A race to the top, or to the bottom?

In the last few weeks, announcements and rumors have been flying about technology leaders launching new mobile computing products:

• Microsoft jumped into the tablet business with its Surface tablets for Windows RT and Windows 8.
• Google announced its Nexus 7 tablet, built by Asus.
• Amazon is rumored to be announcing a replacement for the current Kindle Fire in late July or early August.
• That was followed a couple of days ago by rumors from reliable sources that Apple plans to announce  a 7" to 8" iPad in September or October.
• Yesterday, Bloomberg broke a story that Amazon is working on a smartphone to be built by Foxconn, and is trying to acquire patents in order to protect itself from the widespread litigation between smartphone and software vendors.

Assuming that all the rumors are true, it means that Amazon, Apple, Google and Microsoft will be competing directly against each other with tablets and (with the exception of Microsoft) smartphones. The margins on mobile devices are very low--only Apple has figured out how to make solid margins on its hardware. Samsung is making money because it manufactures so much of its own products, and it sells so many of them. No one other than Apple and Samsung makes money on smartphones. As for tablets, Apple makes excellent margins, but according to the latest hardware cost breakdowns, Google is just about breaking even on the Nexus 7, while Amazon is making a small gross margin on its Kindle Fire.

If Apple jumps into the 7" tablet market, will it compete with Amazon and Google on price, or will it add features that they don't have, such as 4G support, in order to command a higher price? How does Amazon expect to differentiate its smartphones from the pack of Android models? When Microsoft's Surface tablets make it to market, will they be competitive?

With everyone cloning everyone else and making incremental improvements, are we nearing the point where there are no clear lines of differentiation for anyone? If:

• Everyone has access to the same components, 
• Everyone's trying take advantage of whatever gaps have been left by their competitors until they get filled, and
• Android Jelly Bean's user experience is finally competitive with iOS and Windows RT,

Doesn't that mean that competition will inevitably come down to the number of apps available, customers' investments in libraries of apps (which affects switching costs) and price? That's a market that looks very much like personal computers.

Kno-t Again: Intel invests $20 million and takes over Kno's tablet designs

According to The Wall Street Journal's All Things D, Intel Capital and Advance Publications (parent company of Condé Nast) led a new investment round of $30 million in Kno, the Silicon Valley-based startup that planned to ship tablets for the educational market starting late last year. $20 million of the total is coming from Intel. Kno claims that none of the tablets were actually ever shipped to customers, but several hundred were manufactured for Kno by Foxconn. As part of the deal, Intel will acquire ownership of the designs for Kno's tablets and will license them to other manufacturers, so Kno is officially out of the hardware business.

Kno will continue to develop its tablet software and pursue eTextbook licensing deals, but will target existing tablet platforms such as Apple's iPad. It's a smart move by Kno, and probably the only viable option that it had. I wouldn't be surprised if some of the $30 million goes to buy out one or more of Kno's earlier investors who had come on board because they believed in the potential of their tablet.

I still have a hard time believing in Kno's long-term prospects: It can no longer take advantage of the unique capabilities that it had designed into its tablets (for example, the 15" dual touch/stylus displays) to differentiate its offerings, and it has to compete with a variety of eTextbook distributors and publishers, including Chegg, the company co-founded by Kno co-founder Osman Rashid.

Kno announces prices for its eBook readers

Kno, the Chegg spinoff that plans to rent college eTextbooks, has announced prices for its two eBook readers. The single-screen model will be priced at $599, and the dual-screen model will be $899. A limited number of readers, manufactured for Kno by Foxconn, will be available by the end of the year. Kno plans to test its readers and rental program at ten unnamed U.S. colleges and universities.

Kno's single-tablet pricing isn't too far from the price of the equivalent iPad, which has become the de facto industry benchmark. However, the Kno readers have a very different set of use cases than the iPad. Kno's devices are designed to provide as close of an electronic substitute as possible for the experience of using printed textbooks, so they have big screens that can fit most textbooks in current use on the screen at full scale. Students can take notes and highlight with a stylus, or use their fingers. They're not general-purpose devices like the iPad or notebook computers.

Kno claims that their rental program will cover the cost of their single-screen tablet in three semesters. However, the question is whether students want an expensive dedicated eBook reader at all, or if they can live with the smaller screen of the iPad and similar devices. I think that most students will go with the iPad. They'll get a ligher, easier-to-carry device, an enormous selection of apps and a choice of eBook vendors, rather than being locked into Kno.

Kno started developing their eBook reader well before the iPad was announced. If they had waited until the iPad was available, I suspect that they would have chosen to support the iPad and other tablets rather than building their own. If Kno's eBook readers don't get market traction quickly, they may be forced to alter their strategy and support other devices.

An agrarian mind in an industrial world

You're probably seen the recent articles about the spate of suicides (nine this year so far) and working conditions at Foxconn's factories in China. One two-part article, written by a reporter who got a job in a Foxconn factory in Shenzhen, shows the sadness of the lives of the company's manufacturing workers, almost all of whom are no more than 30 years old. Yet, the Foxconn situation is only an extreme case of what hundreds of millions of people go through worldwide. So few of us are satisfied with our working lives. We see our workday as a burden to be endured, rather than a life to be enjoyed. Why are we so unhappy so often?

At least a part of it comes from the fact that factories, offices, hierarchical management and mass production aren't natural to humans. Our natural organizations are families, with hierarchies based on age. When we worked in the fields to raise food for our families, the goals and objectives were very clear, and not arbitrarily imposed by some power figure. Over time, the rise of feudal societies began to decouple us from control over our working lives--we did things because we were told to do them, not because it necessarily made sense.

The industrial revolution and mass production widened the gap between doing work that we had to do in order to earn a paycheck and work that we were fully engaged and interested in. The professional management movement brought hierarchical structure and mass production into the office, and education brought the same practices into the classroom. Is there any wonder why we now have several generations of disengaged students and workers? Decades of being ordered to do things that made no sense, that we knew were counterproductive, but that we did anyway because they determined our rewards and compensation, have taken their toll. We have schools that don't educate and companies that don't work. Students and employees put up with class or work during the week in order to get two days to themselves.

We are missing an enormous opportunity to engage in what we do more fully and with more satisfaction, and I believe the key is to take control of our school or work lives. Whether that means more small businesses, more startups, more cooperatives, more home schooling, or more whatever, I don't know. I do know that the Foxconn situation is only a more extreme case of what the vast majority of people in industrialized nations deal with every day. We've lost control over our lives. It grates at our nature. We want to be free to do what we believe are the right things.

Please note that this has nothing whatsoever to do with capitalism. Capitalism doesn't presuppose or require factories, mass production, hierarchical management or bureaucracies.  You can be capitalistic and believe strongly in free enterprise, but still recognize that we are wasting years of our children's educations and decades of our own work lives doing things that are counterproductive to the personal goals that we have for growth, happiness and satisfaction.