Who Won The Smartphone Wars: Google Or Apple?

Last week, an Oracle lawyer said in court that Google had made $31 billion in revenue and $22 billion in profit from Android, according to Bloomberg. ~ Miguel Helft

(T)he comparisons between Google’s Android business and Apple’s iOS business that are starting to surface (Apple generated $32.2 billion in iPhone sales in the most recent quarter), well, they don’t mean much either. Apple sells mostly hardware. Google sells mostly ads. Those are fundamentally different businesses. Both companies are very successful at what they do. ~ Miguel Helft

I could not disagree more.

Congratulations On Making Money

I want to congratulate Google on making any money at all on Android, let alone ~$22 billion in profits. As they used to say: A billion here and a billion there and pretty soon you’re taking real money. ((Senator Everett Dirkson))

Congratulations On The Pivot

Google doesn’t get enough credit for the amazing pivot they made with Android. Google purchased Android in 2006 with the intention of competing against Blackberry and Microsoft. When they saw the iPhone in 2007, they went back to the drawing board and by 2008, they were ready to introduce a revamped Android operating system that could compete head-to-head with the iPhone and its iOS operating system. It was an amazing achievement.

Compare that to Microsoft, which moved much, much more slowly and didn’t introduce a competing smartphone operating system until 2009. By then it was too late. The iPhone took the high end of the market, Android took the low end and there was just no room for Microsoft’s entrant to grow and prosper.

There is an immeasurable distance between late and too late. ~ Og Mandino

Congratulations On Achieving Your Primary Strategic Objective

Any money that Google makes form Android is a bonus because money was never Android’s primary objective anyway.

Android’s immediate objective was to keep Microsoft from dominating mobile the way Microsoft had dominated the desktop. Android’s long-term objective was to prevent Google from being locked out by platform owners. In the latter case, Apple’s app ecosystem proved to be surprisingly troublesome. However, in the short run, Android was an unconditional success. Not only was Microsoft prevented from dominating the nascent mobile marketplace, the entire foundation of Microsoft’s personal computing business model was undermined.

The highest realization of warfare is to attack the enemy’s plans. ~ Sun Tzu

Before Android, there were two viable business models in personal computing: licensing an operating system for profit and device sales. After Google began to give Android away for free, Microsoft’s licensing business model was unsustainable.

Congratulations On Not Losing

Google has made an estimated $22 billion in profits over the lifetime of Android.

The iPhone, on the other hand, has generated more revenue in the past three months than Android has in its entire existence. Further, it’s been estimated that the iPhone has made around $500 billion over its lifetime.

That’s what winning looks like.

Apple sells mostly hardware. Google sells mostly ads. Those are fundamentally different businesses. ~ Miguel Helft

First, as Benedict Evans, Horace Dediu and others are fond of saying, unfair comparisons are often relevant comparisons. The goal of business isn’t to be fair, it’s to win.

If you’re in a fair fight, you didn’t plan it properly. ~ Nick Lappos ((The Military Quotation Book by James Charlton))

Second, what the heck makes Miguel Helft think that you can’t compare Apple and Google just because they have two different business models? Almost every business, in almost every market sector, has a different business model. That’s how they compete.

Was it unfair to compare Microsoft’s very successful software licensing business model to Apple’s mostly unsuccessful integrated hardware and software business model in the 1980’s, 1990’s and 2000’s?

Hell no!

(T)racking precisely how well Apple and Google’s mobile platforms are going has ceased to be very interesting. They both won, and both got most of what they wanted, more or less, and at this stage iPhone or Android phone sales announcements are really just victory laps. ~ Benedict Evans

Well, yes and no. It’s certainly true that Google didn’t lose the Mobile wars (as opposed, say, to Motorola, Microsoft, Palm, Sony, Rim, etc.) And $22 billion in profit moves Android firmly into the winner’s column. But Android was primarily a defensive play. Google’s objective was to not lose. That’s why making $22 billion in profit is so sweet. But $22 billion doesn’t compare to the $500 billion the iPhone made. Apple was the clear winner here…and it’s not even close.

Cloning The PC Wars

With its disruptive and leveraged strategy, it is Google that is attempting to be the Microsoft of the smartphone market. Perhaps ironically, Apple is well positioned to be the “Apple” of the smartphone market. ~ Bill Gurley, AboveTheCrowd.com, 5 January 2010

The pundits had it half-right, which meant they had it all wrong. They opined that Google was the new Microsoft and Apple was the new Apple. Google was the new Microsoft alright, but Android was not the new Windows. And Apple was the new Apple, but the iPhone is not the new Macintosh, it’s the new Windows.

How can I make such an outrageous claim? The proof, as they say, is in the pudding.

Google pays billions to Apple to make its search engine the default search provider for iOS devices, the company collects much more from ads placed on Apple devices than from ads on Android devices. A recent analysis by Goldman Sachs estimated that Google collected about $11.8 billion on mobile search ads in 2014, with about 75 percent coming from ads on iPhones and iPads. ~ Farhad Manjoo

The iPhone is the new Windows because everyone — Google and Microsoft included — has to develop for it. Google needs Apple’s mobile platform. And Microsoft needs Apple’s mobile platform. But Apple doesn’t need Google or Microsoft’s platforms. The smartphone wars are over. Apple won. Microsoft lost. Android placed.


It may sound like I’m denigrating what Google’s Android has accomplished. Nothing could be further from the truth.

Android absolutely and overwhelming achieved its strategic objective. It gutted Microsoft’s business model and provided Google with access to the then burgeoning mobile marketplace.

But, let’s keep things in perspective. Just because Google won with Android, doesn’t mean it won nearly as much as Apple did with the iPhone. Android kept Google from being locked out of mobile. With the introduction of the iPhone, Apple went from being just another fortune 500 company to one of the largest, most successful companies in the free world. If that ain’t winning, what is?

Apple Analysts Are Crying Wolf (Again)

There’s a whining at the threshold,
There’s a scratching at the floor,
To work! To work! In Heaven’s name!
The wolf is at the door!

~ All Apple Analysts Everywhere ((No, seriously, it was written by Charlotte Perkins Gilman, In This Our World [1893]))

In “The Shepherd’s Boy”, Aesop provided us with a wonderful fable about a boy who repeatedly cried wolf because he wanted to draw attention to himself. The moral of the story was that an alarmist might be believed once, perhaps twice, but then they would never be trusted again.

Wow, was Aesop ever wrong. If you’re an Apple analyst, you can cry wolf time and time again and each and every time, Wall Street investors will react like a flock of frightened sheep.

iPhone Sales May Be Slowing

It was the best of times, it was the worst of times. Apple just had its best year ever so, by employing some sort of perverse logic, many Apple analysts have concluded it is only logical to assume Apple must now have its worst year ever.

Wait, what?

But hold on to your hat, there’s more logic where that came from! Not only is Apple going to have a bad quarter — which inevitably means they’re going to have a bad year —  but…wait for it… it also means Apple is — dun, dun, dun — doomed!

No, seriously, an Apple analyst is literally predicting Apple is doomed.

The iPhone slowdown spells doom for Apple. ~ Jeff Reeves, MarketWatch, January 9, 2016

With all due respect, it’s pretty obvious Jeff Reeves doesn’t know how to spell.

Nature, not content with denying him the ability to think, has endowed him with the ability to write. ~ A. E. Housman

And what is triggering this coming Apple apocalypse? Why a single quarter of flat or decreasing iPhone sales, that’s what.

And what are all these gloom and doom predictions of lowered iPhone sales predicated upon?

“Channel checks.”


Year after year after year, channel checks have proven to be an unreliable way to gauge future sales of Apple products. But year after year after year, the cry of “channel checks” — like the cry of wolf — fills the hearts of Apple investors with dread.

I’ve been following tech for 15 years and am still startled how a random, flakey estimate can become accepted Truth in 24 hours.” ~ Benedict Evans on Twitter

Déjà Vu All Over Again ((Attributed to Yogi Berra.))

It’s not like this is anything new. People have been predicting doom for the iPhone since its inception.


The market is already saturated with popular [phones] that are virtually free to consumers. … The old iPod magic doesn’t translate (to) the iPhone. ~ Ashok Kumar, Capital Group, 30 July 2007


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

Tears, perhaps. But Apple cried all the way to the bank ((I cried all the way to the bank. ~ Liberace)) . Lindberg was right when he predicted Apple wouldn’t be able to sustain 25 per cent margins. It was more like 40 per cent.

No Growth

When the iPhone came out, it was so far beyond what was out there on the market, pretty much up until now, but with what’s coming out from competitors, that advantage is going away. For the first time, Apple’s going to be faced with a serious growth challenge. ~ Edward Zabitsky, ACI Research, 22 Apr 2009

Everything Has To Decline

If you look at any institution in history – look at the Roman Empire – anything in history, and what it looks like when it’s peaking. Look at Apple, and how can you say it’s not peaking? (H)ow much better can it really get? The thing is, it may take another year or two before it starts to decline, but it has to – everything does. ~ Trip Hawkins, Founder and CEO of Digital Chocolate, 3 Aug 2011


The last quarter slowdown could be foreshadowing bigger issue to come for iPhone sales and mark a peak in the growth rate of the iPhone. ~ Charlie Zhou, Seeking Alpha, 31 August 2012

Last Hurrah

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


Apple just reported that it sold more than 5 million iPhones over the iPhone 5′s opening weekend. This is a very disappointing number. It’s below top Apple analyst Gene Munster’s estimate of 6 million to 10 million. Worse, it indicates that growth may be slowing at Apple. Apple sold the iPhone 5 in nine countries over its opening weekend. It sold the iPhone 4S in seven. It actually sold fewer iPhones per country this year than the last. That’s not just deceleration, that’s shrinkage. ~ Nicholas Carlson, Business Insider, 24 Sep 2012

Winding Down

One thing Apple investors are waking up to, in other words, is that the iPhone’s amazing run is winding down. ~ Jay Yarow, Business Insider, 18 December 2012

Slowing Down

There’s no way around it: The iPhone business as currently constructed is slowing down significantly. ~ Jay Yarow, Business Insider, 23 April 2013

All-Time High

Apple’s struggles with the iPhone 5 appeared just shortly after the phone’s launch. That event coincided almost perfectly with Apple’s all-time high. Although the iPhone 5 has sold well (it’s the world’s single best selling phone), it failed to live up to the expectations of optimistic Wall Street analysts. ~ Salvatore “Sam” Mattera, The Motley Fool, 9 July 2013

Sales Growth Slowing

Looking at the yearly trajectory, one can see how the rate of iPhone sales growth is slowing down.” ~ Sam Gustin, Time , 28 October 2013

Slower Growth

Apple could be negatively impacted by slower growth in iPhone sales. In my opinion, the company cannot grow indefinitely in the smartphone market area and one day, it will materialize in its share price. ~ Gillian Mauyen, Seeking Alpha, 15 November 2013

Wow. Apple analysts cry wolf, wolf, wolf, wolf, wolf, wolf, wolf, wolf, wolf, wolf, wolf, wolf — with nary a wolf in sight. Yet now they expect us to take them seriously?

It is a mark of prudence never to trust wholly in those things which have once deceived us. ~ Descartes


Let’s face it, predicting the future is not Wall Street’s forte.

Economist Alfred Cowles dug through forecasts of popular analysts who “had gained a reputation for successful forecasting” made in The Wall Street Journal in the early 1900s. Among 90 predictions made over a 30-year period, exactly 45 were right and 45 were wrong. This is more common than you think. ~ Motley Fool

Wall Street indexes predicted nine out of the last five recessions. ~ Paul A. Samuelson

The phrase “double-dip recession” was mentioned 10.8 million times in 2010 and 2011, according to Google. It never came. There were virtually no mentions of “financial collapse” in 2006 and 2007. It did come. A similar story can be told virtually every year. ~ The MoneyGeek Unplugged

Investment bank Dresdner Kleinwort looked at analysts’ predictions of interest rates, and compared that with what interest rates actually did in hindsight. It found an almost perfect lag. “Analysts are terribly good at telling us what has just happened but of little use in telling us what is going to happen in the future,” the bank wrote. It’s common to confuse the rearview mirror for the windshield. ~ The Motley Fool


Stocks have reached what looks like a permanently high plateau. ~ Irving Fisher, Professor of Economics, Yale University, October 17, 1929

To be fair, just because the pundits have been wrong in the past, doesn’t mean they will be wrong this time around. I honestly don’t know how many iPhones Apple sold this past quarter. But here’s the thing: The pundits don’t know either.

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

Much Ado About Nothing

Everyone acknowledges iPhone sales were unexpectedly high this time last year. That creates what analysts call a “tough compare”. In other words, Apple is being punished this year for doing so well last year.

If Apple doesn’t beat last year’s iPhone sales, it doesn’t portend an inexorable downward sales spiral. Apple is the world’s biggest company, as measured by market value, with around $525 billion market cap ((Market cap is a constantly changing number. Jay Yarrow listed it at $565 billion in his article but as of January 20, 2016 it is around $525 billion)). It has $206 billion cash on hand. It had $13.5 billion in cash flow last quarter. It is expected to do $77 billion in sales this quarter. (Via Jay Yarrow, Apple is going to have a tough year – Business Insider.) Apple remains — despite all the current kerfuffle — the most profitable company in the S&P 500.

A bad year for Apple would be a great year for almost any other company. So is Apple doomed? Not so much.

Cause And Effect

We’ve got to disabuse ourselves of this notion that short-term stock fluctuations accurately reflect the long-term health of a company.

(Wall Street) focuses on the waves and not of the currents. ~ Consuelo Mack

The breaking of a wave cannot explain the whole sea. ~ Vladimir Nabokov

Wall Street likes to focus on the short-term.

If you heat your company by burning the furniture, Wall Street will adore you and write glowing articles about you but you’ll be cold soon. ~ Farooq Butt (@fmbutt)

but a good company must focus on the long term instead.

If you’re long-term oriented, customer interests and shareholder interests are aligned. ~ Jeff Bezos

Wall Street has cause and effect reversed. You can’t tell how good or bad a company will do by looking at its stock. But you can tell how good or bad its stock will do by looking at the company. Believing the direction of AAPL stock determines the direction of Apple is like believing a weathervane controls the direction of the wind.

Buy Low, Sell High

I thought the goal was to buy low and sell high. If so, this might be a good time to buy Apple stock rather than to sell it.

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

But what do I know about stocks? Not very much. But that Warren Buffett guy, he seems to know a thing or two.

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

Apple owns the high end in smartwatches, smartphones, tablets, notebooks and desktops. Seems to me, that’s a pretty good place to be.

Total Apple device shipments (iOS, WatchOS, TV, Mac) 2015 about 330.5 million. ~ Horace Dediu (@asymco) 1/14/16

The End (Or Is This Never Ending?)

Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market. ~ Warren Buffett

If you can’t tolerate fear-mongering, then you shouldn’t be in the stock market to begin with. Invest in something safer and more stable — like Syrian real estate.

“Apple is screwed” – 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015 [2016, 2017…. ~ Sammy the Walrus IV ((Sammy the Walrus is Neil Cybart’s nom de plume)) (@SammyWalrusIV)

It seems as though this has become an annual ((Semiannual? Quarterly? Daily?)) ritual. The naysayers keep crying “Wolf” and I keep responding “Bull”.

It’s always been easier to explain how Apple will fail than it is to explain how the company will succeed. ~ Neil Cybart on Twitter

If the cries of Apple’s doomsayers unnerve you, then get the hell out of Apple stock, because the FUD ((Fear, Uncertainty and Doubt)) is never going to end. Analysts are going to keep on crying “Wolf” and scared investors are going to keep on acting like sheep. Do yourself and Apple a favor. Get the flock out. Apple doesn’t want you as an investor anyway.

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


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

Post Script — Just For Fun

A MAN STOMPS INTO A BAR, obviously angry.

He growls at the bartender, ‘Gimme a beer,’ takes a slug and shouts, ‘All financial advisers are arseholes!’

A bloke at the other end of the bar retorts, ‘Take that back!’

The angry man snarls, ‘Why? Are you a financial advisor?’

The bloke replies, ‘No, I’m an arsehole.’

(Just in case you’ve never read my bio, I was once a lawyer, but I didn’t feel that I was hated enough, so I became a financial advisor just in time for the collapse of the technology bubble in the year 2000.)

Platforms — Past, Present and Future

Last week, Benedict Evens re-linked to an article written in May of 2013, entitled “Apple, Open And Learning From History“. (All quotes, below, are taken from this article unless otherwise attributed.)

It’s still a good read and it got me thinking about platforms — past, present and future.

Let’s start by taking a leisurely stroll down memory lane.


In the 1990s, the PC market was mostly a corporate market (roughly 75% of volume). Corporate buyers wanted a commodity. They were buying 500 or 5000 boxes, they wanted them all the same and they wanted to be able to order 500 or 5000 more roughly the same next year. They wanted to compare 4 vendors on price with the same spec sheet. They didn’t care what they looked like (and they were going under a desk anyway) and they didn’t care how easy it was for non-technical people to set them up because the users would never touch the configuration. Nor did they care much about the user interface, because most of the users were only going to be running 1 or 2 apps anyway.

Meanwhile with no internet, home buyers were mainly interested in a PC that ran the same software they used at work (and all of the games were for PC). ~ Benedict Evans

As an aside, many have suggested that it was the internet, far more than Steve Jobs, that revived the fortunes of the Macintosh, and I think there’s a lot to be said for that proposition. The internet grew to become an independent, unmonopolizable ((Not an actual word.)) platform laid atop the then existing personal computer platforms. The Macintosh — and later iOS and Android — could all access the internet just as much, and just as well, as Windows could.

(Buyers) may have known Macs were supposed to be easier, but Apple had no shops of its own and what TV advertising it could afford didn’t show off the user interface (it’s hard to demo an desktop computer’s user interface on TV).

And, of course, Apple’s computers were ultimately beige boxes and not really that much prettier than PCs anyway. And they were significantly more expensive. ~ Benedict Evans

Strength Against Weakness

Hence, in this market all of Microsoft’s advantages were in play, and none of Apple’s. Apple, in Steve Blank’s phrase, did not have product/market fit.

The Open model deployed by Microsoft and Intel produced a generic commodity product that was exactly what the market wanted: Apple’s model did not. Fundamentally, Apple’s selling points were irrelevant, invisible or both. ~ Benedict Evans

This is a great insight by Benedict Evans and I have heard and read a similar thesis promoted by Ben Thompson too. The essence of strategy is to use your strengths against your opponent’s weaknesses, while simultaneously nullifying your opponent’s strengths.

So in war, the way is to avoid what is strong and to strike at what is weak. ~ Sun Tzu, The Art of War

The corporate marketplace was a field of battle that played to Microsoft’s strengths and negated Apple’s strengths.

(C)ompete on a battle field where they have no chance of winning. ~ ~ Sun Tzu, The Art of War

Lessons Learned

The “lessons” we supposedly learned from the 1990s were that:

a) Closed platforms may create markets (see Apple Macintosh); but

b) Open platforms commoditize a market, creating cheaper and ever cheaper versions of the product, which in turn

c) Greatly expands the market that the closed product created; and since

d) Developers follow the platform with the most market share; we can draw two inevitable conclusions:

1) Open platforms always win; and

2) There can be only one platform winner.

These are over-generalizations, to be sure, but it is the simplified —not the nuanced — version of the past that filters down through time to becomes the incontrovertible and unassailable dogma of tomorrow.

Platforms, then, were considered to be analogous to poker hand. A second-best hand was like none at all — it cost you dough and won you nothing.

These two general conclusions — that open always wins and that there can be only one — were pretty much considered to be universal truisms in the 1990s and 2000s. To deny either — especially in the face of the the overwhelming evidence provided by the success of Microsoft Windows — made you, at best, a fool, at worst, a heretic.

That which has been believed by everyone, always and everywhere, has every chance of being false. ~ Paul Valery

The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd. ~ Utterly Russell


We should have had some qualms about these seemingly obvious “universal truths.”

…I’ll grant you it’s obvious. Trouble is, just because things are obvious doesn’t mean they’re true. ~ Terry Pratchett, Wyrd Sisters

Does “open” always win in every, or even most, markets ? Does everything ultimately become a commodity?

No, and no.

There are thousands, and perhaps millions, of markets that have multiple vendors and that can be divided into both premium and discount sectors. And market monopolies — like the one Microsoft Windows enjoyed for almost two decades — are not only not the norm, but they are actually fairly rare.

Examples abound. Do we all purchase and drive the cheapest car on the market? Do we all purchase and wear the cheapest clothes? Do we all buy the cheapest food and drink the cheapest beverages?

Of course not.

So, if monopolies, such as Windows, are unnatural and the co-existence of premium and discount products are the norm, then why are computer platforms so very, very different?

Well, they’re not.

The most useful piece of learning for the uses of life is to unlearn what is untrue. ~ Antisthenes

History Repeats?

Today, of course, [May of 2013] Android, combined with chip makers such as Qualcomm and MediaTek, is producing a quite similar flood of generic commodity smartphones.

Hence, there’s a pretty common narrative that ‘we’ve seen this before’ – that the same open approach, producing the same flood of generic commodity product, will crush Apple in the same way. ~ Benedict Evans

Here’s how that narrative played out in the press.

Low priced Android phones are expanding the mobile markets.

Android is the only operating system, modern smart-phone operating system, that exists on devices that cost $200 or less. That is what is enabling the next billion of users of the Internet on mobile in the world. ~ John Lagerling, Director of Android Global Partnerships, Google, 8 August 2011

Android’s cheaper phones are taking market share from the iPhone.

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

Apple needs to sell lower priced phones in order to increase their 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…. ~ Henry Blodget, CNBC, 3 January 2013

Android’s increased market share will capture all the developers.

Slowly but surely, Android’s dominant market share is causing developers to prioritize it. ~ Henry Blodget (@hblodget) 11/7/14

History repeats, with Android playing the role of Microsoft and Apple playing the role of…well, Apple.

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. … But Apple will also continue to lose platform and ecosystem share in most of the world. … (I)f 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

Apple, indeed, has a history of making fine products that are very expensive and proprietary — only to give the market away to the competition. The problem Apple is facing currently is much like the same problem they encountered during the Operating System wars of the 1980′s – 1990′s, (i.e., they produced a far superior product that was light years ahead of the competition, yet they blundered by overcharging). This allowed a horde of inferior “affordable” and “good enough” products such as Microsoft’s Windows along with the legions of IBM-compatible clone makers like Hewlett-Packard and Dell to overtake Apple. Now we see Apple repeating its past mistakes…but this time with Android. ~ Austin Craig, The Motley Fool, 23 January 2013

Reality Disagrees

The great tragedy…the slaying of a beautiful hypothesis by an ugly fact. ~ T.H. Huxley

Open Android was the new Windows and the closed iPhone was destined to become just as niche and just as marginalized as the old Macintosh had been. That was the theory. Reality, however, begged to differ.

(A)ccording to a new study by Canaccord Genuity, as of Q3 2015, Apple is now making 95% of the smartphone profits. ~ Android Authority


“M” is for “Market share”
Of which you like to boast
But “P” is for “Profit”
And we make the most.
~ not Jony Ive on Twitter

And sales are still going gangbusters too.

iPhone Unit Sales
2007 to 2015E: 907 million
2016E: 275 million (30% of previous 8 years)
~ Neil Cybart

What the heck is going on here?


If one looks again at all of those 1990s PC market dynamics, almost none of them apply to the smartphone market. Phones are NOT generic, fungible commodities:

Phones are bought by individuals on design and user interface.

Phone are also bought on price, and the iPhone is expensive, but the subsidy system weakens the effect (to a varying degree depending on the market and on the proportion of contract versus prepay). Moreover, the price gap between an iPhone and a cheap Android is much smaller in absolute terms than the gap between a Mac and the cheapest PC.

Apple has a massive retail presence and has premium placement in every mobile operator shop

It is in the nature of a phone UI that you CAN show it off in a TV spot – which Apple can now afford (originally, thanks to the cash from the iPod)

Apple is stronger in apps than the competition, and that shows no signs of changing.

In other words, Apple has product/market fit in the phone market in a way that it never had in the personal computer market. ALL of the key dynamics that doomed it in the computer market are fundamentally different in the phone market – this time, they all work in Apple’s favour, and in favour of the high-end market in general. ~ Benedict Evans

The key difference between the desktop market of the 1990s and the mobile markets of today is that In the 1990s, the purchaser of the computer and the user of the computer were quite often two separate people with two separate agendas.

Part of the emancipation of IT was stopping HR, and legal from making all the decisions. Growth of BYOD and OTT services was part of that. ~ Benedict Evans on Twitter (@BenedictEvans)

Today, the purchaser and the user are most often one and the same person. Buyers who are purchasing a computer for their own use think very, very differently from buyers in IT departments. You might even say they “Think Different“.

Valuing price over the user experience is the most consistent (and easiest) mistake in any consumer market analysis. ~ Ben Thompson (@monkbent)

Now Apple’s, rather than Microsoft’s, strengths, came into play. Microsoft’s interests were aligned with the buyers in the IT departments. Apple’s strengths were aligned with the consumer.

As soon as the consumers, rather than corporations, started making the buying decisions, a premium market developed with premium customers who paid premium prices to purchase premium hardware. And premium consumers spent more money — and supported the efforts of more developers — than did bargain hunters who were primarily concerned with lower prices.

The pundits of the 1990s were right when they asserted that developers were essential for the the creation of a successful platform. (Developers, developers, developers, developers.) However, they were wrong when they concluded that developers always follow the platform with the most users.

Developers, don’t follow end users — they follow the money.

Lessons Revised and Re-Learned

When experts are wrong, it’s often because they’re experts on an earlier version of the world. ~ Paul Graham

So let’s review and revise the “lessons” we learned in the 1990s.

— Closed creates markets (see Macintosh and iPhone);

— Open creates cheap products and expands the market that closed created;

— Cheap becomes ubiquitous; however

— Developers follow the money, not the customers.

Therefore, platforms that pay developers the most, attract the most developers.

We got it wrong in the 1990s. If every platform user were of equal value to developers, then the platform with the most users would win every time. But if premium users are worth more than discount users, then developers will be attracted to the platform that makes them the most money, rather than the platform that has the most users.

You don’t count users, you count dollars. If, for example, platform A has one billion users worth one dollar each and platform B has one-tenth the number of users, but each user spends ten times as much on the platform, then — so far as developers are concerned — platform A and platform B are roughly equivalent.

Never, ever, think about something else when you should be thinking about the power of incentives. ~ Charlie Munger

The age of Windows was an anomaly, but we didn’t know that. So we based our future assumptions on the exception, rather than the rule.

Nearly every tech prediction based on lessons drawn from Windows has been proven wrong. ~ Ben Thompson

What is true for most every other market holds true for computing too. Open doesn’t always win. Closed can win. Or open can win. Or both can co-exist.

An answer is invariably the parent of a great family of new questions. ~ John Steinbeck


Android may have the most users, but Apple has the most high-end users.

(I)t’s blindingly obvious in every metric that Apple has most of the high-value users. ~ Benedict Evans (@BenedictEvans)

Apple doesn’t dominate the premium sector of the smartphone industry — they OWN it. No one else is seriously competing for the top 10% of smartphone buyers.

Apple doesn’t want to corner the phone market. It wants to corner the premium phone market. ~ Charles Arthur (@charlesarthur)

Some people connote “premium” with “failure”.

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 is failing consumers by only targeting premium users? Yeah, not so much.

Asking Apple to increase its market share by selling cheaper phones is like asking Tiffany & Co. to increase its market share by selling more costume jewelry.

On Par

App store revenue: Poor disclosure and rounded numbers, but looks like iOS and Google Android “might” be roughly level. ~ Benedict Evans (@BenedictEvans) 1/6/16


This would still mean iOS and Android have roughly the same app spending despite close to 2.5x more active Android devices. Benedict Evans (@BenedictEvans) 1/6/16

Google is the new Microsoft but Android is not the new Windows. ~ Benedict Evans (@BenedictEvans)


Benedict Evans started his article with the following quote:

History teaches us nothing except that something will happen. ~ Hugh Trevor-Roper

With all due respect, Hugh Trevor-Roper is wrong. Just because we don’t always learn from history doesn’t mean that history has nothing to teach us.

Teachers open the door, but you must enter by yourself. ~ Chinese Proverb

It’s not enough to know history, we have to analyze and understand it too.

Any fool can know. The point is to understand. ~ Albert Einstein

There is a great difference between knowing and understanding: you can know a lot about something and not really understand it. ~ Charles F. Kettering

Why Does Any Of This Even Matter?

So why does any of this even matter? It’s ancient history, right?


The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn. ~ Alvin Toffler

We are currently being inundated with new platforms. And older platforms are desperately trying to remain relevant in new product categories.

— Apple just introduced three new platforms with the Apple Watch, iPad Pro and Apple TV.

— Google continues to upgrade and alter Android and they recently introduced Android Wear.

— Microsoft is trying to stretch Windows — formerly it’s notebook/desktop only operating system — into a system that works on desktops, notebooks, hybrids, tablets and phones.

— Amazon keeps sticking its nose into the platform arena (where, so far, it has consistently been bloodied).

— Several watch makers are trying to get into the platform game.

— Blackberry has a platform that’s hanging on for dear life.

— Traditional car manufacturers are in a desperate race against new entrants, such as Apple and Google, to create new software both for drivers and for driverless vehicles.

So, who’s going to win and who’s going to lose the new platform wars?

Who knows?

I always avoid prophesying beforehand, because it is a much better policy to prophesy after the event has already taken place. ~ Winston Churchill

I don’t try to predict the future. It’s hard enough just trying to convince those still living in the past that they are already living in the present.

Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window. ~ Peter Drucker

I’ll end with these two thoughts.

Alan Kay once said:

The best way to predict the future is to invent it.

True enough. But as a know-nothing writer who creates nothing and critiques everything, I lean more toward John Siracusa’s take on the future:

The best way to predict the future is to complain about it for 15 years. ~ John Siracusa (@siracusa)

Asking Apple To Do The Impossible

On December 28, 2015, Nilay Patel wrote an article for The Verge entitled: Apple’s Year In Beta. The sub-title was “Everything Needs More Focus And More Time.” (All quotes, below, will be from the article unless otherwise attributed.)

(I)t is surprisingly easy to make the argument that everything on Apple’s huge list of new products and features this year sucked a little bit. ~ Nilay Patel

Easy? Yes. Fair? Maybe not.

Straw Man

All of Apple’s products this year were just fine…. And that’s really the issue. We’re not used to Apple being just fine. We’re used to Apple being wildly better than the competition, or sometimes much worse, but always being ahead of the curve on some significant axis. ~ Nilay Patel

Wildly better? Always ahead of the curve?

A “Straw Man” argument is an informal fallacy based on refuting a position that no reasonable proponent would actually make. It’s easy for Apple to disappoint Nilay’s expectations when Nilay sets his expectations so unrealistically high. If Nilay thinks Apple’s successful products are always wildly better than the competition, it’s no wonder that he would tend to be wildly disappointed in Apple.

Take a gander at some past Apple products:

– Apple III
– Apple IIe
– Apple Lisa
– Apple IIc
– Quadra 700
– Powerbook 100
– Centris 610
– Newton
– Macintosh TV
– Pippin
– Performa
– eMate 300
– Power Mac G4 Cube
– Apple Mighty Mouse

You’d have to look far and wide to find anyone who reasonably considers any of these Apple products to be “wildly better” than those of the competition. Further, products such as iCloud, Maps, and iMessage — which are now considered to be critical to Apple’s ongoing success — were all severely criticized in their time. Even Apple’s most successful products — the Macintosh, iPhone, MacBook Air and iPad — were severely panned when they debuted…and long afterwards too.

Nilly’s premise is correct: Apple is sometimes (not the hyperbolic “always”) ahead of the curve. However, the implied conclusion is incorrect: Apple’s products are not admired because they are ahead of the curve, rather, they are CRITICIZED precisely because they are ahead of the curve.


(W)hat we got in 2015 was an Apple that released more products than ever, all of which felt incomplete in extremely meaningful ways — ways that meant that their products were just fine, and often just the same as everyone else’s.

I would go so far as to say every new Apple product or feature released in 2015 was essentially in beta. Apple released a lot of big new platforms that, by themselves, weren’t nearly complete. ~ Nilay Patel

Yeah, here’s the problem with that argument: “Incomplete” is not a valid criteria for critiquing tech products.

Name me a significant new tech product that didn’t feel incomplete when it first appeared on the market.

(Crickets chirping.)

The original Macintosh? The original iPod? The original iPhone? The Original iPad? The original MacBook Air?

The Kitty Hawk? The Ford Model-T? The steam engine? The printing press?

None of these products felt “complete” when they debuted.

The contention that a product has to feel complete at birth is all backwards. Tech products don’t feel complete when they debut. On the contrary, the closer a tech product is to becoming “complete”, the closer it is to becoming obsolete. “Complete” comes at the end — not at the beginning — of a tech product’s life cycle.

Killer App

Apple needed — expected, really — its vast army of dedicated and passionate third-party developers to come up with killer apps for things like the Apple Watch and iPad Pro. ~ Nilay Patel

Nilay goes on to say that the Apple Watch, Apple TV, Apple Music and iPad Pro are all new platforms in search of a killer app.

Why do we continue to think that new platforms immediately — or ever — generate killer apps? It was years before apps such as Uber and airbnb appeared on smartphones. And even those two industry altering apps don’t truly fit the definition of “killer apps”. In the nineteen-eighties, people bought desktop computers in order to get Lotus 1-2-3, but no one buys a smartphone in order to get the Uber or airbnb apps.

Truth be told, there probably hasn’t been a true “killer” application since Lotus 1-2-3. It turns out that when it comes to smartphones, the killer feature is — well — the killer feature is the smartphone itself.

To get a sense of what I mean, just consider the first iPhone, which introduced a new platform with two incredible killer apps: the Safari browser (which was revolutionary in 2007) and Maps. The next iPhone introduced the App Store with a laundry list of additional killer apps, and you know what happened next — the entire tech industry turned upside down. And eventually Apple introduced iMessage, a platform-level feature that creates and reinforces an extraordinary amount of value if everyone you know is an iPhone user — those blue bubbles mean something in the culture now. ~ Nilay Patel

Hmm. Most of those examples are system features, not apps, right? But what the heck, I’ll play along.

You can’t have it both ways. You can’t claim that Apple’s newest products feel incomplete at inception and then support your position with examples of products that weren’t nearly complete at inception themselves.

The examples Nilay provides resoundingly disprove his thesis. The iPhone was not complete when it appeared, Maps was considered a joke as recently as last year, the App Store, sans apps, appeared a year AFTER the original iPhone did, and iMessage did not show up until June 6, 2011 — FOUR YEARS after the iPhone was introduced. Who’s to say that Apple’s newest platforms won’t mature in a similar fashion?

Not to go all biblical, but if you are building an argument on the twin premises that a new platform needs to be mature at birth and needs to have killer apps, then you are “like a foolish man who built his house on the sand.” ((Matthew 7:24-27 English Standard Version))

Change The World

And that’s really the story of Apple in 2015. After years of promising investors new products, the implication over and over again was that the iPhone changed the world, and it would happen again with another new product. And while the company delivered on dazzle and hype — sometimes far more than usual — the products themselves often felt searching, waiting to be imbued with reason. ~ Nilay Patel

Say what now?

First, I assure you that the implications Nilay is projecting onto Apple occurred only in his fevered imagination. In no way, shape or form did Apple imply “over and over again” that they were, in 2015, introducing a world changing product that would eclipse even the iPhone.

Second, the iPhone is big deal. A really, really big deal. Expecting ANY product to be the next iPhone is asking a bit much.

Third, try to remember that in 2007 we didn’t know that the iPhone was going to become the juggernaut that “The iPhone” became. Let’s give Apple’s new products a little time to grow before we prematurely declare them to be mere iPhone wannabes.

One of the mantras of modern business is to “under promise and over deliver“. If Nilay thought Apple literally promised to change the world in 2015, then it is no wonder that he also thought Apple under delivered on that promise. How could he feel otherwise? It would be nigh on impossible for Apple — or any company — to meet those kind of inflated expectations.

Asking The Impossible

There are no right answers to the wrong questions. ~ Ursula K. Le Guin

If you’re asking why Apple’s new products aren’t “wildly better than the competition”, why they’re “incomplete”, why they didn’t inspire the creation of “killer apps”, why they didn’t change the world; then you’re going to get the wrong answers.

A critic is some who never actually goes to battle, enters the battlefield after the fighting is done, and shoots the wounded ~ variously attributed to Tyne Daly and Murray Kempton

Apple Watch has been on the market for 8 months, Apple Music has been on the market for 6 months, the iPad Pro and the newest iteration of Apple TV have been on the market for a mere 4 months. No new platform can create a robust ecosystem in that short amount of time. It’s impossible. However, the impossible is precisely what Nilay expects — nay, demands — of Apple.

We shouldn’t be asking why Apple’s new platforms and platform enhancements haven’t ALREADY generated significant new ecosystems. Rather, we should be asking whether Apple’s new platforms are broad enough and strong enough to support robust future development. My short answer to that question is that some products look promising and others do not. But it’s still far too early to know for sure.

Expecting Apple to introduce platforms that are mature at birth is asking too much. Apple can’t do the impossible. They’re only capable of doing the improbable.

Technology And The Jobless Future

Vivek Wadhwa believes we are headed toward a jobless future and he says so in the following two articles ((All quotes, unless otherwise attributed, are drawn from the two articles of Vivek Wadhwa)):

Sorry, but the jobless future isn’t a luddite fallacy.

We need a new version of capitalism for the jobless future

Within 10 years, we will see Uber laying off most of its drivers as it switches to self-driving cars; manufacturers will start replacing workers with robots; fast-food restaurants will install fully automated food-preparation systems; artificial intelligence–based systems will start doing the jobs of most office workers in accounting, finance and administration. The same will go for professionals such as paralegals, pharmacists, and customer-support representatives. All of this will occur simultaneously, and the pace will accelerate in the late 2020s.

What Types Of Jobs Will Be Disappearing?

The arrival of self-driving cars is terrible news for anyone who makes a living driving. (Eduardo Munoz/Reuters)

I could equally well argue the arrival of the bulldozer was terrible news for anyone who made a living digging ditches too but I would never actually make such an argument, because I seriously doubt very many people actually want to return to the days when they had to dig ditches in order to make a living.

While it always has been — and always will be — true that technology will replace jobs, the first two questions we should be asking ourselves are 1) What kinds of jobs are being replaced and 2) Do we actually want to do those kinds of jobs anyway? The Industrial Age ended physical labor for many and the Information Age ended tedious labor for many more.

Looks like you’ve been missing a lot of work lately.

I wouldn’t say I’ve been missing it, Bob. ~ OFFICE SPACE

Few people want to go back to the days when we had to dig ditches; when we had to dig through card catalogs to find books; when we had to have an army of switchboard operators to manually connect individual phone calls; and I sincerely doubt we’ll look back forty years from now and pine for the good old days when we had the privilege of working as truck and taxi cab drivers either.

Self-driving cars, widely implemented, would save more American lives than curing AIDS, stopping murder and eliminating war combined. ~ Austen Allred

Jobs Will Be Few

Some new jobs will surely be created, but they will be few.

Hmm. That is an exceptionally strong claim and it is the foundation upon which Vivek Wadhwa builds his argument we are headed for a jobless future.

Exceptional claims demand exceptional evidence. ~ Christopher Hitchens

And yet, Vivek Wadhwa not only fails to provide exceptional evidence in support of his exceptional claim, he provides us with virtually no evidence at all. On the contrary, all the available evidence argues against Vivek Wadhwa’s assertion many jobs will be lost but few new jobs will be created.

There are more net jobs in the world today than ever before, after hundreds of years of technological innovation and hundreds of years of people predicting the death of work. The logic on this topic is crystal clear. ~ Marc Andreessen

Time after time, technology has eliminated jobs and, time after time, new, and mostly better, jobs have sprung up to replace them. But this time, Vivek Wadhwa assures us, this time, things will be different.

(The jobless future), like any other revealed religion, is largely made up of prophesies. ~ paraphrasing H. L. Mencken

The Jobless Will Be Unqualified And Under-Qualified

(W)e won’t be able to retrain the people who lose their jobs, because, as I said to Andreessen, you can train an Andreessen to drive a cab, but you can’t retrain a laid-off cab driver to become an Andreessen. The jobs that will be created will require very specialized skills and higher levels of education — which most people don’t have.

In 1900, 97% of the people in the United States worked on farms. In 2000, 3% of the people in the United States worked on farms.

I strongly suspect if Vivek Wadhwa had been writing in the year 1900, he would have argued one could train the non-farming 3% to take on the job of farmer but one could not possibly retrain 94% of farmers to take on manufacturing and service jobs that required “very specialized skills and higher levels of education.” He would have been wrong then and the existing evidence strongly suggests he is wrong now, too.

There Will Be No Time To Retrain

Vivek Wadhwa counters the future will not be like the past because, while we had three centuries to transition from the Industrial Age to the Information Age, we will only have one or two decades in which to transition from the current age to the Age of Joblessness.

The technology elite who are leading this revolution will reassure you that there is nothing to worry about because we will create new jobs just as we did in previous centuries when the economy transitioned from agrarian to industrial to knowledge-based. Tech mogul Marc Andreessen has called the notion of a jobless future a “Luddite fallacy,” referring to past fears that machines would take human jobs away. Those fears turned out to be unfounded because we created newer and better jobs and were much better off.

(W)hat is missing from these arguments is the timeframe over which the transitions occurred. The industrial revolution unfolded over centuries. Today’s technology revolutions are happening within years. We will surely create a few intellectually-challenging jobs, but we won’t be able to retrain the workers who lose today’s jobs. They will experience the same unemployment and despair that their forefathers did. It is they who we need to worry about.

Is Vivek Wadhwa right? Is it different this time because there will be no time to adjust?


The Destroyer Is The Creator Too

Vivek Wadhwa fails to recognize the contradiction inherent in his argument. While he insists jobs may go away at an ever faster pace due to technology, he completely ignores the fact retraining will also occur at an ever faster pace due to that very same technology.

If anything, the future looks even brighter than the past, because we are even more prepared for rapid retraining today than we have ever been before. The rise of the automobile destroyed the livelihood of those who made horse drawn carriages and it did nothing to help retrain those unemployed workers. But the rise of the personal computer — and in particular the smartphone — is both destroying existing jobs and simultaneously providing us with the ideal tool for retraining. Vivek Wadhwa has it exactly backwards. The rapid retraining he says can’t possibly occur in time has already begun and begun in earnest ((Oh sure, some will fall through the cracks and be reduced to writing articles for tech blogs…but that is the price we pay for progress.)).


In the 1970s, W. Karl Kapp, a professor of economics at Switzerland’s Basel University, attempted to capture the hazards of making predictions by relying solely upon straight line projections:

If there had been a computer in 1872, it would have predicted that by now there would be so many horse-drawn carriages that the entire surface of the earth would be ten feet deep in horse manure.

The problem with doomsday projections is they are always full of metaphorical horse manure. They can foresee the problem, based upon current trends, but they can’t envision solutions based upon the adjustments that will be made in response to those self-same trends. Malthus predicted mass starvation due to overpopulation but he didn’t foresee birth control or the green revolution in farming. Environmentalists in the 1970s predicted we would run out of fossil fuels by the first quarter of the twenty-first century but they didn’t foresee increased conservation efforts, or the creation of more efficient ways to wring oil from shale or energy from solar panels.

Experience tells us that tomorrow there will be ever more and ever better jobs than there are today. Belief in the jobless future is the triumph of despair over experience. Belief in a better future is the triumph of reason over fear.

The god-like Powers Of Tech

AUTHOR’S NOTE: I do not know the source of this outstanding analysis, but I got it from Ben Thompson, HERE, and I will attribute it to him until such time as I’m advised otherwise.

ADDENDUM: Ben Thompson has informed me that the brilliant “Omniscience, Omnipotence, Omnipresence” analysis upon which I built this article was original to him. Outstanding!

Study the past, if you would divine the future. ~ Confucius

1) Four Ages: Hunter/Gatherer, Agrarian, Industrial, Information

It is generally accepted that the age of “Modern Man and Woman” began around 150,000 years ago.

— The Hunter/Gather Age lasted about 140,000 years.

— The Agricultural Age lasted about 10,000 years.

— The Industrial Age lasted about 300 years.

— The Information Age began about 30 years ago.

As you can tell at a glance, the Ages are occurring at an ever accelerating pace. Ideas beget ideas.

When it comes to global standards of living, history resembles a hockey stick resting on its side. ~ Marian Tupy

CAPTION: Real GDP from 1 to 2008 BCE

Humans are distinguished from other species by our ability to work miracles. We call these miracles technology ~ Peter Thiel (@peterthiel)

CAPTION: Life Expectancy In England From 1540 to 2011

There was a time when people owned one suit and no other garment at any given time. Only a century ago. ~ Horace Dediu (@asymco) 11/1/14

If you’re yearning for the good old days, just turn off the air conditioning. ~ Griff Niblack

If you think you have it tough, read history books. ~ Bill Maher

The Agriculture Age multiplied our food. Farmers could grow enough food for themselves, and have a surplus to sell to others. This allowed for the rise of cities and civilizations.

The Industrial Age multiplied our muscle. A single person sitting in a bulldozer could do the work of thirty, and do it while exerting much less back-breaking effort.

The Information Age is multiplying our minds. A single mind can crunch calculations in seconds that a thousand clerks could not have completed in a decade.

For me, a computer has always been a bicycle of the mind. Something that takes us far beyond our inherent abilities. ~ Steve Jobs

2) The Information Age

My 7 year old just asked “Does B.C. mean before computers?” ~ Micah N Gorrell (@_minego) 6/14/15

The Information Age — which only just began 30 years ago ((Contrarians often contend that one age has not yet ended, which means the next age, or stage, could not yet have begun. However, when a new age or stage begins, the other age or stage does not disappear, it simply diminished in importance. A new — more important — layer is added atop the last.

Man and womankind did not stop hunting when the Agricultural Age began. Neither did they stop growing food when the Industrial Age began. Just the opposite — they grew food at an every faster pace.

The farmer since 1800 has become more productive in the United States by a factor of 36. -Deirdre McCloskey

The same is true of the Information age. Just because we’ve left the age of desktops and notebooks does not mean that they’ll disappear, anymore than agriculture or industrial machinery disappeared.)) — is already in its third stage.

Stage 1: Omnipotence

The computers of the 1980’s and early 90’s were all about Omnipotence — the promise of computing power. The combination of Microsoft, Intel and Moore’s law, kept computing power doubling and re-doubling, seemingly ad infinitum.

Stage 2: Omniscience

The mid-ninties brought us Omniscience. The combination of the Internet and Google Search put all the knowledge of human history at our fingertips. Some of us were less-than-impressed with how we actually employed this seemingly god-like power ((“I have a device in my pocket containing the sum of all human knowledge…
…I use it to view pictures of cats, and start arguments with strangers. ~ Phil Veal

I’ll use a quote from Steve Jobs to respond to the pessimism expressed, above:

Tools are always going to be used for certain things we don’t find personally pleasing. And it’s ultimately the wisdom of people, not the tools themselves, that is going to determine whether or not these things are used in positive, productive ways. ~ Steve Jobs)) but no objective observer can deny that our ability to rapidly and accurately search the internet was a giant leap forward in the way in which humans gained access to their shared storehouse of knowledge.

CAPTION: The main file room at FBI headquarters in Washington DC, 1944 (via LIFE)

Stage 3: Omnipresence

The smartphone industry compressed 25 years of PC industry history into 5. ~ Benedict Evans (@BenedictEvans) 11/12/14

The third stage of the Information Age was initiated by Apple in 2007 and 2008 with the introduction of the iPhone and the App Store, and extended by Google with the introduction of their free Android operating system.


Pundits underestimate the revolutionary power of the intuitive smartphone user interface — probably because we’re old. Remember IT departments? Kid’s don’t.

An entire generation is growing up without knowing what ‘I don’t have local admin rights’ means. ~ Benedict Evans on Twitter

Teaching a teenager how to use a smartphone is like giving a fish a bath. ((Shamelessly stolen from Arnold H. Glasgow: “Telling a teenager the facts of life is like giving a fish a bath.”))

Using our fingers — using touch as the primary input method — seems so natural, so obvious, to us now. But it wasn’t at all obvious in 2006.


So much of what we try to do is get to a point where the solution seems inevitable: you know, you think ‘of course it’s that way, why would it be any other way?’ It looks so obvious, but that sense of inevitability in the solution is really hard to achieve. ~ Jony Ive

Microsoft and Blackberry made smarter and smarter user interfaces. But we didn’t want a smarter user interface. What we wanted — and what Apple gave us — was a user interface that makes US feel smarter. A user interface that makes us feel better about ourselves. A user interface that makes computing FUN and something we want to do, even when we don’t have to do it. The iPhone user interface gave us all that…and more.



People sometimes forget that the iPhone was introduced in 2007 and that it took another year before the App Store was introduced.

It will take until February (2008) to release an SDK because we’re trying to do two diametrically opposed things at once: provide an advanced and open platform to developers while at the same time protect iPhone users from viruses, malware, privacy attacks, etc. This is no easy task.,” Jobs wrote on Apple’s Hot News page. “We think a few months of patience now will be rewarded by many years of great third party applications running on safe and reliable iPhones. ~ Steve Jobs (Quote provided via Mark Rogowsky, of Forbes)

Talk about an understatement.

The powerful one-two combination of the iPhone/App Store — like the powerful combination of Microsoft Windows/Intel and the combination of Internet/Google Search — created a wholly new category of device that was so small, so easy to use, and so easy to enhance via seamless — and inexpensive — access to software programs known as “apps”, that almost every person on Earth could — and more importantly, every person on Earth would want to — carry it with them at all times.

Removing what seems like trivial friction can have an enormous impact on how useful a product is. ~ Benedict Evans (@BenedictEvans) 6/18/15

How true. But the App Store removed more than trivial friction. It removed an entire dam of frustration and unleashed a virtual flood of innovation. How quickly we forget that, in 2007, if we wanted to install software on our computers, we used to have to travel to a store, buy software in a box — often at hundreds of dollars per program — bring it back to our home or office, spend hours installing it, and act as our own IT department if anything went amiss. Nowadays, I can be flinging angry birds at hungry pigs in a mere matter of seconds. Or, to take a slightly more serious tack, I can annually upgrade my computer operating system — with virtually no effort — from almost anywhere — for free.

At the Apple World Wide Developer Conference (WWDC), Apple released a video entitled “The Incredible Impact of Developers” ((The video was named “The Incredible Impact Of Developers” when it was originally displayed on Apple’s web site, but it has since been renamed “The App Effect” when it was made available on YouTube.)). You can watch the video, HERE.


Here are two transcribed excerpts from the video:

Apps plus handheld devices. I think that’s a watershed moment for civilization. I put it up there with the invention of the microscope and the telescope. Here we live in a time where the most powerful tools ever imagined to investigate and probe our world are in the hand of essentially everyone. ~ Neil deGrasse Tyson, Astrophysicist

If you think the industrial revolution was transformational, the App Store is way bigger. I don’t think we’ve seen anything reach a mass adoption at anything close to this pace. It took, for example, electricity over 100 years to get to its first 50 million users. It took television 13 years…and the App Store got to 50 million users in only 17 months. ~ James Manyika, Director, McKinsey Global Institute

Perhaps you think the above speakers are engaging in egregious hyperbole?

Or, more likely, you have forgotten the 9 circles of hell that you had to sojourn in order to download an application onto your mobile phone in 2006. Dante’s hell hath no fury like that of the Verizon and Cingular technocrats of yore.

Do you remember WAP? Well, of course you don’t. You have psychogenic amnesia, which is your brain’s way of protecting you from traumatic events — like WAP — that are too horrible for the psyche to bear. If you were to look up the historical records, you would see that WAP caused early onset Tourettes. Victims, who had been exposed to WAP for too long a period of time, would begin to twitch, violently convulse, and suddenly break into uncontrolled fits of swearing.

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

The hardest part of creating a new platform is getting developers to develop for it. And Apple made that part look like a walk in the park.

In 2008 Apple launches the App Store with 500 apps. In 2015 the App Store has 1,500,000 apps.

The average person has 119 apps.
850 apps downloaded every second.
100,000,000,000 apps downloaded.

It’s not hyperbole if it’s real. And there’s nothing more real than the effects of the smartphone/app store combo.

$10.35 billion: amount American moviegoers spent on ticket purchases.

$14.28 billion: amount iOS users spent on apps.

~ Horace Dediu on Twitter

The term “game changer” is way over used, but when it comes to the iPhone/App Store combo, the term is spot on.

We were able to change the rules of the game, and that’s what got us excited about getting in the phone business. ~ Steve Jobs

3) The Omnipresence Stage

The current stage of computing is Omnipresence and it has been misunderstood, misapplied and misdefined.


The important part of “Mobile” devices is not their mobility, but the fact that they are ever present on our persons.

Yes, it’s true that many people DO NOT carry their Smartphones with them at all times…yet. But this is only because it is early days. As time passes, even the outliers will be drawn toward keeping their phones with them at all times. And, as an aside, this is one of the reasons why wearables are a shoo-in to become the next great computing category. More on that, below.


Note that while the category “mobile” lumps tablets and phones together, “Omnipresence” does not. Phones are ever present. Tablets are not. Computing has bifurcated into primary supercomputers that we always have with us and secondary computers that have larger screens.

We tend to think of ‘tablets and smartphones’ as a new category next to ‘PCs’. More helpful to think of ‘big screen and small screen’. ~ Benedict Evans (@BenedictEvans)

Tablets are not hired to do the same job as smartphones. While smartphones are our primary — and for most, our only — computing devices, tablets — along with hybrids, notebooks and desktops — are secondary devices catering to those who need greater screen size, flexibility, complexity or power.

Posit, paradox of usability: the more powerful, flexible & general-purpose a computer system, the smaller/narrower the user base & use cases. ~ Benedict Evans (@BenedictEvans)

‘Computing’ is inexorably being absorbed by the mobile phone. ~ @asymco


Yes, today’s devices are “mobile”, but that is not what defines them. The current stage of computing is defined by the intersection of three separate elements:

1) Everyone; will have a
2) Supercomputer;
3) With them at all times.

4) Everyone

Everyone’s going to have a mobile phone. Yes, everyone. ~ Benedict Evans on Twitter

7.1bn people on earth.
5.2bn adults
4.4bn literate adults
3.5-4bn mobile phone users, so far
~3bn internet users

~ Benedict Evans on Twitter

Some time next year, the 20 billionth mobile phone will be sold. ~ Benedict Evans (@BenedictEvans) 6/17/15

Smartphones are being sold to four-fifths of the adults on the planet.

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


By 2020, 90 percent of the world’s population over 6 years old will have a mobile phone. – Ericsson

Largest Tech Expansion Ever

In 2007, Apple introduced the modern smartphone. Eight years later, there are approximately 2 billion Smartphones in existence and we are headed town having 4 billion people on earth with a Smartphone. Smartphones are being sold to almost everyone on earth and they are upgraded every two to three years. There will soon be something like 5 times more smartphones than consumer PCs and, unlike PCs, they will be always will you, available for use both both at work and at home and while traveling.

Unit sales since 1995:
16.7bn phones
4.2bn PCs
~ Benedict Evans on Twitter


Mobile phones sell at ~2bn units a year, to ~4bn people, at $200 avg. Has any manufactured product ever done similar? ~ Benedict Evans on Twitter

The sale of a smartphone to ~4bn people in the next few years is the largest expansion of the reach of industrial capitalism in history. ~ Benedict Evans (@BenedictEvans) 11/16/14

(Emphasis added)


For hundreds of millions of people, mobile phones are not just their first computer but their first electrical device of any kind. ~ Benedict Evans on Twitter

Many middle-class families in China never owned a personal computer or television, jumping directly to mobile devices. ~ Ajit Pai on Twitter

Over half the rural population of Bangladesh now has a mobile phone. That’s a totally new kind of purchase. ~ Benedict Evans on Twitter

5) Supercomputer

Today, your cell phone has more computer power than all of NASA back in 1969, when it placed two astronauts on the moon. ~ Dr. Michio Kaku

Today, your cell phone has more computer power than a supercomputer called a Cray-1 back in 1975. A Cray-1’s raw computational power of 80 million floating-point operations per second (FLOPS) pales beside the 76.8 Gflops inside the iPhone 5s.

Today, your cell phone has more computer power than a supercomputer called a Cray-2 bak in 1990. The Cray-2 was the worlds fastest computer. The liquid-cooled, 200-kilowatt Cray-2 had a performance of up to 1.9 GFLOPS, which still compares unfavorably to the 76.8 Gflops inside the iPhone 5s.


6) Everpresent

The most interesting place to be is no longer in front of a computer, it’s to go out into the world with a computer in your hand. ~ @monkbent

An always-with-us device changes entirely the way we interact with our computers and the way everyone else, who has a supercomputer in their pocket, interacts with us. The always-on-you supercomputer changes the way we communicate, and the way we exchange ideas. It even changes the way we trade and it has — already — created an entirely new branch of trade known as the sharing economy.

Someone much smarter than me, called the smartphone a “cursor for the cloud”. The smartphone always knows where you are and that adds context — a dimension that simply was not possible with earlier computer devices.


The productivity benefits of asynchronous communication are hard to overstate. Not too long ago, the world ran on meetings and phone calls. ~ Balaji S. Srinivasan on Twitter

There will be more written on Twitter in the next two years than all the words in all the books ever printed. ~ Dataclysm

If you look at the personal computer, it’s going from being a tool of computation to a tool of communication. ~ Steve Jobs


We’re now talking not about hundreds of people getting the benefits of an idea, but of millions. ~ “The App Effect”



The above bears repeating. There will be more photos taken this year than were taken on film…EVER.

Do you think all the recent videos of police shootings are a coincidence? Think again. Everyone has a camera with them at all times.


The key to rising prosperity over the course of human history has been the exchange of goods. ~ Bill Gates

If you have networks of trade and exchange, it becomes cheaper to buy stuff than to steal it. ~ Steven Pinker

No meaningful shopping malls have opened in the US since 2009. ~ Benedict Evans on Twitter

Just stop for a moment and think about the implications of the above.

Thanks largely to smartphones, ecommerce is a $4b industry in… Vietnam. ~ Andrew McAfee (@amcafee) 6/13/15

It turns out, there are a lot of middlepersons in this society. And they generally tend to slow things down, muck things up, and make things more expensive. The elimination of them is going to be profound. ~ Steve Jobs

Sharing Economy

We don’t have to own things. We don’t have to own our own cars. We don’t have to own our own music. We can call it up when we need it. ~ “The App Effect”

Apps like airbnb and Uber have literally changed the way we do business.

Who’d have thought NYC taxi revenues would be slashed in 2014, because of iPhones… ~ Walt French 10/2/14

No one predicted Uber when the iPhone came out in 2007. No one. The truth is, we just don’t know what these devices will allow us to do next. We. Just. Do. Not. Know.

7) Changing The World

Most tech innovation is attacked as ‘rich people’s toys’, but ends up giving the poor things that previously only the rich could have. ~ Benedict Evans (@BenedictEvans)

See if you can think of a technology that didn’t start looking like a toy for rich people. Now, one that didn’t help everyone. ~ Benedict Evans on Twitter

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

Mobile in emerging markets solves problems much further down Maslow’s Hierarchy. ~ Benedict Evans (@BenedictEvans) 8/24/14

The Juniper report divides the two groups thus: Poor people use the mobile Internet for personal advancement, whereas rich people use it for personal convenience.

24 percent of people in developing countries use the mobile Internet for educational purposes, versus 12 percent in the richest countries. ~ Juniper Report

97 percent of people in developing countries say mobile Internet access has been transformative in their lives, versus 78 percent in the richest countries, including the United States. ~ Juniper Report

CAPTION: Charging Phones Via Solar Power

Some people will walk for a day or more just to charge their phone in parts of Sub-Saharan Africa… ~ @BenedictEvans

8) The Next Stage — Always With Us…And Always On Us

The Ages of Man and Womankind are moving faster and faster, and the stages of the Information Age are tumbling, one upon another, at an every quickening pace.

As I mentioned, above, the Information Age is only 30 years old, but we’re already in the third (Omnipresence) stage. The third stage of the Information Age began only 7 years ago, with the introduction of the App Store… but we may already be entering the next stage of development.

Smartphones (pocket supercomputers) are important because they are always with us, but smartwatches ((Smartwatches are poor descriptions of wearable technological devices, because the time keeping aspect of the device is its least important attribute. In other words, the watch is to a smartwatch as the phone is to a smartphone.)) are not only always with us but, unlike smartphones, they are also always on us, too. This adds at least two wholly new dimensions to computing.


First, being “always on us” adds Identity. The Smartwatch knows who we are — and that we are who we say we are — and this allows us to discreetly and securely broadcast our identity to payment centers, other individuals, home and car locks, and an endless variety of wirelessly connected devices.


Second, being “always on us” adds sensors that are in touch with our bodies and which can read and monitor our physical condition.

I think we’re in the very early days of sensors. We’ll soon look back at the Apple Watch’s feeble heart-rate monitors and mock them in the same way that we currently mock the original iPhone’s inability to take videos or perform simple tasks such as “cut and paste.”

Even though we’re only in the early days, the path ahead is clear to see. Once the Smartwatch becomes the norm — and it’s already well on its way — and once sensors become more sensitive and more powerful — the health and fitness benefits that the Smartwatch will provide to us are, literally, unimaginable. (Or, at least, the health and fitness benefits are beyond the limits of this author’s poor imagination.)

Just as one example, some modern cars can automatically alert a service center about a technical problem, yet a child’s looming illness creates no such alert. Children being born today will look back at their parents lives and wonder how they even survived without “always-on” devices to monitor their health.

You think I’m exaggerating? Try this experiment. Picture the state of technology that existed on the day you were born. Got it? Archaic, right?

That is how children being born today will picture the smartwatch.

9) The Next Age

I’m talking about entering the next stage in the Information Age, but perhaps I should be talking abut entering the next Age of Man and Womankind, instead.

With Google Now and Apple’s recent entry into predictive technology, it’s clear that technology is morphing out of the role of a dumb servant and into the role of a helpful, ever-present, assistant.

The next thing is going to be computer as guide or agent. And what that means is that it’s going to do more in terms of anticipating what we want and doing it for us. ~ Steve Jobs

However, my guess is that the next Age, after the Age of Information, will be tiny wearable devices imbedded in our clothing or our bodies, which will act — for the most part — without conscious interaction or decision-making on our part. Today, supermarket doors slide open as they anticipate our approach. Tomorrow’s technology will anticipate our approach and prepare our path. Who knows where that path may lead?

Science is magic that works. ~ Kurt Vonnegut on Twitter

10) Conclusion

Mankind, by the perverse depravity of their nature, esteem that which they have most desired as of no value the moment it is possessed… ~ François de Salignac de la Mothe Fénelon, Télémaque

The Agricultural Age gave us a cornucopia of food. The Industrial Age gave us the strength of giants. The Information Age has given us the god-like powers of omnipotence, omniscience and now, omnipresence.

I was a peripheral visionary. I could see the future, but only way off to the side. ~ Steven Wright

I suspect that most of us are peripheral visionaries too. We can see things way off to the side, but we often don’t see the things that are occurring right in front of us.

I don’t know much, but I know this: We’re still just at the very beginning of all this.

And I can’t wait to see what happens next.

Explaining Away Apple’s Success

On May 31, 2015, John Naughton, penned a story for The Guardian, entitled: If Steve Jobs’s death didn’t ruin Apple, the iCar surely will. I don’t know Mr. Naughton well, but after reading this article, I don’t want to know him well.

The Cult Of Apple

When Steve Jobs was alive it was tempting to draw analogies between Apple and a religious cult.

No. It wasn’t. At least it wasn’t for those of us who who want to understand Apple, rather than to assign Apple’s success to some unknowable mystical agency. Apparently, the occult is the only way that some critics can explain away Apple’s success.

What the mind doesn’t understand, it worships or fears. ~ Alice Walker

Saying that Apple — one of the most successful companies in the world — is like a cult is cognitive dissonance at its worst. The formula goes like this:

— I think Apple’s products are stupid.
— People are buying Apple’s products.
— I’m not stupid so…
— People who are buying Apple’s products must be stupid!

“‘Fashion, bauble, cult, marketing, toy’= ‘I do not understand what this product tries to achieve'” ~ Benedict Evans on Twitter

The moment we label that which we don’t comprehend as “irrational”, is the moment when we end the learning process. Here’s a clue for us all: Just because we don’t understand something does not mean that it can’t be understood. When others are doing something that we don’t understand, we should be striving to lessen our ignorance, not striving mock their ignorance.

Who dares to teach must never cease to learn. ~ John Cotton Dana

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

Why do people like Apple’s products? Is it because Apple is a Cult? Or is the answer much simpler and much easier to comprehend?

My philosophy is that everything starts with a great product. ~ Steve Jobs

(Jony Ive) craved products that didn’t force adjustments of behavior, that gave what Powell Jobs called a “feeling of gratitude that someone else actually thought this through in a way that makes your life easier. ~ Jonathan Ive and the Future of Apple – The New Yorker

The author of this article could do with a close shave from Occam’s razor. People aren’t buying from Apple because Apple has created a cult. People are buying what Apple’s culture has created.

You Say That Like It’s A Bad Thing

Product launches in the Moscone centre in San Francisco seemed more like evangelist congregations than capitalist rituals. And in the days before the revered new products actually appeared in the cult’s retail outlets, excited worshippers could be seen camping out in surrounding streets.

The Author says that like it’s a bad thing.

The last time I looked at my marketing books, having “evangelist” customers who “revered” one’s products and were so “excited” about the release or those products that they literally camped outside of one’s stores in order to buy those products — was a good thing. In fact, saying it’s a good thing is damning with faint praise. It’s a great thing!

There isn’t a company in the world that wouldn’t sell their metaphorical soul to have customers as enthusiastic, as devoted, and as loyal as those that Apple has. If Apple is a Cult, isn’t that an admirable quality and shouldn’t your company, and every other company, be doing everything in its power to become a cult too?


But, of course, Apple is not a cult. Apple has had failures — which disproves the lazy and tedious claim that Apple’s customers are undiscriminating. When and if the quality of Apple’s products starts to disappear, watch how quickly their “cult-like” followers start to disappear too.

So if Apple is not a Cult — and it’s not — and if Apple attracts customers like no other, then maybe reasonable companies should be asking themselves smarter questions. Questions like:

— What is Apple doing that we are not?
— And why aren’t we doing that too?

The Customer Is King

I remember once being in a British shopping arcade on the day that the local Apple Store opened for the first time. Long queues had formed from the moment the arcade gates had been unlocked that morning. Then came the magic moment: the glass doors opened, a hush fell on the assembled crowd, a group of T-shirted staff walked out, formed a human avenue leading into the store and then clapped rhythmically as the mob surged in.

It was a truly extraordinary moment in which the conventional marketing mantra about the customer being king was turned on its head. In the case of Apple, it seemed, the customers felt privileged to be allowed to enter the store.

(Emphasis added.)

How could the author of this article be more wrong? Let’s review:

— World class retail store;
— Filled with premium products; and
— greeted by a corridor of Apple employees, clapping enthusiastically as one enters the store.

That’s the author’s idea of “the customer being king…turned on its head”? What more does Apple have to do in order to demonstrate that they DO treat their customers like kings — literally put a Tiara on every customer’s head as they enter the store?

The Cult Of Personality

…I concluded that much of this Apple worship could be put down to the astonishingly charismatic personality of Jobs. He was, after all, the only chief executive in the history of the world to be accorded the kind of adulation normally granted to rock stars and messiahs. Apple was obviously a one-man band and he was the Man. It seemed reasonable to conclude when he died, therefore, that the cult of Apple would diminish or at any rate that its share price would have peaked.

How wrong can you be?

Pretty damn wrong, I’d say.

The author has — as so many have before him — reversed cause and effect. People didn’t buy Apple products because they revered Steve Jobs. They revered Steve Jobs became he created products that people wanted to buy. Similarly, people don’t buy Apple products because they like Apple. They buy Apple products because Apple makes products they like.

Dumb And Dumber

Jobs has been succeeded by Tim Cook, a nice man for whom the phrase “charisma deficit” might have been invented. But the cult of Apple is still going strong….

The author admits he was wrong about the cult of Steve Jobs personality, but far be it from him to learn from his mistake. Oh no, he’s doubling down instead. Apple is a cult. That’s his story and he’s sticking to it.

At this point in Apple’s success story, one has to work awfully hard to still believe that Apple is being powered by cult-like loyalty from an ever larger and larger base of unthinking and uncritical fanboys. One might even say that with their unwavering belief in the unbelievable, it is the critics, not Apple, that are acting like they are part of a cult.

A great deal of intelligence can be invested in ignorance when the need for illusion is deep. ~ Saul Bellow

Reality Distortion Field

When Jobs was in his pomp, we used to say that he was surrounded by a “reality distortion field” that made it impossible to have an objective view of him.

Did you now? And what exactly was our “distorted” view of Steve Jobs?

— That he created some of the best loved products on the planet?
— The he created one of the greatest companies of our generation?
— That he engineered one of the greatest business comebacks of this generation — or any generation?

Not much reality distortion going on there. All pretty objectively true.

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

The iCar

All kinds of portents – from straws in the wind to chicken entrails and recent corporate hirings – are leading people to conclude that Apple must be working on a car.

Yeah, I’m guessing it’s mostly that last thing — the recent corporate hirings — and not so much the mystical nonsense that you pulled our of your derrière, that has the industry all abuzz.

Why this obsession with cars?

The…possible motivation is at least rational, based on a strategic view that the information technology industry will eventually peak and that it makes sense to have a beach-head in industries such as healthcare and transportation, for which there will always be stable consumer demand.

Say what?

The information technology will eventually peak? Really?

Or, has the author, once again, gotten it all backasswards? Information technology isn’t peaking. On the contrary, software is leaking into every aspect of our lives, including — unsurprisingly — cars.

As Jony Ive’s friend and colleague, Marc Newson, puts it:

There is certainly vast opportunity (for cars) to be more intelligent.

I would add that there is certainly vast opportunity for many of Apple’s critics to be more intelligent, too.

Driving Us Mad

(M)aybe it’s time to consider whether those Apple shares of yours might be approaching their peak. As the ancient Greeks knew, those whom the gods wish to destroy, they first make mad.

Well, the author of this article is no Greek god, but he’s sure as Hades made me mad. I think he has a lot of gall giving investment advice. Why should we trust the advice of a man who predicts Apple’s fall when it’s pretty darn obvious that he hasn’t a clue as to what caused Apple’s rise?


For almost forty years Apple has proven they can have success doing things in their own unique way. And for most all of those same forty years, critics have derided Apple as a cult. Apple is one of the great success stories of our times. Pretending that Apple’s success is irrational is not only irrational, it does us all a great disservice.

Not to know is bad not to wish to know is worse. ~ African Proverb

We shouldn’t be trying to explain away Apple’s success. We should be trying to explain it.

The Macalopes’s Take

For another take on this article, check out: “Assumption junction: Calling Apple a religion has no function” by the Macalope.

The Apple Watch’s Raison D’être

After having read a seemingly infinite number of Apple Watch reviews, I believe I may have discovered something that many, if not most, of the reviewers didn’t: The Apple Watch’s Raison D’être ((rai·son d’ê·treˌrāzôn ˈdetrə/noun: the most important reason or purpose for someone or something’s existence.)). And, I discovered it, not in the Apple Watch reviews, but in an article that preceded the reviews by over a week.

Two weeks ago, David Pierce wrote an article entitled: “iPhone Killer: The Secret History Of The Apple Watch” for Wired. ((The author of the article, David Pierce, thought he had discovered the Apple Watch’s Raison D’être too, but he was far off the mark: “(T)he Apple team landed upon the Watch’s raison d’être. It came down to this: Your phone is ruining your life.”)) In the article, Pierce quoted Kevin Lynch, Vice President of technology for Apple as saying:

“We’re so connected, kind of ever-presently, with technology now,” Lynch says. “People are carrying their phones with them and looking at the screen so much.”

“People want that level of engagement,” Lynch says. “But how do we provide it in a way that’s a little more human, a little more in the moment when you’re with somebody?”

In other words:

— The Apple Watch needs to help provide us with the same level of engagement that we already enjoy;

— But do it in a way/manner that is more natural, more intuitive, more human;

— Paying special heed to how we can we remain present with others while still interacting with, and reacting to, our technology.

These three overlapping goals are, in my opinion, the key to understanding the Apple Watch.


You might have noticed that I didn’t mention Fitness when discussing the Apple Watch’s Raison D’être. When it comes to the Fitness aspects of the Apple Watch, I like John Gruber’s analogy ((To me, Apple Watch’s health and fitness tracking features might be like what the iPhone’s camera is to someone with no interest in photography. I’m glad it’s there, and I’ll surely wind up using it in some ways, but it’s not a reason why I would buy it in the first place. ~ John Gruber)). Fitness is to the Watch as the camera is to the phone. It’s there whether you use it or not, so you might as well use it.

[pullquote] Fitness features will not be the key to the Apple Watch’s success, but the Apple Watch’s success will be the key to using the fitness features[/pullquote]

Smartphones have taught us that the best camera is the camera you have with you. Similarly, the best fitness device is the one you wear all the time. Fitness features will not be the key to the Apple Watch’s success, but the Apple Watch’s success will be the key to using the fitness features.


Competitive smartwatch products may be useful in their own right, but they are not asking — nor are they answering — the same questions that the creators of the Apple Watch have posed. Accordingly, I don’t think existing smartwatches are competing with the Apple Watch at all. At least not yet.

And if others decide to go head-to-head with the Apple Watch, they’re going to find it difficult to emulate the one-two punch of the Force Touch/Taptic Engine that distinguishes the Apple Watch and makes it so compelling.

Defining Success

13fdc7ef298fc646f30c6216778665cf.0I will deem the Apple Watch a success if it, like the iPhone and iPad before it:

1) Initially outsells all other pre-existing devices in its category;

2) Becomes the de facto premium smartwatch of choice;

3) Creates a firm foundation for growth ((The iPhone was introduced in 2007, and across its first 12 months of availability, Apple sold about 5.3 million iPhones. By the third quarter of 2009, the company sold 5.2 million iPhones in a single quarter. In the first quarter of 2012, it sold 37 million. In the first quarter of 2015, it sold 74.5 million. The original iPhone… was also the best smartphone in the world, and over time the number of people who wanted to buy the best smartphone in the world kept growing as the underlying technology improved. ~ Vox)); and

4) Significantly and meaningfully strengthens the overall Apple Ecosystem.

I think the Apple Watch is already a shoo-in to accomplish all four of those objectives.

Mac installed base ~85m. iPad installed base, ~170m (my estimates). Apple Watch likely to be more iPad than Mac. Maybe larger. ~ Ben Bajarin on Twitter


If you were predicting Apple would fail for the last decade, it’s worth working out why you were wrong before continuing such predictions. ~ Benedict Evans on Twitter

The Verge’s Nilay Patel says that while the Apple Watch is easily the best smartwatch you can own today, but he remains a skeptic:

(D)o you want another tiny computer in your life that you have to worry about and charge every day? That’s the real question of the Apple Watch. Does it offer so much to you that you’re willing to deal with the hassles and idiosyncrasies of a new platform that is clearly still finding a true purpose?


I think that’s wrong. ((I’m not debating the issue. I’m just trying to explain why I am right. ~ Elevator Gossip (@GSElevator))) I think the creators of the Apple Watch know its purpose and the Apple Watch is designed to serve that purpose. I think it’s the reviewers, not the Apple Watch, that are struggling to discover its true purpose.

Things don’t have to change the world to be important. ~ Steve Jobs

The question isn’t whether the Apple Watch has a reason for being. It does. ((There’s two kinds of people in this world: those who think their opinion is objective truth, and… there’s one kinds of people in this world. ~ Joss Whedon on Twitter)) The question is whether Apple has executed on that vision and created a wearable computing device that fulfills that vision.

Our DNA is as a consumer company, for that individual customer who’s voting thumbs up or thumbs down. That’s who we think about. And we think that our job is to take responsibility for the complete user experience. And if it’s not up to par, it’s our fault, plain and simply. ~ Steve Jobs

Fortunately for Apple, it’s the votes of the customers, not the reviewers, that matters.

Have spent embarrassing amount of last two days reading gadget reviews. Takeaway: “Reviewers do not understand what motivates people to buy.” ~ Dan Frommer on Twitter

The reason I’m bullish (while some critics are calling bull$hit) on the Apple Watch is because Apple is asking all the right questions and they have a proven track record of success. Some will say this makes me an Apple fanboy.

You’re entitled to your opinion, and I’m entitled to know you’re wrong and stupid. ~ God (@TheTweetOfGod)

I say it makes me way more likely to be right. We’ll have to “watch” and see. ((The goodness of the true pun is in the direct ratio of its intolerability. ~ Edgar Allan Poe))

Premature Predictions About The Apple Watch

On February 27, 2015, Brian X. Chen penned an article entitled: “Apple’s New Job: Selling a Smartwatch to an Uninterested Public”, and on March 2, 2015, Mark Wilson published “You Guys Realize The Apple Watch Is Going To Flop, Right?” Let’s take a look at their critiques of the yet to be released Apple Watch.

There is going to be an unprecedented level of incomprehension and trolling around Apple Watch. ~ Benedict Evans (@BenedictEvans) 9/30/14

But by all means, write articles that Apple is going to lose. Makes my job easier. ~ Ben Thompson (@monkbent) 10/27/14

Consumers Not Excited About Category

For Apple, the hard part — making a smartwatch — is nearly over.

Soon it will be time for the harder part: selling the long-anticipated Apple Watch to consumers who, so far, are not very excited about the idea of wearing computers on their bodies. ~ Brian X. Chen

Saying consumers are not excited about the idea of wearing computers on their bodies is like saying horse owners, prior to the introduction of the Ford Model-T, were not very excited about being seen in horseless carriages. Mister Chen has it backwards. People are not excited about wearables because today’s wearables are not exciting. Trust me, when wearables become useful — similar to when cars became useful — customers will be plenty excited about the category.

Abandoned Features

Nearly two years ago, the company experimented with advanced health monitoring sensors that tracked blood pressure and stress, among other variables. Many of those experiments were abandoned more than 18 months ago after the sensors proved unreliable and cumbersome, these people said. ~ Brian X. Chen

First, features from prototypes often don’t make it into the final product.

A good design finds an elegant way to put all the features you need in in. A great design leaves half those features out. ~ Inspired by Mike Monteiro (@Mike_FTW)

Second, have we learned nothing from Apple’s history of making products? Apple is famous for creating products that contain fewer features and a better user experience. For example, if you wanted a mobile phone with more features than the iPhone, you could have purchased a Droid.

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 Advertisement, 18 October 2009

Valuing features over the user experience is the second biggest mistake in consumer market analysis. ((Valuing price over user experience is the first most consistent mistake.))

Flooded Market

Still, when Apple releases its watch in April, it will enter a market already flooded with smartwatches running Android Wear, a version of Google’s Android software system tailored for wearable computers.

Flooded market? That’s just not so. In relative terms, the number of smartwatches on the market is minuscule and their impact on consumers has been negligible.

Further, although the Apple Watch may share the same category as current smartwatches, that does not mean that they are in the same class. The Apple Watch is as different from the current crop of smartwatches as the iPod, iPhone and iPad were different from the MP3 players, mobile phones and tablets that preceded them.

Measuring the existing market is a mistake because the existing products are hired for different jobs.

For example, were tactile keyboard Smartphones from 2006, below, ever a real threat to the touch-based iPhone? No. They may have been in the same category, but they were most definitely not in the same class and they were most definitely not competing for same customer base.


Andy Rubin on seeing the obvious, non-novel iPhone: “Holy crap.” ~ Benedict Evans (@BenedictEvans)

The Apple Watch may or may not succeed, but it is facing virtually no competition for the customers that it is targeting.


Five years from now, we will look back on round shaped smartwatches and view them the same way that we currently view physical keyboards on touchscreen smartphones.


Unlikely To Be Game Changer

But it is unlikely to be a game-changer for Apple, at least anytime soon. Toni Sacconaghi, a financial analyst for Sanford C. Bernstein research, thinks the watch will make only a modest contribution to Apple’s bottom line this year. He predicts that Apple will ship 7.5 million watches in the second half of the year.

That is peanuts compared with the tens of millions of iPhones that fly off the shelves every quarter. ~ Brian X. Chen

With all due respect to Mister Chen, this analysis of what constitutes a “game changer” is wrong on many levels.

First, contending that a product has to outsell the iPhone in order to be considered a “game changer” is setting the bar at an impossibly high level. After all, the iPhone, by itself, brings in more revenue than such tech luminaries as Microsoft or Google. Suggesting that a product has to be bigger than Microsoft, or bigger than Google, in order to be considered a “game changer” is unrealistic.

Our goal isn’t to make money. Our goal absolutely at Apple is not to make money. This may sound a little flippant, but it’s the truth…Our goal and what gets us excited is to try to make great products. We trust that if we are successful people will like them, and if we are operationally competent we will make revenue, but we are very clear about our goal. ~ Jony Ive

Second, the term “game changer” and “money maker” are not one and the same. The Macintosh was surely a “game changer”, yet Apple is only the fifth largest maker of PCs in the world today, and it took them thirty years to rise to that level.

We’re not focused on the numbers, we’re focused on the things that produce the numbers. ~ Tim Cook

Third, aren’t we employing a double-standard here? Google Glass, for example, was widely considered to be a “game changer” — right up until the moment when it was discontinued. And is it going to outsell the iPhone? Not hardly.

What’s the over-under on how long it will take Apple Watch to outsell Google Glass? A minute? No, seriously… a minute? Less? ~ Frank Boosman (@fboosman) 11/18/14

Jonathan Ive’s New Newton

The Apple Watch is Jonathan Ive’s new Newton. It’s a potentially promising form that’s being built about 10 years before Apple has the technology or infrastructure to pull it off in a meaningful way.

As a result, the novel interactions that could have made the Apple watch a must-have device aren’t in the company’s launch product, nor are they on the immediate horizon. ~ Mark Wilson

The next Newton? Hmm. Why does that sound so familiar?

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

A product ahead of its time. Hmm. Why does that sound so familiar?

I added it up and … like 800 people are going to buy the iPad. . . . It’s not that the iPad is a failure. It’s just a product ahead of its time. No one should actually buy this iPad — between its inevitable first-generation bugs, fulfillment problems, and buyer’s remorse over added features and price drops, it’s heartbreak waiting to happen. ~ Molly Wood, CNet, 31 January 2010

JetsonsHow is the Apple Watch ahead of its time anymore than the iPhone was ahead of its time? The iPhone had WAY less support than the Apple Watch does. The iPhone didn’t even have native applications during its first year of existence and even after they were added in 2008, Apple didn’t have the base of developers that it does today.

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

I owned the original iPhone. Compared to today’s phones, and even compared to the second and third generation iPhones, it couldn’t compete. But compared to what came before it, it blew the competition away. I suspect that the same will be true of the Apple Watch.

You want to wait? Go ahead. But I, for one, still don’t regret having owned the original iPhone and I doubt whether those who buy an Apple Watch in April will look back and regret their purchases either.

Just Another Fitness Band

(R)eports suggest that Apple has pulled a lot of the power-draining specialty hardware from the watch—namely sensors to measure “blood pressure, heart activity, and stress levels, among other things.” That’s deep health mining stuff—much deeper than the heart rate and accelerometer-based movements the Apple Watch that ships will offer. In this sense, the Apple Watch will no longer stand out from any other fitness band on the market. ~ Mark Wilson

With all due respect, I have to vehemently disagree. The communication tools alone — including smart replies, emoji, dictation, voice messaging, walkie-talkie, glances, digital touch, sketch and doodles, Siri, taptic engine, and heartbeat — will be more than enough to distinguish the Apple Watch from all other fitness bands.

Besides, the Apple Watch isn’t about being a fitness band, it’s about being a platform.

We never saw ourselves in a platform war with Microsoft, and maybe that’s why we lost. ~ Steve Jobs

[pullquote]It is platform, more than anything else, that will matter most.[/pullquote]

I would contend that Apple — both with the iPhone, and now with the Apple Watch — very much see themselves in a platform war. And it’s a war they intend to win.

Will the Apple Watch have more sensors in future models? You betcha. But that will not be what makes or breaks it. The Apple Watch is a platform and the foundation for that platform is being laid now. Focusing on missing sensors is like focusing on the missing cut and paste feature in the original iPhone. It is platform, more than anything else, that will matter most.

Not For The Masses

When I look at the Apple Watch, I’m not seeing an empathetic creation for the masses. I’m seeing what the New Yorker’s more than 16,000-word story on Jonathan Ive would only hint at—that Apple may have built out the watch to satisfy the urges of a designer who has become more obsessed with Bentleys and Rolexes than making attractive, functional technology that will actually make life better for the 99%. ~ Mark Wilson

What? When the heck did Apple become the company that made products “for the masses”?

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

Hasn’t the knock on Apple always been that they make high-priced products for those who have too much money and too little sense?

(O)n some level, (Apple is) failing consumers when only 18% of the global smartphone population has an iPhone. ~ Jay Yarow, Business Insider, 24 May 2013

No Jay, you’re wrong. In fact, you’ve gotten it exactly backwards. Apple is the integrated solution that creates markets, not the modular solution that expands markets.

We’ve always believed that our role in life is to make the best, not the most. ~ Tim Cook

Apple created new product categories with the Mac, the iPod, the iPhone and the iPad. They are the cutting edge that clears the path for others to follow. If you question that statement, simply take a look at the operating system you are using on your desktop and notebook computers, the operating system on your touch devices, and the physical design of your notebook computers, your smartphones and your tablets. They were all inspired by Apple designs.

You know its driven Apple from the beginning… This compulsion to take incredibly powerful technology and make it accessible. ~ Jony Ive


As it happens, I think the Apple Watch will be a thing. Others do not. But we don’t know. Let’s come back in six months and see. ~ Benedict Evans

Yeah, I too think the Apple Watch is going to do all right — actually much more than just “all right”. I think, with Apple’s track record, they deserve the benefit of the doubt. But that doesn’t mean that I KNOW the Apple Watch is going to do well. Because I just don’t know. And I’m willing to wait and see how it plays out before jumping to any premature conclusions. But the one thing I am not willing to do is to sit here and listen to a lot of nonsensical guff as to why it won’t work out.

You’ve got a good theory as to how it will all turn out? Bring it on. But if all you’ve got is the weak sauce people like Brian Chen and Mark Wilson have been serving up, then shut up, get some popcorn, sit down, and wait in silence for the curtain to go up, like the rest of us. It promises to be one hell of a show.

BONUS CLAIM CHOWDER: Why Apple’s Upcoming Presentation Will Be A Failure

Steve Jobs’ blockbuster keynote address at last week’s Macworld was brilliantly and powerfully delivered — one of his best ever. It was also a colossal mistake. I think Jobs blew it. Here are my six reasons why:

1. Jobs raised buyer expectations too high.

2. Jobs raised Wall Street expectations too high.

3. Jobs gave competitors a head start.

4. Jobs undermined Apple TV hype

5. Jobs put iPod sales at risk.

6. Jobs wrecked Cisco talks.

Mike Elgan, Computerworld, 18 January 2007

Thanks for your insight, Mike. I can’t wait ((Actually, I can wait. I can wait forever.)) to hear the many reasons why the upcoming Apple Watch presentation “blew it” too.

The Secret To Apple’s Success Remains A Secret

On January 29, 2015, James B. Stewart of Common Sense wrote: “How, and Why, Apple Overtook Microsoft.” (All quotes are from this article unless otherwise attributed.)

When Microsoft stock was at a record high in 1999, and its market capitalization was nearly $620 billion, the notion that Apple Computer would ever be bigger — let alone twice as big — was laughable. Apple was teetering on bankruptcy. And Microsoft’s operating system was so dominant in personal computers, then the center of the technology universe, that the government deemed the company an unlawful monopoly.

This week, both Microsoft and Apple unveiled their latest earnings, and the once unthinkable became reality: Apple’s market capitalization hit $683 billion, more than double Microsoft’s current value of $338 billion.

[pullquote]Apple’s profit this year is $5 billion more than last year. Perspective: Microsoft’s entire quarterly profit this year was $5.8 billion. ~ Farhad Manjoo[/pullquote]

Apple’s rise from near bankruptcy to the largest tech company in the world is one of the most fascinating business stories of our times. Virtually no one predicted that Apple would survive, much less thrive, from their fall in the late nineties. As Apple has rewritten the record books, business professors have had to rewrite their business books, too. Apple has been studied as much or more than any company on the planet yet, despite the intense scrutiny, Apple remains inscrutable. Apple’s success, both past and present, continues to baffle and confound friends, critics, journalists, analysts, and investors alike.

At this point the whole journo-analyst class, myself included, has to concede we were wrong about Apple having to make a cheaper iPhone. ~ Farhad Manjoo

With an introduction like the one I’ve quoted, above, you would think that the purpose of an article entitled “How, and Why, Apple Overtook Microsoft” would be to praise Apple, not bury them. However, other than those first few laudatory paragraphs, the remainder of the article focuses not on Apple’s rise, but, rather, on the likely reasons for their demise.

Sharing Microsoft’s Fate?

Apple has won. How this happened contains some important lessons — including for Apple itself, if it wants to avoid Microsoft’s fate. Apple, after all, is now as dependent on the success of one product line — the iPhone accounted for 69 percent of its revenue — as Microsoft once was with Windows.

Suggesting that there are lessons to be learned from Apple’s unprecedented rise is obvious. However, suggesting that the Apple of today is in a similar position to the Microsoft of yesterday, simply because Apple is dependent upon a single product, is dubious. And suggesting that Apple needs to learn from Microsoft’s mistakes in order to avoid Microsoft’s fate is, frankly, ludicrous.

Don’t get me wrong, I think it’s great to study Microsoft and other companies. There’s much that can be learned. But Apple is as unlike Microsoft as a company can be. It is perfectly reasonable to suggest reasons why Apple may, one day, plateau and be superseded by another tech company. It is perfect unreasonable to suggest that Apple will falter in the same way and for the same reasons that Microsoft did.

Microsoft’s Vision

The most successful companies need a vision, and both Apple and Microsoft have one. But Apple’s was more radical and, as it turns out, more farsighted. Microsoft foresaw a computer on every person’s desk, a radical idea when IBM mainframes took up entire rooms. But Apple went a big step further: Its vision was a computer in every pocket. That computer also just happened to be a phone, the most ubiquitous consumer device in the world. Apple ended up disrupting two huge markets.

I respectfully disagree with the author’s oversimplified take on the respective visions of Microsoft and Apple. First, the author is subtly misquoting Microsoft’s vision statement, which was:

A computer on every desk and in every home. ~ Bill Gates,1980

This was one of the greatest corporate vision statements of all time. While it is true that Microsoft virtually achieved their audacious mission and has struggled to replace it with a worthy successor, I would suggest that it wasn’t the achievement of, but rather the corruption of, Microsoft’s mission statement that caused Microsoft to lose their way. [pullquote]Idle Observation: most or all of the companies described as ‘missing mobile’  were in fact in mobile 6-7 years before Apple. ~ Benedict Evans[/pullquote] After all, Microsoft didn’t ignore mobile computing. On the contrary, they were into mobile computing far earlier than Apple was.

It wasn’t Microsoft’s original mission statement that kept them from conquering mobile. Rather, it was the morphing of Microsoft’s vision from “A computer on every desk and in every home” to “Microsoft Windows on every computer” that derailed their mobile efforts. This oh-so-subtle shift in vision had oh-so-dramatic practical implications. Windows became the be-all and end-all for Microsoft and, inevitably, the “Windows everywhere” mantra became corrosive as it left no room for innovation anywhere but within the framework of Windows.

Microsoft missed mobile because mobile devices demanded a different user input (touch) and a different user operating system optimized for touch. If Microsoft had remained true to their original mission of computing everywhere, they might have created a mobile operating system to compete with their Windows desktop operating system. Instead, Microsoft tried to shoehorn Windows into every device — from watches to phones, to televisions and to “big ass” tables. Windows, not computing, became the cash cow that was worshiped at Microsoft and all other competing innovations were sacrificed upon its altar.

Like many successful companies, Microsoft nurtured its dominant position, but at the risk of missing potentially disruptive innovations. “You have to acknowledge that Microsoft has been successful and it still is,” said Robert Cihra, a senior managing director and technology analyst at Evercore. “But clearly, they’ve struggled over how to protect the Windows franchise while not having that hold them back in other areas. I think even Microsoft would agree that they’ve been too concerned with protecting Windows over the years, to their detriment.”

As Tim Bajarin put it:

(The Microsoft of today is) about making Microsoft relevant to all platforms and mining for dollars well beyond the Windows franchise. This is fantastic for Microsoft and I believe this new strategy is going to make them more relevant to the tech world.

I agree. Microsoft’s future is cross-platform services that work everywhere. Yet even today, in a vastly changed — and I would argue, vastly improved — Microsoft, CEO Satya Nadella, who should know better, continues to worship, and suggest that others should worship, Windows.

We want to move from people needing Windows to choosing Windows to loving Windows. ~ Satya Nadella

Microsoft cannot seem to shake their Windows dependency, still focused as they are on what is good for Microsoft instead of what is good for their customer.

“We absolutely believe Windows is the home for the very best of Microsoft experiences.”

What about the customer experience?” ~ Ben Thompson

Apple’s Vision

And what of Apple’s vision? Was their vision really ever “a computer in every pocket”? Hardly. Remember, Apple’s revival started with the candy colored iMacs; continued on with the brilliantly designed Powerbook notebook computers that are now the template for practically every notebook computer on the market today; and took a huge leap forward with the iPod which, if anything, was a device tethered to a computer and which specialized in music distribution. Even the iPhone came AFTER Apple had been exploring the tablet form factor that later become the iPad. Apple’s mission was anything but “a computer in every pocket.”

So what is Apple’s vision?

We’ve always believed that our role in life is to make the best, not the most. ~ Tim Cook

We think about doing a great product. And we think that if we do that well, that other things will take care of themselves. And so that’s what we’re focused on. ~ Tim Cook

If Apple had a more radical vision than Microsoft, it was a vision to make the very best computing devices possible, cannibalization be damned.

Mr. Sacconaghi said. “Unique, disruptive innovation is really hard to do. Doing it multiple times, as Apple has, is extremely difficult. It’s the equivalent of Pixar producing one hit after another. You have to give kudos to Apple.”

By contrast, “Steve ingrained in the DNA of Apple not to be afraid to cannibalize itself,” Mr. Isaacson said. “When the iPod was printing money, he said that someday the people making phones will figure out they can put music on phones. We have to do that first. Now, what you’re seeing is that the bigger iPhone may be hurting sales of iPads, but it was the right thing to do.”

Diversification Or Losing Focus?

Microsoft has repeatedly tried to diversify, and continues to do so under Mr. Nadella. But “it’s been more of a follower whereas Apple has been more of a trendsetter, trying to reinvent an industry,” Mr. Sacconaghi said.

[pullquote](D)iversification simply telegraphs lack of a definite strategy. ~ Farooq Butt[/pullquote]

Diversification is all well and good, but a laser focus is healthier and better. I would argue that Microsoft wasn’t diversifying so much as they were flailing around trying to discover what was next. During their heyday, Microsoft had too little competition, too much money, and too little idea of how to spend that money.

Does that sound like any other company we know? A company that actually brags about their lack of focus by calling their random projects “moon shots”?

Apple, on the other hand, has more money than God and while it is fair say they have no idea what to do with it all, it is not at all fair to say they’re spending it on random Project X moon shots. Apple seems to have a very clear idea of where they are going and they use their purchases to advance their purposes, whereas Microsoft and Google sometimes try to use their purchases to discover their purpose.

What Is There Left For Apple To Do?

Apple is also running into “the challenge of large numbers,” Mr. Cihra said. With a market capitalization approaching $700 billion, the number “scares people,” he said. “How can it get much bigger? How is that possible?” Apple is already the world’s largest company, by a significant margin.

“It’s getting tougher for Apple,” Mr. Cihra said. “The question investors have is, what’s the next iPhone? There’s no obvious answer. It’s almost impossible to think of anything that will create a $140 billion business out of nothing.”

Every year, pundits ask “What is there left for Apple to do?”. And every year, Apple provides a resounding answer that exceeds all expectations. And every year, those self-same pundits use Apple’s success as a cudgel with which to beat down future expectations. You think I’m exaggerating? Take a gander at the past parade of pundits predicting peril for Apple:

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

“Apple 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

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

“Still, the iPod, iPhone, and iPad are all some of the top selling products in their categories, so why 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

“If you look at any institution in history – look at the Roman Empire – anything in history, and what it looks like when it’s peaking. Look at Apple, and how can you say it’s not peaking?” ~ Trip Hawkins, Founder and CEO of Digital Chocolate, 3 Aug 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

“It’s been years — considered a long time in tech — since Apple delivered a “mind-blowing” product…” ~ Jon Swartz, USA Today, 4 October 2012

“Apple has nothing new in the pipeline.” ~ Henry Blodgett

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

“Deutsche Bank’s view is that Apple likely has few surprises left.” ~ 10/2/14

The Secret To Apple’s Success


James B. Stewart devoted an entire article to explaining “How, and Why, Apple Overtook Microsoft” and yet it’s clear that he doesn’t, and many other pundits don’t, have a clue as to how Apple succeeded. And if we don’t understand how Apple succeeded, what right do we have to claim — and what excuse do we have for claiming — that we know the reasons why Apple will fail?

I notice a consistent pattern in Apple’s critics. Those that understand Apple the least, criticize Apple the most. If you want me to believe that you understand the reasons why Apple will fall, first demonstrate to me that you understand the reasons why Apple grew at all and grew so tall. Until then, I’ll remain skeptical of the doomsayers. For while I have great respect for the opinions of many Apple observers, I still believe that the secret to Apple’s success…remains a secret.

The secret of business is to know something that nobody else knows. ~ Aristotle Onassis

The best entrepreneurs know this: every great business is built around a secret that’s hidden from the outside. ~ Peter Thiel

We Shouldn’t Be Dazzled By Apple’s Multiple Disruptions

On Wednesday, February 4, 2015, Juan Pablo Vazquez Sampere, professor of business administration at IE Business School in Madrid, published an article entitled: “We Shouldn’t Be Dazzled by Apple’s Earnings Report.”


Apple’s record Q1 earnings report may have led some consumers to believe the “old” Apple was back. And the world wants that Apple back. We want the Apple that revolutionized industries and communication in the last decade.

(D)oes the fact Apple earned more money in one quarter than any public company in history mean our beloved Apple is alive and well?

A look at the bigger picture within which these numbers sit suggests an alternate view. To see that larger picture, let’s locate Apple within its larger context as a once disruptive innovator that’s now essentially an incumbent.

To summarize, the Professor’s thesis is the once disruptive Apple has now become the defensive incumbent and Apple’s record quarterly profits are, in part, proof of Apple’s changed status.

Theory And Facts

A fundamental tenet of disruptive innovation is established firms normally do not react to disruptors and for a good reason. Generally, disruptors take over the least profitable customers of the industry. As that happens, established firms usually redirect the resources they might have spent defending their low value consumers toward their high value consumers.

While it’s true disruptors normally take over the least profitable customers of an industry, it’s important to note Apple’s disruptions have occurred at the top, not at the bottom, of the market. For example, the iMac attacked the high end of the desktop industry, the Powerbook attacked the high end of the notebook industry, the iPod attacked the high end of the MP3 industry and the iPhone attacked the high end of the mobile phone industry.

One of the most common misunderstandings about disruptive innovation is thinking that incumbents are either blind to the opportunity disruptors are creating or they are deliberately choosing to ignore it. It’s more accurate to say that they see it, but are unable to adopt the disruptor’s business model for some reason.

But not reacting at the business model level does not mean failing to react at the technological level. Very often incumbents do adopt a disruptor’s technology if it serves their best customers.

In many cases, what is gold for the disruptor is only the cost of doing business for an incumbent, which can now serve its best customers better — even if it does not earn much in the way of additional revenue or profits.

(T)here are the cases when new technology helps incumbents better monetize their premium customers. One such example is the smartphone’s screen size.

And now we come to the nub of the professor’s argument. He contends Apple’s increased profits in the last quarter were due to a technological innovation — screen size — rather than to a truly disruptive change in Apple’s business model.

In a smartphone market that is growing at a healthy rate of over 25%, data indicates that Apple had lost 2% of market share in the last three years.

I think we have to stop here and question why the professor is using market share as the yardstick for success. I recently read that Apple is taking 90% of all mobile profits. Profit share would seem to be a far better indicator of success — and disruption — than market share.

This loss of market share came from new customers that chose other brands and, even more importantly, from former Apple customers who defected because of frustration over a particular feature: screen size.

At this point, we need to challenge the factual premises being used to support the professor’s argument. Contrary to his assertion, all the available evidence indicates the iPhone’s customer loyalty is the highest in the industry and customers from other manufacturers are moving to the iPhone at a far greater rate than they are moving from the iPhone.

By launching the iPhone 6, Apple has regained a portion of these customers, as well as an additional share of new customers, who now can compare different phones without screen size being an issue.

So at a strategic level, what Apple has done is what incumbents usually do: adopt a disruptor’s technology (Samsung’s and Xiaomi’s, mainly) to sell more to its premium customers.

At this point I think we have to come full stop and examine the professor’s thesis with an extremely skeptical eye. Is he seriously suggesting Samsung is the disruptor here? Perhaps the good professor has been stranded on Gilligan’s Island for the past year and is unaware of the fact Samsung’s mobile empire is rapidly unravelling. Samsung is anything but a disruptor to Apple. And Xiaomi? Very disruptive. But very disruptive to Samsung, not Apple.

Despite these record numbers, though, the process of disruption continues. Xiaomi and other disruptors still eat away at the low end with business models that are capable of monetizing their products much more effectively than Apple.

Here’s the thing: That’s just not so. As noted above, Apple has always targeted the premium, not the low end, of the market. Xiaomi is not disrupting Apple in any way because Xiaomi does not compete for the same customers Apple does.

From Disruptor To Incumbent

If the professor is arguing the iPhone 6 and 6 Plus are not, in themselves, disruptive products, then I’m with him. They are iterations in a long line of iterations that followed in the disruptive path created by the 2007 iPhone.

If, however, the professor is arguing the iPhone is currently being disrupted by Samsung, Xiaomi or others, then I have to question both his theory and his facts, as I have done.

But what the Professor really seems to be chiding Apple for is Apple’s seeming reticence to continuously disrupt new markets and constantly re-invent new industries on an annual basis.

Apple used to revolutionize industries, announcing record sales numbers because it had introduced a new technology, feature, or product that we had never imagined but that, when we saw it, we all instantly wanted. That Apple seems no longer present. In this instance, all Apple has done is copy a feature for its own best customers. While that’s very effective for today, it does not solve the problem of tomorrow for a company that competes on serial innovation.

But even more fundamentally, this is not the Apple that we want or need. We, as loyal customers, believe Apple exists to revolutionize industries (and in the process earn a ton of money).  Announcing boatloads of money, as if that were point, makes us think Apple no longer has the vision to keep on revolutionizing. It makes us think that it can no longer do what it did before — which is to tell us what comes next.

What’s more, by dazzling us with dollars, it seems that Apple’s leaders are deliberately trying to divert our attention. By making such a communication effort to let us know how much money they’ve made — instead of what they’ve done to change the world recently — they are inevitable forcing us to ask ourselves, is this what we get from the new Apple?

Is this a fair criticism? Exactly how soon and how often is Apple supposed to create disruptive innovations without fear of being demoted to the lowly status of “incumbent”? (An incumbent, mind you, that just made more quarterly profit than any other company in the history of the world.) I’m sure we could name several companies that have disrupted their respective industries over the past five years but how many companies can we name that have disrupted their industry twice in the past seven years, as Apple has done with the iPhone in 2007 and the iPad in 2010? How many serial disruptors can we name — companies that disrupted their industry over and over again the way that Apple has with the Apple ][, Macintosh, iMac, Powerbook, iPod, iPhone and iPad? ((Not to mention the upcoming Apple Watch…which I’m not going to mention because it hasn’t disrupted anything yet.))

Isn’t criticizing Apple for not having re-invented computing since 2010 or 2007 the equivalent to criticizing the New England Patriots for having “only” won four Super Bowls in the past decade and not having won a single Super Bowl since early February 2015? What Professor Sampere and many others are wishing from Apple is the equivalent of wishing their favorite soccer/football team would win the World Cup every year (even though the World Cup is only held once every four years) or that one’s favorite baseball team would win the World Series two or three times in a single season.


Personally, I’m still grateful for the mere two disruptions Apple has managed to produce over the past eight years and I’m anxious to see if Apple has done it again with Apple Pay or can do it again with the debut of the Apple Watch in April. But that’s just me. Unlike Professor Sampere — who demands Apple do the wholly impossible — I am content with Apple continuing to do the wholly improbable.

Author’s Note: For another, slightly more tongue in cheek take on the same article, see: “Too much book learning: Convincing yourself Apple’s doomed” from the great Macalope.

Addendum: Yet another great discussion of the matter is contained in “How Many Laws Did Apple Break?” by Jean-Louis Gassée. Highly recommended.

Thoughts On Apple’s E-book Appeal

On Monday, December 15, 2014, Apple’s appeal of the e-book anti-trust case was heard. Here are some of my thoughts on the matter.

Drug Dealer Analogy

Deputy Solicitor General Malcolm Stewart…called in to defend the antitrust ruling…tried several times Monday to compare Apple to a driver who carries a narcotics dealer to a drug pick up.

The point of his analogy…was that, if Apple knew book publishers were engaged in an unlawful conspiracy to fix the price of e-books and was prepared to facilitate that conspiracy, it was as guilty as they were.

Judge Dennis Jacobs would have none it. Narcotics trafficking, he pointed out, was one of the very few “industries in which the law does not look with favor on new entrants.”

The packed courtroom erupted in laughter. ((All quotes — unless otherwise indicated — are taken from the article entitled: “They laughed at the DOJ’s e-book antitrust case against Apple” by  Philip Elmer-DeWitt @philiped DECEMBER 15, 2014))

The “Drug Dealer” analogy illustrates how differently the two opposing sides see this case. The Department of Justice sees Apple as the ringleader who galvanized the Book Publishers into performing an illegal act. Apple sees itself not as the driver of a getaway car filled with drug dealers but, as a bus driver who should not be held accountable for the subsequent illicit actions of that buses’ passengers.

But Apple’s protestations of innocence go much further than this since they don’t believe that either they or the Book Publishers were committing a crime. Apple contends that, in challenging Amazon’s book selling monopoly, they were performing a public good. Going back to the Department of Justice’s analogy, Apple doesn’t think they were driving a getaway car or a bus. Apple thinks they were driving a fire truck on its way to put out the monopoly fire caused by Amazon. In Apple’s view, their actions should have been applauded by the Department of Justice, not condemned.

Per Se

The appeal is likely to turn on an obscure legal point: Did the district court judge commit a reversible error when she found Apple guilty “per se” of a horizontal price fixing conspiracy?

From the admittedly skewed perspective of this recovering attorney, “per se” is anything but obscure.

A quick example might be helpful. If you were driving down the road and the truck in the next lane exploded, you would need to prove negligence in order to collect damages. But if the truck were carrying dynamite, the truck would be considered inherently dangerous. No proof of negligence would be required by a plaintiff. The truck would be considered — by virtue of carrying a dangerous cargo like dynamite — negligent per se.

In the Apple e-book anti-trust case, Judge Cote treated Apple like a truck filled with dynamite. The Department of Justice was not required to prove Apple was in violation of anti-trust law. Illegality was assumed.

The key legal question was whether the Apple’s conduct as a new entrant in the e-book market should have been viewed as “per se illegal”—in which case it could be simply presumed to be anticompetitive—or whether it should have been judged under a more demanding “rule of reason” analysis, in which case the fact finder (which here was Judge Cote) had to undertake a much more searching investigation of all the circumstances in order to decide whether the conduct was pro-competitive (i.e., benefitted consumers) or anticompetitive.

I know about one one-thousandth as much anti-trust law as does Judge Cote but, even so, I could never shake the feeling that it was a mistake for her to apply the “per se” standard to Apple. And I’m not the only one who felt that way. Apple obviously disagreed with the Judge’s stance and they had relevant case law from the Supreme Court to back up their position.

Apple argues that vertical price-fixing agreements — for example, between an e-book distributor and e-book publishers — are not per se unlawful. At trial and in its appellate brief it invoked the Supreme Court’s ruling in Leegin Creative Leather Prods v. PSKS that vertical price restraints must be weighed by the more forgiving “rule of reason. ((”Why Apple’s e-book appeal is a big deal by Philip Elmer-DeWitt @philiped DECEMBER 14, 2014))

Justice scale on blue background

Why Not Amazon?

When the Department of Justice charged Apple with conspiring to fix the price of e-books, the case was widely seen in both Silicon Valley and New York publishing circles as an error of enforcement.

Why was Apple, a giant in its own right but a new entrant in the e-book market, being prosecuted and not that other giant, Amazon?

Amazon, after all, had an 80% to 90% share of the e-book market — a monopoly by almost anybody’s standard — and was selling the publishers’ most important titles below cost. ((Book News: Apple Enters A New Round In E-Book Price-Fixing Fight DECEMBER 15, 2014))

This case has always been confounding to the majority of those who study anti-trust law. Instead of pursuing Amazon, the monopolist, the Department of Justice pursued Apple, the new entrant. Some of the members of the Appeals Court also viewed this as odd.

At times Judge Jacobs came close to suggesting that the government had prosecuted the wrong company. At the very least, he said, a horizontal initiative “used to break the hold of a monopolist” ought not be found to be illegal per se. He likened any collusive conduct on the publishers’ part to “mice getting together to go put a bell on the cat.”


This case has always been about prices. The Department of Justice views high prices as anti-consumer — and therefore in violation of anti-trust laws — and low prices as a public good. The problem with this approach is that it is both bad economics and bad policy.

Bad Economics

Economists know there is no such thing as a “fair” price but non-economists don’t see it that way at all. Most consumers view high prices are always bad and low prices are always good.

Take, for example, the price of oil. When prices go up, people are outraged, oil companies are castigated in the popular press and governments hold hearings. When prices go up, it’s viewed as an evil conspiracy led by evil conspirators and it’s darn well got to be stopped.

And when prices go down? Nary a whisper is heard from consumers, conspiracy theorists or government regulators. When prices go down, it’s due to supply and demand — just economics doing its thing. Economic theory seemingly never works when prices go up but always works perfectly when prices go down.

The government’s anti-trust enforcers seem to view the economics in the Apple e-book case in the very same simplistic way as most consumers view oil prices. High prices are bad. Low prices are good. End of story. After Apple entered the e-book market, book prices went up. To the Department Of Justice’s way of thinking, what more did one need in order to prove that Apple and the Book Publishers were anti-competitive co-conspirators?

Turns out, one needs to know more. A lot more.

The judges appeared to give weight to this suggestion, and to accept (Apple’s) contention that a brief price spike, which damned Apple and the publishers before Judge Cote, should not result in an automatic finding of illegal price-fixing. Instead, (Apple) said the price spike was limited only to the five publishers, and that the overall effect of Apple’s entry to the ebook market dramatically benefited consumers since many more players were willing to enter the market.

Bad Policy

In addition to being bad economics, the government’s position on pricing was also bad policy. The Department of Justice saw itself as the protector of consumers. If consumers were hurt by Apple’s actions then, in their view, Apple was in violation of anti-trust law.

But the purpose of anti-trust law is to provide more competition, not lower prices, and that’s exactly what Apple was doing. By focusing on prices instead of competition, the Department of Justice completely lost sight of its mission.

Of Course Prices Went Up

I have always viewed the Department Of Justice’s stance on pricing to be non-sensical. OF COURSE PRICES WENT UP. Amazon was selling some books below cost and AT A LOSS. This is a classic way to monopolize a market and is often characterized as predatory pricing. When Apple entered the market, Book Publishers added contractual clauses that caused Amazon to lose its ability to sell books at a loss. Rising prices were not an indication that Apple was gaining an anti-competitive advantage, they were an indication that Amazon was losing an anti-competitive advantage.

When Apple tried to point this out to Judge Cote she would have none of it. She quite clearly stated the wrongdoing of Amazon did not exonerate Apple. And in a sense, she was quite right. For example, If the guy in the car next to you is driving 30 miles per hour over the speed limit, that does not excuse you from getting a ticket if you are driving a mere 15 miles per hour over the speed limit. The wrongdoing of others does not excuse your own wrongdoing.

What Judge Cote stoutly ignored was context. Apple’s actions were not occurring in a vacuum — they were occurring in response to Amazon’s actions. Using my speeding analogy, Apple may well have been speeding but, in their view, they did not deserve a ticket because they were acting like a fire truck, rushing to put out the monopoly fire initiated by Amazon.

Judges Jacobs and Lohier seemed quite concerned that Judge Cote had used the wrong standard, but Jacobs’s qualms clearly went much further—seeming to question the government’s judgment in ever having brought the case. His problem was that Apple was a new entrant that was bringing competition to a market that had been, until then, dominated by a “monopolist,” Amazon. Judge Jacobs also repeatedly referred to Amazon’s $9.99 pricing policy, whereby it sold books at below the wholesale acquisition cost, as “predatory pricing,” and seemed to suggest that Amazon was obviously using it as a means of maintaining its monopoly dominance.”


If Apple loses at the Appellate level, there is no doubt in my mind that they will appeal the case to the Supreme Court. If the Supreme Court accepts the matter, the case will live on.

And if Apple wins? I very much doubt if the Appellate court will dismiss the case outright. It is far more likely that they will remand the case to a lower court in order to have a portion of it re-litigated. Once again, the case will live on (and on and one and on…).

If Apple wins its appeal, the most interesting question to me will be whether the Appellate Court remands the case to Judge Cote or to a different Judge altogether. Common sense would tell you that it’s a bad idea for an Appellate Court to chastise a Judge and then ask that Judge to be objective when re-trying that same case again. But we in the legal profession do not see ourselves as subject to those emotions so readily exhibited by ordinary people. In fact, we sometimes do not see ourselves as people at all.

There is no shortage of lawyers in Washington, DC. In fact, there may be more lawyers than people. ~ Supreme Court Justice Sandra Day O’Connor ((Excerpt From: Robert Byrne. “The 2,548 Wittiest Things Anybody Ever Said.” iBooks. https://itun.es/us/h_yeB.l))

If the Appellate Court were to remand the case Judge Cote, they would be saying that she made a mistake in law. If they remand the case to a different Judge, that would be highly unusual. And highly suggestive, as well.

An Attitude Of Gratitude

Thursday, November 27th is Thanksgiving in the United States. So rather than do my normal weekly column, I thought I’d take a moment to talk about some of the things I am grateful for.

There’s a tendency in technology — in all things, really — to be more than a little unappreciative for the all the wonderful things we have around us. This is not a new phenomenon.

All right, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, a fresh water system, and public health, what have the Romans ever done for us? ~ John Cleese as Reg, in Monty Python’s Life of Brian

By almost every objective measure, things are getting better. We don’t notice because we don’t know history well so we don’t recognize how much better the now and here is than the then and yesteryear was. Further, it’s our nature to focus on the bad and accept the good as our due.

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

This is why a day of Thanksgiving — a day to remember how truly good we have it — is worth having.

Mobile And Personal Computing

In our own little corner of the world, mobile and personal computing has dramatically improved people’s lives.

(H)umans are distinguished from other species by our abilities to work miracles. We call these miracles technology. ~ Peter Thiel

In 1995 there were 16 million people connected to the internet. In 2005 that number had grown to one billion. Already in 2014, that number has surpassed three billion — 40% of the world’s population.


In 1995, there were 250 million PCs. By 2020, 90 percent of the world’s population over six years old will have a mobile phone.


Sometimes this new technology does not come in the exact form we expected or desired so we deride, dismiss or ignore its significance. Chris Dixon, below, gently chides us for our tendency to let what we forever want blind us to the wonder of what already is.

We asked for flying cars and all we got was the entire planet communicating instantly via pocket supercomputers. ~ Chris Dixon

Everyone Gets A Pocket Supercomputer

The implications of a supercomputer in every pocket will be enormous for everyone, but it will be disproportionately greater for the poor.

Mobile in emerging markets solves problems much further down Maslow’s Hierarchy. ~ Benedict Evans (@BenedictEvans) 8/24/14

Most tech innovation is attacked as ‘rich people’s toys’, but ends up giving the poor things that previously only the rich could have. ~ Benedict Evans (@BenedictEvans)

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

I have been fortunate to have lived my life in the age of computing. But I’ve got a feeling we ain’t seen nothing yet. In the past, computing was available to those few of us who lived in developed countries and who had the wherewithal necessary to buy the devices we desired. That’s about to change and, I believe, change for the better. The impact on the world will be truly profound.

Thanksgiving in the palm of your hand

Mea Culpa

Gratitude is not only the greatest of virtues, but the parent of all the others. ~ Cicero

All too often, I am less grateful than I ought to be.

Silent gratitude isn’t very much to anyone. ~ Gertrude Stein

And all too often, even when I am grateful, I fail to express my gratitude. So let me conclude this short article by expressing my thanks to the creators of, and the contributors to, Tech.pinions, and most especially to you, the readers and commentators of Tech.pinions. I am truly grateful for you all.

Microsoft Is (Sorta) Doomed

On October 27th, 2014, Techpinion’s very own, Brian S. Hall, wrote an article entitled “Microsoft Is Doomed. Doomed!

Brian was, of course, being facetious. Far from predicting doom for Microsoft, he was mocking the Microsoft doomsayers. Let’s take a look at a few of his article’s choicer bits:

I have to believe Microsoft’s latest earnings has finally obliterated all the silly “Microsoft is doomed!” discussion that’s been so bien pensant across the blogosphere these many years. This is a company that generated $23 billion in revenues and is clearly poised for growth.

Repeatedly, the analysts trotted out “jobs to be done” and “the innovators dilemma” and “the smartphone is the computer” to explain why Microsoft was so obviously doomed. How could they all have been so utterly wrong?

Microsoft is welcome to serve up a bowl of tasty claim chowder.

That sound you hear now? That’s Satya Nadella, laughing from his CEO chair in Redmond.

Hmm. With all due respect to Brian, Microsoft is not poised for growth, the critics aren’t wrong yet, there’s no claim chowder to be had here, and I very much doubt that Satya Nadella is laughing about the challenges facing Microsoft.

Truth springs from argument amongst friends. ~ David Hume

The difference between Brian’s view and mine reminds me of a joke:

    Holmes and Watson are on a camping trip. In the middle of the night Holmes wakes up and gives Dr. Watson a nudge. “Watson,” he says, “look up in the sky and tell me what you see.”

    “I see millions of stars, Holmes,” says Watson.

    “And what do you conclude from that, Watson?”

    Watson thinks for a moment. “Well,” he says, “astronomically, it tells me that “there are millions of galaxies and potentially billions of planets. Astrologically, I observe that Saturn is in Leo. Horologically, I deduce that the time is approximately a quarter past three. Meteorologically, I suspect that we will have a beautiful day tomorrow. Theologically, I see that God is all-powerful, and we are small and insignificant. Uh, what does it tell you, Holmes?”

    “Watson, you idiot! Someone has stolen our tent!”

circus tent 3d illustration

Brian, like Watson, is very observant but he’s overlooking the problems that are closest at hand. Just because Microsoft made lots and lots of money last quarter does not mean that all is well. Profits are great, profits are swell, but they do not, the future foretell. For example, Nokia outsold the iPhone for four years after the iPhone’s launch…and we all know how that story ended.


The Microsoft that just brought in record quarterly income, is the same Microsoft that faces severe challenges going forward. First, Mobile is the fastest growing segment in tech and Microsoft has no prospects there. Second, Microsoft’s business model is dependent upon licensing its Windows Operating System to manufacturers and that business model has been disrupted and is no longer viable. Third, approximately seventy percent of Microsoft’s income is generated by its Windows Operating System and its Office productivity suite but all of that income is coming from PCs (notebook and desktop personal computers) and PC sales are flat or declining.

Let’s examine each those issues in one by one.


In 2006, Microsoft Windows ran on about 95% of all personal computing devices in existence.


Today, that number is well south of twenty-five percent and Microsoft itself estimates that number to be around fourteen percent. ((MS COO Turner: We have 14% share of all devices (including our 90% PC share).”~ @maryjofoley) 7/14/14))


In 2010, Microsoft saw that it was nowhere in Mobile and they tried to turn things around with the introduction of Windows 8 and Windows RT. Microsoft was going to use its Windows Operating System as leverage to drive sales of Windows 8 tablets and it was going to use its Office productivity suite as leverage to drive sales of Windows RT.

Four years later, Windows tablet sales are nonexistent, Windows RT is gone, and both Windows and Office are being given away to mobile users for free.

We’re seeing the consumer valuation for those [Offce] start to approach zero,” said Wes Miller, an analyst at Directions on Microsoft, a research firm that tracks the company.

“Lots of consumers don’t need a PC,” said Rick Sherlund, an analyst at Nomura Securities. “They just need an Internet connection. They don’t need Office as much.”

In other words, free Windows and Office on Mobile devices are now being used by Microsoft to 1) mollify their existing user base; and 2) as a freemium product designed to entice mobile users to try, and then potentially buy, the full product. Mollifying Microsoft’s existing base is, in my opinion, a good move. Microsoft needs to milk Windows and Office for all they are worth, for as long as they’re worth something.

However, using freemium to attract new users has proven to be a losing proposition.

Microsoft launched Office for iPad in March and says it’s seen 40 million downloads of the three apps since then. But the full functionality of the apps has only been available to Office 365 subscribers, and it’s added less than three million Home and Personal subscribers since then, at roughly the same pace as it added subscribers earlier.  People have been very interested in the apps, but most haven’t been willing to pay for the full functionality (or already had access to it through existing Home or Business subscriptions). ~ Jan Dawson

[pullquote]Neither Windows nor Office have any significant value on mobile devices[/pullquote]

This is the reality facing Microsoft today: Neither Windows nor Office have any significant value on mobile devices.

The problem with MS Office isn’t the price. Jordan Cooper (@blenderhd)

Exactly right.

User behavior isn’t the same on phones as it is on PCs. ~ Jared Newman

[pullquote]User behavior isn’t the same on Mobile as it is on PCs[/pullquote]

Let me repeat that, because this is the part the many people are still not getting. User behavior isn’t the same on phones (and tablets) as it is on PCs. In other words, operating systems like Windows and productivity suites like Office, have great value on PCs but have little or no value on phones and tablets. Accept that as a fact and your entire understanding of what is happening to Microsoft dramatically changes.

One’s destination is never a place, but a new way of seeing things. ~ Henry Miller

Microsoft is GIVING AWAY both Office and Windows for free…and the move is being met, not with applause but, with apathy:

Was poised to download MS Word, Excel for mobile. Then thought: what do I need them for again exactly? Charles Arthur (@charlesarthur) 11/7/14

Notice how long the web cared about free Microsoft Office for iOS. Times have indeed changed. Sammy the Walrus IV (@SammyWalrusIV) 11/7/14

Mobile is where it is at and Microsoft is nowhere in Mobile.

The high-growth parts of the tech industry, smartphones and tablets, are not built on Microsoft software. Microsoft applications have very little presence on those devices. Meanwhile, on the Internet it continues to be an also-ran to giants like Google and Facebook. ~ Ben Thompson, Stretechery

But perhaps you think that Microsoft is going to make their money in Mobile by selling hardware.


Estimated share of Q3 handset industry profits: Microsoft: -4%, Motorola: -2%, HTC, BB: 0%, LG: 2%, Samsung: 18%, Apple: 86%. ~ Kontra (@counternotions) 11/4/14

Microsoft’s hardware has done nothing but bleed red ink. For an excellent discussion of Microsoft’s hardware woes, check out the Mark Rogowsky’s article entitled: “Amazon, Microsoft And The Quixotic Quest To Sell Mobile Devices“.

CAPTION: Microsoft is never going to make any money off of any of these mobile devices.

If you think Microsoft’s short-term earnings makes their long-term problems in Mobile go away, then you’ve got another think coming.

Business Model

Business models are the best crystal ball technology ever invented. ~ @andreascon

Microsoft makes its money from Windows by licensing the operating system to manufacturers and consumers. Google killed that business model by giving their operating system away for free. Apple piled on by bundling their operating system for free with the purchase of their hardware.

Incumbents are rarely disrupted by new technologies they can’t catch up to, but instead by new business models they can’t match. ~ Aaron Levie (@levie)

Operating systems are losing all of their value. Their price is rapidly moving to zero. Yet Microsoft still makes approximately thirty percent of its income from this dying business model.

Moving from one technology to another is difficult. Moving from one business model to another is one of the hardest transitions there is. But that’s exactly what Microsoft now has to do.

If you think Microsoft’s short-term earnings makes their long-term problems in licensing Windows go away, then you’ve got another think coming.

PCs (Notebook and Desktop Computers)

This is what Windows sales looked like in 1995:


We’ve come a long way since then and yet, in some ways, it would be apt to say that Microsoft is still partying like it’s 1995.

  1. Approximately seventy percent of Microsoft’s income comes from Windows and Office.
  2. Almost all of that Windows and Office income is generated from sales to PC manufacturers and owners.

This presents Microsoft with two problems.

First, PC sales are flat or diminishing. Second, Microsoft’s portion of that diminishing market share is also rapidly diminishing.


The challenge staring Microsoft in the face is the 1.5 billion copies of Windows being used is not increasing and is, in fact, decreasing. … Desktops and notebooks are not growing in sales and not attracting first time buyers in any meaningful numbers. ~ Ben Bajarin







Here are four recent headlines regarding Google Chromebooks.

Chromebook sales increase 67%, Acer holds the market lead

Chromebooks may grab 5% of PC market

Chromebook sales set to nearly triple by 2017, Gartner says

Microsoft’s next big headache: The Google Chromebook

Chromebooks are eating away at Microsoft’s PC sales from the low-end. And Macs are eating away at Microsoft’s PC sales from the high-end.


Apple’s Mac hits record market share in U.S., says latest IDC research. ~ Walt Mossberg (@waltmossberg) 11/6/14

Apple Grabs Record US PC Market Share On Strong Mac Sales in Q3 2014 ~ AppleTree

26.8% of the PCs sold in the U.S. between July 4th and September 1st were Macs. ~ Horace Dediu (@asymco) 9/24/14

Mac reached the highest PC market share since Windows 95 launched. ~ Horace Dediu (@asymco) 10/20/14

The Apple Mac, by itself, easily generates more revenue than does Microsoft’s Windows.

Mac ~$6bn/quarter, Windows ~$4bn. ~ Jan Dawson (@jandawson) 10/24/14



In the third quarter of 2014, Macs took in more than 25% of the back-to-school sales. And at Harvard University, an astonishing 71% of new students owned a Mac computer.

Further, the trend in education is towards tablets and away from laptops.


This is bad news for Microsoft since their presence in tablets is practically non-existent. Meanwhile, the iPad is capturing 90 percent tablet share in U.S education.

The back-to-school season voted and the Mac won… ~ Tim Cook


Good Technology released the latest iteration of its Mobility Index Report, in which it found iOS holds 69 per cent of the enterprise market — that’s nearly seventy times larger than the 1 percent share held by Microsoft. ~ Jonny Evans


Windows Phone activations remain consistent with the six previous quarters: flat at 1 percent. ~ Venturebeat

The iPad took 89 percent of activations during the third quarter, while Android tablets claimed the remaining 11 percent. Windows tablets are yet to make a dent. ~ Jonny Evans


(O)verall, the trends in the enterprise remain unchanged. Businesses prefer iOS, sometimes choose Android, and essentially ignore Windows Phone. ~ Venturebeat

Custom business apps showed a 107 percent quarter-over-quarter growth and 731 percent growth over the same time period last year. And Windows developers are getting virtually none of that business.

If you think Microsoft’s short-term earnings makes their long-term dependency on an ever shrinking PC base go away, then you’ve got another think coming.


(Wall Street) focuses on the waves and not of the currents. ~ Consuelo Mack

Microsoft’s most recent earnings statement was a wave and an impressive wave at that. But if we want to foresee Microsoft’s future, we need to focus on the currents, not the waves, and the tech currents are flowing against, not with, Microsoft.

Wisdom consists of the anticipation of consequences. ~ Norman Cousins

Windows will continue to make money for some time to come, but it is not a growth sector.

Windows has taken Microsoft as far as it could. ~ Ben Bajarin (@BenBajarin) 10/31/14

And Windows is not Microsoft’s future.

Microsoft has many very interesting things going for them and none of them have to do with Windows. ~ Ben Bajarin (@BenBajarin) 10/30/14

Office is transitioning from a monopoly software suite, running on a monopoly platform, to a cloud service, that is just one of many competing cloud services.

Seventy percent of Microsoft’s income is in flux and is either going to go away or is going to transition to something entirely new. And these sorts of things happen “gradually, then suddenly.” ((“How did you go bankrupt?” Two ways. Gradually, then suddenly.” ~ Ernest Hemingway, The Sun Also Rises))

So no, Microsoft is not “Doomed.” But neither is its future assured.

Realizing Windows is not a hegemony will unleash market forces nobody can predict. ~ Jean-Louis Gassée (@gassee)

Ridiculous to say Microsoft is doomed. But entirely sensible to wonder whether (and how much) it will shrink in the next few years. ~ Jan Dawson (@jandawson) 10/23/14

In fact, the one thing we know for certain is that the Microsoft of tomorrow is going to be radically different from the Microsoft of today. So, in a way, the monopoly Windows and Office supported Microsoft that we know is — sorta — doomed as it makes way to the unknown Microsoft of tomorrow.

The Promised Land always lies on the other side of a Wilderness. ~ Havelock Ellis

And if you think the magnificent earnings of a single quarter are going to change the fact that today’s Microsoft is a Microsoft in transition — not just from one or product to another, but from one business model to another — then you’ve got another think coming.

Apple’s Design: The Gift That Keeps Giving (2 of 2)

This is part 2 of a 2-part article. Part 1 can be found here.


Market Research gives the customer what they ask for. It’s like giving a gift from a list. Great design is like great gift giving. Rather than giving the recipient what they ask for, great Design gives them an un-asked for gift that both surprises and delights.

The Up Side Of Design

Market research is great at iteration.
Design is great at creation.

Market Research gives us the products and services that we ask for.
Design gives us products and services that surprise and delight.

Market Research meets our expectations.
Design exceeds our expectations.

Market Research listens to us.
Design understands us.

Market Research gives us what we want.
Design gives us what we love.

The Hard Side Of Design

If Design is so great, why doesn’t everyone do it?

Everyone doesn’t do Design for the same reason that everyone doesn’t give unasked for gifts:

1) It’s a lot harder; and
2) It’s a lot riskier.

Giving a gift from a list is easy.

Giving a gift that it truly meaningful requires intimate knowledge of the gift-receiver and often requires not only a great deal of thought, but a great deal of effort, as well. Further, it requires a degree of empathy that, frankly, many of us simply do not have. If we oft-times don’t understand what we want for ourselves, how ever are we going to get it right when we try to understand the unstated wants of others?

Think how hard it is for you to anticipate the needs of your family and loved ones. Now think how much harder it must be for Apple to anticipate the needs of their customers.

(O)bserving the way people really live, developing a deep understanding of the real problems they have, and gaining an appreciation of the “hacks” they devise to overcome them can deliver an understanding of prospective customers’ needs that is more accurate than what any of those prospective customers could ever articulate on their own. ~ Ben Thompson, Stretechery

And the reward for taking all that extra time, giving all that extra thought, and making all that extra effort is often abject failure. Great Design — like great gift giving — surprises us in all the right ways, but great Design, like all un-asked for gifts, also risks surprising us in all the wrong ways too.

Once we leave the safety of the gift giver’s list, we risk greatness…but we also court disaster. Gifts don’t go “good, better, best.” They go “good, dreadful, best.” The same is true of Design. We can’t risk giving or designing the best without the risk of the giving the truly dreadful. The moment you move from Market Research to Design is the moment you untether yourself from the wishes of your customers and move into the oh-so-nebulous realm of fulfilling the unforeseen desires of your customers.

Source: “Christmas Gifts And The Meaning Of Design” by Ben Thompson of Stratechery.

Du sublime au ridicule il n’y a qu’un pas. (From the sublime to the ridiculous there is but a step.) ~ Napoleon

Think about it. How many times have you received unasked for gifts that were just AWFUL. They were in poor taste. Or they tasted poor (the infamous Christmas fruitcake comes to mind). They were a waste. Or they didn’t fit your waist. They made no sense. Or they cost only cents. The white elephant that was soon hidden away in a trunk.

When the unasked for Design is done right, it resonates and touches us emotionally. When the unasked for Design is done wrong, it also touches us emotionally — but with all the wrong emotions. Poor attempts at Design evoke emotions such as revulsion, disgust, scorn, condescension and contempt. Good Design is loved. Bad design is derided and mocked.

To create good Design, you need more than an ability to anticipate the unstated needs of your customers. You need the courage of your convictions too. (See video interview of Steve Jobs, below, from the 11:50 to the 13:10 mark.)

Often the difference between a successful person and a failure is not that one has better abilities or ideas, but the courage that one has to bet on one’s ideas, to take a calculated risk — and to act. ~ Andre Malraux

The Risky Side Of Design

Bad decisions make good stories. ~ Unknown

The Microsoft Kin

Microsoft invested two years and about US$1 billion developing the Kin platform. The Kin ONE and TWO went on the market in May 2010. Within two months, Verizon stopped selling the phones because of poor sales. Microsoft scrapped its planned European release, stopped promoting the devices, ceased production, and reassigned the Kin development team to other projects. ~ Wikipedia

Bad design — like a bad gift — often just makes no sense whatsoever. You’re left shaking your head and wondering what the Designer could possibly have been thinking. Most of the time, they were thinking about themselves.

The HP TouchPad

The HP TouchPad is a tablet computer was developed and designed by Hewlett-Packard. The HP TouchPad was launched on July 1, 2011. On August 18, 2011, 49 days after the TouchPad was launched in the United States, Hewlett-Packard announced that it would discontinue all current hardware devices running webOS. Remaining TouchPad stock received substantial price reductions. ~ Wikipedia

I included the HP TouchPad in this list so I could trot out this quote from then HP CEO, Leo Apotheker:

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

First, doesn’t Leo’s quote remind you of the weird Uncle who tries, but fails, to be cool and gives you those bizarrely off-pitch gifts that you’ll never be able to use or wear?

Second, cool people never say that their goal is to be cool. They just are cool. Clue #1: If you’re trying to be cool…you’re not.

Third, and finally, cool people don’t try to be cool people. They try to be themselves. Good design shops don’t try to imitate or emulate other design shops. They’re opinionated and they try to be themselves. Clue #2: If you’re trying to be Apple, give it up. It’s a sure sign that you don’t have what it takes.

One should want to learn from Apple. But no company should be striving to learn how to be like Apple. That’s a recipe for disaster.

The Google Nexus Q

The Nexus Q was given away at no cost to attendees of Google I/O 2012, but the product’s launch was postponed after user feedback indicated that the device had too few features for its price. Google eventually shelved the product and gave the Nexus Q away at no cost to customers who had preordered it. ~ Wikipedia

I remember when the Nexus Q was introduced — with great fanfare — at Google I/O 2012. Critics weren’t so much critical of it as stunned by it. It had really cool technology, but what it did was so limited and the way it did what it did was so weird that it was hard to see a market for the device. It was a complete head-scratcher. I don’t remember anyone thinking it was a good idea, although the criticism seemed muted because no one could quite figure it out.

In gift giving terms, the Google Nexus Q reminded me of something someone would buy for another if they had way too much money, and way too much time, and way too little common sense and no feedback at all. I can only guess that the Nexus Q was some higher-up’s pet project, and that there was no one at Google who was powerful enough — or brave enough — to say “no” and pull the plug.

There is no doubt that the Google Nexus Q was innovative, but it wasn’t Design. Design looks to meet the unanticipated needs of the customer. The Google Nexus Q was all about the cool technology.

The Amazon Fire Phone

The disaster that is the Amazon Fire Phone is still unfolding. There are reports that Amazon ordered a million of these dogs and have only been able to pawn 35,000 of them off on their unsuspecting customers.

According to a recent CIRP survey of 500 Amazon Prime customers, literally none of them owned a Fire Phone. ~ Charles Arthur (@charlesarthur) 10/23/14

Jeff Bezos is one of the smartest men on the planet, but this appears to be an example of unbridled hubris. Amazon thought they could substitute a gimmick in lieu of substantive features. If you want to see how truly gimmicky these devices are, take a gander at the following short Amazon pre-release promotional video.


I’ve included a longer promotional video showing more supposed features (which are really still more gimmicks), here.

In gift giving terms, this is an example of the gift giver thinking that some cool gimmick made the gift fabulous, when, if fact, all it did was make the gift gimmicky. It’s an especially sad gift because other than the gimmick, the gift had few other redeeming virtues to speak of.


Here’s a bonus design gaffe. What’s wrong with this picture?


Action with without vision is a nightmare. ~ Japanese proverb

A learning experience is one of those things that say, “You know that thing you just did? Don’t do that.” ~ Douglas Adams

The Focus Of Design

The common thread in all of the above Design disasters is that the Designer — the gift-giver — was thinking of something or someone other than the customer. Microsoft thought of their product. HP thought of themselves. Google thought of the technology. Amazon thought they could pull one over on their customers.

[pullquote]The most fundamental part of design is truly understanding your customers at a deeper level than they even understand themselves.[/pullquote]

It is this lack of understanding and appreciation for the very hard work and deep thinking required to surprise and delight that leads to countless companies and Steve-Jobs-wannabes crashing-and-burning, even as they declare their fealty to design. … The most fundamental part of design is truly understanding your customers at a deeper level than they even understand themselves. ~ Ben Thompson, Stratechery

When it comes to Design, technology alone is not enough. In fact, it’s not even the place where Design begins.

You’ve got to start with the customer experience and work back toward the technology, not the other way around. ~ Steve Jobs

It’s in Apple’s DNA that technology alone is not enough. We believe that it’s technology married with the humanities that yields us the results that makes our heart sing. ~ Steve Jobs

The technology isn’t the hard part. The hard part is, what’s the product? Or, who’s the customer? ~ Steve Jobs

The be all and end all in Design is understanding the unmet — and unasked for — needs of the customer.

Our DNA is as a consumer company — for that individual customer who’s voting thumbs up or thumbs down. That’s who we think about. ~ Steve Jobs

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

It’s really great when you show somebody something and you don’t have to convince them they have a problem this solves. They know they have a problem, you can show them something, they go, “oh, my God, I need this.” ~ Steve Jobs

Apple has always been, and I hope it will always be, one of the premiere bridges between mere mortals and this very difficult technology. ~ Steve Jobs

Listen to how Steve Jobs described the Macintosh, below, paying particular attention to the text that I’ve bolded:

…In 1979, when I saw an Alto [that had been developed] at Xerox PARC [Palo Alto Research Center]. It was as if, all of a sudden, the veil had been lifted from my eyes. It had the mouse and the multiple-font text on the screen, and you realized in an instant that this would appeal to exponentially more people than the Apple II. I’m talking about people who didn’t want to learn how to use a computer — they just wanted to use one. You could eliminate a whole layer of what someone had to know in order to take advantage of this tool. ~ Steve Jobs

The whole idea of the Macintosh was a computer for people who want to use a computer rather than learn how to use a computer. ~ Steve Jobs

Most people have no concept of how an automatic transmission works, yet they know how to drive a car. You don’t have to study physics to understand the laws of motion to drive a car. You don’t have to understand any of this stuff to use Macintosh. ~ Steve Jobs

[pullquote] The only way to make a product that your customer understands from the start is to understand your customer before you start to make the product.[/pullquote]

The only way to make a product that your customer understands from the start is to understand your customer before you start to make the product.

The Distrust Of Design

All business success rests on something labeled a sale, which at least momentarily weds company and customer. ~ Tom Peters

Design seeks to wed the company to the customer by making a commitment to understanding the customer first. However, most companies treat a sale less like a wedding and more like a one-night stand. They don’t care about what they make, they care about what they sell.

Design, in their eyes, is just an extremely clever marketing trick and Apple, in their eyes, is just an extremely successful Lothario who uses Design to seduce their naive and gullible customers. These companies believe that the secret of Apple’s success is sincerity…

……and if you can fake that, you’ve got it made. ((“In the early days of television, a young producer told news correspondent Daniel Schorr that the secret of making the transition from print to TV reporting was sincerity. “If you can fake that,” said the producer, “you’ve got it made.” This gag floats around show business (the word “honesty” sometimes substituting for “sincerity”), attributed to a wide range of prominent personalities: Mark Twain, Groucho Marx, George Burns, French dramatist Jean Giradoux, and rocker David Lee Roth.” Excerpt From: Ralph Keyes. “The Quote Verifier.” iBooks. https://itun.es/us/nvDax.l))

With lies you may go ahead in the world, but you can never go back. ~ Russian proverb

Since they believe that design is a gimmick, they spend their time trying to learn more about Apple when they should be spending their time trying to learn more about their customers. Good Design looks to meet the unanticipated needs of the customer. Bad Design looks like marketing. Which reminds me of a joke:

BOYFRIEND: Why do you never scream my name when you climax?

GIRLFRIEND: Because you are never there.

Many of Apple’s competitor’s share the same fate as the boyfriend, above. Their customers aren’t excited by the presence of their products because their products aren’t presents that surprise and delight.

The Rewards Of Design

Design — like the un-asked for gift — is hard and it’s risky. But the rewards are great.


Apple is a company that provides easy solutions wrapped in a desirable experience. People pay extra for that. ~ Lou Miranda (@TheNewLou)

Good Design is profitable. In the second quarter of 2014, Apple made 68% of all the profits in mobile devices. ((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)) In the third quarter of 2014, Apple made 86% of all the profits in handsets.

Estimated share of Q3 handset industry profits: Microsoft: -4%, Motorola: -2%, HTC, BB: 0%, LG: 2%, Samsung: 18%, Apple: 86%. ~ Kontra (@counternotions) 11/4/14

The iPhone 6 and 6 plus went on sale in late September and the new iPads went on sale in mid-October. One can confidently predict that Apple’s take of the mobile profit pie is likely to grow even larger in the fourth quarter of 2014.

Apple now generates almost 15x more profit per iPhone sold compared to what Samsung makes selling per Galaxy. ~ Neil Shah (@neiltwitz) 10/29/14


Good Design differentiates. There just isn’t enough good Design in the world. Master it and you immunize yourself from commoditization.

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))


Profitability and sustainability are only the beginning of the rewards garnered from Design. The true reward is the emotional response one receives from one’s customers. Good Design — like the unasked for gift — touches the heart. You don’t just have a business relationship with your clients, you have an emotional relationship, as well. You took the time and effort to understand what they wanted, and they, in turn, respond with gratitude and loyalty.

I get asked a lot why Apple’s customers are so loyal. It’s not because they belong to the Church of Mac! That’s ridiculous. It’s because when you buy our products, and three months later you get stuck on something, you quickly figure out [how to get past it]. And you think, “Wow, someone over there at Apple actually thought of this!” And then three months later you try to do something you hadn’t tried before, and it works, and you think, “Hey, they thought of that, too.” And then six months later it happens again. There’s almost no product in the world that you have that experience with, but you have it with a Mac. ~ Steve Jobs

The average Apple customer loves Apple’s Designs. But even more, they appreciate the love behind the designs, which is why they, in turn, love to get behind Apple and support them.

People don’t buy what you do, they buy why you do it. ~ Simon Sinkek ((via Abdel Ibrahim (@abdophoto))


Design is not for everyone. There are other ways — honorable ways, profitable ways — to compete. But for those who are gifted at Design, Design is the gift that keeps on giving.

AUTHOR’S NOTE: This series of articles were inspired by an analogy used by Ben Thompson in his great Stratechery article entitled “Christmas Gifts And The Meaning Of Design.” His article can be found here.