Why computing isn't going away

For the last couple decades, we've studiously siloed computing devices from communication devices from media devices.

The bright lines between products

Then the bright lines between products, content and connectivity blurred as computing became increasingly distributed, physically and programmatically. This blurring has challenged enabling infrastructure to handle new functionality that straddles before distinct silos.

Apple's iPhone and Amazon's Kindle 3G have highlighted - and accelerated - this trend. Both vertically integrate the device and its connected services behind a single consumer brand. Amazon went a step beyond Apple by building connectivity directly into the device by using wholesale agreements with carriers in their own "Whispernet" platform.

Both Apple and Amazon were rewarded with the lion's share of industry profits by owning the choke point for afterwards-point-of-sale services.

Now, the writing is on the wall for other players: Embrace scalable cloud economics or remain stuck in a low-margin hardware business. Cloud services can be averaged over multiple product lines, and the marginal cost of adding features in the cloud is negligible when compared to that of hardware. Device makers who realize and exploit this will profit.

Even at best scenarios, tablets and laptops are differentiated by increasingly fewer hardware elements assembled by the same mega-ODMs. However think instead of storage memory as a cloud service. Imagine a tablet or laptop that comes with 1 terabyte of storage in the cloud. Or think of a media tablet "tuned" to Comcast or Dish Network channels, or business laptops that embed remote IT troubleshooting or Find My PC as standard feature sets.

What about connection to the cloud features?

What about connection to the cloud features? Do you build in only the basic Wi-Fi chipset and hope the device is connected often enough to your cloud features? Or do you bite the bullet and add a 3G or 4G modem to fill the gap between hotspots? How much business do you lose when your cloud can't be reached?

I do not believe that the computer industry will collapse down to one or two players. Nevertheless I do believe that the Apple and Amazon lessons are real and require other CE players to borrow the lessons and remake themselves.