Archive | July 2016

Is the PC industry “collapsing?”

Not exactly!

1) Yes, PC sales continue to fall. Q2 2016 sales are down 4.5% from the same quarter in 2015.

2) But given that PC sales fell over 10% for all of 2015, and are being forecast to fall 11% this year, a 4.5% drop is actually better than expected!

3) Oddly, Apple PC sales are falling faster than average: they are losing market share. I have no idea why that is, but it is an interesting shift given that Mac share had been rising for 6-7 years now.

4) Going forward, I predict that PC sales will continue to decline: bad years will be down around 10%, average years will see a 5% drop, and good times will be flat. It is possible we might see a year where sales actually increase, but a) I wouldn’t count on it; and b) any increase will be 1-3%, nothing spectacular.

5) PCs are a mature market, with stable and reliable technology, and an ever lengthening replacement cycle. Most people and businesses will buy a new computer only when the old one breaks down; a new machine every 6-7 years.

6) This has NOTHING to do with how computers are being used. Fewer new ones are being purchased, but the most recent US data shows that people in all demographics continue to use their computers for an hour per day (not including work usage) and the usage is actually higher in 2016 than it was last year: internet on a PC rose 10 minutes year over year according to Nielsen.

7) Also worth remembering that even with continuing declines, we will see over 250 million computers a year be sold, worth well over $100 billion. Still a massive industry, and an important platform, with an installed base of over 1.6 billion devices.


What does the Pokémon Go craze really mean?

Here are ten quick thoughts, especially on the augmented reality (AR) angles: does the success of PG mean that AR is at a tipping point? (As always, I have no view on the stock market implications.)

1) It is definitely a hit. But comparing the number of daily average users (DAUs) to Tinder or Twitter doesn’t make sense; we should be measuring it against other successful mobile game titles. Pokémon Go has been downloaded about 7.5 million times, and let’s assume that 6 million are playing it daily, which is likely high, but we are early in the adoption cycle. Our old friend Angry Birds had over 30 million DAUs at one time, Clash of Clans was over 100 million DAU, and the record holder seems to be Candy Crush Saga, which had 158 million people PER DAY playing it in Q1 2015. Although PG has yet to launch globally, it is clearly not yet in the “big leagues” for mobile games.

2) But will it have ‘legs?’ Many games come out, peak quickly, but then see numbers drop again almost as quickly. Others have much greater longevity or retention as they call it in the gaming business. Retention is defined as the percentage of people who played your game in Month 1 also play it in Month 2. Losing more than half of your players in the months after launch is normal: only 16% of games have Day One retention rates higher than 50%! We just don’t know yet what Pokémon Go retention will be – my own guess is that it will likely have slightly lower retention than average for some of the reasons below.

3) The time of year matters: this is a great summer game. I suspect it will do less well when the weather gets colder or wetter. #CatchACold isn’t nearly as fun as #CatchEmAll!

4) This may be more about how much people love Pokémon than how much they love Augmented Reality. There are a number of other similar AR mobile games , and none of them have seen this kind of success. Ingress (an earlier game from the makers of PG, and without the AR overlays) had about a million monthly average users.

5) It is hard to overestimate the laziness of human beings. Yes, people are running around and trying to “catch ‘em all”, which is great for fitness: one woman said her pedometer measured twice as many steps in a day while she was playing! But, as we know from fitness bands, the drop-off rate for gamifying physical exertion is high. People do it for a few days, then turn back into couch potatoes! 😦

6) The most popular smartphone games tend to be casual time-fillers. You can play for a minute or two while in a line-up, or on a bus. Pokémon Go requires more of a time commitment – early data suggests that the average player is spending over 43 minutes per day in the game. That is amazing engagement, but likely to appeal only to a fairly narrow slice of serious gamers.

7) Some people are saying that this will be big for Augmented Reality in general. I don’t think that there is much evidence for that. Playing with your phone in a limited AR way is good, but how will that translate into AR headsets? Or into non-game AR content? Or into non-Pokémon AR content? All good questions…

8) A lot of smart futurist-type people and forecasters have been saying that AR will be the next big thing since 2010. They have been badly, embarrassingly wrong so far. And I think some of the buzz around Pokémon Go is from AR-boosters pouncing on this first success like a drowning man grabbing a life-saver.

The success of Pokémon Go means that at least some people, for some period of time, will actually use and enjoy using augmented reality for certain kinds of content. We didn’t know that before, so this is definitely meaningful new information.

But whether this is a bellwether for ever-increasing growth in the AR market is unproven in my view. Critically, most of the AR advocates have been pushing AR headsets of late, not the mobile phone overlay version. I don’t think the success of Pokémon Go does anything to suggest that people will also be willing to wear expensive, heavy, obtrusive headsets.

9) It is worth noting that Pokémon Go is unusually VISIBLE. Tens or hundreds of millions of people can and are using their smartphones to hurl birds at pigs, be ninjas with fruit, or drive around Hollywood with Kim Kardashian. But unless you peer at their little screens, the game playing are not being thrust into your awareness. In contrast, even a few dozen people gathered in one spot in Central Park makes headlines. (Which I find slightly odd: I have been to Central Park, and it has well over 100,000 visitors per day in the summer. Why make a fuss about a few dozen playing Pokémon?) I would argue the impact of Pokémon Go is being exaggerated to some extent by the extremely public nature of the game.

10) There are lists of issues that are getting written up: people getting robbed, walking into traffic, security issues around the app, draining your battery, or even using up data. (The last is not a big deal: PG uses about 10 MB per hour of play.) I think these are all fairly minor points, and will not be significant long term factors.

My conclusion?

I think AR in mobile gaming will be very similar to motion control in console gaming. The Nintendo Wii showed that motion control was a real market, and a profitable market, with tens of millions of people trying it and using it. But it reached a quick peak, and then fell rapidly from that peak: see chart below. Critically, it NEVER became the way that most people played games. It was an alternative, but always a small piece of the pie. I suspect AR in gaming will be the same. And motion control never crossed over from console gaming into how we interacted with our TV sets or computers…despite many companies trying to make that transition.



The first death due to “self driving” cars: who is at fault?

Tesla is now being investigated by the NHTSC following a May accident where a driver was killed while his car was in Autopilot mode. There are a few articles out there, but this Washington Post has the best information by far, accident site is the picture at top. In addition to the obvious human cost, this is the first time a human has been killed while a car was in autonomous or semi-autonomous self driving mode. There will be a lot of debate about where the fault lies. I am not interested in the legal aspects, but there are a few parties who share some fault. Sorry for the cursing below, but a guy is dead and I am angry about that.

The Driver: Not a nice thing to say, but the Tesla website and owner’s manual and everywhere else tells you SPECIFICALLY to keep your eyes on the road, your hands on the wheel, and always be ready to take control. That said, attempts to make this all about the (dead) driver are NOT going to fly with popular opinion, politicians, the media, regulators, and so on.

Tesla: Stop calling it fucking Autopilot. It is a very sophisticated and capable advanced cruise control – and calling it Autopilot makes drivers think it is more capable than it is. Yes, Tesla warns people not to trust it too much, but if a pilot cruising along at 35,000 feet turns on the “autopilot” the plane NEVER smashes into another airplane. It will automatically avoid a crash, which did not happen in this case.

The Media: Stop fucking calling Teslas “self driving cars.” They are nothing close, at least in 2016. Tesla warnings that the Autopilot feature is in beta, needs to be backed up by human drivers, and so on get turned into background noise by a million media mentions that call them self-driving. Nobody reads End User License Agreements disclaimers, but that usually doesn’t end up with people getting killed.

Tesla Again: Time to get a little technical. There are two broad approaches to making vehicles more autonomous that are related to how the car “sees” the road. One is to put a big, expensive, active sensor on top of the car a la Google. The Google car uses LIDAR, which is like laser radar, to scan the environment with great precision. It costs a lot of money, is pretty ugly, and doesn’t work in snow, but it does have certain advantages. One of them is that it would have detected a truck in the path of Joshua Brown’s car.

The other approach is to have a suite of cameras that look in all directions. This is cheaper, blends in better with the car, and works well under many circumstances. This is what Tesla uses, and it appears to be at least in part responsible for the fatal crash. To quote the Tesla blog post announcing the crash: “Neither Autopilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky, so the brake was not applied.” In other words, the lighting conditions were such that purely optical systems (whether a human eye or a semi-autonomous car with cameras) were not good enough. Elon Musk stated publicly in October 2015 that fully autonomous vehicles don’t need to use LIDAR, but would need “passive optical and then with maybe one forward RADAR… if you are driving fast into rain or snow or dust.” I think we can now say that we can add bright daylight and white trucks to “rain or snow or dust” and remove the word “maybe.” I will make a prediction here: purely optical solutions are not sufficient and all autonomous (and maybe even semi-autonomous, see next point) vehicles MUST have at least one active sensing technology at wavelengths different than the human eye uses. We will not settle for robot cars that are roughly as dangerous as human drivers: they need to be safer, or there’s not much point. [Edited to add: I was unclear above. The Tesla does have a front facing radar unit, but it only scans the road ahead up to about the level of the hood. The truck body was high enough that the radar didn’t ‘see’ it, not detected by the cameras, and still low enough to cause a catastrophic and fatal crash.]

Semi-autonomous Vehicles: There is a fundamental problem here. Developing fully autonomous vehicles is going to take a while, and there are many benefits from incrementally getting there. Rolling out features like automatic emergency braking (which will be standard on most American cars for sale in 2022) will save thousands of lives, billions of dollars, get consumers to trust the technology, and also allow the technology to reach economies of scale. But there is an uncanny valley in terms of driving.

Uncanny valley refers to the fact that Elmer Fudd is kind of adorkable, but the characters from Polar Express were nightmarish! As animation moves from the cartoonish to almost-human, there is a perverse effect where “superior” animation actually looks worse.

In the same way, nobody became a worse driver because they had an automatic transmission. Even cruise control doesn’t seem to have increased accident rates. But as semi-autonomous technology gets better and better, there is a very real risk that human drivers will be lulled into inattentiveness by the improvements in autonomy.

I am not sure there is an easy fix for that last point, except getting active sensing into cars fast.

Compared to What?: Tesla is spending a lot of time saying that this was the first fatality in over 130 million miles driven, and the average in the US is one fatality every 94 million miles driven. That is true, but beside the point in two ways.

First, I think the public and regulators are going to demand more of semi-autonomous cars. Making the same mistakes a human would have made won’t be good enough, and it is clear that the Tesla camera approach was not good enough in this instance.

Second, this was a car, and expensive car, and on a divided highway. As part of that 94 million mile stat, there are many motorcycles (15% of fatalities), old and unsafe vehicles, and collisions in bad weather, at night or on much more dangerous roads. Given the conditions, I think that most of us would expect our robot cars to do better.