The Samsung issues we are seeing has me thinking about something. It’s a conspiracy theory with zero evidence but something that strategically intrigues me. Tim Cook said in a recent interview with Charlie Rose that Apple could have made a bigger iPhone years ago. So the question is, why didn’t they? The writing was on the wall that larger screens were trending upwards. The pundits read this as Apple’s inability to see market demands and hailed Samsung as the rising star who will dominate forever and ever. Apple must have known that all they needed to do to shut everyone up and crush Samsung in the high end Android camp, where it would really hurt them and Google combined, was to release a larger iPhone. Well, my theory is they did know this and they let Samsung and perhaps even Google have their time in the sun intentionally. In the art of war, this tactic is referred to as a feigned retreat.
A feigned retreat is a military tactic whereby an army will pretend to withdraw or that they have been routed in order to lure an enemy into a position of vulnerability. Feigned retreats are one of the more difficult tactics for an army to undertake, and require well-disciplined soldiers. This is because if the enemy presses into it, undisciplined troops will lose coherence and the rout will become genuine.
Samsung knew the large screen iPhone poised the greatest threat. Yet Apple had no sense of urgency. I recall many conversations with Samsung execs who asked with genuine surprise, “What are they waiting for?” Over time, I heard them convince themselves Apple just must not be interested in larger phones. That the one handed operation conviction will trump where the market is going. All the while Apple was sitting back patiently waiting to employ their thermonuclear war that had less to do with the battlefield of the courts and more to do with the battlefield of the market. Knowing that, once they released larger phones, they would gain share in the premium smartphone segment mostly at the expense of Samsung. From every data point I see globally that is exactly what is happening. In fact, I just read a report from Baidu today in China that highlighted data from a survey they did. Over 40% of current high end Android buyers are planning on switching or strongly considering switching to the iPhone 6 Plus. 21% said they would absolutely plan on buying it and 21% said they would strongly consider buying it. All primarily because of the larger screen.
Obviously this is just a theory. I could poke many holes in it with counterpoints. Perhaps I’m giving Apple too much strategic credit. Nonetheless, I thought I would put it out there to spur some fun conversation.
On the second day Steve jobs was back at Apple I had a chance to sit down with him and ask him about how he planned to rescue Apple. At the time, Apple was $1 billion in the red and we now know they were only a month or two away from even greater financial disaster. The company had been mismanaged and multiple CEOs had tried to make Macs more like traditional PCs to stay competitive but this was a strategy that almost buried Apple.
So when Jobs came back to Apple, he faced a company thats morale was low and prospects were even lower. When I asked him about what he was going to do, the first thing he told me was he wanted to go back and take care of the needs of their core customers. He defined these customers as the graphics, advertising and engineering professionals that used Apple’s products for all types of photo editing, imaging and video projects. He felt the past CEOs had abandoned them while they tried to make Apple more relevant to a broader audience.
He was aware the Mac had led the desktop publishing revolution and it was deemed the best personal computer for what was a narrow audience of graphics and engineering professionals but a lucrative one if done right. So, as he told me then, the first order of business was to create more powerful Macs and go back to these professional audiences and give them the tools that would make their business projects easier and more profitable for them.
With the new 5K Retina Mac, Apple is fulfilling Jobs’ vision that started back in 1997 and delivering to these pro users what appears to be the best personal computer ever designed for creative professional audiences. While we have had 4K displays on the market for some time now, most of these are just displays. While they have come down in price, they are still just stand-alone 4K displays. What Apple is bringing to market is a 5K Retina Display that is a full Mac starting at $2499, a price even the small-medium sized business (SMB) graphics professionals can afford. More importantly, by moving the display to 5K, it is upping the ante for its competitors and will probably become the de facto standard for graphic based desktop PCs. It will be a game changer.
However, I see this price point as being interesting for a number of reasons. Any graphics or engineering professional would probably buy an upgraded model that has a faster processor and faster graphics co-processor that would push the price closer to $3,000+. But at $2499, this price is SMB and consumer friendly for some families looking at an all-in-one desktop PCs to become multipurpose home computers the whole family shares. In this case, it could even double as a TV that could run OTA 4K TV shows already available on Netflix and will be coming from OTA versions of HBO, CBS and other major networks in the future.
Although laptops dominate the market for personal computers, desktop demand has also been steady as all-in-ones have garnered real interest in many homes because of their utilitarian nature and shared capabilities. Many are set up on kitchen counters or desks in the den or family room where various members of a family can use them to check email, search the Web, do light productivity tasks and even watch videos fromYoutube and streamed over the web. But the option of a 5K all-in-one that could also handle streaming 4K programs is quite interesting and could make it a hit with upscale consumers as a PC and 4K streaming TV capable device rolled up into one.
One of the more interesting questions I was asked by a couple of media folks at the Apple event was whether I thought this 5K Retina Mac could be the precursor of an Apple branded TV. There has been a lot of speculation as to whether Apple’s new TV strategies would include an actual TV or just a souped up Apple TV with new UI and new ways to interact with TV content. My son Ben and I go round and round about this subject and personally I don’t think an Apple branded TV makes sense given the cutthroat competition in the TV market (neither does he).
However, Apple did something very interesting with the design of the 5K Retina Mac. They created a special processor of their own known as the timing controller or T-CON designed just to manage and manipulate each pixel with levels of precision we have not seen so far in TV or PC displays. I have no clue if this could be put into a dedicated Apple TV but, at the technical level, this processor could give them a decided edge in TV designs should they want to go in that direction.
I see the iMac with 5K Retina Display as an important product for Apple and their professional audiences and perhaps a hit with upscale consumers who want a high res monitor that could be used for multiple purposes included watching 4K based streamed TV content. But I suspect the technology designed into this could be used in other products over time and this makes this new iMac a product to watch closely over time.
At Today’s Apple’s Event, I got a question over and over again. I thought I would share my thoughts on it. First off, the question, “Did Apple do enough?” is the wrong question. The correct question is, “Did Apple release a better product than they did last year?” Of course the answer is yes. A smart fellow once told me, “If it is worth doing, it is worth improving.”
We can view product enhancements and demand the revolutionary without realizing that revolutionary requires evolutionary improvements. Leaps in innovation don’t happen without the evolutionary cycles that come before them. But what matters is that each year’s product is better, in a fundamental way, to meet the needs of current and new customers.
I have a core thesis that Apple does not really have any competitors. I know many disagree and we can debate this from a business, strategy, and market standpoint, but from a product standpoint I believe this is true. In fact, I believe Apple’s primary competitive product benchmark is last year’s model. This is why the correct question is whether or not Apple released a better product compared to last year’s version.
Is the new iPad Air better? Yes. Is the new iMac better? Yes.
Getting that out of the way, let’s look at why it matters to today’s announcements.
Today’s Announcements
iPad. In my mind Apple did several important things for the iPad product family. The first is Touch ID. While it may seem like an obvious upgrade, it is also significant for two reasons. In enterprise accounts, where the iPad is nearly universally deployed in some way at Fortune 500 companies, Touch ID is an extremely important improvement. We can debate whether the iPad has peaked in consumer markets but one area I am absolutely certain it has not is in enterprise. What is key to understand about the iPad in enterprise accounts is it is not being deployed to replace notebooks or desktops in most cases. Rather, what it is doing is bringing a computer to a field worker who used a simple handheld device or no computer at all.
The iPad is being deployed to many mobile field workers who are generally on their feet all day. Public safety, construction, employees doing truck rolls or installs, compliance officers running routine safety checks on oil rigs, power plants, etc. These mobile field workers usually use a clipboard and have may never have used a computer regularly in their day job. Desktops and notebooks are designed to be used while sitting down, not walking around in the field. This is the enterprise use case for which the tablet form factor is best designed. But because these workers are mobile, they are also the more likely to lose or have their work tool stolen. This is where Touch ID is critical. Enterprise has been clamoring for Touch ID on iPads for the security elements they enable. The upside for the iPad in enterprise is still large and Apple’s partnership with IBM will greatly enhance this.
Enterprise sales alone won’t continue to drive annual iPad growth. So what is the current story for consumers?
Apple has shared a statistic over the past few quarters. 50% of iPad buyers are new to the iPad. This is a key metric. Rather than look at Apple’s lineup and wonder if it will drive upgrades, look at it and wonder if the current lineup is inviting to first time iPad buyers. Here is the full lineup.
From beginning to end, Apple has an iPad for nearly every price point. By keeping the original iPad mini in the mix at $249, Apple has an attractive price across the board. This is a key story when we think about first time buyers. Not everyone needs the current generation iPads. Last year’s models serve a purpose in helping fill price gaps and giving consumers more options.
The challenge of thinking about upgrades is we still have literally no idea what the consumer upgrade cycle is. We have estimates about how many Gen 1 and iPad 2s are still in use and it is a significant number. But we have no read on if those consumers will upgrade at this point. Because of that, predicting the consumer upgrade cycle is near impossible. It could happen one random quarter and catch everyone off guard or we may get early signs. But right now, we don’t know. So in my analysis, I’m focusing on the story for first time buyers. And that story is strong with the full iPad lineup.
Retina iMac. Lots of interesting things about this computer. The first is I joked Apple made a 27″ 5K TV for $2499 (less than a 4K HDTC) that just happens to include a computer. The display is something to behold when you see it. With this product, Apple continues to cater to their bread and butter customers – the creative professionals. This is a product a creative professional will see and say it is NEEDED not it is just wanted.
Whether you make movies, TV shows, create graphic arts, edit photos, etc., there is literally no better option than this 5K Retina iMac. I expect significant demand for this iMac and let’s hope Apple can keep up with it.
Tying it All Together
Again Apple has emphasized the story of their ecosystem. During the event I tweeted:
Key point from Cook – Apple’s products are designed to work together seamlessly. Very different reality than other ecosystems.
The hardware story, iOS 8 and OS X Yosemite with features like Handoff and Continuity strengthen the ecosystem. No other company is addressing the full lineup from desktop, notebook, tablet, smartphone, and soon a smartwatch, to work together this harmoniously from a user experience standpoint. If you are going to own any combination of computers from PCs, tablets, smartphones, and eventually a smartwatch, Apple’s seamless ecosystem is presenting itself with the strongest offering across categories. This is the heart of the “only Apple” narrative.
Technology is breaking down barriers throughout the world. Conversely, a form of technological nationalism has taken hold, limiting tech’s rise. Expect such nationalist fervor to become more widespread, more virulent, probably more unfair.
Technology is the new oil. It’s vital to our lives, our economy, our personal wealth, our national interests. As such, governments believe it is right to be intimately intertwined in the development, use, purchase, promotion and spread of technology.
Government inquiries, embargoes, regulatory barriers and tax disputes with technology companies will become commonplace. Fighting (and/or championing) such affairs will become a standard course of business for tech firms, much like complying with accounting standards are today. VCs, start-ups and well established high tech companies will need to fundamentally reconstruct their focus. I say this all without judgment.
That most of the world’s largest, richest tech companies are American — Apple, Microsoft, Google, Facebook, Amazon, Cisco — makes this new world order that much more combustible.
Should Five Percent Appear Too Small
Big technology companies are sitting atop sizable piles of money. Many governments believe they are owed their rightful share of these piles. The European Union (EU) alleges Apple is concealing taxes duly owed on sales and profits generated throughout Europe. Their allegations rest almost entirely upon the obvious:
“Multinational corporations have a financial incentive when allocating profit to the different companies of the corporate group to allocate as much profit as possible to low tax jurisdictions and as little profit as possible to high tax jurisdictions.”
Examine Apple’s European org chart. What does it appear optimized for? If successful, the EU’s action could cost Apple billions. That is why, when Tim Cook told the US Senate “we pay all the taxes we owe — every single dollar,” he is no doubt being 100% accurate and equally irrelevant.
Tax battles are costly for tech firms, but just one fight of many. Regulatory barriers can similarly limit the full and beneficent spread of the world’s most liberating technologies. As famed tech investor Peter Thiel recently remarked:
“It probably would be better for Europe to find ways to be more innovative, rather than ways to regulate.”
This sentiment was echoed by uber-VC Marc Andreessen, an aggressive proponent of Bitcoin, a cryptocurrency that could, in theory, disrupt a core government function and major policy lever:
‘‘The problem with building a new product or service in the existing financial industry is that tens of thousands of pages of legislation and thousands of lobbyists are going to come down on you very quickly. We needed a new technology to have the wedge to be able to enter the market, to be able to justify all the work to rebuild the system.
With bitcoin, we now think we have that wedge.”
Neelie Kroes, the EU’s digital chief, has made it abundantly clear government is not so willing to rebuild its systems:
“I do wonder how many more Valley companies have to get slapped before the rest of them realize it’s time to start investing in better relations with the EU.”
Expect such “investments” to become commonplace. Likewise, add Amazon to that list of companies who apparently need to be “slapped”:
The European Commission is poised to launch a formal in-depth probe into its serious concerns over improper state aid, dragging Amazon into a multi-pronged clampdown on sweetheart tax deals that has already ensnared Apple in Ireland and Starbucks in the Netherlands.
To absolutely no one’s surprise, Amazon has declared it pays “all applicable taxes in every jurisdiction that it operates within.” As with Apple, the accuracy of this statement is borderline meaningless.
Prediction: numerous governments will alter their tax rules simply to prevent other governments from getting a larger share of any Big Tech monies available. To wit: Why let Europe get a (theoretical) cut of Apple’s bounty when that money could be put to better use in America? Or Brazil? Or China?
Here, There And Everywhere
Tax disputes are certainly not the only concern for tech companies. Just this year:
The Chinese government (blocked) virtually all access to Google websites, instead of just imposing 90-second delays when banned search terms were used. Experts initially interpreted the move as a security precaution ahead of the 25th anniversary of the Tiananmen Square crackdown on June 4. But the block has largely remained in place ever since.
This latest move and previous actions by China have significantly impacted Google’s long term potential inside the world’s largest Internet market. Not surprisingly, China’s own Baidu has a 90% share of search — and not because users prefer its results to Google’s.
Despite Baidu’s ubiquity, many users are finding it to be a poor replacement—especially students, academics, researchers, and technicians who need to rapidly find reliable information online.
It’s not only Google that faces such barriers. Twitter and Facebook are both “filtered” in China. Nor is the problem confined only to American technology companies.
Two popular messaging services owned by South Korean companies, Line and Kakao Talk, were abruptly blocked this summer (by China), as were other applications like Didi, Talk Box and Vower.
Nor is hardware spared. Despite its stellar reputation for security, China’s CCTV ran a report earlier this year suggesting Apple’s iPhone location tracking could put state secrets at risk. If true, China obviously has no choice but to take swift, decisive action.
Government entanglements can take many forms. For example, Apple was caught off guard last month when regulators did not provide the requisite approvals for the company to begin legally selling its new iPhones in China. This despite Tim Cook’s many visits to the country, Apple’s sizeable third party workforce there, and the fact Apple and its partners had readied a major advertising push, believing they had done everything necessary to satisfy the various interested parties. Not so, apparently.
Surprise! Regulators have now proffered their assent, in large part due to Apple’s latest assurances that the American government cannot “backdoor” access iPhone data and obtain any of those China state secrets as noted above.
Rules are rules. The costs required to successfully navigate such rules may not always fall the way prices of technology always seems to fall. Nor may such rules prove as leveling. As Bloomberg recently reported, myriad new government rules in China are likely to benefit local companies, such as Xiaomi.
Moreover, now that users in China can legally purchase iPhone 6, it may cost them more than anticipated. China’s government recently decreed that China Mobile, the world’s largest carrier, must reduce phone subsidies. The effect of such actions are obvious.
“High-end flagship phones will suffer the most from the regulation due to their prohibitive prices in the China market without subsidies.”
“Samsung and Apple, as the two major high-end flagship phone makers, have the most to lose.”
A Day In The Life
Brazil has demanded Apple delete the Secret app from iPhone. Russia recently seized Bitcoin mining equipment at its border with China. Several US states have taken legal action against Uber and Lyft. The EU wants Google, Facebook and Twitter to help it combat what they view as online extremism — and what others view as free speech. The lesson, once again: Tech company interactions with governments will become the norm. Simply put, because tech touches everything.
No matter what you think of Europol‘s veracity, when Europe’s cybercrime unit writes the following, it necessitates a reasoned, continued and very likely financial response from well-heeled technology companies eager to profit from the Internet of Things:
With more objects being connected to the Internet and the creation of new types of critical infrastructure, we can expect to see (more) targeted attacks on existing and emerging infrastructures, including new forms of blackmailing and extortion schemes (e.g. ransomware for smart cars or smart homes), data theft, physical injury and possible death, and new types of botnets.
Death and botnets are always scary. Fighting them is no doubt expensive.
Technology’s promise carries with it parallel strands of fear, always. Consider how smartphones and social media have deepened our understanding of events around the world, such as the recent protests in Hong Kong. Now consider not everyone is pleased by this.
Tim Cook has spoken publicly about civil liberties. Is it fair to ask him — and Apple Inc — to choose a side in this latest skirmish? Is it fair to ask the same of Twitter? Many will.
You Say You Want A Revolution
I suspect you want me to say these many government interventions are dubious, the product of terminally greedy tax collectors, frightened regulators, and entrenched forces hoping to kill off outland competition.
I won’t. Mostly because such sentiments are not relevant.
The many reasons for these many government actions will grow in number, kind and intensity as technology continues to destabilize and disrupt industry after industry. You must understand: There is no bigger industry than government.
Tech is money. Money is power. All three are quickly spreading around the world and most of us want, at minimum, our perceived fair share. Do understand, however, that what’s right and what’s wrong are just two sides to this proverbial Rubik’s Cube.
Freedom is not a zero sum game. Not all believe the same is true for money and power. This is true everywhere. The really big disruption won’t just be of the established order, but of human nature.
Schadenfreude |ˈSHädənˌfroidə | noun | pleasure derived by someone from another person’s misfortune. ORIGIN German Schadenfreude, from Schaden ‘harm’ + Freude ‘joy.’
Samsung has reported a 60% fall in quarterly profits. Just three years ago, Samsung rose from seemingly nowhere to dominate the global smartphone market. Today, Samsung is being pressured from above and below as Apple steals away its premium customers and Xiomi and others steal away customers from the low-end.
Keep in mind that these numbers come from BEFORE the introduction of the iPhone 6 and 6 Plus. The blood-letting has just begun.
Cheer up, the worst is yet to come. ~ Philander Johnson
The Church Of Market Share
Truth be told, I take no pleasure in Samsung’s distress. It is the pundits who preached the gospel of the Church Of Market share who grind my gears.
I don’t suffer fools, and I like to see fools suffer.~ Florence King
They jeered Apple’s premium business model, all the while cheering Samsung on and on — encouraging them to grow market share faster and faster…
…until the train that was Samsung went right off the rails.
Why Can’t Apple Be More Like Samsung?
Remember when the analysts were saying that Apple should be more like Samsung? Seems like only yesterday. Oh wait! It WAS only yesterday.
Thinking of all the pundits that wanted Apple to be like Samsung (low-end iPhone etc.). They aren’t saying that this morning. ~ Sammy the Walrus IV 10/7/14
Remember blogger turned @WSJ then @nytimes columnist recommending Apple cut prices and give free products to gain market share? ~ Rags Srinivasan (@rags)
Ah, good times. Good times.
Here’s a couple of additional Samsung/Apple predictions/recommendations from the archives just to remind us all of how long this nonsense has been going on for.
How royally stupid does that statement look, now that Samsung is the one that is getting crowned…if you take my meaning.
After spending the better part of yesterday digging deeply into Samsung’s analyst day materials, it has become clear to me that Apple, over the long haul, stands very little chance against the Samsung behemoth. ~ Ashraf Eassa, Seeking Alpha , 7 November 2013
Hmm. It seems to me that your digging created a hole, and you fell right into it.
If you find yourself in a hole, the first thing to do is stop diggin’. ~ Cowboy wisdom
Why Isn’t Apple Suffering The Same Fate As Samsung?
All this bad news for Samsung begs the question: If all these bad things are happening to Samsung, why aren’t they happening to Apple too? I could be all snarky and simply say it is because Apple doesn’t follow easily disprovable economic principles and business practices — and that would be true — but it would make this article way too short.
So, just for funsies, let’s do something that the High Priests of the Church of Marketshare never seem to do. Let’s stop and think.
Never be afraid to sit awhile and think. ~ Lorraine Hansberry
It is neither an accident, nor a surprise, that Samsung is struggling while Apple continues to thrive. Many astute observers predicted it long ago.
Logical consequences are the scarecrows of fools and the beacons of wise men. ~ Thomas Henry Huxley
Why then was this a shock to so many? And what lessons can we learn both from Samsung’s fall and Apple’s continued ascent?
Samsung, grab your sh*tty stylus and prepare to take f*ck*ng notes. ~ not Jony F*ck*ng Ive
Commoditization, Average Sales Price, And Margins
COMMODITIZATION
(T)he Apple brand has faltered … And it’s all because Samsung ignored the industry lock-in to constantly focusing on product, and instead changed the game on Apple. ~ Adam Hartung, Forbes, 4 April 2013
…it’s clear that Samsung will brute-force its way into taking more and more marketshare from Apple at the high end while at the same time will enjoy key structural advantages in the low end that Apple would – at least in its present form – not be able to match. ~ Ashraf Eassa, Seeking Alpha , 7 November 2013
This is the “Samsung-is-so-big-they-don’t-have-to-play-by-the-rules” theory of business. Samsung didn’t change the game. Pundits only thought they did because they didn’t understand the rules of the game.
Pundits have predicted, correctly, that hardware would inevitably become commoditized. This, they proclaimed with confidence, would cause Apple’s prices to fall while Samsung, with its good-enough and better-than-good-enough hardware and its lower prices, would usurp Apple’s market share, relegating Apple to niche status. Ironically, commoditization DOES apply to Samsung — the favorite of the Priests of Market Share — but it DOES NOT apply to their favorite whipping boy, Apple. Why? Differentiation.
From Ben Thompson:
Almost all industries have two tenable positions: the differentiated high-end, and the low-cost low-end. The iPhone faces little threat in the differentiated high-end of the market. Suggesting this market is limited in size is fair; counting the days until customers flee for cheap phones is silly. ~ Ben Thompson
What differentiates Samsung?
Hardware? Please. Xiaomi and others are taking a page out of the Samsung playbook by copying Samsung’s designs and making hardware that is more than good enough.
Software? Please. They’re all running the same Android operating system.
TouchWiz? Please. Stop before I die laughing!
Samsung actually DID have some differentiators like scale, time to market, marketing prowess and budget. But none of those is unique to Samsung, and none of them provided Samsung with sustainable differentiation. To put this in military terms, the Samsung army was able to take ground, but they were unable to hold it.
AVERAGE SALES PRICE
There is no doubt, in my mind, that the whole (smartphone) sector is hugely overstretched. 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
Well, Samsung and the rest of the mobile hardware manufactures may be overstretched and left in tears, but Apple is doing just fine, thank you very much.
And here’s something else to chew upon. The iPhone 6 Plus is 100 dollars MORE than Apple’s previously highest priced phone model. While the rest of the industry is in a race to the bottom of the pricing barrel, Apple is preparing to INCREASE the average selling price of their phones.
ASP will rise significantly this quarter. ~ Horace Dediu (@asymco) 9/9/14
MARGINS
Here are Apple’s actual margins:
And here is how badly Apple’s critics mis-predicted Apple’s margins:
And even if the industry just continues as it has for the past few years, with companies like Samsung continuing to build phones that are as good as or better than the iPhone, it’s hard to see how Apple’s profit margin will continue to expand the way it has over the last several years. ~ Henry Blodget, Business Insider, 7 Sep 2012
Overall, the iPhone 5 is a good phone and will probably sell well, but in the long run Apple will have a hard time maintaining its extremely high margins because the iPhone is clearly no longer cut above the rest. Since Steve Jobs is gone, Apple should be honest with itself and begin to dramatically increase its R&D budget to stay in the game. Otherwise, the competition will leave it in the dust.” Alvin Gonzales, Motley Fool, 17 Sep 2012
Market Share
Apple’s critics obsess over the relatively high price of Apple’s products and insist that Apple must lower their price in order to gain market share.
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, it’s low-priced phones in China and India, same thing on the tablets. ~ Henry Blodget, CNBC, 3 January 2013
I have been left disappointed by Apple’s decision not to release iPhone Lite as I thought this was the most important product for Apple to stop its marketshare decline. ~ Sneha Shah, Seeking Alpha, 25 October 2013
First, Apple DID NOT lower their prices and their market share has gone UP in important markets such as the United States And Japan.
It’s looking possible Apple will sell more iPhones than Samsung sells Androids this quarter. ~ Benedict Evans (@BenedictEvans)
Second, Samsung followed the pundits advice, lowered their prices…and lost market share anyway.
It appears that Samsung has been cutting prices in order to maintain market share but has lost market share anyway ~ via Charles Arthur, The Guardian
WINNING
The fetish with Market Share is bizarre. Market share times margins equals profits. Market share and margins are the means. Profit is the end. Market share doesn’t mean a thing if it doesn’t lead to more profits and a better platform.
For example, Sony recently announced that it has been improving its smartphone market share in Western Europe and Japan…and is projecting a £1.3 billion loss.
For what hath a man profited, if he shall gain a whole bunch of market share, and loseth his own shirt? ~ John 09:12
Bill Shamblin explains:
More than a 1-to-1 ratio of profit share to market share demonstrates a company’s ability to differentiate its products, provide more value than its competitors, command higher prices, charge a premium and enjoy pricing power.
—
Less than a 1-to-1 ratio of profit share to market share demonstrates that a company is buying market share; that the company has not been able to differentiate its product in the market and is likely competing primarily on price.
—
Pricing to gain market share simply for the sake of market share is a chump’s game. ~ Bill Shamblin
Market share is not the sine qua non of business — profit is. In football terms, market share is the yardage, profits are the points. In baseball terms, market share is the number of hits, profits are the number of runs. In hockey terms, market share is the number of shots on net, profits are the number of goals. Market share, like yardage, hits, and shots, are a necessary means but profits, like points, runs, and goals, are the end. Pretending otherwise for even one second borders on the inane. Continuing to stubbornly believe such rubbish borders on the insane.
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
Integration
HARDWARE
If I had to name just one thing that the pundits got wrong about about Samsung and Apple, it would be their myopic focus on hardware (sometimes called “innovation”) comparisons.
Samsung’s hardware was better, they said. Samsung was out innovating Apple, they said. Samsung was on the rise and Apple was all-but-dead, they said.
(T)he Galaxy S II is remarkably easy to summarize. It’s the best Android smartphone yet, but more importantly, it might well be the best smartphone, period. ~ Vlad Savov, Engadget, 28 April 2011
What [Samsung] are doing is they’re innovating faster. just the pace that they’re coming out with [products] is so much faster ~ Gene Munster, Piper Jaffray, 12 March 2013
The competition is increasing its lead over Apple. Samsung’s S5 seems to have enjoyed a strong launch, outstripping the iPhone 5S launch for which Apple bulls were prepared to declare a national holiday. ~ Michael Blair, Seeking Alpha, 4 May 2014
Samsung DOES make superb hardware. But how has all that supposed hardware superiority worked out for them?
SOFTWARE
By focusing on hardware alone, the pundits totally ignored software and — even more — they totally ignored hardware/software integration. Judging a smartphone by hardware alone is like judging a sailboat by the boat alone. The size, shape and design of the boat is important, but the sails make the boat go. Similarly, the size, shape and design of the phone is important, but it is the software that puts the “smart” in smartphone.
As Ben Thomson put it:
Software Matters – For years analysts treated all computers the same, regardless of operating system, and too many do the same thing for phones. … (Y)ou cannot do any serious sort of analysis about Apple specifically without appreciating how they use software to differentiate their hardware. … (M)any people buy iPhones (and Macs) because of the operating system that they run. … Not grokking this fact is at the root of almost all of the Apple-is-doomed narrative. … (And) for the high end buyer app quality matters as well, and here iOS remains far ahead of Android. ~ Ben Thompson
Here is a video (via Abdel Ibrahim (@abdophoto) of The Tech Block) of Steve Jobs explaining that the iPod is just software in a beautiful box.
AUTHOR’S NOTE: When I see a video link, I generally skip it. But I highly encourage you to follow the link and watch at least the first 90 seconds of the video. I think you’ll find it worth your while.
Some professional reviewers may have voted for the Samsung hardware while declaring Samsung more innovative, but the only reviewers that count — the buyers — voted with their dollars, and when it came to premium phones, they voted 3-to-1 in favor of the iPhone.
Platform
PLATFORM ECONOMICS IN BIZARRO WORLD
The real game changers in the S4 are Samsung’s pace of innovation and the platform it is creating to challenge Apple in this crucial area of innovation – platform economics. ~ Haydn Shaughnessy, Forbes, 18 March 2013
Samsung is innovating on ‘platform economics’? Wow. How wrong could one be? Samsung is currently suffering precisely because it has no platform to help differentiate its products. Samsung’s lack of platform makes it the polar opposite of Apple. Which reminds me of an awful, awful joke:
Samsung’s profits.
No, that THAT awful joke. This awful joke:
Question: Why couldn’t the polar bear get along with the penguin?
Answer: They were polar opposites.
THE NUMBERS LIE
There is an illusion that the current lopsided shipment market share is irrelevant. This idea is completely false. Losing market share is almost always never a good sign. Android is roasting Apple and if things keep going the way they are, Apple will be toast. ~ Alvin Gonzales, Motley Fool, 21 Dec 2012
That was written in 2012 and it got it exactly wrong. Android currently runs on two times as many devices as iOS. TWO TIMES. But it is Samsung, not Apple that is getting roasted.
Sooner or later that [market share discrepancy] ought to make a difference. ~ John Gaffney (@jfpgaffney)
And there it is. Your faith based argument:
“Sure, Apple’s App store is doing okay now — BUT JUST YOU WAIT! Once Android has more market share than iOS, the tide will turn.
Okay, okay, Android has more market share than iOS and the developers haven’t flocked to the Google Play store…yet. BUT JUST YOU WAIT. Once Android has a super-majority, iOS is doomed.
Okay, okay, Android now has twice as many handsets in the wild as does iOS and the Apple App store just keeps growing stronger every day. BUT JUST YOU WAIT! Sooner or later the weight of Android’s market share ought to make a difference.
JUST. YOU. WAIT!”
The bedrock theory upon which the Church of Marketshare is founded, is that the platform with the most market share wins. And that theory is demonstrably wrong.
The great tragedy…the slaying of a beautiful hypothesis by an ugly fact. ~ T.H. Huxley
ABSOLUTE NUMBERS
Absolute numbers matter more than share (percentages).
As of June (2014 there were 886,580,000 iOS devices sold. 1 Billion sold will happen well before this year is out. Horace Dediu (@asymco)
One billion units is hardly niche.
Absolute numbers matter more than percentages – While it’s natural to talk about market size as a percentage, the absolute size is just as important. In the case of Apple, for example, the fact they “only” had 15.5% percent of the market in 2013 is less important for understanding the iPhone’s viability than is the fact they sold 153.4 million iPhones. That is more than enough to support the iOS ecosystem, percentages be damned. ~ Ben Thompson
OPEN
The collective development opportunities made possible by the fact that Android is Open Source will see to that. (What will) matter to the mobile application developer (is that) there are eight or ten Android handsets shipped for every iPhone. Addressable market will again trump elegance. ~ Brian Prentice, Gartner, 21 September 2009
That’s flat out wrong. Always has been. Always will be.
Developers don’t care about people who spend time on the platform. They care about people who spend on the platform. Platforms aren’t a democracy. It’s not one vote per person. It’s one vote per dollar, and each person is free to vote as often as they can afford to do so.
METCALF’S LAW
Perhaps you’re thinking of Metcalf’s law. Metcalf’s law says that the more people you have on a network, the more valuable that network becomes.
Android and iOS are platforms. Nowadays, the internet is the network. Don’t conflate the two. iOS can remain closed and still communicate with the rest of the world via the internet.
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
PREMIUM DEVELOPERS
There is a striking difference between the two companies though, Apple produces their own hardware and software, they collect all the money whereas Google licenses out the software and occasionally gets in on the manufacturing of a device. iOS is a closed system, Android is open-source and if history proves to be right time and time again then I’m sure that Android will end up winning the battle. ~ Ash Anderson, Motley Fool, 21 Dec 2012
Once Steve Jobs goes away, which is probably not far away, then 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 … If they continue to close it and let Android continue to creep up then it’s pretty difficult as I see it. ~ Patrick Lo, CEO, Netgear, 31 January 2011
That’s the theory of “Open”. These are the facts.
The Apple App Store has now paid out over 20 billion dollars to developers, half of that in the last 12 months.
The Apple App Store has paid out 10 billion dollars to developers in the past year. During that same time, Google has paid out 5 billion.
In other words, Apple has half the users that Android has but pays out twice as much to developers. That means that an Apple user is worth four times more than an Android user to developers or, conversely, that it takes four Android users to equal one Apple user.
A sobering thought: in order for Google to match Apple’s iOS revenue with Android, they would need 3.6 billion Android users. ~ Ari Najarian (@stickbyatlas) 6/27/14
Arguing that the Android market share is going to sink the iOS platform is like arguing that the Titanic is going to sink the iceberg.
PREMIUM CUSTOMERS
The difference in payout between iOS and Android is telling in a whole different way too. We used to think that Android engagement averages were much lower because there were so many more Android users. It was assumed that high-end Android users were worth as much to Android as high-end iOS users were worth to Apple. The numbers tell us that this is not so.
There are roughly the same number of high-end Android and iOS users. Yet the total payout over the past 12 months was 5 billion for Android and 10 billion for iOS. This means that Android engagement numbers are not lower because of all the low-end users. It means, instead, that high-end Android users act very differently than high-end iOS users.
Either the Apple App Store motivates the high-end user to spend more or the high-end user chooses the Android platform because they want to spend less. Neither bodes well for Android developers.
THE NEW PLATFORM PARADIGM
The Prophets of the Church Of Market Share have had it wrong all along. Market share does not draw developers to a platform. Dollars draw developers to a platform.
And the strength of a platform is not dependant upon the number of users. It is dependant upon the amount those users spend.
Premium
NICHE
Android now commands 80% of the smartphone O/S market and over 50% of the tablet O/S market. Apple, which pioneered the touch screen smartphones and tablets, finds itself increasingly becoming a niche premium player. ~ Sneha Shah, Seeking Alpha, 16 January 2014
Shah treats the role of the premium provider as though it were that of a vulgar street walker.
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
Why does Chandler think that choosing between being a premium provider and a low-cost provider is difficult? If you can make the choice, premium is the obvious choice to make.
In the fourth quarter of 2013, Apple sold 64% of all the premium smartphones in the U.S. That number will grow in the the fourth quarter of 2014. Yet pundits seem to treat the premium sector as a ghetto that must be avoided at all costs.
Presuming all decisions are based on price is the easiest way to mispredict the future. ~ Ben Thompson (@monkbent)
The pundits seem wholly incapable of understanding two simple facts. First, Apple WANTS to be the premium provider. They are targeting that market. Second, Apple will not pursue additional market share if it endangers their position as the sector’s premium provider.
This is such heresy to the priests of the Church of Market Share that they simply cannot grok it.
The hardest thing to explain is the glaringly evident which everybody had decided not to see. ~ Ayn Rand
Yet it is the norm everywhere in every market! There isn’t a good or service that doesn’t have a premium and a low-end sector and, as a general rule, the premium sector is the place to be.
Brand
Samsung makes some truly lovely high-end phones, but by selling a million, bazillion, gazillion mid-tier and low-end phones too, their brand has become diluted.
If I’ve told you once, I’ve told you a thousand times: Resist hyperbole. ~ William Safire
No one mentions of “Samsung” and “premium” in the same breath.
Middle
High end buys iPhones. Low end cares only about price. No middle. There.~ Ben Thompson (@monkbent)
Samsung sells high, mid, and low-end phones — which is exactly what the pundits have been urging Apple to do — and Samsung is paying dearly for it. Samsung is losing the high-end to Apple. They are losing the low-end to Xiaomi and others. They’re trapped in the wholly undifferentiated and wholly indefensible middle.
Two Ways To Grow
There were two ways for Apple to broaden its ecosystem – take a chunk of the mid-range or take another chunk of the high-end. ~ Benedict Evans (@BenedictEvans) 9/11/14
Clearly, Apple has chosen the latter. Unlike Samsung, Apple doesn’t WANT to corner the phone market. They want to corner the PREMIUM phone market.
If you want to catch trout, don’t fish in a herring barrel. ~ Ann Landers
And they’re doing it, too. The new iPhone is a direct assault on that part of the premium market still being controlled by Samsung.
(W)ith the iPhone 6 and iOS 8, Apple has done its best to close off all the reasons to buy high-end Android beyond simple personal preference. You can get a bigger screen, you can change the keyboard, you can put widgets on the notification panel (if you insist) and so on. Pretty much all the external reasons to choose Android are addressed – what remains is personal taste. ~ Benedict Evans
Apple Is Doomed Anyway
“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)
None of what I’ve said will deter the High Priests of The Church Of Market Share from continuing to predict Apple’s doom. If the facts disprove their theory in the here-and-now, they simply fall back upon irrefutable prophesies that will only occur in the here-in-after.
Faith is an oasis in the heart which will never be reached by the caravan of thinking. ~ Kahlil Gibran
Apple’s lack of market share will be their doom, they say. It is going to happen, they say. All we have to do is patiently wait for the day that is sure to come, they say.
CAPTION: Waiting and waiting and waiting and waiting and…
And what the hey, while we’re waiting, we can always have some fun by twisting every story into anti-Apple FUD:
Well, of course Samsung’s problems are bad news for Apple. All news is bad news for Apple…in accordance with the prophecy!
My only hope is that the pundits who told Apple to be more like Samsung, shorted Apple and invested heavily in Samsung. That would be some schadenfreude that I could really get behind.
The best way to convince a fool that he is wrong is to let him have his own way. ~ Josh Billings
Someone with ridiculous skills on a computer/phone/iPod/other electronical device and scares us mere earthlings. they have a habit of breaking these after stretching them beyond their ability for normal usage. they also sometimes know more about a product than the producer. ~ Urban Dictionary
There are many stereotypes surrounding Tech Geeks. Are these stereotypes fair? What is this, kindergarten? Who cares if they’re fair ((A person reveals his character by nothing so clearly as the joke he resents. ~ Georg C. Lichtenberg)).
A programmer’s wife tells him: “Go to the market and grab some apples. If they have eggs, grab a dozen.” The programmer returns with 13 apples.
A Tech Geek and his wife are out for a drive in the country. The wife says, “Oh, look! Those sheep have been shorn.” “Yes,” says the Tech Geek. “On this side.”
If a Tech Geek had named Kentucky Fried Chicken, it would have been called “Hot Dead Birds.” ((Via Jan Dawson (@jandawson))
A Tech Geek is someone who can’t sleep at night worrying that someone, somewhere is enjoying tech without having first truly understood how it works.
What Are Tech Geeks Good At?
Most of my articles focus on the fact Tech Geeks know a lot about things and little to nothing about human nature.
Every man loves what he is good at. ~ Thomas Shadwell
We often refuse to accept that we are not good observers of human nature because, ironically, it’s human nature not to do so. We’re not good at knowing what we’re not good at knowing.
Everybody is ignorant, only on different subjects. ~ Will Rogers
What Are Tech Geeks Not So Good At?
Even the most conceited and myopic Tech Geek will acknowledge that the vast majority of Tech Geeks — present company excepted, of course — knows zilch, zippo, zip, zero, null, nix, naught, nada, nothing about fashion.
Don’t be humble. You’re not that great. ~ Golda Meir
Tech Geeks struggle to understand normals, more less fashionistas ((fashionista |ˌfaSHəˈnēstə| noun informal
1 a designer of haute couture.
2 a devoted follower of fashion: sleek designs that press all the fashionistas’ buttons)), but apparently even though we know we know less-than-nothing about fashion, that does not stop us from thinking that we’re qualified to pontificate upon the subject. Sigh.
The worst kind of arrogance is arrogance from ignorance. ~ Jim Rohn
A Tech Geek Has Got To Know His Limitations
Dirty Harry once observed “A man’s gotta know his limitations.”
Tech Geeks have to know their limitations too. We’re not good at fashion. If fashion were water, we’d be out of our depth in a puddle.
Author’s Note: Image stolen from a Horace Dediu Tweet
I mean, honestly, are you going to tell me you understand that jacket? Just to put things in perspective, that jacket costs $695.00. You could buy one of those jackets or TWO Apple Watches. Go figure.
For most of us, fashion is — and forever will be — A riddle wrapped in a mystery inside an enigma. ((In the fall of 1939, following the Soviet occupation of East Poland, Winston Churchill told the British public in a radio broadcast, “I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma….))
Are Tech Geek’s Qualified To Judge The Apple Watch?
In a word: “No.”
It seems smart watches will have to be analyzed both by fashion and by function. ~ Ben Bajarin (@BenBajarin)
The worst thing about techies covering this Apple event is the lack of understanding of fashion. ~ Abdel Ibrahim (@abdophoto)
Pretty sure a very different set of reviewers is going to be necessary for the Apple Watch. ~ Ben Bajarin (@BenBajarin)
The Apple Watch is maybe the best example of how disconnected most techies are from what people want and love. ~ Abdel Ibrahim (@abdophoto)
The vast majority of us are not even close to being qualified to comment on fashion. But we comment anyhow.
It’s All Geek To Us
Apple Watch is the antithesis of what we’ve come to expect from Apple. Software looks absolutely amazing, hardware design is dated and ugly. ~ Zach Epstein (@zacharye)
I’m going to go out on a limb here and say the #AppleWatch looks silly. ~ Thomas Halleck (@tommylikey)
Where do you come off thinking that you can be the judge of what is and what is not fashionable?
QUESTION: You’re trapped in a room with a tiger, a rattlesnake and a tech geek who wants to give you his opinion on fashion. You have a gun and two bullets. What should you do?
ANSWER: Shoot the geek. Twice. To make sure.
Apple’s New Disruption
Fashion or Tech?
If Apple thinks they’re competing with Luxury watch makers and not technology companies they’ve already failed. ~ (Name redacted to protect the guilty)
It doesn’t have to be one or the other — fashion OR tech. Apple could be competing against “both.”
Steve (Jobs) always wanted to stay one step ahead. When the industry started to become very colorful and lickable, then he realized—and Jony and I realized—that we needed to take a different path. ~ Don Lindsay ((Excerpt From: Max Chafkin. “Design Crazy.” iBooks. https://itunes.apple.com/WebObjects/MZStore.woa/wa/viewBook?id=697961602))
CAPTION: People lined up to look at, not buy, Apple Watch in Paris’ fashion district
Disruption
The most interesting disruption comes from attacking an industry from what looks like an irrelevant angle. ~ Benedict Evans (@BenedictEvans)
One disrupts through finding problems that look irrelevant, or finding solutions that look irrelevant. ~ Benedict Evans (@BenedictEvans)
Apple is attacking the watch industry with tech. And Apple is attacking the tech industry with fashion.
What could be more irrelevant to the watch industry than tech? Watches are already as accurate as they are ever going to need to be. And what could be more irrelevant to the tech industry than fashion? Most tech insiders wouldn’t know what was and what wasn’t fashionable even if it was literally sitting on their faces.
It’s classic strategy. Concentrate your strengths against your opponent’s weaknesses.
The Competition
Can you picture any watch maker competing with Apple’s technological prowess? Can you picture any of Apple’s current tech competitors competing with Apple’s fashion sense?
Can you imagine something fashionable coming from Google, Amazon, Facebook, or Microsoft? They are tech companies. Nothing more. ~ Lou Miranda (@TheNewLou)
Apple has not just “stolen a march” on Google. If the Apple Watch is successful, Apple will have practically made their watches competitor-proof on the high-end. Fashion is just not in Google’s DNA. (To be fair, fashion is not in the DNA of any tech company and, until September 9th, no one thought that it should be.)
Exploit The Line Of Least Resistance
Sun Tzu advised one to “strike into vacuities,” — to move into undefended space, and to “attack objectives the enemy must rescue.”
Google and Facebook defend against disruption by jumping over the horizon to entirely new tech. Apple, by jumping to things that weren’t tech before. ~ Benedict Evans (@BenedictEvans)
Apple is not a tech company, and Apple Watch is not a tech product. ~ John Gruber
There is no way to know IF the Apple Watch will be a success because the final product is not yet available and we haven’t yet seen the public’s reaction to that product.
The public is the only critic whose opinion is worth anything at all. ~ Mark Twain
However, IF the Apple Watch is a success, I think it’s going to be very, very hard for competitors to mount an adequate response.
Summary
Tech Geeks are good at things, not people. And we’re especially not good at fashion. But like most people, the less we know about a subject, the stronger our opinion on that subject is.
There is going to be an unprecedented level of incomprehension and trolling around Apple Watch. ~ Benedict Evans (@BenedictEvans)
Remember the disdain that was poured upon the iPod, the iPhone and the iPad when they first appeared? That’s going to be nothing compared to the bile poured upon the Apple Watch. Apple thinks that fashion is the ultimate weapon in the tech wars. Tech Geeks think that fashion is a joke. We’ll have to wait and see who has the last laugh.
Apple pioneered the PC, the mouse-driven PC, the digital music player, the modern laptop, the smartphone, and the tablet. Steve Jobs directed the creation of each of these transformative products, collaborating with Steve Wozniak, Jon Rubinstein, Jony Ive, and others along the way. Apple is now entering Wearables without Steve Jobs at the helm – though Jony Ive’s fingerprints are all over the Apple Watch (literally. The Apple Watch is a fingerprint magnet). Along with several other Techpinions columnists and a few thousand journalists, Apple employees, and Apple guests, I attended the launch and got hands on with several Apple Watches.
A Strange Way To Launch a Product (for Apple)
Apple famously limits the number and type of products it works on. When it enters a new product category, like smartwatches or tablets, it explains what it thinks is wrong with the existing products and what role its device will fill. Apple also often curates use cases for a new product, and opens it up for apps and features later. The original iPod had fewer features than the competition; it took years before FM radio was added. The first iPhone was described as a phone, an iPod, and a web browser – the App Store did not come until a full year later. The context portion of Apple’s launch monologue typically explains why a minimalist approach makes sense. The limited functionality allows consumers to understand precisely what the problems the product is designed to solve – even consumers did not realize they had that problem before Apple pointed it out.
That is not how Apple CEO Tim Cook introduced the Apple Watch. Like Samsung or Google or Asus, Tim Cook simply said Apple is building a watch. He then went on to describe endless features – exceptionally accurate timekeeping, interactive watch faces, fitness tracking, notifications, Siri dictation, GPS directions, Apple Pay, hotel access, BMW integration, watch-to-watch communication, and more. Rather than take the less-is-more approach – with more-is-more over time — Apple jumped straight to the more-is-more stage. This part reminded me of the iPad launch. However, the iPad really was “just” a larger iPod touch – and it was fair to say that consumers understood the value proposition of iOS apps on a larger display. That isn’t the case for apps on watches.
Consumers need concrete reason to buy things, especially new things; Apple may try to rectify this closer to launch. Google has not explained to consumers why they need an Android Wear watch, and mainstream consumers are not buying them. Samsung has not explained why consumers should buy one of its Tizen watches, and they are not selling, either (Samsung stuffed the channel with the first generation Galaxy Gear, but many ended up being given away with purchase of a Samsung TV or smartphone). Note: the reason to buy an Apple Watch is crystal clear for early adopters – get the first Apple Watch! I’ll discuss that below.
In Apple’s conception, a smartwatch does not solve a limited set of problems, it is intended to be a computing platform that combines fashion and a unique user interface. While Apple is prioritizing timekeeping, watch-to-watch communication, and fitness, Apple does not really know which watch apps will appeal to consumers – the apps have not been written yet. The Apple Watch will not be available for at least a few months, and it was announced now to give developers time to write apps. (The fact that it stalls consumers from buying rival smartwatches is a really nice bonus.) This launch was as much an appeal to developers as it was a pitch to consumers.
So What is the Rationale Behind the Apple Watch?
Tim Cook didn’t explain why Apple said “yes” to the watch and “no” to all the other things Apple could have built instead. So I’ll provide three:
1. Apple SVP Design Jony Ive wanted to wear a watch that he and his staff designed. I’m completely serious. Apple is unlike any other consumer technology company in that its products do not always start as ideas from Engineering or Marketing, they often come from Design. Vendors competing with Apple tend to be organized differently, and their product focus and prioritization of attributes within those products reflect it.
2. Apple strongly believes in the power of new user interfaces to create new categories. Once the design staff decided to investigate watches as a potential product, they not only did research on horology, but on user interface design. The combination of touch, force touch (pressing down harder invokes secondary options), and using the crown for variable zooming is different from any of the existing smartwatches. Does it work? We’ll see. But Apple believes that this opens up new possibilities for small-scale app design.
3. Apple is capitulating to demand for larger phones, and that opens up the opportunity for limited computing experiences at times when pulling out a large device from your pocket or purse is unwieldy. For example, Apple Pay is built into the iPhone 6 and the Apple Watch, but it makes a lot more sense on your wrist. Fitness tracking is easier on your wrist. Looking up directions is better on a phone, but following directions on your wrist is fantastic. This is similar to the reason Apple gave for building a tablet, as there are times when a phone is too little and a laptop is overly fixed and complex.
Key Attributes of the Apple Watch
It is a fashion device first. It is expensive – there are three collections (with six watch band options), and they start at $349. The gold version could be priced in the stratosphere: it’s real gold. No other vendor has paid this much attention to the style of the case and especially the straps, which are simply design masterpieces. There are two sizes – small and large 38 mm and 42 mm, and even the larger model is smaller than most competing smartwatches. No other smartwatch even offers a smaller, more female-friendly option. On the wrist, the Apple Watch looks much smaller than it appears in photos. Apple has also put a tremendous amount of effort into making the watch faces beautiful. Some are interactive. No smartwatch competitor has anything like this.
It’s a computing device second. The user interface combines touches, swipes, “force touch” (pressing harder), a side button, and a side scroll wheel/home button. Creating text is simplified with watch-generated short responses or with dictation (I was not able to get a live demo of this, but if it works well, it will significantly enhance usability.) No one thing is central to the Apple Watch – the concept of apps is the central conceit. This is similar to the iPhone (after the App Store was launched) and the iPad. Timekeeping is not central to the Apple Watch any more than phone calls are central to the iPhone. The Apple watch offers fitness tracking, navigation, notifications, NFC for Apple Pay, and much more. Two users with Apple Watches can send each other drawings and a haptic simulation of their heartbeat.
It is a phone companion (for now) requiring an iPhone 5 or better. The Watch does have its own processor and storage, so it can be used untethered for fitness tracking, music, and some apps. However, GPS, messaging, and anything requiring cellular connectivity will not work when out of Bluetooth range from an iPhone. Battery life is clearly an issue, as the screen turns off when you don’t have your wrist raised, and you’re expected to charge it every night using a magnetic cable. The magnetic connection is elegant, and an improvement on most competitors, though it is another unique cable to pack (and lose) while traveling.
Finally, the Apple Watch indicates the company is moving away from the “i” branding that started with the iMac and became a phenomenon with the iPod. It seems that Apple views the “i” mark as old fashioned and limiting, preferring the Apple mark itself for Apple Pay and Apple Watch.
Assessing Apple Watch Potential
Short term, Apple did not provide mainstream consumers a reason to buy the Apple Watch, but it certainly provided plenty of incentive for Apple early adopters: this is a gorgeous timepiece with a new user interface and endless utility. The pool of tech early adopters has increased significantly over the years; Pebble has sold over a quarter million watches. Apple early adopters are a far (far) larger group than that, and Apple should expect to sell millions of first generation Apple Watches.
Long term, two assumptions must be made. First, that Apple’s user interface works well, and second, that app developers show the value of having computing capabilities on your wrist. Given Apple’s track record with user interfaces and its relationship with developers, both of these conditions are probable. If both are proven true, the Apple Watch will have broad appeal to the installed base of iPhone users. This is a finite pool, though it is large, and some consumers may potentially buy more than one Apple Watch. Apple may make the Apple Watch less dependent on an iPhone in a future version, opening up adoption to consumers who use Android (or Windows) phones.
The biggest driver for mainstream adoption in the second and third generations is likely to be a lower entry price point. However, higher end models – potentially extremely high end – will remain in the line for as long as consumers buy them or they lend the line cachet. Apple could also expand its styles, adding a round design and creating special editions. Apple could also expand the connectivity contained in the watch; while it is unlikely that a watch would replace smartphones for most people, it is certainly conceivable that, sometime in the future, Apple might design a watch that could.
This column was adapted from a Current Analysis report. The full report includes key competitive comparisons and recommendations for Apple, Google, Samsung, Pebble, and MetaWatch.
Let’s start with the bad news: The Apple Watch. This beautiful, technological marvel is, in my view, the device our future selves point back to as delineating when Apple changed forever.
Not necessarily for the good.
The company long known for delivering absolutely amazing computing devices, so perfect, so uncannily universal that often times, one device, one product line, one price point is sufficient, is no more. The new Apple Watch starts out with three distinct variations and what appears to be a near-infinite number of eye-catching bands.
This feels wrong.
Tim Cook said the Apple Watch is the company’s most “personal device yet.” Maybe so. At present, my take is thus: The Apple Watch is a pricey talisman, one certain to accelerate the top-line yet with only marginal tangible benefit to Apple’s existing customers.
Have we crossed a line?
The Strange Changes
Yes, change is necessary, often good. I realize this is Tim Cook’s Apple, not Steve Jobs’ Apple. That’s both obvious and expected. What I find so troubling is that I no longer know if this is my Apple. Having defended Apple for years against the silly, baseless charge that “Apple is a marketing company,” I woke up last week to discover that, as John Gruber flatly stated, “Apple is not a tech company.”
I am at a loss to adequately explain why anyone would pay $349 for this device. Indeed, $349 just gets you in the door. Yes, many analysts made similar declarations about the iPhone and the iPad. Fair enough. The Apple Watch may prove transformative. Still, Apple was able to fully, succinctly proclaim exactly how we could and would all benefit from those earlier products. This is much less so with Apple Watch:
It’s the most personal product we’ve ever made, because it’s the first one designed to be worn.
Yes, but what does it do? And why should I buy one?
A device you wear is vastly different from one you keep on a desk or carry in your pocket. It’s more than a tool. It’s a very personal expression.
Yes, but what does it do?
Apple Watch combines a series of remarkable feats of engineering into a singular, entirely new experience. One that blurs the boundaries between the physical object and the software that powers it.
I do not understand.
Apple Watch also presents time in a more meaningful, personal context by sending you notifications and alerts relevant to your life and schedule.
Such as?
Apple Watch is right there on your wrist, so it makes all the ways you’re used to communicating more convenient.
Tell me one!
Don’t Want To Be A Richer Man
Most of the world could never afford Apple products, be they Macs or iDevices. This was, frankly, because the costs of quality, usability, integration and reliability necessitated those high prices. True, Apple margins on iPods, iPhones, iPads and some Macs are sizable. Prices can be lower, in theory. The bargain between Apple and customer, however, is we accept these large margins knowing that year after year after year Apple products will get better, without fail, until a completely new magical device takes flight. That’s money well spent.
Will this be so with Apple Watch?
I think not.
Based purely on the company’s marketing messages, the various Apple Watch(es) appear priced primarily for reasons almost fully extraneous to its technology or functionality. I find this disconcerting, to say the least.
For most users, Apple offers the very best smartphone, tablet, MP3 player and laptop available anywhere. The Apple Watch changes this equation in no way. Still, I can’t help but wonder if my relationship with Apple will change now that this “non-tech” company so proudly offers what we assume will be, per Gruber, gold bands on deluxe watches that retail for an astounding $10,000 or more.
I don’t even go into those stores.
Time May Change Me
Throughout its history, Apple has gifted us with numerous incredible devices. Recall the iMac, the iPod (classic) or the very first iPhone. We never envisioned such a device, then quickly wondered how we ever lived without it. It was as if someone from the future left this marvel behind, perhaps accidentally, perhaps as a test. But always, magic, always liberating.
The Apple Watch feels the opposite of this. Lock-in is not liberating. With Watch, Apple has created a mobile computing device with a small screen which requires another mobile computing device with a small screen, the iPhone, before it can function properly.
I can’t help but think how much better it would be — for us, the users — had Apple taken all that Watch work, all those Watch resources, and made the iPhone, iPad and Mac even better, more magical. This applies to the iPhone, in particular. The fact is, I believe Apple and iPhone are on the cusp of remaking everything and I selfishly do not want Apple to blow this opportunity by getting sidetracked with a watch.
And now the good news.
Change Their Worlds
In his long interview with Charlie Rose last week, Tim Cook stated it’s important to think about long term, big picture ideas. One of these, he said, is what comes after the Internet?
I suspect Apple is not merely thinking about what comes after the Internet, but actually working toward this. What is it? My prediction: The entire Internet done right. That is, a secure, family friendly, screen-optimized web paid for by all of us — with our money not our privacy.
Google should be very concerned.
With iTunes, apps, Apple Pay, Apple TV, iCloud, continuity, inter-app communication — now available across all screen sizes and devices — we can finally have our “web” the way we’ve always wanted, the way we’ve always deserved, before we foolishly allowed it down that horrible path back in the 1990s, funded by pornography, data tracking, unceasing ads and content “aggregation” that bordered on theft.
Apple has developed the tools to make these bad bits all go away. We get what we want, reliably, securely, privately, by paying for it, not by having bits of us taken, not by having our eyes and ears assaulted with unwanted garbage.
This will change everything. It cannot come soon enough.
Oh, and the company is not just remaking the digital web and e-commerce. Apple is helping to re-configure offline retail, making it better, faster, more personal. Consider its currently available toolkit:
Apple Pay (money and credit)
Touch ID (security)
iPad (cash register)
iBeacon and Passbook (for deals and rewards)
AirDrop (peer-to-peer sharing of money and benefits)
No one else has anything like this.
Perhaps I’ve been unfair to the not-yet-released Apple Watch. But, companies can’t do everything. The iPhone is literally helping us to change the world. It is re-making commerce, the web, play, learning, work. I don’t want to lose this opportunity.
I fear the Apple Watch has captured Tim Cook’s focus and consumed the best of the company’s design, hardware and software skills. If so, while Watch may be great for Apple I believe it is detrimental for the rest of us.
People really love to hate Apple. It should be considered a disorder at this point. ~ J. Gobert (@MrGobert)
The Apple Watch may or may not fail, but the analysis of the Watch has already failed. People just cannot wait to pronounce judgment. They. Can. Not. Wait. There’s plenty of thoughtful analysis out there, but mostly we’re hearing the same old discredited theories dredged up and reanimated like some horrible army of undead zombies.
About one-fifth of the people are against everything all the time. ~ Robert F. Kennedy
There is something within human nature that immediately has a knee-jerk negative reaction to the new. If we’re not familiar with it; if we cannot understand it, we condemn it. Instead of saying: “I know little or nothing about this, so I’ll learn more and suspend judgement until I do” we instead say: “I know nothing about this…so it must suck.”
People’s reaction to ideas: Bad ideas: “That’ll never work” Good ideas: “That could work” Great ideas: “That’ll never work”
Not only are we terrible at assessing the new, but we seem compelled to share our uninformed opinions with EVERYBODY.
He who knows little quickly tells it. ~ Italian Proverb
Some say it’s wrong to mock those who make obviously stupid statements. There’s no sport in it.
Making fun of Apple’s critics is like hunting dairy cows with a high powered rifle and scope. ~ NOT P. J. O’Rourke
Others focus on more humanitarian arguments:
Do we really need insults at all? Aren’t insults just the precinct of the desperate or powerless, or simply of people too dim-witted to make cogent and logical arguments? Isn’t the whole phenomenon of insults…a sign of the general coarsening of culture? Such concerns are shared by many people, all of them half-witted, imbecilic cretins. ~ Insults Every Man Should Know
Look. These pundits said what they said. If they don’t like it, they can try to explain it away.
The surest way to make a monkey of a man is to quote him. ~ Robert Benchley
But don’t expect me to cut them any breaks. If they didn’t want to come off looking stupid, they shouldn’t have said stupid things.
I don’t suffer fools, and I like to see fools suffer.~ Florence King
Intelligent debate is welcome and there are many questions surrounding Apple’s newly announced Apple Watch. But patently dumb allegations should not be debated — they should be mocked. So here are a couple (hundred) of my most unfavorite quotes, in all their glory, arranged sorta, kinda alphabetically by topic. Let the mocking begin.
Author’s Note: Some of the quoted material contains (R rated) curse words. I decided to use verbatim quotes in order to accurately convey their original tone and meaning.
From all the rumors and leaks, it now appears that Apple is going to unveil the mythical iWatch at its much-hyped product launch event on Sept. 9. While nothing has been definitely confirmed … I still wouldn’t buy it.
It’s always best to make summary judgments on things you know nothing about. That’s just logic.
Sameer Singh suggests a different approach.
Never dismiss a new product outright. Attempt to understand why it’s needed. Draw conclusions later. ~ Sameer Singh (@sameer_singh17)
Nah, that’s never going to happen. From the Claim Chowder archives:
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
Fools never learn.
Fools rush in where angels fear to tread. ~ Alexander Pope
Against logic there is no armor like ignorance. ~ Dr. Laurence J. Peter
People will always jump to conclusions and judge things that they don’t understand. You have to ignore all of the ignorant people out there. ~ Steve Jobs
Anecdotal
Showed my mom a tablet. She instantly got it and bought one. Same with Apple TV. If I showed her this watch…nope. ~ J. Gobert (@MrGobert)
Me: Hi mom, I’m back in town. How are you? Mom: I’m watching the Apple event. Me: Finally! Mom: Again! When can I order a watch? Me: !!! ~ Rene Ritchie (@reneritchie)
You’ve got your anecdotes and I’ve got mine. The important thing to remember is that anecdotal evidences is the BEGINNING of inquiry, never the end. Isolated stories can point us toward the truth, but they are not WHOLE truth. In fact, when taken in isolation, anecdotes are more likely to mislead than to lead.
Men are apt to mistake the strength of their feeling for the strength of their argument. ~ Anonymous
It’s bad to bring in a verdict before all the evidence is in. It’s even worse to bring in a verdict before the trial has even begun.
Battery Life
Apple hasn’t solved the basic smartwatch dilemma, which is that smart watches use up far more energy than dumb watches, and that there’s nowhere to store that much energy in something the size of a watch. Indeed, Apple has made the problem worse, by combining a powerful computer with a very bright, ultra-high-resolution, full-color display. Either of those things would require a lot of energy; both together require a very thick watch and a limited battery life. ~ Felix Salmon
My first knee-jerk reaction to the Apple Event was similar to the above. Apple didn’t announce battery life and I took that as a bad sign. Then I reconsidered. The product doesn’t even exist yet. Apple literally COULD NOT have announced the final battery life figures because they don’t know what they are. So I decided to cool my jets and wait until the numbers are announced. There will be more than plenty of time to criticize the battery life figures once we know what they are. Why start now?
Imaginary obstacles are insurmountable. Real ones aren’t. ~ Barbara Sher
And while we’re waiting for those battery life numbers to appear, let’s chow down on some delicious battery life claim chowder from yesteryear. Yum!
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
We hate the very idea that our own ideas may be mistaken, so we cling dogmatically to our conjectures. ~ Karl Popper
Charging Cable
Ugh, not another charging cable! ~ Joanna Stern (@JoannaStern)
(T)he user will have to take off the device for 1/3 of his life as well as carry an extra cable around with him. ~ Radio Free Mobile
Oh NO! We won’t have our device available to us for a full one-third of our life!
Admittedly, we’ll be asleep during that time, and dead to the world…
But still! One third of our life! And! And! And! And we’ll have to carry an extra cable! Oh, the horror! Oh, the HUMANITY!
Sheesh. I swear, if Apple made a time machine, we’d all be complaining about it having a proprietary power cable. Sigh.
People thought it was scandalous that the iPhone needed to be charged nightly. Not a deal breaker if worth it. ~ Ben Thompson (@monkbent)
Buck up, people. We may not be the Greatest Generation, but I think we can tough it out and suffer through yet another charging cable.
Make it your habit not to be critical about small things. ~ Edward Everett Hale
They that are serious in ridiculous things will be ridiculous in serious affairs. ~ Cato the Elder
Coldplay
A watch playing Coldplay is a bug, not a feature. ~ John Collison (@collision)
Okay, I’ll concede that one.
Dangerous
Wearing a radio directly on the body spooks many people who rationally or irrationally fear the health risks of close electromagnetic radiation. ~ Forrester CEO, George Colony
Oh, for the love of G….
Look, what are you trying to say here? That I’d be more fearful of having all of those “irrationally-perceived-as-dangerous” radio waves at the end of my wrist rather than in my pants pocket right next to my jumbly-wumblies?
Are you freaking kidding me?
Never miss a good chance to shut up. ~ Cowboy wisdom
Everybody
AppleWatch may have a heart rate monitor but so does every serious athlete already. ~ Eric Perlberg (@eric_perlberg)
We never seem to get this right. It’s not the eggs that make the soufflé, it’s the Chef. Saying “every one already has” a feature is like saying that “every restaurant already has” eggs, therefore, every restaurant is of equal quality. Apple is the Master Chef of ecosystems. Others are more akin to the Dirty Spoon.
Expensive
(A)t $349 [Apple Watch] is significantly more expensive than its better looking competitors (Moto360 $249, LG G Watch R $230). ~ Radio Free Mobile
It’s expensive — and not covered by carrier subsidies. It’s $600 for the whole package of a subsidized $200 iPhone and the $400 Watch. ~ Forrester CEO, George Colony
Apple clearly believes that the Apple Watch’s advances in size, speed, function and elegance are worth the $150 price premium, but not everyone feels that way. In an informal poll at the Macworld.com Web site, 40 percent of Mac fans indicated that they would not be buying an Apple Watch, and every single one cited the price.
Oh wait! Did I say “Apple Watch”? That last paragraph was actually a 2001 quote from Macworld concerning the original iPod, not the Apple Watch. Note how the nature of the products change, but the nature of the criticism remains exactly the same.
Presuming all decisions are based on price is the easiest way to mispredict the future. ~ Ben Thompson (@monkbent)
Every time Apple brings out a product, critics cite price as its fatal flaw, even when such criticism makes little or no sense.
“iPads are too expensive which is why most of the buyers are new to iPad” Wait, what? ~ Ben Thompson (@monkbent) 7/24/14
Many of Apple’s critics have never understood the difference between price and value. As we move toward wearable computers, the disconnect is only going to grow greater.
The more personal the computer the more value we will place upon it. ~ Horace Dediu (@asymco)
The most expensive Apple Watch will cost more than the most expensive iPhone which will cost more than most PCs. ~ Horace Dediu (@asymco)
And now that Apple is going high fashion? Look out. Most of us are going to lose our grip on pricing entirely.
(There’s going to be a) nerd meltdown when we all learn what “fashion” items cost. ~ Cabel Sasser (@cabel)
When the prices of the steel and (especially) gold Apple Watches are announced, I expect the tech press to have the biggest collective shit-fit in the history of Apple-versus-the-standard-tech-industry shit-fits. ~ John Gruber
Normally, as the price of an item goes down, demand goes up. However, as Ben Thompson likes to point out, with Veblen goods (named after economist Thorstein Veblen, who popularized understanding of the effect) as the price of the product goes up, the demand rises too. This is because the “job” a Veblen good is “hired to do” is not utility alone — it’s added prestige. Veblen goods are counterintuitive and full of surprises for the unwary.
Asia is by far the biggest market for Swiss watch exports accounting for 55 percent July shipments.” ~ CNBC
What folks don’t understand about Asian luxury market in particular is people buy BECAUSE it’s expensive. ~ Ben Thompson (@monkbent)
If you don’t have a background in engineering, you shouldn’t be commenting on how to construct the space station. And if you don’t have a background in economics, you shouldn’t be commenting on pricing, either.
The Prophets of the Church of Marketshare never understood Apple’s premium business model to begin with, even though there is a premium provider for almost every good and service known to man. Woman too. And now that Apple is moving toward fashion pricing, the explosive growth in the number of tech bloggers who will think they are qualified to comment on economic theory is simply going to boggle the mind.
Tech bears the same relationship to fashion as a multiple-choice test does to an essay exam.
Fad
I have no doubts [Apple Watch] will sell. If I had money to blow I’d buy one out of curiosity. But that’s not a product. It’s a fad. ~ J. Gobert (@MrGobert)
The iPhone was a fad too.
The iPhone is 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 Fool, 6 Mar 2012
Data Processing was a fad too.
I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won’t last out the year. ~ editor of business books, Prentice Hall publishers, 1957
Movies were a fad too.
Movies are a fad. Audiences really want to see live actors on a stage. ~ Charlie Chaplin
Be awfully careful before you summarily label — and then dismiss — something as a “fad”. It’s lazy and, even worse, misleading analysis.
Who is there who can make muddy waters clear? But if allowed to remain still, it will gradually clear itself. ~ Lao-tsu
Gimmicks
(A)t today’s Cupertino, California, event, we — the press, the world at large — were treated to a beautifully designed smartwatch (e.g., those interchangeable straps) laden with an embarrassing slew of useless gimmicks. … Cheap tricks that consumers will tire of after a few weeks. ~ Joseph Volpe
Heres an idea Apple – rather than enter the world of gimmicks and toys, why don’t you spend a little more time sorting out your pathetically expensive line up? Or are you really aiming to become a glorified consumer gimmicks firm?
Oops! So sorry. That last quote was taken from the forums at Macrumors and refers to the introduction of the original iPod in 2001, not the Apple Watch in 2014. My bad.
Hubris is one of the great renewable resources. ~ P. J. O’Rourke
The line between gimmicks and genius is thin, as both Jan Dawson and Benedict Evans remind us:
This stuff Apple is demoing now is classic Apple. Thin line between Samsung’s gimmicks and Apple’s delighters, but fairly clear here. ~ Jan Dawson (@jandawson)
There’s an interesting line between products everyone thinks are crap and products everyone thinks are stupid. The latter change the world. ~ Benedict Evans (@BenedictEvans)
Since the line between gimmick and genius is so thin — and since the consequences of getting it wrong are so great — we should think long and hard before we summarily dismiss something as a mere gimmick. Gimmicks, like art forgeries, abound and they need to be identified and discarded. But let’s not allow our analytical brushes to paint too quickly or with too broad a stroke, lest we conceal the subtle masterpiece.
Some things have to be believed to be seen. ~ Ralph Hodgson
I Don’t Get It
I don’t get it. … Apple did not save wearables, as many thought it would. … Apple unveiled something, at best, lukewarm. At most, it’s prettier than the smartwatches that’ve come before, and that’s likely its greatest innovation. ~ Joseph Volpe, Endgadget
I don’t see it. Exquisite but no values behind it (except for design values). ~ Sean Egan (@Sean_Egn)
Here’s an idea. If you don’t understand something — REMAIN SILENT.
Better to remain silent and be thought a fool than to speak out and remove all doubt. ~ Abraham Lincoln
Good advice, seldom taken.
Worth remembering: the industry thought the iPod was stupid when it first came out. Even as recently as the iPad, people missed the point. ~ Jared Cocken (@engers)
We’ll see. It’s worth remembering that the iPod, iPhone and iPad, in turn, were greeted with initial skepticism. Apple Watch seeks to be the next in that lineage, routing the skeptics and delivering a massive payoff for Apple. ~ Steve Lohr, The New York Times
It’s okay not to get something. But it’s not at all okay for us to take that one step further and assume that because we don’t get it, it can’t be got. It’s like we’re blind, so we assume that everyone else must be blind too. It just ain’t so. If we don’t “get something”, that’s a sure sign that we should be shutting our mouths and opening our minds.
Half of being smart is knowing what you’re dumb at. ~ Solomon Short quotes
I Don’t Wear A Watch
The Apple Watch seems lovely. The problem is I don’t wear a watch, and 75% our office does not wear one either. ~ ariel seidman (@aseidman)
Most people don’t wear watches anymore. ~ J. Gobert (@MrGobert)
There’s a famous quote attributed to Pauline Kael, the movie critic, which is usually paraphrased as “How did Nixon win? I don’t know anyone who voted for him….”
The point was, Nixon had just won the US presidential election — in a landslide — and yet Pauline Kael lived in a world where almost no-one had voted for him.
I fear that the people who spend all day thinking and writing about technology often suffer from the same myopia about the behavior and mentality of the vast majority of everyday users of technology. We are nothing like them in many respects…. ~ Jan Dawson
When I was growing up, everybody wore a watch. Everybody. It’s only been a decade or so since some people stopped wearing watches and they did so because they were carrying mobile phones that also told time. In other words, the behavior of not wearing a watch 1) is recent; 2) is of relatively short duration; and 3) was caused by a shift in technology.
To suggest that no one will buy a wearable because you don’t wear a watch and no one you know wears a watch is the height of myopia — you’re living in a self-centric world where no one voted for Nixon.
The difficulty lies not so much in developing new ideas as in escaping from old ones. ~ John Maynard Keynes
Think about it. Did you carry a phone in your pocket prior to 2007? If you did, you were in the 1%. Now half the U.S. (and growing) carries their phone with them everywhere. Why the change in behavior? Change in technology.
Did you take pictures at public events using a ginormous tablet? Of course not. Who would do that? Well, turns out, lots and lots of people. (And it’s usually the ones seated just in front of you.) Why the change in behavior? Change in technology.
Stop saying you don’t wear a watch. You don’t wear a watch…yet. Tech changes. Behavior changes. Tech changes behavior. If wearing watches went out of style because of changes in technology, then wearing a watch can come back in style because of changes in technology too.
Wisdom consists of the anticipation of consequences. ~ Norman Cousins
Our inability to even contemplate — more less fathom — the possibility that tomorrow may be different from today reminds me of this joke:
One caterpillar to another, as they watch a butterfly: “You’ll never get me up in one of those things.”
I Only Need The Time
The things I miss most about wearing a watch would be fulfilled by wearing a watch and I can do that for $50. ~ The LeeBase (@TheLeeBase)
We used to only need to make phone calls too. And we could do that for $50. Then the iPhone came out in 2007. And now, we need more.
Our vision is more obstructed by what we think we know than by our lack of knowledge. ~ Kristen Stendahl
There is nothing more reactionary than the general public. For most of us, our vision of the near future is actually our recollection of the recent past.
A leader is one who sees more than others see, who sees farther than others see, and who sees before others see. ~ Leroy Eims
Here’s the thing, Trip. It takes years to make an “overnight” success. The folks at Apple haven’t been sitting around on their barcaloungers sipping champagne and eating chocolate bonbons. They didn’t wake up on Monday, September 8th, and say: “Hey, everybody. Let’s innovate!” Then — bada bing, bada boom — out popped the Apple Watch just in time for the September 9th Event.
Hey! Wait just a darn tooting minute. Aren’t you the same Trip Chowdhry who said this:
[Apple has] only have 60 days left to either come up with something or they will disappear. ~ Trip Chowdhry (March 2014)
March, April, May….
Hmm. Maybe I should change the title of this article from “Claim Chowder” to “Claim Chowdhry”.
Never put both feet in your mouth at the same time, because then you won’t have a leg to stand on.
Left-Handed
I guess left-handed folk are supposed to switch wrists. ~ Patrick Igoe (@PatrickIgoe) [9/9/14, 2:07 PM]
I guess some left-handed people have the patience of a gnat.
For you lefties: The Apple Watch crown works OK when the watch is on your right hand. But there’s a southpaw mode which flips the UI around. ~ Harry McCracken (@harrymccracken) [9/9/14, 5:17 PM]
Apple Watch can be inverted for left handers. Hurrah. ~ Matt Warman (@mattwarman) [9/9/14, 6:26 PM]
For you lefties: …there’s a southpaw mode which flips the UI around. ~ Peter Hilleren (@Peter000) [9/9/14, 6:38 PM]
Left-handers: You can just turn Apple Watch upside down (and swap straps around) and it’ll just work. ~ John Gruber (@gruber) [9/9/14, 9:49 PM]
I have more sources, if that’s not enough.
A handful of patience is worth more than a bushel of brains. ~ Dutch proverb
Seriously. Can’t people just ask a question and then wait an hour or two for the answer before they start whining? I mean, honestly. Is it really asking so much?
It is a general rule that when the grain of truth cannot be found, men will swallow great helpings of falsehood. ~ Isaac Bashevis Singer
Look And Feel
It is square and fat. 85% of wristwatches sold in the market are round and in pure looks, I think the Moto 360 and the LG G Watch R are much better. ~ Radio Free Mobile
The form factor has fixed limits — the small screen obviates advertising, electronics fatten the case, big fingers obscure the screen when touching. For many, the form will be seen as simply ugly. ~ Forrester CEO, George Colony
Apple Watch ‘too feminine and looks like it was designed by a student in their first trimester’ (Boss of Tag Heuer, Zenith and Hublot says Apple has made “some fundamental mistakes” with its smart watch) – The Telegraph
It’s not a revolution and it’s not what any of us really expected. It’s lipstick on a smartwatch. It’s an accessory and nothing more. ~ Joseph Volpe, Engadget
All this coming from critics who have never seen nor touched nor worn nor experienced the Apple Watch.
Baffled by strong opinions on the Apple watch hardware from people who’ve not held one. I have held one and am still undecided. ~ Benedict Evans (@BenedictEvans)
With smartwatches, even more than phones, even more than tablets, even more than PCs, any verdict requires actual use in the real world. ~ Harry McCracken (@harrymccracken)
Go back and re-read the above quote by Harry McCracken. Wearables simply cannot be understood until we’ve worn them. And nobody outside of Apple has worn them. Yet.
What you don’t see with your eyes, don’t witness with your mouth. ~ Jewish proverb
Ridicule is the tribute paid to the genius by the mediocrities. ~ Oscar Wilde
Name
The Apple Watch names are strange. Apple Watch, Apple Watch Sport, Apple Watch Edition. Weird that two have third names, and Edition is odd. ~ Farhad Manjoo (@fmanjoo)
I like analyzing product names too, but truth be told, if the product is lousy, the name simply doesn’t matter. And if the product is great, the name simply doesn’t matter either.
Remember how critics mocked the name “iPad”? How’d that turn out?
Talk of product names reminds me of this classic Saturday Night Live skit.
Hmm. Perhaps Apple should name their next product: “Mangled Baby Ducks.”
The $350 watch market is niche at best. ~ J. Gobert (@MrGobert)
Gee. When have I heard this lament before? Oh yeah. Whenever Apple introduces a new product category. The $350 iPod will be niche, the $600 iPhone will be niche, the $500 iPad will be niche, etcetera, etcetera, etcetera. Some Claim Chowder from the archives:
The iconic Apple iPhone will either not exist or occupy a very small niche satisfying the needs of committed Mac fans around five years from now. ~ Eugene Kaspersky, Kaspersky Lab, 27 April 2010
iPad
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
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
Niche, huh? Let’s see how those niche products panned out:
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
Quick Apple Q3 numbers for those who like that sort of thing: $37.4 billion; 7.7b profit; 35.2m iPhones; 13.3m iPads; 4.4m Macs; 2.9m iPods. ~ Macworld (@macworld)
Apple’s iPhone sales alone were larger than the revenues at 474 of the companies in the S&P 500 stock index.
Most CEO’s would cut off their right arms to have “niche” products like those.
To be positive is to be mistaken at the top of one’s voice. ~ Ambrose Bierce
Pocket, Purse, Or Wrist?
Apple failed. They did not make the case to compel me to pay $350+ to reduce the pain of pulling my iPhone out of my pocket. ~ The LeeBase (@TheLeeBase)
For many, two devices on the body are unnecessary. Pulling the iPhone out of a pocket or purse is fine — most will not need another device to access payments or track health. ~ Forrester CEO, George Colony
Ya’ know, human beings are kinda funny (in an odd sort of way). I guess it’s human nature to ignore human nature. Go figure.
The fundamental principle of human action—the law that is to political economy what the law of gravitation is to physics—is that men seek to gratify their desires with the least exertion. ~ Henry George
Do want to call that kind of behavior lazy? Okay, we’re lazy. But mostly, we’re human.
I’ve always felt extremely lazy when I explain my main reason for wanting an Apple Watch. It would eliminate the need for me to reach all the way into my pocket to retrieve my iPhone when it buzzed. I stand by my brazen laziness. And I very much appreciate that the Apple Watch will analyze incoming email to create its own “quick choice” reply. Very smart. ~ Ken Segall
Benedict Evans poses some important questions regarding the tablet and the smartphone, respectively:
How much was it worth not to have to open your laptop? ~ Benedict Evans (@BenedictEvans)
I use my phone even though my tablet is in my bag or my laptop on the table. How much does a watch cannibalise in the same way? ~ Benedict Evans (@BenedictEvans)
We know that a large proportion of smartphone use is done in the home, where a laptop or tablet is within easy reach. Shouldn’t that be telling us something? Persistence matters. Convenience matters. Laziness matters. Human nature matters.
And besides, what else — or should I say who else — are we ignoring here?
For half the population, your phone is not always in your pocket. ~ Benedict Evans (@BenedictEvans)
Oh yeah. The female of the species. Remember them? The one’s who do most of the shopping for (literally) mankind? The ones who wear most of the jewelry? The ones who make up the majority of people living on this planet? The ones who often put their phones in their purses instead of in their pockets?
We should be very, very careful not to substitute our judgment for the judgment of others. Just because we don’t like something; just we’re not enthusiastic about something; does not mean that others will feel the same way. That’s just common sense. Unfortunately, there is nothing so uncommon as common sense.
Replace
I see a world where the watch will eventually replace the phone. ~ AAPL Orchard
The long-term success of the iTime (or whatever it gets called) will be similar. If it can’t replace the iPhone completely it’s a goner. ~ John Dvorak
My stance on the smartwatch as a viable mobile accessory is unambiguous; I’ve argued my case before. As a category, it needs to replace — needs to completely replace our need for a cellphone. ~ Joseph Volpe, Engadget
That’s great and all, except that it’s completely wrong.
“A smartwatch doesn’t replace my smartphone.” “A tablet doesn’t replace my personal computer.” “A motorcycle doesn’t replace my car.” ~ AAPL Tree (@AAPLTree)
A device should not try to be something it’s not. It should be true to itself. Why would we want a smart watch that replaces our smartphones? We already have smartphones that work great. What we want — or what we should want — is for smart watches to do what they do best. No one is quite sure what that is yet, but you can be darned sure that squashing a smartphone down to the size of a watch is not going to work any better than squashing a Personal Computer down to the size of a tablet worked.
Replace the phone with the watch? You’ve got it all wrong. And don’t blame Apple just because your vision is faulty.
The worst kind of arrogance is arrogance from ignorance. ~ Jim Rohn
Yeah, about that. I’m not a big believer in surveys about products that don’t exist. You shouldn’t be either.
iPad:
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. ~ Mike Lazaridis, Co-CEO, Research In Motion, Inc, 16 April 2010
iPhone:
Days before the iPhone debuted, the market research company Universal McCann came out with a blockbuster report proving that practically nobody in the United States would buy the iPhone. “The simple truth,” said Tom Smith, the author of the iPhone-damning report, is that “convergence [an all-in-one device] is a compromise driven by financial limitations, not aspiration. In the markets where multiple devices are affordable, the vast majority would prefer that to one device fits all.” Solid survey research suggested not only that the iPhone would fail, but also that it would fail particularly hard in the United States because our phones and cameras are good enough, already. ~ Derek Thompson, The Atlantic
Today there are lots and lots of people saying they have no interest in an Apple Watch or in the smart watch category altogether. They are telling the truth. They really can’t imagine owning a smart watch. However, their beliefs do not reflect the limits of the smart watch category. Their beliefs reflect the limits of their imagination.
You can’t ask people to decide on a trade-off when they have experience of one side but not the other. ~ Benedict Evans (@BenedictEvans)
Tethered
It requires an iPhone to function making it very clear that this is an accessory rather than a new product category in its own right. ~ Radio Free Mobile
Toni Sacconaghi, Bernstein: While the device is aesthetically attractive, and has a very innovative UI (“digital crown” and differentiated touch), we struggle with the fact that the majority of the Watch’s functionality is dependent on the presence of an iPhone.
This shit better have some major non-tethered functionality. ~ Jason Hirschhorn (@JasonHirschhorn)
Remember when the iPod, the iPhone, the iPad were all tethered to the Mac? No? Neither does anyone else.
Memory may be a terrible librarian, but it’s a great editor. ~ Ralph Keyes
The iPod, the iPhone, the iPad and now the Apple Watch are or were tethered to another device. They offload or offloaded tasks which they could not handle or which they were ill-suited to perform to the better suited device. Tethering is not a fatal flaw. In fact, it can be a chief advantages. Take, for example, the iPod:
One of the biggest insights we have was that we decided not to try to manage your music library on the iPod, but to manage it in iTunes. Other companies tried to do everything on the device itself and made it so complicated that it was useless. ~ Steve Jobs
Unnecessary, Unneeded, Underwhelmed
The very first new post-Steve Jobs product, Apple Watch, is stunningly pretty, is functional — and is utterly unnecessary. ~ Brian S Hall (@brianshall)
Did not expect to be so underwhelmed by implementation. It’s basically Android Wear 2.0, which isn’t saying much. ~ J. Gobert (@MrGobert)
I think Apple Watch will be a flop. ~ The Tech Guy, Episode 1118
Great just what the world needs.
I was so hoping for something more.
The reason why everyone’s disappointed is because we had our hopes up for this incredible device.
Why oh why would they do this?! It’s so wrong! It’s so stupid!
Oh wait! Those last four quotes weren’t about the Apple Watch at all. They were taken from the forums at Macrumors and were referring to the launch of the original iPod.
The more things change, the more they are the same. ~ Alphonse Karr ((The original saying & original author.))
New Apple product X is announced. Pundits & analysts say X will fail. X breaks all previous sales records. Step. Rinse. Repeat. ~ Nick Bilton (@nickbilton)
Three years from now, the same people making fun of this thing today will complain that Apple hasn’t innovated since the Watch. ~ Mitchell Cohen (@mitchchn)
CONCLUSION
Professional critics of new things sound smart, but the logical conclusion of their thinking is a poorer world. ~ Benedict Evans
Always listen to experts. They’ll tell you what can’t be done and why. Then do it. ~ Robert A. Heinlein
I have not exhausted all of my material, nor have I exhausted all of the stupidity…but I have exhausted myself. Enough. No more Claim Chowder.
It’s possible to fight intolerance, stupidity and fanaticism when they come separately. When you get all three together it’s probably wiser to get out, if only to preserve your sanity. ~ P. D. James
I want to make something perfectly clear. I am not advocating for or against the Apple Watch. That will be addressed in a future article. What I am advocating for is clear thinking.
The creators of Apple Claim Chowder used to be arrogant and obnoxious but ever since the introduction of the Apple Watch just the opposite has been true. Now they’re obnoxious and arrogant. After all, the vast majority of the Claim Chowder cited here, and in my previous 7-part series ((Apple Claim Chowder Series:
Conversation would be much improved by the frequent use of three words: I don’t know. ~ André Maurois
The wise man doesn’t give the right answers, he poses the right questions. ~ Claude Levi-Strauss
Never be afraid to sit awhile and think. ~ Lorraine Hansberry
Next
Next time, I’ll look at the design of the Apple Watch and try to pose some of the right questions. Come join me then.
Post Script
If you want to take the chance of having me ridicule you in one of my future articles, be sure to join me on Twitter @johnkirk. I’m looking forward to mocking your acquaintance.
After spending more time digesting the Apple Watch announcement and talking to dozens of journalists, doing several radio shows, reading many articles, and doing two podcasts, I have some updated thoughts.
If you have read many of my posts on smartwatches, namely this one and this one, you will know it has been a category where the value proposition has not been clear. I’ve been very specific that notifications alone, or at least in their current form, are not entirely useful for your wrist. The value can not and is not in notifications alone. That is the primary value Android Wear has implemented and as myself and many others who have tried every version point out, it is unclear if there is any real value there. So what have we learned from the little bit of information we have on the Apple Watch? Does this product extend the value proposition in any meaningful way? At a high level, Apple brings several assets to the category.
User Interface
As Tim Cook said, in a recent interview with Charlie Rose:
Apple’s goal is to be the best, not necessarily the first, but the best.
This is achieved by their user experience prowess. Apple takes things, related to computing in this case, and simplifies them from the current complex state they are in. If I was to articulate why an average consumer would not like any of the smartwatches I have tried, the word complex would be front and center. For this category to take off, Apple’s user interface and user experience design chops will need to be front and center.
Philosophy
Apple has stated their screen philosophy as “the right screen for the right moment.” This is their argument for not merging iOS with OS X the way Microsoft has with Windows 8. So the interesting question with the Apple Watch becomes, what is the right moment the watch is the right screen for?
Even though I am critical of smartwatches, there are pockets of time where I have found them valuable. All of those instances when I have found value have been when my smartphone is not near me or I’m not in a place where I can use it. For example, when I am at home, I often take my smartphone out of my pocket and leave it on a table near my entry way. With the Android watches, I only get value from the watch when it is in proximity (appox. 15 ft) to my phone. So if I go outside or upstairs or into the kitchen, all my smartwatch is is a watch. Apple’s approach with Wifi will allow the watch to remain smart even when it is not in proximity to my smartphone. The same is true in the car. Personally, I’ve found wrist notifications quite useful during my long commutes. Exercising, bike riding, even walking down the street in the city between meetings, become interesting use cases where arguably a better device than our smartphone could exist to add value to our digital lives.
The right screen for the right moment philosophy is, I think, a key way to think about the role the Apple Watch will play in Apple’s ecosystem. Both for us watching Apple and for Apple itself.
The Evolution of Communication
If we think about it, mobile phones have played a role in the evolution of our communication. Arguably, nothing has had as large an impact on communication as SMS. Hands down, the longest conversations I have with people are when we are face to face. Audibly talking on the phone would come second, but in the digital world, our conversations are shorter and more compact. With SMS, short responses are the norm. Even though a conversation can be engaging or drawn out, it is simply done with shorter messages. Part of me wonders if we are on the cusp of yet another form of mass communication evolution.
Benedict Evans and I discussed this briefly on the Mobile Focused Tech.pinions Podcast, and we mentioned an upcoming iOS app called Popkey. Popkey, in a similar style to Line stickers, is enabling new ways to communicate but through a more visual nature than text. For example, a friend of mine named Ben Thompson who is the author of Stratechery, turned me onto Line. It is one of the seven messaging apps I use, but I only use it to talk to certain people and he is one of them. Our conversation will go along and then I’ll say something like “I’ll email you the details.” He will then follow up with this Line sticker.
This sticker is his way of saying “Ok” or “sounds good” and it is always this same sticker. It has a style and a personalization unique to him. But these stickers are somewhat static. You can create your own but how many people do that? Perhaps Apple’s doodle type method on the screen will enable similar yet even more creative ways for us to interact as a part of this communication evolution.
All of that being said, there are still questions I have that will not be answered even after the Apple Watch is released. For example, what is the replacement cycle? Is there a replacement cycle? Benedict Evans had a great tweet the other day that said, “watches replace their owners.” Meaning, a great watch outlives its current owner and is handed down or re-used by someone else. Is this a product category Apple is future proofing like a watch or is it more like a typical electronics product? Is this an annual release cycle of a product or longer? If you spend $2,000 on a watch will you be angry if it is outdated in a year when the new one comes out? I have a long list of other questions to dive into for another analysis but I’ll leave it at this for now. Smartwatches are officially a category thanks to Apple and good or bad, I have a feeling there will be some bumps in the road.
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.
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.
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.
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
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.
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:
–
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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:
The Why Of The Watch
Steve Jobs On Category Creation
Category Mistakes We Makes
Knee Jerk Objections
Lessons Unlearned
Watch Use Cases
Watch User Interface
First Generation Issues
Fashion Issues
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.
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
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:
Apple will offer universal content search and a single log-in across apps for its Apple TV
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.
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.
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.
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.
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
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
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
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
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
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.
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
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.
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
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 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
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
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
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.
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
Wasn’t Apple supposed to have disappeared by now without the iWatch? ~ Brad Reed (@bwreedbgr) 8/20/14
—
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
CAPTION: Tim Cook and Apple crying all the way to the bank.
As we lead up to this years “main event,” I wanted to share some initial points underscoring my read that there is unprecedented demand for Apple’s iPhone this holiday quarter and beyond.
Major Upgrade Cycle: This has been the source of many analysts’ upside, but I think it may even be larger than many realize. From data points I have from the US, China, and even parts of Europe, it appears there is an unusually large number of legacy devices (smartphones more than two years old) still in use in the world. This includes devices like the iPhone 4, and Galaxy SIII. Our own research revealed the average life cycle of an iPhone in the US is 2.8 years. That number is even higher when only multi-person families are included. Apple’s quality curse is they build such good devices they can and do remain in use for longer than the traditional 24 months.
Gaining Share with the Phablet: One of the more compelling theories for the existence of the 5.5 inch iPhone is it could steal customers away from Samsung who were previously fans of the Galaxy Note line, on the simple premise of screen size alone being the most premium smartphone on the market.
Emerging Market Growth: Perhaps one of the most interesting things Apple can do is use previous years’ models, as they typically do, but be even more aggressive at their price points and target them in emerging regions. Keeping the 5s, for example, at a 5c price would go over very well in China for the middle tier market. Keeping the 4s and pricing it even lower could do extremely well in markets like India and other parts of South East Asia.
All of this gives me the sense this could be more than just a typical growth holiday quarter for Apple but that they blow past most consensus estimates for the holiday quarter with ability to meet the demand their only limiter. While my job does not depend on making estimate predictions for shipments, I would not be surprised, assuming they can make sufficient quantities, that Apple sell mid-60’s of iPhones in the holiday quarter.
The other thing that will be interesting to watch is what happens with Samsung’s sales. Last quarter, Samsung shipped 78m smartphones and they stuffed the channel prematurely to mask some of their challenges. I think it is extremely possible, given the sense I get on both Apple and Samsung trend lines, that Apple and Samsung sales in the holiday quarter could be closer than people think.
As some recent comScore data suggests, iOS and Android are neck in neck as far as users go in the US. I have a sense Apple takes the majority share in the US by end of the year.
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.
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”:
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.
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.
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Convergence
Further, look at the two photos, below, showing the multiple tasks that we can now accomplish with the aid of a single device.
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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.
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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.”
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
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
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
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
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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
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
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
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
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.
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
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
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
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
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
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
Thought exercise: Try to picture the above scene with the participants using pre-2007 phones. Pre-2010 tablets. Netbooks. A Surface Pro 3.
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)
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)):
What is the job the product is being hired to do; and
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
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
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
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
As a dog returneth to his vomit, so a fool returneth to his folly. ~ Proverbs 26:11
Fans
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
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
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
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
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
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.
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
But 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
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
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
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 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
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
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.
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
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
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
(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
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
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.
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!”
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.
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:
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
Apple 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:
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:
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 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.
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
…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
$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
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
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
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
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
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 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
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
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
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
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
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
Recently, after spending a lot of time with many of Microsoft’s OEM partners and looking at their overall strategic view of the PC and tablet markets of the future, it has become clear to me there really is a huge difference between how Microsoft and their partners view the computing market compared to the way Apple designs and markets their Macs and tablets to these same users. This divide in strategy is very pronounced.
In a sense Microsoft approaches the market from the top down, while Apple goes after the market from the bottom up.
Microsoft centralizes their strategy around their belief that everyone needs tools for a wide range of productivity tasks, regardless of who they are. Microsoft and their partners, including Intel, are designing all of their products around this focus. Of course, productivity is Microsoft’s sweet spot and a strong push to create products with an eye on productivity first makes sense. This is why they keep pushing the 2 in 1 concept. Is it a tablet or is it a laptop? As far as they are concerned, it doesn’t matter to the customer. The tagline for 2 in 1’s is “It is a PC when you need it and a tablet when you want one”. They believe that, in this product, they can push the customer to cover all of their bases and hope in the process these 2 in 1’s revive the lagging PC market and get it back on track. The problem is, since the focus of these designs really emphasize the productivity aspect of the experience, 2 in 1’s turn out to be OK laptops and, in many cases, mediocre tablets.
On the other hand, Apple approaches the market from the bottom up. When Steve Jobs introduced the iPad in 2010, he put a huge emphasis on the fact it was a “consumption” device first. In fact, he downplayed any possible productivity features although he did hedge his bet by creating a version of Pages, Numbers and Keynote apps for those who “might” want them. But when Apple created ads for the iPad they were all focused on consumption. Only in the last 18 months have they even added the focus on the iPad as a serious “creation” tool. Notice the distinct difference even in terminology. For Microsoft, the term “productivity” is key to their marketing while Apple uses “creativity” instead. Microsoft shows ads of people mostly working while Apple shows ads of people doing cool things with their iPhones and iPads. Microsoft’s ads invoke work while Apple’s ads show you how to use their products to create and play.
In a good article on TUAW written by Yoni Heisler entitled “Microsoft still doesn’t get why the iPhone succeeded,” Heisler says:
As Microsoft continues its push to remain relevant in the mobile space, it still doesn’t appreciate the factors that allowed Apple to enter a market it had no previous experience in, and turn that market on its head with the iPhone. Arguably blinded by the profits brought in by its Windows monopoly and its suite of productivity software, Microsoft still doesn’t seem to fully comprehend how the iPhone was able to push established players like RIM to the brink of irrelevancy in just a few years.
As an illustration, here is Nadella’s response to a question from Joshua Topolsky regarding Microsoft’s strategy to sell more devices to consumers.
You’re defining the market as “It’s already done, Apple and Google have won, because they won the consumer side.” And I’m going to question that. I’m going to say “No, any thinking consumer should consider Microsoft because guess what, you’re not just a consumer. You’re also going to go to work, you’re also going to be productive and we can do a better job for you in there.” And that’s what I want to appeal to.
And therein lies the problem. Consumers primarily buy mobile devices that make their lives easier and more fun, work be damned. Microsoft Office wasn’t available on the iPhone until June of 2013. An iPad version wasn’t released until four months ago! And guess what, hundreds of millions of consumers bought iPhones and iPads anyhow.
Heisler captures the essence of the difference between Microsoft and Apple well. Microsoft is all about productivity while Apple wants to give people a break from work and let technology do cool things for their customers. While this may seem like semantics, it actually drives a very different mental picture to consumers about how they view their devices. As Apple has proven, this approach is highly successful and brings into real question whether Microsoft’s productivity push will help them get customers outside of the enterprise to buy their products in the future.
In fact, Apple drives a solid line between productivity and content creation vs creativity and content consumption. Tim Cook and team are adamant that, when it comes to productivity, they believe that Macs are at the center of this activity. They have created innovative laptops, especially the MacBook Air and these products continue to defy the downward market trend in PCs and every quarter Apple sells at least 4 million Macs worldwide. They then focus iPads and iPhones on the more fun activities one can use technology for and again, have sold massive amounts of these products to very satisfied customers.
Of course, there is an actual dichotomy in the ultimate use of iPads in many people’s lives. Although Apple designs their iPads as pure tablets, people and companies have found their own ways to use them for actual work and productivity. But ironically, it was never at the center of Steve Jobs’ design and its role as a productivity tool has come mostly from third party products like external keyboards and companies and individuals creating apps and tools that allow them to adapt iPads and even iPhones for work when needed.
Satya Natella’s heavy focus on productivity is an interesting one and using 2 in 1’s to bridge the gap between a laptop and tablet will be driving their strategy forward. With the goal of creating a single OS that runs on laptops, tablets and smartphones, Microsoft is at least creating an OS environment less confusing than in the past. However, Apple has shown there is success in making great laptops, tablets and smartphones each with different goals in mind. However, if Microsoft continues down this heavy productivity road I suspect they will be challenged in their quest to gain any serious ground against Apple and even Google, who at the moment have the lion’s share of the mobile market. Apple with the Mac and Google with the Chromebooks are seriously eating into the Windows market share and have changed the dynamics of the personal computing marketplace forever.
Most of my articles focus on the fact Tech Geeks know a lot about things and little to nothing about human nature.
Even the most conceited and myopic Tech Geek will acknowledge that the vast majority of Tech Geeks — present company excepted, of course — knows zilch, zippo, zip, zero, null, nix, naught, nada, nothing about fashion.
Intelligent debate is welcome and there are many questions surrounding Apple’s newly announced Apple Watch. But patently dumb allegations should not be debated — they should be mocked. So here are a couple (hundred) of my most unfavorite quotes, in all their glory, arranged sorta, kinda alphabetically by topic. Let the mocking begin.
Did you take pictures at public events using a ginormous tablet? Of course not. Who would do that? Well, turns out, lots and lots of people. (And it’s usually the ones seated just in front of you.) Why the change in behavior? Change in technology.
But when it comes right down to it, the BlackBerry Storm will be the superior mobile device and represents a true iPhone killer. ~ 
Microsoft workers celebrated the release to manufacturing of Windows Phone 7 last week by parading through their Redmond campus with iPhone and BlackBerry hearses. ~ 
Apple 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
$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. ~ 
