- The high-end smartphone market is becoming saturated, meaning the growth potential is in the low-end.
- The PC market is shrinking.
Ubuntu phones to sell for $200 to $400, is this the right strategy?
Canonical's founder Mark Shuttleworth is one person in the tech world who it seems always has something interesting to say, and today he was at the CeBIT computer expo in Germany, where he definitely had a few good words about the plans for Ubuntu Touch. Shuttleworth talked about the potential price points, and the intended user base, but we have to wonder if the strategy is sound.
Shuttleworth and company have never been shy about aiming high with Ubuntu Touch. The team has always been clear that it wants to see Ubuntu Touch running on high-end hardware, even though it would be usable on lower-end hardware. We all saw the spectacular failure that was the Ubuntu Edge, which could have been any smartphone enthusiast's dream, but unfortunately it couldn't generate the funding needed to make it a reality (though, it should be noted that the fundraising certainly proved the market for such a device, which is likely an argument that Canonical has used when speaking to potential hardware partners.)
At CeBIT today, Shuttleworth also said that Canonical is not aiming to convert iPhone users, who more often have an "emotional attachment to the Apple ecosystem", but rather will be aiming at Android users. Shuttleworth says that non-Apple systems don't tend to have the same "emotional attachment", but there is also a need in that space for a platform that is easy to use, which he says is not something that you would find with Android. In the end, Shuttleworth clarified the target market for Ubuntu, saying that handsets will be selling in the "mid-higher edge, so $200 to $400". The reasoning for this maybe a bit more telling though, as Shuttleworth went on to say:
We're going with the higher end because we want people who are looking for a very sharp, beautiful experience and because our ambition is to be selling the future PC, the future personal computing engine.
This is very interesting, because it points to the marketing strategy for Ubuntu, but it is a somewhat controversial strategy. Consider these two points:
We've seen it in plenty of areas and with quite a few manufacturers: aiming at the high-end doesn't really work with smartphones. HTC nearly ran itself out of business by abandoning the mid and low-end markets before deciding this year to re-enter those spaces. Windows Phone has been showing great growth numbers over the past year, but almost all of that movement comes in the low-end market. Even Samsung relies heavily on a myriad of low-end smartphones released around the world in order to maintain the revenue that it has in the mobile sphere. Only Apple has been successful in the smartphone market without a true low-end option (aside from re-releasing three and a half year old hardware for emerging markets, which doesn't really count given its price tag.)
But, that's the trick with Ubuntu. Canonical isn't really aiming at the smartphone market, it seems. As Shuttleworth said, Canonical wants "to be selling the future PC". This of course brings us to the second point, which is that the PC market isn't really any better than focusing on the high-end smartphone market, and it could be even worse in the end. PC sales are down almost across the board (once again, Apple is the outlier). The general thinking is that mobile devices like smartphones and tablets are eating away at the PC market, but that doesn't mean that mobile devices are necessarily replacing traditional PCs. However, that is exactly what Canonical wants to do with Ubuntu.
While many users have found that tablets are good enough for the majority of computing uses (checking e-mail, browsing the web, consuming content, and some light gaming), there are also some users who still need a traditional PC for a variety of uses (mostly more advanced things like photo/video editing, or more hardcore gaming). The first group greatly outnumbers the second, but the second group is far more outspoken (as you will see in most Internet message boards and comment threads). The question is whether Ubuntu will be able to fill the needs of both groups, because while the more tech advanced may be the minority, they hold a lot of power because they are often giving advice or flat out making the decisions for the more casual computing group.
This is important for a couple of reasons. First, Ubuntu is a Linux system, which still has the reputation for being less user friendly than options like Windows or Mac/iOS. Android has been by far the most successful Linux-based system, but Android doesn't yet have a presence on traditional PCs (though that is supposedly on the way). Casual users will need fears of switching to be soothed in order for Ubuntu to see more mass adoption. A big part of this will be in software, and by that we don't necessarily mean the OS software, but rather the apps and games available.
Unfortunately, this has traditionally been a weak point for Linux distributions. While Linux has always offered a substantial selection of quality apps, it doesn't have the brands that people are used to seeing. There is no Microsoft Office, no Photoshop, and no iTunes. Instead, you'll find OpenOffice, GIMP, and Rythmbox or Banshee. This shouldn't necessarily be that big a deal, but it usually is. It was the same issue that Android faced in its early days, and the issue that Windows Phone is currently facing - the apps are there and they are good quality, but they are off-brand.
The other issue is in games, which has always been seen as the weakest point of the Linux platform. But, Canonical has been working extremely hard to fix that by working with Valve to bring Steam to Debian distros of Linux, like Ubuntu. So far, over 2000 games on Steam have been ported to Linux, and the number continues to grow. Plus, Valve's own Steam Box console initiative is based on Linux, so there is a pretty big name in PC gaming trying to push forward the platform.
However, these are games designed for desktop play with either a controller or mouse and keyboard, not mobile-optimized games for use on a touchscreen. Theoretically, once the games have been ported, optimizing for touch is relatively easy, but that doesn't mean that we'll be seeing Angry Birds, QuizUp, or Candy Crush on Ubuntu any time soon. It is very likely that Ubuntu could get caught in that same vicious cycle as so many other platforms where it can't attract users because there aren't enough games and apps, but it can't attract app and game developers because there aren't enough users.
Shuttleworth repeated a promise today to have the best apps available for Ubuntu, but that's one of those promises that rings hollow until it is seen fulfilled.
Secondly, the entrenched power in PCs - Microsoft's Windows - has been showing some signs of weakness. The Metro UI for Windows 8 and Windows Phone has been highly divisive, which has meant that Microsoft's convergence dream has been put on hold. Desktop users don't really like Metro, tablet users don't like the lack of apps for Windows 8 tablets, and while Windows Phone has shown good growth and now has a respectable app ecosystem, it is the most divorced from the other pieces right now. Though there is a fair chance that the walls will break down more in the next month or so with Windows Phone 8.1, which could see WP apps scaling to tablets and mitigating some of the app troubles of the Windows tablet ecosystem.
Microsoft has pushed manufacturers to build hybrid laptop/tablets that have taken various forms, but none have taken off that much with the public. Aside from the UI, the issues have usually been with usability. Devices with swivel hinges (like the Lenovo Yoga) make for great ultra-portable laptops, but tend to be heavy or too big as tablets; devices with detachable displays or keyboard docks don't always do well as laptops as they tend to need table surfaces for best use as a notebook; and, well, Windows Phones are just that - phones and nothing else.
Ubuntu is aiming to be slightly different in a few key regards. First, the UI adapts for the use case. This means a phone has a phone UI, a tablet has a tablet UI, and a desktop has the same Ubuntu desktop UI that is recognizable to users because of its similarities to Mac OS. To use the Windows comparison, imagine that Windows desktops didn't have the Metro Start screen or Metro apps at all. Instead, the Metro UI would only exist on phones and tablets, and running that same app on a desktop would present the app in a traditional windowed environment. And, when a tablet is docked to a keyboard, only the traditional desktop UI would be shown. That sounds like a good way to fix some of the complaints with Windows, right? Well, that's the hope with Ubuntu.
Second, rather than needing to sync data through the cloud in order to bridge the gap between devices, everything is on one device; and, phones don't have to be just phones, they can be everything. We've already seen a phone that can become a tablet with the Asus PadFone devices, but we have yet to see a phone that can become a desktop. Phones can't just have a keyboard attached like a tablet could, and would require a docking station, but the idea of docking a phone and it becoming a full desktop is a compelling one. Especially given that there is no syncing involved because it is all one machine and the apps are all universal. If you have a browser, a game, and a reading app open on your Ubuntu phone when you dock it, those apps will be open with the same data on screen in the desktop mode.
Of course, it is unclear just yet whether consumers would really prefer docks over transforming devices. The Asus PadFone hasn't gotten much traction, implying that users are okay with having separate phones and tablets. And, as mentioned before, hybrid Windows devices haven't been that big in the market either. We have yet to see hardware that could do what Canonical is planning for Ubuntu, so it's hard to say how the market will react, because Canonical is trying something completely new here.
The interesting thing about what Shuttleworth said today is in the pricing for Ubuntu devices though. He said Canonical would aim for the "mid-higher edge" with devices between $200 and $400. The question is exactly what that means. If it means that mid-range/upper-mid-range devices are in that price point, that's one thing and not much different from what we see in the smartphone market right now. But, if it means mid-range devices will be around $200 with high-end devices around $400, that is something completely different and very interesting.
Let's assume for a moment that Shuttleworth meant the latter. This would mean you could purchase a high-end Ubuntu smartphone for about $400, then all you would need is a dock, a monitor, a keyboard, and a mouse in order to turn that phone into a full desktop. Assuming you don't have any of those components, if you go for a monitor in the 23-inch range, that would cost you about $150, say another $50 for a mid-range mouse and keyboard set, then we'll go high for the dock and estimate another $100 there. That would mean you would pay $650 total for a top-of-the-line smartphone that doubles as your desktop computer. That's a pretty good deal when the alternative would be to pay $600 just for the best smartphone.
And, with Canonical's vision, suddenly your PC is part of that same two-year update cycle as your smartphone, because your PC is your smartphone. Many people tend to use the same PC or laptop for upwards of 5 years or more, so speeding up that cycle would certainly lead to better overall experiences for PC users.
Of course, there will be those that bring up the obvious argument against this way forward: the size and heat limits of mobile devices means that there will always be a power gap between mobile devices and traditional computers. Even if you can dock a smartphone to get a desktop environment doesn't mean that you'll suddenly have specs that can compete with what you'll find in a dedicated desktop or laptop. But, that argument brings us right back to the beginning again.
Whether or not the tech elite want to hear it, believe it, or accept it, the future of computing is not in the best of the best. The future of computing is in "good enough". In the grand scheme of things (and the larger consumer base), very few users need the power for advanced photo and video editing. Most just need the basics of media consumption, minor creation/editing tools, and a quality web browser. And, very few users need a top-notch gaming rig, because most either use a dedicated console, or don't bother playing games more intense than say Asphalt or Badlands.
This is not to say that the top-of-the-line offerings will disappear, because they won't. The options will always be there for those who want it, but the tech elite don't drive the market, average consumers do. And, average consumers are happy with average performance on a set cycle. That's where most companies are aiming, and that is obviously the market that Canonical wants to hit with Ubuntu.
But, Ubuntu has a long way to go. It still needs to prove that it can build the app ecosystem needed. It needs to prove that its plans for hardware will work better than what we have now. It needs to show the average user why convergence is important. And, it needs to build brand recognition, which is probably the most difficult of all. Ubuntu has a very small, but loyal following, so it isn't starting from scratch; but, when you're planning to go head to head (to head to head) with Google, Microsoft, and Apple, you need a lot of help and a lot of luck.