The launch was record breaking. Within the first quarter, the company reported profit of $1.75 billion on sales of $9.42 billion. Excluding one-time items, per-share earnings were 30 cents — beating 28 cents on sales of $9.21 billion expected by analysts. From an original review on its record-breaking sales: 

“Noted by industry experts as a game-changing feat of design and engineering … The mobile handset’s radical and revolutionary design transformed consumer’s expectations for how a mobile handset should look and feel.” 

Sound familiar? Think back to 2004 when Motorola launched the ‘game-changing’ RAZR at a price tag of $600 with service and $800 without. According to Wikipedia, the phone entered the mass-market as a mid-priced phone in 2005 and by July, 2006 reached the 50 millionth shipment. It seemed (at the time) that everyone finally had access to the sleek, super-thin and sexy device.

Nearly two years later (posted recently on marketwatch)

The Ratings Game: Motorola stock sinks again on sell rating. Good news is hard to find these days for Motorola Inc., the historic but now struggling U.S. technology giant.

So what went wrong?

In the tech industry, we’re used to switching out gadgets year after year as prices drop and our devices become lighter, smaller, thinner and more functional. But the downslide of the RAZR and the impact the fall had on Motorola in such a short timeframe is baffling. Although many factors were responsible, including lack of diversification and continued innovation (although they did try with the launch of the Q which was highly anticipated as the next record-selling device, but was a disappointment to end users and did little to boost Motorola’s lagging sales.  

(from wikipedia) According to a survey by Mobile, 78% of RAZR users would not buy another Motorola handset because of poor usability.  This figure was even higher for first-time users. One company ranked it 11th out of 13 for ease-of-use, when compared to competitors’ products — the RAZR required extra steps and had poor usability, meaning that users had a 47% success rate for a given task. Also, many people dislike the interaction with it, saying that it’s “awful” and “slow”. The software user interface (UI) is regarded as clumsy and ill-designed.   

 To its credit, Motorola continues to launch handset and PDA-esque devices, most recently the linux-based Ming A1600 in China. With handwriting recognition, GPS, a 3.2 megapixel camera and a business card scanner, the device is popular as a low-cost PDA solution for the continuously expanding growth market of China.

Lesson learned: It’s not just about look and feel. It’s about the entire user experience with usability at the core. To ensure success, Apple has paid attention to diversification (rather than relying strictly on the hardware) by introducing the carrier/subsidy model as well creating a platform that allows services to be an additional component of the business model. On top of it all is a robust developer platform that allows services and software to enhance and expand utility on a customized level. And that allows control of the user experience top to bottom - and makes the iPhone the true personal device we’ve craved for some time. Apple understands that stunning hardware needs to be paired with easy-to-use (and easy to create) software, and in the end, it is this combination that fosters the kind of innovation that will allow the iPhone to stay in the lead for some time.

With today’s launch of the new 3G iPhone, it’s clear that Apple continues to pave the way for a new kind of ‘smart phone’ - one that doesn’t rely on business users with large budgets or an overly technical audience. It’s just a smart and simple device that anyone - and everyone can use. Is the iPhone just a hype that is paving the way for other devices and services to follow? Or is this the kind of success that is destined to continue for some time. The 50 million mark in sales seems inevitable.  It seems this is just the beginning of the possibilities in a 3G, location-aware, convergent world.

Attending were bloggers Kip Kniskern, Molly Holzschlag, Jesse Warden, Jonathan Snook, Keith Peters, Erik Natzke, Julie Lerman and Rob Howard. The highlights of this media roundtable were playing with the new Surface Table and dropping science with Bill Gates. I asked Bill if he had one of the Tables in his living room, thinking if anyone did, he would. However, he did not, noting there were only seven in existence at this time. The two people present who did not have iPhones were in awe of the Surface. The rest of us were suitably impressed - but I guess you only get one shot at the “wow factor” of your first interaction with a responsive, gesture-based interface.

Last year, I asked Bill what he wanted for Christmas and also what he thought of the OLPC ($100 laptop) initiative. This time, I asked him to describe the next phase of his life and how being a father has affected the legacy he would like to leave behind. Here’s what he had to say.

Anyway, in terms of having kids is not — it’s not an easy thing to describe how that affects you. I mean, authors I suppose try and do that, or various creative forums. It’s a very exciting thing. My daughter happens to go to a Tablet PC school, so she knows more about Tablet PC than I do. I get her homework, her graded homework every day, I see what she got wrong at dinner, I can know whether we have to discuss scientific notation or whatever it is, and she’s just so much more — for her it’s so natural to use the pen and just be reading everything online. They got rid of the textbooks, and it’s a phenomenal thing. And this year it’s all based on OneNote where they use the collaborative synching of OneNote where they’re updating their thing, and the teacher sees it.

Anyway, that’s a pretty phenomenal thing. The thing I asked for Christmas last year, those Teach12.com DVDs, the sad fact is that in their science area I now have all of their lectures. These things are brilliant. If you weren’t here to hear me enthused about that, these are not — they’re kind of pricy, but these are brilliant science lectures. If you want to learn about — if you want to understand how semiconductors work, get the lecture called “Physics in your Everyday Life” and watch it. He will explain to you, better than I’ve ever seen explained, because I’ve always tried to explain to people how semiconductors work. If you want to know about geology, just get the geology course. If you want to know biology, you want to know string theory, you want to know anything, they’ve gone and found the very best lecturers in the world and they’re fantastic. The problem is I’ve seen them all now. I’m going to go back and re-watch maybe about half of them, because they’re that fun and interesting.

Some of them — my daughter is 11, my son is 8 — some of them are good enough I’ll get to watch with my kids and go through and see if they’re ready for them. So, I might have to think of something new. I’ve told them they should go get more lectures. There are some areas that they don’t cover very well. They don’t cover chemistry as well as they should. There’s actually nothing that’s really good on chemistry out there.

Anyway, I’m 50-some-years old, so I guess there’s a lot of different changes. July 1 will be as much of a demarcation for me as there’s been for a long time, just because I was 17 when I was writing the BASIC full time, so I’ve worked full time for Microsoft since then, and so that will be the first time that I don’t work full time for Microsoft. So, it will be an interesting change. I’ll still work at Microsoft, I’ll come in one day a week, and there will be various projects that I work on. I get to take my kids to school, but after July 1 I’ll get to pick them up, too. I’ve never gotten to do that.

During the conversation, Bill spoke about Microsoft’s new projects, RoundTable and the Surface, and how they effect change in the industry. Specifically he talked about natural interaction techniques as well as content and collaboration across multiple media devices. He started to get into 3D and Second Life (which he evidently feels is “First Life” in his world).

There’s a lot in terms of the interaction style, where if you have to interact with the keyboard and mouse, there’s just a lot of things that aren’t simple. You have a lot of companies trying to make breakthroughs on that. For us really an iconic thing is something like Microsoft Surface where you just take information, take how you interact with a map when you have a keyboard and a mouse, and then take when you have Surface where you can zoom in, pan around, try out different things. Take how you would sit down with a friend and look over some photos. Your computer is set up so that it’s not that easy for multiple people to sit there, not that easy for multiple people to navigate around, it’s just not a shared experience; whereas having the tabletop type environment with the natural interface makes that very simple.

We actually have a product that’s not a consumer product, so it’s not as visible as a lot of consumer things, that are called RoundTable, that show some of the potential on this, where you take and you have just digital cameras and digital audio pickups, and so if somebody is remote but wants to have a meeting, a virtual meeting with a group of people, they get to see all the participants, and it automatically directs the meeting in terms of knowing who’s talking, telling them who’s talking, showing that in the main display, but still showing the 360-degree view of everybody in that room.Our view is that these natural interaction techniques are very complementary to each other; that is touch screens, surface touch, touch whiteboard, pen type interfaces, which you’ve seen on the tablet, natural 3D input, which you see on things like the Nintendo Wii at this point, but you’ll see very broadly as a standard input peripheral over time, not just for videogames but for PCs as well, and that’s one of those push/pull things where the Web is not 3D today, but that’s partly because the peripherals aren’t there, and the peripherals aren’t there partly because the Web is not 3D. Well, why isn’t it 3D? Well, there’s been at least five startups a year that have said now we’re going to make the Web 3D, and then they go and fail. The tools, the performance, the richness, the environments. You know, (First Life ?) has gotten some degree of critical mass in terms of what they do, but still people won’t think, okay, I go to a bookstore on the Web, it’s going to be a 3D experience; I go to a site to navigate what my house is going to look like, that’s a 3D experience, but that will change. We and many others are investing super heavily in the input devices, the runtimes.

The conversation went well, however I cannot help but wonder how long it will take before consumers truly get a taste of the new Surface Table and if, by then, the wow factor will dim to a murmur. Here are my thoughts on the new Surface after playing with it in-person and seeing the demos by the team:

It’s more impressive in person than I had anticipated. It’s more than a $10,000 version of the iPhone, that’s for sure. The level of interaction and subtle attention to detail has not been lost on the device, it is truly fun and evokes a group response. That is the primary difference between the Surface and the iPhone (besides size and cost of course.) The iPhone is a decidedly personal device, while the Surface is a collaborative experience. The folks at Microsoft demo’d the table and much like the video suggests, there are many commercial applications for the device — you can imagine using one at a high-end restaurant or lounge in a fancy hotel. The size, cost and customization of the Table means it is not consumer-oriented or priced. The goal was to create a truly ‘natural’ interface that acts and responds in a way that is intuitive and playful.

Another difference between the iPhone and the Surface is the ability to sense other objects and directly interact with them using a form of 2D tag (note the round buttons with dots in the image below - these are currently the ‘identifiers’ where in the future we can imagine using RFID tags or some form of QR code that is ubiquitous). The tags allow you to take a photo (as in the photo of the group above) and automatically download them to the table surface by placing the camera on the table. In seconds. It also allows you to place objects like your mobile phone on the table, and sync or compare it instantly to another device (for in-store use).

The Surface team has done an impressive job, that’s for sure. But the timing of the release of such a product is unfortunately quite a ways behind the other ‘groundbreaking’ interfaces such as the iPhone. If released last year, more attention might have been given to the unique nature of the interface. But now, this level of interaction is becoming mainstream, and the innovation will only continue to grow.This week at Macworld, Steve Jobs announced the new MacBook Air as the ‘thinnest laptop in the world’ with a rather limited gesture-based trackpad and a built-in (non-removable) battery. This device — long awaited and much anticipated — is the beginning of a new era of ‘ultra mobile personal computing’ (UMPC) that wirelessly merges (and converges) multiple devices, networks, content in a way that works seamlessly with the way we live.

Parking in san francisco is behind the times - today I noticed a pay
by phone pilot program - at first glance pretty confusing.

• What is the future of the mobile web - with full browser access from mobile devices in the future replacing ‘mobile-specific’ web sites?
• How are transcoded web pages working (or not working) in the current system?
• What will be the norm - browser-based content or installed apps? 
• What will future ‘standard’ ad units look like? 
• How will Google’s entry into the market affect mobile advertising?
• What is the experience of the U.S. vs. Europe vs. Emerging Markets?
• What is the value proposition of mobile advertising to the end user? 
• How will the Blyk model (free minutes for paid advertising) work?
• What is the carrier reaction and/or dependency to the mobile web?

The group used these questions as starting points for a larger discussion which I will try and summarize below. The bottom line is, we’re just at the beginning of a new era of mobile and integrated/convergent media consumption.  The topic of mobile advertising has been discussion worthy lately, especially since the announcement made by Google last week that they are officially entering the mobile space. In an insightful post dated June 2th (pre-iPhone, pre-Google announcement), visionary Alan Moore discusses mobile as the 7th mass media in a post titled: “What do, Cyworld, the iPhone, blyk, Admob, MyNuMo, Artists first, Moblog UK have in common? They are all part of the 7th Mass Media: Mobile,” with some comments (paraphrased by Howard Rheingold in this Smart Mobs post):

Moving to the advertising sector, Alan thinks that the new mobile platform is the ground for far greater developments comparing to the traditional ad business of the classic media, due to the nature and expansion of the mobile technology that make the advertising messages more personal, thus more meaningful. This adds a new dimension to the viral and mouth-to-mouth marketing strategies, making them faster, more focused on appropriate customer audiences, and this way perhaps less expensive.

From our session, several themes rose to the top of our discussion:

 1. Death of the Mobile Web and rise of the ‘Middle Web’: Fully rendered browser experiences and style sheet driven mobile sites are quickly becoming the norm. It was agreed that a new format of merged/converged web sites is rising and we coined it the ‘Middle Web.” The debate continues whether moving into .mobi or m.site.com formats for specific mobile content will be relevant in the future. Certainly there will always be room for targeted mobile content and services which merit custom microsites and separate URLs. However moving between the sites (cross-linking) along with access to transcoded web pages and web-based apps the ad model starts to fall apart. We see a larger gap created between commotization and specialization when it comes to ‘big’ web sites versus mobile-specific sites. 

2. The iPhone Effect: It was agreed that the emergence of the iPhone has sped up the mobile eco-system 10x through usability and physical design. It has also largely cracked the mobile web issue by offering an easy to view, easy to browse solution. The U.S.  has the ability to set the pace of innovation through both devices and content, accellerated because of the iPhone. Also discussed (briefly) was the fact that the full-featured phone is no longer limited to the enterprise audience. The iPhone gives ‘smartphone’ feature access to the general consumer, which finally gives rise to an entirely new level of content and services targeted to the masses.

3. Text Based Mobile Ads Enable Browsing: Through observation of user behavior, it appears that many mobile users click on text-based advertising as a means of cross-linking or browsing on a mobile device. Especially when the content is appropriately targeted, it seems the text linking replaces the ‘next’ button for bored mobile browsing. This might account for the extremely high click-through rates companies like Ad Mob and Greystripe are experiencing — not just a novelty, but content that enables continued mobile browsing.

4. Apps/Games versus Mobile Web: These two experiences on mobile devices are very different. Apps/Games are a bigger barrier to entry, but a better experience overall. The value exhange of ‘free’ for paid advertising is a double ‘opt-in’ for promotions and subscriptions. The ability to focus advertising and know the target audience’s needs and behaviors is high. Moving forward, the user experience and consumer adoption of web-based applications and flash games will decide the future, especially as the capabilities of the mobile web continue to evolve.

5. Is Mobile Advertising a Novelty? Two questions arise —  is the current success of mobile advertising  novelty-based  and has it reached a plateau? Within the current mobile eco-system, mobile advertising seems to be flourishing. The click-through rates are extremely high, especially in countries where the mobile web is the web (i.e. South Africa and India).  However when contrasted with regular web-based or traditional advertising spending, the monetization is not quite there.  Funding for mobile advertising seems to be other mobile content and services, and works within a targeted and specific user base. Outside of the mobile eco-system, the future of mobile advertising seems questionable, especially in growth markets such as the Americas and Western Europe.  For emerging markets such as China, India and South Africa — the promise of a larger mass market accessing mobile content and services continues to grow.

From a comment on Alan Moore’s blog post, a reader states, “Until either mobile can offer advertising real estate on a scale to match TV and print (and scale is not measured solely in number of devices), or the model for buying, selling and measuring advertising changes radically, mobile is not ready for prime-time.” More of this reader’s comments can be found on his blog: Brands, Digital Media and Me.

So - Where is the Future of Mobile? During our discussion, Raj Singh stated “The U.S. is the future of mobile.” Supporting this statement was the fact that the U.S. dollar wins overall (even though it is at a low point currently) and the monetary strength of the U.S. has influence over carriers. The walls are being torn down as Google ‘opens up’ and innovation paves the way into the future. Innovation is seeing as a ‘push’ rather than a ‘pull’ in various cultures and economic situations.

This was quickly counteracted by Mike Rowehl who stated “India and S. Africa is the future of mobile.” Developing countries such as India and S. Africa are jumping past traditional web-based and other consumption methods straight to mobile devices. However the infrastructure is still not in place and the user base is still too far behind to set the immediate trends. Fragmentation from both carriers and operators along with global convergence is not happening due to differences in culture, establishment of true 3G networks, etc.

As a wrap up, the group was resolved that in a contained mobile eco-system, mobile advertising works. But moving into traditional outlets and more general consumer advertising, it falls apart. Although mobile media is quickly moving into mainstream, there is still a wide gulf between the mobile and traditional media outlets for consumption of content and advertising. It’s surprising how traditional advertising and media is still tentative about the web - not to mention the mobile web with a mere fraction of a % of overall budget targeted to the internet as a whole. In the end, it was agreed that the future of mobile was dependent on community and communication — with the final success factor determined by the simplicity and utility of the user experience overall.