzed and insight extracted, at massive scale. Every glossy magazine archive is now structured data, and so is every video feed. How does this change retail?
    Benedict Evans
  • From mobile first to mobile native November 3, 2016 12:10 am
    What happens if you just forget about the PC altogether? But also, what happens if you forget about featurephones? What happens if you presume all of the sophistication that a modern smartphone has and a PC does not, and if you also presume that, with 650m iPhones in use and 2.5bn smartphones in total, you can build a big company without thinking about the low end anymore?
    Benedict Evans
  • Echo, interfaces and friction October 11, 2016 2:46 am
    With Amazon's Echo, Snapchat Spectacles or the Apple Watch, e're unbundling not just components but apps, and especially pieces of apps. We take an input or an output from an app on a phone and move it to a new context. We remove friction, but we also remove choices. 
    Benedict Evans
  • Imaging, Snapchat and mobile August 16, 2016 6:57 am
    We’re going from computers with cameras, that take photos, to computers with eyes, that can see. 
    Benedict Evans
  • In praise of failure August 10, 2016 9:41 pm
    You need to ask not whether this idea will fail, let alone whether it could fail, but rather, ‘what would it be if it worked?’ You need, in a sense, to ‘suspend disbelief’ - to put aside your normal human risk-aversion and skepticism, accept the probability that it could go to zero, and ask if this could 'put a dent in the world', and if so, how big. 
    Benedict Evans
  • Videos of the future July 26, 2016 11:39 pm
    After a decade in which phones swallowed physical objects, with cameras, radios, music players and so on turned into apps, AR might turn those apps back into physical objects - virtual ones, of course. On one hand cameras digitise everything, and on the other AR puts things back into the world. 
    Benedict Evans
  • Platform wars: the final score July 25, 2016 8:48 pm
    The platform wars and over and Apple and Google both won. So, what's the score, how many smartphones and tablet are out there, and what should we think about next?
    Benedict Evans