Tech Thanksgiving

In the United States, today is the holiday known as Thanksgiving. So rather than write my normal column, I thought I’d devote today’s article to some of those things that I’m most thankful for — but with a tech slant.

We must find time to stop and thank the people who make a difference in our lives. ~ John F. Kennedy

True enough. And not just on Thanksgiving, but the year around too.

I am thankful for Tim and Ben Bajarin ((By working faithfully eight hours a day you may eventually get to be a boss and work twelve hours a day. ~ Robert Frost)), who run Tech.Pinions, and for all the writers and contributors at Tech.Pinions. I am honored to call them my colleagues and even more honored to call them my friends.

Thanks for bringing the smart.

I’m oh-so-very-thankful for the readers of Tech.Pinions, and even more thankful for those who take the time to comment on our articles. I LOVE reading and responding to your comments — so Bring It On!

Some people are always grumbling because roses have thorns. I am thankful that thorns have roses. ~ Alphonse Karr

I am thankful for the great technology we have today. As for myself, when it comes to modern technology, I see far more roses than I do thorns.

Let us rise up and be thankful, for if we didn’t learn a lot today, at least we learned a little. ~ Buddha

I am thankful that my research and my writing allow me explore the world of tech and to learn something new and wondrous each and every day. I hope to learn a lot every day — but I’ll settle for learning just a little.

At times our own light goes out and is rekindled by a spark from another person. Each of us has cause to think with deep gratitude of those who have lighted the flame within us. ~ Albert Schweitzer

I am thankful for the Blogasphere — and thankful to be a part of the Blogasphere. Only in today’s age and with today’s technology would I be able to read and interact with some of the finest minds on the planet. I often find my spirit rekindled by a spark from another and, it is my sincere hope, that I may, on occasion, do the same for one of them.

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

I am thankful that I get this opportunity to express my thanks.

And two final thoughts.

First, Thanksgiving is a day of feasting and watching (American) football. But I implore you to take the sage advice of the one-and-only, Miss Piggy:

Never eat more than you can lift.

Second, a wise word of warning from the ever insightful Erma Bombeck:

If a man watches three football games in a row, he should be declared legally dead.

Take a break, now and then, to thank those around you. It’s good for their mental health…and yours.

Happy Thanksgiving!

Further Thoughts On The Future Of Education

On November 20th, fellow Techpinions writer, Steve Wildstrom, wrote an interesting column on Education and the Future of MOOCs. As Steve put it:

(MOOCs are) massive, open, online courses that were supposed to replace traditional lectures and recitations and make free, or at least very cheap, higher education available to everyone.

Hmm. Color me highly skeptical.

My Background

My father was a school superintendent and I have a learning disability so I’ve always been fascinated with alternative ways to learn. Lectures — in my humble opinion and the humble of opinion of most of the world’s educational experts — are a lousy way to learn. So, of course, that’s the way the vast majority of students are taught. Go figure.

— Lectures are “telling.” In sales, there’s an expression that “telling” is not selling. Similarly, “telling” is not educating.

— Lectures are one size fits all. Enough said.

— Lectures are not interactive. Learning is.

MOOCs

When I was a kid, I thought that television would revolutionize education. I was wrong. Television can transmit all the knowledge in the world. But that’s not at all the same as teaching.

MOOCs are sort of like television on Steroids. They’re better than television…but they’re still not good at teaching.

In his article, Steve Wildstrom points out two problems with MOOCs:

First, the technology has a long way to go and no one seems to have figured out a completely effective way to deliver lectures on video

Second, and more important, MOOCs seem to work best for those who need them least … My experience is that MOOCs require very highly motivated students.

When MOOCs Work

When I graduated from law school, I took a review course to prepare for the bar exam. Some of the lectures were live but most were tapes (we used video tapes way back then). The lecturers were some of the best and brightest in the world. Most were infinitely better than my law school professors and, for the most part, the tapes were entertaining and extremely informative.

Still, the lectures would have been useless had I, and my classmates, not been so highly motivated. We sat in front of TVs for hours, took copious notes and studied those notes like madmen (and women). However, if we hadn’t had the deadline of the LSAT’s looming over us, we never would have gone through with it. We would have found the lectures intolerable.

Tablets

There’s not a doubt in my mind that tablets are going to dominate education in the near future. Tablets are one-to-one, easy to transport, easy to learn and use and they already have access to a seemingly infinite catalog of educational materials.

— The big advantage of tablets in education is that they are blank slates – they can literally become most anything.
— The big disadvantage of tablets in education is that they are blank slates — they won’t teach you on their own, they need to have meaningful content.

My Vision

The ideal way to teach someone is a course specifically designed for them, taught at their pace, with repetition and infinite patience. No human — not even a tutor — can do this. Fortunately, computers are very strong in pace, repetition and patience. Unfortunately, it takes a LOT of programing to create a teaching program that adjusts to the needs of each of its users.

I always thought that we would have computer programs that led us step-by-step through a course, quizzing us along the way and adjusting the pace of the learning to match our level of skill, interest, and understanding. These courses could, naturally, be as interactive as required.

In this, I have been sadly disappointed. If such a software program exists, I don’t know of it and it’s certainly not mainstream.

Conclusion

In my opinion, MOOCs are a diversion. They will be extremely useful for the extremely few, but they will never become effective educational tools for the masses.

I still think – with zero evidence to support my hypothesis — that interactive educational programs should be the way to go. Hope springs eternal.

Perhaps you know something about MOOCs or educational software that I’ve neglected. If so, please be so kind as to put your thoughts in the comments. Or joint me on Twitter @johnkirk. I’d leave to hear your thoughts on the subject.

Microsoft: Failing By Design

Microsoft Achieved Its Goal

Microsoft had one of the greatest corporate mission statements of all time:

“A computer on every desk and in every home, running Microsoft software.”

And guess what? Incredibly, THEY ACHIEVED THEIR GOAL! ((For a wonderful take on this, I highly recommend Ben Thompson’s article entitled: “Skating Towards The Goal“)) There IS a computer on nearly every desk and in nearly every home, and nearly all of them run Microsoft software…

…but then what?

For Over A Decade, Microsoft Has Been Playing Not To Lose

Ben Thompson compared Microsoft to the great ice hockey legend, Gordie Howe, and I heartily agree with the analogy. Like Howe, Microsoft has great strength, durability, and a willingness to mix it up. There is also great virtue in Microsoft’s single-minded pursuit of a goal, and its absolute refusal to be deterred from that goal. However…

Those who know how to win are more numerous than those who know how to make proper use of their victories. ~ Polybius

Microsoft’s dominant traits worked magnificently when they were striving to become the king of the hill; when they were aggressively pursuing a clearly defined goal. Those very same traits became counter-productive when they became king of the hill and there was nothing left to achieve; when they stopped playing to win — because they had already won all they had set out to accomplish — and started playing not to lose, instead.

“Ultimately it was Bill’s decision. When you’re king of the hill, you are driven to play defense and protect.” ~ a former Microsoft executive

In truth, I very much like the “king of the hill” metaphor as a way of describing Microsoft, because Microsoft was not just great at climbing the hill, but they were masterful at pulling down, and climbing over, the bodies of the corporations that were ahead of them. But again, what good are those skills once one has reached the pinnacle?

Without a clear goal to head towards, Microsoft lost their focus. With nothing to look up toward; they turned their gaze downward, onto their competitors, instead.

Our friends up north [at Microsoft] spend over five billion dollars on research and development and all they seem to do is copy Google and Apple. ~ Steve Jobs

After a competitor had achieved a product breakthrough, Microsoft belatedly attacked. They were the slow follower — not so much going where the metaphorical puck had been, more like chasing opponents all over the ice, throwing vicious body checks, missing, then crashing into the boards just after their opponents had gracefully skated by.

After a decade of exhausting themselves by skating all over the ice for no apparent reason, all that Microsoft was left with was a warehouse full of unsold Zunes, Kins, and Surfaces, a server full of unused Bing searches, and a wistful memory of fifty billions in lost expenditures.

I spent a lot of my money on booze, women, and fast cars. The rest I just squandered. ~ George Best

The Ballmer Era Is Over

Any jerk can have short-term earnings. You squeeze, squeeze, squeeze, and the company sinks five years later. ~ Jack Welch

Microsoft’s revenues tripled during Ballmer’s tenure to almost $78 billion in the year ended this June, and profit grew 132% to nearly $22 billion. But while profit rolled in from Microsoft’s traditional markets, it missed epic changes, including Web-search advertising and the consumer shift to mobile devices and social media.

“Steve was a phenomenal leader who racked up profits and market share in the commercial business, but the new CEO must innovate in areas Steve missed—phone, tablet, Internet services, even wearables.”

I disagree that Steve Ballmer was a phenomenal leader. He fell into the classic trap of protecting his cash cows and chasing short-term profits. In my opinion, during the Ballmer era, Microsoft looked as silly (and as ineffective) as a one-legged man in a butt kicking contest.

What Ballmer Is Leaving In His Wake, Ain’t Pretty

The time to repair the roof is when the sun is shining. ((John F. Kennedy)) Once it starts to rain, it’s too late.

A quick overview of some of Microsoft’s current woes:

1) Microsoft is LOSING money on phones. And that’s not counting the purchase of Nokia.

Conservative+Tablets+vs.+PCs+Shipments

2) Tablets are decimating the Notebook and Desktop markets.

All you need to know about tablets is that they will drive more innovation in personal computing the next 10 yrs than the PC ever did. ~ Ben Bajarin (@BenBajarin)

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3) PC shipments fell 8.6% in the third quarter, the sixth consecutive quarterly decline.

2013-11-mobile-eating-the-world-06

Microsoft’s software was on 17% of all personal computing platforms sold last quarter. Apple’s was 13%. (Tablets, smartphones, PCs) ~ Ben Bajarin (@BenBajarin)

Having a “monopoly” on notebooks and desktops will soon be equivalent to having a “monopoly” on non-colored soda products — a distant third of three.

4) Windows lock-in is becoming irrelevant. ((Even the Windows lock-in is becoming irrelevant and losing power quickly. ~ Matthew Johnson (@anandabits)

You used to buy a Windows PC because everyone had Windows PCs. All the major programs were written for Windows and it became the de facto standard for almost every office and home on the planet. Windows ran the world and because of its wide reach, we all grew accustomed to the Office suite of applications. Writing a report? You used Word. Needed to do a presentation on plant life in the rainforest? PowerPoint and its atrocious sound effects were there to add glass-shattering emphasis to that clip art on slide two. Your email was stored in Outlook and your numbers were crunched in Excel and there was nothing you could do about it because nothing else came close to the power and reach of Microsoft Office.))

5) Long-Time Windows Users Are Fleeing The Platform. ((Why I’ve all but given up on Windows.))

6) Almost all of Microsoft’s Revenue is all sourced from software and software pricing is dropping to $0. ((The contrast couldn’t be more stark: 75% of MS’s revenue and 95% of its gross profit come from licensing. Apple now charges $0 for most software.))

7) Microsoft’s hardware offerings are not competitive. ((Apple’s Software revenues are more than double Microsoft’s Surface revenues. ~ Horace Dediu (@asymco)

So iPad Air weighs half as much as Surface Pro 2, has longer battery life, and costs $200 less. But hey – look at that kickstand! ~ Ian Betteridge (@ianbetteridge)))

8) Throwing advertising dollars at the problem isn’t helping. ((Apple spent $1.1 billion on advertising in the last 12 months. 0.64% of sales. (Microsoft spent $2.6b or 3.3% of sales yr. ended June). ~ Horace Dediu (@asymco)))

9) Hardware manufacturing partners are fleeing Windows.

If you don’t make a total commitment to whatever you’re doing, then you start looking to bail out the first time the boat starts leaking. It’s tough enough getting that boat to shore with everybody rowing, let alone when a guy stands up and starts putting his jacket on. ~ Lou Holtz

10) Microsoft’s consumer satisfaction rating fell to its lowest level since 2007.

11) Business model transitions are terribly dangerous.

Why Has Microsoft Tied The Hands Of Its New CEO?

Over the past several months, Microsoft has:

1) Committed To A New, Functional Organizational Business Structure;
2) Purchased Nokia for 7.2 Billion Dollars;
3) Ended Stack-Ranking; and
4) Committed to becoming a “Devices & Services” Company

We are watching Microsoft abandon nearly all the strategies that made them successful and embracing new ones in the hope of a future ~ Ben Bajarin

Well, yes and no. But mostly no. Because Wait! There’re MORE!

Microsoft has also committed to their old strategies of:

a) X-Box;
b) Turning Bing into a platform;
c) Maintaing both Windows RT and Windows 8; and
d) Manufacturing their own, Surface, Tablets.

Microsoft is like a sailor who has one foot on the departing boat but refuses to take his other foot off the dock.

Microsoft hasn’t just tied their incoming CEO’s hands — they’ve trussed him up like a turkey. Now ask yourself: “Why would Microsoft do that?” To my mind, there can be only one answer.

After finding no qualified candidates for the position of Microsoft CEO, the Board is extremely pleased to announce the appointment of…

The Microsoft Board Has Taken Charge Of Microsoft And Is Charting Microsoft’s Course

I do not subscribe to the idea that a Bill Gates return would be a good outcome for Microsoft. Indeed, much of what troubles Microsoft today is directly attributable to Gates, particularly the Vista disaster/distraction and the Windows obsession. ~ Ben Thompson

[pullquote]The Microsoft Board is going to TELL the new CEO what to think[/pullquote]

Too late. Gates, via the Board, is already back. He’s the reason Ballmer “volunteered” to walk the gang plank, he’s the reason Microsoft has been forging ahead so quickly with the functional business reorganization, the purchase of Nokia, the ending of stack ranking, the commitment to new policies and the recommitment to old. Microsoft doesn’t need to wait to see and hear what the new CEO thinks, because the Board is going to TELL him what to think.

Doubling-Down On The Wrong Strategy

It is better to run back than run the wrong way. ~ Proverbs

Prior to pushing him out the door, The Board’s mandate to Ballmer was to move faster.

Motivation alone is not enough. If you have an idiot and you motivate him, now you have a motivated idiot. ~ Jim Rohn

It’s clear to me that the Microsoft Board didn’t “get” why Microsoft has been falling behind over the past decade and, based on their recent actions, it’s just as clear that they still don’t get it.

The human body has two ends on it: one to create with and one to sit on. Sometimes people get their ends reversed. When this happens they need a kick in the seat of the pants. ~ Theodore Roosevelt

Microsoft isn’t failing because it’s not going fast enough — it’s failing because it’s going in the wrong direction.

If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around. ~ Jim Rohn

If the Microsoft Board could kick the person in the pants responsible for most of their troubles, they wouldn’t sit for a month. ((Inspired by Theodore Roosevelt))

In this business, by the time you realize you’re in trouble, it’s too late to save yourself. ~ Bill Gates

True enough.

Mocking Our Customers (Part 2)

Recap

I hate people who are intolerant. ~ Dr. Laurence J. Peter

I hate intolerant people. ~ Gloria Steinem

Last week I wrote about intolerance — how we tend to believe that everyone is entitled to their own opinion, unless, of course, their opinion is too different from our own, in which case they are extremists, and really, extremists aren’t quite as human as we tolerant people are, right?

The surest way to corrupt a youth is to instruct him to hold in higher esteem those who think alike than those who think differently. ~ Friedrich Nietzsche

Truth is, intolerance is our natural, default position.

Most people can’t understand how others can blow their noses differently than they do. ~ Ivan Turgenev

The Stain Of Disdain

Intolerance spills into every part of our lives, including our relationships with our current and potential customers.

If ever I become a big, successful company, I hope I’m not real mean to my customers — like I am now. ((Inspired by Deep Thoughts by Jack Handy))

Hubris

“But wait, wait,” I hear you say, “I am not like that. I treat my customers with respect. Or, at least, I treat them with all the respect they deserve.”

Yeah, right. I’m quite sure that you cherish the greatest respect towards everybody’s point of view — never mind how comical that point of view may be.

Be honest with yourself. Think back over the times you and your co-workers have stood around the virtual water cooler, mocking the stupidity of your customers; bemoaning how they don’t “get” your product or service.

A bad workman blames his tools. ~ Chinese proverb

True enough. But the reverse is true too. A bad toolmaker blames his customers.

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

Bingo.

To badly paraphrase Charles Schultz of Peanuts fame, we love people — it’s our customers we can’t stand. ((I love mankind—it’s people I can’t stand. ~ Charles M. Schulz))

“If you want to get to the truth about what makes us different, it’s this,” Bezos says, veering into a familiar Jeffism: “We are genuinely customer-centric…. Most companies are not…. They are focused on the competitor, rather than the customer.” ~ excerpt from The Everything Store

ID10Ts

Ah, but you’re not convinced. You need some concrete examples, eh? Well, let’s visit our favorite whipping boy, the IT department (but don’t console yourself by thinking that your department or your company is any better — ’cause it’s not).

IT not only holds its customers in disdain, they have informally codified the practice. Feast your eyes on a couple of the lovely IT Acronyms used to describe — well, used to describe you:

  1. His machine was experiencing an I.D. Ten Type error. (Type it out with numerals: ID10T error. Yup, that’s you they’re referring to.)
  2. PEBCAK (“Problem Exists Between Chair and Keyboard”)
  3. PEBKAC (“Problem Exists Between Keyboard And Chair”)
  4. PIBCAK (“Problem Is Between Chair And Keyboard”)
  5. PICNIC (“Problem In Chair Not In Computer”)
  6. POBCAK (“Problem Occurs Between Chair And Keyboard”)

Funny, right? Unless you’re the butt of the joke. Which you are.

What you discover about life’s shell game is that it’s hardest to follow the pea when you’re the pea. ~ Robert Brault

You don’t like being treated like an idiot. What makes you think that your customers like being treated that way either?

Gods, Rational Beings and Human Beings

When we look at our clients, we make (at least) two egregious errors. First, we think that our customers should be just like us. Second, we think that our customers should be rational beings instead of human beings.

Gods Like Us

I’ve got sad news for you: You’re not a god and your customers are not meant to be made in your image.

Our customer’s will never be pitch perfect nor should we want them to be. If they were the same as us, what would they need us for? Rather, our customers should be IN HARMONY with us and it is WE who need to adjust ourselves to tune in to their needs, not the other way round.

It is our differences — the very differences that we find hard to tolerate — that make us and our products and services valuable to our customers.

Rational Beings Like Us

Logic: The art of thinking and reasoning in strict accordance with the limitations and incapacities of the human misunderstanding. ~ Ambrose Bierce

Consumers are not logical, rational beings. We are human and liable to human foibles. We are susceptible to advertising and lack of product knowledge; we fall prey to the need for instant gratification, etc. We are, in a word, imperfect.

[pullquote]Don’t make the mistake of conflating “imperfect” with “flawed.”[/pullquote]

But don’t make the mistake of conflating “imperfect” with “flawed.”

Human beings are a complex mix of heart and mind. We, the providers of goods and services, need to predicate our relationships with our customers on the basis of humanity and not upon the vanity of rationality. Expecting human beings to act as automatons is as silly — and as undesirable — as expecting fish to climb trees. Or drink in bars.

A fish walks into a bar. The bartender says, “What will it be?” The fish croaks, “Water.”

Human Beings Like Us

Just as it is in our client’s nature to do what is best for themselves, it is in our nature to do what is best for ourselves.

[pullquote]That’s not our job.[/pullquote]

But that’s not our job.

We’re SUPPOSED to be doing what’s best for our customer.

To forget one’s purpose is the commonest form of stupidity. ~ Friedrich Nietzsche

Problems are gifts.

Every problem has a gift for you in its hands. ~ Richard Bach

Gifts that we have to work very, very hard to unwrap. But when we take the time to do so, the reward is immense.

Every time you think your clients are stupid or whenever your clients frustrate you, you should be asking yourself why that is.

I don’t like that man. I must get to know him better. ~ Abraham Lincoln

Solving the basic disconnect between what the customer wants and what the customer is currently getting, is exactly what the customer is hiring you to do.

We are continually faced by great opportunities brilliantly disguised as insoluble problems. ~ Lee Iacocca

The further apart you and your customer are, the greater the opportunity for you to find a solution that bridges that gap.

Don’t find fault, find a remedy. ~ Henry Ford

Conclusion

Successful people are always looking for opportunities to help others.  Unsuccessful people are always asking, “What’s in it for me?” ~ Brian Tracy

“But, but, but,” I hear you say, “this sounds like it’s hard to do.”

Yup, it’s hard to do.

It’s SUPPOSED to be hard, if it wasn’t hard everyone, would be doing it. The value — and the profit — comes from our doing the hard, complex work necessary to make our client’s life easier and simpler.

Money can be made when something looks easy, because easy is very hard to do. ~ Carl Schlachte

If your really want to acquire better customers, there’s really only one way to do it:

Be the change you wish to see in the world. ~ Gandhi

Next Week

In part 3, I will focus on a single example — how Microsoft, by disdaining and misinterpreting the importance of design, also dissed their end users.

Microsoft’s Bing Is Bad Strategy

There’s been a lot of talk, of late, of Microsoft possibly abandoning Bing. Lets’s set aside the reliability of those rumors, the political intrigue involved and the practicality of implementing such a plan and look, instead, at the overall strategy that underlies Microsoft’s Bing.

In my opinion, Bing is, and has always been, bad strategy, plain and simple. Here’s why.

Money Instead Of Strategy

In warfare, if the commander values his troops, he expends brains instead of blood. Likewise, in business, if a CEO values his profits, he expends brains instead of cash.

Microsoft’s ironic problem is that they have far too much money. It’s just easier for them to throw money at a problem than to think it through. It’s been estimated that Bing has cost Microsoft as much as 17 billion dollars. There isn’t another company in the world that would have been willing to lose so much money without re-evaluating their strategy. Microsoft is like a despot that has unlimited manpower. They just keep throwing their troops (money) onto the spears of their opponents in the hope that they will, eventually, blunt those spears.

Attacking Where They Are Strongest

In war, the way is to avoid what is strong and to strike at what is weak. ~ Sun Tzu

Well, “duh”, you’re saying. Of course one wants to avoid attacking where one’s opponent is strong.

But isn’t that exactly what Microsoft is doing with Bing? Google search is where Google is at its best. Attacking Google Search with Bing is like marching one’s troops directly into the mouths of the enemy’s cannons.

Siege

A siege is the most uneconomic of all operations of war. ~ B.H. Liddel Hart, Strategy

Thus the highest form of generalship is to balk the enemy’s plans; the next best is to prevent the junction of the enemy’s forces; the next in order is to attack the enemy’s army in the field; and the worst policy of all is to besiege walled cities. ~ The Art of War

In my opinion, Bing vs. Google Search is the equivalent of a weaker army besieging a stronger army. It makes no sense.

Don’t get me wrong. It’s not pleasant for Google. They have lost some market share. But it’s far worse for Microsoft. Microsoft is bleeding money while Google goes merrily along doing what Google does best. Google is sitting behind its moat and its walls and they are laughing all the way to the bank while they watch Microsoft fruitlessly bleed themselves by banging their heads against Google’s impregnable walls.

Attrition

Attrition is a two-edged weapon and, even when skillfully wielded, puts a strain on the users. ~ B.H. Liddel Hart, Strategy

Microsoft is losing bucket loads of money on Bing and they’re gaining absolutely nothing in return. They have no hope of unseating Google in search. They’re not causing Google to lose any appreciable profits. Their strategy is not only backfiring, it’s actually counter-productive because it’s HELPING Google.

If Bing didn’t exist, Google would almost certainly be facing anti-trust and monopoly scrutiny from governments around the world. By subsidizing Bing with 17 billion dollars, Microsoft is actually HELPING Google by removing the onus of monopoly from their shoulders.

Some strategy, eh?

Conclusion

I seriously doubt that Microsoft is going to abandon Bing. They’re a proud and stubborn company. But as far as pure strategy goes, I can’t see it. It makes less than zero sense. It’s both a negative for Microsoft and a positive for Google. It’s not a strategy — it’s the antithesis of a strategy.

So, what do you think? Agree or disagree? Let me know in the comments, below.

Postscript

I often use quotes from my twitter stream in my articles. If you’re interested in following me, you can find me @johnkirk. I look forward to seeing you there.

Tech Intolerance (Part 1)

There’s something I don’t understand… there is this thing that people do – a lot of people – that I just do not understand and I will likely never understand…it’s been going on for years, almost a decade now, and it just doesn’t make a lick of sense… It didn’t back then… It doesn’t now:

Why do people buy Apple products? (((A)t the end of the day, I just don’t get it… there are droves and droves of otherwise really intelligent and competent human beings out there that will line up for a tablet with a half-eaten fruit on the back… There is no amount of smoothness nor simplicity that is worth opening my wallet twice as wide… This has been called the “Apple tax” for as long as I can remember… It’s absolutely mind-blowing to me that anyone on this Earth and in this economy would buy an iPad mini and pay the Apple tax simply because it’s Apple…At the end of the day, I can’t stop folks from burning money.

If you think the opinions expressed in this article are an aberration, feel free to read the 255-plus comments.))

This is but one example of intolerance. It could easily be reversed and applied to the Apple fan who disparaged Android or to any one of an infinite number of intolerant assertions.

The Twisted Path Of Intolerance

In literature as in love, we are astonished at what is chosen by others.” ~ Andre Maurois

In tech, too, we are astonished at what is chosen by others.

PREMISE: It doesn’t make sense (to me);
THEREFORE: If doesn’t make sense (for anyone).

PREMISE: There is no reason (apparent to me);
THEREFORE: There can be no possible reason.

PREMISE: You are not using (the) reason (I would use);
THEREFORE: You are unreasonable.

PREMISE: Any intelligent person would think and act the way I do;
FACT: You are not thinking and acting the way I do;
THEREFORE: You are not intelligent.

There are two types of people. People like me. And people who want to be like me. ~ The Intolerant Credo

CHECK YOUR PREMISES

Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong. ~ Ayn Rand

  1. Just because we don’t know, doesn’t mean it can’t be known.
  2. Just because we don’t understand, doesn’t mean that it can’t be understood.
  3. Just because we don’t have proof of its existence, doesn’t mean that it doesn’t exist.
  4. Just because we can’t see it, doesn’t mean that it can’t be seen.
  5. Just because we can’t fathom it, does not mean that it is unfathomable.
  6. Just because we don’t get it, doesn’t mean that it can’t be got.
  7. Just because it’s not right for us, doesn’t mean that it’s not right for anyone else.

Frantic orthodoxy is never rooted in faith but in doubt. It is when we are unsure that we are doubly sure. ~ Reinhold Niebuhr

LOCUS

The fundamental contradiction contained in intolerance is one of locus. We don’t understand others. But we can’t be at fault because we are smart. So we employ a form of mental Jujitsu. If we can’t understand you and if we are smart then you must be dumb.

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

We do not hear a persuasive argument; we cannot articulate a reason that explains the actions of others; we don’t see sufficient proof to overcome our convictions, so we conclude that OTHERS, not ourselves, are deaf, dumb and blind.

get-a-brain-moransIt is the equivalent of concluding that if we do not understand the theory of relativity, that Einstein must have been a moron. Oh, pardon me — I mean, a ‘moran’.

Money demands that you sell, not your weakness to men’s stupidity, but your talent to their reason. ~ Ayn Rand

THEIR reason, not OUR reason.

INTOLERANCE

For my grandfather, there were two kinds of people in the world:  Those who agreed with him, and those who hadn’t yet agreed with him.” ~ B. Spira

It’s the usual thing of tech obsessives mistaking their tastes for that of wider public. ~ Charles Arthur (@charlesarthur)

Whenever something gets easier for the masses, there will always be a neckbeard there to complain about it. ~ H.C. Marks (@HCMarks)

Intolerance is not about living as we wish to live. It is about asking others to live as we wish to live. ((Inspired by Oscar Wilde))

Think for yourselves and let others enjoy the privilege to do so, too. ~ Voltaire

The intolerant refuse to grant others the right to think and decide for themselves. And perhaps more importantly, the intolerant refuse to grant others the right to be mistaken.

Freedom is not worth having if it does not connote freedom to err. It passes my comprehension how human beings, be they ever so experienced and able, can delight in depriving other human beings of that precious right. ~ Mohandas Gandhi

The intolerant ask the wrong questions. They ask: “What is right and what is wrong.” But when it comes to personal taste, there is no one single answer to those questions. There are as many answers as there are individuals residing on the planet. It’s not a question of what’s right, it’s a question of what’s right for us.

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

— The intolerant place the onus on others.
— The tolerant place the onus on themselves.

— The intolerant ask: Why do you not understand?
— The tolerant ask: Why do I not understand you?

When I don’t understand, I have an unbearable itch to know why. – Robert Heinlein

CHANGE

You can lead a horse to water, but you can’t make him drink.
You can lead a man to knowledge, but you can’t make him think.

You cannot overcome ignorance with knowledge.

The voice of reason is inaudible to irrational people. ~ Dr. Mardy’s Aphorisms

It has been my experience that the less we know, the more certain we become.

The truth is not for all men, but only for those who seek it. ~ Ayn Rand

It’s hard enough to acquire knowledge when we’re actively seeking it. It’s all but impossible to acquire knowledge when we’re actively resisting it.

There is nothing you can’t prove if your outlook is only sufficiently limited.” ~ Dorothy Sayers

Our ability to learn and change is, perhaps, only surpassed by our refusal to do either.

Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so. ~ Douglas Adams

SO WHY BOTHER?

Men will always be mad, and those who think they can cure them are the maddest of all. ~ Voltaire

Why bother to counter the Trolls if we know that they are impervious to reason?

I can think of at least two reasons, one noble, one practical. First the noble.

The phrases that men hear or repeat continually, end by becoming convictions and ossify the organs of intelligence. ~ Johann Wolfgang von Goethe

It may sound overdramatic, but I truly do fear the memes of this world. There is reality and perception and in the world of nature, reality is the only thing that matters and perception is merely its shadow. But in the minds of men (and women), the laws of nature can be reversed: the shadow can engulf the substance, and perception can become reality.

It is therefore, in my opinion, crucial that we contest nonsense and falsehoods lest they be perceived as truths merely because they are repeated over and over again.

Who controls the past controls the future. Who controls the present controls the past. ~ George Orwell

Falsehoods must not be sanctioned either in word or in deed, but most insidiously, by one’s silence.

Evil requires the sanction of the victim. ~ Ayn Rand

Next Week

Next week I shift the focus to how we treat our customers — how our intolerance for the very people we are supposed to be serving undermines their satisfaction and sabotages our success. Further, I will attempt to introduce a time-tested method used to counter our all-too-human tendency to disparage our customers.

Apple’s Definition Of “Winning”

We are winning with our products in all the ways that are most important to us, in customer satisfaction, in product usage and in customer loyalty. ~ Tim Cook, Apple earnings call

Customer satisfaction. Product usage. Customer loyalty.

Is Tim Cook right? Is Apple really winning in those areas? And is that really what’s most important?

Customer Satisfaction

Based on their most recently published research, ChangeWave measured a 96% customer satisfaction rate among iPhone users and a 99% customer satisfaction rate among those who owned iPads. Impressive, to say the least.

Product Usage

Experian reported that iPhone users spend an average of 53% more time each day on their phones than Android phone users. Nearly two-thirds of iOS devices are already running iOS 7. The App Store now has over 60 billion downloads. And Apple has nearly doubled its total payout to app developers this year — now at $13 billion, up from $7 billion in January.

“Regardless of what you might hear or read about how many are bought or sold or activated, iPad is used more than any of the rest. And not just a little more, a lot more. The iPad is used more than four times more than all of those other tablets put together.” ~ Tim Cook

Now before your read on, stop and think about that for a moment. The iPad is used four times more than all other tablets put together. Astounding.

Industry analyst, Alexander, noted that “In an increasingly bifurcated tablet market, Apple has yet to experience any serious competition for the premier customer, particularly those users wanting to do more with a tablet than watch videos, surf the Web, and do email….”

If usage is the defining criterion, then there are actually very few tablets that are directly competing with the iPad.

Customer Loyalty

Based on the most recently published research, Kantar measured a 92% customer loyalty rate among Apple customers, significantly higher than that of the competition.

Summary

Based on the above, I think it’s fair to conclude that Apple is “winning” in Customer Satisfaction, Product Usage, and Customer Loyalty. But is that what matters? What about things like profits, growth, innovation, and market share? Aren’t they what really matter?

But, Apple Is Not Growing…

True enough. Apple has not released any significant new products over the past year and, consequently, they have not grown over they past year either. But they have remained extremely profitable.

apple-profitsFor example, Apple’s sales of 33.8 million iPhones earned more than the combined sales of 211.2 million phones sold by the rest of the world’s top 5 phone makers.

Still, profit without growth is like sex without love. It’s an empty experience…

…but, as empty experiences go, it’s one of the very best.

Eventually, Apple will have to grow or die. But in the meantime. Apple, can take solace in the fact that they’re making money hand over fist, while simultaneously screwing the competition, to boot.

But, But, Lack Of Innovation…

Many analysts covering Apple are bearish, citing ‘dwindling catalysts.’ But seriously, who are they to judge? Those self-same analysts missed every catalyst that Apple ever caught on their ride from last to first.

They are ill discoverers that think there is no land, when they can see nothing but sea.” ~ Francis Bacon

Apple naysayers act like small children who think that if something is out of sight, it ceases to exist. Just because THEY can’t see what’s coming down the pike doesn’t mean that Apple and others can’t see it. As always, it’s a question of vision. And I’d put Apple’s vision up against the analysts’ any day of the week.

But, But, But, Growth Should Be Constant, Continuous, Ever Upward…

Really? Show me an example of something healthy, where growth was constant and ever upward and I’ll show you the exception to the rule.

A child of five would understand this. Send someone to fetch a child of five. ~ Groucho Marx

NO ONE is always at their best. Well, I take that back…

Only the mediocre are always at their best.” ~ Jean Giraudoux

Sun Tzu said that “Energy may be likened to the bending of a crossbow; decision, to the releasing of a trigger.” A bowman needs to pull the bow before releasing the arrow. The arrow won’t go very far if he doesn’t take the time and effort to do so. Similarly, a company needs to do the preparation before releasing a new product.

I means, seriously, do I really need to cite Sun Tzu in order to make this point? New products take time to prepare. Duh.

There Is A Season For Everything

You’d be a pretty poor farmer if you planted the seed and then walked away before the harvest. And you’d be a pretty poor investor if you thought that every season was harvest season and no season was to be set aside for the planting.

Don’t judge each day by the harvest you reap, but by the seeds you plant. ~ Robert Louis Stevenson

Apples critics deny the realities of life. They want rain without thunder and lightning. They want crops without plowing the ground. ((Inspired by Frederick Douglass))

When clouds form in the skies we know that rain will follow but we must not wait for it. Nothing will be achieved by attempting to interfere with the future before the time is ripe. Patience is needed. ~ I Ching

I mean, are you prepared to argue with the freakin’ I Ching?

I didn’t think so.

When you walk through a farm, some see the (beauty), some only observe the manure. ~ Henri Matisse

Manure is often used to fertilize crops. If you can’t stand the sight of manure and you can’t patiently wait for the seed to ripen, don’t become a farmer. And if you can’t stand the turmoil of the market and you can’t patiently wait for an investment to mature, don’t become an investor.

Warren Buffett said Apple is run ‘for the investors who are going to stay, not the ones who are going to leave.’ Which are you? Do you walk away in the Spring or do you wait for the Autumn to arrive?

But, But, But, But, market share, Market Share, MARKET SHARE!!!

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

Apple regularly fires some of its customers for the sake of empowering its target market. News Flash: Apple has been “ignoring” a large portion of its potential customer base since 1996. They could have done worse.

For example since Google’s IPO, Google is up 833.8%. On the other hand, since Google’s IPO, Apple is up 3200.2%. Not bad for a company that doesn’t cow-tow to market share.

What the heck do you think the phrase “target market” means anyway? If you “target” everyone, you target no one. Seems to me that Apple is aiming for the premium market and their aim, so far, has been spot on.

And remember, just because YOU’RE not the target market doesn’t mean there is no target market.

The Critics Have Big Buts

“Critics? I love every bone in their heads.” ~ Eugene O’Neill

There seems to be a law in human nature which draws us to passionately condemn the preeminently successful. For every action there is an equal and opposite critical reaction.

The critics are always ready to give Apple the full benefit of their inexperience and are never without multiple ways for how Apple should spend its wealth. Some critics even think that they are more powerful than God. After all, Jesus was only able to turn water into a wine but critics are able to turn anything they focus upon into a whine.

Look, everyone has the right to be stupid. But some of Apple’s critics are abusing the privilege.

Watch Carefully What Apple’s Competitors Are Complaining About

Companies like Samsung and Microsoft spend their time criticizing those very aspects of Apple that they would most like to emulate. Samsung mocks Apple’s customer’s for standing in line? Microsoft mocks Apple’s tablets for their inability to do “real” work? Don’t kid yourself. They’d both cut off your right arm to have what Apple has.

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

Turns out that copying products is easy. Copying the culture that produced those products is hard.

Investors

The eight most terrifying words for any CEO must be: “I’m Carl Icahn and I’m here to help.”

Sheesh, thanks but no thanks.

And as if Carl Icahn weren’t bad enough, other investors are demanding that Apple lower its prices in order to capture more market share. Market share sounds great and all, but what they’re really talking about is a price war. As Pliny the Younger put it, “An object in possession seldom retains the same charm that it had in pursuit.” A price war is a delightful thing to those who don’t have to participate in it, but a rather frightful thing for those who have to pay for it.

When the gods wish to punish us, they answer our prayers. ~ Oscar Wilde

Sadly, A CEO must always be prepared to defend his company against his investors.

The right to be heard does not automatically include the right to be taken seriously. ~ Hubert H. Humphrey

Lessons To Unlearn

We should be careful to get out of an experience only the wisdom that is in it—and stop there; lest we be like the cat that sits down on a hot stove-lid. She will never sit down on a hot stove-lid again—and that is well; but also she will never sit down on a cold one anymore. ~ Mark Twain

I think that most critics are like a cat that sat on a hot stove-lid. They got burned when Apple fell in the nineties, misdiagnosed the cause of that failure as missing market share, and they haven’t stopped lecturing Apple on the wrong lesson ever since.

Memory is the greatest of artists… ~ Maurice Baring

Meanwhile, the very actions that the critics are begging Apple to stop taking are also the very actions that have made Apple successful for the past 13 years. It’s like telling a football coach that wins Super Bowl, after Super Bowl, After Super Bowl, that he’s doing it all wrong.

New Facts Demand New Conclusions

Logic?” Jim says. “What’s that?” The professor says, “I’ll give you an example. Do you own a weed eater?” “Yeah.” “Then logically speaking, because you own a weed eater, I presume you have a yard.” “That’s true, I do have a yard.” “I’m not done,” the professor says. “Because you have a yard, I think that logically speaking, you have a house.” “Yes, I do have a house.” “And because you have a house, I think that you might logically have a family.” “Yes, I have a family.” “So, because you have a family, then logically you must have a wife. And because you have a wife, then logic tells me you must be a heterosexual.” “I am a heterosexual. That’s amazing! You were able to find out all of that just because I have a weed eater.”

Excited to take the class, Jim shakes the professor’s hand and leaves to go meet Bob at the bar. He tells Bob about how he is signed up for Logic. “Logic?” Bob says, “What’s that?” “I’ll give you an example,” says Jim. “Do you have a weed eater?” “No.” “Then you’re gay.”

Apple’s critics seem to rely upon a similar chain of “logic” to predict Apple’s future. Apple doesn’t have majority market share (a weed eater) so they must be doomed.

We should all be so lucky as to be as “doomed” as Apple is.

After a battle in the War of the Spanish Succession (1701–14) Villars, the defeated commander of the French forces, was justified in writing to King Louis, “If God gives us another defeat like this, your Majesty’s enemies will be destroyed.” His judgment was prophetic in so far as the battle proved to have cost the allies their hopes of victory in the war.

Apple could rightfully claim nearly the same as Villars. Should Apple “suffer” another “disastrous” year like 2013, their competitors will be utterly destroyed.

Look, maybe Apple is doomed, maybe they’re not. But Apple’s critics have got to start coming up with better reasons for predicting Apple’s demise ’cause the same tired old reasons they keep trotting out and using over and over again just ain’t cutting it.

Attention, Attention! The naysayers have been predicting Apple’s demise since 1997 – and for the very same reasons. All the while Apple, by ignoring their critics, has merely grown to become the richest company in the free world.

Criticize Apple all you want, but please, come up with something that hasn’t been proven wrong year after year after year for the past 13 years.

“We’ve clearly never seen a tech company like this before. Perhaps it’s time to stop using tired PC tech company metaphors to predict their future.” ~ Ben Thompson

Listening For Genius

The principle mark of genius is not perfection but originality, the opening of new frontiers.” ~ Arthur Koestler

If a company values its profits more than its vision, it will first forfeit its vision and subsequently forfeit its profits, too.

Talent hits a target no one else can hit. Genius hits a target no one else can see.” ~ Arthur Schopenhauer

Look, there’s risk in everything. But Apple has proven itself successful by doing things their way.

I’d rather be a failure in something that I love than a success in something that I hate. ~ George Burns

The Stoic Philosopher, Thales, when asked “What is difficult?” replied “To know oneself.” When asked “What is easy?” he said “To give another advice.”

Critics shout boldly, but genius speaks in a whisper. Perhaps, in lieu of shouting instructions at Apple, we should be quietly listening and learning from them, instead.

Tablets: The Future Of Education

“(O)ur share of tablets in education is 94%. I mean, it’s sort of unheard of. I’ve never seen a market share that high before. ~ Tim Cook

Which Computing Form Factor Is Most Likely To Dominate Education?

Handicapped students.Phones? No way. Too small.

Notebooks? Possible. They’re so much smaller and lighter these days. And they can be easily carried to and fro and set up on desktops.

Tablets? Far more likely. Tablets can be used in so very, many, more ways than notebooks can and they can be also used as a notebook, if required. The most flexible, the least expensive, the most likely choice for education.

Which Operating System Is Most Likely To Dominate Education?

Student holding digital tabletWindows? Not likely. First, Microsoft is still not making a true tablet. More fool they. Second, Microsoft’s tablet products are woefully behind in the app software market.

Android? Not likely. Security, anyone? No true tablet software. And putting your entire school’s data in the hands of the world’s largest advertising agency? Android’s chances seem highly dubious.

iOS? Far ahead already. Massive lead in education-specific software. Apple’s business model promotes user privacy and device security. The winner so far. The most probable winner in the near term.

If You Grow Up Using An Apple iPad In School, When You Graduate What Will You Want To Use At Work?

beauty childI haven’t seen any one talking about this, but if the current generation grows up using Apple iPads in school, what long-term effect will that have on their computing preferences?

The answer seems obvious. And the implications could be profound.

Apple’s Grand Strategy

Grand Strategy

Grand Strategy is not about winning the war, its about winning the peace. It’s not about destroying your competitor, its about preserving who you are. It’s not about moving toward a destination, it’s about knowing what your destination is.

Too many countries and too many companies lose sight of their Grand Strategy in their desire to win the war. They forget why and what they’re fighting for.

The fact that Apple started Tuesday’s event with a repeat of the video shown during their WWDC event clearly demonstrates that they have a Grand Strategy and that they are determined to be guided by that strategy first, and foremost.

Some pundits seemed to miss, dismiss or ignore the importance of that video. In doing so, they’re missed, dismissed and forfeited their chance to understand Apple.

Strategies

— Microsoft makes its money by licensing software to hardware manufacturers.
— Apple makes its money by selling hardware to end users.
— Google makes its money by attracting your attention with free services and then selling your attention to advertisers.

If you were Apple, what could you do to enhance your strengths while weakening or negating your competitor’s strengths?

Strategy #1: Focus on the user experience.

It’s perfectly fine not to care about quality. What’s not perfectly fine is criticize those who do care about quality for seeking it out and enjoying it.

Strategy #2: Give away your software in order to make your hardware more valuable and your competitor’s software less valuable.

AAPL’s business model is hardware. Giving away a free OS is a natural step. Puts even more pressure on MSFT though. ~ Sameer Singh (@sameer_singh17)

Strategy #3: Make your platform so valuable that your competitors will feel compelled to put their services on your platform.

I destroy my enemy when I make him my friend. ~ Abraham Lincoln

Campaign

Apple is very consistent. Worth remembering that in ’01 they bought SoundJam (which was $50), renamed it iTunes and gave it away for *free*. ~ Carl Schlachte, Sr. (@carlsuqupro)

Make Software Free
— Make all Operating System software free.
— Make all Consumer software made by Apple free. (iWork — Pages, Numbers, Keynote — iLife — iPhoto, iMovie, GarageBand — iTunes Movie Trailers, iBooks, Maps, Find my iPhone, Podcasts, Keynote Remote — 20 apps in all.)

I estimate the drop in OSX and iLife/iWork prices means about $450 million foregone software revenues for Q4. ~ Horace Dediu (@asymco)

Folding reporting Software into iTunes now makes sense: Software revenues were going to go to zero. ~ Horace Dediu (@asymco)

Make The Look And The Feel Of The Software The Same
— Update (almost) all Apple consumer software;
— Make (almost) all Apple consumer software available across all screens (iPod Touch, iPhone, iPad, Macs and Apple TV).

Make Online Software Cross-Platform
— Create on-line versions of on-device software;
— Make on-line versions free;
— Make on-line versions of the software look and feel like the on-device software.
— Make on-line software collaborative.

No iCloud account required to open Pages files? Nice! Collaboration? Very nice! ~ Joseph Thornton (@jtjdt)

iWork collaboration means … I’ll never have to open Google Docs again! ~ Rene Ritchie (@reneritchie)

Unify Hardware
Almost all new iPads & Macs are:

— Retina Screen
— 64 bit

“The iPad is 64 bit. Windows is, by and large, still 32 bit. Enough said.” ~ Ben Bajarin (@BenBajarin)

— A7

Apple’s messaging of the A7 in iPad: desktop-class architecture. No desktop needed. ~ Ben Bajarin (@BenBajarin)

— M7
— Lightening Cables (except iPad 2)
— Touch ID

Lack of fingerprint scanner in iPads points against it being an ecosystem play. Convenient in phones, not needed in tablets. ~ Benedict Evans (@BenedictEvans)

I respectfully disagree. There is not a doubt in my mind that the next generation of Apple tablets AND notebooks AND desktops will have Touch ID. Why? Many reasons, but one is that Touch ID is a habit. Once people get used to it, they’ll want it everywhere.

Unify Software

By making the operating systems free, and by extending updates as far back as practicable, Apple is doing its very best to remove fragmentation and consolidate their devices on the latest operating system versions.

Apple’s free software is the ultimate fragmentation fighter. ~ Harry McCracken (@harrymccracken)

Target Usage & Engagement

“Usage share is what’s important to us.” ~ Tim Cook

Apple is not after total share, they’re after meaningful share. If a tablet owner isn’t using their tablet, they’re of no use to the platform. And if they using they’re tablet but not engaged in activities that strengthen the platform, they’re of no use to the platform.

“Tim Cook says Apple has sold 170m iPads and iPad usage is 81%.” ~ Ed Baig (@edbaig)

Eighty-one percent of the usage share. Now THAT’s meaningful share.

Themes

1) Apple showed an incredibly strong commitment to the Mac. While others are looking for a PC exit strategy, Apple is making it clear that they’re all in.

Apple didn’t get the memo that Apple killed the PC market. ~ Jay Yarow (@jyarow)

If you still had doubts that Apple thinks notebooks still have a role to play just look at the line up & the price points they now have. ~ carolina milanesi (@caro_milanesi)

2) Apple made it clear that they are committed to the tablet as a category. They literally mocked those who make tablets that are PCs and PCs that are tablets. Anyone who thinks that the iPad lines and the Mac lines are ever going to unify really need to give the matter another think.

3) Apple made two pricing moves that show that they feel they are totally alone in the premium tablet space.

First, they dropped the iPad Mini by $30 (to $299), rather than the traditional $100 dollars, then they INCREASED the price of the Retina iPad Mini by $70 (to $399).

Second, instead of dropping the price of the iPad 4 to $399, they retained the iPad 2 and at $399.

Apple has a total lock on 10″ tablets. Question is the smaller cheaper space. ~ Benedict Evans (@BenedictEvans)

Those two moves make it abundantly clear that Apple thinks it is dominating that sector and that they don’t need to make price concessions.

Wondering if Apple was thinking about the weakness of the Android tablet offer when it priced the mini. Limited competitive pressure. ~ Benedict Evans (@BenedictEvans)

Further, by offering the iPad 2, instead of the iPad 4, as the low cost large screen iPad, Apple is pushing buyers up market to their higher quality and higher priced iPad Air.

Apple may not have a lock on the 7-8 inch tablet space, but their pricing indicates that they have a lock on the PREMIUM 7-8 inch space and – so far as platforms and profits go – that’t the only space that matters.

Apparently Apple is not worried about the competition. Instead, they think that the competition should be worried about Apple.

Where’s The Hat And Other Miscellaneous Thoughts On Today’s Apple Event

Unmet Expectations

A grandmother is watching her grandson play on the beach when a huge wave comes and takes him out to sea.

She looks up and pleads, “Please God, save my only grandson. I beg of you, my life has no meaning without him. Please bring him back.”

And a big wave comes and washes the boy back onto the beach, good as new.

She looks up to heaven and says: “He had a hat!”

No matter what Apple does today, it won’t be enough. Just accept the fact that the critics are always going to want to know: “Where’s the hat?”

Stock Market Reaction

Unless you’re a trader, day-to-day price is truth in the stock market the way popularity is truth in high school.~ Jon Fortt (@jonfortt)

The market is going to react either positively or negatively to today’s announcements. Just understand that the market moves for its own reason and its reaction may have absolutely no relationship whatsoever to reality.

Doomed

The crisis of yesterday is the joke of tomorrow.”~H. G. Wells

No matter what Apple does or does not announce today, someone is going to predict that they’re doomed (or words to that effect). Ignore them. They’re a joke.

Controversy

“Controversy equalizes fools and wise men – and the fools know it.”~Oliver Wendell Holmes.

There will be mindless controversy today. Fools thrive on it. Let’s mind our manners and focus our mind’s on what matters.

Clarity

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

Things are not going to clear up today no matter how hard we stir them. Only time and patient analysis will give us the clarity we seek.

Transformation

There is nothing in a caterpillar that tells you it’s going to be a butterfly.
R. Buckminster Fuller

Transformation is hard to see. It’s particularly hard to see when you’re not looking for it and insisting that it’s not happening.

There’s a lot going on beneath the surface of each Apple event. Over the upcoming weeks and months, let’s look for, and explore, the long term trends, together.

Timing

Knock knock.
Who’s there?
An interrupting cow.
An interrupting co—
MOO!

In comedy, timing is everything. In Tech too.

Things happen fairly slowly, you know. They do. These waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you’re going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely it actually unfolds fairly slowly. It takes years. One of our biggest insights [years ago] was that we didn’t want to get into any business where we didn’t own or control the primary technology because you’ll get your head handed to you. ~ Steve Jobs

Technology is like a wave. If you’re too early, you miss it. If you’re too late, it crushes you. Just ask Microsoft.

Vision is worth exactly nothing without timing.

Mavericks is a wave. Coincidence? Probably…

…but maybe not.

Conclusion

Never give a heckler the last word.~Elaine Boosler

Remember all that noble stuff I just said about ignoring the morons on the Internet? Yeah, well, forget all that. Give ’em hell!

Human Nature And Nature Of IT

“It is human nature that rules the world, not governments and regimes.”~Svetlana Alliluyeva

It is in our nature to think that what works best for us is what works best for the company we work for. We work very hard at making our jobs more efficient, easier to do, rationalizing that we’re making the company more efficient too.

But our REAL job is to help our customers, not ourselves. We are tasked with absorbing the complexity of life so that our customers can enjoy life’s simple pleasures.

CAVEAT: I’m about to lambaste IT departments. Again, I’m not picking on them alone. We all do this. It’s human nature. It’s just a question of 1) recognizing what we’re doing; and 2) taking measures to make things better.

During the nineties and aughts, IT departments – quite naturally and quite understandably – forgot who their real customers were; forgot the real jobs that they were hired to do. IT’s internal customers were the company’s employees and IT’s job was to make the lives of those employees easier. Instead, IT came to believe – as so many of us do – that making their own lives easier was their job. Employees were not viewed as internal customers to be helped and assisted, rather, the company’s employees were more often viewed as adversaries to be feared and resisted.

What Employees Want

Employees want technology that is best suited to do the job that needs to be done. They want the ease of use that leads to a superior user experience. Yes, they want technology to enhance their lives, but mostly, they want technology to get out of their way so that they can get their jobs done.

What IT Wants

Corporate IT departments do not focus on the things that are important to their internal clients. They focus on things like costs, measurements and controls.

Costs

Corporate IT departments need to justify their purchases. They’re very focused on costs, often to the exclusion of benefits. They look at speeds and feeds and other features; they weigh the various benefits; they make a decision and, in most instances, that decision is primarily a financial one.

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

Measurements

Corporate IT departments need to document and measure their purchases. IT cares little about things that cannot be measured.

For instance, how does one properly measure quality, look-and-feel, attention to detail, and design? Answer: one doesn’t.

Further, IT is not the end user. How much, then, do they care about the user experience, how a product feels, whether it eliminates small annoyances, how easy it is to modify or whether it’s delightful to use? Answer: Not much.

Unmeasurable and unnoticed benefits are simply disregarded. The decision comes down to cost and features and the unquantifiable bits simply don’t enter into the decision making process.

To IT, “good enough” is not just good enough. It’s ideal.

Control

If there’s one thing that IT knows about computers, it’s that the corporate employee knows nothing about computers.

“You can’t make anything idiot-proof because idiots are so ingenious.”~Ron Burns

IT is a firm believer in Murphy’s Law.

If anything can go wrong, it will.
~Murphy’s Law


And IT well knows that things can go from bad to worse in a hurry.

“To err is human but to really foul things up you need a computer.”~Paul Ehrlich

The last thing IT wants to give you is something new, powerful and powerfully dangerous.

Generals like to fight the last generation’s wars. IT likes to fight with the last generation of computers and computer software.

IT wants control. And it fears loss of control – to the employees – most of all.

Corporate IT Systems and cathedrals are much the same – first we build them, then we pray.”~Unknown

The War Or Priorities

It’s a war of priorities and, since it’s a Civil War, everyone loses.

The difference between IT and an employee is that an employee will pay two dollars for a one-dollar item that they want and IT will pay one dollar for a two-dollar item than they don’t want.

IT has no respect for the intelligence of its internal customers.

“Don’t explain computers to laymen. Simpler to explain sex to a virgin.”~Robert A. Heinlein

Employees become unhappy.

“I could see that, if not actually disgruntled, he was far from being gruntled.”~P. G. Wodehouse

IT treats employees with disdain.

“It’s not our fault. It’s an ID ten T problem (ID10T).”

Employees become more and more frustrated with the technology they are using.

For a list of all the ways technology has failed to improve the quality of life, please press three.~Alice Kahn

IT stops listening – if they ever listened in the first place.

I have heard your views. They do not harmonize with mine. The decision is taken unanimously. ~ Charles de Gaulle

Employees begin to deeply resent and then mock IT’s decisions.

“Yo operating system so ugly it makes blind men cry.”

IT becomes ever more inscrutable and byzantine.

I called IT and asked for help. They referred me to the self-help section. When I asked them where the self-help section was, they said that if they told me, it would defeat the purpose.

Employees begin to fight back by undermining and sabotaging the system.

“If you can’t join them, beat them.”

— Employees want IT to change and are disappointed when they stay the same.
— IT wants employees to stay the same and are disappointed when they change.

Your Real Job

“I always advise people never to give advice.” P. G. Wodehouse

Again, your real job is to make the lives of your customers better, not to make your job easier.

People cannot be managed. Inventories can be managed, but people must be led.
—H. Ross Perot

IT and the employees are part of a team, like two oars in a row boat. If you don’t work together, you just end up going around in circles.

“In all human affairs, the wisest course is to be passionate about the role of reason and reasonable about the role of passion.”~Dr. Mardy’s Aphorisms

Remember, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”~Charles Darwin

“Some people like my advice so much that they frame it upon the wall instead of using it.” – Gordon R. Dickson

Beware Geeks Bearing Hybrids

Anyone that has been paying attention to the evolution of OS X and iOS will have at some point noticed that the two operating systems are slowly acting more like each other. ((All article excerpts are from: “MacPhone Air: Mark Shuttleworth predicts Apple will merge Mac and iPhone“))

Geeks onlineAgreed.

Mark Shuttleworth, founder of Canonical who recently attempted to crowdfund the Ubuntu Edge phone that would double as a desktop PC … predicts Apple will merge Mac and iPhone hardware one day soon, creating a device similar to the Ubuntu Edge.

Vehemently disagree.

…Shuttleworth said that though his company’s Ubuntu Edge didn’t reach its crowdfunding goal, it drummed up enough interest in a phone that doubled as a desktop PC, and other companies would adopt the concept as their own.

Yeah, right, You failed miserably, so now everyone is inspired to be you.

“(Shuttleworth pointed) out that the Cupertino company specifically labeled the phone’s A7 SoC as a “desktop-class processor.” Shuttleworth thinks Apple specifically chose this nomenclature as a way to hint at the future of its hardware, stating that it was a “very clear signal” that Apple would merge the iPhone and MacBook Air into one device.

Yeah, right, because Apple just LOVES to give hints (eye roll).

OS X and iOS have been on a collision course for some time now, though both operating systems are traveling in slow trains.

Collision course or parallel courses? There’s a big difference between the two.

Who knows if Shuttleworth is right in predicting that Apple would converge the two devices….

Oh, me, me, me!

I’m sorry — was that supposed to be a rhetorical question?

Shuttleworth’s analysis is as wrong as wrong can be. Here’s why.

Jobs To Be Done

Compueternerds online

“To forget one’s purpose is the commonest form of stupidity.”~Friedrich Nietzsche

If a device isn’t doing a useful job, it won’t get hired. If it’s doing an unmet job, then it will be staggeringly successful.

Tablets are stealing jobs from keyboard-based computers in a steady war of attrition~Horace Dediu (@asymco)

What many fail to realize is that mass market consumers are using tablets in the SAME ways they used to use PCs. And then some.~ Ben Bajarin (@BenBajarin)

As one teen said to another: “I love my iPad. I can do so much more on it than on my laptop.”~ Horace Dediu (@asymco)

If you don’t think that the tablet is doing its job, it’s because you don’t understand the job the tablet is being hired to do.

Design

Design isn’t a matter of building, it’s a matter of taking away. It’s like Michelangelo taking a block of marble and chipping away at it until it reveals David.

Perfection is achieved, not when there is nothing left to add, but when there is nothing left to take away.
—Antoine de Saint-Exupéry

Tech Geeks (like us) v. Real People (like them)

geekI define the word “Geek” as, well, pretty much anyone who is reading (or writing) this article. We’re not like real people.

(I mean, c’mon, you know I’m right.)

The way we see the problem is the problem.” ~ Stephen Covey

— Real people look for solutions;
— Geeks look for problems — and find them.

In most aspects of life, too much of something is just as bad—and often much worse—than too little.~Dr. Mardy’s Aphorisms

— Real people focus on what it is.
— Geeks focus on what is missing.

I’M NOT FINISHED.”
—Edward, Edward Scissorhands

— Real people say: “What can I do with it?”
— Geeks say: “What can I do to it?”

In all human affairs, the wisest course is to be passionate about the role of reason and reasonable about the role of passion.~Dr. Mardy’s Aphorisms

Geeks are passionate about reason. They need to also be reasonable about the role that passion plays in our lives.

The brain and the heart are like the oars of a rowboat. When you use only one to the exclusion of the other, you end up going around in circles.~Dr. Mardy’s Aphorisms

Using reason to evaluate a product is like rowing with one oar. Only if we view a product through both its utility and its appeal to human emotions can we truly make any progress.

Geeks Simultaneously Think That The Tablet Is Fabulously Successful And Fatally Flawed

Most people look at the growth of the tablet and say: “Wow, the tablet must be doing something right.”

tablet1

Geeks look at the growth of the tablet and say: “Yeah, sure, it’s doing well and all…but what would REALLY make the tablet great would be if it were a hybrid!”

Touch Input And Pixel Input Are Inherently Incompatible

DESTINY! DESTINY! 
NO ESCAPING THAT FOR ME!”
—Dr. Frederick Frankenstein, Young Frankenstein

Contrary to geek wisdom, Frankenstein’s monster was not a shining success, the creation of life from inanimate matter. It was, well, a monster, a sort of hybrid.

— A telescope is good for big things. A microscope is good for small things. A Tele-Microscope is good for nothing.

— A Microwave cooks fast. A stove cooks slow. A Micro-Stove Oven leaves us cold.

This was the genius of the iPad. It was a mediocre notebook computer, but it was a great tablet. This was why, after 10 years of failure, the tablet took off. We still haven’t learned the lesson. Geeks still want the tablet to be a combination of a tablet and a notebook despite the fact that the market clearly prefers tablets to be tablets.

Listening To The Market

When I was in law school, they taught me that when the Judge was agreeing with you, you should shut up and sit down.

Fine, fine advice…that I never took. But that doesn’t mean that you shouldn’t heed those wise words.

The public is the only critic whose opinion is worth anything at all.~Mark Twain

In technology, the market is the Judge. And when the market is shouting you down…

…shut up, sit down and enjoy the ride. That’s what the vast majority of consumers are doing. We would be wise to do so too.

The Tao Of Apple

“There are three rules for running a successful business.

Unfortunately, no one knows what they are.

The Now Of Apple

A man is known by the company he organizes. ~ Ambrose Bierce

Steve Jobs’ Greatest Creation Was Apple Itself

Steve Jobs’s most important, but least recognized, contribution to the world was, not as a visionary, designer or a salesman, but rather as a management innovator. When Jobs was asked whether his greatest creation was the iPad or iPhone, he replied:

No. Apple — the company. Because anybody can create products, but Apple keeps creating great products.

With Apple, Steve Jobs showed us what can happen when a company realigns its priorities in order to focus totally on adding value for customers. The ironic result? The company makes loads and loads of money.

My passion has been to build an enduring company where people were motivated to make great products.

Apple’s continued success depends upon current management’s ability to understand and extend the management principles that Steve Jobs put in place, while also recognizing and minimizing its shortcomings.

[I want] to make Apple a great $10 billion company. Apple has the opportunity to set a new example of how great an American corporation can be, sort of an intersection between science and aesthetics. Something happens to companies when they get to be a few million dollars — their souls go away. And that’s the biggest thing I’ll be measured on: Were we able to grow a $10 billion company that didn’t lose its soul? ~ Steve Jobs

Traditional companies — fueled by monetary incentives and ruled by hierarchical bureaucracy — have their limitations and seem destined to fall into the Innovator’s trap. Apple’s style of doing business seems to neatly sidestep the Innovator’s dilemma, but does so by exposing Apple to a wholly novel set of incentive-related dilemmas.

Apple, The Functional Organization

Jobs rearranged Apple into a functional organization. He made the user experience priority number one, stripped away middle management, eliminated traditional monetary incentives and career paths and centered the organization on himself.

The functional organization is ideally suited for innovation. That is Apple’s strength. And that is Apple’s weakness.

The Yin And The Yang Of Apple

Apple_Yin Yang_1Critics say that Apple is too hyper-focused; can’t juggle multiple critical tasks; focuses far too much time, energy and money on product features that aren’t particularly practical or appreciated by their customers; that Apple only makes modest product upgrades; is out-of-touch with mainstream market tastes; is constantly playing feature “catch-up” with over-priced, slow-to-market, easily-copied products that contain far too few features, far too few choices and far too many constraints.

Perhaps, even worse, is Apple’s overall attitude. They’re self-assured to the point of hubris; they’re stubborn, insular, isolated, elitist, pretentious, secretive, obsessive, cocky and paternalistic. They’re undemocratic and controlling, creating over-designed, bleeding (not cutting) edge products that – when accompanied by their my-way-or-the highway stance – are a slap in the face to the vast majority of consumers.

Guess what? All of these criticisms are mostly true but they’re also mostly irrelevant. They’re trade-offs. Apple gains something in exchange for each thing that it gives up and, for the most part, those exchanges are asymmetric, with Apple gaining far more than it loses.

None of the above criticisms are any threat to Apple’s continuing success. On the contrary, many of the things that Apple is criticized for are the very qualities that are responsible for Apple’s current mega-successes.

So if that’s not the problem, then what is the genuine issue that confronts Apple?

The How Of Apple

To finish first you must first finish.” ~ Rick Mears

Apple’s North Star

Take a look at the following compilation of Apple’s stated priorities; their self-professed “North Star”:

Our north star is to make the best product … we’re about having the best experience and having the happiest customers … Apple is focused on product-quality first, price second … the products, not the profits, are the motivation … the goal of the company is to delight the customer … we want to really enrich people’s lives at the end of the day, not just make money.

Now you may say that prioritizing the user experience over profits and growth is all a lot of hokum but, as they say, actions speak louder than words (just not as often). And every action that Apple has taken reinforces their words — they really don’t prioritize profit and growth. Which is swell and all except for one thing…

…everyone else in the world — including their employees, their creditors and their investors — DOES prioritize profits and growth.

That Which Gets Incentivized Gets Done

Making the customer experience priority number one is very noble and all, but it doesn’t address the needs of the employees and the investors.

Apple is NOT prioritizing growth. You may find that admirable – I do – but the Street doesn’t care. And, frankly, shouldn’t. ~ Ben Thompson (@monkbent)

Apple has the exact opposite problem of Microsoft. Microsoft has everyone incentivized to make money and, therefore, innovation suffers. Apple has everyone incentivized to innovate and, therefore, focus on things like career paths and market share and profits suffer. Apple constitutionally cannot maximize profits because they’re committed to innovation.

There are no internal incentives for Apple to pursue profit/market share. This, of course, is problematic for a platform company. ~ Ben Thompson (@monkbent)

That Which Gets Measured Gets Managed

What gets measured gets managed. – Peter Drucker

The danger of bad metrics is what gets measured gets done. ~ RogerKay (@RogerKay)

Apple’s functional organization turns traditional management issues on its head. The problem with most companies is that they measure the wrong things, therefore their managers drive their people to do the wrong things. At Apple, the problem is that their priorities are hard to measure in any meaningful way, therefore it is difficult, if not impossible, to manage and incentivize in any meaningful way.

The problem with Steve Jobs’ business solution is that THERE IS NO FOCUS.

Effective leadership is putting first things first. Effective management is discipline, carrying it out. ~ Stephen Covey

Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.~ Stephen Covey

businessman climbingAgain, the problem with most companies is that their managers are very effective at carrying out policy; at driving people up the ladder – but the priorities being carried out are the wrong ones; that the ladder is up against the wrong wall.

No so at Apple. Apple has its priorities in order; their “ladder” is against the right wall, but they have no managers, no management incentives, no career paths to drive people up that ladder.

— At Microsoft, the primary problem is that no one is responsible for, in charge of, the defender of, the champion of, innovation. No one “owns” innovation at Microsoft.
— At Apple, the primary problem is that no one is responsible for, in charge of, the defender of, or the champion of, market share and profitability. No one “owns” profitability at Apple.

— At Microsoft, the sales and money guys are running the asylum.
— At Apple, the design guys are running the asylum.

— At Microsoft, not only are they keeping their “eyes on the prize”, but they can’t pries their eyes away from the size of the prize long enough to realize that without innovation their company dies.
— At Apple, all minds of every kind are behind the designs that they find fine. Money? Market-share? Investors? A happy, but happenstance, side-effect. A paradoxical beneficiary of the same friendly fire that has simultaneously devastated competitors like Palm, Nokia, RIM, HTC, and Microsoft.

The Great Leader

Of course, the answer to “Who’s in charge” used to be crystal clear — Steve Jobs. Jobs was THE driving force behind Apple. Loss of focus a problem? Not so long as Steve Jobs was at the helm.

Now, however, Steve Jobs, the visionary founder is gone. Without his leadership, most pundits feel that Apple’s current management has no choice but to re-introduce traditional hierarchical bureaucracy to run the company. The company will then steadily go on defense; the salesmen and the money-men will take over; and, in time, the managers will cease to understand either the company’s products or its customers and Apple will start its inevitable descent into mediocrity and irrelevance.

So far, Tim Cook and Apple have rejected that course. They’ve continued to function as a functional organization. But they’re doing so without the man who put the “fun” in functional.

There’s no doubt that the good ship Apple has lost its Captain, its visionary. But has it lost his vision too?

Has Apple been left adrift in a fog of indecision, floating in sea of doubt, helplessly waiting for the next wave of innovation to toss them upon the rocks?

The Old Guard

Steve Jobs knew that he was dying and he did everything in his power to pass along his management philosophy to his Lieutenants. If you watch the words and the actions of Apple’s top management, it is clear that they are committed to Jobs’ management approach and that they, in turn, are doing everything in their power to implement and maintain Jobs’ management philosophy.

Apple’s Old Guard was there in the down times. They suffered and survived Apple’s near-death experience. They will not forget. They will not waiver. They are committed, resolute and hungry to prove themselves. They’ll do all that they can to extend Jobs’ — and their own — legacy.

But what happens when the Old Guard is gone? What happens when new blood – those who have enjoyed nothing but mega-success at Apple – take over? Will they be capable of, or willing to, maintain the discipline and focus necessary to keep Jobs’ management dream intact and alive?

THAT is Apple’s true dilemma.

The Tao Of Apple

Apple_Yin Yang_2

Tao |dou, tou| noun (in Chinese philosophy) the absolute principle underlying the universe, combining within itself the principles of yin and yang and signifying the way, or code of behavior, that is in harmony with the natural order.

Literally Chinese for ‘(right) way.’

Priorities tell us what we should be doing. Values tell us how we should be doing it. Motivation tells us why it’s worth doing. Principles tell us who we are striving to be. Culture maintains and reinforces who we are.

Apple is trying to institutionalize the priorities, values, motivations and principles of a functional organization. They are employing the staying power of culture to counter and combat the perverse effects of entropy and ennui.

Priorities Are The “What”

“The most important thing in life is knowing the most important things in life.” ~ David F. Jakielo

Apple has made themselves very clear: Their number one priority is the user experience.

“We innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent.” ~ Jeff Bezos

Jeff Bezos’ words. Apple’s philosophy.

He who wants to do everything will never do anything.” ~ Andre Maurois

Fools think that everything should be a priority. But, of course, when you prioritize everything, you actually prioritize nothing.

The whole point of getting things done is knowing what to leave undone. ~ Lady Stella Reading

“The bottom line is, when people are crystal clear about the most important priorities of the organization and team they work with and prioritized their work around those top priorities, not only are they many times more productive, they discover they have the time they need to have a whole life.” ~ Stephen Covey

The odds of hitting your target go up dramatically when you aim at it. -Mal Pancoast

The successful man is the average man, focused. Apple is hyper-focused on what they need to do in order to remain hyper-successful.

Values Are The “How”

In most things, 80% of perfection is not only “good enough”, it’s actually optimal, because the cost expended to achieve more is disproportionately greater than the benefit gained.

The opposite is true in things like brain surgery, and submarine and space travel. The last 1% is just as important as the previous 99% because anything less that 100% is literally fatal.

The new ensign was trying to impress the master chief with his expertise learned in sub school. The master chief cut him off quickly and said, “Listen, it’s really simple. Add the number of times we dive to the number of times we surface. Divide that number by two. If the result isn’t an even number, don’t open the hatch.

Neil Armstrong once said, “You only have to solve two problems when going to the moon: first, how to get there; and second, how to get back. The key is don’t leave until you have solved both problems.”

What Apple does is neither brain surgery nor rocket science but they choose not to accept 80% of perfect as their norm. They strive, instead, to walk the extra mile and pay the extra price necessary to be excellent and move their products ever closer to the unobtainable goal of perfection.

“(F)rankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.” ~ Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings Call

“Excellence is rarely found, more rarely valued.” ~ Johann Wolfgang Von Goethe

One’s natural instinct may be to do what’s easy; to do the least that we can do. A better, but still self-centered, instinct is to do what we do best. We’re only at our very best when we do our best to do WHAT’s best.

Quality means doing it right when no one is looking. ~ Henry Ford

Motivation Is The “Why”

“The purpose of life is a life of purpose.” ~ Robert Byrne

“Being the richest man in the cemetery doesn’t matter to me… Going to bed at night saying we’ve done something wonderful – that’s what matters to me.” ~ Steve Jobs

The best thing in life aren’t things. ~ John Ruskin

“We believe that we’re on the face of the Earth to make great products, and that’s not changing.” ~ Tim Cook

A person is only as good as what they love. ~ Saul Bellow

  • Making a computer work is an act of engineering.
  • Making a computer work the way we do is an act of creativity.
  • Creating a computer that does real work is an act of engineering.
  • Creating a computer that makes work feel like play is an act of genius.


  • I think that the following is one of the key differences between Microsoft and Apple:

  • Microsoft makes computers work.
  • Apple makes computers fun.

Principles Are The “Who”

Find out who you are and do it on purpose.” ~ Dolly Parton

People should know what you stand for. They should also know what you won’t stand for.

A piece of spaghetti or a military unit can only be led from the front end. ~ George S. Patton

Culture may start at the top, but it has to be made into a habit so pervasive that it permeates the entire organization.

“Motivation is what gets you started. Habit is what keeps you going.”-Jim Rohn

Company culture isn’t ping-pong tables or vacation policies. It’s the set of principles by which decisions are made when the boss isn’t watching. ((This quote came from an article entitled “North Stars“. It’s a great article and I highly recommend it. I originally cited it without attribution because I had lost the link, but a commentator was kind enough to provide it. My thanks to the commentator and my renewed apology to the author of the Uncanny Valley. Your tolerance is greatly and sincerely appreciated.))

(R)egardless of who is in what job, those values are so embedded in this company that Apple will do extremely well. ~ Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings

Watch your thoughts; they become words. Watch your words; they become actions. Watch your actions; they become habits. Watch your habits; they become character. Watch your character; it becomes your destiny.

Rules Are Not The Answer

The problem with rules is that they begin to ossify the moment we begin to codify them. We start to practice the letter of the law rather than its spirit. We begin to rely upon routines. We assume. We stop pursuing the Way and presume that we know the Way — or worse — we presume that the way we’re currently doing things IS the Way.

Never assume the obvious is true. ~ William Safire

Most of our assumptions have outlived their uselessness.” ~ Marshall McLuhan

Never, never rest contented with any circle of ideas, but always be certain that a wider one is still possible. ~ Pearl Bailey

So if rules are not the answer, then what can Apple do? How can they constantly refresh their outlook, keep their minds focused and continuously make the major, and minor, course corrections necessary to ensure that they stay on the path?

Questions Are The Answer

Somebody once told me, “Manage the top line, and the bottom line will follow.” What’s the top line? It’s things like, why are we doing this in the first place? What’s our strategy? What are customers saying? How responsive are we? Do we have the best products and the best people? Those are the kind of questions you have to focus on. ~ Steve Jobs

Apple asks itself some of the very best questions that I have ever heard any corporation ask.

The greatest challenge to any thinker is stating the problem in a way that will allow a solution.

I was going to write out some of the questions, but I really think you should take the time to view the following two short videos, instead. They’re just over one minute each. Do yourself a favor and watch them (again and again).

Some critics mocked these commercials; said they were pointless and pretentious. Talk about throwing pearls before swine.

A man may fulfill the object of his existence by asking a question he cannot answer, and attempting a task he cannot achieve. ~ Oliver Wendell Holmes

Apple is flat out telling us (not that many are listening):

We are Apple.

A wise man’s question contains half the answer. ~ Solomon Ibn Gabirol

We have not grown complacent.

It is not the answer that enlightens, but the question. ~ Eugene Ionesco

Nor have we forgotten the way.

Judge a man by his questions rather than his answers. ~ Voltaire

We will ask ourselves these questions, and more, to ensure that we stay on the path; that we follow our North Star.

“We make our world significant by the courage of our questions and by the depth of our answers.” – Carl Sagan.

We are Apple. This is what matters.

The Wow Of Apple

Stay Hungry

See it big, and keep it simple. ~ Wilferd A. Peterson

The cure for boredom is curiosity. There is no cure for curiosity. ~ Ellen Parr

“The reasonable man adapts himself to the world. The unreasonable man persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”-George Bernard Shaw

Stay Foolish

Almost all really new ideas have a certain aspect of foolishness when they are first produced. ~ Alfred North Whitehead

“Invention requires a long-term willingness to be misunderstood. ~ Jeff Bezos

Today’s mighty oak is just yesterday’s nut, that held its ground. ~ David Icke

If no one is telling you your idea is crazy, it’s probably not a very good idea.” ~ Francis Ford Coppola

The greatest pleasure in life is doing what people say you cannot do. ~ Walter Bagehot

“It’s kind of fun to do the impossible.” – Walt Disney

“When life gives you lemons, make grape juice, then sit back and let the world wonder how you did it.” – Unknown

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

Stay Focused

“I recently experienced a small epiphany: I think the never-ending worry about Apple’s future is a good thing for the company.” ~ Jean-Louis Gassée.

I agree. Far from resting on their laurels, Apple is desperate – as always – to prove themselves. The naysayers have, quite unintentionally, through the gift of adversity, given Apple exactly what it needs…focus.

Adversity is your greatest professor ~ Greg Evans

As a rule, adversity reveals genius and prosperity hides it. ~ Horace

A successful business is not a trouble-free, worry-free business. A successful business is an edifice that must be rebuilt every day. As Winston Churchill put it:

Success is never final. Failure is never fatal. It is the COURAGE to continue that counts.

When it comes to courage, Apple seems to have more than enough. Despite all storms that they have successfully survived, despite all the shoals that they have successfully navigated, every day they rise to the jeering of the hecklers who assure them that today is the day that they’ll sail the good ship Apple off the edge of the earth and into oblivion.

Life is not about waiting for the storm to pass. It is about learning to dance in the rain.

I’ll close with these words from the mighty (and mighty quotable) Albert Einstein. It’s almost as if he had Apple in mind when he penned them:

Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” ~ Albert Einstein

Did You Hear The One About How Eric Schmidt Got Hired At Google?

Perhaps you’ve heard that Eric Schmidt called Android ‘more secure than the iPhone.’

Did you hear the one about how Eric Schmidt got hired at Google?

Google had a tryout for the leading CEO candidates. They invited the best and the brightest to their campus and gave them a one-question exam. They picked up a chair, plopped it on a desk and wrote on the board: “Using everything you have learned, describe the most effective way to remove the chair from the desk.”

Most of the candidates began furiously writing their answers. However, Eric Schmidt finished in less than a minute, turned in his paper and left the room. Weeks later it was announced that Eric Schmidt had been named CEO of Google.

His answer to the examine question consisted of two words:

What chair?

When you’re reality sucks, simply deny that the reality exists.

Apple To World: “Doomed? I Know What You Are, But What Am I?”

Last week, I talked about Apple: The Splendid Failure. How Apple was viewed as a failure because they prioritized product and customer experience over profits. This week, I try to put things into perspective and demonstrate where Apple really stands in relation to their rivals. Next week, I’ll conclude by focusing on Apple’s true dilemma.

Two Tenable Business Positions

strategy101Almost all industries have two tenable positions: the differentiated high-end, and the low-cost low-end:

This is not controversial. It’s Business School 101.

The iPhone faces little threat in the differentiated high-end of the market. “(C)ounting the days until customers flee for cheap phones is silly.” – Ben Thompson

Apple’s iOS Dominates The Differentiated High End (Premium)

Life is like a dog sled team. If you ain’t the lead dog, the scenery never changes.” – Lewis Grizzard

Apple is clearly the lead sled dog and their competitor’s view hasn’t changed much since 2007. Apple dominates the differentiated high-end (premium) portion of the connected computing devices market. ((How much premium ground has the iPhone lost? Based on an Aug. 5 note by investment research firm Consumer and Intelligence Research Partners (CIRP), Apple’s still holding its own; over the last year, 78% of iPhone users upgraded to another iPhone, but only 67% of Android users upgraded to another Android device.

In addition to better retaining customers overall, Apple also appears to have had an edge among high-end shoppers. According to CIRP, those buying a smartphone for the first time preferred Android to iOS by a wide margin, 56% to 35%. Those upgrading from another smartphone, however, preferred iOS 49% to 46%. First-time buyers tend to be less affluent, and to go for budget devices. Longtime smartphone owners tend to be more affluent, and to maintain or improve the luxury of their devices.

An Aug. 12 CIRP note added more context. It found that whereas 20% of Apple’s customers come from Android, only 7% of Samsung’s customers come from iOS. This is despite the fact that Samsung, according to IDC, now represents half of all Android shipments. Samsung users were also less likely than iPhone users to upgrade within the same brand. ~ Michael Endler, Apple’s iPhone Battle Plan: 6 Factors))

Apple’s iOS Dominates The Premium Purchasers

(T)he iPhone is more expensive than most of the phones on the market, and this shapes the kind of people who buy it. ~ Benedict Evans

“Premium device sales produce immediate benefits in the form of increased profit margins, but they also engender a number of recurring benefits.

[pullquote]Apple still has the customers that everyone else wants.[/pullquote]

Owning the premium markets means having the customers who are best educated, wealthiest and most likely to buy accessories. Apple users are more educated and affluent than Android users, for example. iPhone users upgrade devices more regularly than most other mobile phone users. (T)hese users are more likely to buy accessories, and Apple has more users between the ages of 18 and 34, which is widely considered by advertisers to be the demographic that drives taste. As Forrester’s David Johnson told InformationWeek in a recent interview, Apple still has the customers that everyone else wants. ” ~ Michael Endler, Apple’s iPhone Battle Plan: 6 Factors

The public is the only critic whose opinion is worth anything at all. ~ Mark Twain

Apple’s iOS Dominates The Premium Developers

“Premium customers attract premium developers. Despite Android’s massive advantage in global market share, surveys regularly show that iOS is still developers’ biggest priority. Why? Some of the imbalance has to do with logistics — Android is much more fragmented than iOS. But here’s a bigger reason: Apple’s customers are the ones spending money.” ~ Michael Endler, Apple’s iPhone Battle Plan: 6 Factors

Apple Doing What Apple Does Best

Price is what you pay. Value is what you get. ~ Warren Buffett

Apple’s premium strategy focuses on their strengths.

  • Apple is NOT competing on features, they’re competing on benefits;
  • Apple is NOT competing on hardware alone, they’re bundling hardware, software and services into a single ecosystem that their competitors cannot match;
  • Apple is NOT selling you a phone or a tablet, they’re selling you an experience.
  • Apple is NOT competing on price, they’re competing on value.

The quality will remain when the price is forgotten. ~ Henry Royce

If you disagree, well, Apple won’t sell you their iPhone.

What we want to do is make a really great product and provide a great experience. And I’m sure we’ll get enough customers that want to buy that. ~ Tim Cook

What’s Wrong With Being Mercedes-Benz, BMW or Disney World?

“Apple’s market share is bigger than BMW’s or Mercedes’s or Porsche’s in the automotive market. What’s wrong with being BMW or Mercedes?” ~ Steve Jobs

Apple is avoiding a market share fight, which is ultimately about price and compromise. Instead, they’re focusing on premium products, premium purchasers, premium developers and premium profits.

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

Apple has solidified its hold on the Mercedes-Benz/BMW portion of the U.S., European and Asian markets.

“Wait, wait, wait!”, I hear you say. “There IS no Mercedes-Benz/BMW Asian market.”

Bite your tongue.

Apple’s products are out-of-reach of the vast majority of Asian consumers but that doesn’t mean there is no market for them. Apple’s products are aspirational. And there are a LOT of people who can afford them.

Saying stupid things like “the iPhone 5C is equivalent to the average monthly salary in China” belies a fundamental misunderstanding of China, its inequality, and its sheer size. ~ Ben Thompson

Mercedes Benz and BMW dominate motor vehicle profits with little market share. Disney World dominates Amusement Park profits with relatively little market share, too. No one ever says that they’re doomed or that they need to create a lower priced product in order to attract larger market share.

What’s wrong with being the Mercedes-Benz, the BMW, or the Disney World of smart connected devices?

Presuming all decisions are based on price is the easiest way to mispredict the future. ~ Ben Thompson (@monkbent)

The Cult Of Market Share And The Mostly Misunderstood Network-Effect

“Aha!”, cry the Naysaysers, “There’s the fatal flaw in your argument. It’s okay for Mercedes-Benz, BMW or Disney World to have small market share, but the iPhone and the iPad are built upon Platforms and Platforms play by a different set of rules.”

Third-party companies are building apps and services to run on smartphone and tablet platforms. These apps and services, in turn, are making the platforms more valuable. Consumers are standardizing their lives around the apps and services that run on smartphone and tablet platforms. Because of these “network effects,” in platform markets, dominant market share is huge competitive advantage. ~ Henry Blodget

“At a certain point, growth becomes more important than absolute levels, so even if Apple is currently sending more money to developers than Android, if Android’s growth is faster than Apple’s, developers will bail and go to Google Play.” ~ Tero Kuittinen, analyst at Alekstra

Yeah, right. Almost all industries have two tenable positions: the differentiated high-end, and the low-cost low-end – but let’s carve out a non-existant exception for the iPhone. Sheesh.

The Counter-Argument

The Math Is All Wrong

You can’t simply take two things of unequal value, divide them into two separate piles, total the piles and declare the numerically superior pile to be the more valuable.

Question #1: Pile “A” has 10% of the items and pile “B” has 90%. Which pile is more valuable?

Answer #1: If you answered Pile “B”, congratulations, you’re a small child. Run along, now, and go play with a nice Unicorn.

If you answered “There’s no way to know which pile is more valuable”, congratulations, you have a lick of common sense.

Question #2: Pile “A” has 10% of the items and consists of ten, one-hundred dollar bills ($1,000). Pile “B” has 90% of the items and consists of 90 dimes ($9.00). Which pile is more valuable?

Answer #2: If you hesitated, even for a moment, to pick pile “A”, congratulations, you may have what it takes to become a TV talking head who evaluates Apple for a living. Run along, now, and go play with a nice Unicorn. Everyone else is qualified to read on.

The Comparison Is All Wrong

  • I could argue that not all market share is alike – that some customers are move valuable than other customers (See: The Math Is All Wrong, above).
  • I could argue that “Android” is not really a single entity and that it shouldn’t be totaled all together – that Android is many different operating system versions, forked user interfaces, innumerable screen sizes and hardware configurations, etc.
  • I could argue that things like customer satisfaction and ecosystem matter more than sheer quantity.
  • I could argue that market share doesn’t matter if the unit ends up in a drawer or isn’t isn’t interacting with the platform.

Yeah, I could argue all of that. And it’s all true, too. But I don’t really need it to prove my case, so let’s set all that aside.

The Naysayers Are All Wrong

Remember, it doesn’t matter whether you win or lose; what matters is whether I win or lose. ~ Darrin Weinberg

Apple doesn’t give a damn how much market share you have so long as their business is viable and profitable.

The “market-share-uber-alles” theory is like a marshmallow — easy to chew, but hard to swallow. If market share is King, then why are former market share leaders Nokia and Blackberry such Jokers?

Turns out pricing a phone at cost (i.e. the Lumia 520) gets you share! It’s the worst kind of share, but, yay! ~ Ben Thompson (@monkbent)

Focusing on market share instead of profits is like trying to make your car go faster by honking on the horn. (HINT: It’s going to take something more.)

Thunder is good, thunder is impressive; but it is lightning that does the work. ~ Mark Twain

Market share is good, market share is impressive; but it is profit that does the work.

Any man who can drive safely while kissing a pretty girl is simply not giving the kiss the attention it deserves.” ~ Albert Einstein

Any company who can drive market share while simultaneously pleasing their customer is simply not giving their customer the attention they deserve.

Technology Tourettes

Some Pundits have “Technology Tourettes.” They keep shouting out inappropriate things like “open” and “market share” and “history repeats” at all the wrong times and in all the wrong places. ~ John R. Kirk ((I often quote myself; it adds spice to my conversation. ~ George Bernard Shaw))

“But, but, but…” the afflicted stammer, “…history is repeating. PC vs. Mac. Windowzzzzzze!”

Apple’s approach in mobile ignores history, specifically the Mac/Windows wars of the 1990s, which Apple clearly lost. In this scenario, Android is Microsoft’s Windows—available to all kinds of manufacturers—while iOS is on only Apple devices.~ Sam Grobart, Bloomberg

Yeah, yeah, yeah, that’s all very nice, but it’s also all very irrelevant.

“Those who do not remember the past are condemned to repeat it.”-George Santayana

Maybe so, but those who only THINK they remember the past are condemned to misinterpret it.

“People that keep talking about smartphones evolving like PCs are just so clueless. … In actuality, the only lessons that can be drawn is that most low-end Android has zero lock-in. As expected. ~ Ben Thompson (@monkbent)

Tech history is not repeating itself, tech historians are repeating each other — and they’ve got it all wrong.

“God cannot alter the past, though historians can.”-Samuel Butler

Two Big Differences

I think we can agree. The past is over. ~ G. W. Bush

So what’s different this time around? Well, practically everything. But let’s just focus on two major changes that have occurred over the past twenty years: Platform and Scale.

Study history, not historians.

Platform

As a child my family’s menu consisted of two choices: take it, or leave it.”~ Buddy Hackett

When computers were in their adolescence, the Operating System menu consisted of two choices: Windows or Mac. They really weren’t compatible with one another so you had to make a choice. As it turned out, most chose Windows.

Is that true today with iOS and Android? Well let’s see. Whether you choose iOS or Android, can you still:

— Make phone calls?
— Do email?
— send texts?
— Transfer files?
— Surf the Internet?
— Make online purchases?
— Listen to music and watch videos?

You bet you can. Both iOS and Android are almost entirely interchangeable with one another because they both run on the same platform — the Internet.

The Internet is a gateway to get on the Net. ~ Bob Dole, former senator

The REAL platform is the Internet. And both iOS and Android have equal access.

Switching costs between mobile OSes are negligible. ~ iSky (@skyxi)

Seen in this light, let’s re-examine Blodget’s “Android-Must-Win”, thesis again:

Consumers are standardizing their lives around the apps and services that run on smartphone and tablet platforms.

Wrong. Customers are standardizing their lives around the Internet. iOS Apps and Android Apps are incompatible in the same way that Diesel fueled cars are incompatible from Petroleum based cars. The engines that power the vehicles are very different, but they’re more alike than unalike (four wheels, similar size, run on roads, fuel at gas stations, etc.). Similarly, the engines that power iOS and Android are very different, but the Infrastructure that they both run on is one and the same.

Choosing between iOS and Android is not like choosing between a Mac and a PC. It’s like choosing between a BMW and a Ford.

Scale

scale: noun|the relative size or extent of something.

Most industry observers have not yet begun to grasp the difference in scale between the PC market of yesterday and the mobile market of today. The mobile market is much, much, much bigger. When compared with one another, PCs look like a baby next to a giant.

(T)hese markets are so big, and there’s so many people that care and want a great experience from their phone or their tablet, that Apple can have a really good business. A really good business. ~ Tim Cook

There has been a fundamental change in the scale of the computing industry. In 2012:

350 million PCs sold.

1.7 billion phone sold.

1.6 billion PCs in use. 

3.2 billion mobile users.

PCs replaced every 4 or 5 (or 6 or 7) years

Phones replaced every 2 years.

PCs shared.

Phones, one per person.

(E)verybody in the world is going to have a smartphone. There are a lot of people that maybe worry that the market is so big now it can’t get any bigger, but it’s going to get a lot bigger. ~ Tim Cook

Take a step back and re-look at the sheer size of today’s mobile market vs. yesterday’s PC market. We are going from a world where:

  • 350 million PCs were sold every year to a world where 2 billion smartphones are sold every year.
  • Zero iOS devices existed to a world where there are 700 million iOS devices, and counting.
  • large

  • Zero Tablets existed to a world where Tablet growth is even MORE rapid than was Smart Phone growth.
  • slide-44-638-1

  • Zero tablets to a market that is going to surpass the sales of all PCs.
  • (Just to put things in perspective,) more tablets are sold each QUARTER than streaming TV boxes have been sold EVER. ~ Benedict Evans (@BenedictEvans)

  • The niche player in mobile (Apple) is closing on the dominant player in PCs (Microsoft).
  • chart919

  • Consumers used to “upgrade” to a new operating system by buying a new computer to a world where 200 million users upgraded to iOS 7 in FIVE DAYS.

The idea that Apple is vulnerable to the low end is a relic of an idea. It goes back to the Mac of the 1990s, at a time when the world-wide computing market was orders of magnitude smaller than today and where purchasing and development decisions centralized in the hands of a few large companies. And even when looking at that competition, the Mac somehow managed to survive.

That’s not likely to be the case for those who found themselves in competition with the Mac in its pocketable re-incarnation. ~ Horace Dediu, Asymco

Perspective: The iPhone Stands Alone

You say that iOS is a niche that’s going to be overwhelmed by Android? I don’t think so.

Just to put things in perspective, the iPhone – a product that did not exist in May 2007 – is, by itself:

  • Bigger than 474 companies on the Standard & Poor’s 500-stock index
  • Bigger than 21 of the 30 component companies in the Dow Jones industrial average.
  • Bigger than Microsoft and Amazon.
  • Bigger than Coca-Cola and McDonalds.

$AAPL 9M iPhone launch generated >$5.4 B in revenue in 3 days, more than $MSFT Surface, $GOOG Motorola, $AMZN Kindle and $5B put together. ~ Daniel Eran Dilger (@DanielEran)

1 out of every 800 people ON THE PLANET ordered an iPhone over a single weekend in September, 2013. Does that sound niche to you?

Apple’s revenue from iPhones in the launch weekend was around double its total revenue in the quarter Windows 95 was launched. ~ Benedict Evans (@BenedictEvans)

Apple is so much larger than Microsoft, that the iPhone — by itself — is larger than all of Microsoft and Apple — sans iPhone — is STILL larger than all of Microsoft.

Chart 2

That’s right. If the iPhone disappeared from the face of the earth, Apple would STILL be bigger than all of Microsoft.

Apple Is Doomed…Not!

I have never made but one prayer to God, a very short one: ‘O Lord make my (critics) ridiculous.’ And God granted it. ~ Voltaire

You say Apple is doomed because the iPhone is niche? Are you kidding me?

So many companies wish they are as doomed as Apple. ~ ßen ßajarin (@BenBajarin)

If the iPhone is niche, then what is the Kindle Fire, the Surface, McDonalds, Coca-Cola, Microsoft, the S&P 500 and the Dow?

Apple Now Holds 10% of All Corporate Cash ~ Moody’s

The whole debate is so silly, so childish, that sometimes I think that Apple would be well within their rights to simply say:

“‘Doomed?’ I know what you are, but what am I?”

I like companies who have a future and women who have a past.

Conclusion

“A conclusion is the place where you got tired of thinking.” ~ attributed to Arthur McBride Bloch

Question: Does Apple have enough market share to control its destiny?

Weather forecast for tonight: dark. ~ George Carlin

Some things are easy to predict. Some things are not.

Conversation would be vastly improved by the constant use of four simple words: I do not know. ~ Andre Maurois

The truth is, I don’t know. No one knows for sure. But one thing is for sure — Apple is betting the company on it.

Never tell me the odds. ~ Han Solo, Star Wars

Question: How much time does Apple have?

The iPhone is Apple’s Windows. It’s a moneymaker, par excellence. The only question is whether the proceeds from the iPhone will give Apple enough time to come up with a new profit stream.

Microsoft milked Office & Windows for 25 years without another big hit. Adwords is 13 years old. iOS is only 6 years old. ~ Benedict Evans (@BenedictEvans)

Based on the above, I’d say Apple will be just fine.

The problem is not that there are problems. The problem is expecting otherwise and thinking that having problems is a problem. ~ Theodore Rubin

Post Script:

I have heard your views. They do not harmonize with mine. The decision is taken unanimously. ~ Charles de Gaulle

Next week, I’ll conclude the series with: “Apple’s True Dilemma.” Until then…

There are two kinds of people in the world, those who need closure

Markets, Not Pundits, Matter

pundit |ˈpəndit| noun | An expert in a particular subject or field who is frequently called on to give opinions about it to the public.

I write about tech. I like to pretend that I’m an expert. So I guess I could describe myself as a pundit.

An expert is one who knows more and more about less and less. ~ Nicholas Murray Butler

Sadly, I’ve become discouraged with many of my fellow pundits. (Present company excepted, of course!) Oh, there’s the click-baiters (and the master-click-baiters) out there, but I’m not talking about them. I’m talking about people who take their opinions seriously…but perhaps just a bit too seriously.

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

I can only assume that many of these pundits have miraculously learned how to write without learning how to read because, if they could read their stuff, they would surely stop writing it.

Blessed is the man who, having nothing to say, abstains from giving in words evidence of the fact. ~ George Eliot

Let me just throw out two quick examples for your consideration:

  • In the Summer, Apple announced iOS7. Pundits were horrified. Tasteless. Childish. A sure sign that Apple was doomed.

    And the public reaction to iOS7? Oh yeah, a big hit.

  • In the Fall, Apple announced a gold iPhone 5S. Pundits were horrified. Tasteless. Childish. A sure sign that Apple was doomed.

    And the public reaction to the gold iPhone? Last I heard, gold iPhones were being sold for as much as $1,800 a pop on eBay.

New Apple product X is announced. Pundits & analysts say X will fail. X breaks all previous sales records. Step. Rinse. Repeat. ~ Nick Bilton (@nickbilton)

I’m not saying that Pundits shouldn’t express their opinions – of course they should, and in the strongest terms.

I have opinions of my own, strong opinions, but I don’t always agree with them. ~ G.W. Bush

All I’m saying is that we should keep in mind that it is the opinion of the market — not the opinion of the pundit — that matters. The pundit votes with their opinions. The market votes with their dollars. The market wins every time. We should be trying to shape our opinions to reflect the market not pretending that the market is a reflection of our opinions.

I am a thinker with writing problems. ~ John Kirk

Now, don’t get me wrong. I have no trouble with stirring the pot. As a former attorney, I can find a problem for every solution. But stirring the pot is supposed to improve the stew, not burn it.

Be a fountain, not a drain. ~ Rex Hudler

Arthur C. Clarke once said that new ideas pass through three periods (in the minds of critics):

— It can’t be done.
— It probably can be done, but it’s not worth doing.
— I knew it was a good idea all along!

It’s a given that critics will always think this way. But if we’re doing our job as pundits, we should be watchful of – and cautioning against – falling into the traps set by stages 1 and 2.

It may be asking too much to expect Pundits to act as Prophets, but is it really asking so very much that they not play the role of fools and jackanapes?

You don’t write because you want to say something; you write because you’ve got something to say.” ~ F. Scott Fitzgerald

Author’s Note: I’ve been twittering a lot of late. Come join me @johnkirk and get your tweet quoted in my next article (…or not).

Apple: The Splendid Failure

“All of us have failed to match our dream of perfection. I rate us on the basis of our splendid failure to do the impossible.” ~ William Faulkner

The Innovator’s Dilemma

If you’ve heard this story before, don’t stop me, because I’d like to hear it again. ~ Groucho Marx

The Innovator’s Dilemma made the point that successful companies can lose their way when they pay too much attention to legacy products and not enough attention to new stuff. They are making so much money they either don’t see a competitor rising up or are too complacent to feel threatened. In either case the incumbent generally loses and the upstart generally wins.

Standing still is the fastest way of moving backwards in a rapidly changing world.” ~ Lauren Bacall

The paradox is that choosing “shareholder value” or profit as your North Star will eventually lead to the demise of your business. Disruption, short-term greediness, whatever you want to call it—you will die. To paraphrase Clayton Christensen, you fail by getting too good at pleasing your best customers, while companies that were once beneath contempt eat you from below.

Although gold dust is precious, when it gets in your eyes it obstructs your vision. ~ Hsi-tang

This is exactly what happened to Steve Ballmer and Microsoft. They did everything that the stock market wanted them to do — make money, make more money, make even more money — but they failed to create any new businesses that would generate a new stream of income to sustain them in the future.

(A) strategy that seeks to maximize revenue and profits – i.e. the sort of strategy at which Ballmer excelled – necessarily precludes the creation of significant new products. ~ Ben Thompson

People are now (foolishly) contending that Apple doesn’t innovate, but Microsoft’s two big cash cows – Windows and Office – were both created in the 1980’s! Now THAT’s a lack of timely innovation.

It is necessary for us to learn from others’ mistakes. You will not live long enough to make them all yourself. ~ Hyman George Rickover

Ben Thompson further contends that the same thing will happen to Apple if they have a Steve Ballmer-like CEO at the helm or if they follow the advice of the stock market.

“…everyone at Apple would be working so hard, and be making so much money, both for themselves and for Apple’s shareholders, that they would ensure that Apple never again reinvents consumer computing.” ~ Ben Thompson

The Innovator’s Impossible Solution

There is always an easy solution to every human problem—-neat, plausible, and wrong. ~ H. L. Mencken

The innovator’s solution is unbelievably simple…and simply unbelievable:

    1) Invent the future…before your existing competitor’s — and the competitor’s that don’t yet exist — do; and
    2) Prioritize future profits over current profits.

Simple, no?

No.

Inventing The Future

Every once in a while a revolutionary product comes along that changes everything… One is very fortunate if you get to work on just one of these in your career. Apple’s been very fortunate its been able to introduce a few of these into the world. ~ Steve Jobs

Do we know what company is going to create the next revolutionary product and invent the future? Of course we don’t. That company may not even exist yet or be too small for us to take note of. How is one supposed to prepare for that?

Prioritize future profits over current profits

Ignore profit, risk financial ruin, ignore financial incentives for your employees, ignore your creditors, ignore your investors, ignore your stockholders, ignore Wall Street…

…in other words, ignore reality.

It’s A Dilemma

That’s why it’s called a dilemma and not a problem. A problem can be solved. A dilemma is a choice between two equally undesirable alternatives. A company can make money when it’s young and risk stagnating when it’s old or risk starving when it’s young but theoretically innovate forev…well, innovate longer and more often, anyway.

I want to die young at a ripe old age. ~ Ashley Montagu

Hundreds of thousands of companies go out of business every year because they chose the latter course. Makes choosing the former look a little more palatable, eh?

I know I’m (working) myself to a slow death, but then I’m in no hurry. ~ Robert Benchley

Steve Jobs Hoped To Resolve The Innovator’s Dilemma

From the errors of others a wise man corrects his own. ~ Publilius Syrus

Steve Jobs clearly hoped to resolve the Innovator’s Dilemma:

Apple has the opportunity to set a new example of how great an American corporation can be, sort of an intersection between science and aesthetics. Something happens to companies when they get to be a few million dollars — their souls go away. And that’s the biggest thing I’ll be measured on: Were we able to grow a $10 billion company that didn’t lose its soul? ~ Steve Jobs

In order to overcome the Innovator’s dilemma, Steve Jobs created a radically new way to run a company, structuring his company entirely differently than any large company of 20th Century.

Kobayashi Maru ((The Kobayashi Maru is a test in the fictional Star Trek universe. It is a Starfleet training exercise designed to test the character of cadets in the command track at Starfleet Academy. The Kobayashi Maru test was first depicted in the opening scene of the film Star Trek II: The Wrath of Khan and also appears in the 2009 film Star Trek. In Star Trek VI: The Undiscovered Country, Dr. McCoy referenced the test as an example of the no-win scenario that he and Captain Kirk were facing. The test’s name is occasionally used among Star Trek fans or those familiar with the series to describe a no-win scenario, or a solution that involves redefining the problem. ~ Wikipedia))

Do not go where the path may lead, go instead where there is no path and leave a trail. ~ Ralph Waldo Emerson

What does Kobayashi Maru mean? It means that when you’re faced with a no-win scenario, you redefine the problem. ((It also means that you haven’t seen enough Star Trek.))

If the only tool you have is a hammer, every problem looks like a nail. ~ Abraham Maslow

There’s great wisdom contained in the above aphorism. On the other hand, if the only tool you have is a Hammer…

…then you really should get more tools.

Steve Jobs went out and forged some more tools.

Effective people don’t just do things differently… they do different things.” ~ Slogan for Covey Leadership Center

Prioritize The User Experience Over Profits

Apple puts the customer at the center of their business. Profit is viewed as necessary, but not sufficient.

We believe that we’re on the face of the Earth to make great products, and that’s not changing. ~ Tim Cook

Apple’s primary objective is to make a great product, to build the best, to to delight the customer and provide a great experience.

Any activity becomes creative when the doer cares about doing it right, or better. ~ John Updike

Apple reinvents existing markets by making the user experience easier, richer, and more pleasant.

The visionary starts with a clean sheet of paper, and re-imagines the world. ~ Malcolm Gladwell

Each time, they begin at the beginning, and start with the user’s experience first and drive back through their infrastructure to make that a reality.

You know, we want to really enrich people’s lives ~ Tim Cook

They absorb the complexity and present the simplicity. They’re obsessed with details and sweat the small stuff so that the customer doesn’t have to.

We try to make tools for people that enable them to do things that they couldn’t without the tool. But we want them to not have to be preoccupied with the tool. – Jony Ive

If it disappears, we know we’ve done it. ~ Federighi

The Expected Result: Innovation and Fanatical Customer Loyalty

The proof of the pudding is in the eating. ~ Miguel de Cervantes

If you make innovation your number one priority, you’d expect innovative products and fanatical customer loyalty. And, unsurprisingly, Apple has them both.

Innovation

Design is where Apple products start,” writes Lashinsky. “Competitors marvel at the point of prominence Apple’s industrial designers have. ‘Most companies make all their plans, all their marketing, all their positioning, and then they kind of hand it down to a designer,’ said Yves Behar, CEO of the design consultancy Fuseproject. The process is reversed at Apple, where everyone else in the organization needs to conform to the designer’s vision. ‘If the designers say the material has to have integrity, the whole organization says okay,’ said Behar. In other words, a designer typically would be told what to do and say by the folks in manufacturing. At Apple it works the other way around.”

Fanatical Customer Loyalty

A satisfied customer is the best business strategy of all. ~ Michael LeBoeuf

ap709556740620Apple’s customer’s love Apple. For some reason that surprises people.

People who don’t love Apple or Apple’s products (and there’s absolutely nothing wrong with that — as we’ll see later, Apple is not for everyone) claim that they don’t understand why Apple’s customers are so loyal. It must be that Apple’s customers are stupid or that they’re part of a cult or because Apple’s marketing has cast a spell upon them.

Are you kidding me?

Source

If Apple’s first priority is the user experience, then OF COURSE Apple’s customers are going to be loyal to them. It’s not an enigma or some great mystery, just the opposite. Apple’s high customer loyalty is an obvious result of Apple’s policies and priorities. Since Apple puts the customer experience first, what would be surprising would be if Apple’s customer’s were NOT loyal.

Appreciation is a wonderful thing: It makes what is excellent in others belong to us as well. ~ Voltaire

The Unexpected Result: Devoted Employees And Massive Profits

If a company prioritizes product over employees and profits, then employee loyalty and profitability are supposed to suffer. But that hasn’t happened at Apple.

Devoted Employees

The problem with prioritizing product over profits is that it demotivates employees by reducing career advancement and removing economic incentives. Or, at least, that’s how it’s supposed to work.

Money doesn’t make you happy. I now have 50 million but I was just as happy when I had 48 million. ~ Arnold Schwarzenegger

I don’t think that working at Apple is a picnic, but it’s very clear that they attract and keep good employees. The reason for this is that they substitute intrinsic rewards for financial rewards. That’s not going to cut it for everyone but it’s highly motivating to the type of employees that Apple finds desirable.

“People come (to Apple) for the values that are evident in every product we build,” Ive says. “When we make decisions, it’s not a battle of people trying to break us out of our value system. We all want to double down on these values, whose aim is to make things simpler, more focused. Those are spoken and unspoken mantras in all the discussions we have. You can call that Steve’s legacy, but it’s Apple now.”

Working on fascinating projects, pursuing excellence, having a sense of purpose, feeling like you’re making a contribution to the world — these things are highly motivating to many people.

And frankly, we don’t settle for anything less than excellence in every group in the company ~ Tim Cook

Perfection is our goal, excellence will be tolerated. ~ J. Yahl

Turns out that for many, the products, not the profits, are motivation enough.

You can tell a lot about a company by the people they keep.” ~ Advertising slogan for Microsoft Corporation

“He who has a ‘why’ to live can bear almost any ‘how.'” ~ Friedrich Nietzsche

Profits

Take a long, hard look at these quotes regarding de-emphasizing profits at Apple:

“Manage the top line, and the bottom line will follow.” ~ Steve Jobs

If you keep your eye on the profit, you’re going to skimp on the product. But if you focus on making really great products, then the profits will follow. ~ Steve Jobs

“The goal of Apple is not to make money but to make really nice products, really great products. That is our goal and as a consequence if they are good, people will buy them and we’ll make money.” ~ Jonathan Ive

Sounds like a lot of pie-in-the-sky hooey, right? If you prioritize product over profits then profits are going to suffer, right?

Wrong.

Apple currently has 55% phone profits. I think the 5c designed to bring them back up to 65%. ~ eric perlberg (@eric_perlberg)

But how could this be?

So many companies wish they were as doomed as Apple. ~ ßen ßajarin (@BenBajarin)

Apple’s Secret, Hidden In Plain Site

“A paradox is truth standing on its head to attract our attention.”

So how does this work? If Apple is prioritizing product over profits, then why do they have so much profit?

Simple. They only go after the profitable part of the market (duh).

It Is No Bed Of Roses

It’s not all sunshine and flowers for Apple. Their contrarian strategy riles the analysts. Their elitist pricing maddens the critics. And for some reason, Apple, makes people go out of their gourd.

Pundits, Analysts, and Investors. Oh my!

Industry observers don’t understand Apple. (To be fair, I think Apple may reciprocate, in kind.)

I know that you believe that you understood what you think I said, but I am not sure you realize that what you heard is not what I meant. ~ Robert McCloskey

Lots and lots of analysts would prefer that Steve Ballmer ran Apple. The way Steve Ballmer is running Microsoft into the ground is the kind of failure that analysts can understand and appreciate.

Apple, on the other hand, doesn’t play by the known rules:

— Apple doesn’t do low prices;
— Apple chooses quality over quantity;
— Apple doesn’t go after market share;
— Apple emphasizes touchy, feely, emotional things that can’t be measured;

Unless analysts learn to appreciate the unmeasurable value consumers place on the experience of a product, they will be forever surprised. ~ Ben Thompson (@monkbent)

— Apple doesn’t play well with Wall Street.

Giving your company over to the whims of Wall Street is like turning your daughter over to a pimp.

The reason Apple isn’t playing by the known rules is because Apple is playing an entirely different game – a game that the Analysts are unfamiliar with.

No product has been more disrupted by the shift from enterprise to consumer than analyst forecasts. ~ Ben Thompson (@monkbent)

Apple taking advice from Wall Street would be like a baseball player taking advice from a football coach.

There is nothing so stupid as the educated man if you get him off the thing he was educated in. ~ Will Rogers

To be fair, even if Apple were playing the game, short-term, myopic, panic-stricken Wall Street is hardly who’d they turn to for advice.

Just out of curiosity, why the hell do analysts think that lowering the price of something is innovative?

Basically, Wall Street is trying to teach a fish how to swim. And Apple’s having none of it.

Apparently, Wall Street feels everyone — except Apple, who has done it time and time again – has expertise in disruption theory.

Critics

Apple is not for everybody:

— They sell a premium product at a premium price.

— They also think that they know technology better than their customers do. Go figure.

The downside to being better than everyone is that people seem to think you are pretentious. ~ Despair.com

— Also, Apple has a very loyal fan base.

Everybody hates me because I’m so universally liked.

Apparently, Apple’s whole attitude and the attitude of Apple’s customers just really ticks people off. The sad truth is that excellence makes people nervous.

If you haven’t got anything good to say…you can always blog about Apple.

I don’t get it. All Apple is asking you to do is not buy their stuff and shut up. Is that really so hard?

Descartes walks into a bar, and the bartender asks “Would you like a beer?” Descartes replies, “I think not” and poof! he vanishes.”

If only Apple’s thoughtless critics were so easily disposed of.

Reality Distortion Field

You think APPLE has a reality distortion field? When it comes to delusional thinking, Apple can’t hold a candle to their critics.

There are an incredible number of people who honestly believe that Apple can hoodwink 9 million people into buying an iPhone. ~ James Kendrick (@jkendrick)

Judging from the lines around the block and the cheering in Palo Alto, Apple screwed up again and built something nobody wants. ~ John Lilly (@johnolilly)

Most people need a reason to criticize others. Apple’s critics just need a keyboard.

Judging from the comments, Apple seems to have two major problems: not enough demand AND not enough supply ~ Horace Dediu (@asymco)

After using the iPhone 5S for a few days I can say it hasn’t fixed that awful sense of emptiness inside me. Worst iPhone release ever. ~ Jonathan Wight (@schwa)

I offer Apple’s critics a bargain: if they will stop telling falsehoods about Apple, I will stop telling the truth about them.

Conclusion

Is Apple an Illusion or a paradox waiting to be resolved?

We are confronted by insurmountable opportunities. ~ Walt Kelly, from Pogo

Apple is like a good sermon. They comfort the afflicted and afflict the comfortable.

“It’s easy to make a buck. It’s a lot tougher to make a difference.” ~ Tom Brokaw

“The reasonable man adapts himself to the world. The unreasonable man persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”-George Bernard Shaw

I am now convinced that Apple will always be viewed as a failure by their critics and by their investors, no matter what they make or how much they make…

We are all failures–at least, the best of us are. ~ James M. Barrie

…ah, but what a splendid failure they are.

Next Time: “Apple’s Dilemma: The Bear Case Against Apple”

Author’s Note: I’ve been twittering a lot of late. Come join the discussion @johnkirk

Microsoft Sinks Beneath The Surface

Dogs chase cars, but that doesn’t mean they know how to drive.

Microsoft is chasing the tablet market, but that doesn’t mean they know how to take control of that market and drive it.

Microsoft’s Flawed “Vision” For Tablets

I was walking down the street wearing glasses when the prescription ran out. ~ Steven Wright

Microsoft has lost their vision. They see everything through the lens of “Windows”. It’s distorting their outlook and it’s destroying their tablet strategy.

We don’t see things as they are, we see them as we are. ~ Anaïs Nin

If The Surface Is Microsoft’s Answer To The iPad Then They Are Asking Themselves The Wrong Question

The Surface is supposed to be the answer to Apple’s iPad. It’s nothing of the sort. It’s much, much more of a laptop than it is a tablet.

The Surface Pro ain’t a blockbuster, true. But it is the best-selling Windows laptop model among those that cost $800 and above. ~ Harry McCracken (@harrymccracken)

That’s not a GOOD thing, that’s a BAD thing. The Surface is competing as a LAPTOP. It’s supposed to be competing as a TABLET.

Follow this link and take a gander at how Microsoft is advertising the Surface 2:

Not once during the commercial – NOT ONCE – is the Surface used as a tablet.

After seeing Surface 2 ad, I’m more convinced than ever Microsoft has zero clue why iPad is selling in the tens of millions. ~ Tom Reestman (@treestman)

Honestly, what are they thinking? Picasso said that “Good artists copy, great artists steal.” Not only isn’t Microsoft stealing the great tablet ideas of their competitors, they’re not even capable of COPYING them properly.

Microsoft won’t make a tablet if it’s the last thing they don’t do. ~ Alex Dobie (@alexdobie)

Neither Fish Nor Fowl

The problem with the Surface is that it’s a laptop with no keyboard and a tablet with no apps ~ Benedict Evans (@BenedictEvans)

Microsoft claims the Surface Pro is the best selling product in its class. What class is that? ~ Avi Greengart (@greengart)

Microsoft has the Windows RT market all to themselves. ~ ßen ßajarin (@BenBajarin)

Unfortunately for Microsoft, having the Windows RT market all to themselves is the equivalent a sailor having the bottom of the ocean all to themselves.

Denial Ain’t Just A River In Egypt

Surface 2. Why? ~ Sammy the Walrus IV (@SammyWalrusIV)

Because the only thing better than writing off $900 million is doing it twice? ~ Brad Reed (@bwreedbgr)

Microsoft’s Surface Strategy 1) Make mistakes 2) 1) + some more mistakes 3) Go to 1) ~ chetansharma (@chetansharma)

The Job It Is Not Being Hired To Do

Microsoft has improved the hardware, but made no fundamental changes to the software. ~ Avi Greengart (@greengart)

So Microsoft thinks the problem with Surface was specific flaws that are fixable, not the broader 2-in-1 strategy. ~ MattRosoff (@MattRosoff)

There’s something comical—almost deserving of pity—in Microsoft still claiming you can’t “get things done” on an iPad. ~ Tom Reestman (@treestman)

It would probably help Microsoft immensely if they were to understand the things that people wanted to get done on their tablets. But maybe not.

Same ol’ marketing message that iPads can’t do real work and a Frankenstein hybrid is the answer. ~ Tom Reestman (@treestman)

The ingenuity of the device blinds us to its utter uselessness. ~ Anonymous

Damn The Market, Full Speed Ahead

If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around. ~ Jim Rohn

Not only isn’t Microsoft changing their tablet strategy, they’re doubling down, literally accelerating their progress down – what I think is- the wrong path.

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change. ~ Charles Darwin

Fini

Sometimes I lie awake at night, and I ask, ‘Where have I gone wrong?’ Then a voice says to me, ‘This is going to take more than one night. ~ Charlie Brown

It might take one a long time to explain exactly where Microsoft went wrong. But it doesn’t matter anyway. Despite all the evidence to the contrary, Microsoft is convinced that they’re in the right. And so, inevitably, we can expect Microsoft to sink much, much further beneath the Surface before they even begin to attempt to reverse their course and try to save themselves.

And by then, it might well be too late…

It is not necessary to change. Survival is not mandatory. ~ Peter Drucker

Apple And The “Noah” Rule

Critics: Apple Has Nothing Under Construction

Following Apple’s iPhone Event last Tuesday, September 10th, the Pundits – echoed by the stock market – have been relentlessly critical of Apple’s iPhone 5C pricing strategy. Investors have driven Apple’s shares down more than 10% since last week’s event. Snippets from some of the commentary:

(Author’s note: You don’t have to read every snippet. But you might want to re-read them after I’ve made my point.)

  • (A) common theme emerges: Apple should have used the device to establish a new iPhone price band low enough to drive growth in big, price-sensitive markets like China. But it chose not to, essentially doubling down on the market’s increasingly more saturated higher end, and protecting its high margins. And, in doing so, it has — for the time being — forfeited the market’s massive not-at-all-saturated lower end to Android. ~ Source
  • “(Innovation) has slowed down,” said Laurence Balter, chief market strategist at Oracle Investment Research, when asked about innovation at Apple. ~ Source
  • (I)nvestors and consumers alike are wondering if innovation is truly stalled without the late co-founder Steve Jobs at the helm. ~ Source
  • Jobs is believed to have left Apple with a pipeline of product plans and new ideas, but the longer we get from his passing, and the longer it takes for those products to come out, the more investors may question their existence. ~ Source
  • In his (biography of Steve Jobs), Isaacson wrote that Jobs left Apple a pipeline of innovative products for several years. “We are not seeing them yet,” Isaacson said. ~ Source
  • Indeed, (what they’ve shown us is) not an innovation at all, but merely a refinement and systematic roll-out of an old idea…. ~ Source
  • Many expected chief designer Jony Ive to carry Jobs’s visionary torch, but so far, it’s not clear if he has the equivalent vision.” ~ Source
  • “The C in 5C does not mean ‘cheap’ as I had hoped. It means clueless, as in clueless about how the vast majority of new smartphone users are paying for their phones.” ~ Fred Wilson
  • “Just how far behind is Apple trying to fall? I do not get Tuesday’s release and product launches. Something is just wrong,” Doug Kass of Seabreeze Partners Management said in a note Wednesday. Customers in emerging markets are price-sensitive and want a lower-priced phone, but the iPhone 5C — or “iPhone dud,” as Kass describes it — won’t be cheap enough to drive market share gains that could lead to earnings growth.
  • “I think (Steve jobs) would have abhorred plastic, he would have thrown that out the window,” said Balter.” ~ Source
  • “Maybe we should call him ‘Timid Tim,’” Troy Wolverton writes for The San Jose Mercury News. “As Tuesday’s iPhone event showed yet again, Apple under CEO Tim Cook is anything but bold,” Wolverton writes.
  • (Cook) has demonstrated a spectacular lack of imagination as to how to spend Apple’s riches. ~ Source
  • What (the pricing policy) doesn’t represent is any clear answer about where Apple goes when that engine finally runs out of fuel. ~ Source
  • People keep believing there will be a “next big thing” at some point, but the fact is there is no next iPhone, at least in terms of the amount of value it has created in such a short time. ~ Source
  • (Apple) seems to have no idea what to do with that embarrassment of riches except to try to grow it just a bit more and that isn’t a strategy, it’s score keeping. ~ Source
  • Apple is suffering a classic case of The Innovator’s Dilemma. It invented the modern smartphone, profited wildly, and is watching the industry change beneath it. But it can’t seem to do anything about it except try to wring out as much profit from the existing business model as possible. ~ Source
  • It’s hard to be the one to kill your own golden goose and it’s much harder to know when the right time to do that is, but increasingly it feels like the time has already come for Apple. ~ Source
  • In the end, Cook chose to spare the golden goose. But the goose will eventually be cooked. Whether the CEO has a plan for that remains to be seen. ~ Source
  • These days, Apple is more like a fashion label than an electronics company….Apple is becoming more like Prada and less like Edison. ~ Source
  • Some are questioning how much more innovation is really even possible in smartphones right now. Scott McGregor, CEO of Broadcom Inc. BRCM +2.45%  said a few weeks ago in a press round table discussion that he believed innovation in smartphones had stalled. ~ Source

Pop Quiz #1

Who said:

“If you’re long-term oriented, customer interests and shareholder interests are aligned.”

See answer, below.

How Construction Works And How Construction Looks To Outsiders

(I)t’s worth noting that Apple’s strategic choice is confounding for another reason. Consider the lucky man who builds a great business and finds himself wealthy beyond imagination. He builds a grand palace overlooking the ocean. Over time, though, he realizes the cliffs are eroding beneath his palace. He could do something radical, like move his palace to higher ground or spread his real estate holdings across many different regions. Instead, he chooses to buy some new carpet and repaint. ~ Mark Rogowsky

Really, Mark? Apple’s just been sitting on its hands, not doing any additional construction? If that’s what you think, then it is no wonder that you’re confounded. Let’s take your analogy and run with it, shall we?

Construction houseIn construction, there are roughly five phases: ((There are, of course many phases, which use many names. This is just one variant.)) Foundation, Framing, Rough-In, Close-In and Finish.

Foundation: Easy to see progress. Big earth movers come in, dig out the foundation and block is laid.

Framing: Also easy for outsiders to see progress. The outline of the building quickly rises atop the foundation.

Rough-In: At this point, if you’re watching the construction, you may feel that everything has come to a screeching halt. This is when the water, electric, sewer, etc, is connected to the house. Much of the work is done underground and all of it is nearly invisible to the outside observer.

Close-In: After the Rough-In is completed, the house is “closed-in” – made watertight – and the interior infrastructure, such as air and heating ducts, electrical wiring, plumbing, etc. is added. This phase is frustrating to watch too. Although lots and lots of work is going, to the casual observers, it seems like little is happening.

Finish: Now we’re talking. Lots of action and lots to see. The floors go in, the drywall goes up, there’s spackling and painting and the cabinets and tubs, etc. are put in. Lots or motion, lots of changes, lots of progress for the casual observer to readily appreciate.

Mark Rogowsky, and the other pundits, are claiming that Apple is idly watching the metaphorical ground beneath its business being washed away while taking no more action than to “buy some new carpet and repaint.” I think this is a childish claim that blatantly ignores the known facts. Apple is doing lots and lots and lots of new “construction” to their business, however, to the casual observer, the construction appears to have come to a grinding halt because Apple is currently moving from the “Rough-In” phase of the construction to the “Close-In” phase. But just because the casual observer cannot SEE a lot of activity does not mean that Apple has not been active. On the contrary, the savvy observer can clearly see that Apple – like any good construction company – is quietly installing the infrastructure necessary to support a huge additional build-out.

Pop Quiz #2

Who said:

“We are willing to think long-term. We start with the customer and work backwards. And, very importantly, we are willing to be misunderstood for long periods of time.”

See answer, below.

Close-In

So, what kind of infrastructure (mostly hidden from the public eye) has Apple been putting into place recently? Well, contrary to common belief, there’s been a LOT of activity, so let’s just list it in alphabetical order.

Appearances often are deceiving. ~ Aesop

A7 Processor:

— “Desktop class architecture”

Speed to spare, and hard to catch from behind.

While Samsung was going for brawn w/ 8 cores, Apple went for brains w/ 64-bit. ~ Adam J. Reid (@read_reid)

No one else can go 64-bit any time soon because the backward compatibility tax is too large to support. ~ Steve Cheney (@stevecheney)

It will be amazing to see what developers do to take advantage of 64 bit and create new class of applications. ~ ßen ßajarin (@BenBajarin)

Apple TV:

— Not the one that exists today, but the the one that is yet to come; the one powered by the new A7 chip, running iOS and using the new gaming controls (see “Games”).

Bluetooth:

— Bluetooth Low Energy (BLE), a technology that has been in Apple laptops since 2011 and in all phones since the iPhone 4S. Apple simply throws a switch, and 200 million users are good to go — no waiting for NFC chips.

Carriers

— DoCoMo: Biggest carrier in Japan

— China Mobile: Biggest carrier in world

— ‘Nuff said.

Cases:

— “Cases?”, I hear you say. “Cases aren’t innovative. Well, just chew on the following data a bit before you make a final decision on that point:

Apple’s case for the iPhone 5S: $39 For the 5C: $29 Nokia’s average selling price for feature phones: $34 ~ Benedict Evans (@BenedictEvans)

Enterprise:

Forrester jumping on the “5S will be a big deal for business” bandwagon (I’m the driver) ~ Ben Thompson (@monkbent)

Free Software:

— iOS 7, All five iOS iWork and iLife apps, iWorks and iLife in the Cloud, (and possibly OS X Mavericks, too) all free.

Games

Game Controller Framework

Apple’s big bet on iOS 7 gaming

iBeacons:

— With iBeacon, Apple is going to embrace the internet of things.

Bluetooth Low Energy support in the form of iBeacons. An announcement that might well start a little revolution, not so much because Apple invented it (in fact they did not…) but because iOS support of any protocol that more of less makes sense usually ends up in a drastic uptake of its usage, and this particular protocol happens to really make sense.

— Replacing NFC

Indoor applications for iBeacons

Cash Registers

eCommerce

The Internet of things

iPhone 5C Product Placement:

— For all intents and purposes, Apple’s mainstream iPhone (the iPhone 5C) just dropped in price by $100.

What exactly did Apple just do? Amongst other things, halved the US price of the iPhone. ~ Benedict Evans (@BenedictEvans)

— You can’t market a one-year-old phone. Apple is already marketing the begeezus out of the iPhone 5C.

The 5C to me seems more like a play at not making the iPhone 5 feel like the “old version.” Which could work brilliantly ~ Abdel Ibrahim (@abdophoto)

— The iPhone 5C is to the MacBook as the iPhone 5S is to the MacBook Pro. The former is the company’s standard, the latter is company’s premium offering.

Does anyone really think typical consumers will see a blue iPhone 5c in store & say “oh, it’s just last year’s chipset in a new enclosure”? ~ Benedict Evans (@BenedictEvans)

iOS 7:

“The vivid realization of hardware and software together in one device.”

iTunes Radio:

Pandora’s box might have just been slammed shut.

M7 Coprocessor:

— M7 knows when you’re walking, running, or even driving. The combination of the M7 and iBeacon promises richer contextual computing.

Apple co-opting wearable tech by putting the … sensors into the phone. ~ Benedict Evans (@BenedictEvans)

Apple saw a job to be done around fitness so they did the only sensible thing: designed and built a new chip, the motion coprocessor. ~ Horace Dediu (@asymco)

Maps:

Around this time a year ago, Tim Cook wrote a letter to Apple’s customers apologizing for Maps. Exactly a month later, Apple announced a major executive reshuffle. Forstall resigned. Jony Ive took charge of Human Interface in addition to Industrial Design. A new Technologies group was created, led by Bob Mansfield, who returned from retirement. Federighi and Cue took over additional responsibilities as well.

Failure is success if we learn from it. – Malcolm Forbes

Mac Pro:

Over the top power.

OS X Mavericks

— Pending…any day now…

Passbook

— Mobile payments — The Holy Grail of eCommerce.

Passbook seems like a good way to extend finger scanner to 3rd parties. Controlled, no 3rd party code. ‘Unlock this pass with your finger’ ~ Benedict Evans (@BenedictEvans)

Touch ID:

— The foundation for customer convenience, personal privacy, enterprise and government security, in-person and on-line payments, and more.

The above items are the building blocks for Apple’s future. They are the equivalent of the infrastructure – ducts and the pipes and the electrical wiring – that is the very blood and guts of a new home.

Apple has not been idle – far from it. They’ve been patiently laying the groundwork for a whole new Apple, one built on a whole new foundation.

Pop Quiz #3

Who said:

“Invention requires a long-term willingness to be misunderstood. You do something that you genuinely believe in, that you have conviction about, but for a long period of time, well-meaning people may criticize that effort. When you receive criticism from well-meaning people, it pays to ask, ‘Are they right?’ And if they are, you need to adapt what they’re doing. If they’re not right, if you really have conviction that they’re not right, you need to have that long-term willingness to be misunderstood.”

See answer, below.

Finish

A building has integrity just like a man. And just as seldom. ~ Ayn Rand

What will Apple’s construction look like when it’s finished? It’s always hard to tell during the Close-In phase, and it’s even harder to tell when one is looking on from the outside, as we are. So I make no promises.

PATIENT: Doctor Doctor, will this ointment clear up my spots?
DOCTOR: I never make rash promises!

However, I – and anyone who has been truly paying attention – can tell you that Apple is slowly, methodically, painstakingly, laying the foundation for the next stage of their existence. To think or say otherwise is simply wrong-headed.

There are no shortcuts to any place worth going. ~ Publilius Syrus

Conclusion

No innovation at all…Tim Cook has demonstrated a spectacular lack of imagination as to how to spend Apple’s riches…Apple has no answer about where to go when the profit engine finally runs out of fuel…There is no next iPhone…Apple is watching the industry change beneath it, but can’t seem to do anything about it…One wonders how much more innovation is really even possible…

Really? Seriously? Honestly?

Are the pundits watching the same Apple that you and I are watching?

Things happen fairly slowly, you know. They do. These waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you’re going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely it actually unfolds fairly slowly. It takes years. ~ Steve Jobs

Based on the available evidence, which seems more likely: Apple has stopped working on innovating or the pundits have forgotten how innovation works?

Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.’ — John Maynard Keynes, The General Theory of Employment, Interest and Money.

The pundits want Apple to fail in the conventional way (like Microsoft, and so many other tech companies have). Apple has a different idea in mind. They want to succeed in an unconventional way.

Apple believes in the “Noah” rule.” ((Predicting rain doesn’t count; building arks does. ~ Warren Buffett)) While the pundits are spending their time predicting rain, Apple is spending their time building an Ark.

Pop Quiz Redux

Who said:

“If you’re long-term oriented, customer interests and shareholder interests are aligned.”

“We are willing to think long-term. We start with the customer and work backwards. And, very importantly, we are willing to be misunderstood for long periods of time.”

“Invention requires a long-term willingness to be misunderstood. You do something that you genuinely believe in, that you have conviction about, but for a long period of time, well-meaning people may criticize that effort. When you receive criticism from well-meaning people, it pays to ask, ‘Are they right?’ And if they are, you need to adapt what they’re doing. If they’re not right, if you really have conviction that they’re not right, you need to have that long-term willingness to be misunderstood.”

Answers:

1) Jeff Bezos
2) Jeff Bezos
3) Jeff Bezos

Surprised? The pundits love Jeff Bezos. Why don’t they love Apple? Apple is following Bezos’ advice to a “T”.

Pompous Premature Postulations And Predictions Are The Pontificating Pundits’ Purpose And Purview

A PUNDIT walks into a bar and starts drinking quite heavily. After a while he starts bothering the barman, (who happens to beTim Cook), about the air-conditioning – first he asks for the air-conditioning to be turned up because it is too hot, then he asks for it to be turned down because it is too cold. This goes on for a couple of hours. To the surprise of others, the barman is very patient, walking back and forth and being very accommodating. Finally an observer asks, ‘Why don’t you just throw him out?’

‘Oh, I don’t care,’ says Tim Cook with a grin.

‘We don’t actually have an air-conditioner…

Tim Cook is ignoring the pundits’ constant griping. We should too.

Reviewing Apple’s iPhone Event

I am providing you with a copulation of answers to several questions raised… ~ Marion Barry

The recent Apple iPhone event raised so very, many questions. Let’s touch on a few of them and see where we stand today.

Don’t sweat the petty things and don’t pet the sweaty things. ~ George Carlin

Apple TV

BREAKING NEWS: Piper Jaffray analyst Gene Munster on suicide watch following conclusion of Apple event with no sign of Apple television ((It’s an in-joke. If you don’t get the reference, just laugh hysterically anyway, then move on.)). ~ Peter Cohen (@flargh)

Sniping & Backstabbing

Personally, I could have done without the sniping and backstabbing done by Apple’s competitors. Apple does it too, so I’m not taking a “holier-than-thou” stance. I just think that it’s bad policy. But no matter what I think, it’s not going to stop any time soon.

Here are some examples of competitor’s mocking ads for those of you who like that sort of thing.

People who like this sort of thing will find this the sort of thing they like. ~ Abraham Lincoln

iPods

Not. One. Word.

Wow.

iPhone Buyback

Not mentioned at the event, but recently announced and implemented. I’m intrigued.

Phone buybacks, trade-ins and resales were already a big business but now Apple’s stepping in too. What effect will Apple’s participation have on the secondary markets? Worth keeping an eye on.

Apple’s Free iWork Just iScrewed Microsoft

Q: Where are an elephant’s genitals?
A: On his foot.
Q: Why do you say an elephant’s genitals are on his foot?
A: Because if he steps on you, you’re screwed.

Apple just stepped on Microsoft. Hard.

I don’t hear anyone talking about this and I’m not sure why.

Google has been attempting to undercut Microsoft Windows with Chrome for the desktop and Android in mobile. Apple has always subsidized its OS sales, but recently, they have begun to bundle their OS with their hardware for free.

(I)t’s not just Android that has made the OS layer non-monetizable. ~ Ben Thompson (@monkbent)

Google also attacked Microsoft’s other cash cow, Office, with free versions of Google Docs. Now Apple joins the attack by bundling iWorks into every new iPod Touch, iPhone and iPad.

Further, Apple already announced that iWork in the Cloud would be free and work cross-platform.

The problem for Microsoft (is) that you can’t charge for software anymore. ~ Horace Dediu (@asymco)

iWork being free could be truly disruptive to Office (especially ) if Apple were to make it free or pre-installed on all new Macs. ~ ßen ßajarin

Microsoft has an unequalled gift of squeezing big mistakes into small opportunities. ((With apologies to Henry James.))

Colors

PATIENT: Doctor doctor, I keep painting myself gold
.
DOCTOR: Don’t worry it’s just a gilt complex.

I refuse to argue over matters of taste. Let the market decide.

In matters of style, swim with the current; in matters of principle, stand like a rock. ~ Thomas Jefferson

iOS 7

Lots of controversy here. Some hate iOS 7. Some love it. Some say its going to upset Apple’s client base. Some say it’s going to reinvigorate Apple’s client base.

Only time will tell…

…and that time starts on Wednesday, September 18, 2013.

Carriers

Perhaps the biggest news for the iPhone came from outside the Apple event when reports indicated that Japan’s largest carrier (DoCoMo) and the world’s largest carrier (China Mobile) would be selling the iPhone this Fall.

Huge.

Literally and figuratively huge.

Something that people don’t seem willing to understand: Apple could have a deal with any carrier at any time they chose. But they choose to make deals only on their terms. Does that policy mean that they sell less phones? You bet. Does that policy mean that they make more money and sell only to the most engaged customers? You bet.

Apple’s low market share is not by accident, it’s by design.

M7 Chip

People say that Apple’s new M7 motion sensor is only potential…

…but that potential is huge.

People say that Apple isn’t innovating…

…but those people are dead wrong.

Apple is quietly putting together the foundation for the next five to ten years. People seldom pay attention when foundations are being laid…

…but they should.

Let’s wait just a bit and see what Apple hath wrought.

A7 Chip

How big is the new A7 chip for Apple? Well, let’s start with the fact that all of the differentiation between the iPhone 5C and 5S is built upon it:

— Faster and more powerful
— Camera features
— Fingerprint scanning

All of these benefits are made possible by the A7.

And future uses? Who knows?

But one thing to keep in mind. The incredible horsepower of the A7 is not so much targeted at consumers as it is targeted at developers.

With the A7 chip, Apple appears to be playing to their strengths. And it’s hard to know how quickly (or how slowly) the competition will catch up. ((No competitors are even close to bringing 64 bit to market and even for some platforms like Android which is focused on the low end non-spec smartphones it may not even make sense.))

Fingerprints, Privacy, Payments And The End Of NFC (We Hardly Knew Ye)

This topic deserves its own article, so let me briefly say this:

— Remember when people criticized Apple for not hopping on the NFC bandwagon fast enough? Yeah, forget about all of that.

Illustration of of Apple’s market power: it has effectively killed NFC despite Android supporting it. ~ Benedict Evans (@BenedictEvans)

— Remember when people said that Apple wasn’t innovative? Yeah, forget about all of that, too.

It seems Apple will skip NFC just like they skipped blue ray. ~ JF Martin (@jfmartin67)

— Remember when people said that Apple was doomed? Yeah, you forget about that one, too.

Having built a ‘secure element’ into the 5S…what else might Apple do with it? ~ BenedictEvans

Ah, now THERE is a grand question, indeed.

Seven Hundred Million iOS Devices

iphone-salesiOS is niche or going away?

Get over yourself.

iOS is 700 million strong and growing every day. iOS will reach a billion customers by 2014.

An iPhone 4S (2 year old phone) is only worth $50 less in good condition than the Samsung Galaxy S4 (4 month old phone) on Gazelle. ~ Abdel Ibrahim (@abdophoto)

Gazelle is not an analyst or a pundit or a fan boy. They want to make money. Their estimate of what they can re-sell hardware for is about as objective an appraisal as one can get. It’s set by the market. And so long as the market values Apple’s iPhones as premium products, then Apple’s iPhones ARE premium products.

Apple’s Unreasonable Pricing Strategy

Again, a topic for a full article. Let me just say this. The iPhone 5C is Apple doubling down on their current pricing strategy.

Apple’s iPhone event was a confident declaration that iPhones are worth paying for. ~ Ben Thompson (@monkbent)

Much more to follow in later articles.

Differentiation

One of my concerns was whether Apple would be able to sufficiently differentiate the iPhone 5C from the 5S. Would they be able to make the iPhone 5S $200 more valuable than the iPhone 5C without resorting to crippling the 5C?

It turns out that Apple only had to differentiate the phone by $100 since they inserted the iPhone 5C in the mid-level, rather than the low level, price bracket.

And did they meet their burden? Easily.

— Better A7 processor;
— Better camera features; and
— Fingerprint scanner and security system.

As an aside, I have to admire Apple’s marketing strategy. They created three differentiators between the iPhone 5C and iPhone 5S, all of which can be explained in a single sentence.

By way of comparison, go to a Microsoft store and ask the salesperson the difference between Windows 8 RT and Windows 8; or the difference between the Surface and any one of the notebook or hybrid computer models made by Microsoft’s (dwindling) hardware partners.

See what I mean?

Flagship v. Premium

Another topic that deserves another article. Let me boil it down to this:

The iPhone 5 was both Apple’s Flagship and Premium model. The iPhone 5S is Apple’s new premium iPhone. The iPhone 5C is Apple’s new Flagship iPhone.

Take a look at apple.com today and note which new iPhone appears first: the 5C, not the 5S” ~ Horace Dediu (@asymco)

Posit: yesterday Apple cut the price of the iPhone by $100, at same margin, and made it cooler. Also launched entirely new high-end phone ~ Benedict Evans (@BenedictEvans)

People are just not getting it. Apple has just reduced the price of their “Flagship” – the iPhone 5c – to $99 subsidized, $549 unsubsidized. Apple is going to sell a TON of these mid-level phones. This is by design.

Much, much more in later articles.

Jony Ive

The difference that Jony [Ive] has made, not only at Apple but in the world, is huge… If I had to pick a spiritual partner at Apple, it’s Jony. ~ Steve Jobs

appledesignteamJony Ive is the real deal, Apple’s true visionary.

Fast Company says that over the entire course of Ive’s leadership, only five designers have ever left Ive’s team with only two actually quitting, the other three simply died.

An incredible tribute to an incredibly gifted man and one of Apple’s greatest assets. So long as Jony Ive is with Apple, Apple won’t have to worry about that “vision thing.”

Innovation

When I hear people say that Apple isn’t innovative anymore, I have to do a reality check. Are those people living on the same planet that I am?

— MacBook Air
— iOS 7
— Mac Pro
— A7
— iPhone 5S

Taken together, the Mac Pro mentality and the A7 direction are terribly exciting. ~ Rene Ritchie (@reneritchie)

Agreed. The charge that Apple isn’t “innovative” would be laughable if it weren’t for the fact that so many people seem to take it seriously.

Critics who claim that Apple is not innovative may look like idiots and talk like idiots but don’t let that fool you: They really are idiots. ((With apologies to Groucho Marx.))

Critic’s Free Advice Worth Every Penney

The long knives are out for Apple. Critics are literally calling Apple “clueless” ((FRED WILSON: “The C in 5C does not mean ‘cheap’ as I had hoped. It means clueless, as in clueless about how the vast majority of new smartphone users are paying for their phones.”))

Leading candidate for Stupid Comment of the Day from Jony Evans at ComputerWorld: “Apple may have “hit its BlackBerry moment.” ~ Shawn King (@ShawnKing)

I don’t know about that, Shawn – the competition for stupidest comment is mighty fierce.

A critic is a person who rocks the boat and then claims that they are the only one capable of saving the ship.

Pshaw.

“The critic leaves at curtain fall
To find, in starting to review it,
He scarcely saw the play at all
For starting to review it.”

― E.B. White

Measure not the work until the day’s out and the labor done. ~ Elizabeth Barrett Browning

I have studied the wisdom of many (critics) and many cats. The wisdom of cats is infinitely superior. ~ Hippolyte Taine

Apple’s been doing pretty well on its own by ignoring the critics’ advice. Let’s wait and see how this all plays out before we jump to any premature conclusions. And let’s hope against hope, that Warren Buffet got it right when he said:

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

David The Disruptor v. Microsoft The Goliath

This is part two of a two-part series. Part One looked at the fall of Steve Ballmer and the decline of Microsoft in mobile. Part Two tries to discover why it all happened.

Introduction

Steve Ballmer was just fired after 13 uninspiring years at Microsoft. A hotly debated question is whether Ballmer failed because he was a bad manager or whether he was simply a victim of disruptive innovation.

Analogy: David v. Goliath / Disruption v. Microsoft

PATIENT: Doctor doctor,- I keep comparing things with something else.
DOCTOR: Don’t worry, it’s only an-alogy

Disruption is often described as a David v. Goliath story. Let’s take that analogy and run with it.

Saul and the Israelites are facing the Philistines near the Valley of Elah. Twice a day for 40 days, Goliath, the champion of the Philistines, comes out between the lines and challenges the Israelites to send out a champion of their own to decide the outcome in single combat, but Saul and all the Israelites are afraid. David, (a mere shepherd,) accepts the challenge. Saul reluctantly agrees and offers his armor, which David declines, taking only his sling and five stones from a brook.

David and Goliath confront each other, Goliath with his armor and shield, David with his staff and sling. David hurls a stone from his sling with all his might and hits Goliath in the center of his forehead, Goliath falls on his face to the ground, and David cuts off his head. ~ Excerpted from Wikipedia

Obviously, in our story, David represents disruption and Goliath represents the fallen giant, Microsoft.

The Rules Of Disruption

Disruption occurs:

    • When a new product or service competes with a successful incumbent product or service.

David challenged Goliath.

The Apple iPhone challenged Microsoft’s Windows Mobile. The iPad challenged low-end notebook and desktop computers running Microsoft Windows. Google Docs challenged Microsoft’s Office Suite.

    • When the features of the new product or service are inferior and the features of the incumbent product or service are superior.

David was young, small, weak, had no armor and no weapon to speak of. The incumbent, Goliath, seemingly had all the advantages and no disadvantages. What was there to fear?

The iPhone, iPad and Google Docs were the “David” to Microsoft’s “Goliath.” The iPhone was low capacity, with no stylus or keyboard and with few advanced features. The iPad was underpowered – nothing but a big iPod Touch. Google Docs were immature and terribly limited in functionality. Microsoft seemingly had all the advantages and no disadvantages. What was there to fear?

 

    • When, unbeknownst to the incumbent, the existing product or service is over-serving a large part of their current customer base. The incumbent’s supposed strengths are actually irrelevant to the vast majority of its customers. This means that the challenger need only provide “good enough” service to satisfy the over-served part of the market.

Goliath was the master at one-on-one, hand-to-hand combat. With his size, strength and power, he was simply unbeatable. However, David’s sling shifted the shape and size of the battlefield. David didn’t have to engage Goliath’s strengths. He could attack Goliath from a distance, thereby negating Goliath’s strengths and turning Goliath’s size into a weakness.

Microsoft was a major player in mobile phones ((42% market share in 2007)) and dominated PC operating systems and Professional Software Suites. With their size and ongoing monopolies, they were simply unbeatable. However, the iPhone shifted the battlefield from styluses and menus to touch, the iPad shifted the battlefield from power to simplicity and mobility and Google Docs shifted the battlefield from expensive, powerful and compatible on all PCs to free, simple and compatible on all browsers. The iPhone, iPad and Google Docs negated Microsoft’s many strengths and turned those strengths into weaknesses.

    • When the challenger, in addition, provides exceptional service where the incumbent is weakest and where the customer’s unmet needs are the greatest.

David was exceptionally strong where Goliath was exceptionally weak. His small size and lack of heavy armor made him quick and mobile. His sling made him agile and deadly from a distance.

The iPhone, iPad and Google Docs gave people the simplicity they craved at the price of complexity and power that they neither desired nor needed. From Microsoft’s vantage point, users were replacing powerful tools with weak “toys” (replacing powerful swords with limited use slings.) From the user’s vantage point, however, they were giving up nothing of practical use (heavy armor that they could not wear and weapons that they could not wield) for the sake of mobility and ease of use.

    • The incumbents cannot effectively respond without sacrificing the benefits they are receiving by maintaining the status quo.

The incumbents were no fools and they were no slouches, either. Both Goliath and Microsoft saw the shift in battle strategy and they would have liked to have responded in kind. However, their very nature prohibited them from doing so. Only by giving up his strength, armor and sword could Goliath have competed with David’s sling. And then his size would have slowed him down and hampered him anyway.

Only by giving up their monopoly profits in Windows and Office, could Microsoft have competed with the lower margin ((Yes, lower margin. The iPhone and the iPad had high margins for Apple because Apple made their profits from the hardware. However, Apple’s integrated model bundled the software and Android’s subsidized model gave away the software for free, thus making it impossible for Microsoft to maintain their software licensing margins.)) iPhone, iPad and Google Docs. And then, Microsoft’s size and structure would have made it impossible for them to keep up with the nimble Apple and Google, in any case.

The incumbent is caught in a bind. He can’t cater to the new service without abandoning the old. And he can’t abandon the old service without abandoning the advantages that go along with it. Furthermore, any such change would make his best customers, and his best incentivized employees, and his best shareholders (or, in the case of Goliath, his fellow soldiers, his commander and his King), mad as hell.

20/20 Hindsight And Revisionist History

It’s very easy to criticize both Goliath and Microsoft. The answer, in retrospect, appears perfectly clear. Goliath should have simply reshaped his body into that of a lean, mean, sprinting machine and become skilled with the sling. Microsoft should have abandoned its obsession with Windows and focused on new, innovative products that would cannibalize Windows.

Or not.

There is always an easy solution to every human problem—neat, plausible, and wrong. ~ H. L. Mencken

The above is all perfectly good advice…assuming one knows absolutely nothing about human beings. Not only does this course of action run counter to human nature, it runs counter to common sense, too.

PATIENT: Doctor doctor, I’ve broken my arm in two places.
DOCTOR: Hmm, I’d advise you not to go back to either of those places then.

Telling someone to do what no sane person in their their position would do is not really good advice, it’s madness.

Too bad that all the people who know how to run the (company) are busy driving taxicabs and cutting hair. ~ George Burns

It’s easy for those of us who have have absolutely nothing to lose, to blithely provide radical advice to those who have everything to lose. But it’s also easy for those who have “skin in the game” to reject such wrong-headed advice. If either Goliath or Microsoft had taken the above-prescribed advice, it would have been a case of curing the disease by killing the patient. ((Cure the disease and kill the patient. ~ Francis Bacon, Essays [1625]. Of Friendship))

Microsoft Is Like A Trust Fund Baby

Microsoft does have one major advantage that most disrupted companies do not. Microsoft has — and will continue to have for quite some time to come — a huge stream of income.

This means that Microsoft can, unlike, for example, Palm, Nokia and Blackberry, make the changes necessary to survive. Their resources give them the time that most companies are denied.

But just because they can do something, doesn’t mean that it would be easy to do and just because they can do something doesn’t mean that they will choose to do it either.

Conclusion

When evaluating companies, and in particular their executives, I find it useful to start with the assumption they’re highly intelligent. ~ Ben Thompson

Was Ballmer a bad manager or was he a victim of innovative disruption? I have no doubt that Ballmer made some serious mistakes. But it was not what he did wrong, but what he did “by the book” that got Microsoft into the mess that it’s in today.

A man is known by the company he organizes. ~ Ambrose Bierce

In the long view, you can’t really criticize Ballmer and Microsoft ((“But why would anybody want that CEO job as long as Bill stays on the board? (Steve, too, most likely, given that he still owns 333 million Microsoft shares.) Both need to quit to give the newcomer a free rein and air to breath. Otherwise, failure isn’t just an option, but the most likely outcome.” ~ Joachim Kempin)) for striving to do what they do best. It’s innovative disruption, not Ballmer, that’s sinking the good ship Microsoft. ((“Microsoft’s next CEO will need to be Superman. Here’s the mess Steve Ballmer will leave for his successor:  
–Windows 8 has failed to produce a turnaround in Microsoft’s gradual decline.
–The Surface tablets have more or less died in the market.
–The company’s just been through a massive top-level organizational change. Those things typically take a year to trickle down through the organization, as the lower levels of management get resorted and reassigned. That process will be disrupted while everyone waits to see if the new structure will stick with the new CEO (unlikely; new CEOs almost always want to change things).
–And now Microsoft needs to mesh the Nokia and Microsoft businesses. There’s a cultural challenge: Nokia’s is a collectivist Finnish hardware company while Microsoft is a dog-eat-dog hypercompetitive software business. There are also operational challenges. As I learned when I worked at Palm, it’s incredibly difficult to manage an operating system to please both your in-house hardware team and your licensees. They always want conflicting things. Microsoft claims it can both license Windows Phone and run Nokia. I hope that’s just bluster, because I don’t think it will work in practice.” ~ Michael Mace))

I must be willing to give up what I am in order to become what I will be.” – Albert Einstein

Ballmer: The Good, The Indifferent, The Bad and The Analysis

QUESTION: Why is it when birds fly in a “V” shape one side is longer?

The answer will be provided, below.

Part 1 of 2

Microsoft’s Steve Ballmer is going to retire within the next 12 months. There’s a lot of ground to cover, so let’s get to it.

One of the most striking differences between a cat and Steve Ballmer is that a cat has only nine lives. ((With my apologies to Mark Twain for stealing and re-purposing his prose.))

1. The Good

1.1 CRAZY, ZANY, BALLMER

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

images-72Ballmer gets a lot of grief for what he says, what he says it about, what he does and how he looks. He does, admittedly, have an eerie resemblance to Uncle Fester from the Adams Family.

But let’s set all that aside. You’ve got to get off the guy’s back and cut him some slack. The man is high energy and fun. The world would be a lot better place if more people put as much of themselves into their work as he does.

1.2 THE SALES GUY

Besides, Ballmer is the sales guy. Firing up the troops is part of his job. And he does that job exceptionally well.

The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made. ~ Groucho Marx

chartAnd speaking of doing one’s job, the job of the sales guy is to bring in the money. And NOBODY did a better job of bringing in the money than did Steve Ballmer.

Microsoft more than tripled its annual revenue from $22 billion annually when Ballmer took over to $78 billion when he announced his departure. To put that in perspective, while Ballmer was CEO, Microsoft grew revenue by $55B. Dell grew by $31B, Oracle by $27B, Intel by $19B, IBM by $16B. [Source: Aaron Levie (@levie)]

1.3 DOES STEVE BALLMER LOVE MICROSOFT?

Oh yes. With all his heart and all his soul. And I honor him for it.

[pullquote]Steve Ballmer loved Microsoft…just not enough to leave it[/pullquote]

“This is an emotional and difficult thing for me to do. I take this step in the best interests of the company I love…” ~ Steve Ballmer

Steve Ballmer loved Microsoft…just not enough to leave it as soon as he should have. And for that, his legacy, and Microsoft, will have to pay a price.

2. The Indifferent

There were things about Steve Ballmer that I didn’t much care for, but they weren’t relevant to his demise. They were merely annoying. In terms of analyzing his tenure at Microsoft, I’m indifferent to them.

2.1 STOCK MARKET REACTION TO RETIREMENT ANNOUNCEMENT

I don’t put all that much stock in the stock market’s knee jerk reactions to events, but I will admit that it’s kind of discouraging that the announcement of Ballmer’s resignation made shares jump as much as 9.4%. That’s good for a cool $28 billion in extra market cap value overnight. Not exactly a ringing endorsement.

Being a CEO is a poor way to make a rich living.

2.2 BUREAUCRACY AND INFIGHTING

So much of what we call management consists in making it difficult for people to work. ~ Peter Drucker

Politicking is endemic in any big company, but Microsoft does seem to epitomize the very worst of this kind of behavior. And Ballmer apparently raised politicking to an art form.

2.3 ORWELLIAN COMMUNICATION STYLE

If I seem unduly clear to you, you must have misunderstood what I said. ~ Alan Greenspan, Federal Reserve chairman

Microsoft has always had a bizarre communication style. To be truthful, it sometimes hurts my head.

Perhaps Bill Gates and Steve Ballmer had the same, inscrutable, English teacher when they attended Harvard together. Perhaps not. In any case, Ballmer has the gentle touch of a blacksmith when it comes to word craft. For example, did you fully understand his recent reorganization tome memo? No?

Neither did anyone else.

Here’s a couple of snippets:

“The evangelism and business development team will drive partners across our integrated strategy and its execution.”

Say whaaaaaa…?

“Our focus on high-value activities—serious fun, meetings, tasks, research, information assurance and IT/Dev workloads—also will get top-level championship.”

Meetings…serious fun…top-level championship…Come again?

“In the new, rapid-turn world, we need to communicate in ways that don’t just exchange information but drive agility, action, ownership and accountability.”

As Curt Woodward so charmingly puts it: “You’ve got to love a passage about communication that makes almost no sense….”

If you’re a glutton for punishment, there’s way more where that came from. Knock yourself out.

There are worse things in life than death. Have you ever spent an evening reading a Steve Ballmer Memo?

Poor communication is not really a fatal flaw, but still, Ballmer’s inability – or unwillingness – to communicate clearly didn’t help him any.

2.4 BOMBAST

Steve Ballmer:

— “Linux is a cancer that attaches itself in an intellectual property sense to everything it touches.”

— “Google’s not a real company. It’s a house of cards.”

“Zeal without knowledge is fire without light.” ~ Thomas Fuller

— “(T)here will be 30 million Windows Phone 7 smartphones sold in 2011.” ((Say, what ever happened to Windows Phone 7, anyway?))

“500 million people will be using Windows 8 (in 2013).”

Underpromise and overdeliver. ~ Thomas Peters

— “There’s no chance that the iPhone is going to get any significant market share. No chance.”

— “(W)e are not going to let any piece of this [go uncontested to Apple].” … We are not leaving any of that to Apple by itself. Not going to happen. Not on our watch.”

The words you speak today should be soft and tender … for tomorrow you may have to eat them.

I think that part of Ballmer’s bombast comes from his sales background. But personally, I could have done with less of it.

Boasting is not courage. – African proverb

2.5 NEVER ACCEPT RESPONSIBILITY

I make mistakes; I’ll be the second to admit it. ~ Jean Kerr

Excerpt from: Ballmer just opened the second envelope:

“Ballmer’s view of executive leadership doesn’t admit standing up and taking responsibility. He can’t say ‘I screwed up’ and then explain what he’ll do to rectify the situation. No. Instead, (Lieutenants) are fingered while they pretend they aren’t being blamed.

When questioned about Apple overtaking Microsoft, Ballmer had this to say: ‘It is a long game. We have good competitors but we too are very good competitors,’ he said. ‘I will make more profit and certainly there is no technology company on the planet that is as profitable as we are.’

When it comes to profits, Ballmer is willing to take credit.”

“A man can fail many times, but he isn’t a failure until he begins to blame somebody else.” ~ John Burroughs

2.6 BALLMER WAS NO VISIONARY BUT THEN, HE WASN’T HIRED TO BE A VISIONARY

People complain that Ballmer wasn’t a software guy, wasn’t a product guy, wasn’t a visionary. But Ballmer wasn’t hired to be a visionary.

You may as well expect pears from an elm. ~ Miguel de Cervantes

Bill Gates had set the course. What the board wanted from Ballmer was a steady hand at the tiller that would follow the course that had been laid in for him and to follow that course with all due speed. And that’s exactly what Ballmer did — in spades.

“If you see Ballmer’s job as being the preservation of MS’s position on the desktop, he’s certainly been a success. Microsoft’s real customers, IT departments, still trust Microsoft and still buy from them, mainly because Microsoft treats them very well. You say Ballmer’s a failure because he hasn’t been “disruptive”? His customers don’t want disruption…. ~ In defense of Ballmer

[pullquote]Ballmer thought he was both the skipper and the pilot[/pullquote]

There’s nothing wrong with having a non-visionary at the helm. There are lots of non-visionaries at the helms of large corporations. The trick is to know that you’re not the pilot and to find a pilot (visionary), that you trust, to advise you.

If Ballmer had a failing as a captain, it might have been that he thought he was both the skipper and the pilot.

3. The Bad

3.1 DID BALLMER RESIGN OR WAS HE FIRED?

Two campers named Ballmer and Gates are walking through the woods when a huge bear appears in the clearing about fifty feet away. The bear (which owns a huge block of Microsoft stock) sees the campers and begins heading toward them.

Gates drops his backpack, digs out a pair of sneakers, and frantically begins to put them on. Ballmer says, “What are you doing? Sneakers won’t help you outrun that bear.”

“I don’t need to outrun the bear,” Gates says. “I just need to outrun you.”

Technically, Ballmer may have fallen on his metaphorical sword – but only because the Microsoft board was already ushering him before their metaphorical firing squad.

“I think it’s very likely that Ballmer’s decision [to retire] is part of a broader strategy within Microsoft as expressed by the reorganisation in July that is geared toward shifting the corporate culture.” ~ David Cearley of Gartner

Poppycock. ((Look that word up. I think you’ll be surprised by its origin.))

The evidence that it was a recent and sudden decision to abandon Ballmer to the bears is overwhelming:

  • Interviews with dozens of people indicate that Ballmer had not aimed to leave this soon.
  • One former senior executive said: “It’s a total shocker.”
  • He was definitely not leaving and then he suddenly was,” said one source.
  • He was at the very beginning of a major corporate restructuring that consolidated power to himself.
  • Ballmer’s July restructuring announcement made it crystal clear that he was there to stay. ((“Lots of change. But in all of this, many key things remains the same. Our incredible people, our spirit, our commitment, our belief in the transformative power of technology — our Microsoft technology — to make the world a better place for billions of people and millions of businesses around the world. It’s why I come to work inspired every day. It’s why we’ve evolved before, and why we’re evolving now. Because we’re not done. Let’s go.”)) (“It’s why I come to work inspired every day … Because we’re not done. Let’s go.”)
  • He clearly lost the backing of Bill Gates — notice how his farewell letter didn’t thank or even reference Gates?
  • The board gave themselves 12 months – TWELVE MONTHS – to find a successor. They were clearly unprepared.
  • Finally, I find the implied logic contained in the following tweet to be totally persuasive:

Not to be cynical but who decides to retire without “spending a lot of time thinking about what comes next?” Just saying… ~ Lessien (@Lessien)

Diplomacy is the art of saying ‘Nice doggie’ until you can find a rock. ((Will Rogers)) The Microsoft Board just found themselves a big ol’ rock.

3.2 THE TIMING OF BALLMER’S DEPARTURE IS JUST AWFUL

Ballmer writes in his farewell memo:

There is never a perfect time for this type of transition, but now is the right time.

No. It’s not.

They’ve just completely recreated the company in a pattern that’s totally alien to most organizations of their size. ~ Guy English

The just announced reorganization consolidated power with the CEO. Announcing one’s retirement right after an audacious power grab doesn’t make any sense for either Ballmer or Microsoft.

The timing is painfully awkward. I think that Guy English is spot on when he says:

Microsoft is currently searching for a new CEO who’ll fit the straight jacket Steve Ballmer has left behind.

Just a disaster in the making.

3.3 LOST STOCK VALUE

Microsoft PriceDo you really want to know why Ballmer is being left to the bears? Feast on this chart.

On the last day of 1999, the day before he took over as CEO, Microsoft’s market capitalization was $600 billion. On the day before he announced his intention to retire, it was less than $270 billion. ~ John Paczkowski

When Ballmer became CEO, Microsoft had a market value of $604 billion … Now, Microsoft’s market value is $269 billion, less than half of its value when Ballmer came to power. ~ Excite News

For a guy who said that helping Microsoft’s stockholders was a big part of his job, he did one lousy job.

3.4 LOST MONOPOLY

Don’t judge each day by the harvest you reap, but by the seeds you plant. ~ Robert Louis Stevenson

Flat stock market not enough justification to fire Ballmer? How about the loss of Microsoft’s all important computer operating system monopoly?

Screen Shot 2013-07-20 at 9.32.23 pm

Microsoft’s share of connected devices sales (in effect, PCs plus iOS and Android) collapsed from over 90% in 2009 to under a quarter today.

Screen Shot 2013-07-20 at 9.23.57 pm

And Microsoft is nowhere in mobile. And mobile is where all the growth is occurring.

[pullquote]Should we be shocked that Ballmer lasted as long as he did?[/pullquote]

Looking at the above two charts, should we be shocked that Ballmer is being pushed out the door or should we be shocked that he lasted as long as he did?

I’m not going to write a long Ballmer blog post. He did some great work, but Microsoft is absent from mobile and mobile is all that matters. ~ Benedict Evans (@BenedictEvans)

Wow. That about says it all. Mobile is everything and (for analysts more discerning than I) dissecting Ballmer’s demise isn’t even worth the effort. It’s the ultimate dis.

3.5 LOST ENTERPRISE

In the first quarter of calendar 2013, iOS accounted for 75 percent of total device activations among enterprise users, Good Technology’s latest Mobility Index Report revealed on Wednesday. The remaining 25 percent were Android devices, while other platforms took less than 1 percent.

Tablets are now so popular among business users that they accounted for 27 percent of total device activations in the workplace in the first quarter. ~ Good Technology

Were you wondering if the Enterprise was going to bail Microsoft out? Stop wondering.

3.6 LOST REVENUE AND PROFIT LEADERSHIP

“There’s no chance that the iPhone is going to get any significant market share. No chance.” ~ Steve Ballmer

Remember how I was saying earlier that no one made money the way Steve Ballmer did? Well, that wasn’t quite accurate. Actually, a single Apple product—the iPhone—now generates more revenue than all of Microsoft put together. ((Apparently, if you’re a Nobel prize winning economist, the only possible conclusion you can draw from this information is that Apple is in much worse shape than Microsoft. Go figure.))

Yeah.

Give that some time to sink in.

3.7 LOST OPPORTUNITIES

A Windows Mobile Phone, a Zune, a Kin, and a Windows RT Tablet, WALK INTO A BAR and the bartender says, ‘What is this? Some kind of joke?’ ((AN ENGLISHMAN, AN IRISHMAN, A SCOTSMAN, A RABBI, A MINISTER AND A PRIEST WALK INTO A BAR and the bartender says, ‘What is this? Some kind of joke?’))

Steve Ballmer missed on search, tablets, phones, MP3 players, the consumerization of IT…the list goes on and on. As Nicholas Thompson of The New Yorker wrote: “Ballmer proved to be the anti-Steve Jobs” in his tenure. “He missed every major trend in technology. His innovations alienated people.”

Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road. ~ Stewart Brand

Next

[pullquote]There’s more birds on that side[/pullquote]

QUESTION REDUX: Why is it when birds fly in a “V” shape one side is longer?

ANSWER: There’s more birds on that side.

* * * * *

Sometimes answers are complex. Sometimes they’re dumbfoundingly simple.

Sometimes the questions are complicated and the answers are simple.” ~ Dr Seuss

In Part 2, I’ll explore WHY Steve Ballmer and Microsoft failed. Is it as simple as saying that Steve Ballmer was a bad CEO? Or was his end inevitable and preordained by the Innovator’s Dilemma? Or was it something else entirely?

Discovery consists of seeing what everybody has seen and thinking what nobody has thought. ~ Albert Szent-Györgyi von Nagyrapolt

Join me next time and we’ll thrash it out together.

Who’s The Gorilla And 8 More Questions About the iPhone 5C

Question #1: Is The iPhone 5C coming?

Sure looks that way. The rumors have grown so loud that they’ve become deafening. Let me put it this way: If the iPhone 5C is NOT announced on September 10th at the upcoming Apple event, it will be the non-announcment heard ’round the tech world.

There’s nothing in this world more instinctively abhorrent to me than finding myself in agreement with my fellow-humans. ~ Malcolm Muggeridge

Question #2: Why The Change In Apple’s Strategy And Why Now?

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

Apple definitely considered doing a mid-range phone years and years ago. They opted, instead, to continue manufacturing their one-year and two-year old phones and sell them at lower price points. That strategy has been successful, but it also may have run its course. For a good read on this topic, I commend you to Rene Ritchie’s article entitled: “Why iPhone 4C didn’t make sense but iPhone 5C just might.”

The hardest thing to learn in life is which bridge to cross and which to burn. ~ David Russell

Question #3: How Will Apple’s Corporate Philosophy Shape Their Decisions On The iPhone 5C?

Do what you feel in your heart to be right – for you’ll be criticized anyway. ~ Eleanor Roosevelt

When thinking about the iPhone 5C, we need to keep in mind that Apple is unique. First, Apple has always been about making the best, not the most. ((Tim Cook: “For us, winning has never been about making the most. Arguably we make the best PC, we don’t make the most. We make the best music player, we wound up making the most. We make the best tablet, we make the most. We make the best phone, we don’t make the most phones.”)) Second, Apple is not afraid of cannibalizing their own products. Third, Apple believes in simplicity — less, but better. Fourth, Apple’s strength is in its ecosystem. Any tactical decision that diminishes the cohesion of Apple’s ecosystem would be strategically counter-productive.

The man who follows a crowd will never be followed by a crowd. ~ R. S. Donnell

Question #4: Is Apple Introducing the iPhone 5C In Order To Standardize Their Technology?

Absolutely.

Logic merely enables one to be wrong with authority. ~ Doctor Who

This is definitely one of the most compelling reasons for the move to the iPhone 5C. It will allow Apple to simultaneously retire the iPhone 4 and 4S and move its new customer base to the newer iPhone screen size and to the newer iPhone Lightning power cords. This is not the only reason for the move to the iPhone 5C, and it may not be the primary reason for the move, but it is entirely consistent with Apple’s doctrine of simplifying their product lines and consolidating their ecosystem.

Question #5: Is Apple Doomed If It Doesn’t Add More Market Share?

Get a grip.

Apple’s market share is bigger than BMW’s or Mercedes’ or Porsche’s in the automotive market. What’s wrong with being BMW or Mercedes? [2004] ~ Steve Jobs

The iPhone is America’s most profitable product.
— Apple Computers, iPads and iPhones were just named the top three brands of 2013.
— Apple easily out-profits both Microsoft and Google.

Rule Number 1: Never lose money. Rule Number 2: Never forget rule Number 1. ~ Warren Buffett

If Apple is doomed, then what does that say about the respective state of their rivals?

Profit is one of the nine reasons to be in business. The other eight are unimportant. ~ John Kirk

Apple is doing just fine. Turns out that selling a differentiated premium product is a sustainable business model. Who knew? ((Ben Thompson: It turns out there are two sustainable positions in an industry (and to be clear, this isn’t exactly rocket science. Again, business school…). The low cost leader – Samsung – and the highly differentiated one. See, Apple already did “transform the industry with a revolutionary design.” And while Android has made significant gains on the hardware, software, and even ecosystem fronts, the overall package offered by Apple is still highly differentiated. The evidence bears this out: Apple charges the highest prices for phones, happily subsidized by carriers (especially in the US), because customers will change carriers to get the iPhone. This results in by far the highest margins in the industry with only a small portion of the overall volume.)) (Most every knowledgeable business observer, that’s who.)

We learn from history that we do not learn from history. ~ Georg Wilhelm Friedrich Hegel

Those who do not know their history insist that history is about to repeat itself – that Android is about to become the next all-encompassing Windows monopoly. But if you know your business history, then you know that Windows was an aberration, not a precedent; the exception to the rule, not the rule.

We’re seeing history repeat itself all right. Just not the history most have mis-remembered.

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

Question #6: But Didn’t Steve Jobs Say That Apple Needed Market Share, Not Profits?

“What ruined Apple was not growth … They got very greedy … Instead of following the original trajectory of the original vision, which was to make the thing an appliance and get this out there to as many people as possible … they went for profits. They made outlandish profits for about four years. What this cost them was their future. What they should have been doing is making rational profits and going for market share.” – Steve Jobs, 1995

Whenever Apple’s market share comes up, so does the above Steve Jobs quote. But when you’re re-reading that quote, keep these things in mind.

First, Steve Jobs was still running Apple when the current iPhone pricing policies were set. It’s unlikely that he forgot his own advice.

Second, the iPhone has been gaining market share in key global markets.

Third, pricing to gain market share simply for the sake of market share is a chump’s game.

Apple already has 65 percent of the mobile phone profits with only 6 percent of the market share. How much more profit share can Apple reasonably hope to acquire?

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Fourth, Steve Jobs wasn’t talking about ALL market share, he was talking about acquiring the RIGHT market share. Some customer’s are simply not worth having.

The question is one of price elasticity: How much more profit, if any, will Apple garner by lowering the price of their phone? ((“Price elasticity” seems to be way beyond the pay grade of most pundits and analysts who follow the mobile sector, but what it essentially means is that when the price of something goes down, sales almost always go up, but the rate of that sales increase depends upon the price elasticity of the product. In other words, dropping prices may increase sales but the increased sales may result in disproportionately larger or smaller profits. Unless we truly understand the price elasticity of the iPhone, we really shouldn’t be calling for Apple to drop its iPhone prices.)) And will the market share that they acquire be desirable?

Question #7: Is Pricing The Key To The iPhone 5C?

No.

(The price of the iPhone 5C) is the only thing that deserves analysis ~ Horace Dediu

I respectfully disagree.

The success of the iPhone 5C depends upon valued differentiation. The key is not to make the phone cheaper, it is to make it more valuable EVEN THOUGH IT IS CHEAPER. (Perhaps Apple should call it the iPhone 5 “V” instead of the iPhone 5 “C”.)

Many companies foolishly try to differentiate their products by price. This is always a mistake. If the lower priced item is more valuable than its price, then it cannibalizes its premium sibling. If the lower price is achieved by crippling the value of the product, then poor sales and user dissatisfaction ensue. (See, for example, Windows RT).

The key is to differentiate without disabling the product. You want to create a product that is, yes, lower priced, but the lower price is merely the icing on the cake. The “cake” is that the lower priced product is actually MORE VALUABLE to its intended audience than its premium priced cousin.

Take for example the iPod Nano and the iPad Mini. In both cases, they were lower priced than their premium siblings. But in both cases, the features that the products were missing (size, for example) actually ENHANCED their value to their target audience. Apple needs to do the same with the iPhone 5C.

A satisfied customer is the best business strategy of all. ~ Michael LeBoeuf

Question #8: How Will Apple Differentiate The iPhone 5C From the iPhone 5S?

I don’t know.

I used to be indecisive but now I am not quite sure. ~ Tommy Cooper

— They could do it by making the phone only work in certain geographic locations, like China.

China is a big country, inhabited by many Chinese. ~ Charles de Gaulle, former president of France

I don’t think that’s likely.

— They could do it via specs: lower memory, storage, processor, no LTE antennas, no NFC, no Siri…

…no way. This is crippling the product, not enhancing it. The new iPhone 5C will certainly have lower specs, but those lower specs – as with the iPod Nano and the iPad Mini – should be consistent with the job the product is being asked to do. Artificial differentiation should be avoided at all costs (see what I did there?).

People want economy and they will pay any price to get it. ~ Lee Iacocca

Apple’s goal is to CONSOLIDATE their ecosystem, not fragment it. ((Tim Cook: “And I would just add to that, because we are not fragmented like our competition, we can update an iOS with a major release and a substantial percentage of our customers will update to the – to our latest offer. We’ve made that very elegant and very easy. Also because the usage for iOS is so much higher, when we integrate things well, people use them a lot more and so just those concepts by itself are huge advantages from a customer experience point of view and from a more of the metrics that you’re thinking about point of view.”)) Nothing should be “missing” from the iPhone 5C that will be “missed” by any of its intended audience.

Power is not revealed by striking hard or often, but by striking true. ~ Honoré de Balzac

Question #9: Who’s The Gorilla?

Competing in the market is like wrestling a gorilla. You don’t quit when you’re tired, you quit when the gorilla is tired. The question is, who’s the gorilla in the smart phone space – Apple or Apple’s competitors?

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

We may find out who the Gorilla is on September 10th.

The Microsoft Surface is (French) Toast

The Apology

Please allow me to begin by apologizing for the saucy language you are about to encounter. There is simply no way for me to tell the following joke without cursing. I really don’t like cursing (although, I do so love using it for effect), so I’m going to employ a substitute for the curse word. I trust that the savvy and discerning Techpinions reader will be able to pierce the veil and see through my little euphemism. Enjoy!

The Joke

On a Saturday morning, three boys come down to the kitchen and sit around the breakfast table.

Their mother asks the oldest boy what he’d like to eat.

“I’ll have some firetruckin’ French toast,” he says. The mother is outraged at his crude language. She hits him and sends him upstairs.

When she calms down, she asks the middle child what he wants. “Well, I guess that leaves more firetruckin’ French toast for me,” he says. The mom is livid. She smacks him and sends him away.

Finally, she looks at the youngest son and asks him what he wants for breakfast.

“I don’t know,” he says meekly, “but I definitely don’t want the firetruckin’ French toast!”

Excerpt from: “Jokes Every Man Should Know

The Analogy

• The mother in the Joke represents the computer buying public.

• The first two boys represent any one of the several PC hardware manufacturers who made tablets running the Windows 8 software but who have since been booted from the market.

• The youngest boy represents Microsoft.

Microsoft – like the youngest boy in the Joke – has gotten the reaction of the public (the mother) all mixed up. The boy thinks that the mother is upset about the French Toast, not the cursing. Microsoft thinks that the public is upset about Windows 8. So Microsoft has been quick to swear off (see what I did there?) Windows 8 and move on to the brand, spanking, new Windows 8.1. That’s going to fix EVERYTHING!

Or not.

‘Cause the real problem – the problem that Microsoft doesn’t see or get – is with Microsoft’s accursed tablet philosophy. Microsoft thinks that what people REALLY want in a tablet is a PC. And Microsoft thinks that what people REALLY want in a PC is Windows. Thus and therefore, Microsoft thinks that what people REALLY want in a tablet is a PC that runs Windows – a hybrid, that does it all and is all things to all people.

Until Microsoft’s outlook (oh my, yet another obscure reference) changes – and I think it’s unlikely to change anytime too soon – Microsoft, like the youngest boy in the Joke, is going to keep on getting slapped around without a clue as to why it’s happening.

Paul Thurrott’s Analysis

Paul Thurrott, in his article entitled, “Can Surface be Saved?“, is seemingly critical of Microsoft’s tablet efforts but, in the end, he erroneously sides with Microsoft’s take on why Windows 8 tablets are failing in the marketplace.

The Surface Is The New Zune

The parallels with (Surface and) Zune are interesting. In both cases, Microsoft established a new (well, recycled in the case of Surface) brand for a new family of hardware products. In both cases, Microsoft adopted a coopetition model in which it sought to have it both ways by both supporting partner devices and then competing with them head-on with their own.

The fear at the time of the reveal event was that Microsoft would alienate these partners by making its own hardware. ~ Paul Thurrott

Microsoft’s move to “co-opetition” is quite interesting. When Microsoft announced the Surface, the pundits seemed to fall into one of two groups. The theorists suggested that by making their own hardware, Microsoft would harm their relationship with their hardware partners. On the other hand, realists looked at the market and concluded: “Harm their relationship? Nonsense. Where are the hardware manufacturer’s going to go?”

In a way, the theorists and the realists were both right. If the Microsoft Windows 8 Tablet program is the sinking Titanic, Microsoft’s PC manufacturers are the lifeboats and those lifeboats aren’t so much paddling toward anything as they are simply madly paddling to get AWAY from the sinking ship that is the Surface. ((Paul Thurrott: First, of the few PC and hardware makers that voiced support for Windows RT last year and the subset of those that actually shipped devices, virtually all have completely and publicly backed away from the platform. Indeed, the most successful Windows RT device, by all measures, is Surface RT. And that device required a nearly $1 billion write-off because of poor sales.
Second, more and more PC makers are turning to free Google platforms. Not just Chrome OS, which is a super-cheap/low-risk bet, but also now Android.))

Redefining “Superior”

Killing off Surface would just deprive customers of some of the only truly superior PC hardware out there.

And these devices really are superior. We can debate specifics around battery life, the keyboard choices, the number of ports, the non-adjustable kickstand, or whatever. But these are beautiful and well made products. ~ Paul Thurrott

Okey dokey then. Let’s take a step back for a second and examine that bit of analysis. I have no argument at all with the hardware quality of the Surface. Beautiful and well-made? Yes. But nothing is truly “superior”unless it serves its intended purpose.

There is nothing so useless as doing efficiently that which should not be done at all. ~ Peter Drucker

The “Pro” Tablet

I previously described (the Surface) as what a “Pro” line of iPads might look like if Apple were to make such a thing. ~ Paul Thurrott

This is where Paul’s analysis and Microsoft’s tablet philosophy go right off the rails. They both think that what the world wants – that what the world needs – is a “Pro” line of tablets.

…I still believe that this kind of hybrid device—one that combines work and play thematically and tablet and laptop physically—is the future of the PC. Not just the Ultrabook, but the PC. The ability to use and travel with just a single device that does it all is still a dream today. ~ Paul Thurrott

Yeah, not so very much.

I can see the appeal of Paul and Microsoft’s “dream”. But – as Microsoft has demonstrated – merging a tablet with a PC is not a “dream”, it’s a nightmare.

Not One Hybrid, But Multiple Screens

Ironically, Bill Gates predicted the future of computing back in 2007:

I don’t think you’ll have one device.

I think you’ll have a full-screen device that you can carry around and you’ll do dramatically more reading off of that – yeah, I believe in the tablet form factor…

…and then you’ll have the device that fits in your pocket…

…and then we’ll have the evolution of the portable machine. And the evolution of the phone will both be extremely high volume, complementary–that is, if you own one, you’re more likely to own the other.

[pullquote]The one, unifying computer is not the hybrid, it’s the Cloud.[/pullquote]

What’s actually happening is that we’re moving toward owning multiple windows (Ironic, eh?) to view and interact with our centralized data in the Cloud. One screen for our pocket (smart phone), one screen for the desk (PC), one screen for the wall (TV) and one screen for walking and lounging about (tablet). The one, unifying computer is not the hybrid, it’s the Cloud.

So if Bill Gates predicted this so very long ago, why doesn’t Microsoft get it? Well, as Upton Sinclair so rightly put it:

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

A hybrid computer that runs Windows is not the consumer’s dream, it’s Microsoft’s dream. And the bulk of the computer buying public is having none of it.

Black or White Thinking

Am I saying the the Surface isn’t good for anyone? Absolutely not. There are literally millions upon millions of users who will need it, love it, absolutely adore it.

But that’s not enough.

In today’s marketplace, millions of computers is a niche. The goal is to sell in the BILLIONS. And I’m not being hyperbolic. Android is closing in on a billion activations fast. And iOS isn’t that far behind.

The pertinent question isn’t whether Windows 8 tablets are good or bad. Like all products, they’re good for some people and bad for others. The pertinent question is one of proportion. Will enough people want enough Windows 8 tablets to make them a majority or even a plurality? All the evidence to date says that they will not.

The Surface Is Firetrucked

So let’s tie this into one nice, neat package and put a ribbon on it.

In the Joke, the mom’s problem isn’t with the French Toast. It’s with the kids’ cursing.

In reality, the public’s problem isn’t with the quality of the Surface hardware or about tweaking the Windows 8 software. It’s with Microsoft’s cursed belief that tablets really want to be PCs.

As long as the kid in the Joke doesn’t understand the problem, he’s going to keep getting smacked around by his mother.

As long as Microsoft doesn’t understand the problem, they’re going to keep getting smacked around by the marketplace.

If Microsoft doesn’t start getting the joke, instead of being the joke, their tablet ambitions are going to end up as (French) toast. ((Urban Dictionary: Toast – Destroyed, terminated, ceased functioning, ended abruptly by external forces.))

“Android Dominance” Is An Oxymoron

Alarm Bells Should Be Ringing At Apple: It’s Getting Absolutely Creamed By Android, Which Now Controls ~80% Of The Smartphone Market ~ Jay Yarrow, Business Insider

No, it’s not.

Definition of an oxymoron:

A figure of speech in which apparently contradictory terms appear in conjunction

Fact #1: No version of Android dominates mobile OS market share.

“Android Dominance” is an oxymoron. No single “slice” of the Android “pie” is equal to the 93% of iOS users who have upgraded to iOS 6. iOS 6 is the world’s most popular mobile operating system.

iOS_Android_fragmentation-640x281
Source

Fact #2: Historically, iOS customers have been quick to update to the latest OS version. ((iOS 6 Adoption At Just Over One Week: 60% For iPhone And 41% For iPad | TechCrunch))

Fact #3: Apple’s iOS users have even more reasons to rapidly upgrade to iOS 7.

iOS_7_UpdatesiOS_7_Only

A recent developer survey revealed that 95% of developers are updating their apps for iOS 7.

More importantly, 48% of those developers intend to make their updated apps work only on iOS 7.

With so many new and updated apps working only on iOS 7, iOS users are going be strongly motivated to upgrade to iOS 7 as soon as possible.

Fact #4: OS Versions matter.

Apple, arguably, has higher-quality apps because developers still focus on iOS first. The reason they focus on the App Store is that it generates more revenue than Google’s Android store, and users are more engaged. However, there’s no reason to believe this will continue. ~ Jay Yarrow, Business Insider

[pullquote]People who look only at overall OS numbers without taking OS versions into account are missing the “trees” for the “forrest”[/pullquote]

Yes, there is.

Pundits, like Jay, can’t seem to understand why Android leads in market share but iOS leads in usage, engagement, developers, income and everything else that makes a platform strong. ((Why The iPhone's Usage Advantage Over Android Remains So Important. The latest evidence confirms it: iPhone users are far more engaged with their devices than are Android users.)) ((Why Google’s Android is Losing the Battle to Apple’s iOS)) ((Apple iPhone users use their devices 55% more than Android users)) (("Both in apps and overall smartphone usage, iPhone owners rank higher than owners of Android handsets. After surveying both U.S. and European smartphone owners, researchers not only found owners of the Apple device more frequently use apps, but conduct more tasks suitable to smartphones, such as browsing the Internet. This despite Android’s advantage both in number of handsets out there and in sales. The dichotomy just reinforces our Android in a Drawer theory, which says many owners of the Google-powered devices see their handsets as just a spiffier version of dumb feature phones, ignoring most of what makes smartphones smart.")) ((Apple’s iOS continues to dominate with nearly 60% Web usage share vs. Android’s 26%)) ((Apple Continues To Dominate Mobile Video Viewing, With 60% Occurring On iOS Vs. 32% On Android)) (("Sandvine says that the iPad accounts for more home traffic than any other device, at more than 10 percent; and it says that if you added up all of Apple’s devices (iPads, iPhones, Macs, etc.), the company ends up with more than 45 percent of home broadband usage.")) ((Why FRONTLINE Isn’t Doing Android — Yet)) ((BBC – we have an Android development team that is almost 3 times the size of the iOS team)) ((Why there aren’t more Android tablet apps, by the numbers)) ((Android’s consumer strength hasn’t translated to enterprise, where Apple still dominates)) ((Apple rules the skies with 84% in-flight share vs. Android’s 16%)) ((Apple’s iPhone may have kept 400K customers from leaving T-Mobile)) ((screen-shot-2013-07-23-at-10-21-49-amSource)) ((Google shares were down as much as 5% in after-hour trading following a report of second-quarter net income of $3.23 billion compared with $2.79 billion a year ago. The overall revenue figure came in at $14.1 billion. The main reason for Google’s perceived weakness: less-than-spectacular mobile ad sales.)) ((app-revenue-q12013 Source))

Let me help you out. There is no paradox. The latest version of Android does NOT lead the latest version of iOS in market share. People who look only at overall OS numbers without taking OS versions into account are reversing the traditional proverb – but still making the same proverbial mistake – by missing the “trees” for the “forrest.”

Fact #5: Android hardware and software is split into many, many pieces.

  • 11,868 Distinct Android devices seen this year
  • 3,997 Distinct Android devices seen last year 
  • 8 Android versions still in use
  • 37.9% Android users on Jelly Bean

“And by the way, this is the most ideal state of Android. It only includes a version of android which talk to the Google play store so it doesn’t include things like Kindles and Nooks.” ~ Tim Cook, WWDC (113:30)

android-fragmentation-3

Android, for all its popularity, remains a messy, fragmented, less-than-ideal experience for a normal consumer. ~ Jay Yarrow, Business Insider

Ah! And finally we get to the crux of the matter.

Fact #6: It is iOS 6 – not any single version of Android – that is the most dominant and monolithic mobile OS in the world.

“iOS 6 Dominance” is not an oxymoron – it’s a fact. And it is iOS 7 that promises to extend the dominance of Apple’s mobile platform into the foreseeable future.

It’s impossible to look at the landscape today and believe that developers will still be iPhone-focused in five years unless Apple does something drastic to change its competitive position. ~ Jay Yarrow, Business Insider

I sorta hafta to disagree. And reality hasta disagree too. It’s not only “possible” to believe that developers will still be iOS-focused (notice how Jay conveniently ignored iPod Touches and iPads in his OS comparison?), it’s probable too.

You don’t agree? You’re an oxymoron who says that only total OS numbers, not OS versions, really matter? Sorry, I can’t hear you. The facts are shouting you down.