Thriving in a ‘PC-plus’ world: An interview with Lenovo CEO Yang Yuanqing | McKinsey & Company

http://www.mckinsey.com/insights/high_tech_telecoms_internet/thriving_in_a_pc-plus_world

Great interview from June by McKinsey’s Gordon Orr and Rik Kirkland  with Lenovo Chairman/CEO Yang Yuanqing. Genuinely great leader who was part of the original Lenovo crew from the mid-80s.  Probably the tech sector rock star, their version of our Bill Gates/Michael Dell rolled into one.

He makes some key points about Lenovo’s rise to #1 in the sagging PC industry.

1. The company followed a “protect and attack” strategy of protecting its enterprise/commercial business in the west while attacking in emerging markets, particularly Brazil and India through acquisitions and organic growth.

2. It diversified out of PCs into mobile early and has been a scrappy player inside of China’s fierce smartphone market.

3. It isn’t reluctant to invest in R&D to differentiate its products.

4. Being Number One is a self-fulfilling brand builder, as he put it: everyone knows the name of the tallest mountain in the world, but what’s the name of the second tallest?

yangyuanqinglenovo

The Twilight of the Laptop

It’s been three years since I bid Lenovo adios and used my employee discount to buy my last ThinkPad, a T410s. I was a big ThinkPad booster in my day. I was paid to be. Cash incentives aside, the all black design, the red trackpoint pointer in the middle of the keyboard, the promise of a rugged, durable, non-nonsense computer was a classic alternative to the generic chromed plastic and blue indicator lights being pumped out by the competition in the PC industry’s ongoing race to the bottom of commodity computing. ThinkPads were the best laptops on the market and it was easy to market that fact.

No offense to the good designers and engineers I worked with back then, but the T410S was a lemon that took two annoying warranty trips back to the service center to solve a bad display problem and then an aggravating overheating problem that caused it to shut down and turn into a brick. I hadn’t done my homework when I bought that machine, and when I tried to breathe a second life into it with a 64 GB SDD harddrive I learned that the  original disc’s form factor was utterly weird, expensive, and ultimately impossible to upgrade. So I said to hell with it, built a great desktop tower myself with parts ordered from Newegg and haven’t looked back.

The ThinkPad still works but I don’t use it anymore and have passed it along to my son. I expected to buy another one this summer, but ….

This post is being written on a $250 Google Nexus 7 tablet with a $70 Logitech wireless bluetooth keyboard. The battery life is great. I can use it in my lap, on the porch, in the morning with my morning coffee. While I don’t like having to take my fingers off of the little keys to touch the screen and move the cursor around, I can get past all that because for $320 I have a great set up for taking notes, editing documents from my Dropbox and Google Drive accounts, watching past episodes of Deadwood on HBO Go and controlling my Sonos speaker system playing WWOZ over TunedIn radio.

I won’t buy another clamshell classic laptop ever again. I may be given one if I take another job inside of a corporation, but even then I imagine the “bring-your-own-device” to work trend will give me the freedom to show up with a tablet/wireless keyboard combo. This isn’t a retromingent screed against PCs, just a statement of personal preference backed up by one of the more vicious disruptions in computing platforms since the PC was introduced to the world in the late 70s.

The old argument that serious creation and composition would always prefer a real notebook with a real keyboard is silly. I can see myself buying a Thinkpad tablet just to get to the ThinkPad’s legendary keyboard (the way the Thinkpad engineers deliver the best keyboard experience is a great, untold story but one that few serious typist/Tpad fans would dispute), even the Microsoft Surface is a nice piece of hardware. And as I see more and more iPads and Android tablets pulled out in meetings and turned into typing devices with bluetooth keyboards, I think I’m justified in saying the sun is setting on the world of Inspirons, Pavillions, Satellites and ThinkPads.

I’ve tried external keyboards in the past, most memorably a folding contraption back in the heyday of the Palm Pilot that got maybe a grand total of three hours usage before I gave up in expensive disgust. But this stripped down combo of Android and bluetooth typing is working for me when I am away from the desktop battlestation.

Quaking Sands of Technology

So everyone has heard of Creative Destruction, the phenomenon of change that destroys incumbents and gives birth to insurgents, a repeating and accelerating cycle of technology killing its commercial antecedents while opening opportunity to a new generation of attackers. Richard Foster, a director at McKinsey, wrote a book in 2001 about the trend, finding in his research that the average tenure of the S&P 500 was shrinking from 61 years in the late fifties to 18 years today. Gone are Kodak, Palm, Compaq.

The fall of Research in Motion — aka Blackberry — is stomach churning to contemplate if you’re the CEO of a technology company over ten years old. According to the New York Times the company owned half of the smartphone market in 201?. That’s 50% market share a mere three years ago. Now, as the company dies under the assault of the iPhone and Android, it is “exploring strategic options” … aka looking for a buyer.

Jean-Louis Gassee, the ex-Apple exec, told the Times that “Buying Blackberry is necrophilia.”

From status symbol to relic in only a few years. Obviously somebody at RIM was either:

a) complacent and had the hubris that the market share was eternal or …

b) blind to the signs of technical disruption that were going to trash their business model (touch screens, app stores, media & entertainment ecosystems) …

or c) cocksure that IT departments at big companies would see the upstarts at Apple and Google for the insecure, hackable toys they were and stand by Blackberry’s vaunted BES secure server technology

Then the President bitched he wanted to use an iPhone and suddenly every corporate drone in America was pounding at the doors of IT demanding iPhone support.

If the Blackberry can blow the dominance of a market in just three years, then who is next? The minicomputer industry wheezed along for at least a decade after the introduction of the PC. The shift to solid state from analog took a decade to crush the old guard in vacuum tube monitors and spinning hard drives.  Intel’s fat and happy ownership of microprocessors is getting slapped around by ARM and aggressive competitors like Qualcomm. Microsoft? Well, that’s a tale for another day, but don’t count out the corporate inertia that is propelling that beast forward (and don’t discount the potential of the Xbox, the most remarkable accidental asset in MSFT’s arsenal). PCs are dying, just getting diversified and pushed hard into the emerging markets but I think I’ve bought my last laptop (as I am writing this on a Nexus 7 tablet with a bluetooth keyboard).

The old strategic imperative to keep 70% of the business in the cash cows, 20% in incremental improvements and 10% in bet-the-farm-over-the-horizon initiatives is a death sentence in this days of agile ready-fire-aim startups with nothing to lose and everything to gain. Innovation — the darling buzzword of management consultants in the last decade — can’t be performed by committee nor Powerpoint. For some of the technically driven behemoths acquisitions are the solution, buying up the Waze’s and Tumblr’s and hoping the integration process doesn’t squelch the spark that made those companies so hot to begin with.

Over dinner a few months ago with the CEO of Acquia, Tom Erickson, he told me he was drawn to the irresistible combination of SaaS, Cloud and Open Source. All three trends are massive disruptors that wiser people than me knew were coming over a decade ago. But the companies making the most of those disruptions are the ones with nothing to lose. As Mitch Kapor once said, the biggest impediment to progress is an installed base.

On trains

Cape Cod has been served by limited weekend train service this summer, the Cape Flyer, and initial reports are very positive with the operating costs close to being covered and the passengers “liking” the hell out of the thing on Facebook. It’s not the fastest train in the world, but it certainly is gaining in popularity after the nightmarish off-Cape traffic on the Fourth of July weekend that apparently backed up 25 miles from the Sagamore Bridge. The Cape has no daily passenger service to Boston or Providence, with commuters to those cities forced to drive or take the bus. The bulk of the train activity seems to be the scenic dinner train out of Hyannis and the trash train that hauls the Cape’s detritus to the generators in Rochester.

I would certainly reconsider my weekly drive to Manhattan if there were a dependable and speedy train from the Cape to NYC via Providence, but I won’t go into the terrible state of the Acela (over-priced, over-crowded, and too slow) and the general scandal of the American railroad infrastructure along the busy northeast corridor from Boston to Washington.

Two things have trains on my mind this week. First is a book by Tim Parks, an expat living in Verona, Italy who writes about his love-hate affair with Trenitalia in Italian Ways, an account of the Italian rail service he depends on for his commute between his home and his professorship in Milan. I like Italian trains — I’ve taken the Cisalpina Eurostar from Zurich to Florence and then Florence to Venice and back again to Zurich — they are slightly funkier than their French or German counterparts and Italian railroad stations are nicely chaotic. I like train-based travel accounts. Paul Theroux is the master in my opinion, largely because he’s so judgmental of his fellow passengers and makes his tales more about the eccentricities of the people on the trains than the scenery out the windows. Parks isn’t nearly as nasty and mean-spirited, I suppose because he’s lived in Italy for 30 years and doesn’t want to give too much offense. He spends an inordinate amount of time carping about the illogic of the Italian ticket/time table system and the atrocious layout and lack of directions in an Italian train station. But when he takes a cue from Theroux and describes his fellow passengers in a Sicily-bound train, all yapping away in their mobile phones, the book becomes interesting.

And the second thing that has sparked my recent interest in trains is Tesla-founder Elon Musk’s forthcoming announcement of his “hyperloop” concept — a combination of the Concorde, a rail gun, and an air hockey table — that would make travel between Los Angeles and San Francisco faster than a jet.

PC sales swoon, I yawn

Lots of retweets and links to this morning’s IDC report on the PC industry falling off a cliff in the first quarter — sales are down some 13% from the previous year. Stowe Boyd blogs that the analysts need to get over it, stop using words like “worrisome”  and embrace the better world of cheap touch devices in this “Post-PC Era” that happens to coincide with the third birthday of the iPad.

“Personally, I think we should be cheering the transition to more convenient, lower-cost, gesture-based tablets. It’s not regrettable. But the IDC analysts are obviously rooting for the past, and we’re zooming into a future they don’t like much. I think they should side with the people shifting to tablets.”

Windows 8 and its lukewarm welcome is taking some of the blame. Not having upgraded myself I can’t bring myself to trash an OS that I haven’t played with, but I hear over and over that the upgrade is particularly frustrating on older, non-touch enabled PCs. In a talk I gave to the Cape Cod Technology Council last Friday morning, I led off with the obvious observation that the PC paradigm shift is the most massive upheaval the tech world has seen in thirty years, comparing the disruption of tablets on PCs to what Wikipedia did to the Encyclopedia Britannica ….. an analogy Stowe cites as well.

It’s not an all-or-nothing transition. PCs are not going to become the typewriters of tomorrow. The advantages of large screen/awesome keyboard composition will prevail. My microprocessor and storage might one day live in my phone which I’ll snap into a desktop cradle and wirelessly connect to a bluetooth full size keyboard/mouse and a big flat panel display, but as far as I’m concerned the PC experience comes down to the size of the screen and the awesomeness of the keyboard. The box itself — whether it is a clamshell laptop, a Yoga multidevice like the Surface, an iPad with a bluetooth keyboard or a big tower I built myself from parts bought off of Newegg — is irrelevant. Not to the companies that make them of course, but the “paradigm” of sitting in front of a monitor and banging on keys will remain the same for all professionals. Touch is nice for consuming, but hell on creating.

Fully charged

My daughter gave me a Duracell Powermat for Christmas and I’m loving it so much I bought a second one for my New York office. The system consists of a sleek base unit that can accommodate two devices, a case for my Samsung Galaxy S3, and a portable battery unit that can charge a fading phone away from the base. This is cordless charging, the same inductive technology used to recharge electric toothbrushes. I first saw it demonstrated in 2009 at Qualcomm, but it was a bit clunky and didn’t seem all that interesting at the time.

But in practice the system is awesome with a couple irritations. After fitting the case over the phone and plugging it’s male connector into the phone’s female micro-USB port (tight fit, which makes changing cases a bit of a hassle — more on that in a second) the phone can be placed on the charging base where it magnetically slips into the proper position with an audible confirmation that charging has started. I set the phone to go into “bedside” mode when its docked on the Powermat. Only two phones are supported — the Galaxy and the iPhone 4s — but the iPhone 5 case is expected sometime soon. The base units come in three, two and single device configurations. I thought the spare battery brick was a nice-to-have, not a need-to-have, but on a recent vacation it was pressed into use.

The hard plastic case isn’t as rugged as an Otterbox and has to be removed if I want to dock the phone in the car cradle. I imagine Duracell has a car unit in the works, but for now I have to peel off the Duracell case to use the phone in the car for the usual GPS/handsfree/Audible/music stuff.

Duracell is pushing the technology hard, painting a picture where charging bases will be available in coffee shops, nightclubs, airport lounges, stadiums, etc.. and apparently truly wireless charging is over the horizon.

Here’s the obligatory YouTube vision of Millenial bliss:

The double-device mat is $90 at Amazon and includes the portable battery pack and a case for a single phone.. A one-device mat is $32.

The Cost of Latency in eCommerce

In the 1980s and 90s during the early years of the PC industry, there was alot of discussion of the economic impact of slow computers on user productivity.  This was driven by some IBM research out of its Thomas Watson center in 1982: The Economic Value of Rapid Response Time by Walter Doherty and Ahrvind Thadani.

“When a computer and its users interact at a pace that ensures that neither has to wait on the other, productivity soars, the cost of the work done on the computer tumbles, employees get more satisfaction from their work, and its quality tends to improve. Few online computer systems are this well balanced; few executives are aware that such a balance is economically and technically feasible.

In fact, at one time it was thought that a relatively slow response, up to two seconds, was acceptable because the person was thinking about the next task. Research on rapid response time now indicates that this earlier theory is not borne out by the facts: productivity increases in more than direct proportion to a decrease in response time. This brief describes some of this research and the implications for increasing productivity and cutting costs that are among the chief challenges of business today.”

Then ten years ago Eric Horvitz at Microsoft started looking at the impact of interruptions on PC users and how long it took them to get back on task. The entire science of interruption is interesting,. especially for the lifehacker movement that tries to deliver great productivity via various hacks and techniques to reduce interruption.

Delays and interruptions are arguably related. While you wait for a slow site to load in your browser your mind seeks something to do rather than stare at the screen, a buffering warning, or some icon of an hourglass. You switch tabs, change screens, or just give up on the poky site or service and move on to the next thing, subconsciously annoyed at your old laptop, bad internet connection, or the general crumminess of the pipe between you and your destination.

My partner Ben shared this interesting fact buried in a five-year old presentation by Amazon’s Greg Linden on the economic impact of “latency” on ecommerce. This blew me away. In a presentation he claimed “Every 100ms delay costs 1% of revenue.”

You can get the presentation at Strangeloop, a vendor in the site optimization space. Here are some other impacts of site speed on key performance indicators:

I’ll take the liberty of extrapolating that from Amazon’s most recent reported revenue of $48 billion in 2012 to mean that 100ms of performance is equivalent to half a billion dollars a year.

In my experience CTOs and  CIOs at web-centric companies have tended to give more weight to availability than performance, stressing fault-tolerance and uptime over site performance.  While they may be driven by how many “nines” their infrastructure is rated at, I wonder how many are making the investment in monitoring services and tools to determine their site load times. For ecommerce operations focused on converting browsers to checked out carts, I would argue response time as valid a function of success as A/B testing and strong content marketing and audience development.