Goodbye to Vita….

Last week, I said good-bye to my Vita. If you followed any of my previous posts, you would know that I have been fairly critical of the PS Vita. But what was it that pushed me over the edge?

When I originally purchased the Vita, my excitement surrounded the myriad of potential games; NHL, MLB The Show, Gran Turismo, Grand Theft Auto, and of course Madden. The bottom line for any video gaming system is its software. The problem with the Vita is that the software is about as exciting as the Sahara desert. EA did not release a college football title, has not announced an NHL game, and even went so far is to say they are waiting to see what happens with Madden 13 before committing to the future of the franchise. Resistance was a disaster, Uncharted was average at best, and Call of Duty has so much pressure on it to succeed, it won’t be able to live up to the hype.

Granted, the Vita will likely gain new titles in time. It has only been on the market in the US for only 5 months. However, there has been no indication of good solid upcoming titles. Worse, developers have not committed to the platform. Why? Much like the 3DS, developers are finding that they can make more money by developing for mobile platforms.

My concern with the Vita is that while I think that it will gain some traction in time, the current hardware is already dated. First, the Vita is on 3G, not LTE like most devices coming out in 2012. Because of this, online gaming is not nearly as good. Second, the screen size at 5 inches feels somewhat small and the DPI is low in comparison to the new tablets and smartphones coming out on the market.

The ultimate issue I have with the hardware for the Vita is the processing and graphics power.  While this is no doubt an improvement over the PSP, the power is not nearly as strong as the PS3 and is behind the newest tablets and smartphones. This may not be evident now, but in 12-months it will be apparent.

With all of these issues, Sony has to gain new developers AND they will need to update their hardware in order to stay competitive. Unfortunately, I just don’t see it happening and I think Sony will eventually become a software developer for the various mobile platforms.

Are Video Game Consoles Dead?

I have long been a proponent of the video game industry; nothing gets my blood flowing faster than the launch of a new gaming console. However, it has been well over 5-years since we have seen a new Xbox or Sony Playstation. Yes, the Vita dropped in 2012, but that has gone largely under the radar.

If you have been watching any of the talking heads on CNBC or read the WSJ lately, you would believe that the hardware industry is practically dead. There is a good reason for the belief.

Microsoft and Sony are simply reluctant to launch a new console. Why? The return is just not there. The cost to develop an Xbox or PS is astronomical and with developers seemingly focused on $1.99 games on iOS and Android, there is good reason for Microsoft and Sony to hold off on launching a new device.

What would gamers really expect to see in a new console right now anyways? Yes, the graphics could be better, but when you consider that the cost of a new game is $60, would there be an appetite for $70-$80 games which is likely what it would cost to produce even more technical games?

Also killing the industry is the mindset of consumers. Gamers are liking the price point of games coming out for iOS and Android. At $0.99 to $9.99, gamers can by up to 6 games for the cost of one Xbox 360 game. Plus, if one of the games is not good or lacks depth, you have 5 others that hopefully fill that void. On the other hand, a bad Xbox 360 game results in a $60 loss and a frustrated customer.

Developers are also liking the iOS and Android ecosystem. They can produce a game for a fraction of the cost of developing on Xbox or PS and if the game is successful, the return is huge.

While this paints a bleak picture for console fans, there is some glimmer of hope. As great as iOS and Android games are, the marketing is a bear. The advantage to physical software and big box retailers is that your game may be competing against 50-100 other gamers as opposed to 100,000+ on iOS and Android. Also, developers like Bungie and Rockstar have been able to make games with astronomical returns because people will pay $60 for a game that brings in over 10 hours of happiness.

The gaming industry is changing and while mobile gaming is no doubt impacting the console industry, it should not outright kill it. There will be a demand for high quality games. It is my hope we will see even more high quality games on Xbox and Playstation and less “garbage”. I also think that developers on iOS and Android will also need to differentiate their game from the market and will need to invest in a better experience, not simply a cheap experience.

All this amounts to a positive experience for gamers!

My Disappointment with the Vita

It has been a little over two months since the launch of the PS Vita. When I first heard of the Vita, my initial reaction was that it was an immediate failure. This was based on my belief that the vast number of smartphones and tablets have essentially killed this platform. However, when I saw the demo of the Vita (then it was the NGP), my feelings changed quickly. If a handheld console could really produce PS3 like graphics and have games like Call of Duty, Madden NFL, and The Show, this was going to be a game changer.

After two months, my feeling on the Vita have been a mix of disappointment and frustration. I am not so sure if it is the Vita or the developers, but the games and overall experience has left a lot to be desired.

Without good games, the hardware will inevitably fail; see the Sega Dreamcast as Exhibit A. The problem with the Vita, so far, is that while there have been some big titles, the games have been mediocre at best.

The Show was heavily advertised and was a good game, but the graphics were fairly average and the gameplay was so-so. The biggest frustration with the Show was that while the developers wanted to make a mobile experience, they cut out some of the things that make a good baseball game; in particular, there is no re-plays or emphasis on big things like a huge defensive play, a critical strikeout, or a home run. The end experience is bland and lacks emotion. The number of people asking about enabling re-plays and cut scenes on the Vita version should tell the developers what they need to know.

Uncharted was also heavily featured. It too seemed to lack depth and emotion, but was a good game. I enjoyed Uncharted, but because of a lack of multi-player, there was no reason to own the game after completing the short story. There was also a series of frustrating requirements including balancing on a log by using the accelerometer, rubbing off the dirt on an artifact by using the back touchscreen and using the front touchscreen to navigate cliffs. This seemed forced and without the ability to turn those features off, they became tedious.

Recently, I picked up Mortal Kombat. Having seen some of the previews and trailers for this game, I truly thought this was going to be a great game. However, like the Show, the graphics looked average and washed out and it was clear that this was simply a game that was ported from the PS3 to the Vita; a bad port at that. Don’t get me wrong, it is still a fun game, but with the average graphics performance, I can see how iOS will eventually surpass the Vita in 2012/2013 in terms of graphics performance.

This leads me to my disappointment. Yes, the Vita is a new entry and there is plenty of room for improvement. Looking at PS3 games in 2006 compared to 2012, it is clear that the developers learned the intricacies of the system and how to get the most out of the hardware. I do hope that will happen for the Vita. My bigger disappointment is in simply the lack of effort. I felt that it was critical for the Vita to tear the ball of the cover and wow people. I know when I first saw the PSP, I was truly amazed at what I was seeing. Even the Xbox 360 and PS3 amazed me with their initial launch titles. Without a killer title that amazes people, and with competition from smartphones and tablets, gaining momentum for the Vita is going to be tough if not impossible. About the only game that has amazed me is FIFA Soccer and that does give me hope. But when Sony developers can’t amaze me, that leads me to worry big time.

Do I think the PS Vita is doomed? No, but I do think their chances for long-term success will be driven largely by developers. With EA not fully committing to the system (no NCAA Football or NHL Series has been announced), it is quite concerning. Sony really needed to hit a home run with The Show and Uncharted and most people will say that they barely got a double. It will be interesting to see what happens with Madden NFL and Metal Gear Solid; if those games flop or disappoint, we could see the Vita vanish before it even starts.

Why I Might Be Changing….

For the last two years I have been the biggest supporter of all things Apple. I have a MacBook Pro, iPad 2, the newest iPad, and of course, every iPhone ever released.

There can be no question that I am a huge Apple fan. With the understanding that Apple is expected to release a new version of their crown jewel, I am considering making a switch.

I have been very reluctant to switch smartphone platform’s; I am too engrained in the Apple ecosystem and the number of applications I have measure into the $150-$200 range on the low side. Changing operating systems is obviously a big move.

So why would I want to change? Simple, it’s boredom. I am tired of the same operating system with roughly the same look which is going on 5-years old. So I have decided to break down the following operating systems and discuss the advantages and disadvantages of them.

Android
The obvious choice for someone changing from iOS is Android. Heck, it was practically a knock-off of iOS so it is a no brainer for people to gravitate towards Android. Android has touted their “openness” and their willingness to allow people to do practically anything they want to their phone. This is the opposite of the iOS philosophy. The disadvantage to this openness is that the operating system becomes more susceptible to viruses and confusion.

I do like the way that Android allows their users to customize their experience; changing the entire feel of their device to customize their needs is what truly distinguishes this operating system from the pack. I also like the way that widgets allow a user to quickly glance at their home screen and know the score to a game, the current weather, number of emails or text messages, and the latest news.

The biggest challenge for Android is the lack of consistency. It makes the operating system not only fragmented, but generic. Ice Cream Sandwich running on a Samsung could like drastically different than the same version running on an HTC or Motorola. This is good for a hardware manufacturer to differentiate their device, but it makes it very challenging for application developers to keep their applications running at the same level and quality across the spectrum of devices.

Another headwind for Android in my opinion is the quality of applications. By far, most people will say that the quality of apps on Android pale in comparison to their iOS counterparts. The reason is money. Most developers make significantly more money on iOS than Android and until that changes, Android will have inferior applications.

Overall
Pros
Lots of hardware partners
Customization allows for a unique look
Lots of Application choices
Geared towards the tech crowd

Cons
App Quality is inferior to iOS
Fragmentation is a challenge
Generic feel to Operating System; no hardware standards.
Web Browsing is not as fluid as on iOS or Windows Phone

Windows Phone
When Microsoft first announced the new Windows Phone operating system, I was convinced this was my next platform. It had everything I wanted or demanded in a platform; a consistent UI, a desktop class operating system with hardware spec requirements, gorgeous web browsing and interface, and a truly unique outlay; not another knock off of iOS. Both AT&T and Verizon are placing their weight behind Windows Phone with a big push expected this fall.

The thing with Windows Phone that just gravitated my interest towards the platform was the use of Live Tiles. Like widgets, Live Tiles allow a user to quickly glance at the screen and get updated information at a glance. Nothing aggravates me more than having to go into an application to get the information I need when I can get it at a glance. Adding to the strength of the OS, Windows Phone has integrated their world class productivity suite (Windows Office) into the mobile platform. In addition, Windows Phone has also includes cloud based synchronization and Xbox Live. The foundation for a strong OS is firmly in place.

The challenge for Windows Phone is its philosophy of compromise. It doesn’t let the user customize much if at all (like iOS) and it tries to appease the business class by eliminating steps to get to information. The result is that the user ends up scrolling. A lot. This ends up frustrating many users and the inability to “hard sync” the device can add more frustration. Like the iPhone and Apple, Windows Phone is great if you are engrained in the Windows environment; you have a PC, rock an Xbox 360, love Bing, and frequently use Microsoft Office. If you are not engrained in that environment, the lack of Google maps, Google Search, and other commonly used “non Microsoft” tools could lead to a lot of frustration.

Overall
Pros
Unified Experience
Standard Hardware Requirements
Fully engrained in Microsoft ecosystem
Desktop Class OS

Cons
Number of apps
OS lacks true customization
Has not fully taken off in the market; finding accessories can be a challenge
Can’t hard sync with desktop
Syncing with Mac leaves a lot to be desired.

Conclusion
RIM is dropping their new OS and BB 10 devices this fall which should provide some excitement. But overall, the market is pretty well established and my expectation is that with the carrier push expected this fall, Microsoft could be the dark horse this year. However, the bottom line is that while the other operating systems offer many exciting features, the reality is that Apple has so many things that make it the number one selling smartphone in the United States. Apple has a desktop class OS, arguably the best hardware in the world, full integration with all Apple products, and with iCloud, syncing your iPhone with your PC is even easier than syncing your Windows Phone with a PC!

When you step back and weigh the pros and cons of iOS it becomes clear that while there are certainly areas where Apple can refresh their OS, if not completely revamp it, in comparison to the competition, Apple still has the best marketshare, the most 3rd party accessory support, the most and best quality applications, and the strongest customer support on the planet.

While there are certainly times I get the itch to play with a Motorola RAZR, Samsung Galaxy, or a Nokia Lumia, I always find myself saying, “this is cool, but Apple just seems to do it better”.

I guess I won’t be switching anytime soon.

Damn you Apple.

My Defense of Verizon

Defending a wireless carrier is practically tantamount to being an attorney defending a serial killer. How could anyone defend a wireless carrier who charges astronomical amounts of money from innocent customers?

Recently, Verizon announced that they are going to eliminate unlimited data plans, and will not grandfather existing unlimited data plans should they elect to get a new handset through an upgrade. Shocker. Of course, blogs and news outlets have been crying foul and forums are filled with hatred. Verizon customers are even threatening leaving and paying an Early Termination Fee (ETF) because of their anger.

Everyone needs to calm down.

Verizon is a business and they have to make money. I know this comes as a shock to liberal media outlets who believe that every business should be a non-profit and act as such. The reality is that times have changed.

In 2005, the most popular phone was the Motorola RAZR. This was a device with a relatively low resolution screen, minimal memory, and its primary use was for making phone calls. People clamored for the device because it was small, sleek, and those that owned one were perceived to be cool.

This was what carriers loved and were used to. Yes, you could send a text message on it, but it wasn’t easy and most people used it to make phone calls. Carriers like Verizon, AT&T, T-Mobile, and Sprint loved these devices because they fit their business model which was centered on minutes and text messages. Both voice and text were low cost, high margined products that the carriers were comfortable offering. In addition, the subsidy offered on them was relatively cheap; carriers only needed to subsidize $75-$150 off the market price of the phone to grab a 2-year contract.

Carriers at that time also offered smartphone’s like the Palm Treo and Blackberry 6700, which were geared for the business professional. The devices were over $350 and the data plans were fairly expensive by today’s standards. As a result, not many ordinary consumers bought one.

That all changed with the Blackberry Pearl in 2006. This was a device made by Research and Motion and was geared towards the pro-sumer; someone who may have a business and wanted a relatively small device to carry around for personal needs as well. It caught on fairly quickly and many consumers started to gravitate towards it and liked the ability to have email on their phone and more functionality than a feature phone like a RAZR. Carrier’s realized that they could add an additional revenue stream, data, and pushed the Pearl. What was not realized by many consumers is that RIM optimized data through their own servers, which did not put much if any strain on the carriers, so they remained a fairly high margin product for carriers in 2006.

In 2007, the carrier’s business model was upended when Steve Jobs held up the Apple iPhone; consumers were immediately drawn to the device. RIM immediately responded, mocking the device for its lack of business features. Many professionals were intrigued with the device, but they too found that the inability to connect to their work email, the lack of native applications, and the high cost, made this a novelty product.

Apple didn’t rest, and in 2008 the Apple iPhone was for the first time heavily subsidized by AT&T (to the tune of $400 per phone), offered Activesync Exchange which allowed people to connect to their corporate servers, and third party native applications. Immediately, people were demanding the iPhone. It was $199 with a 2-year contract and offered more perks than a Blackberry or a feature phone.

Because of the hype of the iPhone, Google’s Android platform changed from a Windows Phone model to a iPhone-like icon based grid and debuted on T-Mobile. Verizon, sensing that the iPhone could poach their client base decided to back and heavily invest in Android.

In 2008, AT&T offered a $30 unlimited plan which allowed their customers to pay a $30 fee and get all the data they wanted. I believe this was largely driven by Steve Jobs; customers don’t want to ruin their “experience” by having to routinely check their data usage.

As a result of the hype of the iPhone and frequent Data Usage, AT&T was starting to experience some significant problems with their network. It was overloaded and even with significant capital investment, AT&T could not get ahead of the problem and soon they were considered the “worst carrier” by most Consumer Reports surveys and other media outlets. Customers began to complain about routine dropped calls and lack of data.

Realizing the problem, the other three carriers (Verizon, Sprint and T-Mobile) capitalized on AT&T’s issues. They backed Android which offered an open experience. They loudly proclaimed that their network was free of dropped calls and data issues. As a result, Android became a very viable candidate. But Apple fans, who held a lot of clout with AT&T demanded improvement. When Apple dropped the iPhone 3GS in 2009, Apple consumers who signed a 2-year contract for the iPhone 3G just 12-months earlier, demanded the ability to upgrade. For them, it was a $200 cost, but for AT&T it was another $400 outlay per customer upgrade. AT&T with pressure from Apple, agreed to let consumers upgrade.

Apple released the iPhone 4 on AT&T in 2010 to a host of boos. Consumers were upset with the service of AT&T and wanted to see the iconic device drop on Verizon or Sprint which routinely had better customer reviews. Continuous rumors from tech blogs indicating that the next phone would be on Verizon added fuel to the fire. Customers loved their iPhone but hated their carrier.

In February of 2011, that all changed. Verizon was the first carrier in the US besides AT&T to get the iconic phone and people were ecstatic. By the time the iPhone came to Verizon, Android had built a loyal following on the network. Like iPhone customers, many had invested time and money in Android and the thought of switching was not as strong as Verizon and Apple anticipated. As a result, the phone came out to a lackluster release. Media that was used to sellouts of Apple’s phones, were surprised that there was a lack of lines and sellouts of the Verizon iPhone.

Apple’s clout was diminished. Carriers who were paying up to $400 to subsidize the phone and a $30 unlimited data plan were squeezing their margins in the hope of gaining marketshare. The realization by carriers was that for them to regain control of their margins, they needed to stop catering to the “Apple crowd”. As a result, AT&T announced in 2011 they would no longer offer an unlimited data plan. Furthermore, they would not let people upgrade on an annual basis. Apple fans screamed and threatened to leave for Verizon.

Verizon’s response was to market the unlimited data plan and reinforce the belief that their network was stronger. However, Verizon knew that consumers were using more data than voice minutes and that the future was in data. With AT&T already eliminating the unlimited plan, Verizon was willing to follow suit.

So here we are in 2012 and we are upset about Verizon eliminating the unlimited plan if a consumer decides to upgrade their device. It really is no surprise. Verizon and AT&T know that their business model has changed; for them to be profitable, continue to build their infrastructure and gain marketshare, they need to focus their efforts on data, not voice.

Here is another bold prediction; by 2013/2014 we will see carriers eliminate subsidies all together. Again, carriers have to outlay significant upfront costs in exchange for a 2-year contract. This kills margins, as the return on investment is over 24-months. It wasn’t a big issue when the cost was $100-$150, but with a $400 subsidy, something will have to give. If carriers stop subsidizing at the current levels, consumers will need to be prepared to spend over $500+ for a phone, which will likely limit their appetite to upgrade on an annual basis.

In my opinion, this is why Apple’s stock has been leveling out if not dropping slightly. If carriers eliminate this current model, Apple will be hardest hit. Currently, consumers can buy a $199 Apple iPhone or a $199 Galaxy Nexus. However, if the Nexus is $550 and the iPhone is $650, people may be more inclined to go with the Galaxy Nexus. This could be a huge problem for Apple. Apple is not known for cutting their prices and therefore margins, so it will be very interesting to see how they respond.

I hate to tell consumers this, but the current model is simply unsustainable. Apple currently does not hold the sway they did in 2008 and 2009 and carriers are turning the tables back on them. Customers are also evenly split with many preferring Android or Windows Phone over the iconic iPhone.

I also hate to tell Apple this, but their time at the top of the smartphone food chain could come to an end and they need to be positioned for this potential change.

Bottom line is that carriers have to make money to continue operations and consumers need to understand it. We all wish that we could get a free lunch, but there is simply no such thing.