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Tuesday, November 8, 2016

Analysts: What Are These?

Analysts are not always a savvy breed. In fact, sometimes they are downright stupid. Their general types of stupidity can be broken down into classes. I'll just name a few.

The first class, show offs, often throw around terms like disruption, logistics, zero-inventory and so forth without actually knowing their implications. Showing off is a pointless pretense of prowess, unless it shows valuable insight. Usually this class misses the forest for the trees.

The complainers just have axes to grind about their specific issues. They consider their beefs to be of paramount importance while ignoring the majority of users. A specific kind of complainer is the port complainer. They have whined about their disappearing serial port, FireWire port, headphone jack, and old-style USB port. But, hey, things change. It's disruption in action. Old media becomes obsolete, like vinyl records, cassette tapes, and CDs: this is because media is now delivered online. Cords disappear and wireless connections dominate: this is because virtually all updates are now accomplished over-the-air (OTA).

Then there are trolls. They know that the generation of disinformation creates knee jerk reactions that budge stock price. Close your eyes and imagine for a minute that many of them are simply Russians from the St. Petersburg Troll Factory and you will be just about right!

The feature creatures are typically Windows people who just care about feature lists and spec bullet points. They count ports, processors, gigaHertz, and keys on the keyboard. They are the ones that think shovelware makes for good workflow. If they actually use the features that they write about then they would know better. It's the user experience that leads to user satisfaction and commands user loyalty.

I don't want to forget the price people. To them price is everything. Forget about surprise and delight, user experience, or even quality! I can't tell you how annoying these people are. Their inevitable assertion is that the cheapest product always wins, which as we know already is totally wrong. Even if you're selling refrigerators! It's the product that gives the best value that wins. If you get into a price war, you've already lost.

The market share obsessors are yet another class of flawed analysts. To them, it's only about units, no matter if these units are only used for limited purposes, left in a drawer, or even if they are catching fire. They totally avoid the issue of who is actually profiting and thus who will see the consistent growth. For instance, Apple has 12.1% of the smartphone market yet makes 104% of the profit. Yet Android has 87.5% market share. How can this be? The Android hardware makers' profit is largely negative. Yep - they are losing money.

The software profiteers subscribe to the 90s Microsoft model: just build the software and let other idiots kill each other making cheaper and cheaper hardware; there's no profit in hardware, right? Wrong! If there's no profit in hardware then who is going to make it? By the way, the hardware makers often want their own unique look, defeating the standardized software. Also consider that software prices are plummeting. With the introduction of the App Store, Apple has turned software into a $2 commodity. This has forced the software profiteer into the subscription model.

Finally I give you the walled garden haters. These are descended from the people who like to build their own computers and hack them. They want freedom from carriers, authoritarian systems, and so forth. They want to pwn their hardware. In their minds all software is free, regardless of the time and effort expended by software developers. This class doesn't fundamentally grok the concept of an ecosystem, along with why ecosystems are essential to the survival of modern hardware. The hubris of these haters is in ignoring that hacking, device security, and identity theft has become the defining crucial problem of our time. All this for one reason: walled gardens are inherently more secure. IT people have long ago figured this out.

It's disappointing to find that so many analysts are last-millennium-thinkers, and they have themselves become disrupted. They're still betting on Microsoft for God's sake! Don't let their investment firms get ahold of your portfolio!