Microsoft and Google’s platform problems

Microsoft and Google appear to be moving in different directions when it comes to their platforms and first party hardware, as I’ve written about before. However, in some respects they’re fighting the very same battle when it comes to platforms — they’re struggling to set apart their services on platforms increasingly controlled by others.

Microsoft: winning on competitors’ platforms

Microsoft is moving towards a model where it provides its services without preference on third party platforms and away from its historical model of preferring its own Windows-based platforms. Just this week, Microsoft released a version of OneNote that works on Android Wear smartwatches as well as on iOS. Perhaps the most striking example of the new attitude toward third party platforms was the release of Office on the iPad a few months back.

However refreshing as this change may be, Microsoft is, in many of these areas, going to be competing head-on against the companies on whose platforms it seeks to establish itself. OneNote goes up against Google’s own Keep note taking service on Android, and Office on iPad goes up against Apple’s own iWork. Microsoft may not feel too threatened by either of these products, since its own versions are arguably much more fully featured, but there are other important considerations.

First, Microsoft’s core products and services are increasingly competing against free products which provide much of the same functionality, as the chart below shows (the business model framework may be familiar to some readers from this previous piece):

Microsoft competing against free

In short, where Microsoft seeks to charge for Office, Windows or other products, Apple and Google give them away for free (albeit for different reasons: Apple as a way to add value to the purchase of one of its devices, Google to generate data, ad revenue or a channel to sell its other products). For this reason alone, Microsoft faces an uphill battle in selling many of its third party products, especially on platforms controlled by its major competitors. OneNote is an interesting exception: arguably one of Microsoft’s most compelling products, it’s available for free outside of the classic Office bundles.

Second, Apple in particular and Google to a lesser extent favor first party products and services through deeper integration into the operating system. In other words, though OneNote may reside as an app on iOS, it will never be integrated into the core functions of an iPhone in the way that Apple’s own Reminders app is. Though Google’s Chrome is available on iOS, it can never be set as the user default browser. And so on. Apple’s and Google’s apps will always come preinstalled on their operating systems while Microsoft’s will never be, and that further disadvantages Microsoft as it seeks to compete.

Third, Google and Apple have increasingly broad ecosystems of devices running their respective platforms. Apple, with about eight hundred million devices running iOS and OS X and Google with well over a billion devices running Android (and to a much lesser extent Chrome OS), compared with about 1.25 billion Windows PCs in the world and a much smaller number of Windows Phones. Whereas Microsoft’s installed base of devices once dwarfed all others’, that’s simply no longer the case, and both Google and Apple have arguably been better at seeding users with their core products and services running on those devices than Microsoft has been. Almost all the services Microsoft offers on third party products are add-ons on its own devices too, rather than coming built-in. As such, Google and Apple are better able to create and stimulate demand for these products and services than Microsoft, especially on a cross-device basis.

In short, if Microsoft is to compete effectively on a third party basis, its services on competing platforms have to be so good they can overcome the price/business model disadvantage, the lack of integration, and its far smaller mobile device installed base. As of right now, Microsoft simply doesn’t seem to have any products or services that can do that successfully and this should be a key area of investment. In the meantime, it’s being successful largely with products it’s unable to monetize from most users, such as OneNote and Skype.

Google: regaining control over its own platform

Google’s problem is similar but different. It – nominally at least – owns a platform in the form of Android. But it’s a platform it’s increasingly lost control of, in two ways:

  • Full Android licensees such as Samsung have overlaid so much of their own stuff on top of stock Android that Google’s services and the core of the operating system are buried
  • The AOSP version of Android is so heavily used both by third party forks like Amazon’s Fire devices and by Chinese vendors in particular who have built their own service stack on top of it.

Google competes both on the platform it owns, though has lost control off, and on third party platforms (mostly iOS, to date). But it suffers to the same extent as Microsoft when it comes to its lack of integration on iOS, where its apps are popular but will never be as tightly woven into the core experience as Apple’s equivalents. At the same time, Apple has been slowly removing Google in a variety of ways from its products. This has a very public and obvious side – the removal of the YouTube and Google Maps apps from iOS – and a less public and obvious side: using Bing as the default search engine behind both Siri and the new Spotlight features.

At the same time, many of Google’s core services are duplicated by its own OEM licensees and to an extent carriers too, even on Android. It’s not uncommon to use an Android phone which features three different pre-installed apps for video, one each from Google, the OEM and the carrier, and the same goes for many other features too. Although certain core Google services like search, email and maps are already well established, it’s that much harder for Google to establish new services to the same degree when Android devices are so heavily customized by both OEMs and carriers.

For all these reasons, Google has now started to reassert its control over Android in a variety of ways. This was a major theme at its I/O developers’ conference (though it never said so explicitly). Android One is an attempt to get stock Android back in the game in emerging markets, while Android Wear, Android Auto and Android TV offer non-customizable versions of Android for three new domains. It’s as if Google has realized its mistake and is retaking control as much as it can, step by step.

Apple continues to be different

Though Google and Microsoft share some of the same challenges, Apple continues to stand out in this regard. It controls its own platform from top to bottom, and doesn’t seek to compete on third party platforms. The only software it does provide on third party platforms (these days, essentially iTunes) is intended to add value to its own devices, not compete on its own merits. As both Google and Microsoft struggle to compete on platforms they don’t control in the pursuit of massive global markets, Apple continues to pursue its target niches with a very different model.

2015: The Battle For Our Body Begins

Much of the battleground of computing throughout tech history has been for our desks, our laps, and our pockets. In 2015, the battleground for our body will begin. It can be argued that battle had already begun but my firm belief is a true market for wearable computing has not yet emerged. Companies were playing in the space but the vast majority of consumers were not yet interested or, if they were, they were left disappointed. Apple’s smartwatch entrance will change this. Every company I spoke with who had already been in the market with a wearable of some type openly admitted to me that when Apple enters the space there will truly be a market. Even Apple’s hardware competitors acknowledge while Apple is not always early to a category they are pivotal in establishing those categories.

Any sound analysis of adoption cycles will reveal timing is the key to mass consumer adoption of a technology. Some companies get into product categories long before the surrounding technologies are ready and even before the market is ready. I recall several years at the Consumer Electronics Show going to the wearable technology pavilion. It always showed interesting stuff, but none of it was mass market ready. Microsoft is exceptional at being too early. They had a vision for the tablet but were too early. They seemed to know wearable technologies would be big and developed the Smart Personal Object Technology. Microsoft, with those two examples, were early and the technology along with the market was not ready for such products. I’ve heard executives say time and time again, being too early is just as bad as being too late. Timing is everything. Thanks to Moore’s Law, the timing is about right to enable a true wearable computing landscape.

Invasion of the Microchips

Ultimately, the continued advancement of Moore’s Law is enabling smaller, more powerful, and more battery efficient processors. Thanks to this advancement, we will be able to bring more computing power, with better battery efficiency, to extremely small objects. But wearable computing is unlikely to be advanced unless computing systems are designed specifically for wearable computing applications. This is what Intel is looking to accomplish with their Edison module and Qualcomm is doing with their Toq platform. Similarly, Apple built their own integrated system for the Apple Watch called the S1, which is essentially a full computer architecture on a single chip. Designing specific microprocessors, not just using off the shelf solutions geared at other applications, is the way to meaningfully move this category forward.

Interestingly to me, Apple is actually accelerating Moore’s Law for their own benefit. They have this luxury because they design processor architecture just for themselves. Moore’s Law states transistors roughly double every two years. Apple, with the A8 has nearly doubled the transistor count in one year. Apple has packed 2 billion transistors into the A8. Which begs the question, what can Apple do with the Apple Watch when they can pack 2 billion transistors into it? Which is inevitable at some point in the future.

Advancements like these are what set the stage for the battle for our body.

Wearing Computers

The idea of wearing a computer is still foreign to many consumers. Whether it is a smartwatch or a fitness, health, or activity tracker, most people have not adopted the practice of wearing a smart object on their person. This market is in the very early stages of development. There is no doubt wearable computers have problems to solve. However for many, those problems are not yet evident. Over the course of 2015, I believe we will take steps to identifying the problems for the masses wearable computers will solve.

Some of these solutions will be general purpose products which will do a range of things well and and possibly one or two things really well. Others will focus on just a few use cases, perhaps doing only several things really well and that is all. One thing I’ve concluded about this space is it will not be limited to just one approach. In a market of several billion and growing consumers who may be interested in wearable computing, there is enough market share to go around. Like many consumer tech markets, wearable computing is not a zero sum game.

Up to this point, I’ve been critical of both the current crop of health and fitness wearables and the current crop of smartwatches. That is not because I don’t believe in the category but because nothing on the market yet cracks the mainstream value proposition. But 2015 looks to be the year more focus across the board will be placed on solving tangible pain points for consumers.

As Lou Gerstner, the former CEO of IBM, once said. “The market is the ultimate arbiter.” I expect many companies to take their licks refining and pruning their offerings to bring something unique and useful to the mass market. There are more possibilities of where this market can ultimately go. But the market will be the ultimate arbiter in the battle for our body. And given the intimate nature of these products in our lives, there is no better judge and jury.

The Wearable-Identity Connection

Two of the hottest topics in technology these days are smart wearable devices and digital identities. The former, thanks in part to last week’s unveiling of the Apple Watch, has captured the attention of nearly everyone recently, while the latter has gained more notoriety recently than anything else, but is poised to be a key issue for years to come. While at first glance the two are unrelated topics, I believe we will see them come together in some very intriguing ways over the next few years.

One of the key characteristics that ties these two concepts together is they’re both very personal. Wearables are the most personal technology device you can own because, by definition, they are designed to fit or be worn somewhere on your body—and you can’t get any more personal than that. In fact, I believe some of the key challenges facing wearable makers is the need to account for this basic, but essential fact. It’s one thing to design something that lots of people want to use and carry with them—it’s something else entirely to design something that millions of individuals are willing to regularly wear. Unless you’re a big believer in standardized uniforms—and all that implies—the idea that lots of people are going to all wear the same wearable strikes me as a bit naïve.[pullquote]It’s one thing to design something that lots of people want to use and carry with them—it’s something else entirely to design something that millions of individuals are willing to regularly wear.”[/pullquote]

In the case of digital identities, the collection of data that goes into that identity is, again, by definition, as personal as you can get. The challenge here is that we haven’t really seen any great example of products or services that tie all of our information into a coherent, singular form. In fact, some people would argue that it’s better to have information about various aspects of your life—from email and social network site passwords, to your financial information, medical records, friends and family contact info and so much more—kept separate because that makes it harder to piece together all your critical information. (Never mind the fact that just by analyzing all your online activities, many firms probably already have a “scarily” accurate view of you that they’re selling to the highest bidder—that’s a topic for another column on another day…)

The basic assumption here is that none of the elements that would go into a unified digital identity are really safe, so we’re better off spreading that security risk across many individual services. That way, if someone gets one thing—like access to a credit card account—they don’t necessarily have access to all your other key bits of information or personal data, such as your personal photos. While that argument is relatively sound in some ways, it obviously ignores the potential benefits—particularly around convenience and ease-of-use—that a unified approach would clearly offer.

The problem is, one of the critical challenges in putting together a unified type of digital identity service is that you would have to create some kind of “master key” that would unlock the entire treasure trove of your personal data. The potential risks in that scenario are frightening to many people and no one is really confident enough in any single security/authentication mechanism to serve this purpose.

But that is exactly where I believe the wearable/identity connection can, and must, occur. One of the “side” benefits of having a device you wear is that it’s in direct contact with your body. In conjunction with the right sensors, that bodily connection could be used to provide some kind of biometric data to uniquely identify you and serve as a “password-less” automatic means of getting access to your digital identity. Conversely, without that biometric match, access to your digital identity would be denied.

While lots of attention has been focused on fingerprint-based biometric recognition, there are challenges to this technology. In fact, in many cases, such as manual laborers whose fingerprints have worn down, people with certain genetic issues and others, it simply doesn’t work. There are some promising new developments in low-cost iris scanners, as well as mechanisms for matching hand geometry, faces, vein pattern-based recognition and, likely, more to come. In all cases, there are tradeoffs between cost, accuracy and convenience and that will likely lead to the use of several different methods of biometric identification.

Regardless, it seems clear that wearable-identity connection could become extremely important over the next few years and open up a wealth of interesting opportunities for digital identities as well. We’ve yet to see anyone pull together all these aspects into a single solution—no, not even Apple—but I suspect that when it does come together, the impact will be profound.

Are Dogs Even Necessary In An iPhone World?

Does the iPhone hate dogs?

I know, that’s not a fair question. Still, I can’t help but wonder if the iPhone, if all smartphones, will fundamentally alter our relationship with our most trusted, faithful, ready-to-die-for-us-but-until-then-let’s-go-for-a-walk companions.

The arrival of the iPhone has, for better and for worse, diverted significant chunks of our attention away from both people and places. That much we know. But what about our dogs? Do we no longer require their fellowship? If not, what happens to them?

I do not know. The possibility of this scenario is without precedent. In such cases, I turn to fiction.

In the beloved film classic, Conquest of the Planet of the Apes, all the dogs and cats are dead. Briefly, it’s because apes from the future come back to the present (1983) and, well, a disease subsequently wipes out all our little friends. Not a problem. Humans, being a resilient lot, decide apes will make effective pet replacements. They also quickly realize apes can do all sorts of things, more, even, than dogs and cats.

Smartphones are our apes is what I’m saying.

Let’s set aside for the moment how the apes launch a rebellion and wipe out most of humanity. For now, smartphones provide immediacy, interaction, diversion from our stresses. They tell us when to exercise, remind us if we are spending too much time at work, offer comfort when we are upset. They play music, show videos, hold our entire library, manage our schedule. They learn our habits, know our routines, and make us better than we are. 

So why even have a dog?

These are the primary reasons for having a dog:

  • Dogs alert us to dangers. They can even alert us to changes in our body.
  • Dogs remind us to go out for a walk. They help us lose weight and get fit.
  • Dogs are always there, always ready to interact with us at a moment’s notice.
  • With dogs, we feel more connected, happier.
  • If you have OCD, depression, or suffer from PTSD, dogs can help.
  • Is your child safe? A dog can warn you.
  • If you feel lonely, your beloved dog offers comfort.
  • Need someone to just listen, empathize? Dogs are especially good at this.

Thing is, smartphones already do all of these. Some they do even better than dogs. And should you need to track a loved one, if they have a smartphone that’s much better than if you have a dog.

Smartphones also cost a great deal less than pets.

My oldest dog just required surgery. This set me back $5,000. That alone pays for two shiny new iPhones, an Apple Watch and at least two years of cellular service.

sparkycast

It’s not the cost, however, that prompted my speculation on the necessity of dogs. It was a trip to the vet. The old dog was in his normal jovial mood when I drove him in for surgery, despite having to go without eating for more than 12 hours. But he quickly got scared, intuiting the clinical surroundings could only mean something was amiss. He kept nudging up against me, kept seeking reassurances. I happily obliged. Every time.

Until one time when I did not. I was busy tweeting some brilliant insight, as I do, when I suddenly realized he was trying especially hard to grab my attention. A scared dog will do that. I stuck my iPhone in my pocket and left it there for the remainder of the appointment.

It is extremely difficult to put away that beckoning screen. Not just for me but for hundreds of millions of others. This is fact and offered without judgment.

Where does this lead us? Again, I do not know. I do know that smartphones will alter us because they will alter our relationships, disrupt our time, rearrange our priorities, and deconstruct traditional links with our surroundings.

I wish I could say always for the better, but that would be a lie.

The old dog’s fine. In fact, the vet says he probably has four good years remaining. What our screens will do for us by then, I can only imagine. I do know they are replacing much more than just other gadgets.

Tech.pinions Podcast: Apple iPhone 6, Apple Watch and Apple Pay

Welcome to this week’s Tech.pinions podcast.

This week Ben Bajarin, Bob O’Donnell, Tim Bajarin and Jan Dawson discuss the recent Apple announcements, including the iPhone 6 and 6 Plus, the Apple Watch and Apple Pay.

Click here to subscribe in iTunes.

If you happen to use a podcast aggregator or want to add it to iTunes manually the feed to our podcast is: techpinions.com/feed/podcast

Runtime: 29:51

I Shall Now Make My Apple Event Predictions!

I always like to make my predictions AFTER the fact. Improves accuracy. Yet I’m still bound to get a few things wrong.

You can only predict things after they have happened. ~ Eugene Ionesco

Truth be told, I’m working on some massive articles regarding the Apple Event and they’re just not done. I simply haven’t been able to absorb the information yet and I’d rather do it right than do it now.

I’m finding it impossible to keep up with the research in my field” (said every researcher ever throughout history). ~ David Smith (@drs1969)

So I thought I’d fill this week’s column with my quick takes on last Tuesday’s Apple Event.

iPhones

Surprises? Not So Much.

Lots of leaks. Few surprises.

Sales Projections

Expected sales? AT&T said that iPhone 6 demand was “off the charts” and Apple has confirmed the iPhone 6 and iPhone 6 Plus crushed earlier preorder records. So how many are they going to sell?

My official answer to how many iPhones Apple will sell in the holiday quarter— crap tons. ~ Ben Bajarin (@BenBajarin)

Average Sales Price

Apple is selling its base mode iPhone with 16 gigabytes  of storage and its mid-tier iPhone with 64 gigabytes of storage. Further, the iPhone 6 Plus starts $100 higher than all previous iPhone models did before it.

Apple has 10% of handset sales, high-end Android another 10% and the rest of Android a further 40% (& growing). Guess which Apple targeted. ~ Benedict Evans (@BenedictEvans)

A weird thing is about to happen. The Average Sales Price of the iPhone is about to go UP! That’ll put a real dent in the “iPhone” is a commodity theory.

The iPhone Is A Commodity Claim Chowder

With all things tech, fused products and commoditization are inevitable markers of the product cycle. The iPhone 5 will be Apple’s last hurrah as competitors increasingly gain ground. ~ Kofi Bofah, Onyx Investments, 29 August 2012

As the mobile phone market increasingly offers more quality phones at a range of price points, Apple now faces a difficult choice. Does it try to remain a premium product-premium price company, or does it dive into the commoditized lower priced arena? Neither choice is very appealing. ~ Bob Chandler, Motley Fool, 2 May 2013

I’m guessing the choice to go premium wasn’t as tough as old Bob here imagined it to be.

Phones and tablets are inevitably following computers into commoditization. ~ Peter Nowak, MacLeans.ca, 28 January 2013

The iPhone as a commodity. That’s really all Apple’s iStuff is — an enormous and very profitable fad. It’s the Pet Rock of the new millennium. ~ Anders Bylund, Motley Fook, 6 Mar 2012

portfolio

Miscellaneous

Here’s a couple of miscellaneous thoughts for you all to chew upon as you wait for me to finish my research and publish my Magnum Opus on the Apple Event:

It’s still a common mistake to see smartphones (and even phones) as a luxury. In fact, their value is inversely proportionate to income. ~ Benedict Evans (@BenedictEvans) 8/15/14

More people on earth have a mobile phone than a street address. ~ Benedict Evans (@BenedictEvans)

Tablets

There’s been a lot of talk of late about tablets diminishing in importance. I don’t see it that way. To me, phones and tablets are just one big continuum — they’re all tablets. But that’s an article for another day.

PotTart

Pay

Platform building is one of the hardest things in tech. A payment platform requires simultaneous adoption by 1) Banks; 2) Retailers; and 3) Consumers. It took years and years and years for credit cards to finally gain critical mass and they were mocked all along the way.

How do you stop a charging Rhino? You take away its credit card.

And many digital payment schemes have come and gone without consumers even noticing.

Only here’s the thing. Apple makes platform building — the hardest thing in tech — look easy. Take a gander at some of the ads that appeared on the very day of the Pay announcement:

20140909_C1_EmailBanner_BLUE_600x178

MCard

WFARGO

Some people say Apple is late to the NFC party. But until Apple showed up, NFC was a wake, not a party.

It will take years for this to play out, but I believe Apple has already pushed digital payments past the tipping point. Pay is a done deal. Once we’re using our phones (and watches) to make payments, it will change the way retail looks and works forever.

Never underestimate the impact of the law of unexpected consequences. ~ Harvey B. Mackay

Brand

On his ‘Critical Path’ podcast, Horace Dediu expressed surprise at Apple’s move from i-everything to -everything branding. I am surprised by his surprise.

iNames, RIP. ~ John Gruber (@gruber)

The “i” Brand was misnamed from the start (not that it matters to a brand). It originally stood for “i”nternet in the iMac and now it’s simply a nonsensical way of knowing it is made by Apple. Apple is moving into an era where they need consumers to know the product or service was made by Apple. “iPay” would have been generic. Pay is anything but generic. The  branding is both a name and a logo and the  will put Apple’s brand in your face — which is right where Apple wants it to be.

Watch

Mea Culpa

I thought the Apple Watch would be more of a wrist band, less of watch. I was very concerned about battery life, so I thought the Apple wearable might have no screen. I was wrong.

Apple went the fashion route. Now, the fact Apple made all those fashion hires should have been telling me something. But I wasn’t able to put 2 + 2 together. It’s not the first time I’ve been wrong about Apple and it most certainly won’t be the last.

Why?

A lot of the post-Apple Event discussion on the Watch has been around whether Apple provided the “why”. “Why should I buy this?” “Why does this product even exist?” My favorite take on this so far is by Ben Thompson at Stretechery: “APPLE WATCH: ASKING WHY AND SAYING NO“.

I agree with most of Ben’s article but I have some serious issues with a couple of the details. I hope to write a too long article about this in the not terribly distant future.

What’s Next

Here’s a rough outline of the series of articles I’m working on:

  1. The Why Of The Watch
  2. Steve Jobs On Category Creation
  3. Category Mistakes We Makes
  4. Knee Jerk Objections
  5. Lessons Unlearned
  6. Watch Use Cases
  7. Watch User Interface
  8. First Generation Issues
  9. Fashion Issues
  10. Price Issues

All topics are subject to change.

Change is inevitable, except from vending machines. ~ Anonymous

I hope to have the articles done before Watch 2.0 comes on the market in 2016.

Hobby

Rest assured, the Watch is no hobby. Tim Cook used the “one more thing” line to announce the Watch. He called it the “Next Chapter” in Apple’s story. And it was announced by Tim Cook himself. If the Watch fails to become a category, it won’t be due to any lack of effort on Apple’s part.

OMT

Apple’s Wheelhouse

Keep the following in mind. As things get smaller, design matters more. And as design matters more, Apple’s expertise in design matters more.

I love how people say a big company can just ‘get good’ at design – they’d never say that about search or AI or big data in the same way. ~ Benedict Evans (@BenedictEvans)

Further, as things get more personal, fashion matters more. And fashion is an alien concept to most tech companies (and to most tech observers, like you and me). Apple is way, way ahead of most companies in design. And they seem to have “stolen a march” on most companies when it comes to fashion, too. Apple’s wearable products will never achieve mass adoption. However, Apple seems willing to settle for massive admiration (and massive profits) instead.

The most expensive Apple Watch will cost more than the most expensive iPhone which will cost more than most PCs. ~ Horace Dediu (@asymco)

Claim Chowder, Redux

Finally, I’ll end with some delicious claim chowder. Enjoy!

I was talking recently to someone who knew Apple well, and I asked him if the people now running the company would be able to keep creating new things the way Apple had under Steve Jobs. His answer was simply ‘no.’ I already feared that would be the answer. I asked more to see how he’d qualify it. But he didn’t qualify it at all. No, there will be no more great new stuff beyond whatever’s currently in the pipeline. ~ Paul Graham, March 2012

(W)hy are people losing their faith in the money-making machine that is Apple? Maybe it’s because they’ve done it all. What is there left for Apple to do? ~ ~ Emily Knapp, Wall St Cheat Sheet, 24 May 2011

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Mobile Focused Podcast: Apple’s Doubling Down on the Ecosystem

Ben Bajarin and Benedict Evans discuss the announcements around Apple’s big event. We discuss everything from iPhones taking share of premium from Android, to payments and Apple’s business model advantage, and some high level thoughts on what smart watches may actually be.

Some highlight quotes:

“Apple is blessed by their developers.” – Benedict Evans

“Apple attracts not just a certain type of customer but also a certain type of developers” – Benedict Evans

“With the Apple Watch, Apple is tackling their most ambitious hardware project yet.” – Ben Bajarin

Show Notes

iPhone 6 and Android Value – Benedict Evans

Google Wallet Leaking Money

The iPhone 6 Size Conundrum

Since Apple introduced the iPhone in 2007, the size of the screen on each version was the same. For the first five years, the screen on the iPhone was 3.5 inches. Then they moved to a 4 inch screen with the next generation of iPhones. But this year, Apple is offering an iPhone 6 with a 4.7 inch screen and the iPhone 6 Plus with a 5.5 inch screen. Consumers of the past didn’t have to think about which size to get. This time around, iPhone customers are actually agonizing about this and it has started a whole new dialog on Twitter, Facebook and in media columns on the pros and cons of each sized iPhone. I call this “The iPhone Conundrum” and, for a lot of people who will buy new iPhones, this is actually a very difficult question to answer. While the media got hands on with the new iPhones and were able to see the distinct differences in their sizes, Apple’s overall customer base has not and, particularly for those ordering early, they are going to have to make this decision without the touch and feel test that goes with this when they are on the shelves in the store.

Smartphones over 5-inches have actually been big hits in Asia, especially in Korea. In these countries, they serve as a smartphone and small tablet, thus the nickname “phablets”. In the US and most of Europe, phablets have not been big sellers. While we’ll see sales of about 1.5-1.7 billion smartphones this year, only about 10% of these are larger than 5 inches and classified as phablets. When we heard Apple was perhaps going to introduce a 5.5 inch phone, we almost questioned it because of the lesser demand for these larger smartphones — and Apple is all about volume of units sold. However, Apple getting into the phablet space just reflects market reality given the competitive landscape. From what we have heard, the decision to do a 5.5-inch phone was actually driven by their Asian customers.

Screen Shot 2014-09-11 at 10.21.13 PM

For we industry watchers who look for trends, this begs the question of which size will drive the bigger volumes and, for Apple, what SKUs do they stock in which markets? Our educated guess is, in Asia and markets where phablets sell well, the mix will be 65% iPhone 6 Plus and 35% iPhone 6. In the US and Europe it could be switched — 65% iPhone 6 and 35% iPhone Plus. While I think this is actually a good projection, it is by no means foolproof. One could argue the reason demand for smartphones with larger than 5-inch screens has not taken off in the US is because Apple did not have one to sell. At this point we just don’t know how many US customers will want the 5.5-inch model. We are hearing about some early surveys and, to my surprise, there is a lot of interest in the 5.5 inch iPhone now it has been announced but, until people start buying them, I don’t think any of us researchers can accurately predict what that mix of phone sizes will be in the US and Europe. This is Apple’s conundrum.

Trying to forecast demand for the US launch of these new iPhones has to be a difficult one.

From the customer’s standpoint, this decision demands serious consideration. The majority of people in the US market actually put their smartphones in their pockets. This is especially true of men and many women. Of course a lot of women, including my wife, keep their phone in their handbag when they goes out and lays it on the counter when at home. In this case, size matters.

I have been carrying a 4 inch iPhone 5S, a Galaxy Note III 5.7 inch and a 4.7 inch Amazon Fire with me for months. The iPhone 5, which is my primary smartphone, is carried in my front pocket. The Note 5.7 inch is in my right hip pocket and my Amazon 4.7 inch Fire is in my left hip pocket. I did this to test these sizes for a long period of time to get a sense of how these work in the real world. While I like the Galaxy Note’s larger screen size for things like reading and web browsing, it is jut too big to put in my front pocket. Even in a hip pocket it is taller than the pocket itself and a small part is exposed. Interestingly it fits there well and has never broken or gotten scratched even though it bumps up against a chair when I am sitting. Same goes for the Amazon Fire although with its 4.7 inch screen I can put it in my from pocket with ease.

I am personally struggling with this decision myself. The women in my office have all told me they want the 4.7 inch model and have not even considered the larger version. But in my case, I do like the bigger screen since it makes it easier to surf the web and read text. As I have aged, this has become a factor since it gets harder and harder to read things on smaller screens without my reading glasses. Another factor for me is my go to tablet is the iPad Mini. That means I carry a smartphone and a tablet around most of the time. The one reason I lean toward the iPhone 6 Plus is I know I would use it as a phablet as I do the Galaxy Note III today.  I like the ultra portability of a smartphone but one with a larger screen allows me to use it in a “phablet mode” too.

There is another key consideration that goes back to Steve Jobs’ design goals for an iPhone. Jobs believed all iPhones had to be able to be used with one hand. He was adamant about this. The fact they now have a 5.5 inch phone that cannot be used in one-hand mode for most people shows Tim Cook was willing to break ranks on Jobs’ one-handed operational mantra and respond to customer and market demand with the iPhone 6 Plus. If I got the iPhone 6 Plus, I give up this important feature for me but the tradeoff of a bigger screen making it easier to read will probably sway my final decision.

In the end, demand for either new iPhones will be so high I wonder if Apple can even meet demand, especially for the first three months. Most financial analysts believe Apple could sell as many as 60-65 million iPhone’s in the holiday season, compared to 51 million sold last holiday. However, I think actual demand for these phones in Q4 could be way more than Apple can produce, which means the iPhone 6’s they do make will sell quickly.  Nice problem to have and, as most financial analysts predict, Apple will most likely have record sales when all are counted early in January, something that will clearly make Wall Street and their investors very happy.

Apple Watch will finally move the needle on smartwatches

A few weeks ago, partly in anticipation of Apple’s big event this week, I published a report on market prospects for smartwatches, and wrote a companion piece here on Tech.pinions on the topic. The title of the piece was “Grading on a Curve: Smartwatches in 2014” and it reflected my frustrations with smartwatches as they exist today and their limitations, both in imagination and execution. The conclusion of my smartwatch report read:

For all the above reasons, current market prospects for smartwatches are poor, and a few million sales per year are likely to remain the norm for the foreseeable future, with Samsung dominant and other vendors picking up scraps of the overall market. We don’t see smartwatch penetration exceeding 10% of the population in the near future, and it is likely to be considerably smaller in many markets for some time to come. However, all of this is subject to there being no major catalysts to drive growth above current levels.

Two major things could catalyze demand in this market: a player overcoming the significant technological challenges associated with the current smartwatch model, or a player which breaks the model and reinvents the category. Apple seems the likeliest company to do either of these things, and we believe that its entry – likely in late 2014 or early 2015 – will catalyze the market and drive much more rapid growth.

Given the announcement of the forthcoming Apple Watch, I thought I’d revisit some of my thoughts from my earlier piece and report with a view to answering the key question of whether Apple can indeed move the needle on the smartwatch market with its entry, based on what we know now.

Grading on a curve, revisited

I’ll start with the diagram that summarizes my frustrations with the current market, which is based on the Verge’s reviews of major smartwatches. I’ve updated it to include two smartwatches released and reviewed since I originally did the chart (the Moto 360 and Meta M1):

Updated Grading on a Curve chartAs you can see, a number of the smartwatches receive scores around 8 out of 10, putting them above the Galaxy S5, Nexus 5 and HTC One Mini in the smartphone category, and the Galaxy Tab S, Surface Pro 3 and Kindle Fire HDX in the tablet category. For the record, here’s my own rating (from that report) of some of the major smartwatches in the market at the time, with a possible total of five points available in each category for a total of 35 points overall:

Jackdaw Research smartwatch grades

As you can see, I’m a significantly harsher critic than the Verge is and I’m not grading on a curve. Interestingly, at least some at the Verge seem to share my frustrations with the smartwatch category as it currently stands, although there’s a disconnect between that frustration and the scores the Verge is dishing out. The point here is the existing smartwatches fail to deliver on the things smartwatches need to do well. (Incidentally, the Moto 360, which I’ve been testing for the last few days, wasn’t out when I did the report and so wasn’t included. Based on my initial testing, I’d give it a 23, so slightly better than the others in the list above.)

How does Apple Watch stack up?

Of the smartwatches I graded in the report, the only one I didn’t have significant hands-on time with was the Meta M1. I did get to see, touch and compare the Apple Watch at the launch event, but haven’t had significant experience with it yet, obviously. In addition, there are key things we don’t yet know about the watch, including the detailed pricing list and perhaps most importantly, battery life. However, we can have a go at rating the watch based on what we know. Here are the scores I would give the Apple Watch on the same seven categories, based on the limited information we have available:

  • Attractiveness – the Apple Watch immediately jumps to the front of the pack on this element. it’s smaller, more polished, and comes in a far greater variety of SKUs than any other smartwatch out there. Score: 5.
  • Bulk – the Apple Watch comes in two sizes. Neither is as small as the smallest analog watches out there, but both are an improvement in both size and shape over other smartwatches. Score: 4.
  • Display – like several of the other smartwatches out there, the Apple Watch has a high resolution, high quality display. It seems on a par with the Samsung devices in this respect. Score: 4.
  • Battery life – this is the wild card at present, since we have no official word from Apple. But based on some of the leaks ahead of time, the size of the device and what it’s capable of, I suspect battery life will be on par with the Moto 360, i.e. very short. Score: 2.
  • Charging – like Motorola, Apple seems to have moved beyond the awkward charging cradles most of the competition uses and created a beautiful and simple charging mechanism. It’s not wireless charging at a distance, but it’s the next best thing. Score: 4.
  • Functionality – the Apple Watch does far more than most smartwatches, which are predominantly notification centric and tend to do fitness tracking as an afterthought, if at all. It’s impossible to know based on brief, controlled demos how good the watch will be at these things, however. Score: 4.
  • Interaction – this in one area where Apple has put significant investment in innovating and I think its paid off in a big way. Interacting with most other smartwatches, especially those based on Android Wear, is a real pain in the neck, aside from those times when voice control is helpful. Apple’s “digital crown” based approach seems to be a big leap forward here. Score: 4.

If you add those scores together, you get a total of 27 out of 35. I’m grading harshly on an unknown – battery life – and holding back the 5s in most categories simply because I haven’t tested it yet. But that’s already better than the other watches out there. That’s a good thing and may well help move the needle. If the functionality and interaction are as good as they seem, that would immediately take the device to a 29 out of 35. If the battery life is better than I’m expecting it will be into the 30s, putting it head and shoulders above the others.

Solving the problem of weak demand

The other major issue I highlighted in my report and in my piece here on Tech.pinions is not only is the supply of smartwatches weak, but it’s attempting to meet pretty weak demand too. Even as most smartwatches cater to notifications and to a lesser extent fitness tracking, the demand for both is low among the general population. Most people don’t make extensive use of push notifications and only 10% of the population uses a fitness tracker. Meanwhile, the devices in the market largely fail as useful watches, and fail to provide much additional functionality.

Apple’s watch does attempt to tackle both fitness tracking and notifications, but I don’t sense that either is central to the appeal of the device. Though Apple eschewed the idea of shrinking a smartphone down to make a smartwatch, in many ways that’s what its done in creating the Apple Watch. I think the key point Apple was making here was actually not about functionality but the interaction paradigm. The fact is the Apple Watch will – when tied to an iPhone – do many of the things your smartphone can do. It will allow you to communicate, to read, to navigate, to check your messages, email and calendar, and listen to your music. As such, Apple’s vision of the smartphone is not so much about extending notifications to the wrist as it is about extending a far greater set of smartphone features to the wrist, of which notifications are only one part.

This expanded vision of what a smartwatch should do should help Apple expand the addressable market for smartwatches beyond fitness fanatics and notification nerds to a much larger slice of the general populace. If the job of the smartwatch is now, to a great extent, the same as the job of the smartphone, it should appeal to most of the people who have a smartphone, and especially to most of the people who have an iPhone.

Price is the major barrier

Given what we know now, the biggest single barrier to the Apple Watch moving the needle on the smartwatch market is price. These devices will start at $349 and go up from there (in the case of the Apple Watch Edition, presumably by a significant amount). As with other Apple products, price will dramatically limit the addressable market, and especially at well over 50% above the price of many current smartwatches. To be sure, if there’s an audience that’s willing to pay a premium for quality and a job done right, it’s iPhone owners, but this device isn’t going to suddenly turn the smartwatch into a mass market device for that reason alone. Yes, it will likely sell well among iPhone owners and will become a significant new revenue stream for Apple, but at this price it won’t achieve majority adoption even among iPhone owners in the next few years.

Of course, prices tend to come down over time even as functionality expands and Apple has a long history of providing significant incremental upgrades over time with its major product lines. At the same time, Apple’s focus on the iPhone ecosystem and its high pricing will provide an umbrella under which other vendors can continue to compete. Just as the iPhone has achieved high share in the premium smartphone market while leaving large chunks of the market to others, so will the Apple Watch. The availability of the Apple Watch will drive awareness of and interest in the category, and many Android owners may consider their first smartwatch as a result. Competitors will no doubt quickly mimic some of the Apple Watch’s key features and functionality, at least on paper, though as with the original iPhone, it may take considerable time for them to truly compete in practice.

A big boost for the smartwatch market

For all these reasons, the Apple Watch will be just the kind of catalyst I talked about in the conclusion to my report. It won’t drive majority adoption of smartwatches any time soon, but it promises to fix several of the key demand- and supply-side barriers to smartwatch adoption, and will be a huge hit for Apple. At the same time, it will provide a boost to other vendors, who will have to compete largely around the Android opportunity and the lower end of the market. Exactly how big the boost to the market will be is hard to estimate until we know more about the watch as we approach its release. But we could easily go from single digit millions of shipments per year to tens of millions in the wake of its launch.

Apple Payments and Smart Watches: Just the Beginning

Over the past few years, Apple has been building a loyal user base. Zero sum game analysis of market share is irrelevant to the market dynamics playing out in mobile. So when it relates to Apple, my analysis centers on two fundamental buckets. One bucket is, “What is Apple doing to add compelling, useful, and convenient new features for their existing customer base?” The other bucket is, “What are they doing to expand their customer base?” Most of what Apple launched today falls into bucket number one.

Bucket number one is significant because Apple has not only some of the most loyal customers on the planet but also the most profitable. Apple customers generally spend more in the iOS ecosystem on average than those in the Android ecosystem. It is with this point in mind that Apple getting into payments is significant.

Mobile Payments

I’ve been saying for a while we are on the cusp of the era of digital identity. We will increasingly move our analog banking, payments, identification, and more into the digital realm. Apple has been laying the hardware and software foundation to help their customers transition from the analog era of payments and identity to the digital one. Apple took the first step in this direction with Touch ID last year with the launch of the iPhone 5s. They have taken another step now with Apple Pay.

In years past, the timing was simply not right for NFC. Even though the technology was there, the infrastructure was not. That is all poised to change now that Apple is including NFC in both their new iPhones. Furthermore, it seems the retail environment is poised to embrace and advance the retail experience, thanks to Amazon, and NFC along with Bluetooth LE beacons are poised to play a role.

Why is this important? First some US credit card statistics:

  1. Total number of credit card transactions in the U.S. in 2012: 26.2 billion ((2013 Federal Reserve Payments Study))
  2. Total number of credit card accounts in the U.S. as of Q3 2013: 391.24 million, vs. 457.64 million in Q3 2003 ((New York Federal Reserve, Quarterly Report on Household Debt and Credit, November, 2013))
  3. Average value of a credit card transaction in the U.S. in 2012: $94 ((2013 Federal Reserve Payments Study))
  4. Total value of credit card transactions in the U.S. in 2012: $2.48 trillion ($2.21 trillion for general purpose cards and $270 billion for private label cards) ((2013 Federal Reserve Payments Study))

On top of those statistics, Apple shared today that, in the US, there are 12 billion dollars a day in credit card transactions which adds up to over 4 trillion dollars per year. Credit card payments are an everyday experience for many consumers. It is also one which feels antiquated in the digital age. Apple is looking to change that. It will take some time but the plastic credit card is dead. With Apple Pay, Apple is looking to be positioned in the middle of this environment by adding layers of security, simplicity, and ultimately, eliminate as much friction as possible from both the in-store and e-commerce transactions. This is good for Apple, their customers, and their ecosystem.

Apple has laid a foundation,and seeing as the US market appears to be on the cusp of a transition to adopt NFC at many retailers, it will be interesting to see if and how Apple meaningfully advances this market. As I said before, Apple has the right customer base to do it.

The Apple Watch

The big surprise was the release of the Apple Watch. Apple is looking to redefine the smartwatch category and until we all get to try the product sometime early next year, we will debate whether or not they have. I’ve been continually skeptical of the smartwatch category. What the job is for the mass market for a smartwatch has been the central tension for me. I’ve noted notifications alone can not be the central value of the smartwatch. In other words, not just duplicating what is on your phone.

Without having much time with the Apple Watch, I think a few points are worth noting on the product. Firstly, and this has been said by many, this is just the 1.0 product. The Apple Watch of today will look and behave dramatically different in three years or less. Second, software is the key. Over the past few weeks, as a watch from Apple seemed to become inevitable, I have been thinking about how this product evolves. More importantly, could–through software–a smartwatch eat the smartphone? Marc Andreessen loves to talk about how software eats the world, but in many cases software allows hardware to eat other hardware. So could Apple evolve iOS and, through natural user interfaces like voice and a number of other advancements, enable the wearable to eat the smartphone? Is the watch/wearable really the evolution of the category? It is a valid question to ask at this point whether or not my 9 year old daughter will use a smartphone when she is a teenager. But again, the point all comes down to software.

Apple has created an architecture for their developers and their ecosystem where they are placing their bet on the smartwatch with the developer community. This is no different than what they did with the iPhone. Giving developers the SDK and APIs now for the smart watch is essential as they build momentum and create a robust ecosystem by the time it is available next year.

While I’m stil not sure what the mass market appeal of smartwatches is today, it is clear that, if they do appeal to everyone, assuming that is indeed the goal (maybe it isn’t), how the software, apps, and functionality advances will be the key driver of this category. This is where Apple’s third party developers come in, and if any company has the third party developers to advance this category it is Apple.

One thing Apple added to the watch that no other smartwatch has is NFC to create the ability to pay for things with just the watch. This could be a key differentiator. We addressed this value proposition specifically in this post, where we learned first hand how Disney World was deploying wearables for payments, and the level of convenience it provided. Payments and health are likely to be cornerstones of Apple’s wearable strategy.

The Brand

The intersection of liberal arts and technology includes fashion. Apple appears to be taking their brand more into this realm. Think about the names for two new products. The Apple Watch and Apple pay are not the iWatch and iPay. Where did the “i” go? Apple is clearly thinking long term and is making the Apple brand even more prominent.

Apple understands this and they began to address it with “Apple Watch”. By releasing three different collections, and a range of bands to choose from, Apple is just scratching the surface in designing a wearable for the masses. Fashion is subjective and for Apple to truly bring fashion to tech, they will need to make even more collections. But this is just the beginning.

The intersection of liberal arts and technology extends well beyond desk, lap, and pocket computers. There are so many directions it seems Apple can now go. Their future is up to them and it will be interesting to see where they go and who follows.

The Password Dilemma

Security-related issues have come to the fore recently and focused a harsh light on some of the methods that companies use to try and protect your data and/or identity. The consistent theme throughout virtually all these methods is the use of passwords and the problems associated with them.

Recent efforts have been focused on using more challenging passwords that contain a minimum number of capital letters, non-alphabet letters and so on. There’s also a lot of attention being paid to two-factor authentication, which often boils down to having two different passwords (although, sometimes one is supplied by an outside party). The simple fact of the matter is that passwords are a horribly outdated, unnatural way of trying to secure data. They are clearly a solution designed by engineers for other engineers, yet have managed to survive and seep into our consciousness to the point where many people think they’re the only realistic option.[pullquote]Passwords are a horribly outdated, unnatural way of trying to secure data. They are clearly a solution designed by engineers for other engineers.”[/pullquote]

Real people, on the other hand, don’t mesh particularly well with passwords. We’ve all heard the stories about the horrendous over usage of the most common passwords (12345, pa$$word, etc.), but even people who figure out clever password combinations can’t typically remember more than about 1 or 2 of them. So, they keep using those same clever passwords over and over, which defeats the purpose of clever passwords in the first place. Given the increasing number of places where some type of log-in are becoming necessary, this model also doesn’t scale particularly well.

There have been a few attempts to break out of our password-dependence over the last several years—notably through fingerprint readers—but they’ve yet to move into regular usage for most people. Plus, even people who use them only tend to do things like log into a single device—not all their devices or all their services or all their data stores. And, in my experience, even some of the better ones—including Apple’s TouchID—are far from consistent and far from perfect, especially when you use them for a while.

As a result, I believe it’s way past high time to get something that we can predictably, reliably use to provide safe, secure access to our entire digital persona—including all our devices and services. In fact, we need a secure, memory-independent means of adding even more data—like digital health records, commerce transactions and more—to our growing digital identities.

Given all the other amazing technical marvels we’ve seen get introduced to the market over the last several years, I’m actually shocked we haven’t seen better solutions. Part of the issue, of course, is cost. But given all the attention we’ve seen on security-related issues and, therefore, the interest in providing security across a very wide range of devices, I think the enormous potential market for some kind of hardware-based security solution will drive costs down rapidly.

Ultimately, I think some type of biometric-type approach—whether it be improved fingerprint readers, retina scanners, vein matching, or some other sensor-based technology that can positively and uniquely identify an individual—will be the winner. But the devil is in the details and accuracy levels need to improved and become more consistent before any of these technologies can go mainstream.

Beyond the hardware, we’re also going to need a lot more work on standards across devices, platforms, software and services in order to really get these kinds of solutions to take off. It’s all fine and good if a single vendor comes up with a reasonably effective technology, but unless it’s widely adopted across a wide range of companies, devices and services, it’s ultimately not that useful.

Solving this dilemma is clearly a challenging task, but given how broken our current password dependent-systems are, it’s one that needs to be tackled—and soon.

I Was Wrong And The iPhone 5c Is Still A Failure

The best way to defeat the iPhone is to create a superior alternative to the app ecosystem. With widgets, notifications, continuity and inter-app processes in iOS 8, Apple did just that. Woe to Android, Windows Phone and anyone who hopes to see Apple falter this decade.

Unless, of course, I’m completely wrong.

Perhaps there’s some amazing technology out there waiting to leapfrog iPhone. Perhaps the new iWatch and iPhablet and all the various Kits and Plays fail to entice. Maybe Tim Cook and Angela Ahrendts succeed in transforming Apple into a luxury brand, turning the iPhone into a “Veblen good” and moving the company from high margin computing to higher margin fashion.

This seems unlikely. Nonetheless, on the cusp of the big Apple launch event, I am thinking not of new products, but of past ones, and not only of successes, but failures. When I labeled the iPhone 5c a “failure,” readers did not hesitate to emphatically declare I was wrong.

Wrong.

The iPhone 5c was a failure both in terms of sales and for how it diminished Apple’s image as an innovator. I may never have been so right as when I declared the 5c a failure. Expect it to be erased from Apple Stores before this year is out.

The 5c will not be the last Apple flop. I suspect the primary value of any iWatch, at least in the first few years, will be to show people you have an iWatch.

Carry That Weight

I understand if you vehemently disagree with my assertions. Tomorrow brings us new products but will not necessarily end any long standing debates. For example, despite the adoption of Chromebooks and the gutting of the great LA Public Schools iPad experiment, I steadfastly believe in the merits of my plan to give an iPad to every child in America. Similarly, regardless of what every other tech writer is saying, and no matter what Apple introduces tomorrow, I still think NFC is a waste of Apple’s talent and our time.

Going on public record can be daunting. Certainly, it is filled with missteps. Here are two minor predictions I have for tomorrow’s event: 

  1. Apple will offer universal content search and a single log-in across apps for its Apple TV
  2. The company will launch consumer-grade, home-optimized iBeacons

Now a big one:

The weeks-long stream of “leaks” is well orchestrated and not at all coincidental. Apple plans to reveal a great many products tomorrow but few will ‘wow’ and several are almost fully dependent upon multiple partners. CarPlay and iPhone payments may be great — but these will take time and usage and third party vendors to make successful. As the ecosystem expands, Apple has less control. This forces them to talk up the product whereas in the past, the product spoke for itself.

We will know shortly if I am right.

Some predictions take longer, however, and are not as clear-cut. My very first Techpinions column, from February 18, 2013, focused on — believe it or not — the Apple iWatch. I wrote:

Very soon, sensors throughout our homes, on our pets and possibly inside our bodies, all monitored or even controlled by our smartphone, will be the norm. Imagine now if these were ad-subsidized devices, like Android or Kindle, offering no escape from the latest marketing pitch or sponsored social media update. Is this a tolerable future?

I know. Brilliant.

But a paragraph later I followed up with:

The next design battle will almost certainly not be about “skeuomorphism” versus “flat design”. Rather, monetizing hardware, the Apple way, versus monetizing data and advertising, the Google way, will set the stage for this next great battle.

Incorrect.

Nearly 2 years later, this was a battle that never happened. The market has embraced both models, not chosen one over the other. Perhaps, as wearables and smart homes become more common place over the next many years, this will change. That’s a rather weak prediction, however.

Here’s a bold one. From March 18, 2013:

As the blogosphere pronounces ‘Apple is Doomed’ at every turn, I can’t help but thinking we have it wrong. Apple will have its ups and downs, no doubt. It’s just, the more I follow Apple, the more I study Steve Jobs, the more I suspect that, while he could not live forever, Jobs absolutely believed his creation, Apple, could. Literally. 

Am I right or wrong?

Fixing A Hole

Confession: sometimes I secretly blame you for when I am wrong. In “iOS 7 Game Changers,” I spoke glowingly of AirDrop:

I predict AirDrop will have a paradigm-shifting impact on content sharing – which means it should have a paradigm-shifting impact on social sharing sites, particularly Instagram, Facebook, YouTube and LinkedIn. 

Hundreds of millions of iPhones with simple, real time, on-the-spot sharing, all thanks to AirDrop. Big transformative things were supposed to happen. I really believed what I said. So why do almost none of you use this “paradigm-shifting” feature? (Because it’s not necessary, that’s why. I did not think it through at the time.)

Of course, some outrageous ideas may yet come true. Just over a year ago I recommended Apple:

Integrate iCloud, fingerprint technology, and an open API. Touch any connected screen and it instantly re-calibrates itself to our preferred, personalized settings, ST:TNG-like. In this way, Apple becomes the company that manages every screen in our life, everywhere, all the time.

I think this is a near certainty within the next 10 years.

Oddly enough, it’s the stuff that seems patently obvious where I get the most pushback. Following last year’s big Apple iPhone launch event, I stated:

Asking Apple to go down market is like asking Microsoft to no longer charge for software. It runs counter to their history, their strategy, their culture and skill set, their strengths, their leadership and how they recruit, reward and incentivize their staff.

…and took a great deal of flak for that.

I contend it was true then and more so now. That even the most expert Apple analysts refuse to accept this makes it no less correct. The 5c was a mildly painful reminder the company cannot go down market. That Apple is moving further up market is no surprise to me.

Getting Better All The Time

I think I have maintained a reasonably high average for prognostication. For example, fully nine months before the actual Amazon Fire Phone was released, I explicitly stated here that:

  • An Amazon smartphone would be focused on getting us to shop more — from Amazon
  • The widely reported “3D” screen technology would be a bust
  • No Amazon Phone could possibly hope to compete with other devices unless it was completely free, which I seriously doubted would happen

You’re welcome.

Unfortunately, there are those predictions that are quickly proven wrong. Just two months ago I wrote:

Given Android’s headstart in wearables, it’s hard to see Apple winning any wearable app wars. Given the limitations of its market reach, it’s similarly difficult to see Apple winning the “smart home” market without buying its way in. 

What was I possibly thinking? With Mac, iOS and HomeKit — and a premium user base — there may be no company with a bigger head start here than Apple.

Apple will reveal much tomorrow. I predict this will be a once-a-decade event, with a stunning array of new products, services and partnerships. However, despite all the talk, all the tweets, all the analysis, we will not know the full impact of the company’s efforts for years to come.

Tech.pinions Podcast: Security and the Cloud

Welcome to this week’s Tech.pinions podcast.

This week Ben Bajarin, Bob O’Donnell, Tim Bajarin and Jan Dawson discuss the recent Apple iCloud security breach as well as general concerns around security on the web, digital identities and the potential impact on mobile payment systems.

Click here to subscribe in iTunes.

If you happen to use a podcast aggregator or want to add it to iTunes manually the feed to our podcast is: techpinions.com/feed/podcast

Runtime: 28:09

Apple Claim Chowder: Business Models

With an Apple Event fast approaching, I’m reviewing critiques of past Apple Events to see how accurate they were. Turns out, not very. Critique is needed and welcome. Repeated errors? Not so much.

Business Models

No one gets more bad advice than does Apple. Apple went from near-bankruptcy to nearly the largest company on earth, all the while being told each step of the way that they were doing it wrong. And now that Apple has done the equivalent of winning ten Super Bowls in a row, have the critics relented? Of course not. Their advice to Apple, as always, is that the only way for them to remain successful is to do the exact opposite of what made them successful.

It’s hard to say who gets criticized the most, the successful person, or the failure but it’s mighty close. ~ Joe Moore

This final section of my Claim Chowder Series focuses on business models. Apple has done all right while employing their own, unique, business model. However, no matter how much success Apple has, the critics insist that Apple is doing it all wrong.

3d joker - puppet, holding in a hand four aces

Closed

Apple has done all right while employing a vertical (closed) business model. The critics insist that Apple is doing it all wrong.

There’s something problematic in the idea that platforms with 1.5 billion users and 100 billion+ 3rd party apps installed are ‘closed’. ~ Benedict Evans (@BenedictEvans) April, 2014

…Apple’s ability to sustain an innovative edge over Android will be reduced to months – if that. The collective development opportunities made possible by the fact that Android is Open Source will see to that. ~ Brian Prentice, Gartner, 21 September 2009

Apple will have to make a strategic decision on whether to open up the platform. Ultimately a closed system just can’t go that far. ~ Patrick Lo, CEO, Netgear, 31 January 2011

It’s quite likely that Apple is going to commit the classic Apple mistake of trying to be too controlling and therefore the market gets away from them and people start to move towards Android. ~ Jimmy Wales, Co-founder, Wikipedia, 8 March 2011

Microsoft will ultimately muscle-out Apple as the leader in smartphones and tablets. Apple’s insistence on controlling every aspect of both its software and hardware puts it at a disadvantage to a more flexible Microsoft. ~ Charles Sizemore, Sizemore Capital, 29 Nov 2012

Average Sales Price

Apple has done all right when it comes to maintaining a high average sales price. The critics insist that Apple is doing it all wrong.

ASP

Phones and tablets are inevitably following computers into commoditization. Apple may still charge a premium for its products, but it will ultimately have to settle for a relatively small market share as a result, just as it has in computers. There is also a limit to that premium – with the likes of Google and Amazon setting the pace, the respective days of $700 smartphones and $500 tablets are numbered. ~ Peter Nowak, MacLeans.ca, 28 January 2013

You only find out who is swimming naked when the tide goes out. ~ Warren Buffett

The strong inference from Qualcomm’s earnings report is that smartphone prices are falling so fast that the new low end Apple iPhone is not likely to be competitive. ~ Nigam Arora, Contributor, Forbes, 25 April 2013

Margins

Apple has done all right when it comes to maintaining high margins. The critics insist that Apple is doing it all wrong.

Margins

The whole sector is priced as if the average player would sustain 25 per cent margin in eternity. It’s bordering on absurdity. This will end in tears. ~ Per Lindberg, MF Global Ltd, Feb 2009

Competition is compressing Apple’s margins. ~ Glen Bradford, Seeking Alpha, 10 July 2011

Apple is focused on defending the high end of the market, and that is becoming harder to do each year. Competitors, such as the Galaxy from Samsung, are starting to catch up. I think it is inevitable that the margin pressure increases. ~ Mark Newman, Director of Mobile Research, Informa Telecoms and Media, 26 Feb 2012

It shows (data chart from Nomura Holdings) that there is no historical precedence for Apple’s gross margins. Check this out. It shows gross margins for Nokia, RIM and Apple over the past ten years and it comes to us from Nomura because it believes the iPhone’s margins are likely 10% above the sustainable levels. ~ Sara Eisen Bloomberg, 15 Oct 2012

Margins are shrinking. ~ Howard Gold, MarketWatch, 1 February 2013

In closing, the price cuts for the iPhone 5c and the shuffling of the iPad lineup do little to address the company’s core problems of its dwindling market share, slower growth, and contracting margins. ~ Leo Sun, Motley Fool, 19 March 2014

Premium

Overheard in 2001: “Who would pay $399 for an Apple music player?!?” ~ kirkburgess (@kirkburgess)

Apple has done all right when it comes to charging a premium price for their products. The critics insist that Apple is doing it all wrong.

In Q2, Apple made 68% of mobile device OEMs’ profits (65% in q1, 53% in Q2 13). Samsung – 40% (41% q1, 49% q2 13) Source: Canaccord Genuity ~ Daisuke Wakabayashi (@daiwaka) 8/5/14

screen-shot-2014-08-15-at-6-28-58-am

The market is already saturated with popular [phones] that are virtually free to consumers. The perceived zero cost of a cellphone like the Motorola RAZR is a serious impediment. ~ Ashok Kumar, Capital Group, 30 July 2007

Free things cost too much. ~ Talleyrand

Bleier believes Apple will have to dramatically lower iPhone prices or risk losing market share to Android-based phones and/or RIM’s Bold, which he believes will be a big hit this holiday season. ~ Scott Bleier, CreateCapital.com, 24 Oct 2008

Pricing to gain market share simply for the sake of market share is a chump’s game. ~ Bill Shamblin

Who’s going to buy an Apple iPad? Well, not you or me, anyway – not this version, not at $600-800. ~ Bruce Beris, bruceb consulting, 4 February 2010

It’s far better to buy a wonderful product at a fair price than a fair product at a wonderful price. ~ paraphrasing Warren Buffett

Americans now are buying more Android phones than iPhones. If that trend continues, analysts say that in little more than a year, Android will have erased the iPhone’s once enormous lead in the high end of the smartphone market. ~ Miguel Helft, New York Times, 17 October 2010

iPhone owns the US market. ~ Benedict Evans (@BenedictEvans) 7/22/14

comscore_jul14_trend

From July 2012 to July 2014, iPhone share in the U.S. went from 32.4% to 42.4%.

Problematically, the Android competition is just as expensive as the iPad lineup, so Apple obviously feels free to continue gouging consumers on iPad pricing. ~ Paul Thurrott, Windows IT Pro, 3 March 2011

Everything is worth what its purchaser will pay for it. ~ Publilius Syrus

If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. ~ Milton And Rose Friedman

No one had a product that could generate that kind of excitement until HP sparked a frenzy when pulled the plug on its poor-selling TouchPad and slashed the price to $99. It’s an ugly way to go, but sacrificing profits might be the quickest way to rack up big revenues, and blunt Apple’s momentum. ~ Brian Caulfield, Forbes, 30 Aug 2011

There is hardly anything in the world that some man can’t make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey. ~ John Ruskin

Amazon’s willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market. ~ Sarah Rotman Epps, Forrester, 29 Aug 2011

Apple is expected to introduce an ‘iPad Mini; next week, which will compete directly with the Kindle and Nexus, but it seems unlikely that this device will sell well if it is priced at, say, $299. ~ Henry Blodget, Business Insider, 7 Sep 2012

Price – Expensive piece of kit [iPhone 5] ~ Oliver Wolf, Greenwich Consulting, 10 Oct 2012

What is a cynic? A man who knows the price of everything and the value of nothing. ~ Oscar Wilde

The iPhone, with its single annual update and super premium price, has been run down from behind by a pack of rivals with segmented product ranges, 6 month product cycles and aggressive price points. ~ Paul Sagawa, Sector & Sovereign Research, 19 Nov 2012

I think they should invest more of it in the margin, in the business. Get lower-priced products out there. Stop going after just the premium piece. Get into the real growth engine of the smartphone market, which right now is Android, its low-priced phones in China and India, same thing on the tablets. ~ Henry Blodget, CNBC, 3 January 2013

Author’s Note: Apple should get into lower-priced products? Why? Because that strategy has worked out so well for Samsung? See chart, below.

XvSamsung

As the mobile phone market increasingly offers more quality phones at a range of price points, Apple now faces a difficult choice. Does it try to remain a premium product-premium price company, or does it dive into the commoditized lower priced arena? Neither choice is very appealing. ~ Bob Chandler, Motley Fool, 2 May 2013

Author’s Note: If being a premium business provider does not appear very appealing to you, you need to get out of the business of providing business advice.

Apple’s philosophy has always been to be consumer-centric. It wants to make easy-to-use, broadly-accessible products. But on some level, it’s failing consumers when only 18% of the global smartphone population has an iPhone. ~ Jay Yarow, Business Insider, 24 May 2013

Apple’s vision is to make the best, not the most. Apple is is the cutting edge that breaks the ice and allows others to follow. There are many fast followers (and even more slow followers). There are few pioneers. If you think that Apple is failing consumers, then you haven’t looked at the computers and notebooks and MP3 players and smartphones and tablets that consumers are using. They were all inspired by Apple.

Amazon’s pricing ambition is the clearest indication of its phone playbook: undercut rivals and grab meaningful market share. It is also shows that Apple’s worst nightmare may be coming true: prices could fall not just for cheap phones in developing markets but higher-end ones too. ~ Amir Efrati and Jessica E. Lessin, jessicalessin.com, 6 September 2013

(T)he pricing of the company’s iPad line as a whole is absurdly high, with Apple’s models often costing at least $100 more than their closest rivals. ~ Troy Wolverton, Mercury News, 24 October 2013

Apple’s new iPads and iPhones will aid the company’s revenue growth going into the busy holiday season. However, Apple’s pricing of iPhone 5c will have a difficult time competing in the lower end of the smartphone market. If Apple products remain expensive the company’s penetration rates will hit a brick wall sooner or later. ~ Ishfaque Faruk, Motley Fool , 26 October 2013

skim

The iPhone 5c appears to be Apple’s red-headed stepchild. The tech giant is selling far fewer units of the 5c than it is of the (more expensive) 5s, according to recent reports. ~ Cadie Thompson, CNBC, 15 October 2013

Author’s Note: So Apple sells more of its premium product than its second-tier product and this is viewed as a bad thing. That reminds me of a joke:

Question: How did the fool try to kill the fish?

Answer: They tried to drown it.

Question: How did the critics try to kill Apple?
Answer: They tried to drown it in profits.

Apple in my view made a huge mistake by not launching a mid end smartphone. ~ Sneha Shah, Seeking Alpha, 2 January 2014

Wars are not won by fighting battles; wars are won by choosing battles. ~ George S. Patton

Note that the average Android price is heading toward $200 and the average iPhone price is heading toward $600. Apple is asking the question, do you want to pay three times as much for our phones? Thus far, 80% of the market has answered ‘no.’ ~ Jim Edwards, Business Insider, 31 May 2014

Twenty percent of the market has answered: “yes”.

For all that Android has improved, and we see the difference as a matter of taste, iPhone still outsells Android at the same price 3:1 ~ Benedict Evans (@BenedictEvans) ~ 3/30/14

As of June there were 886,580,000 iOS devices sold. 1 Billion sold will happen well before this year is out ~ Horace Dediu (@asymco)

Platform

Apple has the strongest computing platform in the world. The critics insist that it is an illusion that cannot last.

Over the last year, Google paid devs ~1/2 of Apple’s App Store ($5B vs $10B) on ~2x the devices @BenedictEvans

In other words, each Apple owner is worth 4 times as much to developers as is each Android owner.

Apple’s critics have always been wrong about the how Platforms work. They insist that cheaper hardware will always outsell more expensive hardware and that platform is a game of winner-take-all with the more ubiquitous hardware sales attracting the majority of the developers. You have to admire Apple’s critics for their consistency. Despite having no evidence to support their position and plenty of evidence to refute it, they’ve remained consistently wrong.

There are very roughly the same number of high-end Android and iOS users, yet total Android payout in last 12m was $5bn, where iOS was $10bn. ~ Benedict Evans (@BenedictEvans) 8/23/14

Apple will likely have a tough time convincing application vendors to build specialized clients for the iPhone until the volumes are there, and the volumes could be limited by the lack of third-party applications – a Catch 22. ~ Jack Gold, J. Gold Associates, 10 January 2007

Even if it is opened up to third parties, it is difficult to see how the installed base of iPhones can reach the level where it becomes a truly attractive service platform for operator and developer investment. ~ Tony Cripps, Ovum Service Manager for Mobile User Experience, 14 March 2007

Will [Android] be as elegantly executed as the iPhone? Probably not. But it won’t matter to the mobile application developer if there are eight or ten Android handsets shipped for every iPhone. Addressable market will again trump elegance. ~ Brian Prentice, Gartner, 21 September 2009

All the apps that count will be ported to every one of them (smartphone platforms). ~ Microsoft’s chief software architect, Ray Ozzie, at the Microsoft’s Professional Developers Conference, 17 November 2009

All the people (including me) who felt underwhelmed by the iPad initially might have missed its true potential. Put another way: the iPad is all about software. Forget the sleek form factor – that’s just a prerequisite. Ironically, it’s the software and services that Microsoft never ‘got’, that Apple totally does get. ~ Dan Wayne, apc mag, 12 February 2010

The iPhone vision of the mobile Internet’s future omits controversy, sex, and freedom, but includes strict limits on who can know what and who can say what. It’s a sterile Disney-fied walled garden surrounded by sharp-toothed lawyers. The people who create the apps serve at the landlord’s pleasure and fear his anger. I hate it. ~ Tim Bray, Developer Advocate, Google, Inc, 15 March 2010

(W)hile Apple’s attempt to control the ecosystem and maintain a closed platform may be good for Apple, developers want more options and customers want to fully access the overwhelming majority of web sites that use Flash. We think that customers are getting tired of being told what to think by Apple. ~ Jim Balsillie, Co-CEO, Research In Motion, 20 October 2010

Android will become the operating system (OS) of choice for developers rather than IOS within 12 months. ~ Adam Leach, Ovum, 23 Jan 2012

If Apple continues to pursue its current pricing and maximize-short-term profit strategy, it may continue to increase its profits for the next couple of years. (BlackBerry and Nokia grew earnings for a couple of years after some analysts began seeing the writing on the wall.)
But Apple will also continue to lose platform and ecosystem share in most of the world.
Apple fans can talk all they want about how Apple is “like BMW,” but in a couple of key competitive respects, it isn’t. And if the gadget platform market behaves the way other platform markets have (think Windows), Apple and its fans may come to regret this short-term thinking in the end. ~ Henry Blodget, Business Insider, 15 November 2013

Author’s Note: Hardware is the musical instrument. Software is the musical score. Platform is the stage. Ecosystem is the Orchestra that brings the instruments, the music and the players altogether on the grand stage. There is no company on the planet who out orchestrates or out ecosystems Apple.

Until such time as the critics understand that the Orchestral performance — the overall ecosystem — is worth far more than its component parts, they will never understand Apple.

Wall Street

October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February. ~ Mark Twain

Just before, during, and after the upcoming Apple Event, Apple stock is going to take a dramatic turn. And you know what that means about the future of Apple’s current products and about the future of Apple…

…absolutely nothing.

Believing that the direction of Apple stock determines the value of an Apple Event is like believing that a weathervane controls the direction of the wind. ~ John R. Kirk

The stock market is neither a gauge of current success nor a predictor of future success.

Markets reflect perception. In that sense they are always right. For the price to change, perception has to change. ~ Horace Dediu (@asymco)

In the short run, the market is a voting machine but in the long run, it is a weighing machine. ~ Benjamin Graham

We think that markets reflect and even anticipate facts. But markets reflect perception, not facts. And perception is not about reality, it’s about human foibles.

If a business does well, the stock eventually follows. ~ Warren Buffett

Claim Chowder

iPhone which doesn’t look, I mean to me… And I guess some of these stocks went down on the Apple announcement, thinking that Apple could do no wrong, but I think Apple can do wrong and I think this is it. ~ John C. Dvorak, 13 January 2007

The best revenge is massive success. ~ Frank Sinatra

Sell your Apple stock now, while the hype’s still hot. You heard it here first. ~ David S. Platt, Suckbusters!, 21 June 2007

I made a killing in the stock market. My broker lost all my money, so I killed him. ~ Jim Loy

(W)e think investors should also pay close attention to Apple. In addition to the Amazon tablet, Apple faces a growing number of risks. ~ Naked Value, 27 Sept 2011

Cook has been increasingly compared to Jobs and found wanting. ~ Rob Enderle, TechNewsWorld, 26 March 2012

I was talking recently to someone who knew Apple well, and I asked him if the people now running the company would be able to keep creating new things the way Apple had under Steve Jobs. His answer was simply ‘no.’ I already feared that would be the answer. I asked more to see how he’d qualify it. But he didn’t qualify it at all. No, there will be no more great new stuff beyond whatever’s currently in the pipeline. So if Apple’s not going to make the next iPad, who is? ~ Paul Graham, March 2012

Market share analysis presumes a zero sum game but greatest wealth comes from creation of new markets. ~ Horace Dediu (@asymco)

Here are seven events, all of which could hurt Apple’s stock price in a big way:

1. Wireless service providers (WSPs) collectively decrease iPhone subsidy
2. Window 8 is a huge success
3. No surprise in iPhone 5
4. Departure of major executives
5. Lukewarm replacement sales
6. Global smartphone growth slows down
7. Chinese demand of iPhone unsustainable during the last quarter
Gutone, Seeking Alpha, 29 May 2012

Here are four reasons why I don’t think Apple’s stock will see $700 again:
1. Growth in phones is slowing as competition increases
2. Margins are shrinking
3. Apple is losing its innovative edge
4. Apple may no longer be a growth story”
Howard Gold, MarketWatch, 1 February 2013

Author’s Note: Apple’s stock adjusted price passed $700 in August, 2014.

As a value investor, I strongly believe in BlackBerry’s future because the company has several advantages, such as the security, the Q10 and the corporate world. On the contrary, Apple’s potential increase appears very limited in the short run because the company won’t release new products, which can increase the interest of the company. ~ Gillian Mauyen, Seeking Alpha, 28 April 2013

Harvard University, the world’s wealthiest university, has liquidated its stake in Apple Inc. as the iPhone maker’s shares tumbled after reaching a record high of $702.10 in September. ~ Michael McDonald, Bloomberg, 10 May 2013

Author’s Note: One doesn’t have to go to Harvard to know that it’s “Buy low, sell high.” Instead, most investors — including large institutional investors — are inclined to buy stock on the way up and sell it on the way down.

Apple has become a value trap, This is a company with no growth, and profit margins that are way too high vis a vis the competition. ~ Doug Kass, Seabreeze Partners Management, 17 Sept 2013

I will look at taking my profits on Apple stock as I do not think that the company has much upside left at the current valuation and price. ~ Sneha Shah, Seeking Alpha, 25 October 2013

They only have 60 days left to either come up with something or they will disappear,” said Trip Chowdhry, managing director at Global Equities Research. (March, 2014)

Wasn’t Apple supposed to have disappeared by now without the iWatch? ~ Brad Reed (@bwreedbgr) 8/20/14


blodgetaug2014

We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. ~ Warren Buffett

Lessons Learned And Unlearned

When I find the road narrow, and can see no other way of teaching a well-established truth except by pleasing one intelligent man and displeasing ten thousand fools — I prefer to address myself to the one man. ~ Maimonides

This has been a very long article and this has been a very long series of articles. Have we learned anything from it? I fear we haven’t learned much. As this week progressed, I watched pundit after pundit make the same ridiculous errors that they’ve always made and, I guess, that they always will make. But just because they will never learn does not mean that we cannot profit from their mistakes.

Wise men profit more from fools than fools from wise men; for the wise men shun the mistakes of fools, but fools do not imitate the successes of the wise. ~ Cato the Elder

Here then are seven last lessons learned and unlearned.

Butcher

Don’t take a butcher’s advice on how to cook meat. If he knew, he’d be a chef. ~ Andy Rooney

Apple is one of the greatest Chef’s of our age. Most critics are butchers. Enough said.

Swimmingly

Never offer to teach a fish to swim. ~ Proverbs

Apple seems to be doing swimmingly without our advice. Perhaps we should stop spending our time telling them what they’re doing wrong and start learning what they’re doing right.

There are a lot of people innovating, and that’s not the main distinction of my career. The reason Apple resonates with people is that there’s a deep current of humanity in our innovation. ~ Steve Jobs

Cannot

The person who says it cannot be done should not interrupt the person who is doing it. ~ Chinese Proverb

Don’t listen to people who say it can’t be done. ~ Steve Jobs

If something is being done, we should stop saying that it cannot be done and start figuring out how they’re doing it.

Things are only impossible until they’re not. ~ Jean-Luc Picard

Prophets

“Apple is screwed” – 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014. ~ Sammy the Walrus IV (@SammyWalrusIV)

It is a test of true theories not only to account for but to predict phenomena. ~ William Whewell

To arrive at a contradiction is to confess an error in one’s thinking; to maintain a contradiction is to abdicate one’s mind and to evict oneself from the realm of reality. ~ Ayn Rand

The prophets of doom have predicted Apple’s demise year in and year out and always they have been wrong. We need to pay less attention to prophets and more attention to profits.

Unconventional

Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally. ~ John Maynard Keynes

It is a paradoxical truism that success comes from unconventional strategies which are, by definition unpopular.

Differentiated

It’s not about doing what you can, it’s about doing what others can’t. ((Excerpt From: C. Michel. “Life Quotes.” C. Michel, 2012. iBooks. https://itun.es/us/AyIDI.l))

Apple’s critics always want Apple to adopt the strategies employed by their competitors. This, of course, makes no sense at all. The goal is to be different from, and more successful than, one’s competitors.

Apple has no competition who sell what their customers are buying. ~ Horace Dediu (@asymco) (3/18/14)

Apple has a monopoly on being Apple. They want to maintain that for just as long as they can.

Long Run

It may not be that the race is not always to the swift, nor the battle to the strong – but that is the way to bet. ~ Damon Runyon

Apple is in it for the long run. We too should viewing Apple from a long-term perspective.

Apple is run ‘for the investors who are going to stay, not the ones who are going to leave.’ ~ Warren Buffett

When you get up in the morning and the press is selling Apple short, go out and buy some shares. That’s what I would do. That’s what I have done. ~ Steve Jobs

If you’re in Apple for only a week… or two months, I would encourage you not to invest in Apple. We are here for the long term. ~ Tim Cook

CookLaugh

CAPTION: Tim Cook and Apple crying all the way to the bank.

Apple Claim Chowder Series:

Introduction
Events
Killers
Cynicism
Product
Evolutionary Or Revolutionary
Business Models

The Doctor-Patient Health Tracker Data Dilemma

In my column last Friday, “Why an iWatch is not Apple’s next big thing“, I pointed out I believed Apple is doing less an iWatch and more a wearable with a narrower focus around fitness and health care.

Of course it will tell time, but I suggested that, instead of trying to be all things to all people in a smartwatch, Apple would make their device the best health and fitness wearable on the market and use this to tie in to the bigger prize of becoming an important medium or data broker between the user and their doctor or health care provider. My feeling is Apple’s next big thing is tying the iPhone and an Apple Wearable to monitoring a person’s health and becoming a powerful mediator between the user and the health care system.

If you follow what is often called the mHealth and digital health revolution, you already know there is a lot of effort going into digitizing the world of health care and using mobile devices and wearables as on-person health monitors to record data that could be useful to a person’s health and fitness programs as well as their health care professionals. Unfortunately, today’s fitness trackers act as islands unto themselves and, in most cases, data is silo’ed and not shared across apps or with anyone else in the health care chain.

I believe Apple plans to fix this issue by aggregating content from fitness apps or fitness wearables that use HealthKit and, over time, play the mediator role between the user and their health care professionals. However, for this to even be a possibility. Apple has to do at least the following things:

Privacy of personal health data must be protected

The recent news hackers stole nude photos of various celebrities from their iCloud accounts underscores that Apple needs to make sure health data is truly private and can only be viewed by the user. While the hackers did not breach any of Apple’s iCloud based servers, they did use social engineering to get access to these celebrities’ passwords and security questions. While stealing nude photos is bad in and of itself, hackers gaining access to personal health data would be much worse. Instead of making dual authentication optional, Apple may need to make it mandatory and force the issue with their users to keep this from happening in the future. They are also going to have to work overtime to gain back consumer trust given what happened with these nude photos. 

Fitness tracking and health data must be accurate

Most of the fitness trackers I have used have varied in their data accuracy. Any Apple device would need to solve this problem and be as accurate as possible if they want to have any success with these products. Also, the user experience itself must be much better than what we have had with the fitness trackers on the market now.

Apple did not invent fitness trackers but, as they did with the iPod, iPhone and iPad, they have the opportunity to reinvent and make them a mainstream product. I believe Apple’s ultimate goal is to become a mediator of data between the user/customer and their doctors and health care providers and make it possible for data to be eventually sent to these professionals at the request of the user/customer. That means privacy and accuracy are critical to this product’s ultimate success.

Doctor and Healthcare Professional Training

I see two key issues or dilemmas when it comes to this data actually impacting any health care professional’s care of a patient.

The first is already overtaxed doctors are working long hours now. The idea of constant data streams coming from health trackers would be overwhelming. Long time readers know I am a heart patient as well as a diabetic and personally have to monitor a lot of things like blood pressure and blood sugar readings multiple times during the day. Thankfully, I do this via health monitors tied to my iPhone so a data stream is recorded and easily accessible to me. But my doctors want those reading too. When I go to my diabetic doctor, he downloads my blood glucose testing meter data so he can see what my blood sugar readings have been over a three month period. My primary doctor wants my blood pressure readings in the same way. What would make their lives easier is if data is collected and aggregated on my iPhone and, upon my approval, sent directly to my digital patient charts, perhaps on a weekly basis. More importantly, the data could also have alert algorithms that warn me and my doctor when these readings are out of whack and perhaps need some professional intervention. Automating this process could be a huge win for me and my doctors and help catch things early if all of this technology worked seamlessly and with privacy intact.

The second would be related to the training of professionals on how to use these self monitoring tools and data in ways that work for them and their patients. As I stated earlier, doctors are overwhelmed in their patient care practices now and while these tools could be quite important to their procedures, it will take some serious training efforts from Apple and related practitioners in the health care system to make this work.

It will be interesting to see how much Apple actually reveals of this strategy next week but I believe the signs are all there and point to a big emphasis on a wearable that has a strong focus on health and fitness. If so, the concerns I mention above need to be factored into anyone’s thoughts on the success of this product.

Side note — I am hearing this wearable from Apple might be actually modular or a module itself that can be put into different sized and colored bands that also include sensors in the bands themselves. If so, this makes sense. Giving users colorful and stylish options on the bands could be a lucrative addition to the wearable device itself and be even more interesting to a broader range of customers.

Five Thoughts on Privacy and Security

Apple’s been in the news this week because hackers apparently forced their way into various celebrities’ iCloud accounts and stole photos, which have now been released to the public. It’s still not clear exactly how the hacks were perpetrated, although that hasn’t prevented plenty of clueless reporting on the topic. In the absence of clarity about exactly what happened, I think it’s useful to focus on a few general points about privacy and security that provide some context for this sort of news.

If Apple really is at fault, it needs to remedy the situation fast

If it becomes clear, as has been reported, Apple’s systems for securing accounts are inadequate in that they either lack rate limiters or are otherwise open to brute force attacks, they need to fix this ASAP. As others have pointed out, these are basic precautions any online service ought to put in place and if Apple hasn’t had them, that’s a massive oversight. There should be (and almost certainly is) an internal review under way at Apple right now looking at all the potential vulnerabilities in Apple’s online sign-on systems and patching them as soon as possible.

The impact to Apple will be very limited

Every time a story like this blows up, I get calls from journalists asking whether this will (A) damage the company concerned, (B) make people warier of similar services in future, (C) dramatically change behavior. And every time, I tell them no to all three questions, for one simple reason: people have extremely short memories when it comes to this sort of thing. Just look at the Google Trends data for the search term “privacy”:

Google Trends privacy

What you see is interest in the topic is actually declining over time, though there are periodical spikes in interest, usually triggered by specific news stories such as the one this week. Interestingly, there’s no spike this month even though the equivalent Trends data for the word “hack” has spiked enormously as a result of the news story. In other words, overall concerns about privacy as measured by this data remain low (and are in fact falling) and although there are brief spikes in interest, they don’t last. As such, this story will likely blow over like all the others before it, and there will be little to no lasting impact on Apple.

What is certain is that, if you were looking to orchestrate a campaign to hobble Apple’s announcements this coming week, this would be about as good an attack vector as you might conceive of. It hits Apple where it’s thought to be weakest (cloud services) ahead of what’s likely to be a series of announcements about particularly sensitive data sets (health, home and financial). But my guess is by this time next week it will be forgotten – the public has a very short memory when it comes to this sort of thing.

Privacy attacks are very targeted

One reason why these attacks tend to blow over so quickly is they affect so few people. This particular attack, like most of them, was very targeted – the Guardian reports only around a dozen celebrities were affected and a total of around 400 photographs and videos leaked so far. The overall scope of the hack may have affected “over 100 individuals” and their personal data. That’s a tiny, tiny fraction of the overall populace, and what all these people have in common is they’re famous.

All of these attacks require three things to be a threat: motive, means and opportunity. And, unlike the sort of financial hacking that has affected Target and others in recent months, all three simply don’t apply to most members of the general population. There’s little motive for hackers to access my personal photos or videos, because the market for images of my kids is non-existent outside my own family. These attacks take considerable time and it’s simply not worth the means required if there’s no payoff. There’s also little opportunity because the kind of personal data necessary to perform social engineering for someone who isn’t famous is hard to come by.

As such, though celebrity photos make for big news stories, most people can easily brush them off since they’re unlikely ever to be affected by them. Financial hacking stories, on the other hand, have far more wide-reaching effects, and the likelihood that many ordinary individuals will be affected is far higher. But that doesn’t apply to this sort of very targeted and therefore, limited, hacking.

The difference between careless and deliberate privacy invasions

Another thing to bear in mind is there’s a very important difference between personal information obtained by third parties despite the best efforts of a provider, and information actively shared with third parties by a provider. I’ve written previously about how business models either create alignment between users and those paying the bills or tensions between them, and the implications that has for security. What’s most damaging with these sorts of stories is when they start to create in people’s minds a pattern of breaches, and that’s far more likely to happen when a company’s business model depends on enabling sharing of personal data than when a company is doing everything it can to protect users’ data from third parties.

What no one is accusing Apple of here is deliberately pushing the boundary on sharing personal information with third parties, and in fact Apple has spent the past week clarifying developer guidelines around HealthKit, HomeKit, Extensions and other functions in iOS 8 which have the potential for privacy invasions and violations. One of the things I was most struck with as I watched some of the individual sessions from WWDC was how carefully Apple has thought through some of the privacy implications of HealthKit. One example I’ll highlight that’s representative: apps can check whether they have write permission for HealthKit data, but not whether they have read permission, because the very fact a user has denied an app read permission to their blood sugar data might be an indication they are storing such information and therefore they’re diabetic. That kind of attention to detail is critical if Apple is to gain the trust of its users around HealthKit, HomeKit and whatever payment solution it will launch next week. The details that have emerged this week about the limits placed on what developers can do with HealthKit and HomeKit data are further illustrations of how seriously Apple is taking all of this. I don’t know if the timing is a coincidence – if the iPhone launch weren’t next week, I’d say it might have been moved up, but I suspect it’s just fortuitous timing.

Both Apple and Microsoft have taken advantage of Google’s focus on advertising to hammer it over privacy invasions. Microsoft’s Scroogled campaign was a good example of this strategy and it works because it reminds users of the inherent tension that exists between the needs of users and advertisers. Both Apple and Microsoft have been highlighting their commitment to keeping user data private, as I mentioned in my business models piece. While this week’s iCloud story may hurt Apple for a few days, it’s in a fundamentally different category from the regular stories about Facebook and Google privacy invasions, because those are about deliberately shifting the boundaries between what’s personal and what’s not. While Apple bears responsibility if poor security precautions allowed the iCloud hack to take place, it’s certainly not leaking that data deliberately to third parties.

Users are always the weak point in security

Lastly, we as the end users are always the weak point in security. That’s not to absolve tech companies of blame: in fact, it’s a key challenge they should all be working to overcome, while managing the balance between removing the barriers to good security and maintaining strong protections for users. I’ve had good discussions on Twitter about this over the last few days, and several themes have emerged:

  • The vast majority of users will always seek the path of least resistance when it comes to security – this means simple, often reused passwords and an aversion to things like two-factor authentication which might strengthen security
  • TouchID and other new forms of authentication can be very helpful in this respect, but they only go so far, as long as PIN codes and passwords are used as alternatives, and as long as they’re only used for on-device security, leaving the web as a whole, and non-enabled devices back in the current username-password model
  • Two-factor authentication which automates one of the factors – e.g. by using a fingerprint sensor or iris scanner on a device to authenticate on the web, or for mobile payments, could be a significant step forward. Two-factor authentication is being held back by its sheer awkwardness: waiting for an SMS or opening an app, manually entering a code etc. and something which makes the second factor easier to confirm could increase adoption.

There are no easy solutions in security, which is characterized by constant tradeoffs between ease of use and prevention of breaches. But better security and privacy protections are essential focus areas for all technology companies, and we can do much better than we currently are.

Apple Claim Chowder: Evolutionary Or Revolutionary

With an Apple Event fast approaching, I’m reviewing critiques of past Apple Events to see how accurate they were. Turns out, not very. Critique is needed and welcome. Repeated errors? Not so much.

Evolutionary Or Revolutionary

The iPhone and the iPad have received a lot of criticism for being evolutionary, not revolutionary. I take strong exception to this sentiment. Apple’s iPhone and iPad — which are only seven and four years old, respectively — have been about as revolutionary as tech can get.

Before And After

From 1906, to 1956, to 2006, we went from the horse to the car to the airplane. However, as the photos below demonstrate, the way we read, entertained ourselves and communicated, while waiting to ride in the horse, the car and the plane, remained largely unchanged…until the iPhone arrived in 2007.

1906

1956

2006

Subway

Convergence

Further, look at the two photos, below, showing the multiple tasks that we can now accomplish with the aid of a single device.

photo.php

Update

Inevitable

Finally, perhaps the critics think that this is no revolution at all; that this is all simply the inevitable result of the march of progress.

Hardly.

Thousand

Android.before.iPhone

Jobs.buttonphones.2007

Things do not happen. Things are made to happen. ~ John F. Kennedy

Critics think Apple’s products are evolutionary? I beg to differ. And reality begs to differ too. They’re as revolutionary as it gets.

An Attitude Of Ingratitude

If you see no reason to give thanks, the fault lies in yourself. ~ Tecumseh

There are (at least) two reasons why we don’t appreciate the significance of the iPhone/iPad revolution.

First, change seems to come very slowly when we’re looking forward but very rapidly when we’re looking backward. The iPhone was a leap. The iPad was a leap. Some acknowledge that they were revolutionary but claim that everything since has been evolutionary. I disagree.

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. ~ Bill Gates

Sometimes, evolutionary can be revolutionary too. During the 70’s, 80’s and early 90’s, personal computing improved at breakneck speed. The changes were gradual and iterative but they came so rapidly, one after the other, that the effect was to change everything in a very short period of time. The same thing is happening in mobile, today.

Big things start small. ~ Hiten Shah (@hnshah)

Big things do indeed start small. But they don’t stay small for long.

The second reason we don’t appreciate what we have is because we’re an ungrateful lot.

Human beings have an almost infinite capacity for taking things for granted. ~ Aldous Huxley

    It’s been years — considered a long time in tech — since Apple delivered a “mind-blowing” product that made a cultural dent, some say, harking back to the iPad in 2010 and iPhone in 2007. ~ Jon Swartz, USA Today, 4 October 2012

Seriously? “It’s been years….” You mean it’s been, like TWO years before that article was written and FOUR years before today, since Apple changed everything. All over again? Geez, what a bunch of slackers they are.

The discontented child cries for toasted snow. – Arabian proverb

All this ingratitude reminds me of a joke:

    A woman was driving down the street in a sweat because she had an important meeting and couldn’t find a parking place. Looking up toward heaven, she said, “Lord, take pity on me. If you find me a parking place, I will go to church every Sunday for the rest of my life and give up sex and tequila.” Miraculously, a parking place appeared. She looked up again and said, “Never mind. I found one.”

3d clown - puppet, juggling with color balls

Claim Chowder

Here are some past quotes regarding “evolutionary” vs. “revolutionary”. They haven’t stood the test of time very well.

An ungrateful man is like a hog under a tree eating acorns, but never looking up to see where they come from. ~ Timothy Dexter

    (T)he iPhone itself may not be so great after all. ~ Randall Stross, professor of business at San Jose State University, 12 December 2009

    The iPad is not the revolutionary product so many hoped it would be. ~ Don Reisinger, eWeek.com, 28 January 2010

    Yet for some of us who sat in the audience watching Steve Jobs introduce the [iPad], the whole thing felt like a letdown. ~ Daniel Lyons, BusinessWeek, 28 January 2010

    Ultimately, the iPad is a large iPod touch: a great device to draw your inspiration from, but perhaps not the seismic shift in technology that we were expecting. ~ Claudine Beaumont, The Telegraph, 28 January 2010

    The company once notorious for its ability to upend convention and revolutionize markets may no longer have what it takes, worry some technology journalists. Call it the iPad or the iPlod, but the message seems clear: Apple may have lost its mojo. ~ Jeremy A. Kaplan, FOXNews.com, 28 January 2010

    Behold: The Apple iFlop. Neither “truly magical” nor “revolutionary,” the cluelessly named Apple iPad tablet device has dropped like a shiny wedge into the gadget game, dividing tech watchers in to opposing views — the critical and the adoring. ~ Scott Moritz, TheStreet.com, 28 January 2010

    Apple’s new iPad device is destined to disappoint (and not just because of the unfortunate name). ~ Russ Wilcox, CEO E-Ink (makers of Amazon’s Kindle), 28 January 2010

    It’s not going to revolutionize anything, it’s not going to replace netbooks… ~ Bruce Beris, bruceb consulting, 4 February 2010

    Tablets look cool, but the reality is they don’t do anything new. ~ Michael Comeau, Minyanville, 5 March 2010

smartphone-gadgets-killed

    The iPad is a not so ‘magical’ e-reader. Expect to hear a lot of: ‘I spent a cold night in line for this?’ ~ Scott Moritz , TheStreet.com, 9 March 2010

    (T)he Apple iPad is not unique, nor necessarily the best of breed in the media tablet sector it is spearheading. ~ Anders Bylund (TMF Zahrim), 11 March 2010

    And while Apple would be expected to ignite the tablet computing sector as it has done with MP3 players and the smart phone, there is something it can no longer do: sneak up and surprise the competition. There is no surprise with this device; it is just a huge iPod touch. ~ John C. Dvorak, MarketWatch, 26 March 2010

    In short, I don’t get the ‘magical and revolutionary’ vibe that Apple chief executive Steve Jobs touted at the iPad’s January unveiling. ~ Rob Pegoraro, Washington Post, 9 April 2010

    The iPad is useless. Beautiful, but useless. ~ Josh Belzman, MSNBC.com, 20 May 2010

    Right off the bat, I’m glad to see that my initial reactions to [the iPad] were accurate. Anyone who believes this thing is a game changer is a tool. ~ Paul Thurrott, Paul Thurrott’s Supersite for Windows, 6 October 2010

    I cannot see a need for the thing [iPad]. ~ John Dvorak, MarketWatch, 22 October 2010

    I can’t imagine anyone under the age of 30 wanting an iPad. … Furthermore, I do not recall ever seeing anyone under 30 actually using an iPad. ~ John C. Dvorak, PC Mag, 13 December 2010

    But I don’t see any overwhelmingly compelling capabilities that would make people sitting on the tablet fence go out and have to buy one, despite some attractive apps. I don’t see this as heads above the competition (especially the Xoom) right now. Apple didn’t really move the bar all that much. ~ J. Gold, J. Gold Associates, 2 March 2011

    The iPhone is heralded as the most revolutionary mobile phone in human history, but the cold and harsh truth is that for all the cheering and punditry, the iPhone’s impact on the world is negligible. ~ Thom Holwerda, OS News, 29 Dec 2011

Commuting

future-of-the-image

    Apple’s new iPhone 5 is a well-crafted device that’s likely to please the company’s fans and sell in the tens of millions. But if you’re looking for something truly innovative in a smartphone, look elsewhere. ~ Troy Wolverton, Mercury News, 12 Sep 2012

    Key take aways: Innovation at Apple is over… Just incremental improvements, nothing ground breaking. The best is over for Apple. ~ Trip Chowdhry, Global Equities, 23 October 2012

    And I’m really struck by this mini iPad thing. As if that’s any kind of a product innovation. You know, once you start just changing the size of your products, I really think you’re not exactly innovating. I wonder if they’re going to start coming out with the tutti-frutti iPad, where it comes out in different colors. As if that would be some sort of innovation… ~ Jeff Gundlach, CEO, Doubleline Capital, 7 Nov 2012

    However, for the company to truly move forward as a tech power, Apple should hang-up on the iPhone after one more iteration – presumably the iPhone 6. You might disagree. Granted, the phone is still selling well. However, aside from a different chip and larger screen, the change from the 4S to iPhone 5 was not that significant. ~ Richard Saintvilus, Forbes, 6 January 2013

    Google glasses may look and seem absurd now but (Brian) Sozzi says they are “a product that is going to set the stage for many other interesting products.” For the moment, at least, the same cannot be said of iPhones or iPads. ~ Jeff Macke, Yahoo! Breakout, 27 February 2013

    Enterprise tablets now exist that provide the best of both worlds between end user and IT, which puts the Apple in a precarious position of needing to add more robust enterprise features. Until that point, Moor Insights & Strategy recommends enterprises re-evaluate their iPad pilots and deployments. Enterprises should immediately evaluate the latest enterprise tablet offerings from HP, Dell and Lenovo and make their decisions on future deployments incorporating those additional options. ~ Patrick Moorhead, Moor Insights & Strategy, 15 March 2013

    Nothing new is coming from [Apple’s] pipeline. The iPhone5S and the iPad Mini aren’t new products. ~ Stephan Dube, Seeking Alpha, 28 May 2013

    Let’s face it this new iPhone is just an upgrade, a refresh, dare I say a sequel. I am sure that true tech devotees will tell me how wrong I am, that this new device is smarter, faster, revolutionary, etc. But to me and millions like me it seems a lot more evolutionary. It looks a whole lot like the last iPhone and the one before that and the one before that too. ~ Sandy Cannold, ABC News, 23 Sept 2013

    (T)hese days, Samsung sells the most smartphones, and up-and-coming manufacturers like Huawei and ZTE are nipping at Apple’s heels. The new iPhones — at least the ones being spun from the rumor mill that claim color as the big innovation — do not exactly sound like great leaps in technology. ~ Nick Bilton, New York Times, 8 September 2013

    Remember when the iPhone was truly innovative? Think hard, because you’d have to go back to 2007, and the release of the first iPhone. But since then, Apple has been tossing out retread after retread… ~ Paul Thurrott, Supersite for Windows, 13 September 2013

    The 5c may be this year’s Surface RT. ~ Rick Munarriz, The Motley Fool, 13 Sept 2013

    Apple’s innovation problem is real. … Rivals have caught up to Apple in the markets it once dominated, and the tech giant’s rumored future products appear to be more evolutionary than revolutionary. ~ Julianne Pepitone and Adrian Covert, CNNMoneyTech, 8 September 2013

    The most that Apple could think to do with the new, faster processor in the iPhone 5S was animate 3D effects that make some users feel ill and a fingerprint sensor that solved a problem that wasn’t exactly pressing. Apple’s new iOS7 mobile operating system, which felt ‘more like a Microsoft release,’ crippled many older iPhones and led to complaints of planned obsolescence. ~ Christopher Mims, Quartz, 30 December 2013

    By copying the work of others, Apple seems to admit it has fallen behind competitors. ~ Transcend Asset, 5 June 2014

Lessons Learned And Unlearned

I can think of (at least) three lessons here.

First, little people belittle greatness.

To belittle, you have to be little. ~ Khalil Gibran

Any fool can criticize, condemn and complain and most fools do. ~ Benjamin Franklin

Ridicule is the tribute paid to…genius by the mediocrities. ~ Oscar Wilde

Little men with little minds and little imaginations go through life in little ruts, smugly resisting all changes which would jar their little worlds. ~ Zig Ziglar

Second, we often do not see what is right before our eyes.

You see, but you do not observe. ~ Sir Arthur Conan Doyle

Third, acceptance comes in stages.

All truth passes through three stages: First, it is ridiculed; Second, it is violently opposed; Third, it is accepted as self-evident. ~ Arthur Schopenhauer

Apple Claim Chowder Series:

Introduction
Events
Killers
Cynicism
Product
Evolutionary Or Revolutionary
Business Models

Apple Claim Chowder: Product

With an Apple Event fast approaching, I’m reviewing critiques of past Apple Events to see how accurate they were. Turns out, not very. Critique is needed and welcome. Repeated errors? Not so much.

Product

Apple’s products receive a lot of criticism and there’s certainly nothing wrong with that. Some of the criticism seems unfair to me but I usually refrain from commenting since values are both individual and subjective. However, perhaps it is worth noting that:

For all that Android has improved, and we see the difference as a matter of taste, iPhone still outsells Android at the same price 3:1 ~ Benedict Evans (@BenedictEvans) ~ 3/30/14

Some of the criticism of Apple’s products is objectively flawed. The first mistake critics routinely make is to hyper-focus on a single missing or underdeveloped feature and then declare the entire product useless or dead on arrival. The world isn’t black and white. Not every feature is essential and not every flaw is fatal.

The art of being wise is the art of knowing what to overlook. ~ William James

Never permit a dichotomy to rule your life. ~ Edward L. Bernays

If you see the world in black and white, you’re missing important grey matter. ~ Jack Fyock

The second mistake critics make is even more embarrassing. Critics often flat out get a product’s priorities wrong. They misinterpret the job the product is being hired to do and promote a particular feature or set of features as essential when, in fact, those features are less than essential and are sometimes actually an impediment to the product’s long-term success. I’ve highlighted features such as keyboards and Flash, below, but the “island of misfit features” is very crowded indeed.

Things which matter most must never be at the mercy of things which matter least. ~ Goethe

Knowledge is power only if man knows what facts not to bother with. ~ Robert Staughton Lynd

Products get bloated one lazy decision at a time. ~ @destraynor

Critics think the flaw lies in the product but quite often it is the analysis, not the product, that is critically flawed.

3d person - puppet, in a hat of the clown with bells

Specs

Sometimes highly technical people forget that the world is not comprised of highly technical people. ~ Wes Miller (@getwired)

Specs are a ceiling. You’ve got to have them in order to get great performance and without them, your potential is limited. However, specs are not a floor. The greatest specs in the world are no guarantee of a great product. Many products have a very high ceiling but a very low floor. In other words, they have great specs but their actual benefit to the user is very low. A focus on specs as the be-all-end-all of a product has led to some poor analysis, as we’ll see, below.

Never underestimate the power of a simple tool. ~ Craig Bruce

    Top iPhone Killers
    1. LG GD900
    2. Samsung Pixon12
    3. Samsung OMNIA HD
    4. Sony Ericsson Satio
    5. HTC Touch HD

    In order to be considered an a iPhone Killer, the phone must have a large touchscreen. And provide something unique that’s not found in an iPhone, whether it’s GPS, higher data rate, vibration feedback, video recording, HD video, higher resolution camera, etc.iPhoneKiller.com, 1 June 2009

Author’s Note: Notice how the criteria used to define an “iPhone Killer” is entirely based on specs and features.

    Google phone Nexus One, whose launch is one of the most-awaited ones in 2010, boasts of tech specs that make iPhone look like a wimp. ~ Nick Brown, IB Times, 30 Dec 2009

    Nothing from the iPad specs that I’ve seen really shows any great cause for celebration. ~ John Breeden II, Government Computer News, 28 January 2010

    We very carefully chose our tablet processor, the Nvidia Tegra 2, and to really compete it will take [Apple] some time. You know, [Nvidia] is well known for graphics. ~ Jonney Shih, Asustek Computer, 3 February 2011

    Technically Playbook is already on a par with iPad and the new devices will be based on its OS. ~ John Criswick, CEO, Magmic, 19 March 2012

samsungad2012

    Watch the iPhone 5 launch with a critical eye, and you’ll see a device that has a smaller less-brilliant screen than competitors. It has a slower CPU and graphics processor. It’s more fragile. ~ Rob Enderle, Digital Trends, 15 Sep 2012

    Google has beat Apple at its own Retina-display-thumping game. Meet the Nexus 7, the eye-popping 323-pixels-per-inch wonder. ~ Brooke Crothers, CNET, 27 July 2013

Mo(o)re computing power no longer makes technology feel better, so ‘design’ is how we choose. ~ johnmaeda (@johnmaeda)

Features

Engineers want power and they will sacrifice simplicity in order to get it. Giving up simplicity is really not much of a sacrifice for them since they thrive in complexity anyway.

I think a nerd is a person who uses the telephone to talk to other people about telephones. And a computer nerd therefore is somebody who uses a computer in order to use a computer. ~ Douglas Adams

Engineers like to solve problems.  If there are no problems handily available, they will create their own problems. ~ Scott Adams

Most people do not have the mind-set of an Engineer. They/we don’t want to work on their computer. They just want their computers to work.

    ’RIM didn’t expect iPhone to take off the way it did because it was so badly flawed from Day One,’ the former RIM employee said. ‘They believed that users wanted great battery life, great security, great mail handling, minimal network use, and a great keyboard experience. They never expected users didn’t care.’ ~ Former RIM Employee, according to Reuters, 16 March 2011

[A]s designers and engineers in general, we’re guilty of designing for ourselves too often. ~ Bill Moggridge

People get to buy the products they want, not the products engineers think they should want. ~ Benedict Evans (@BenedictEvans)

KEYBOARD

Keyboards are a prime example of where the iPhone and iPad critics got it wrong. Critics viewed the keyboard in isolation and concluded that keyboards were superior to typing on glass (which they are). Consumers viewed the product as a whole and concluded that it was worth giving up the keyboard in order to get all the many other advantages afforded by a large, unfettered, touch screen display. The critics’ hyper-focus on features blinded them to the overall benefits being afforded to the consumer.

    iPhone which doesn’t look, I mean to me, I’m looking at this thing and I think it’s kind of trending against, you know, what’s really going, what people are really liking on, in these phones nowadays, which are those little keypads. ~ John C. Dvorak, 13 January 2007

    As nice as the Apple iPhone is, it poses a real challenge to its users. Try typing a web key on a touchscreen on an Apple iPhone, that’s a real challenge. You cannot see what you type ~ Jim Balsillie, Co-CEO, Research in Motion, 7 November 2007

    Not everyone can type on a piece of glass. Every laptop and virtually every other phone has a tactile keyboard. I think our design gives us an advantage. ~ Mike Lazaridis, Co-CEO, Research In Motion, 4 June 2008

    We of course build plastic mock-ups that we show (to customers)…we had a slate form factor. The feedback was that for (our) customers it will not work because of the need to have (a physical) keyboard. These were 14-year-old kids, who, I thought, would be most willing to try a virtual keyboard but they said no, we want the physical keyboard. ~ Mika Majapuro, Worldwide Sr. Product Marketing Manager, Lenovo, 22 February 2010

    The pure slate form factor has failed all these years because, other than for vertical applications, people want and/or need a keyboard for regular use. ~ Jonathan Yarmis, Ovum, part of Datamonitor Group, 6 April 2010

    We’re finding — if you look at the surveys, you can see that large amount of the customers that have purchased touchscreen devices in last two years, they intend to get a device with the QWERTY keyboard on it now, right. I mean, they’ve got into a point where they’ve realize that a touchscreen alone is not enough; so that’s important. ~ Mike Lazaridis, Co-CEO, Research In Motion, Inc, 16 April 2010

    [Computers in Education are] never going to work on a device where you don’t have a keyboard-type input. Students aren’t there just to read things. They’re actually supposed to be able to write and communicate. And so it’s going to be more in the PC realm—it’s going to be a low-cost PC that lets them be highly interactive. ~ Bill Gates, Former CEO, Microsoft, 25 June 2012

    Institutions will try to preserve the problem to which they are the solution. ~ Clay Shirky

FLASH

    [Apple’s] decision not to support Flash…will have a limiting effect on the iPad’s sales potential. This is because one of the key use cases of the device, as marketed by Apple, relates to web browsing or consumption of online content. Absent Flash, iPad users will not be able to enjoy Flash-driven content, which is used in a considerable amount of websites as well as web-based games and videos. ~ Francis Sideco, Senior Principal Analyst, Consumer and Communications, iHS (now iSupply), 2 April 2010

    For those of us who live outside of Apple’s distortion field, we know that 7″ tablets will actually be a big portion of the market and we know that Adobe Flash support actually matters to customers who want a real web experience. ~ Jim Balsillie, Co-CEO, Research In Motion, 20 October 2010

    (W)hile Apple’s attempt to control the ecosystem and maintain a closed platform may be good for Apple, developers want more options and customers want to fully access the overwhelming majority of web sites that use Flash. We think that customers are getting tired of being told what to think by Apple. ~ Jim Balsillie, Co-CEO, Research In Motion, 20 October 2010

    Such a shame. Add this to the list of interesting places on the Internet you can’t see on your [iPad] device. Of course, if you had a Toshiba Tablet, you would enjoy the entire Internet. Yep, Flash sites too. ~ Toshiba ad when viewed on iPad, 22 January 2011

    Despite Apple’s claims, Flash is and will be important on the Internet for many years. ~ J. Gold, J. Gold Associates, 2 March 2011

    Since the experience of using an iPad is much more like using a computer, Apple’s (well perhaps Steve Jobs by himself) stubbornness to reject flash and not support many standard web widgets makes the experience on iPad inferior to a computer, bar portability. This is not the case for Android (and likely Windows 8). ~ Gutone, Seeking Alpha, 2 July 2012

All great truths begin as blasphemies. ~ George Bernard Shaw

SECURITY

    They are in a pickle. Their pickle is security. When the first big security flaw even happens in one of the large enterprises, you will see this turn around. Wait for the day this happens. ~ Thorsten Heins, CEO, Research In Motion, 29 Jan 2012

It is difficult to get a man to understand something when his salary depends upon his not understanding it. ~ Upton Sinclair

Toy

New products are often dismissed as being nothing more than mere “toys”. Here’s the thing — it’s not much of an insult ’cause people really, really like toys.

The supreme accomplishment is to blur the line between work and play. ~ Arnold J. Toynbee

My childhood may be over, but that doesn’t mean playtime is. ~ Ron Olson

kids

Thought exercise: Try to picture the above scene with the participants using pre-2007 phones. Pre-2010 tablets. Netbooks. A Surface Pro 3.

    The iPhone is an expensive toy for the wealthy and self-indulgent… Michael Pachter, Wedbush Morgan Securities, 14 August 2007

    Apple’s iPad 2… (is) still just a toy. ~ 
Zach Epstein, Boy Genius 2 March 2011

    (S)top with the iCoolAde, it’s a toy. ~ Shogan, TechTalk, 5 July 2011

    Apple…doesn’t want you to realize that Steve Jobs’ ‘magical’ toy is really just a Margaritaville frozen drink maker. ~ Rick Aristotle The Motley Fool, 7 July 2011

I remain very confident in the future of anything of which it is said ‘you can’t use that to do real work’ ~ Benedict Evans (@BenedictEvans)

blackberrytoys

Lessons Learned And Unlearned

In [computing] as in love, we are astonished at what is chosen by others. ~ paraphrasing André Maurois

Tech companies — even great tech companies — make two great mistakes. They build great products and they build great products that they, themselves, love.

Doesn’t sound like a mistake at all, right? Only here’s the thing. The twin questions that these companies should be asking is What and by Whom ((paraphrasing Jean Louis Gassee who is, himself, paraphrasing Horace Dediu)):

  1. What is the job the product is being hired to do; and
  2. Who is doing the hiring?

As counter-intuitive as it sounds, no one wants to buy a great product — they don’t care about specs or features. They care about whether the product does the job. And they care about whether the product does the job that THEY want done, not the job the creator of the product THINKS they want to do.

I don’t think the jobs iPads are hired to do in business are understood. ~ Horace Dediu (@asymco)

If it can’t do any useful job then it won’t get hired. Conversely, if it nails an unmet job, it will be blindingly successful. ~ Horace Dediu (@asymco)

Critics who focus on feeds and speeds rather than needs; who focus on features rather than benefits; are never going to get it right because they’re focused on the product when they should be focused on the consumer of that product.

The aim…is to know and understand the customer so well the product or service fits him and sells itself. ~ Peter Drucker

Apple Claim Chowder Series:

Introduction
Events
Killers
Cynicism
Product
Evolutionary Or Revolutionary
Business Models

If the World Was a Village – Tech Edition

Bob’s column yesterday brought back into attention some of the things I discussed in this article called Computing’s S-Curve. We are on the path to connect the planet via a pocket computer. This is so incredibly significant it is difficult to overstate.

In many of the presentations we give at Creative Strategies, we emphasize we are still early in the technology age. We point out that the first 25 years of computing was focused on bringing computers to business. The next 25 plus years will be focused on bringing computers to every person on the planet. Much of this is driven by Moore’s Law. When presenting to the more PC focused audiences, this is a favorite slide to emphasize Moore’s Law in bringing computing to the masses.

Screen Shot 2014-09-02 at 4.58.22 PM

We still have a long way to go but as Benedict Evan’s points out, this opportunity to connect the planet is hugely beneficial from a humanity standpoint.

So where are we in connecting the planet today? Using a range of statistics I gathered, I made a chart showing a few of my favorite data points from the point of view, “If the world was a village of 100 people, how many would be using what technology?”

world_village_1

What strikes me about these statistics is only one of them is over 50%. The mobile phone (not smartphone) is in use by 63% of the global population. Many of those mobile phone users have multiple subscriptions which is why the latest data from the ITU pegs total mobile subscriptions at nearly 7 billion.

What makes the mobile phones, with 63% percent of the global population owning one, interesting is by 2020 those will all be smartphones. To help drive that transition, we now have smartphones that cost $33 dollars and we will have $10 smartphones by 2020.

Yet, we still have a long way to go. I made this chart from some new data from the TNS Connected Life survey

Screen Shot 2014-09-03 at 5.06.16 PM

This chart shows the percentage of smartphone users and non-smartphone users in each of these large global markets. I’ve added their respective population as well in order to see the opportunity for growth and scale.

As we embrace this shift, we realize how valuable these mobile phones are, particularly to those in emerging markets. Mobile phones connected to the internet have given rise to the WeChat business, Instagram businesses, Facebook businesses, and more. People like to argue you need a PC to do work. Tens of millions of consumers, and growing, in emerging markets prove this wrong every day.

As we empower billions of new consumers with pocket computers ubiquitously connected to the Internet, it is bound to have an impact on the economies of these emerging markets. Economists’ estimate bringing connectivity to a market can increase the GDP of that region anywhere from 1-3%.

The Internet has been one of the most critical and disruptive inventions of our era. Bringing the Internet to nearly everyone on the planet may be even more disruptive when all is said and done.

Connecting the Planet, Reshaping Industries

Mobile’s impact will be widespread. Note this chart from Chetan Sharma Consulting.

Screen Shot 2014-09-02 at 6.01.49 PM

There are 14 global trillion dollar industries and mobile has the potential to invade, change, and impact them all. Chetan lays out in this white paper that we are entering a new era of connected intelligence. He is correct and it will be driven by two fundamentals: the connecting of the planet via mobile devices, and the connecting of nearly everything else to the Internet.

When we state that the technology industry’s best days are ahead, it is for the reasons I touch on above and more. While we explain the next 25+ years will be focused on bringing computing to the masses, the next 50+ years will be bringing computing to nearly everything.

Apple Claim Chowder: Cynicism

With an Apple Event fast approaching, I’m reviewing critiques of past Apple Events to see how accurate they were. Turns out, not very. Critique is needed and welcome. Repeated errors? Not so much.

Cynicism

All companies suffer from the slings and arrows of outrageous criticism. However, some companies seem to suffer more than their unfair share.

If a fool has a hump, nobody notices it; if the wise man has a pimple, everybody talks about it. ~ Russian

It is unwise to hold a company in disdain if you are trying to analyze that company. Yet I routinely see Apple labeled and dismissed by the very people who are supposed to be objectively evaluating them.

Never hate your enemies. It affects your judgment. ~ Mario Puzo

Many of Apple’s critics think Apple’s success is based upon the foolishness of its customers. It’s a bizarre, but widely repeated — and widely accepted — theory.

A meaningless phrase repeated again and again begins to resemble truth. ~ Barbara Kingsolver

There’s a strong element of cognitive dissonance at work here:

  1. We don’t like Apple’s products;
  2. We’re rational;
  3. Apple’s customer’s like Apple’s products;
  4. Therefore: Apple’s customer’s must be irrational.

We often challenge the perceptions of others, but only very rarely question our own. ~ Dr. Mardy

Cognitive dissonance is a form of mental jujitsu that lets us flip our weaknesses and turn them into the weaknesses of others. If we don’t understand why someone does what they do, we don’t think of it as a lack of knowledge on our part, we think of it as a lack of knowledge on their part. Why should we question our own understanding of how things work and take the time to learn more about how others think when we can confidently assert that they don’t think at all?

Watch what people are cynical about, and one can often discover what they lack. ~ George S. Patton

Here’s the deal. Apple has well over 800 million active customers and they’re rapidly approaching the billion mark. That’s an awful lot of people voting for Apple with their hard-earned cash.

Cynicism masquerades as wisdom, but it is the farthest thing from it. ~ Stephen Colbert

Apple’s customers are not part of a cult. They’re not mindless fans or slaves to fashion. Neither are they victims of Apple’s Houdini-like marketing or Steve Jobs’ Reality Distortion Field. They’re not to be mocked or dismissed out of hand.

If we want to understand Apple, we need to understand why Apple attracts so many customers and why those customers are so very loyal to Apple. And if we don’t want to understand Apple, that’s fine too. But if we’re going to stop thinking, we need to stop talking too.

If you don’t think too good, don’t think too much. ~ Ted Williams

Joker with big bone

Claim Chowder

Cult

I just have to wonder who will want one of these things [an iPhone] (other than the religious faithful). … So please mark this post and come back in two years to see the results of my prediction… ~ Richard Sprague, Senior Marketing Director, Microsoft, January 2007

I think this will appeal to the Apple acolytes, but this is essentially just a really big iPod Touch. ~ Charles Golvin, Forreter Research, 27 January 2011

For those of us without Apple tattoos, the reaction to Apple’s new iPhone 3G S, announced on Monday, seems to look pretty unanimous. ‘That’s it?’ ~ Nick Mokey, Digital Trends, 8 June 2009

The whole Apple cult is starting to creep me out. ~ Brett Arends, Wall Street Journal, 22 December 2010

As a dog returneth to his vomit, so a fool returneth to his folly. ~ Proverbs 26:11

Fans

apple-logo-chest-fanboy

It’s the loyalists who keep promoting this device as if it is going to be anything other than another phone in a crowded market. And it’s exactly the crowded-market aspect of this that analysts seem to be ignoring. There is no likelihood that Apple can be successful in a business this competitive. ~ John C. Dvorak, MarketWatch, 28 March 2007

It’ll sell a couple million units to the many people who have wet dreams about Steve Jobs, and that will be about it. ~ Matt Maroon, MattMaroon.com , 7 May 2007

This morning, the fool’s parade gets started. Apple is taking online “pre-orders” for its iPad tablet, which is supposed to begin shipping on April 3. ~ Galen Gruman, InfoWorld, 12 March 2010

Now with Android better suited to low spec hardware and commodisation of smartphones seeing powerful handsets available at bargain prices, starting with Android could well shift from a cautionary tale to powerful gateway drug. At that point blind loyalty would be almost impossible. Even for self-confessed iSheep. ~ Gordon Brown, Forbes, 21 March 2014

When [logical] ammunition runs low, inevitably the rusty artillery of abuse is wheeled into action. ~ Wallace Stevens

Fashion

Consumers are not used to paying another couple hundred bucks more just because Apple makes a cool product. Some fans will buy it, but for the rest of us it’s a hard pill to swallow just to have the coolest thing. ~ Neil Strother, NPD Group, 22 January 2007

The iPhone is going to be nothing more than a temporary novelty that will eventually wear off. ~ Gundeep Hora, CoolTechZone Editor-in-Chief, 2 April 2007

That’s really all Apple’s iStuff is — an enormous and very profitable fad. It’s the Pet Rock of the new millennium. ~ Anders Bylund, Motley Fook, 6 Mar 2012

If you’re an image-conscious hipster/rebel/brand-monkey and you don’t use the AT&T network in the SF Bay Area, the iPhone is a great choice, especially if you need obscure apps. ~ Scott Adams, Creator of Dilbert, 17 August 2011

Apple does what it does well, and then sluffs off everything else — like getting e-mail and actually making a call on the iPhone. Succeeding with that sort of hauteur and dismissiveness is awfully dependent on charisma and sex appeal, an expensive proposition in a commodified market. ~ Michael Wolff, USA Today, 11 Nov 2012

You can’t use the iPhone 5C to make your friends feel bad about themselves, and that’s creating a problem for Apple. ~ Kim Bhasin, Huffington Post , 23 October 2013

Apple iPad Fad Is Over. ~ Robert McGarvey, Main Street, 14 August 2014

My definition of a stupid person. A stupid person is a person who treats a smart person as though they’re stupid. ~ Errol Morris

Hype

I can’t believe the hype being given to iPhone. ~ Richard Sprague, Senior Marketing Director, Microsoft, January 2007

That’s the problem with hyping a product before it comes out. It’s bound to disappoint no matter how good it is… ~ Brent Schlender, Fortune, 30 May 2007 (11 June 2007 Print Edition)

God himself could not design a device that could live up to all the hype that the iPhone has gotten… ~ Harvard computer science professor David Platt told Reuters, 25 June 2007

What an utter disappointment and abysmal failure of an Apple product. How can Steve Jobs stand up on that stage and hype this [iPad] product up and not see everything this thing is not and everything this thing is lacking? ~ Orange County Web Design Blog, 27 January 2010

For all the hype about an Apple tablet, it is at best a niche product. The world doesn’t need an Apple tablet, no matter what the hype about rumored features or regardless of what actually releases (if anything). ~ Joe Wilcox, Betanews, 2 January 2010

Don’t Believe the iPad Hype. Apple has sold out pre-orders of the forthcoming device, but it could all be a marketing tactic. ~ Mike Schuster, Minyanville.com, 29 March 2010

I don’t get it. It costs $500 for the basic model, when you could get a laptop with a lot more functionality for about the same price. The iPad hype machine has been in full effect this week, and I still think it’s just that—hype. If I turn out to be wrong, I’ll gladly eat my words, but I’m pretty sure that I’m not wrong. ~ Alex Cook, Seeking Alpha, 3 April 2010

The man who questions opinions is wise. The man who quarrels with facts is a fool. ~ Frank Garbutt

Marketing

‘Mum, the iPad is not ‘amazing.’ It’s just marketed very well, both by Apple and its culpable partners in mainstream media. ~ Paul Thurrott (in response to comment by Mum), Paul Thurrott’s Super Site for Windows, 26 April 2010

Ignorance more frequently begets confidence than does knowledge. ~ Charles Darwin

Reality Distortion Field

From my perch, the market’s very favorable reaction to Apple’s iPhone is yet another example of disbelief being suspended … on the Street of Dreams. ~ Doug Kass, The Street, 17 Jan 2007

The reality distortion field will fade. People will come back to their senses and ask what really matters to them in a mobile. The answers will be basics, like good telephony, long battery life, small size and low price. Which of these attributes apply to the iPhone? ~ Joe Wilcox, Microsoft Watch, 10 January 2007

Apparently Steve Jobs had a lifelong battle with reality, and won ~ Scott Adams

Wealthy

The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks. ~ Matthew Lynn, Bloomberg, 15 January 2007

The iPhone is an expensive toy for the wealthy and self-indulgent… ~ Michael Pachter, Wedbush Morgan Securities, 14 August 2007

It seems like a high priced, unnecessary trinket to me. ~ Paul Thurrott, SuperSite for Windows, 27 January 2010

[The iPad is a] device for people who have more money than brains. ~ Alex Valentine, /dev/null, 28 January 2010

Apple is great if you’ve got a lot of money and live on an island. ~ Andy Lark, Global Head of Marketing for Large Enterprises and Public Organisations, Dell, 29 March 2011

It’s a nice-to-have product, for those of us who don’t have a budget… ~ Ashok Kumar, Analyst, Rodman & Renshaw LLC, 12 November 2010

If one does not understand a person, one tends to regard him as a fool. ~ Carl Jung

Lessons Learned And Unlearned

I’m not offended by all the dumb blonde jokes because I know I’m not dumb…and I also know I’m not blonde. ~ Dolly Parton

Apple is like Dolly Parton in the sense that they know they’re not dumb and they know something about themselves that we haven’t yet discovered. If we want to understand Apple’s success, we have to stop insulting them and their customers and start questioning our understanding of them instead. Here are some lessons to get us started.

First, never assume that what is right for you is right for others.

You have your way. I have my way. As for the right way, the correct way, and the only way, it does not exist. ~ Friedrich Nietzsche

Second, if we don’t understand someone’s motivations, assume that it is due to a lack of understanding on our part, not due to a lack of intelligence on their part. Just because we don’t understand a thing doesn’t mean that it can’t be understood.

The things we know best are those we have not learned. ~ Luc de Clapiers

Human beings are perhaps never more frightening than when they are convinced beyond doubt that they are right. ~ Laurens Van der Post

Third, never stop learning, never stop questioning. Certainty ends thinking. Doubt is the beginning of wisdom.

It is easier to be critical than correct. ~ Benjamin Disraeli. ~ Benjamin Disraeli

No man really becomes a fool until he stops asking questions. ~ Charles Steinmetz

Doubt is not a pleasant condition, but certainty is absurd. ~ Voltaire

Doubt is the origin of wisdom. ~ René Descartes

Apple Claim Chowder Series:

Introduction
Events
Killers
Cynicism
Product
Evolutionary Or Revolutionary
Business Models

Smart Connected Devices: A New Forecast

As an analyst, one of the first things I was ever asked to do was put together a forecast. In fact, a key part of an analyst’s job is to dive deeply into a market, learn as much as you can about what the current market size is, understand where it’s going, and use all the insight you can to make predictions about where it’s headed. While there are some mathematical tricks and a certain amount of scientific rigor that can be applied to the process, it’s fundamentally more of a creative, artistic effort.

At the end of the day, you have to trust your gut and intuition about where you believe certain markets are headed, based on as many useful forms of input as you can ingest. This is really where the magic is, in my opinion, because selecting the right questions to ask about what products are being made, what components are in the pipeline, what tangential trends have started to make an impact, and how people are using the products, is what can help drive a more accurate forecast.

I use those principles whenever I develop a forecast and it led me to foresee a number of things—including a drop in tablets, a turnaround in PCs and an increase in the number of larger 5”+ smartphones—back in the February TECHnalysis Research forecast that were counter to popular thinking at the time. Since then, I’ve completed additional research, including a deep dive into BYOD usage in US businesses and, most recently, my Worldwide Consumer Device Usage study. These have made me realize I need to take those concepts even further.

The bottom line is that I’m now expecting the PC market to perform even better than I first predicted, the tablet market to do even worse and the smartphone market to do better exclusively because of an explosion of interest in larger smartphones. In fact, my new forecast numbers show that the tablet market will never catch the PC market, but instead will linger in the sub-280 million unit range through the end of the 5-year forecast period (through 2018). The reasons for this shift are many, but essentially boil down to the fact that tablets have come to be seen more as “nice-to-have” products instead of “must-have” products. In addition, I believe the rapid rise of the 7” category will not only stop but turn into a retreat, due primarily to the expected growth in larger phones. As a result, we will see a shift back towards larger-size 8”+ tablets, with that category taking more than half of the tablet market starting in 2017.[pullquote]I’m now expecting the PC market to perform even better than I first predicted, the tablet market to do even worse and the smartphone market to do better exclusively because of an explosion of interest in larger smartphones.”[/pullquote]

Conversely, I now believe PCs will actually see year-over-year growth this year and then go through a very modest dropoff throughout the next five years, but stay above the 300 million number through 2018. The big shift in PCs is that commercial PCs will become the larger half of the PC market starting in 2016, as businesses around the world will continue to drive PC purchases.

The story for smartphones is that growing interest in larger smartphones will drive rapid turnover of existing devices, even in the US and other markets that have been slower to adopt larger smartphones to date. This, in turn, will lead to the sub-5” smartphone market peaking in 2015, but the larger smartphone category growing to nearly half of all smartphones by 2018.

The chart below shows these forecast numbers in graphical form.

Sept.-2014-SCD-Forecast

©2014, TECHnalysis Research, LLC

The combined worldwide total of PCs+Tablets+Smartphones, which together I call Smart Connected Devices, will cross 2 billion units in 2015 and peak at around 2.25 billion in 2018. By that point, we will likely have other product categories that need to be considered in the mix, but I do believe the signs are becoming clearer that the decades-long run of compute-intensive devices growing at impressive rates will soon be coming to an end. In fact, from a revenue perspective, my prediction is that 2016 will be the last year of monetary growth for these categories, with modest declines starting in 2017 and continuing forward.

Given these changes, I suspect we will see a number of companies evolve their strategies over time as they adjust to this new world order. Devices will certainly continue to be critical and their sales will not simply go away, but creating software and services that ties these devices and the information they contain together in compelling, useful ways is where the real excitement is going to be.

Apple Claim Chowder: Killers

With an Apple Event fast approaching, I’m reviewing critiques of past Apple Events to see how accurate they were. Turns out, not very. Critique is needed and welcome. Repeated errors? Not so much.

Killers

There is a long, sordid history of products being introduced as iPod, iPhone, and iPad Killers. You know the deal. Product “X” is introduced and it will be an Apple Killer because hypothetical products of the future are always superior to Apple products of today, yada, yada, yada. The problem with this theory is that repeated experience has shown that it just ain’t so.

The only thing experience teaches us is that experience teaches us nothing. ~ Andre Maurois

My rule of thumb is that a product isn’t real until it 1) has a ship date; 2) has a firm price; and 3) has been reviewed by independent third parties.

In the case of news, we should always wait for the sacrament of confirmation. ~ Voltaire

You would think that critics would want to wait until AFTER they had gotten their hands on a product, and perhaps even wait until AFTER they had received some actual sales numbers, before declaring said product a “killer” of anything. But no. Why wait when one can be so wrong, so far ahead of time?

It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts. ~ Sir Arthur Conan Doyle as Sherlock Holmes, From “A Scandal in Bohemia”

Below is a rogue’s list some past Apple “Killers”, grouped by company. I am quite confident that critics have learned nothing from the past and that they will soom be adding many more “Killers” to the list come this Fall. Critics and competitors alike should remember the words of Helmuth von Moltke the Elder (attributed) before declaring any product an Apple “Killer”:

No battle plan survives contact with the enemy.

Joker

Amazon

If everything that we have heard about the upcoming Kindle tablet is true (upgraded Android front end, 7-inch touch screen, $250 price), we think AMZN will have another big product success. ~ Naked Value, 27 Sept 2011

Last year, we wanted to build the best tablet at a certain price. And, this year, we wanted to build the best tablet at any price. Take away the price and it’s still the best tablet. It also happens to be only $499. ~ Jeff Bezos, CEO, Amazon.com, 6 Sep 2012

Feature for feature – the latest Amazon) Kindle Fire is better than the latest iPad. ~ James Altucher, Seeking Alpha, 27 January 2013

Amazon is well on its way to effectively replicate Apple’s business model. ~ Victor Anthony, Topeka Capital, 25 September 2013

Blackberry

blackberry-playbook-amateur-hour-is-over-2But when it comes right down to it, the BlackBerry Storm will be the superior mobile device and represents a true iPhone killer. ~ Andrew Hickey, ChannelWeb, 14 Nov 2008

At today’s BlackBerry developer’s event, RIM announced their iPad-beater: the PlayBook. ~ Brian Barrett, Gizmodo, 27 September 2010

Just the pent-up interest in the PlayBook is really overwhelming. ~ Jim Balsillie, Co-CEO, Research In Motion, 16 December 2010

The launch of Storm 3 gives RIMM the long-awaited answer to the iPhone and high-end Android devices. ~ Michael Li, Investing Blog, 16 January 2011

The sales of the PlayBook have been fantastic, we’ve re-ordered multiple times and it’s exceeded our expectations. ~ Ben McIntosh, Harvey Norman’s Computers, Australia, 22 Aug 2011

‘iPhone Killer’ BlackBerry 10 is here: iPhone is Dead! ~ Bob Brown, InfoWorld, 30 January 2013

Sorry Apple, the BlackBerry Z10 Is Hotter Than the iPhone. ~ Jesus Diaz, Gizmodo, 28 January 2013

BlackBerry 10 will be launching here in the US soon and I think they will increase their share to 3rd place and may even pass iOS in a couple years. ~ Matthew Miller, ZDNet, 14 February 2013

Google

Google plans ‘to market a tablet of the highest quality’ in the next six months. ~ Eric Schmidt, Chairman, Google, 19 Dec 2011

Put simply, the Nexus 7 has redefined the mini-tablet category and raised the bar enough that it doesn’t matter whether Apple releases a Retina-class iPad mini this year or not. ~ Paul Thurrott, Paul Thurrott’s Supersite for Windows, 1 August 2013

If Galaxy Gear quickly creates a buzz, it will be hard not to look at the new iPhone and wonder why Apple is late to the smartwatch party. Samsung’s timing is beautifully calculated to challenge Cupertino. ~ Douglas Ehrman, Seeking Alpha, 5 September 2013

Hewlett Packard (HP)

8 Reasons Why Apple Should Fear HP/Palm… ~ Devin Connors, Tom’s Hardware, 7 May 2010

I hope one day people will say ‘this is as cool as HP’, not ‘as cool as Apple’. ~ Leo Apotheker, Hewlett Packard, 27 January 2011

In the PC world, with fewer ways of differentiating HP’s products from our competitors, we became number one; in the tablet world we’re going to become better than number one. We call it number one plus. ~ Eric Cador, Senior Vice President of the Personal Systems Group, Hewlett-Packard, 21 May 2011

Intel

iPad has come under additional pressure from Intel Bay Trail tablets. iPad’s future may hinge on whether ARM foundries can catch up to Intel. ~ Mark Hibben, Seeking Alpha, 30 April 2014

Apple’s A7 64 bit processor was a breakthrough last year, but this year Apple will face competition from Android phones running 64 bit Intel and Qualcomm processors. ~ 
Mark Hibben, Seeking Alpha, 20 June 2014

Microsoft

Apple iPhone Doomed To Failure — Windows Mobile 7 Plans For 2009 Leaked. ~ Mitchell Ashley, NetworkWorld, 11 January 2008

We are not at all worried. We think we’ve got the one mobile platform you’ll use for the rest of your life. They are not going to catch up. ~ Scott Rockfeld, Microsoft Mobile Communications Group Product Manager, 1 April 2008

About 20 million devices will ship with Windows Mobile on it. We will outsell the iPhone. ~ Robbie Bach, Microsoft, 8 June 2008

7 Reasons Why The Windows 7 Phone Is THE iPhone Killer. ~ Jamie Riddell, CEO of Digital Tomorrow Today, 16 March 2010

100910_msft_buries_iphoneMicrosoft workers celebrated the release to manufacturing of Windows Phone 7 last week by parading through their Redmond campus with iPhone and BlackBerry hearses. ~ Microsoft Employees, Microsoft, 10 September 2010

For the first time since its introduction in 2007, Apple’s iPhone is going to take a backseat at AT&T as Ma Bell prepares a glitzy launch of three Microsoft Windows 7 phones. ~ Scott Moritz, TheStreet.com, 1 October 2010

thurrotttweet

The Lumia 900 and its successors will help Microsoft to reclaim the number 2 (replacing iOS) ranking in smartphone operating system market share in 2015. ~ Wayne Lam, IHS analyst, 19 Jan 2012

Having a secure Windows tablet that works with all the Windows applications — we’re hearing a lot of demand for that and we think that will be quite attractive. ~ Michael Dell, CEO, Dell, 9 March 2012

If Microsoft could ship today, Surface would send ripples across the tablet marketplace. ~ Joe Wilcox, Beta News, 19 June 2012

Author’s Note: The Titanic sent ripples too.

oprah

Author’s Note: Please be certain to check out the device used to send the above tweet.

Lookout Apple, Here Comes Microsoft: Surface Tablets Break Into Top-5 ~ Gary Krakow, The Street, 2 May 2013

Microsoft can better give what a lot of folks wanted in the initial iPad – a single product solution – and with a price/legacy software tradeoff that Apple doesn’t have in a similar product. ~ Rob Enderle, TG Daily, 30 September 2013

IDC reports that Windows Phone sales dropped by 9.4 percent in Q2 2014 compared to the same period last year. They’re now at just 2.5 percent.

And the Surface? $1.7 billion in losses…and counting.

Motorola

I believe that this device (Droid) is the best smartphone on the market today. ~ Sanjay Jha, Co-CEO, Motorola, 28 October 2009

iDon’t have a real keyboard.
iDon’t run simultaneous apps.
iDon’t take night shots.
iDon’t allow open development.
iDon’t customize.
iDon’t run widgets.
iDon’t have interchangeable batteries.
Everything iDon’t…Droid does.
Verizon, 18 October 2009

So I’ve got this DROID X. And I have to say, suddenly, I get it. I understand why this thing is surpassing the iPhone as we speak. ~ Paul Thorrott, Paul Thorrott’s SuperSite for Windows, 21 September 2010

iPad Killer: Truly, Really, I mean It. …Motorola’s new XOOM tablet is poised to become THE best non iPad tablet on the market when it ships later this year. ~ Jim Louderback, Huffington Post, 6 January 2011

Given what I’ve seen of Honeycomb and Motorola’s excellent tablet, Cupertino will have some serious catching up to do with their iPad 2. ~ J.P. Mangalindan, Fortune, 4 February 2011

Nokia

Nokia may hasten the end of the Apple revolution. ~ Kofi Bofah, Seeking Alpha , 30 October 2013

Palm

You know the beautiful thing: June 29, 2009, is the two- year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later. ~ Major Palm investor & co-founder of Elevation Partners, Roger McNamee, 5 Mar 2009

The Palm Pre Will Be an iPhone Killer ~ Ross Catanzariti, PC World, 2 Apr 2009

We have a really good opportunity to become No. 2 in tablets fairly quickly. Possibly No. 1. ~ Jon Rubinstein, Senior Vice President and General Manager, Palm Global Business Unit, HP, 23 June 2011

Samsung

Imagine Samsung introducing revolutionary new lines of mobile phones and tablet computers with twice the battery life of Apple devices! Imagine colors more vivid than you have ever seen in any display before and half the thickness of Apple devices! The foregoing is not just a hyperbole; Samsung is pouring billions into making this happen. ~ Nigam Arora, Contributor, Forbes, 10 Feb 2012

Miscellaneous

Dvorak: ”I’m telling you, look at this product coming out of India called the Adam.”
Curry: “A-D-A-M?”
Dvorak: “Yeah.”
Curry: “And it’s a what it’s a pad?”
Dvorak: “It’s an iPad Killer. And I hate to use that term since the iPad is probably dead anyway.
No Agenda Podcast, Adam Curry & John C. Dvorak, 25 February 2010

Our tablet will be better than the iPad. ~ Chang Ma, VP Marketing, LG, 20 August 2010

(W)ith a new, potentially more compelling tablet coming — the Cisco Cius — the iPad’s success in the corporate world could be short-lived. ~ Don Reisinger, Channel Insider, 5 August 2010

We have an extreme focus on the innovation of LePad and LePhone because these products will dominate the future market. ~ Liu Chuanzhi, Lenovo, 27 January 2011

According to data from research firm BITG, checks at 150 Verizon Wireless stores indicate that in some cases the Thunderbolt is outselling the iPhone 4. …the iPhone may have met its match. ~ Ed Oswald, technologizer.com, 1 April 2011

Sony, Lenovo, Dell to Launch ‘iPad Killers’ in 2011. ~ Paul Thurrott, WindowsIT Pro, 28 April 2011

We will prove that it’s not who makes the tablet first who counts, but who makes it better. ~ Howard Stringer, CEO, Sony, 31 Aug 2011

All in all, I am impressed with the new phone (Atrix 2). And I think Apple has reason to finally be scared of the competition. ~ Cullen Roche, Seeking Alpha, 25 October 2011

Exhibit A: Xiaomi’s MiPad. Although we could easily focus on Microsoft’s recently launched Surface Pro 3, Xiaomi’s recently unveiled MiPad is an equally serious, if not more so, threat to the iPad Mini. ~ Andrew Tonner, The Motley Fool, 26 May 2014

That which does not kill me, makes me stronger ~ Friedrich Nietzsche

Lessons Learned And Unlearned

First, don’t call anything a “Killer”. That term has overstayed its welcome. There will be product killers in the future, but we’ll only know that after the fact, not before.

Believe those who are seeking the truth. Doubt those who find it. ~ Andre Gide

Second, can we not just wait until a product exists before we compare it to an existing product? Seriously. What is our major malfunction?

Everything happens for a reason. Sometimes the reason is that you’re stupid and make bad decisions. ~ Bill Murray (@BiIIMurray)

Third, unreasonable people should not be reasoned with. They should be mocked.

You can always reason with a Troll. You can always reason with a barnyard animal, too, for all the good it does.

Never try to reason the prejudice out of a man. It was not reasoned into him, and cannot be reasoned out. ~ Sydney Smith

Reason is not automatic. Those who deny it cannot be conquered by it. Do not count on them. Leave them alone. ~ Ayn Rand

Apple Claim Chowder Series:

Introduction
Events
Killers
Cynicism
Product
Evolutionary Or Revolutionary
Business Models

The 5.5 Inch iRemote For The Apple Home

You want to talk about Apple. I understand. They are the biggest tech company in the world. Their products are used by hundreds of millions. Oh, and next week there’s — OMG! — a major Apple event, not at Moscone Center in San Francisco but at Flint Center in Cupertino, the very same location where the original Mac was introduced and where the phoenix-like (i)Mac was introduced, and this can only mean…

A new Mac?

How can that be?

We are all expecting an iWatch.

And a large, new iPhone.

Two!

Some of us are even expecting an iPad XL, complete with badly needed split-screen, multitasking function. Tim Cook has repeatedly promised us new products, after all. We are 14 years beyond Y2K. Macs are borderline inconsequential in our glorious new world. Apple can’t possibly be putting the Mac at center stage, can they?

Unlikely, but kudos for cleverly diverting our attention.

Oh, glorious Apple. Stoking the rumors, week after week. Divvying out the “leaks” bit by bit. Building our excitement. Inciting our lust until…shazam!

Something totally unexpected.

Fine. Two can play at that. Here’s my totally unexpected prediction: a 5.5-inch iRemote for the home.

Price? $299, including an Apple TV.

The $299 iRemote

Ben Bajarin says there will be no 5.5-inch iPhone “phablet.” I agree. Jony Ive resisted increasing the size of the original iPhone for years. Market demand forced his hand. The market now wants an even larger iPhone. Ive will once again be forced to capitulate.

A 4.7-inch iPhone should suffice.

An iPhone that size can retain most of Ive’s iconic design, support one handed use, at least for some, and have the additional benefit of offering a larger, longer lasting battery, which is sorely needed.

A 5.5-inch iPhone is nothing more than a twisted abomination of Ive’s design. I can’t believe this will happen. Unless the rumors of a 5.5-inch iPhone point instead to an entirely new device.

The Future Of The iPod

A remote control for the Apple-optimized home does not require one handed use. It needs only be light, mobile, affordable, possibly even unapologetically plastic.

Such a device can control your HomeKit-enabled appliances. 

It replaces that wretched plastic Apple TV remote which has grown so useless even as Apple TV offers up so many more new content possibilities.

It’s the perfect size for tweeting while watching television. It encourages FaceTime calls.

Possibly, this device even supports multiple user accounts. 

That Apple will finally offer “widgets,” which are optimized for both the small iWatch screen and glanceable CarPlay screens, may possibly work better on this new device as well.

The device also does not diminish iPhone sales, where Apple gets the bulk of its money from. Think of this as the future of the iPod, if that helps. Not quite an iPad, which is more personal, this new “iPod” belongs not to a person but to a home. It collects data, controls applications and commands other devices. Yes, even an Apple Television in time.

Instead of storing and presenting your music collection, this new iPod stores, presents and manipulates the collection of data from the family’s wearables, appliances, the Internet-connected thermostats, door cams, and lights. The iPod becomes the universal remote for the Apple optimized household.

Siri will be front-and center with this new iPod, encouraging you to tell her when to turn off the air conditioner, or for how long the oven temperature should be set. Plus, with iCloud, Apple suddenly becomes a leader not just in “machine learning” but more importantly, possesses a knowledge of people inside their homes that is truly unique.

Everywhere A Screen

I accept I may be completely wrong. Where a large iPhone ends, a small iPad begins, or how iPod evolves in a world with all of these is not as clear-cut as even Apple marketing would have us believe. My strength lies not in predicting new technologies but in understanding how existing technologies will re-make the world, the economy, learning, work, power, joy. 

Yet, as computing spreads into all areas of our lives, and burrows its way into all of our things, we need new and better devices to help take full advantage of their combined potential.  

This is a unique Apple strength.

Time and again, Apple shows us how all our many technologies are supposed to work — for people, not for corporations or things or business models or the established order.

steve-jobs-pre-iphone-slide

This is why I am reasonably confident that, whether Apple reveals an entirely new device, a deconstruction of an old one, or something in between or far beyond, it will matter. If not right away, soon.  

Next week, the very moment Apple releases a larger iPhone of any size, tech bloggers will giddily point their finger and exclaim: “J’accuse! Apple copied! The iPhone phablet is copying the Samsung Note!”

This is willfully missing the point. 

Lousy artists copy. Tech bloggers squeal. Sound and fury signifying nothing.

Mobile computing is barely into the Model T phase. Apple is helping to push us forward, mostly in positive ways — even when we think their latest product is just one more device in an already crowded market. We can’t know what we need till we have it, be it an iWatch, a phablet, an all new Mac, or, yes, a universal home remote. 

We live in interesting times. They are about to get even more interesting.

Apple Claim Chowder: Events

With an Apple Event fast approaching, I’m reviewing critiques of past Apple events to see how accurate they were. Turns out, not very. Critique is needed and welcome. Repeated errors? Not so much.

Events

A book is a mirror; if an ass peers into it, you cannot expect an apostle to peer out. ~ George Christoph Lichtenberg

An Apple event is a mirror too. If an ass peers into it, you cannot expect an apostle to peer out.

Prophesy is a good line of business, but it is full of risks. ~ Mark Twain

WHAT WOULD JOBS DO?

Ever since Steve Jobs’ death, there has been an unfortunate tendency by some critics to create counterfactuals that compare the Apple of this world to an Apple still run by a living Steve Jobs. There seems to be an inverse relationship at work here. The less likely it was for a critic to understand and predict Steve Jobs’ actions while he was alive, the more likely it is for that same critic to claim they can channel Steve Jobs’ spirit from the beyond. Ironic, no?

Egotism is the anesthetic that dulls the pain of stupidity. ~ Frank Leahy

All this talk of trying to figure out what Steve Jobs would have done reminds me of a true story:

    For many years, a Franciscan priest by the name of Andrew Agnellus served as an adviser to the British Broadcasting Company (BBC) on religious affairs. One day, a BBC producer sent a memo to Father Agnellus asking how he might ascertain the official Catholic view of heaven and hell. The witty priest’s return memo said simply:

    Die. ((Excerpt From: Andre Bernard. “Bartlett’s Book of Anecdotes.”))

To those critics who truly wish to know what Steve Jobs is thinking now, I extend the same advice.

And he looked at me with those intense eyes that only he had, and he told me to never do that, to never ask what he would do. Just do what’s right. And so I’m doing that. ~ Tim Cook

Premature Predictions

For some reason, people can’t wait until they actually see and use a product before predicting it will fail. It’s like judging a wine before you’ve tasted it. Why we listen to these pre-predictions, I have no idea. But we do.

It’s generally a bad idea to have a strong opinion of a consumer product you have no experience of. ~ Benedict Evans (@BenedictEvans)

Some past premature predictions:

    Apple is slated to come out with a new phone… And it will largely fail…. Sales for the phone will skyrocket initially. However, things will calm down, and the Apple phone will take its place on the shelves with the random video cameras, cell phones, wireless routers and other would-be hits… ~ Michael Kanellos, CNET, 7 December 2006

    BaF8LuUCYAAqxrm.jpg-largeApple will launch a mobile phone in January, and it will become available during 2007. … After a year a new version will be launched, but it will lack the innovation of the first and quickly vanish. The only question remaining is if, when the iPod phone fails, it will take the iPod with it. ~ Bill Ray, The Register, 26 December 2006

    When Apple introduces its iPhone this month, will it pass the acid test? In my opinion, no. ~ Al Ries, AdAge Blogs, 18 June 2007

    In fact, I’ll go far enough to say that, if the iPhone 5 looks like the pictures that have recently appeared, Apple may be screwed. ~ Henry Blodget, Daily Ticker, 30 July 2012

    With Apple’s next smartphone still months away, fans have been gobbling up iPhone 6 rumors faster than Pac-Man on a power pill bender. However, even the hottest rumor mill in tech can’t turn this device into a winner. ~ Avram Piltch, LAPTOP Online Editorial Director, 14 March 2014

A handful of patience is worth more than a bushel of brains. ~ Dutch proverb

All great ideas look like bad ideas to people who are losers. It’s always good to test a new idea with known losers to make sure they don’t like it. ~ Scott Adams

Speculation

If you believe everything you read, better not read. ~ Japanese Proverb

Speculation can be fun. Speculation can even be helpful. However, building elaborate arguments on unfounded speculation is like building a castle on shifting sands.

A foolish man, which built his house upon the sand. ~ The Bible, Matthew

When it comes to speculation, a couple of rules of thumb can be helpful:

It is better to debate a question without deciding it than to decide it without debating it. ~ Joseph Joubert

Exceptional claims demand exceptional evidence. ~ Christopher Hitchens

Better to trust the man who is frequently in error than the one who is never in doubt. ~ Eric Sevareid

Taking crazy things seriously is a serious waste of time. – Haruki Murakami

Wrong

We don’t know what’s about to happen but we’ll pretend that we do. Then — when we’re proven wrong — we’ll still pretend we knew it all along.

If futurism is visionary, history is revisionary. ~ Bruce Sterling. ((Excerpt From: Robert Cottrell. “The Browser Book of Quotations.” The Browser, 2012.))

Here, for example, is what we thought the iPhone would look like:

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Image From “iPhone Dreams: Renders from 2006 tell us everything about what we used to think a phone could be.

No one remembers how wrong they were about the iPhone and the iPad. All they remember is the parts they got right — or the parts they re-imagined that they got right.

The human mind is a delusion generator, not a window to truth. ~ Scott Adams

Any event, once it has occurred, can be made to appear inevitable by a competent historian. ~ Lee Simonson

Even God cannot alter the past, though historians can. ~ Samuel Butler

Change

Whenever a prediction doesn’t pan out, we’ll simply claim we were absolutely right on the money, but Apple changed their mind at the last minute. What the Onion writes as parody, some Apple critics take as gospel:

    CUPERTINO, CA—Claiming that he completely forgot about the much-hyped electronic device until the last minute, a frantic Steve Jobs reportedly stayed up all night Tuesday in a desperate effort to design Apple’s new tablet computer. “Come on, Steve, just think—think, dammit—you’re running out of time,” the exhausted CEO said as he glued nine separate iPhones to the back of a plastic cafeteria tray. “Okay, yeah, this will work. This will definitely work. Just need to write ‘tablet’ on this little strip of masking tape here and I’m golden. Oh, come on, you piece of shit! Just stick already!” Middle-of-the-night sources reported that Jobs then began work on double-spacing his Keynote presentation and increasing the font size to make it appear longer.

Claiming that Apple suddenly changed its collective mind is not enough for some critics. Some will go further and claim that that a spiteful Apple changed its plans IN RESPONSE to a critic’s predictions.

When they discover the center of the universe, a lot of people will be disappointed to discover they are not it. ~ Bernard Bailey

The bottom line is, no matter what shows up on stage at an Apple Event, our predictions are never wrong.

Those who never retract their opinions love themselves more than they love the truth. ~ Joseph Joubert

Delay

Here’s another dodge favored by critics — the old “nonexistent product delayed” trick. You know how it goes. We make an outlandish prediction. Said prediction doesn’t happen. Were we wrong in our prediction? Of course not! The predicted product was simply “delayed” almost certainly due to production issues on Apple’s part. The beauty of this claim is two-fold. We weren’t wrong. Apple is incompetent.

Some recent examples of this line of argument:

blodgett081213

A fresh report from China’s Economic Daily News believes that Apple has indeed delayed the Retina iPad Mini’s launch until early 2014 because of the troubles it’s having. Apple can’t afford to wait that long. ~ Evan Niu, Motley Fool, 13 July 2013

Continued production issues may force Apple to delay ‘iWatch’ until 2015 ~ @appleinsider

When we risk no contradiction, It prompts the tongue to deal in fiction. ~ John Gay

Lessons Learned And Unlearned

People do not wish to appear foolish; to avoid the appearance of foolishness, they were willing actually to remain fools. ~ Alice Walker

Set aside your predictions and preconceptions. Go into the Event with an open mind. See what is, instead of what is missing, and go from there.

The world is full of people who have never, since childhood, met an open doorway with an open mind. ~ E. B. White

The trouble with having an open mind, of course, is that people will insist on coming along and trying to put things in it. ~ T.Pratchett

Apple Claim Chowder Series:

Introduction
Events
Killers
Cynicism
Product
Evolutionary Or Revolutionary
Business Models

Apple Claim Chowder: Introduction

Apple has scheduled an Event for Tuesday, September 9, 2014. Apple’s Events attract critics the way a trailer park attracts tornados. Good analysis and insightful critiques are expected and welcome, however many critics merely repeat the same discredited arguments over and over and over again. Some people simply never learn from their mistakes. Which reminds me of a joke:

    An Apple critic with two very red ears went to his doctor. The doctor asked him what had happened.

    “I was ironing a shirt and the phone rang,” he said. “But instead of picking up the phone, I accidentally picked up the iron and put it to my ear.”

    “GEEZ!” the doctor exclaimed in disbelief. “So, what happened to your other ear?”

    “Isn’t is obvious?” the critic replied. “I had to call you to schedule this appointment.”

Perhaps the above joke would be more apt if it were we, and not the critics, who had the red ears, for the critics seem to escape their repeated errors unscathed while it is we who end up getting burned year after year.

History is a very good teacher, but (it) has very few students. ~ Wael El-Manzalawy

This is the first in a series of articles that examines past claims and, having found them wanting, expounds upon lessons learned and unlearned. Future articles will group the critics’ claims into topics, but I’ll get things started by simply serving up some of the juiciest claim chowder of all time. Bon appétit.

AUTHOR’S NOTE: Almost all of the linked material comes from the excellent iPhone Death Watch and iPad Death Watch Web sites maintained by AAPL Investors.net. Highly recommended reading.

Upset 3d puppet - harlequin, keeping for a head

Apple Claim Chowder

The surest way to make a monkey of a man is to quote him. ~ Robert Benchley

Is there a toaster that also knows how to brew coffee? There is no such combined device, because it would not make anything better than an individual toaster or coffee machine. It works the same way with the iPod, the digital camera or mobile phone: it is important to have specialized devices. ~ Former Apple Vice President, iPod Division, now with Palm, Jon Rubenstein, September 27, 2005

twentyyears

We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in. ~ Palm CEO Ed Colligan, commenting on then-rumored Apple iPhone, 16 Nov 2006

    In our view, the appearance of the iPhone (or something like it) poses little risk to RIM’s business. ~ Chris Umiastowski, TD Securities, 12 December 2006

…I am not sure how [the iPhone] will stand against Sprint’s Wimax`(when it successfully launches) and its phones, which I am looking forward much more than over-hyped Apple iPhone. ~ Bhaskar Chitraju, Indews Broadcast, 18 January 2007

    The big competitors in the mobile-phone industry such as Nokia Oyj and Motorola Inc. won’t be whispering nervously into their clamshells over a new threat to their business. The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks. ~ Matthew Lynn, Bloomberg, 15 January 2007

Windowscompare$500 fully subsidized with a plan! I said that is the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine. ~ Steve Ballmer, Microsoft CEO, 17 January 2007

    The iPhone will not substantially alter the fundamental structure and challenges of the mobile industry. ~ Charles Golvin, Forrester Research Inc, January 2007

The honeymoon is over for the iPhone. ~ Tim Moynihan, Crave, the Gadget Blog from Cnet 11 January 2007

Last year Apple’s iPhone sales alone were larger than the revenues at 474 of the companies in the S&P 500 stock index. ~ Eric Chemi of Bloomberg Businessweek

The iPhone’s willful disregard of the global handset market will come back to haunt Apple. ~ Tero Kuittinen, RealMoney.com, 18 January 2007

    I’m more convinced than ever that, after an initial frenzy of publicity and sales to early adopters, iPhone sales will be unspectacular… iPhone may well become Apple’s next Newton. ~ David Haskin, Computerworld, 26 February 2007

Apple should pull the plug on the iPhone… ~ John C. Dvorak, 28 March 2007

Nobody is completely worthless. Some can be used as bad examples. ~ John Tigges

Apple begins selling its revolutionary iPhone this summer and it will mark the end of the string of hits for the company. ~ Todd Sullivan, Seeking Alpha, 15 May 2007

How do you deal with [the iPhone}? How do they deal with us? ~ Ed Zander, Motorola CEO/Chairman 10 May 2007

We lie loudest when we lie to ourselves. ~ Eric Hoffer

What does the iPhone offer that other cell phones do not already offer, or will offer soon? The answer is not very much… ~ Laura Goldman, LSG Capital, 21 May 2007

The forthcoming (June 29) release of the Apple iPhone is going to be a bigger marketing flop than Ishtar and Waterworld combined. ~ David S. Platt, Suckbusters!, 21 June 2007

I may not agree with you, but I’ll defend to the death my right to tell you to shut up. ~ Andy Borowitz

Once the initial fever wears off, however, the bloom will really be off the rose, and sales will be disappointing (at least here in the U.S.). ~ Jim Louderback, PC Magazine. 6 June 2007

We Predict the iPhone will bomb ~ Porges, The Futurist, 7 June 2007

You may not be able to change the world, but at least you can embarrass the guilty. ~ Jessica Mitford

The iPhone is a sustaining technology relative to Nokia. In other words, Apple is leaping ahead on the sustaining curve [by building a better phone]. But the prediction of the theory would be that Apple won’t succeed with the iPhone. They’ve launched an innovation that the existing players in the industry are heavily motivated to beat: It’s not [truly] disruptive. History speaks pretty loudly on that, that the probability of success is going to be limited. ~ Clayton Christensen, Author of Innovator’s Dilemma, 28 June 2007

There’s a lot of rejoicing at Sprint, Verizon and T-Mobile [at the iPhone’s initial sales]. ~ IAG Research’s Roger Entner, 4 July 2007

Some never open their mouths without subtracting from the sum of human knowledge

Let’s face it, the Internet was designed for the PC. The Internet is not designed for the iPhone. ~ Steve Ballmer, Microsoft, 21 October 2009

    The tablet market has only succeeded as a niche market over the years and it was hoped Apple would dream up some new paradigm to change all that. From what I’ve seen and heard, this won’t be it. ~ John C. Dvorak, MarketWatch, 29 January 2010

I added it up and … like 800 people are going to buy the iPad. . . . ~ Molly Wood, CNet, 31 January 2010

ipad_1.png.CROP.promovar-mediumlarge

If Apple makes a successful tablet, they will have accomplished what no other company before them has ever managed to do, which is why I am not optimistic. If I turn out to be wrong, I’ll gladly eat my words, but I’m pretty sure that I’m not wrong. ~ Alex Cook, Frontier Outlook, 28 January 2010

    Unless Apple has also developed some new type of power source, such as nuclear cells or magical hamsters on tiny spinning wheels for the iPad, don’t expect the claims about battery life to hold true. ~ John Breeden II, Government Computer News, 28 January 2010

You might want to tell me the difference between a large phone and a tablet. ~ Eric Schmidt, Google, 10 January 2010

The true way to be deceived is to think oneself more knowing than others. ~ La Rochefoucauld

You know, I’m a big believer in touch and digital reading, but I still think that some mixture of voice, the pen and a real keyboard – in other words a netbook – will be the mainstream on that. So, it’s not like I sit there and feel the same way I did with iPhone where I say, ‘Oh my God, Microsoft didn’t aim high enough.’ It’s a nice reader, but there’s nothing on the iPad I look at and say, ‘Oh, I wish Microsoft had done it. ~ Bill Gates, Microsoft, 10 February 2010

Nothing is more damaging to a new truth than an old error. ~ Johann Wolfgang von Goethe

The Apple iPad is not going to be the company’s next runaway best seller. ~ John C. Dvorak, MarketWatch, 12 February 2010

The only time he opens his mouth is to change feet.

—David Feherty

The iPad will remain an expensive, niche device compared to all-purpose netbooks…. (N)etbooks sales will still far outstrip those of the iPad. ~ Preston Gralla, PC World, 30 March 2010

The decline of the iPhone has started. And that will become clear long before the year 2010 is gone… ~ Tomi T Ahonen, Former Nokia Executive, Inc, 9 April 2010

iphone.png.CROP.promovar-mediumlarge

(Apple) is not having an impact on Nintendo… ~ Reggie Fils-Aime, President, Nintendo of America, 7 April 2010

I admit, sales of the iPad beat my expectations. I didn’t think that this device would do that well, and I still think it’s an oversized iPod Touch. ~ Alex Cook, Seeking Alpha, 1 June 2010

Never miss a good chance to shut up. ~ Cowboy wisdom

It looks like the iPhone 4 might be their Vista, and I’m okay with that. ~ Kevin Turner, Chief Operating Officer, Microsoft, 14 July 2010

    If a user wants to walk from the kitchen to the dining room in her house, she simply walks through. It does not work like that in mobile–you have to go through the front door to get to the kitchen. iPhone has a home button which works like a go-back-to-front-door button. This is not a model that human beings are used to. People are spatial. ~ Peter Skillman, VP Meego User Experience and Services Design, Nokia, 20 September 2010

There could literally be millions of first-generation iPads gathering dust in people’s home offices already. This product is the tech industry’s biggest MacGuffin yet. ~ Paul Thurrott, Windows IT Pro, 23 October 2010

What you don’t know would make a great book. ~ Sydney Smith

I cannot see a need for the thing [iPad]. ~ John Dvorak, MarketWatch, 22 October 2010

A salad spinner would have been a better investment, [than an iPad] and I don’t even eat that much salad. ~ John Swansburg, Slate, 18 February 2011

The most costly of all follies is to believe passionately in the palpably not true. It is the chief occupation of mankind. ~ H. L. Mencken

Apple is a company that has to come up with hit after hit after hit, every 12 to 18 months, but once you do the iPhone on Verizon, what’s the next thing past this? ~ Patrick Becker Jr, Becker Capital Management, 7 March 2011

    The reliance by Apple and Android phones on the ‘app’ as the central metaphor is outdated. ~ Chris Weber, President, head of North America, Nokia, 10 August 2011

As more developers reach consumers through platform-independent technologies such as HTML5, Apple’s app store could be cut out of the loop as customers gain freedom to transfer their chosen applications from one device to another. ~ Michael Holt, CFA, Morningstar, 28 Dec 2011

What we see is that youth are pretty much fed up with iPhones. Everyone has the iPhone. ~ Niels Munksgaard, Director of Portfolio, Product Marketing & Sales , Nokia, 13 Dec 2011

Nobody goes there anymore—it’s too crowded. ~ Yogi Berra

The following are three reasons the new iPad will be dead on arrival (DOA)… ~ Michael Li, The GadgetMasters, 11 March 2012

    I don’t think anyone has done a product that I see customers wanting. ~ Steve Ballmer, Microsoft, 25 Nov 2012

Siri could signal the beginning of the end for Apple. ~ Greg Satell, Forbes, 26 March 2013

    (Android) Not secure? It’s more secure than the iPhone. ~ Eric Schmidt, Google, 8 October 2013

Apple’s iOS 7 launch is fast becoming its most troubled mobile operating system update, increasing concern that the technology giant has lost some of its magic touch since co-founder Steve Jobs passed away two years ago. ~ Scott Martin and Alistair Barr, USA Today, 17 October 2013

iPhone accounts for 41.9% of US smartphone subscriber base, up from 31.3% a year ago – Apple CFO Luca Maestri, via @macjournals

[Android phones] are a great Christmas present to an iPhone user! ~ Eric Schmidt, Google, 24 November 2013

I know there’s a lot of noise because Apple did [64-bit] on their A7. I think they are doing a marketing gimmick. There’s zero benefit a consumer gets from that. ~ Anand Chandrasekher, SVP and Chief Marketing Officer, Qualcomm, 1 October 2013
Anand Chandrasekher has been quietly reassigned — and removed from the company leadership page on its website as of 25 Oct 2013.

My prayer to God is a very short one: “Oh God, please make my enemies ridiculous.” God has granted my wish. ~ Voltaire

Lessons Learned And Unlearned

True wisdom is less presuming than folly. The wise man doubteth often, and changeth his mind; the fool is obstinate, and doubteth not; he knoweth all things but his own ignorance. ~ Akhenaton

The lesson here is to not take things on faith. Question everything. Facts should underlie every argument and logic should support that argument’s structure.

A man is getting along on the road to wisdom when he begins to realize that his opinion is just an opinion.

Beware the opinions of critics who are too sure of themselves, for it is most likely that they are also too full of themselves.

Doubt is often the beginning of wisdom. ~ M Scott Peck

Further, while it is always wise to question every opinion, it is not always wise to have an opinion on every question. Some things can only be answered in time.

Who is there who can make muddy waters clear? But if allowed to remain still, it will gradually clear itself. ~ Lao-tsu

Apple Claim Chowder Series:

Introduction
Events
Killers
Cynicism
Product
Evolutionary Or Revolutionary
Business Models