Author: Tim Bajarin

For the first seven years of my life, I lived in the home of my German grandmother and two of her daughters who, along with my mother and father, guided me in this early stage of my childhood.

One of the reasons my two aunts lived with my grandmother was that she was totally blind and devoted almost three decades of their lives to caring for her. She developed an eye disease related to glaucoma in the early 1940s. So, when I was born, she had been blind for many years, and this was the only way I ever knew her.

Living with a blind grandmother has made me highly aware of the role the eye plays in our health, and every day, I am thankful for healthy eyesight. But if technologists have their way, the eye will soon become more than just a vehicle for delivering sight.

In April of 2016, Samsung received a patent for smart contact lenses with a built-in camera. Samsung began developing these smart contact lenses as a means to create a better-augmented reality experience and in the process, added the camera feature into its design.

As a diabetic, I have watched closely Google’s patent for smart contact lenses that in its first iteration, will serve as a way to check blood sugars for diabetics. Theraoptix is working on contact lenses for delivering eye medication for treatment of eye diseases.

But the one I am also watching very closely is the patent that Sony filed that includes a camera for taking pictures and video recording. Although Samsung has filed a similar patent, Sony’s experience in cameras and optical lenses and video recording could be the most important of the two.

A post by anohq.com shared more details on the Sony patent:

“Sony’s patent doesn’t mean we’ll be seeing them anytime soon. Nevertheless, Sony’s release of the lens will contain a picture-taking unit, a central controlling unit, the main unit along with an antenna, a storage area, and a piezoelectric sensor.

The last-mentioned unit above is responsible for monitoring the time on how long the eyelids have remained opened, and it will also detect the blink that was done to take a picture, as well as the blinks that were done subconsciously. This will allow the unit to distinguish between taking pictures and a normal blink.

As mentioned in Sony’s patent, the subconscious blink is between 0.2 to 0.4 seconds. Thus the patent states that if the blink exceeds more than 0.5 seconds, then it was done on purpose and will be considered an unusual blinking, therefore, gesturing the unit to capture the image. The antennae will supply the power to the lens wirelessly, source it from the smartphone, a smart tablet or a computer. The technology that was first discovered by Nicola Tesla will use either radio waves, electromagnetic induction or electromagnetic field resonance, and to top it off, the smart lens will sport an autofocus and zoom ability.

But before happy blinking customers can get their hands on this latest device, and for the intelligence agencies to ‘blink’ on everything in their sight, the technology is still to go through stringent tests. Then again, technology such as this is an interesting concept wrapped up in the scary, depending on how it will be used.”

Market Research Future has published a report called “Smart Contact Lenses Market, Forecast Up to 2023” that details much of what is going in the smart contact lenses world and its potential future.

There are two very interesting things tied to this concept of smart contact lenses worth mentioning. The first is the types of positive applications that it could deliver, such as its use to monitor blood sugars and to deliver eye medicine directly to an eye. And the convenience of being able to capture a picture or record a video at a moment’s notice without having to take out your smartphone or a dedicated camera to handle this task. One could see many positive applications for smart contact lenses, at least on the surface.

But the last line in this Anonhq piece is important. It say’s “Technology such as this is an interesting concept wrapped up in the scary, depending on how it will be used.”

It would be a great tool for the spy community but could be misused as well. China has surveillance cameras everywhere but imagine if every person who used smart lenses could be enticed to share any captured images or video with the government as part of their surveillance program. The surveillance angle alone makes this a scary technology. It could also be misused in other ways, so one ethical question those working on smart lenses needs to grapple with is not only the pro’s and cons but ways to make them un-intrusive, so they don’t violate anyone’s personal rights.

The eye does seem to be a new frontier for the tech industry to explore in terms of making the eye smarter. I personally wish they would invest in finding a cure to blindness, glaucoma and other eye diseases that impact a person’s sight and lifestyle, but making the eye smarter might contribute to finding these cures in the process. One can only hope this will be true!

As a technology analyst and consultant, I have had the chance of not only studying and chronicling the world of technology but, once in a while, I get involved in a consulting project that I feel could have a specific impact on the world of Tech.

One such project I was involved with was one of the first MP3 media players brought to market by Diamond Multimedia in 1988. I was brought into the project by a friend of mine who had moved from Apple to Diamond as he saw the idea of an MP3 player being the next big thing in portable music. This was a few years before Apple introduced the iPod. At the time, the leading mobile music player was the Sony Walkman. Also around that time, Napster came to market with its digital music ripping system, and my friend and his boss foresaw a need for a portable MP3 music player, so Diamond harnessed this idea and created RIO PMP300.

But the Recording Industry of America (RIAA) was not happy about this product.

Wikepdia has the details of RIAA’s response to the RIO PMP300:

“On October 8, 1998, the Recording Industry Association of America, filed suit and asked for a temporary restraining order to prevent the sale of the Rio player in the Central District Court of California, claiming the player violated the 1992 Audio Home Recording Act. See RIAA v. Diamond Multimedia.

Judge Andrea Collins issued the temporary order on October 16 but required the RIAA to post a $500,000 bond that would be used to compensate Diamond for damages incurred in the delay if Diamond eventually prevailed in court. Diamond then announced that it would temporarily delay shipment of the Rio.

On October 26, Judge Collins denied the RIAA’s application.[3] [4] On appeal, the Ninth Circuit held that the Rio’s space shifting was fair use and not a copyright infringement.[5]

After the lawsuit ended, Diamond sold 200,000 players.[6]”

The chart below illustrates the history of portable music from the days of the Walkman to today. Interestingly, it does not include battery-powered Boombox’s, which could also be portable, as well as portable radios that go back to the 1940s that teenager’s danced too well before the Sony Walkman came onto the scene.

Apple’s iPod was the real game-changer because it made it easy to get ripped songs onto a portable music device. That was one of the big flaws of Diamond’s RIO PMP300. Getting ripped songs onto it was very difficult. Apple created software that ran on the Mac that would allow you to copy your music from a CD easily and then transfer it to the iPod. This eventually led to Apple creating a dedicated music store for direct downloads and along with Apple supporting this process on a Windows PC too, the iPod took off and became the top portable digital music player for almost a decade.

With the iPhone, Apple created the next major portable music platform that has now eclipsed the need for a dedicated MP3 player and, along with streaming music services, smartphones have emerged as the go-to portable media player today.

In 1981, the music industry, via MTV, launched an important milestone for music performers. It helped birth what has become the music video and allowed music artists around the world to add video to enhance their music performances. Music videos are now part of the portable music scene since most smartphones support streaming video along with streaming music.

While the iPhone and smartphones, in general, are the current portable music player for most people, I believe that the next big evolutionary leap in delivering digital music will come in two important steps.

The first will be to deliver the actual music player in headphones and earbuds themselves. Today, people use Bluetooth radios to deliver music from a smartphone to headsets or earbuds. But I have recently seen some work in the labs around building the entire streaming wireless music delivery system into these headsets and earbuds as well. This would eliminate the need to carry a smartphone to get that music and only have to have the headset or earbuds.

We actually have had headsets with AM and FM radios in them for over three decades. And some headphones today can host an SD card with recorded music too. For example, Sony and others even have headphones with an MP3 player in them that has 4GB of storage, and you can download recorded music for mobile playback.

One can even deliver stored music via a smartwatch to wireless earbuds as Apple allows with the Apple Watch and the iPhone. But the idea of creating a smart earbud or headset with a cellular chip that can access streaming music and audiobooks on demand is an interesting next step in portable music delivery.

The second step will be to integrate music videos into the portable music experience beyond what you can get via a smartphone. That will come via AR and VR glasses or goggles.

If you have seen Apple’s AR examples of how a person could be inserted into a game, you get the idea of what is around the corner with music concerts and videos. The work that is going on with VR and AR could eventually allow a person to be virtually transported into a music performance to be able to be in the mosh pit at a concert or to dance with folks watching a band perform.

AR headsets could also enhance live music concerts. Imagine wearing a set of AR glasses at a concert and seeing the lyrics in front of you as the band performs. Or you could ask via the headset for information on the band performing as well as historical information about a song they may have on their setlist.

A recent article in Virtual Reality Pop shared a few examples of how AR and VR is being experimented within the music industry-

Videos and Live Performances
Not surprisingly, a large number of VR and AR startups are attempting to gain traction in the live music industry. Although I can’t touch on all of them in a single article, here’s a selection of the companies jumping into the video and live performance spheres.

Within has entered into a deal with Universal Music Group to develop VR and AR experiences for some of the artists on its roster. The Chemical Brothers and St Vincent were the first from UMG to work with Within, developing a creative and interactive music experience called Under Neon Lights.

MelodyVR is a London-based company focused on its goal of offering live streaming of concerts in Virtual Reality. Although its full vision has yet to come to fruition, the company has worked with more than 650 international artists, including Post Malone, Blake Shelton, The Who, Kiss, and The Chainsmokers to develop innovative uses of VR in a live music setting, with the hope that VR technology will soon be widely adopted by consumers.
Facebook, in conjunction with Oculus Go and Gear VR, launched Oculus Venues live events last year with an initial Vance Joy concert. Oculus Go is a relatively affordable VR headset at $199 in the U.S. and offers the convenience of not being tethered to a computer. Although it’s early in the game, the potential for this offering to gain significant traction among concert-goers is an exciting move in the direction of the mass adoption of VR and AR in the world of music.

I believe that the integration of a VR and AR experience through smart glasses and smart goggles is not only where we are headed but has the potential of creating a whole set of new experiences that makes music more personal and interactive. This appears to be the next big portable music platform, and it should be fun to watch it develop over the next few years.

I have been fascinated by the various doomsayers who were apoplectic about Apple’s Industrial design team now reporting to COO Jeff Williams and not directly to Apple CEO Tim Cook. They seem to think that great industrial design alone can keep Apple humming and growing.

About every five years, I write a column that attempts to explain how Apple developed its way of thinking and strategies. That last time I did a column like this was for Fortune Magazine in April of 2017, where I shared how one particular thing that helped me understand Apple’s Strategy.

If you have time, I encourage you to read this column as it lays out the key principles of Apple’s success. However, in this article, I did not have enough space to add another piece of the puzzle that makes Apple so successful, and that is it world-class manufacturing and operations.

In discussion with Steve Jobs before the iPhone came out, he told a group of us that one of the reasons Apple had been growing could be directly attributed to Tim Cook’s masterful revamping of their operations and manufacturing. He pointed out that designing the product was only half of the project’s success, and unless you could manufacture it cost-effectively, efficiently and in large quantities, it would never have a chance to succeed.

We now know that when Steve Jobs came back to Apple in 1997, he found that Apple’s manufacturing and operations were very poor and gave the task of updating this part of their business to Tim Cook. From 1997 to about 2010, Cook was the genius behind developing Apple’s world-class manufacturing lines and its overall operations that keeps Apple humming and products delivered on time.

Although Cook is now CEO, he is still a master of operations, and Jeff Williams reports directly to him now. Williams has been trained by Cook, and their manufacturing and operations under him is still a world-class program.

When I read that with Jony Ives leaving, and the Industrial Design team would now report to COO Jeff Williams, given what I know about how Apple Works, I saw this as a natural way to manage this transition. As Jobs suggested, the design is only half the equation for success and works if you can couple it to world-class manufacturing.

In Jean Louie Gassee’s popular Monday Note, he echos this idea that ID and operations go hand in hand and he puts this idea into perspective in this weeks post:

“A more serious concern among the commentators is Apple’s new org chart. With Ive’s departure, Apple Design no longer reports to the CEO, but to the COO of Operations. As voiced by John Gruber in his eminently readable Daring Fireball blog:

“…when Jobs was at the helm, all design decisions were going through someone with great taste. Not perfect taste, but great taste. But the other part of what made Jobs such a great leader is that he could recognize bad decisions, sooner rather than later, and get them fixed.”
Gruber is hardly a doomsayer; he offers that Ive’s departure “may be good news” for Apple. Others, who are less sanguine about the re-org, foresee the Dark Ages:

“The design team is made up of the most creative people, but now there is an operations barrier that wasn’t there before,” one former Apple executive said. “People are scared to be innovative.”

This is silly, and belies a misunderstanding. There’s a difference between the traditional, personal, “artistic” design (and taste) that presides over the composition of, say, a 15th century Botticelli painting, and the Industrial Design (ID) that’s practiced today by any successful hardware company.

Industrial Design goes beyond the fit between form and function that we think of as good design, ID makes sure the product — cars, typewriters, iPhones — can be manufactured in large quantities, meeting cost and reliability targets.

Ive is a living representative of the relatively new lineage of industrial designers, of artists and engineers who understand that to design a product means taking care of the Look and Feel and the operational factors that are required to deliver their wares in extremely large quantities, on time, while meeting cost and reliability targets.”

As Gasee points out, great industrial design goes hand in hand with world-class manufacturing. In this case, putting the industrial design team under COO Jeff Williams not only makes sense but will be critical for Apple to continue to develop great products and make them in the kind of quality and quantities that their customers demand. That is why putting this team under Williams, and not Cook is so important for Apple’s future. Apple’s leadership knows why the two disciplines need to be coupled together and united in their approach to designing and making Apple hardware-based products.

This week’s ThinkTank piece is a bit personal. It is about the role the Apple Watch has played in my health. In my case, it has become a critical monitor that helps me track my blood sugars in real time and gives me an essential tool in my quest to control my diabetes.

I use the Dexcom G 6 Continuous Blood Glucose Monitor that has a sensor that I wear that records my blood sugar readings all day long. It sends those readings via Bluetooth to the Dexcom iPhone app and then sends that reading to my Apple Watch. For 20+ years, I have had to prick my fingers up to four times a day to get blood sugar readings in order to determine my blood sugars and the amount of insulin I take. Now, I just look at my Apple watch to see what my blood sugar reading is on one of its screen complications. That means that I no longer prick my finger and now see my blood sugar readings on the Apple Watch on demand. That alone makes the Apple Watch one of the most important pieces of technology I own.

But an incident that happened recently has made the Apple Watch with its ECG monitoring and constant recording of my heartbeat also very valuable. About a month ago, I had an incident where I could feel my heart beat very fast. My normal heart rate is about 52. But in an instant, it jumped to 140 while sitting still. I could feel the heart beating faster, but Apple Watch showed me the graph of what was going on. For a period of about an hour, my heart rate stayed between 120-140 and charted the spikes in real time.

At the 140 beats per minute peak, I took an ECG reading on the Apple Watch and got an AFIB warning. While it did not confirm AFIB, it did suggest I immediately talk to my doctor and show him this reading. After an hour, the heart rate went back to 52 and has stayed there ever since.

But in looking at the heartbeat graphs, I discovered something that I had not seen before. Even though my average heart rate stays around 50-55, I could see spikes continuously where the heart rate jumped from 52 to about 65-75 often during any minute, and it was monitoring my heartbeat. This caused me real concern as I was not aware that I even had an irregular heartbeat.

I should also note that I had a triple bypass in 2012, so I am a very conscience in any changes in my heart health. Given my past heart health history and these new heart rate events, I made an appointment with my cardiologist to get some tests done to see what was going on.

BTW, after the heart rate jumped up considerably, it has not happened again. I also have taken an ECG reading on the Apple Watch bi-weekly, and it comes back normal, so my concern about AFIB had done down, but I still felt that I needed to be checked out by my cardiologist.

What is important for me and many others is that the Apple Watch has the ability to not only track health activities, but can also monitor health issues like heart health and diabetes. It gives users information about those conditions, and if there is something outside of a normal range and needs to be checked, it prompts a person to see their doctor.

Apple knew what they were doing when the created the Apple Watch and clearly decided to focus on health as a primary reason for it to exist. Yes, it can do much more, but its ability to help keep one healthy as well as alert you to health abnormalities, can’t be underestimated.

I did see my Dr and had multiple tests. The good news is that I do not have AFIB. However, the tests showed that I had palpitations, irregular heartbeat, and minor Tachycardia, which is related to the electric signals of the upper chamber of the heart. At the moment, these issues are all very mild and did not need anything major such as pacemakers, electric shock to get my heart rhythms in sync, or some other treatments that could have been invasive.

Instead, I have to watch my diet closely and increase my exercise, or these conditions could become worse over time if I don’t take care of my heart health. Because I have not had any additional high heart rates, my inclination was to pass it off as an anomaly. But the consistent monitoring of my heart beats by the app in the Apple watch pushed me to the Doctor to get it checked out.

Often we hear stories of how the Apple Watch or even some other fitness trackers have helped save lives. While we know these were shared by real people, they are mostly faceless individuals who we are glad for, but we do not have any personal connection to them.
If you have read my columns here and/or followed me as many of you have throughout my 38 careers in the industry, I hope that this story resonates with you. A product like an Apple Watch for me has become a lifesaver in its own right. That is why I am glad Apple created this important health monitoring technology that happens to be in a watch form that has great design and many health-related functions.

I began covering the PC industry in 1981 and was one of the first professional analysts to study and chronicle the PC market. Over 38 years, the PC industry has produced close to $3 trillion in revenue and created a lot of wealth and jobs for people who create PC’s, PC software, and services that support them.

Today, the majority of personal computers sold are laptops and notebooks. While desktop computers are still made, they represent only about 20% of all PC’s shipped today. The real PC workhorses that fuel a much more mobile business lifestyle are notebooks and laptops that drive today’s productivity, education, entertainment, and social media applications.

I have watched the evolution of the laptop very closely over these 38 years. In fact, I was at CEBIT in 1985 when Toshiba introduced the first ever clamshell laptop, a design that the PC Industry embraced and has popularized for over three decades.
What is ironic about the clamshell design is that until 2012, there was very little innovation in terms of design changes to that form factor.

The first break with traditional clamshells came in 2012 with the introduction of what Intel called “2 in 1’s.” These were fundamentally a tablet with a detachable keyboard. Wired called them “lapelets” at the time, and some called them “hybrids.”

Being able to break the stronghold of the clamshell design was partly due to Microsoft’s newest OS that added a pen and touch support and other features that came out to support their first Surface hybrids in this same year.

One could argue that Apple forced this design revolution with the introduction of the iPad in 2010, that also included a detachable keyboard and a touch UI, but its focus was on being a tablet, not a laptop replacement like the 2 in 1’s were from the beginning.

Since the 2 in 1’s emerged, there has been a lot of experimentation in the area of portable computing. We have seen dozens of hybrids and 2 in 1’s in many form factors and designs. Laptops have also become thinner and lighter. However, these types of mobile computers have not really caught on. They represent no more 10-15% of all laptops and notebooks sold today.

If you take a historical look at the trends in portable computers, from 1985 to 2012 would be called the clamshell era. From 2012-2020, could be seen as the hybrid era. Now, as we are about to enter a new decade, we are about to see what one might call a “flexible Era” of mobile computing as the advances in technology components are accelerating. Over the next decade, mobile computer makers will have a host of new technologies to work with, from new battery chemistry that could power a laptop for a week, to new low voltage semiconductors that have enough power to deliver 3D holographic images to mobile screens. Portable computers will handle AR and VR user interfaces and applications and, work with glasses that could transform the mobile computing experience altogether.

And over the next three years, we should see a perfecting of foldable screens that could be used in laptops as well as smartphones.
In early example of a foldable laptop was introduced by Lenovo a few weeks back. Tentatively named the ThinkPad X1 Foldable, it sports a 13 “ screen that folds in half.

Lenovo showed this to me recently, and I got to test it out, and while it is still a prototype, it is well designed, and they solved one of the biggest problems with any foldable devices. They have developed patented hinges that move with the fold and makes it possible for the screen seems to stay in place no matter how many times you fold it during its life. The quality of this device is excellent since it was designed by Lenovo’s Yamato team that created the ThinkPad line of laptops.

There is no date for its release yet, and most other laptop vendors are working on similar models that could debut at CES in January.

While the folding screens themselves are still a work in progress and may take a few years to perfect its manufacturing process, Lenovo has given us a glimpse of the future of portable computing and which, along with the new advances in technology mentioned above, could make the next decade the flexible era of portable computing.

Various reports surfaced last week that stated Apple was looking to acquire a robo-taxi startup called Drive.ai. Drive.ai is developing a self-driving shuttle service and has raised $77 million thus far.

While Apple has not confirmed this acquisition, purchasing a company like this, that has technology patents, and a team of engineers just focused on self-driving cars, would be a very interesting move by them. They recently laid off 200 from their Project Titan autonomous driving group and adding this type of engineering talent to bolster this project could be highly strategic for them as they continue to research what Apple could eventually bring to this very nascent market.

While we still really have no clue what the end goal of Project Titan is actually about, but an acquisition of a company that was working on a shuttle service could give us a hint.

In the world of autonomous driving, there are five levels of autonomy:

Over the last year, I have had high-level discussions with folks at Ford and GM, and both have told me that they believe it will be well into the mid-2020s before they would sell self-driving autos to customers. Even that date may be a stretch given people having decades of being in complete control of their vehicles and being willing to trust technology to take over their driving experience completely.

Ford and GM will start by adding level 1 level 2 features to their autos over the next two-three years, which are good first steps towards fully automated driving. From a technology standpoint, Tesla, Waymo and some automakers believe they can deliver fully automated vehicles by 2021, but convincing the public to adopt self-driving cars for themselves will take a lot longer.

In talks with the Ford and GM, both have suggested that the first market they see developing for self-driving cars will be in the area of level 5 taxi or shuttle type services. Although there are still much to be done to perfect level 5 vehicles, many who are working in this area think that this will be the way the public is introduced to autonomous driving and will be an important step that needs to be taken before they sell level 5 cars to the public.

The basic idea behind this would be to deliver an Uber or Lyft like service where a self-driving car will come to your location on demand and take you to your destination. Uber and Lyft are already preparing for this type of service in the future. The auto dealers see this as a good opportunity to create a totally new business that would augment their current gas and hybrid business that they expect to have for at least another 15 years if not more. This would also help them develop the acceptance of self-driving vehicles and brand loyalty for the time when they can sell self-driving cars to customers directly. It can also serve as an important new business model for them should many of their customers decide not to buy any vehicle in the future and just rely on automated vehicles to provide on-demand shuttle and taxi services.

I was told by a source close to the auto industry that we could see the automakers start buying property in different parts of any region in the US and around the world in which they could keep these cars parked, and have large charging stations to keep them powered. They would then be able to provide an on-call taxi or shuttle service to people who need to get from point A to Point B.

Apple’s potential acquisition of Drive.ai likely acknowledges the fact that self -driving shuttle and taxi services could be the first major step in bringing automated vehicles to the public.

I am not convinced at this time that Apple is doing their own self-driving vehicles, and instead of developing technologies that could be crucial for automakers and others to use in their own programs.

Given Apple’s business model, an automated vehicle will most likely be another node to deliver Apple apps and services. Yes, they could provide fundamental technology like maps, AI-based navigation, AI-based cameras, and specialty sensors needed for level 5 driving automation.

But imagine if you get into a Robo-Taxi and can personalize and customize the audio, video and Communications experience for your drive. If people are not driving, they will want something to do during the drive time.

In fact, if Apple is involved with the fundamental design of these level 5 cars, they could build in Wifi and Bluetooth systems and have video screens in each seat. When a person gets into an Apple equipped car, it automatically connects to an iPhone and makes it possible to view TV shows, movies, listen to your music and make video calls. One of the virtues of a self-driving car is that you are not driving it. Given you have downtime, you could fill it with Apple based services that make Apple even more valuable to you.

I find project Titan to be one of Apple’s more fascinating research projects and buying a company focused on shuttle or taxi services could make a lot of sense for Apple should they want to play in the autonomous vehicle’s future.

I have been talking to an executive in China who tracks the supply chain. I asked for his views on Apple’s manufacturing exposure during the trade wars and whether China is reluctant to place any significant tariffs or restrictions on Apple.

Most people don’t know that Apple, through their multiple Chinese factories, have over 1 million Chinese workers making their products. This is an important fact. This executive told me that China knows it has to tread lightly when it comes to Apple. As I pointed out in last week’s Think.Tank column, most PC and Smartphone vendors are already looking to move at least US bound products to manufacturing centers outside of China as soon as they can.

Most of the PC vendors are moving in this direction. However, we have heard very little about whether Apple plans to move some manufacturing out of China or if they feel somewhat protected given the large amount of Chinese workers Apple employs. The US also has to be careful with Apple as its products are still in high demand world wide and Apple employs 304K around the world and 47K in the US.

China is about to release a list of US companies that Chinese companies cannot do business with but Apple will not be on that list. For both China and the US, Apple is highly strategic to their economies. This should protect them at this time. Even Apple’s biggest competitor in China is against any moves that would hobble Apple in any way in China. Huawei CEO, Ren Zhengfei said of the call to ban Apple, “That will not happen, first of all. And second of all, if that happens, I’ll be the first to protest.”

However, the executive I spoke with, who lives in China, says that even though Apple’s products are still viewed as the best in the market, there is real backlash coming from some Chinese consumers who are being pressured to only buy Chinese made products. Even worse is a trend being seen from some who have Apple iPhones and Apple Watches who are being shamed by friends who feel China is being persecuted by the US tariffs and make them feel “embarrassed” for owning an Apple product.

Ironically, these “ shamer’s” are pushing people to buy Huawei’s smartphones instead and last week, there were reported cases that Huawei phones are dying by the scores in Hong Kong and throughout China.

At the moment, I see a consumer backlash as the biggest threat to Apple in China Unfortunately for Apple, this is totally out of their control. While I do see some protection from them on the tariff side from China and the US, the anti-Apple movement could pick up steam and impact their sales in China.

Let’s hope that will not happen but it is something that Apple may need to attack with a marking program in China if this shaming push gains more traction.

Early last week, we got a look at the proposed level 4 tariffs that Trump and the US government could place on thousands of products, including PC’s, laptops, notebooks and some smartphones manufactured in China.

Most PC and device makers had thought we would never get to level 4 tariffs, but the trade war with China is intensifying. Tim Cook and other tech execs have been lobbying President Trump for over a year and explained to him how tariffs on PC, CE and Smartphones could impact their companies and industries.

However, Trump and his advisors seem to be willing to apply these new round of tariffs regardless of their impact on major tech companies and consumers. They have not heeded the requests of the tech CEO’s who have told them that it would raise prices on their products and in turn, impact consumer buying and hurt their bottom lines. Unless there is a last minute change in the trade war talks, the level 4 tariffs could go into effect later this summer.

These tariffs leave all of the PC vendors scrambling to try and find a way to avoid these tariffs if at all possible. Unfortunately, since most did not believe we would get to this place, moving to manufacture out of China fast is a real challenge.

In talking to ODM’s and OEM’s, it appears that a manufacturing strategy is emerging that could help in the short term and, over time, allow them to move a lot of their manufacturing out of China. A few OEM’s were proactive and have already worked with their OEM’s to move at least part of their products to countries like Viet Nam, Indonesia, Malaysia, India, and even Mexico.

The problem is that most of the ODM’s shuttered their factories in many of these countries when they moved a majority of their manufacturing to China. Now they too are scrambling to try and get their factories in these countries back online to handle some of the production of products targeted for the US market.

Indeed, this is the first step for most of the OEM’s to deal with these potential upcoming tariffs. Many PC companies are either trying to move actual manufacturing of US-bound laptops and notebooks to countries outside of China or at the very least, do final assembly in these countries, which would allow them to ship from there and avoid the Tariffs placed on products manufactured out of China.

A move to manufacture products outside of China will be a slow and challenging process, but from talking with OEM’s, they no longer believe they have a choice. Even if the level 4 tariffs can be avoided, they do not trust this or even future government’s in dealing with China trade issues and now believe that regardless of the outcome of the trade wars, they most likely can’t trust that putting all of their manufacturing eggs in a China basket is feasible.

The initial strategy to move US-bound products to manufacturing plants outside of China is an essential start to this transition. But this will take time, and some products may still be subject to these tariffs throughout this year as moving to manufacture out of China really can’t accelerate until the second quarter of 2020, according to my sources in Taiwan.

Moving even some manufacturing out of China could have dire consequences for China, though. A key to China’s current economic boom is that about 12 years ago they began a major program to bring young people from their agricultural work roots and recruit them to work in the growing number of factories springing up in dedicated commercial zones.
Millions of youth were recruited out of what would be called poverty level farming and given a chance to work in factories. While on the farm, these youth earned about $10 a week. But in their new factory jobs, they started with salaries of about $100 a week. Making ten times more they made in the fields was transformational for most of these young people, and they helped China become the manufacturing powerhouse they are today.

However, if China’s loses even 10% of the PC, Notebook, printer and smartphone manufacturing to other countries around the world, my Chinese sources tell me it would mean a loss of at least 200,000 jobs and could even shutter some of the smaller factories in China today. This move is bound to impact China’s future growth and impact their GDP.

The trade war ramifications for the tech industry is just starting to hit home and will be forcing PC, Smartphone and many CE vendors to make some radical moves in terms of manufacturing choices throughout 2019 and 2020. There will be a real pain for them and consumers as this move out of China moves forward, and it will impact thousands of jobs in China too.

Over the years, I have had the privilege of being invited to speak to grad students at many of the leading universities in the US and UK. As a technology historian and industry analyst, who has written much about Silicon Valley and tracked its success and failures since 1981, I am asked to talk to students about the role Silicon Valley has played in the tech revolution and trends that may impact their job futures.

Last week, I was invited to speak to graduate students at a private symposium in one of our southern states. I shared some of the histories of Silicon Valley and discussed significant trends in AI, VR, AR, and automated vehicles. I enjoy talking to students who are close to going into the world and carving a career in many fields.

The last time I did this was with a grad program at a Southern California University and these students were very interested in Silicon Valley and the potential jobs they could get in the tech hub of the US. That was about 18 months ago.

This time, when I spoke to these students about Silicon Valley, their view of our region was very negative. While they had a high interest in AI, AR, VR, and automated vehicles, they were less interested in working in Silicon Valley. This view surprised me. In all of my meeting with students in the past, Silicon Valley was high on their list to come to and work with companies like Google, Facebook, Apple, HP, Intel, and many Valley companies that are driving technology forward.

Not this time. Some students were blunt with their views. A few students saw Silicon Valley as evil, citing Facebook, Twitter, and Google, explicitly saying they see them invading peoples privacy and making the world a less safe place. One person wondered how I could still support Silicon Valley, given its potential for upsetting democracy around the world. Their views were mostly generalizations from what they have read. No doubt, some of them have been impacted by fake news and Facebook and Twitters positive and negative impact on their social lives.

Many had been reading about Silicon Valley’s high housing prices, traffic congestion and, San Fransisco and the Bay Areas serious homeless problems. While they did ask me about starting salaries with these big tech companies and knew that some of them paid just-out-of-college graduates good money, they still felt it was too expensive even to consider a job in Silicon Valley. But quite a few said their negative view of Silicon Valley is what would drive them to other companies outside of our region.

After I left this symposium, I wondered if this was perhaps a midwest or southern US view. But I posted the comments from some of the students on my Facebook page and got a lot of feedback that said this slightly cynical view of Silicon Valley is very similar with students on the east coast and some west coast colleges too.

Given these grad students views of Silicon Valley, we might be seeing a real problem developing in attracting top talent to Silicon Valley now, and in the future. The local newspapers have been doing stories on the high cost of living in the Bay Area and how it has driven many people from our region to other areas of the country with lower housing prices and living costs are less. The median price of a house is about $1.3 million in San Jose alone.

At the moment, there seems to be no relief to this high cost of living in Silicon Valley. Many companies in the Valley are leading the charge in AI, AR, VR, automated vehicles, biotechnology, security, etc. and some can’t find enough workers to help them expand these programs.
Add to this the negative view some graduates have on Silicon Valley, and you can see that attracting new young talent to Bay Area companies may be a bigger problem than some have suggested.

I spoke with an HR professional in the Valley, and this person said they are not having any problem getting interns. However, they admitted that keeping them, given the cost of living here, is becoming a bigger problem. When I asked about students views of Silicon Valley, this HR pro confirmed that our image had taken a hit, and some students have become very picky about which company they intern at this year.

I do not know, without more research, how clear this negative view is throughout the college student population. However, the cost of living will be a real problem even if they do want to work at a Silicon Valley company. The combination of these two factors does not bode well for the Valley possibly landing top graduate talent either in the short or long term.

If you have been to China in the last few years, you know that surveillance cameras are everywhere. On street corners, in train stations, parking lots, and every place people congregate in one form or another, including restaurants, hotel lobbies, etc. I was pretty sure that there was some camera in my room the last time I was Beijing too, but could never actually find it.

China’s surveillance society is heavy-handed and driven by the government, and the people have little say on how the Chinese officials use cameras and face Recognition to achieve a plethora of goals. A recent Fortune article explained how AI based face recognition was used to shame jaywalkers on the streets of Shenzhen and explained one of these goals in this story-

For China’s government, that means not only being able to identify any of its 1.4 billion citizens within a matter of seconds but also having the ability to record an individual’s behavior to predict who might become a threat—a real-world version of the “precrime” in Philip K. Dick’s Minority Report.

A NY Times article from April 14, 2019, , shows another example of how China is using AI and face Recognition to profile and track members of a large Muslim minority:

“The facial recognition technology, which is integrated into China’s rapidly expanding networks of surveillance cameras, looks exclusively for Uighurs based on their appearance and keeps records of their comings and goings for search and review. The practice makes China a pioneer in applying next-generation technology to watch its people, potentially ushering in a new era of automated racism.
The technology and its use to keep tabs on China’s 11 million Uighurs were described by five people with direct knowledge of the systems, who requested anonymity because they feared retribution. The New York Times also reviewed databases used by the police, government procurement documents, and advertising materials distributed by the A.I. companies that make the systems.”

At the moment in the US, surveillance cameras are in many public places like stores, college campuses, and even on street corners. However, most are used without face recognition behind them and for things like identifying shoplifting, monitoring school campuses and at intersections to catch cars breaking the speed limit. San Francisco, one of the most liberal cities in the US, voted this week to ban face recognition in city surveillance cameras, which could set a precedent for many other cities in the US to follow suit.

In a recent study by datainnovation.org, they surveyed American citizens about their views on face recognition, and the results are mixed, as seen in the three charts below.

Reading these charts makes it clear that people consider their personal safety first, and privacy second in most cases.

ITF’s Vice President, David Castro, has an interesting perspective on the San Francisco Board of Supervisors banning face recognition in the City By The Bay:

“Police can use facial Recognition to efficiently and effectively identify suspects, find missing children or lost seniors, and secure access to government buildings. Police already perform these tasks manually and at great expense. But facial recognition technology makes it possible to do the same tasks faster and more accurately.

Critics are worried that the U.S. government will use facial Recognition for mass surveillance, as the Chinese government is doing. But this comparison is flawed, as the United States has strong Constitutional protections. In reality, San Francisco is more at risk of becoming Cuba than China—a ban on facial Recognition will make it frozen in time with outdated technology.

There are plenty of legitimate concerns about government surveillance, but the right approach is to implement safeguards on the use of the technology rather than prohibitions. Good oversight and proper guidance can ensure that police and other government agencies use facial Recognition appropriately. For example, police can set limits on when facial Recognition can be used, such as disallowing it to arrest someone without additional evidence. Cities can require that government agencies only use facial recognition systems that meet certain performance requirements. And states can set requirements on the conditions under which they grant law enforcement access to government databases, such as those of mug shots and driver’s license photos.

Ironically, a ban on facial Recognition is a step backward for privacy. Rather than having individuals monitor surveillance cameras, facial recognition technology would use unmanned cameras; the only time anyone would view a recording would be if there was an alert, such as in the case of an active shooter or terrorist attack. Focusing on technology bans misses opportunities to make communities safer and increase privacy.”

Mr. Castros views are valid, but the concern continues to be that facial Recognition could be used in ways that impact personal privacy. As of now, the types of safeguards are not in place to guarantee face recognition not only stay in the right hands but, is not abused, even when it is legal.

These survey results take the current temperature of the American public and are bound to change if face recognition gets abused. Face Recognition will remain controversial for a long time, but, if used properly, it can be an important tool for public safety. However, if abused, it could have dire consequences for our freedom and the well-being of America and the world.

Some years ago, when I was overseeing a major customer conference for a client, I had the chance to do a fireside chat with Masayoshi Son, Founder, and CEO of Softbank. He had just purchased Comdex and was beginning to look closer at US companies to expand his business reach.

One of the things he told our audience is that he had a vision for his company and that his vision spanned a 300-year time frame. He had spoken to select media about his 300-year company vision before my interview with him and had already been ridiculed in the media for what was called an “outlandish idea” considering his visionary time span. US businesses have trouble envisioning a three year or five -year plan, let alone crafting a vision for hundreds of years into the future. In fact, the Western Mind has difficulty with envisioning the future and leaves that to science fiction writers instead.

I have been having discussions with people I know who understand the eastern mind and are especially experts on China. They point out that 50-100+ year plans are not unusual for many Asian political leaders, who have grand visions for their countries and start developing very long-range plans as soon as they take office.

One of my China Sources tells me that China’s Belt and Road initiative is a good example of this long-term global planning and explains their strategy to become an economic superpower to rival the US.

Here is how The Center for Strategic Studies explains this important program backed by Chinese President Xi Jinping:

“Chinese President Xi Jinping hosted the leaders of 28 countries and representatives from several other countries at the Belt and Road Forum in Beijing on May 14-15, 2017. Announced in 2013, the Belt and Road Initiative (also known as One Belt, One Road or OBOR) aims to strengthen China’s connectivity with the world. It combines new and old projects, covers an expansive geographic scope, and includes efforts to strengthen hard infrastructure, soft infrastructure, and cultural ties. At present, the plan extends to 65 countries with a combined Gross Domestic Product of $23 trillion and includes some 4.4 billion people.

I encourage you to read this synopsis as it lays out the idea that China wants to be the center of the trading and commerce universe and by building the types of roads and shipping ports linked to these 65 countries, an All Roads lead to China concept and strategy is taking shape. President Xi is driving this program, and along with his One China Policy, and his most recent promotion to the president for life, he is guaranteed that he will be its leader and director for years ahead in trying to make China the dominant economic world power again. And you can bet he is already grooming his successor whose goal will be to continue driving what at least a 100-year strategy is. Chinese insiders believe Chen Minor could be Xi’s successor to carry on this vision when Xi no longer can lead the party.

Xi Jinping Has Quietly Chosen His Own Successor

Another area China wants to dominate is tech and more specifically, Artificial Intelligence. The book that lays this strategy out clearly is Kai Fu Lee’s “AI Super Powers-China, Silicon Valley and the New World Order.”

This is a fascinating read by one of the smartest people I know in tech and who understands Chinese World domination strategy well. As he points out, China is devoting billions of dollars, and thousands of engineers working full time on AI breakthrough technologies and fully expects to be the dominant player in AI even though the US, at least at the moment, is ahead of them in AI research.

China also wants to be a tech powerhouse like the US. When I am in meetings in China, I am always surprised to find how many people in these meetings have doctorates in one of the many computing and engineering fields. Their education system favors math and the sciences and is building a workforce that is highly tech literate. Part of their 100-year goal is to create a tech-driven country that can use tech to advance China’s goals and to minimize their reliance on the US created technology.

While China is methodically plotting to be the economic power of the rest of this century, US companies still mostly plan quarter by quarter. And when laying out future strategies, they are hard-pressed to envision any long-term vision and company directions more than 10 years out.

At the same time, our government is in turmoil with infighting at every branch of government and at best, at any given time, they are laying out a US vision for the future based on presidential four-year terms. Even if a leader has a long-term vision for the country, getting that vision funded and passed by a split congress is difficult if not impossible in the Washington climate of constant bickering and partisan stonewalling.

It’s no wonder that China and Russia continue to try and hack our elections and use social media to sow discontent within every level of politics. By also taking aim at every US citizen, they assure that the US is mostly treading water when it comes to driving a unified long-term vision for America. And it will take a unified America to combat the world dominating economic threat China will pose in the future.

China’s main quest will be in Asia, while Russia has a similar quest for Europe. Next week I will share thoughts gleaned from Russian experts I have talked to about Putin’s similar vision for Europe and how China in the East and Russia/Europe in the west could isolate the US and minimize its economic power in the future.

I have been a subscriber to Texture, the magazine subscription service that Apple bought in early 2018. This service has close to 300 magazines and, in my case, I subscribe to about 35. I subscribe to all of their food, tech, news and sports magazines and the two diabetic publications they have in Texture. If I had to pay for all of these on an annual basis, it would cost me over $600. Instead, I pay $120 annually. Of course, I don’t read all of them each month, but I get through as many of them as I can in my free time.

As Texture evolved, it added special sections where it curated top news and features extracted from many of the publications, and I could tailor these to my own personal preferences. This made keeping up with the most important stories published each month possible. I also liked the layout and format of the IOS Texture app, which sadly, will be shut down completely on May 28, 2019.

The reason this app is being shut down is that it has been integrated into the News+ app and is now a key feature of the Apple News service subscription. Since I am a big reader of magazines, subscribing to Apple News+ is a no brainer for me since it is the same price I pay for Texture but now get Apple’s curated News Service too.

However, I am in the minority when it comes to being a serious magazine reader. According to Forbes, “The newsstand’s decline is epic. Magazine circulation on the newsstand peaked in 2007, with a sales volume of $4.9 billion total. That number fell to an estimated $2.0 billion in 2017, according to the News Group, one of just two remaining magazine wholesalers.

The good news is that digital magazine readership is showing signs of some stability. These trends surely are part of Apple’s decision to back Digital magazines in their News+ service.

As for the state of Digital news, Journalism.org weighed in on this topic last summer:

“Gauging digital audience for the entire newspaper industry is difficult since many daily newspapers do not receive enough traffic to their websites to be measured by comScore, the data source relied on here. In the fourth quarter of 2017, there was an average of 11.5 million monthly unique visitors (across all devices) for these top 50 newspapers. This is nearly the same as in 2016 (11.7 million), making this the first year since we began tracking the trend that did not show a double-digit rise in web traffic: There was, for example, a 21% increase from 2015 to 2016 and an 18% rise from 2014 to 2015.”

While the numbers of news readers were flat, it did not see a decline. And Apple hopes that their News+ service can help this number of readers for newspapers and news sites rise in the future.

MediaWeek reported recently on what type of devices are used to access digital news, and not surprisingly, mobile devices were used often as digital readers:

“Eight in ten of the 13.2 million digital news media readers use mobile for general internet access and while this number is still surpassed by computers and laptops at 83%, mobiles will grow faster. Tablets are used by 46% of digital news media readers for internet access, and readers use an average of 2.4 devices to access the web.”

But the pitfall for Apple comes in the competition for new subscriptions that are already eating into people’s budgets. Our latest services research among US consumers shows that video subscriptions represent the highest number of paying subscribers. Music services represent the second highest as a whole, while News is only 7%. See chart below:

Subscriptions are a tough business, and consumers generally have a lot of them already. People also have to pay at least $75 for their monthly cell phone bills as well. So a news and magazine subscription on top of that could be hard for a lot of people and families to pay for and most likely not seen as a must-have as much as video, music and cell phones are to them.

In other data I’ve seen, looking at subscription intent, 63% of consumers are not considering a news subscription of any kind. That is a significant headwind for Apple News+ or any combined news service aiming at a US audience.

In my case, I pay $10 for Apple Music, $10 for Apple News+ and I also have Apple’s 2-gigabyte storage plan, which also costs $10. So each month I am already paying Apple $30. Add Apple’s new movie/TV subscription, and at the very least I would be paying Apple $40+ a month. I also pay for Netflix and Hulu.

In a recent twitter comment, Ben Bajarin suggested that Apple might end up doing some bundled subscription of Apple Music, Apple News+ and Apple TV+ for a reduced fee. I don’t know if this is true or if it will happen, but I think the idea of paying Apple perhaps $30 a month on top of their Netflix subscription, cable and cellphone bills may a bit hard to swallow for American families whose budgets are already stretched.

Apple recently introduced Apple TV+, which is more likely to be of greater interest to family’s if they are to add another subscription service from Apple. Although I am personally bullish on Apple News +, this is the one new subscription service from Apple that represents the greatest challenge for success, even though I believe it is one of Apple’s most important service offerings in their pipeline.

One of the digital markets that continues to surprise me is how large the gaming market is and its growth potential.

I am personally not a gamer for two reasons. In my 20’s, I was very competitive in traditional board and card games. When I say I was competitive, that is perhaps an understatement. There was one particular game I played with some new people while I was working in the St Louis area in which my own competitive streak was so off base that it actually scared me and I backed off from playing competitive games for a long time.

The other issue is that with digital games, I can get so immersed in them and waste some much of my time while I could be doing other valuable things. I do not want to find myself sidetracked by falling into a gaming trap that I know would consume me.

But I clearly am the odd-man-out when it comes to gaming. According to Games Industry Biz “The video games industry is on course to generate just shy of $135 billion in 2018. That’s according to research by market analysts Newzoo and shared with GamesIndustry.biz for the 2018 edition of our Year In Numbers infographic. The $134.9 billion market value marks a 10.9% increase over 2017.

As expected, mobile accounts for the bulk of the industry’s revenue — 47% of it, in fact, at $63.2 billion (up 12.8% year-on-year). Smartphones led the way here with revenues of $50 billion (up 14.2%), while tablets accounted for $11.4bn (up 7.8%).”

I found this stat that came as a real surprise to me. In years, past, Wimbledon had the largest sports prize cup at $2.98 million. Now, Fortnite’s World Cup prize is $3 million.

If you look at just eSports revenue alone, it is set to be a $1.096 billion market this year. But the cloud gaming market is set to explode and Google, Apple. Microsoft and more recently Snapchat, see cloud gaming as a major growth market and one that could help drive new services revenue to their bottom lines.

The chart below gives you an indication of just how big the cloud gaming market will be over the next four to five years.

When you look at the potential growth of cloud gaming, it is no wonder that Google, Apple, Microsoft and SnapChat and many others are jumping into this market and getting ready to be aggressive in launching their own gaming services.

How these companies manage their new gaming services will determine how much revenue it delivers to their bottom line. But the potential is big for these companies who already have millions of customers they can market too and make it a big part of their service offerings.

I have always been fascinated by Steve Jobs’ extreme interest in Sony and Disney. One of the first times I talked to Jobs in the early 1980s, he told me of his interest in Sony’s business as well as how Disney emphasized art and technology to build their company. We know that Jobs was especially interested in how Sony’s co-founder and CEO at the time, Akio Morita, thought about technology and software. With Disney, he admired their integration of art, entertainment and the role technology played in building Disney’s brand and business.

As I look at Apple’s current strategy, I see Sony and Disney’s influence still on Apple today.

I had the privilege of interviewing Akio Morita a few months before he left the role of CEO of Sony and retired. At the time, he had just acquired Guber-Peters Entertainment and Columbia Pictures Entertainment in 1989. Up until that time, Sony was known mainly as a hardware company. So I asked him why he bought a television and movie studio. He told me that “movies are just software.” By that time he had already acquired CBS Records Group, and he clearly had a vision that encompassed the role music, TV and movies would have on his hardware business.

He already had the Sony Walkman on the market and most likely had a vision of some type of handheld video player in mind with these newer acquisitions.

I believe that Jobs’ interest in Sony carried over to when he returned to Apple and he went to school on Morita’s vision when he introduced the iPod and eventually iTunes. Although Morita and Sony never put a service program in place, Jobs took their underlining hardware and software ideas and created the service layer of iTunes to round out Apple’s first integrated program of hardware, software, and services.

Jobs also deeply admired Walt Disney. He looked closely at Disney’s integration of art, entertainment and technology and, more importantly, the character of Walt Disney himself. Disney’s character drove him to focus on the family, and he determined to bring his customers a world and environment that was relatively protected from content that would not be family friendly. Consequently, Disney is considered one of the safest and family-friendly companies in the world and their theme parks, movies, and TV shows constantly reflect this theme.

Over the years, Apple seems to have stayed much closer to Morita’s vision of the integration of hardware and software and Disney’s family-friendly model when it comes to their underlying business strategies and practices. Apple’s strict screening of content that is allowed on their site and application stores, as well as their position on privacy, has given them a Disney like glow in the eyes of their customers.

I had been thinking about how Apple is perceived by mainstream America and other regions around the world, and the Disney like view kept coming up in my thinking. I recently read a piece by Benedict Evans, a partner at Andreessen Horowitz, who wrote a great piece that reflects this idea- Here is his take on this subject:

The old Apple promise was that you don’t have to worry if the tech works. The new promise is you don’t have to worry if the tech is scamming you.

I think this runs across all of the stuff they announced last week. Curated magazine articles with no fake news, scammy ads or data gathering. Curated games for you/your kid with no loot boxes or pay-to-win. A credit card that’s secure, with no hidden fees and weird points…

And though the TV announcement seemed really vague from a news/analysis perspective, it was pretty clear for brand messaging — Spielberg and Oprah, not Tarantino.

The old computer problems were about how it functions, and Apple removed (or hid) complexity. It all just worked. But (some of) the new computer problems are several levels further up in abstraction—privacy, trust, harmful content, weird charges, and scams. So just as Apple hid complexity in how your computer worked, now they want to solve complexity in how software/services/internet stuff works.
Another way to put it: they want to be the Disney of computers (in a good way). Disney stands for something—it has a clear brand promise. Apple was showing ambition to do that for News/games/credit cards, and TV.

In Jean Louis- Gasee’s Monday note, he also references Benedict Evan’s blog on Apple’s position on privacy and role as a safe haven for content and services-

“Evans contends that we’ve passed through the epoch when the focus was on making the technology work when we argued about defragging disks and tinkered with the internal working of devices. We have ascended to a new layer of interaction with technology where we worry about our privacy, our safety, our data, about the reliability of information:

“Apple has talked about privacy for a while, and sometimes curation, but these products make that much more tangible. The old Apple promise was that you don’t have to worry if the tech works. The new promise is you don’t have to worry if the tech is scamming you.”
In Evans’ analysis, trust is at the center of the relationship between Apple Services and its customers:
“Trusted, secure, private, no ads, no scams, no tricks you have to watch for (scammy in-app purchases in games, scammy/weird credit card charges) — it’s all curated.”

And Gasee asked the key question surrounding Apple’s customers’ acceptance of their overall position.
“Will customers appreciate, intellectually, this new relationship? Perhaps. But at the visceral level — the one that really counts — Apple’s new promise can work. This is a much better way to think (and emote) about the new Services than reducing the analysis to yet another ding to our pocketbooks.”

The more I look at the current Apple, and it is clear that they are very much more in control of their apps and services and filters all that passes through them to deliver a safe and private digital experience. Whether customers appreciate this or not is up to debate. But this seems to be the cornerstone of Apple today and, most likely, it will be the driver of their products and services in the future.

Over the weekend, Facebook CEO Mark Zuckerberg, wrote an OpEd piece in the Washington Post that calls for new standard bodies, government oversight and potential regulation over the Internet to deal with privacy, security, hate speech, and fake news.

Zuckerberg has faced serious criticism for allowing Facebook to become a vehicle for more than just social media and a place where people can post almost everything from conspiracy theories, hate speech, fake news and opinionated and often bigoted content. While it has, it’s own rules and regulations, and its business model had kept them from being as restrictive in blocking objectionable content and, in my opinion, allowed Facebook to become something that I don’t believe Zuckerberg could have imagined when he created Facebook.

All of the things Zuckerberg listed should be looked at closely by governments around the world. As he points out:

“Internet companies should be accountable for enforcing standards on harmful content. It’s impossible to remove all harmful content from the Internet, but when people use dozens of different sharing services — all with their policies and processes — we need a more standardized approach.”

He also lists legislation to help protect elections, privacy and security and data portability.

Although there are a lot of reasons he felt compelled to suggest more government oversight over the Internet, I see two key dynamics in place in Zuckerberg’s OpEd that is very specific to Facebook and his role as its CEO.

The first is that this is an admission that he and their team have failed miserably in managing Facebook’s content controls and that the type of material that gets through their filters has gotten out of control. He and his team have been backed into a corner due to this mismanagement of their site’s content. By themselves, they no longer can protect their users from bad content without any help from either a broad standards body, working with government regulators, or direct government regulation that helps keep fake news, threats, conspiracy theories, etc. from ever getting posted on Facebook.

Second, Zuckerberg and team need cover, or someone else to blame, for better policing of the content that is allowed to be posted on Facebook. In a sense, he is asking for help to manage the future of Facebook. If Zuckerberg tried blocking sites or specific content that is harmful beyond their current rules and regulations, he would be caught in a First Amendment battle that he can’t win. While he has the right to block certain sites based on their content that does not comply with their guidelines, there are too many gray areas that would rile up folks of many political and ideological spectrums that he needs help in determining what ultimately is OK to be posted on Facebook.

This is a smart move by Zuckerberg and his team. Many politicians are already on their case who want to either add more controls than Facebook would like or even break them up, as Senator Warren has suggested in her quest to take on many tech companies and their real or perceived power. By enlisting governments to help them deal with their own content problems, he can potentially head off even greater government regulations that could cripple their business model.

He also gains the cover to be more aggressive in blocking sites and objectionable content that is extreme and are used for propaganda, fake news, privacy intrusions, etc. Having standard bodies or direct government regulation can go along way, especially in the US, to holding off First Amendment battles that are impossible to win.

Investors will also likely view regulation as a good sign at this point. Should Facebook become regulated, there is a good chance. Their stock rises as the street will understand that regulation will secure Facebook’s dominance. An underlying theme around regulation protecting incumbents has been notably observed throughout business history. Whether or not protecting their dominance is a reason for Zuckerberg to request regulation is unknown, however, it is clear regulation for Facebook could potentially hurt competition and make force regulation on smaller new social media services even before they have a chance to grow and challenge Facebook’s position.

I have been going to Apple launch events for 38 years. Until this week, all have either been hardware or software related with a few service program announcements sprinkled in here and there.

Apple’s Showtime event last Monday was the first one that strictly focused on services by themselves and was designed to clarify how four new service products would aggregate content and allow them to get a piece of the action from the various subscriptions or financial transactions tied to these advanced service offerings. While the event focused on services, the underlining message was an economic growth that bodes well for Apple’s future.

One of the big issues PC vendors struggled with from the beginning of the PC industry, especially those who sell hardware, is that once they sell a PC or peripheral to a user, that is the end of the sale. The exception to this rule was in the printer industry which had a razor/razor blade model where the hardware became a vehicle to sell more ink as long as a person owned that printer. PC vendors tried various ways to provide add-on, recurring revenue models, but never hit on a true recipe for extending their sale beyond the initial purchase of a PC.

Apple perfected the recurring revenue model when it introduced iTunes. When the iPod first came out, you had to actually rip CD’s into the iPod to get your digital music. But once they got the music industry to back their music downloads, Apple delivered the first solid model for gaining additional revenue from a piece of hardware. This eventually begat streaming music subscriptions, and Apple has now added streaming music as a significant leg of their broader services offering.

When the iPhone came out, Apple launched its App Store, and with it, the iPhone revolutionized the smartphone world. The App Store gave Apple another leg in its services offering and delivered another service for aggregated content.

A few years back, Apple introduced Apple Pay. On Monday they added Apple Card, their first credit card, backed by Goldman Sachs. It is tied to Apple Pay, and they did away with late fees and penalties and added Daily Cash benefits that are real cash given to users when purchasing products via Apple Card.

Last year Apple bought Texture, the magazine aggregator that has now become the backbone of their News+ News service that combines magazines and newspaper subscriptions into a single $9.99 bundle. While they only announced a few big name newspapers like the WSJ and LA Times for now, if this service takes off, many other mainstream newspapers who have their own subscriptions services could eventually join Apple News+ some day.

The reason they will be watching this is that even with the success of the New York Times and Washington Posts current subscription program to date, should Apple gain a hundreds millions of News+ subscribers over the next two-three years, they would give these and other holdouts millions of new eyeballs to view their content. Even if Apple got 30-50% of the speculated fees the newspapers give up to be on Apple’s News+ platform, the additional revenue would be more than incremental and make them solid new revenue from people who would never subscribe to their papers alone. Also, it would allow them to drive up ad rates. The New York Times has 4 million paid subscribers today, and their ad rates are tied to these numbers. But let’s say that over the next two-to-three years, Apple gets 50-60 million subscribers to Apple News+ and could deliver that many new eyeballs to the New York Times. Would they not want to join this new service? You can bet that a lot of newspapers are going to be watching this space closely.

Apple also launched a new gaming service called Apple Arcade. They have not priced it yet, but when it comes out this fall, it will have 100 games made exclusively for Apple’s Arcade gaming subscription.

The Showtime focus of the event was the new Apple TV+ offering. Apple brought A-Listers from Hollywood to the event to talk about Apple’s new platform for creative storytelling and is clearly going to invest billions of dollars into creating original content. However, Apple TV and Apple TV+, which will have the original content, is also an aggregator of TV and movie content. While Apple did not announce pricing, which is the billion dollar question, the reality is that whatever they price it at it will be another subscription service that can deliver revenues to their bottom line.

Apple now has six unique offerings under services that have one common economic theme. Each gives Apple a cut of the revenue brought through these transactions or subscriptions. Apple’s services business was $37 billion in 2018 and on pace to be more than $40 billion in 2019. Apple’s hope is to make services a $50 billion a year business in 2020 and that goal seems on track. If anything, these services could help accelerate their business ambitions.

While a lot of people were critical of these announcements in that Apple did not spell out the price of their Apple Arcade and TV+ service, and left a lot of questions about their services open, you can expect them to be priced competitively. While not everyone one will subscribe to all of these six recurring revenue services, Apple is now giving users new choices of aggregated content that is economical and can meet the various needs of their overall customer base.

One other theme that is equally important about Monday’s event was Apple’s emphasis on the privacy that comes with each of Apple’s services. This is a major differentiator between Apple and some competitors. Yes, with Apple you pay for services and this iron clad privacy.

Apple also has another thing going for them, and Oprah Winfrey nailed it when she said: “Apple has a billion pockets y’all”. All Told Apple has over one billion active users of IOS and Mac OS devices to target for these new services. And Apple’s marketing programs are legendary. While these new services most likely will start with small audiences at first, they have the potential to grow and become a powerful engine to fuel Apple’s bottom line growth. The Mac, iPhone, and iPad will also be important products, and Apple will continue to innovate around these hardware devices. And I believe that Apple will have the next major industry disruptor once they bring out their AR glasses and build a base of AR apps to drive its usefulness and growth.

I think we will look back on Apple’s Showtime event as a very important milestone in Apple’s history. I believe it launched the era of services being a more powerful force in Apple’s revenue model and with these new services it brings to Apple’s customer’s many new choices to keep them in the Apple family.