Category: Apple

Mobile Focused Podcast: Less Expensive iPhones, and the Globalization of Tech

I’m happy to announce that I am rolling up my podcast with Andreessen Horowitz partner Benedict Evans into the Tech.pinions podcast as well. We will shoot to release these discussions between us every few weeks, midweek.

Ben Bajarin and Benedict Evans discuss what a low-cost iPhone could mean for Apple and explore the global and regional differences of iOS an Android.

Click here to subscribe in iTunes.

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

Posts Mentioned:

Benedict Evans – Note on Cheap iPhones

Ben Bajarin – The Regionalization of the Smartphone Market

Jan Chipchase – Connectivity is not binary, the network is never neutral

Steve Jobs Reveals The Only Way Forward For Windows Phone

The only way forward for Windows Phone — that is not death — is work. Real work. In the 21st century, real work is inherently collaborative.

Collaboration is the Achilles Heel of all things iPhone, iOS, and Apple.

Steve Jobs, for all his greatness, for all he achieved, did not play well with others. Evidence is legion. Jobs forced the future upon us, refusing to budge to present day concerns. His iconoclast’s vision is reflected in every Apple product and has been since the beginning.

Jobs exalted the individual, from the singular 1984 rebel through to the lone, joyful iPod listener to now, where budding creatives obsessively focus their gaze upon the shimmering, inviting iPhone screen and not upon the people, life and physical flotsam whirring about.

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Apple marketing dutifully reflects both Apple products and Apple culture, a culture which reveres solitary pursuits and nourishes individual genius.

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This leaves a strategic opening for Microsoft and Windows Phone. Not by creating a disingenuous demarcation between “work” (Microsoft) and “play” (Apple), but by optimizing its platform, its cloud, its tools, its services — and especially its mobile devices — for collaboration.

Steve Jobs empowered us, liberated us, heightened our creative abilities. He transformed us into digital cowboys, technological gunslingers, mad genius loners. Not collaborators. His heroes do not need others nor do they require consensus.

crazy ones

To quote Jobs:

Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules…

Such people are the opposite of collaborative. Yet, for all but a few crazy ones, greatness may only be accomplished via continuous collaboration and teamwork, not by being that round peg in the square hole.

Out Of Many One

Make no mistake. This is not about an Apple failure. Apple products, spanning the iPhone, the iPad and the Mac, are exemplary. But, their design and intent, empowering the individual, offers a clearing for whichever company develops computing and communication hardware and services which exalt the group.

Enabling new forms of work and new forms of creativity, facilitating time-shifting, globe-spanning, multi-modal collaboration from men and women, girls and boys whose full potential is untapped when pursuing their visions in isolation is the only way forward for Windows Phone.

The pieces to make this happen may already exist:

  • multi-screen function (desktop, mobile)
  • cloud support
  • Yammer
  • Skype
  • Exchange
  • Office 365
  • Office Lens
  • OneDrive
  • OneNote

Each of these are capable of providing highly functioning services, synchronized sharing, and any time, any place collaboration. The problem, of course, is none of these are yet fully optimized for mobile in general, or for Windows Phone in particular.

Jobs Informs Nadella

The recent revisionist history (such as here, here and here) proclaiming Steve Jobs as a world class “collaborator” is simply unfounded. Recall the single biggest change at Apple since the passing of Jobs: Tim Cook’s executive management shakeup, which the company itself positioned thusly:

Apple Announces Changes to Increase Collaboration Across Hardware, Software & Services (emphasis added)

Apple’s pro-individual, non-collaborative, go-it-alone DNA runs deep. This has created an opening for giant Microsoft’s tiny Windows Phone: collaborative creativity, collaborative work.

It bears repeating: by “work” I do not mean those activities presently optimized for PCs inside the enterprise. Microsoft’s fading retort that Windows is the platform for “work” badly underestimates how capable, valued and productive users of Apple devices are. But Apple hardware and supporting services are purposefully created for the individual. The future demands devices — hardware — for the group, not the one.

It also bears repeating: time is quickly running out for Windows Phone.

In his “bold ambition” statement, Nadella mentioned Microsoft’s commitment to “first party hardware” four times. Yet, within his 3,500-word manifesto, he mentioned “Windows Phone” only twice, and even then withholding clear affirmation:

(1) Today the Cortana app on my Windows Phone merges data from highway sensors and my own calendar and simply reminds me to leave work to make it to my daughter’s recital on time.

(2) We will responsibly make the market for Windows Phone.

This and other Nadella statements led me to state several weeks ago that:

Prediction: Microsoft will focus its mobile hardware efforts not on Windows Phone but on Surface, on new mobile gaming devices, and new mobile “productivity” devices; anything and everything that might help them uncover that next great mobile computing inflection point. Smartphones are lost to them.

I now wish to amend that prediction. Microsoft lost the smartphone wars — that much is clear. But smartphones are lost to Microsoft only in how we define such devices at the present. An entirely new or repurposed mobile device which advances creative and productive collaboration as easily as iPhone advances personalized empowerment is still within Microsoft’s reach.

Margins: Apple, Samsung, and Consumer Electronics

Some recent media has come out stating we need to acknowledge Apple knows what it’s doing as a company and with their strategy. I don’t know any analysts worth their reputation, either on the financial or industry side, who ever doubted Apple knew what it was doing. Part of the quibble with Apple from said media is the belief Apple was leaving money on the table by not changing their established and successful business model of focusing on the high end, more profitable segment of the market. Many called for Apple to make a lower cost iPhone in order to capture more “hardware” sales. But what many of us knew is just selling a lower cost phone doesn’t necessarily mean more money. And, in fact, it could have consequences on the higher margin products. Luckily, Benedict Evans shared a post recently that broke down exactly what I and many others have been saying around the implications of a lower cost iPhone.

What Benedict wrote is something he and I have spoken about on past episodes of our podcast. The thesis was always that a lower cost iPhone would certainly help raise sales of iPhones but would not raise revenues. Selling a lower cost and lower margin product means you need to sell substantially more product to equal similar revenues to selling less of a higher margin good. But as Benedict points out, this does not necessarily mean Apple should not release a lower cost phone — only that it would not necessarily be for the hardware revenue but for the potential value to the ecosystem, in terms of revenue capture beyond hardware, like apps, subscription services, etc. Benedict rightly points out Apple has more options than ever and I would add few companies are in full control of their destiny than Apple.

Back to Apple knowing what it’s doing. This relates entirely to a margins discussion. Several days ago Jan Dawson posted on his blog some thoughts on Samsung. I asked Jan to add Apple and Samsung to a particular chart on margins and it is below.

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If any chart shows Apple knows exactly what it is doing, it should be the chart above. Apple remains the anomaly of all consumer electronics companies when it comes to operating margins. Apple has not and does not have to chase the lower margin commodity products thanks to their vertically integrated advantage. Granted, no one is arguing Apple chase the uber-low end. That’s unwise for any branded OEM. But rather, there is a healthy and growing middle of the market. What we are discovering in many markets like China and even pockets of India and Brazil, are more mature customers who started off buying lower cost entry level smartphones are moving upstream and being willing to spend more on their next smartphone. I believe this trend will continue as a large percentage of smartphone users move off basic devices and become willing to spend more on devices in mid-range price tiers.

Whatever strategy Apple decides, given their approach, they have a limit on their total potential customer base. We simply have no idea what the size of that number is. Employing this strategy means Apple will need to foster opportunities for their customer base to spend more in their ecosystem thus incrusting their average revenue per customer beyond the hardware. The point remains — Apple is in control of their destiny.

Samsung, on the other hand, is a giant question mark. What does Samsung do? They have built a business that requires scale. Their strategy has been to fast follow companies and products which have scale then leverage their vertical components businesses to sell products to each other as they scale. Each group benefits, revenues rise, and they are able to slightly buck the low margin fate that faces so many companies. Samsung has always been Samsung’s best customer in components. But the main point is their business requires scale. So what does Samsung do to maintain scale? They are losing in premium to Apple, and they are losing in the lower and mid-tiers regional players in the regionalization of the smartphone market.

What is even more interesting about Samsung’s struggles is they are actually price competitive with some products in many of these markets with the same vendors they are losing out to. So the question is why? Why not Samsung in these markets where they are price competitive? I do believe it has something to do with the fact they are a foreign brand in markets increasingly favoring brands from their home country. Therefore, to assume Samsung should just compete on the low end to get scale back does not necessarily solve the problem. Nor does doing so help their margins, or the inter-departmental sales approach their components business sell within the country. Samsung, like Jan’s chart shows, is stuck in the middle. Their margin line is unlikely to go up toward Apple’s and unfortunately if it is to go down toward the others, it’s a huge, company wide issue for a vertical component company who requires scale.

What I keep landing on is increasingly hardware, for all vendors including Apple and Samsung, is going to have to play a role as a mechanism to other revenue. Xiaomi is a great example of this, using hardware as an entry point to increased revenue of proprietary services. Amazon also, to a degree, employs this model. However, it is foolish for many to believe Apple can’t do this and that their future depends only on hardware sales. The challenge for others, like Samsung, will be to differentiate on more than hardware. The role of the OEM is changing, and will continue to change.

iPads At The Border

I believe (nearly) every child that comes to America seeking refuge should be welcome. I fully understand if you disagree. It is a complex issue after all. 

We are told tens of thousands of children are showing up at America’s southern border hoping to be allowed permanent entry. The President has requested many billions of dollars to help address this pressing entanglement. The opposition party has similarly offered up many billions, albeit far fewer than the President says are necessary.

What then?

Assuming some, most, or all of these children are allowed permanent entry into the United States, what then?

I have no answer for this. I do have a suggestion, however: I think we should give every single one of these children – every child in America, in fact – a tablet, preferably an iPad.

Readme

What would my proposal cost?

Estimates, which vary wildly, suggest 100,000 children will seek refuge in America this year, and another 100,000 next year. An iPad mini with Retina display retails for $400. Sold in bulk, and for goodwill, Apple may be ready to part with these for $200. Certainly, other tablet vendors would be so willing.

$200 x 200,000 children = $40 million

But let’s not give tablets only to new entrants, but to all children in America, at least those of school age. There are approximately 45 million children, ages 6-17, in the United States. Thus:

45,000,000 x $200 = $9 billion

Yes, that’s a staggering sum. Except, Americans already spend over $650 billion every single year on public K-12 education and another $350 billion every year on  higher education, at minimum. An iPad mini is reasonably future-proof, and likely to last at least three years, for example. Even if we factor my potential tablet spend against only one year of K-12 expenditures, that’s:

$9,000,000,000 / $650,000,000,000 = 0.014

That’s less than 1.5% of one year’s K-12 spend. With this, 45 million children have a tablet — a tablet that can come preloaded with literally thousands of free books; books which reveal America’s history, greatness and failures. Books that teach, warn, inspire.

That’s just the start. There are thousands of free apps that promote creativity and collaboration. We can preload twenty or so on every device. Already, Apple includes iMovie, GarageBand, Pages and Numbers, among others, with every iPad.

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Should the child be fortunate enough to have access to WiFi, YouTube offers amazing resources for self-directed learning. All free. iTunes U similarly offers a wealth of free courses for those with access.

Perhaps Fox will donate the entire Cosmos series toward this effort, helping us to inspire a generation to embrace science, discovery and their innate smartness.

A front facing camera will enable every child to take a picture of themselves and their surroundings, offering a document of their life and their world unmatched in scale.

The Diamond Age

Why do this?

Two reasons:

This is very likely the first and only time in human history where a nation can afford to provide every single child with a fully accessible, easily manipulated tool that contains or can retrieve nearly the entirety of that nation’s history, culture, great works of fiction, film, television, lectures, puzzles and knowledge.

Let’s seize this amazing opportunity!

In his Hugo-winning work, The Diamond Age, author Neal Stephenson posited a future where a young girl, poor, living on the margins, came into possession of a interactive book — what we now call a tablet — that educates and empowers her, leading her to achieve what was once assumed unattainable.

There are only two such ‘books’ in Stephenson’s future world. What a much better world we have now. In fact, in our present day reality, there are already hundreds of millions of such tablets. Even better: almost every one of them can be used, misused, manipulated and managed by nearly any child of any background without any prompting or guidance.

This is profoundly revolutionary.

The System Of The World

The second reason is self-directed learning has many lasting benefits.

Google founders Sergey Brin and Larry Page have famously credited Montessori schooling for spurring their entrepreneurial success. Montessori adheres to a self-directed learning model. Children follow their interests and avail themselves to information and knowledge in their own way and on their own time. Per Larry Page:

“I think (founding Google) was part of that training of not following rules and orders, and being self motivated, questioning what’s going on in the world and doing things a little bit differently.”

 Will Wright, video game pioneer and creator of The Sims, stated this of his self-directed Montessori education:

“Montessori taught me the joy of discovery. It showed you can become interested in pretty complex theories, like Pythagorean theory, say, by playing with blocks. SimCity comes right out of Montessori.”

Amazon CEO Jeff Bezos also attended Montessori school as a child.

Correlation is not causation. What leads a child toward success is no doubt a multi-variant process. But tablets can expose children to untold learning resources, creative opportunities, collaborative play and work. This seems like an opportunity the country should not pass up.

Recently, two villages in Ethiopia were provided with (Motorola Xoom) tablets preloaded with various apps, ebooks, movies, drawing programs and alphabet games. The First Grade children who received the tablets were illiterate, had never used paper and pencil, yet within a few months had taught themselves to read.

“Within five days, they were using 47 apps per child, per day. Within two weeks, they were singing ABC songs in the village, and within five months, they had hacked Android.”

It almost seems unjust to not provide every child with a tablet.

I know there are questions. Who will pay for this? What about theft? What about illicit online activities? Who decides which books to embed? Will the children spend too much time with their tablet? 

These are all answerable. Yes, really.

The larger question: Will it work? Haven’t laptops, PCs and other technologies in the schools failed to incite a learning revolution?

Perhaps. But at no point before now has there existed reasonably affordable, highly interactive tools that are personal, mobile, configurable, pose almost no barriers to operation, and which can store truly stunning amounts of knowledge and learning resources — all of it accessible with the swipe of a finger.

The children are here. The opportunity exists. Let’s be willing to fail with this.

Thoughts On iPhone Inc

The iPhone is bigger than McDonald’s. That seems a useful demarcation for how we should view the iPhone in particular and Apple in general.

The iPhone is that once-in-a-generation product that alters daily reality for at least a century. The Model T production line, overnight shipping, indoor plumbing and the credit card are other such examples. I fully expect the iPhone will enable Apple to become the world’s first trillion dollar company.

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There is a cost however, at least for we users. Almost certainly, iPhone will diminish Apple’s ability to create new game changing products.

Why? Because being irrational is hard, really hard. It’s rational to do everything in your power to maximize a product that has the legitimate potential to help you become a trillion dollar company. To do anything — anything at all — that might alter that path is irrational. Steve Jobs could be irrational at times. Tim Cook cannot. At least, I have witnessed no evidence of this. Apple is now iPhone. iPhone is now Apple. Just like Windows is Microsoft.

The Long March

No one ever got fired for buying Apple computers from IBM.

An iOS-based, touchscreen-enabled laptop, priced around $799, and sold by IBM to the enterprise seems an obvious product Apple should offer. It also seems like the kind of product that could destroy numerous existing giants.

For too long, iPhone users have not had their much desired iPhone “phablet.” A reason for this is because an iPhone phablet would gut iPad sales. Considering the iPad sales numbers for the past year, this is a fear Apple no longer possesses.

You will not give up your iPhone. You will not give up your Mac. You may give up your iPad. At this juncture, iPads are simply not must-have devices for nearly anyone. That’s the primary reason for the diminishing sales gains.

Easy prediction: We will almost certainly get an iPhone phablet this year and, likely by next year, a larger iPad.

I am regularly surprised at how bad Apple is at app discovery. That Facebook app ads are my current best source for app recommendations is a clear market failure. I hope the purchase of Beats, Swell and BookLamp signal that Apple is finally willing to get serious about content curation and recommendation.

I have no idea if Swift is a superior language. I am not a developer. I do know however, Apple is big enough to demand its use.

Despite the iPhone’s incredible array of features and functions, we mere mortals no doubt spend far too much time obsessing over which apps belong on the home screen.

Bugs And Features

The smartphone is the computer. Your app is your business model. Every business is impacted by iPhone. Know this or perish.

That Touch ID can’t read my thumbprint if there’s just a tiny bit of water on it seems more bug than feature.

It’s 2014, fourteen years since Y2K. Still, iPhone users can’t have their preferred calendar app list the date on the app icon. This is the equivalent of how the DOOR CLOSE button on any elevator never seems to work.

Samsung ads mocking iPhone users have been brutal and highly effective. Yes, I have had Android users (justly) mock me for having to scour an airport in search of an available outlet. The iPhone battery deserves its poor reputation. However, Samsung’s latest ad where they mock Apple users for not yet having a large display iPhone strikes me as desperation. Almost certainly, there will be a large display iPhone. What then, Samsung?

Amazing iPhone games are available for $5.99 yet millions refuse to pay such ‘outrageously high’ prices. There is much to celebrate and decry with this.

Using the same OS for the iPhone as for the iPad has some obvious limitations. On the small smartphone screen, getting into an app, grabbing the data, then exiting, a singular app occupying the entire screen makes obvious sense. Not so with the iPad. I want at least two windows open on my iPad almost always. Kindle and Twitter are the most common examples. Email and web browser are another. Even while gaming, I prefer two windows open. I can’t imagine buying an iPad until Apple offers this feature.

The Sincerest Forms Of Flattery

The almost laughable copying by Xiaomi of the iPhone and iOS 7 is all the evidence you need as to why Tim Cook must expend significant resources on building the luxury appeal and premium status of the iPhone; all those hard-to-define elements beyond actual quality, reliability and usability.

There are few people better at this, if any, than Angela Ahrendts.

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Confession: it’s hard for me to watch the original Willy Wonka and the Chocolate Factory movie and not think of Steve Jobs and Apple.

Rumors Jony Ive was in a Flock of Seagulls cover band are completely unfounded.

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Input method is now a more important consideration than processor, OS and software. No one seems to understand this more than Apple.

More Is Less

Lost in the bubbly talk of an Apple iWatch is the fact everything about it seems wrong. We do not need yet another thing. I want my iPhone — or any smartphone — to serve as my ID, car keys, credit cards, TV remote, glucose reader, everything. Apple should focus its genius on making the iPhone devour more of those things, not create new ones.

The newest version of PayPal appears to equal, possibly usurp, Apple’s Passbook vision: Payments, money transfers, loyalty cards, information on nearby shops, it’s all there. Apple certainly wants the iPhone to be used for payments, though maybe they have finally decided enabling payments and not powering them is the way forward. This may also explain the company’s recent decision to once again allow Bitcoin apps in the App Store.

I actually read app update notes. This recent update from Yelp made me laugh.

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Jan Dawson made a strong case for why Apple should stagger launches of its major products. Commenters offered additional insights as to why Apple does not (or should not) heed his advice. Not stated, however, but which I think is at least worth considering, are the possible impacts of corruption. Nearly all assembly of nearly all Apple products takes place in China, where there is a less-than-transparent relationship between the government and business. It seems the implications of this should at least be examined.

I am surprised by how few iPhone users seem to ever use AirDrop to transfer files or data to one another. Perhaps personal iPhone-to-Mac AirDrop sharing is the superior use case.

I am unaware of the age, gender, race or LGBQT numbers at Apple Inc., Apple in Cupertino, or of those who work solely on the iPhone. But together, these people have created something positively impacting lives. And they keep making it better. I tip my hat to them all and hope in some way, my words can ever do the same.

Hitting for the cycle: why Apple should move its product launches

Apple’s earnings for their last financial quarter came out on Tuesday. I reviewed them here (and talked about the iPad specifically here) but wanted to address something more long term in my column on Tech.pinions this week. The issue I’d like to talk about is the cyclical nature of Apple’s operating and financial performance and the massive focus on the fourth quarter of the calendar year (Apple’s first quarter) as the driver of the year. (Note: throughout this piece I’m going to refer to calendar quarters rather than Apple’s fiscal quarters, as I find this requires much less mental gymnastics for readers).

Apple’s results are heavily affected by the sales of its hardware products, which in turn have a huge spike in the fourth and to a lesser extent third quarter of each calendar year – as shown in this chart of  historical revenues.

Apple revenues by quarter

As you can see, ever since about 2003, the fourth quarter has been significantly bigger than any other quarter. The second biggest quarter however, has varied between the third (for much of the 2000s) and the first (for the last three years). The second quarter (which Apple reported this week) is now regularly the smallest. In the past, the spike in the fourth quarter was always driven by “holiday sales” – i.e. Christmas in much of the world and to a lesser extent the Thanksgiving holiday and associated “Black Friday” sales day in the US. This is true for all consumer electronics companies and Apple is no exception.

However, what’s changed in the last few years is Apple’s timing for its major product launches for the iPhone and iPad. The chart below shows how the dates have moved steadily to the right on the calendar, with the iPhone starting in June and July and shifting to October and then September, and the iPad starting in March and April and shifting to November.

Apple product launch datesAlthough product launches for the iPhone are technically in the third quarter, they’re so close to the fourth quarter the vast majority of early sales are pushed into that quarter. It means the fourth quarter becomes even bigger than it already is.

So why is that a problem? Well, there are several issues with it.

Firstly, it exacerbates the problem of supply constraints. Because Apple insists on absolute secrecy, and because it now announces new devices just 10-20 days before they launch, it has to ramp up manufacturing extremely quickly and it can’t meet demand. In late 2012, it was unable to meet demand for the iPhone and iPad until the first quarter of the following year. In 2013, it took almost the whole quarter to get demand and supply in balance. This means Apple is leaving money on the table for much of these quarters and, in some cases, customers may go elsewhere if they’re unable to buy the product they want, especially in the holiday season.

Secondly, it creates this huge spike in fourth quarter sales, followed by a steady drop in sales for the rest of the year. There is what I call a trained Osborne effect here, as Apple has trained devotees of its products to expect a fall launch and then an annual revision. If you care at all about having the latest and greatest device, you won’t buy an iPhone or iPad in the second quarter because you know a new one is just around the corner. That’s why sales don’t just fall from the fourth quarter to the first, but also fall from the first to the second. Apple is unwittingly creating an Osborne effect without even announcing anything, just because the pattern has become so clear. Apple therefore doesn’t just create a huge spike in the fourth quarter, it actually depresses sales in the rest of the year.

What Apple should do – stagger launches

There are short term and long term solutions to this problem. Start with the short term, some of which Apple is already doing:

  • Create a product that appeals to those who don’t care about having the latest and greatest device, and sell it in the lull quarters. Apple has done this with the iPhone 5C, which was heavily marketed at least in Europe and North America in Q2, and which likely drove high sales, driving down ASPs in the process. The 5C was launched at the same time as the 5S, but its most useful effect has been to fill some of the gap in 5S sales later in the year. For this reason, it might well make sense for Apple to keep the 5C concept around.
  • Continue to hold launches late in the quarter. Every iPhone launch but one (the 3G) has taken place in the last two weeks of a quarter (originally the second, and now the third). This spreads the spike effect a little by putting the massive launch weekend in the previous quarter. If Apple was holding iPhone launch events two weeks later, the third quarter would likely be the smallest by far, so this helps to mitigate that effect. But it isn’t yet doing this for the iPad, and it might make sense to do so.

However, the longer term solution is to move at least some product launches to other quarters, preferably in the first half of the year. This would create two annual spikes – one around the holiday season and one around the product launch. By staggering iPhone and iPad launches so they no longer spike around the same time of year, Apple could spread the effects even further throughout the calendar.

But all that is far easier said than done. Apple has moved product windows twice — once when the iPhone 4s arrived later than expected in 2011, and once when it accelerated the iPad development cycle to release the iPad 4 just eight months after the iPad 3. Those are the only two ways to move the product launch windows: produce one faster than the usual twelve month cycle, or leave a longer pause between launches. Neither is easy to do. Pre-empting or delaying the iPhone launch cycle, so tied to two year handset upgrade programs in many markets, would cause significant disruption and break the cycle for many users, possibly damaging sales. It’s arguably easier for Apple to disrupt the iPad launch schedule, since that’s less tied to a particular upgrade cycle, and it has done it once before. It’s also a category that evolves less dramatically from one iteration to the next and which has just seen big upgrades in both sizes. However, the new device upgrade plans available from US carriers and some others around the world may allow Apple more latitude than it has had in the past because customers are less tied to a two year cycle.

Another possibility is Apple staggers the launches for different versions of a product, e.g. launching several iPhones at different times during the year. The iPhone 5S might get an update on schedule in September of this year, perhaps with one larger screen size, while a device with an even larger screen or even the 5C successor might come in the spring. The iPad Air and iPad mini launches could also be split throughout the year, with one coming in the spring and one in the fall. Moving an iPhone launch to the spring would also upset Samsung’s rhythm, which currently pitches its flagship Galaxy S launches as far away in the calendar as possible, with the smaller Note launch much closer to the launch of new iPhones.

A change of this magnitude would be difficult and perhaps even painful in the short term, as it might either delay sales or create a smaller upgrade cycle for one year. But at the moment, Apple is both leaving money on the table by under-supplying demand in the fourth quarter and creating a massive lull in sales in the spring and summer. Both could be solved by moving at least some product launches back to other times of the year, and ideally late in the first quarter. Both overall sales and the stock market would be well served by a move away from fall product launches.

Deconstructing Satya. Episode II. The Empire Strikes Back.

Last week before the news broke, I warned Microsoft employees, all of them, to “get to work on your resume.” Change was coming, major change, and that always always always begins with a bloodletting.

Indeed, as others were decrying the word count of Satya Nadella’s “bold ambition” manifesto — signifying nothing, given it took Steve Jobs 1700 words to tell us he wasn’t going to use Flash on the iPhone — I read each word, every sentence. Nadella’s near-term intentions were obvious.

What was not clear, however, not until now, is how deeply divisive the Nokia purchase remains within the corridors of Microsoft’s ruling elite.  

This Deal Is Getting Worse All The Time

Despite the corporate-speak, despite the strategic shift toward “productivity and platforms,” Nadella’s manifesto message last week was undeniable. Job cuts. Thus, I wrote:

“Big layoffs by Christmas.”

But Nadella kept hinting, so I followed that with…

“Big layoffs by Thanksgiving.”

But Nadella hinted further, so I followed that with…

“Big layoffs by Labor Day.” 

In fact, the big cuts came only a few days later. Points for swift action, I suppose.

Nadella’s willingness to act fast, to re-make Microsoft, hack away at the extraneous and transform the company into “the productivity and platform company for the mobile-first and cloud-first world” appears to be exactly what the company needs.

But when you gut a $7.2 billion acquisition, which the company only closed on this past April, and fire 18,000 people, then you haven’t leapt from a burning platform, you’ve set the platform ablaze. There is no going back, no do-overs for Mr. Nadella. He is about to set the company on a ten year course, possibly longer, and though Microsoft possesses a rather stunning array of assets, what’s most stunning is the company still has virtually zero response to the iPhone, the iPad and Android. In 2014.

Competing in a mobile-first, cloud-first world — with no mobile device the world actually wants — seems less like corporate bumbling at this point and more like French royalty certain the barbarians will forever remain outside the gate.

Sadly, more than 18,000 will soon join those barbarians.

That Was Never A Condition Of Our Agreement

Nadella’s follow-up email to staff announcing major cuts is mercifully shorter than his bold ambition manifesto, though similarly riddled with the kind of corporate-speak analysts with expense accounts use on marketing managers with a too large budget.

My thoughts on Nadella’s latest message are below, in bold italic.

From: Satya Nadella
To: All Employees
Date: July 17, 2014 at 5:00 a.m. PT

5am! Leading is hard. 

Subject: Starting to Evolve Our Organization and Culture

“Starting to Evolve.” Catch that? This is just the start.

Last week in my email to you I synthesized our strategic direction as a productivity and platform company.

And now I’m gonna need those TPS reports.

Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life. Today I’ll share more on how we’re moving forward. On July 22, during our public earnings call, I’ll share further specifics on where we are focusing our innovation investments.

This reads like a draft memo from the assistant to the regional manager. No excuses here. 

The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year.

Nokia is dead. Godspeed all you Nokians. 

Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers.

12,500

In his “bold ambition” email to employees, only days before this, Nadella stated “first party hardware” would form part of the core Microsoft vision. He said this four times! 

    1. Our cloud OS infrastructure, device OS and first-party hardware will all build around this core focus and enable broad ecosystems.
    2. Our Windows device OS and first-party hardware will set the bar for productivity experiences.
    3. Our first-party devices will light up digital work and life.
    4. We will build first-party hardware to stimulate more demand for the entire Windows ecosystem.

[emphasis added]

Now, days later, he guts Nokia, kills off the very popular Asha hybrid phone line and halts development of the AOSP-led Nokia X.  

I suspect Mr. Nadella believes the smartphone wars are lost, despite whatever else the company may tell us. They are no longer worth fighting for. 

Prediction: Microsoft will focus its mobile hardware efforts not on Windows Phone but on Surface, on new mobile gaming devices, and new mobile “productivity” devices; anything and everything that might help them uncover that next great mobile computing inflection point. Smartphones are lost to them. 

We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.

13,000 from the 18,000? 12,500 from Nokia plus 500 from elsewhere? Where does this number come from?

Nadella needs to be straightforward here. So far, he’s failed. 

It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas.

Nowhere near 18,000, however. Thus, it would be best if not said at all.

My promise to you is that we will go through this process in the most thoughtful and transparent way possible.

Your own email appears poorly thought out and lacking transparency!

We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company.

Forget them. Move forward. 

Later today your Senior Leadership Team member will share more on what to expect in your organization.

How bureaucratic is this company?

Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.

That’s three, maybe four outcomes, not two. Can Nadella really not trust anyone to review and edit his emails? 

Fact: Nearly every single Nokia device over the next several years will be replaced by an Android, perhaps a few by iPhones, not Windows Phone (in any form).  

My prediction that the remaining “Nokia” employees will focus mostly on new mobile productivity devices and new mobile gaming devices, not smartphones, stands. Nadella just isn’t ready to tell us this, not yet. Perhaps, he’s not come to terms with it himself. 

First, we will simplify the way we work to drive greater accountability, become more agile and move faster.

Perhaps given your size, strengths and history, being inflexible and moving slower, and with less accountability (e.g. investor input), would be the best strategy?

Yes, I am serious. Agility and speed are never the strengths of behemoths. 

Perhaps You Think You Are Being Treated Unfairly

As part of modernizing our engineering processes the expectations we have from each of our disciplines will change. In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers.

Sideways layers of management? Sideways layers!  

In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft.

Question: How dysfunctional is this company?

These changes will affect both the Microsoft workforce and our vendor staff. Each organization is starting at different points and moving at different paces.

Answer: Appreciably dysfunctional. 

Second, we are working to integrate the Nokia Devices and Services teams into Microsoft. We will realize the synergies to which we committed when we announced the acquisition last September. The first-party phone portfolio will align to Microsoft’s strategic direction. To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.

Integrate Nokia into Microsoft? Realize the synergies committed to last September? Align the first party phone portfolio to Microsoft’s strategic direction? To win the higher price tiers? Which builds on Microsoft’s success in the affordable smartphone space?

We can’t possibly divine what these words mean because Nadella does not know the way forward in mobile. That’s a problem. 

Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture.

Satya

It Is Your Destiny

Last week, I praised Nadella for his bold, borderline revolutionary statements. A few days later he morphs into a parody of his predecessor.

I give him a pass. This time.

When it comes to massive corporate downsizing, we always say there’s a right way to do these things but there’s never a right way to do these things. That said, it seems clear Nadella hasn’t yet figured out exactly what Microsoft should do in mobile and that’s a problem for which no one will give him a pass.

The Smartphone Is Not Merging With the PC

Behold the pot, bathtub and swimming pool. They all contain water. They are the same. ~ Horace Dediu (@asymco)

On July 9, 2014, Walt Mossberg published an article entitled: “How the PC Is Merging With the Smartphone.”

(I)n the past month, it has become clear that a serious effort has begun to merge the smartphone and the PC. ~ Walt Mossberg

To “merge” means:

    merge |mərj| verb “combine or cause to combine to form a single entity”

[pullquote]Writing is easy. All you have to do is cross out the wrong words. ~ Mark Twain[/pullquote]

I respectfully, but vehemently, disagree with Mr. Mossberg’s observation that the smartphone and the PC are merging. Not only aren’t they merging but they — and their underlying design philosophies — are diverging.

Starting Far Apart

Apple, Google and Microsoft are three of the largest players in personal computing. However, their design philosophies start from very different places.

Apple, Google, and Microsoft each offer all three things: devices, services, and platforms. But each has a different starting point. With Apple it’s the device. With Microsoft it’s the platform. With Google it’s the services. ~ John Gruber

Apple, Google and Microsoft not only start from different places, they are also headed in three very different directions.

Moving Further Apart

Google wants you signed into Google services on all your devices, from phones to tablets to PCs. ~ John Gruber

Google may well be offering one experience at the services layer, but that is not the same as merging the smartphone and the PC and it is not at all the same as what Apple and Microsoft are doing.

Microsoft wants you to run Windows on all your devices, from phones to tablets to PCs. ~ John Gruber

Microsoft may well WANT to run a single Windows operating system on all of your devices, but so far their efforts to create one operating system that runs on phones, tablets, and desktops has actually caused Windows to splinter into three operating systems: one for the phone (Windows Phone 8); one for the tablet (Metro) and one for the desktop (Windows 8). Calling them all by one name does not make them all one thing.

[pullquote]There is nothing so useless as doing efficiently that which should not be done at all. ~ Peter Drucker[/pullquote]

Further, while Microsoft may well be attempting to merge the tablet and the PC at the hardware layer 1) that is not the same as merging the smartphone and the PC; 2) the paltry sales numbers for their 2-in-1 devices weigh against, not for, the proposition that merging is the way of the future; and 3) Microsoft’s efforts are not at all the same as what Apple and Google are doing.

Apple wants you to buy iPhones, iPads, and Macs. ~ John Gruber

Apple is not merging anywhere — not at the services layer, not at the operating system layer, and most especially not at the hardware layer.

(Apple chief of design, Jony) Ive demands that the hardware be true to itself—its purpose, its materials, the way it looks, and the way it feels. ~ John Siracusa

Not only aren’t iPhones and Macs merging, but Apple’s continuity features allow Apple to draw bright lines between their phone, their tablet and and their desktop offerings.

Apple’s vision is about harnessing the uniqueness of each device rather than converging them ~ Ben Bajarin (@BenBajarin)

Further, what Apple is doing is not at all the same as what Google and Microsoft are doing.

Whatever This Is, It’s Not Merging

  1. A gardener uses a trowel when he gardens and a shovel when he digs. He doesn’t think, “Hey, the trowel and the shovel are merging because they both dig holes!”
  2. A homeowner uses a watering can to water the flowers in her home and a hose to water the flowers on her porch. She doesn’t think, “Hey, the watering can and the hose are merging because they both water flowers!”
  3. A restaurant employee washes the floor with water from a bucket and washes dishes with water in a sink. He doesn’t think, “Hey, the bucket and the sink are merging because they both do washing!”

Semantics

The beginning of wisdom is a definition of terms. ~ Socrates

Is this just a question of semantics? Well, even if it was, semantics matters. Semantics is: “The branch of linguistics and logic concerned with meaning.”

A definition is the enclosing a wilderness of idea within a wall of words. ~ Samuel Butler

However, this isn’t just semantics. This is a distinction with a difference.

The difference between the right word and the almost right word is the difference between lightning and a lightning bug. ~ Mark Twain

Nothing Is Merging

[pullquote]You cannot step into the same river twice. ~ Heraclitus[/pullquote]

Apple is improving the workflow between its devices. Workflow is, by definition, a flow. Saying that workflow is “merging” is like saying that a river is a lake. The improved workflow between Apple’s devices allows those devices to be true to themselves and to grow ever more distinct, one from the other. At Apple, the smartphone and the PC are not merging.

Google is improving its services. It wants you to think of phones, tablets and PCs as portals used to peer into the Cloud — the Google Cloud that is — where all your content and apps, reside. Google may not care which portal you use, but they have no interest in merging those portals. At Google, the smartphone and the PC are not merging.

[pullquote]Facts do not cease to exist because they are ignored. ~ Aldous Huxley[/pullquote]

Microsoft is improving nothing. They are forcing the merger of the tablet and the PC because their Windows’ business model demands it. They have not learned — or more likely, they refuse to acknowledge — that the mouse driven user input suitable for the desktop is unsuitable for, and incompatible with, the touch driven user input of the tablet. At Microsoft, the smartphone and the PC are not merging.

AxeBlade
Caption: Leaked image of the Microsoft Windows 8.1 Pro Surface Axe/Razor 2-in-1 Hybrid Shaving Combo Device.

Diverging

Microsoft’s muddled personal computing design is going nowhere, but the design philosophies of Google and Apple are unique and they are rapidly diverging, rather than merging.

Normally, in mature markets, products grow closer and closer to one another as each competitor borrows the best ideas of the other and incorporates them into their own product or service. That has happened with Mac and Windows over the past thirty years and with iOS, Android and Windows Phone over the past seven years. However, Apple and Google are now rapidly moving in opposite directions.

Apple is pushing all of the value down into their devices. Google is pushing all the value up into their services. This is going to have dramatic, long-term, consequences.

Google will almost certainly excel wherever machine learning matters most: maps, voice translation, predictive services and who knows what else.

Apple will almost certainly excel at any task that requires rich applications and with any entity or institution (education, business, government) that inhabits the “long tail” of app creation (i.e., specialized or proprietary apps) and demands robust security and privacy.

Suggesting that the smartphone is merging with the PC obscures this reality. It implies that the overall approaches of Apple, Google and Microsoft are drawing closer together when, in fact, they are not.

Henry Ford said:

The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.

I get the feeling that both Google AND Apple fit into this category of business. Each feels that they know best and each is moving on without much regard for the what the other is doing. Focusing on merging is a distraction. What we need to be focusing on is what is emerging from these two great titans of tech.

Woof

A dog goes into a newspaper to place an advertisement.

“What do you want your ad to say?” asks the newspaper clerk.

“Woof Woof Woof. Woof Woof Woof. Woof Woof Woof,” says the dog.

The newspaper clerk adds up the words and says, “Okay, that’s nine words. We charge the same for up to ten words. You could add another ‘woof’ for no extra money.”

The dog says, “But that wouldn’t make any sense.”

Walt Mossberg is not just a good tech writer, he’s one of the very best there is. However, on this one occasion, I believe he added one “woof” too many.

Divining Apple’s Wearable Design

Most of the wearables on the market today are an experiment in artificial stupidity. Rather than solve problems, they create them. Using a wearable today is like using a screwdriver to cut roast beef.

A good design introduces enough unfamiliarity to be interesting, but not so much as to be annoying. ~ John Maeda (@johnmaeda)

Don’t get me wrong. Today’s wearables should not be tossed aside lightly. They should instead be thrown with great force. ((With apologies to the great Dorothy Parker)) In fact, that reminds me of a riddle:

QUESTION: If you throw the Samsung Galaxy Gear off the Eiffel Tower and you throw the Moto 360 off the tower of Pisa, which one would hit the ground first?

ANSWER: Who cares?

Wreck
CAPTION: Today’s Wearable Marketplace

How do I know Android wearables are a terrible idea? China doesn’t even steal them and make knockoffs. ~ The grugq (@thegrugq) 7/10/14

What’s Missing?

Most companies are full of processes designed to solve problems from a long time ago. ~ John Maeda (@johnmaeda)

Today’s smartwatches are going nowhere because they’re using tomorrow’s technology to provide yesterday’s solutions to problems that no one has today. But what about tomorrows’ wearables? Apple is rumored to be bringing out a line of their own wearables this Fall and Apple is well-known for their design prowess.

Will Apple use design to differentiate their product?

“I think a lot of people see design primarily as a means to differentiate their product competitively,” Ive said. “I really detest that.”

Hmm. Maybe not.

Perhaps Apple’s wearables will be better because they will have better technology.

We don’t buy things because they have better technology; we buy them because they’re better designed. ~ johnmaeda (@johnmaeda)

Hmm. Maybe not that either.

Or perhaps Apple’s wearables will be better by design.

Design is so critical it should be on the agenda of every meeting in every single department. ~ Tom Peters

I love it when you can bring really great design and simple capability to something that doesn’t cost much. It was the original vision for Apple. That’s what we tried to do with the first Mac. That’s what we did with the iPod. ~ Steve Jobs

Ah, design. That’s what’s missing in today’s wearables and that’s where Apple shines.

We’re the only company that owns the whole widget — the hardware, the software, and the operating system. We can take full responsibility for the user experience. We can do things that the other guy can’t do. ~ Steve Jobs

Dieter Rams’s Design Principles

Steve Jobs and Jony Ive were admirers of Dieter Rams, a famous designer for Braun, who had a number of mottos and aphorisms about design. Let’s look at seven of his design principles and see how they apply to current and potential wearable devices.

350_2x

1) GOOD DESIGN MAKES A PRODUCT USEFUL

A product is bought to be used. It has to satisfy certain criteria, not only functional, but also psychological and aesthetic. Good design emphasizes the usefulness of a product whilst disregarding anything that could possibly detract from it. ~ Dieter Rams

Today’s wearables are not very useful. In fact, they’re more work than they’re worth. Surveys show most of today’s wearables end up in a drawer after about three months of use.

If notifications are to be useful on your wrist then they can’t just be a mirror of the ones on your phone. ~ Ben Bajarin (@BenBajarin)

At best, today’s wearables duplicate the functionality of a smartphone on a form factor not well suited for performing smartphone functions. Now what does that remind me of? Oh yeah, trying to cram a desktop operating system into a tablet form factor. How’d that work out?

Tablet PC Specification

CAPTION: The first public prototype of a Tablet PC (2001). It ran the Windows XP Tablet PC Edition ((You’ve gotta love Microsoft’s naming conventions.)) operating system ((Bill Gates of Microsoft showed the first public prototype of a Tablet PC (defined by Microsoft as a pen-computer allows hardware in accordance with the specifications made by Microsoft and running a licensed copy of the operating system “Windows XP Tablet PC Edition”) at COMDEX.))

Good design isn’t about being pretty, it’s about solving a tangible problem. Today’s wearables are answers searching for a question. If wearables are to have any tomorrows, it will be because they provide a startlingly good answer to the unidentified, undefined, unmet needs of today.

If we want to forecast what Apple is going to introduce in wearables, we need to stop thinking about what is on the market today. In 2007, what we wanted was an iPod and a phone. What we got was an iPod and a phone and an internet communicator and (a year later) an app store. What we got was a computer in our pocket. The iPhone didn’t give us what we wanted, it gave us what we needed. The same will be true of wearables.

2) GOOD DESIGN MAKES A PRODUCT UNDERSTANDABLE

It clarifies the product’s structure. Better still, it can make the product talk. At best, it is self-explanatory. ~ Dieter Rams

Below is the remote control that came with the Sony Google TV.

1

— Not understandable.
— Not self-explanatory.
— Not good design.

A well designed product doesn’t merely do your work, it also works the way you do.

There was a debate [on the Lisa] team about the mouse. Was it going to have a mouse, and how many buttons should it have? Steve and I wanted one button, because if there’s one button, you never have to think about it. One of the former Xerox guys argued for six buttons. He said, “Look, bartenders have six buttons on those drink dispensers, and they can handle it.” But that was a failure to understand what Steve was trying to do with user experience. ~ Trip Hawkins, excerpt From: Max Chafkin. “Design Crazy.”

If you’re designing a product and your customer has to think about how to use it, then you’re not done designing.

Design makes what is complex feel simpler, and makes what is simpler feel richer. ~ johnmaeda (@johnmaeda)

If we want to forecast what Apple is going to introduce in wearables, we need to stop thinking smartphone interface on a watch form factor. Think monitor on a computer (Apple II), a mouse on your desk and GUI interface on your screen (Macintosh), a shuttle wheel in your hand (iPod), and a touch interface on glass (iPhone and iPad). If wearables deserve to be a separate category, then they deserve a form of input uniquely suited to their size and form factor.

3) GOOD DESIGN IS UNOBTRUSIVE

Products fulfilling a purpose are like tools. They are neither decorative objects nor works of art. Their design should therefore be both neutral and restrained, to leave room for the user’s self-expression. ~ Dieter Rams

Good design gets design out of the way. If it’s done right, it seems inevitable. The best designs feel almost as if they were undesigned because they’re just the way you would expect them to be.

The word that comes up over and over again when describing good design is “disappears”. Here are some quotes, to illustrate:

The advance of technology is based on making it fit in so that you don’t really even notice it, so it’s part of everyday life. ~ Bill Gates

I like things that do the job and kind of disappear into my life. ~ Steve Jobs

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

Technology is at its best and its most empowering when it simply disappears ~ Jony Ive

Herein lies another clue for us all. If we want to forecast what Apple is going to introduce in wearables, we need to stop thinking in terms of what the device can do and start thinking in terms of what the device will allow us to do. A well designed wearable will not make us do more. Instead, it will allow us to accomplish more while we do less. It will not impose its way of doing things upon us. Rather, it will allow us to impose our way of doing, upon those things, that we need done.

4) GOOD DESIGN IS HONEST

It does not make a product more innovative, powerful or valuable than it really is. It does not attempt to manipulate the consumer with promises that cannot be kept. ~ Dieter Rams

Here is Steve Jobs, describing the iMac in 2002:

(Why not) let each element be true to itself? If the screen is flat, let it be flat. If the computer wants to be horizontal, let it be horizontal.

Now compare that sentiment to the Samsung Galaxy Note 3, in one-handed operation mode. Ironically, in the image below, the one-handed mode is being demoed with the use of two hands.

dumb

— Not honest.
— Not true to itself.
— Not good design.

BigAssPhone

Abraham Maslow said: “A musician must make music, an artist must paint, a poet must write, if he is to be ultimately at peace with himself. What a man can be, he must be.” The same is true of devices. Good design doesn’t make a device better than it is. It doesn’t even make a device better. Good design fulfills a device’s destiny. It makes it what is and what it was always meant to be.

If we want to forecast what Apple is going to introduce in wearables, we need to think about allowing a wearable to be true to itself. A wearable will be small. A wearable may be in contact with our body. A wearable will be persistent. A wearable will be proximate. Does a monitor — which is large and battery draining — work within the constraints of small and persistent? I doubt it.

We need to stop thinking “watch” and start thinking sensors (which are small and in contact with our body) ID (which is persistent) information, payments and security (which is proximate). In fact, we need to stop thinking about what a wearable can DO and start thinking about the WHERE of wearables. Wearables may not need to DO anything at all. They may just need to be in the same place and space that we are. That may be their true calling. And that may be more than enough to make them invaluable.

5) GOOD DESIGN IS LONG-LASTING

It avoids being fashionable and therefore never appears antiquated. Unlike fashionable design, it lasts many years – even in today’s throwaway society. ~ Dieter Rams

There has been much talk in the tech press of Apple becoming more of a fashion shop.

Might Apple have a future as a fashion conglomerate? – CNET

Apple Has Gone Full-Fashion With Its Newest Executive Hire – Refinery29

Apple Looks to Fashion as it Preps for iWatch – Esquire

I think this talk is misguided.

The following epitomizes fashion:

Fashion is something that goes in one year and out the other. ~ Denise Klahn

Fashion is a form of ugliness so intolerable that we have to alter it every six months. ~ Oscar Wilde

Fashion is made to become unfashionable. ~ Coco Chanel

Apple is a Design Shop. Design is about style. Design is about aesthetics. Design is about long lasting.

Fashions change, but style is forever. ~ Anonymous

Fashion changes, style remains. ~ Gabrielle “Coco” Chanel

Good design doesn’t date. ~ Harry Seidler

Design IS beautiful, not because it tries to be, but because it MUST be:

When I am working on a problem, I never think about beauty … but when I have finished, if the solution is not beautiful, I know it is wrong. ~ R. Buckminster Fuller

BhL8PCWIUAA_pYx.jpg-large

CAPTION: If it looks well, it flies well — aesthetics and performance relate.

I think this may provide us with the biggest clue as to what Apple is NOT going to do in wearables. If we want to forecast what Apple is going to introduce in wearables, we need to stop thinking “watch” and we need to stop thinking “fashion.” Apple will not create a device that is decorative and a slave to fashion. Fashion changes far too quickly. Apple will seek, instead, to make something that is long lasting and enduring. That most probably means an Apple wearable will be restrained, unobtrusive, barely noticeable, virtually invisible.

6) GOOD DESIGN IS AS LITTLE DESIGN AS POSSIBLE

Less, but better – because it concentrates on the essential aspects, and the products are not burdened with non-essentials. Back to purity, back to simplicity. ~ Dieter Rams

Robert Browning said, “less is more” ((Popularized by the German-born American architect Ludwig Mies van der Rohe)) and there is a lot of truth contained in that pithy paradoxical platitude. However, when it comes to design, I much prefer Dieter Rams’ “less, but better”. It encapsulates — in three words — the concept of good design being as little design as possible.

Almost all quality improvement comes via simplification of design, manufacturing… layout, processes, and procedures. ~ Tom Peters

What is left out … is as important as, if not more important than, what is put in. ~ Katherine Paterson

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

‘Think simple’ as my old master used to say – meaning reduce the whole of its parts into the simplest terms…. ~ Frank Lloyd Wright

[pullquote] Good design subtracts features yet increases functionality[/pullquote]

Features add complexity. Complexity adds functionality. Good design is paradoxical. It subtracts features while simultaneously increasing functionality. A good design finds an elegant way to put all the features you need in. A great design leaves half those features out. ((Inspired by Mike Monteiro (@Mike_FTW)))

A work is perfectly finished only when nothing can be added to it and nothing taken away. ~ Joseph Joubert

Perfection is finally attained not when there is no longer anything to add but when there is no longer anything to take away… ~ Antoine De Saint-exupery

The philosophy (at Apple) was never stated, but it was this: Get rid of all the junk you didn’t need. ~ Tom Suiter, director of Apple creative services ((Excerpt From: Max Chafkin. “Design Crazy.”))

If we want to forecast what Apple is going to introduce in wearables, we need to stop thinking “features”, need to start thinking essentials and need to focus on minimalism — doing the most with the least. That’s why I think an Apple wearable will be more like a band than a watch. But no matter what form the Apple wearable takes, look for it to be less than you expect, yet do more than you might initially anticipate.

Conclusion

There are three responses to a piece of design – yes, no, and WOW! Wow is the one to aim for. – Milton Glaser

There are no “wow” wearable devices on the market today. In fact, I’d venture to say our initial reaction to today’s wearables has been closer to “Yikes!”

The future lies in designing and selling computers that people don’t realize are computers at all. ~ Adam Osborne

Let me repeat that, because I love it so much. The future lies in designing and selling computers that people don’t realize are computers at all.

That about says it all, so I’ll say little more. We won’t have to guess when wearabables get it right. We’ll simply know, because we’ll stop thinking about how much better wearables have become and start thinking, instead, about how much better our lives have become.

Post Script

Thoughts on my thoughts? Leave a comment, below, or contact me on Twitter @johnkirk.

The Smartphone Is The Computer

I have spent the past three weeks in Detroit, a city possessing a rich history and an unremitting present. The vagaries of Silicon Valley count for little here. When I heard a young man ask — for real — if the Samsung Galaxy S5 was an iPhone or an Android, I knew there was much to glean if I simply put my smartphone down and listened.

Here then are my thoughts, insights and observations from the past one score and one day…

There are no smartphone wars. Rather, just amazing, affordable and truly expansive opportunity. Android versus iPhone means nothing to nearly everyone I speak with.

It is hard to overstate just how much television will be disrupted by the combination of children, tablets and YouTube. Free, always accessible content uniquely tailored to their own self-driven interests, available from any location is now possible — and the young will accept nothing less.

Facebook, not smartphones, not telcos, not automobiles, not Disney or ESPN, is connecting the world. Facebook is the new oil. If there is any ‘next Steve Jobs,’ it is Mark Zuckerberg. For whatever confluence of reasons, Zuckerberg divined the power of social media from the start, just as Jobs did with computing. No matter how rich, no matter how many struggles, I expect Zuckerberg to devote the remainder of his life to Facebook and all it represents.

There is middling outrage over the Facebook ‘user emotion’ study. As for me, this represents little more than A/B testing. In fact, I’m more angry over the iPhone keyboard. It’s so terrible. Is this some sort of secret Apple study? I mean, what other possible reason could there be?

Sheryl Sandberg

I am in the place where cars and mass production altered the course of humanity. Now, it is smartphones, social media, mapping, and code; these are re-making the planet as much as the automobile did in the 20th century. We are at the start of a new future. That’s just awesome.

I was often asked the best way to become a professional writer. It’s such an easy question to answer.

Marry well.

Oh, and should you be so fortunate to have an opportunity to write about what you love, for an organization with no concern for page views and provocation, as I am at Tech.pinions, then do not fritter away such a blessing.

I first learned about the SCiO from Techpinions. Point this device at a piece of fruit for example, and it will tell you what it is and even provide data on its composition, such as how much fat and carbs the item contains. Every single time I read more about this device, I think it is absolute magic. I told so many people about it that I now desperately hope it works as advertised.

scio2

I have nothing but good things to say about the Amazon Fire Phone. Yet, I can’t possibly recommend it to anyone. Why would I? In the US, at least, there is almost no reason to recommend any smartphone other than the iPhone or the Samsung Galaxy.

Microsoft’s Windows Phone faces a similar fate as Amazon’s Fire. Fair or not, can you imagine any outcome for Windows Phone other than failure? How does Microsoft start over? What amazing technologies, hardware and combination of services can they possibly deliver to make the world care about a device that is not iPhone or Android? I do not have the answers.

jeff_bezos_fire_phone

If I were in charge of Microsoft I would simply continue to make quality devices, offering great Nokia design, great Nokia imaging, incorporating Skype, OneDrive, HERE, Office and other Microsoft-owned products and services. Plodding along, hoping more and more Android vendors exit the business, picking up the scraps, all while leveraging my enterprise install base and security, identity and productivity tools, hoping users discover my superior value.

It won’t help. The smartphone market is lost to Microsoft.

The screen market, however, is barely in its infancy. Microsoft should forget smartphones and focus instead on screens. Screens will become like power outlets, we only notice them when they cannot be found.

Perhaps no company — not Apple, not even Google — possesses the breadth of services Microsoft offers. The problem, of course, is these services are not exposed for all the world to use. They are locked inside unwanted PCs, shoved inside tablet abominations, buried beneath the content we actually seek from our Xbox systems, sold mostly to IT directors, attached to products and platforms we do not need, and hidden behind an incomprehensible UI. Microsoft has built an anti-moat around its services, not locking us in but keeping everyone out.

azure1

The World Cup has introduced to millions the joys of live sports streamed to our smartphones and tablets. This is so in Detroit and around the country. It has never been more clear we all want to watch what we want to watch when we want to watch it where we want to watch it and on the device we want to watch it on. This is simple, obvious and unstoppable. It’s only a matter of time before we have a difficult time explaining to our progeny how it ever could have been anything else.

tim-cook-attends-pride-event

Last week, Apple CEO Tim Cook very happily took part in the San Francisco Pride Parade. Also, Hobby Lobby successfully won the right to provide only certain forms of contraception for its employees. What do these have in common?

Values equal profits.

Companies are publicly declaring their values, even going to court to defend and promote their values. This is only start. The technologies of Silicon Valley are breaking down barriers, bringing corporations to their knees and empowering individuals and groups around the world. With smartphones in hand, with continuous, real time, location-aware connectivity always available, we become our own corporations — with Uber, AirBnB and others merely pointing the way. We will work for ourselves and we will live by our values.

This is good. But it will be messy. Very messy.

CSC_0100SM

Hype aside, can you envision a situation where you use Bitcoin over, say, your iPhone ‘wallet’ linked to your secure iTunes payment data? iPhone offers ease of use and peace of mind. That’s a powerful combination. Still worse for Bitcoin, is that it is essentially digital cash in a world addicted to easy credit. Learn about the blockchain. Bitcoin itself is merely a bystander.

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

Smartphones are borderline magical. That said, the iPhone 5s battery and the HTC One (M8) camera are embarrassingly bad.

In the past week, I’ve rented two movies from iTunes. I failed to finish both in the first sitting and was not able to watch either until after 24 hours later. iTunes refused, insisting the rental period had expired. This was true, though did not mitigate my anger. I may abandon iTunes rentals altogether. The lure of non-legal downloading is strong.

marissam

How much of Yahoo’s Alibaba riches is Marissa Mayer prepared to spend to get us to visit Yahoo? I suspect all of it. Nowhere I go does Yahoo seem to matter.

Idle prediction: Apple will not kill off the iPhone 5/c/s form factor this year, nor will Apple offer three simultaneous iPhone form factors. Yes, that means I am predicting only one large-display iPhone.

Not a prediction, just a thought experiment: In 2024, when a chid is born, they will be assigned either an Android or an iPhone. This will control everything.

There will be over 1 billion (American) Android activations this year, and several hundred million (Chinese) Android (AOSP) activations. Android is a stunning success story. All those involved in Android have long since earned our respect. That said, some analysts, bloggers and even industry insiders still have not grasped the obvious: Smartphones are the first screen. Smartphones are the primary computer.

Meg-Whitman-CEO-at-HP

The CEO of Yahoo is female. The CEO of HP is female. The #2 at Facebook is female. A man runs Android, the world’s most popular OS. He is from India. The CEO of Microsoft is from India. The tech sector points the way forward not only with its products.

Be smart. Work hard. That’s true everywhere.

Tim Cook Has The Know-How But Steve Jobs Had The Know-Why

On June 13, 2014, John Gruber posted his epic, “Only Apple.” In part of his article, Gruber focused specifically on the changes occurring at Apple under new CEO, Tim Cook.

Jobs was a great CEO for leading Apple to become big. But Cook is a great CEO for leading Apple now that it is big, to allow the company to take advantage of its size and success. Matt Drance said it, and so will I: What we saw last week at WWDC 2014 would not have happened under Steve Jobs.

New Apple didn’t need a reset. New Apple needed to grow up. To stop behaving like an insular underdog on the margins and start acting like the industry leader and cultural force it so clearly has become. ~ John Gruber

These words were received with near unanimous approval by the Apple community. But is Gruber’s sentiment accurate? Does Apple really need to “grow up” and become more mature? Whatever happened to Steve Jobs’s famous admonition that one should:

“Stay hungry, stay foolish”? ((Stewart [Brand] and his team put out several issues of the Whole Earth Catalog, and then when it had run its course, they put out a final issue. . . . On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath were the words, “Stay hungry, stay foolish.” It was their farewell message as they signed off. “Stay hungry, stay foolish.” ~ Steve Jobs))

Is Tim Cook The Better CEO?

When Cook succeeded Jobs, the question we all asked was more or less binary: Would Apple decline without Steve Jobs? What seems to have gone largely unconsidered is whether Apple would thrive with Cook at the helm, achieving things the company wasn’t able to do under the leadership of the autocratic and mercurial Jobs.” ~ John Gruber

There’s not a doubt in my mind that Tim Cook is a better CEO than Steve Jobs ever was. I thought so from day one. But is that the right question? Shouldn’t we be asking ourselves instead whether or not Tim Cook is a leader and whether he can lead Apple forward without Apple losing that rare mixture of genius and madness that made Apple so very unique?

The Price Of Efficiency

It has long been axiomatic that Apple is not the sort of company that could walk and chew gum at the same time. In 2007, they issued a (very Steve Jobs-sounding) press release that stated Mac OS X Leopard would be delayed five months because the iPhone consumed too many resources:

However, iPhone contains the most sophisticated software ever shipped on a mobile device, and finishing it on time has not come without a price — we had to borrow some key software engineering and QA resources from our Mac OS X team, and as a result we will not be able to release Leopard at our Worldwide Developers Conference in early June as planned.

Or consider the October 2010 “Back to the Mac” event, the entire point of which was to announce features and apps for the Mac that had started life on iOS years earlier. ~ John Gruber

Apple has always generated stories like this. It’s long been a given that Apple is understaffed — that Apple had only one guy doing project X and when he got pulled to work on project Y, project X foundered and ground to a halt. Such delays drove us all crazy as understaffed Apple let things — important things — linger, sometimes near death.

But did you ever ask yourself why this was? It’s not like Apple was under resourced. They’ve got more money than god. And it’s not like Steve Jobs was a head-in-the-clouds CEO who didn’t recognize the need to acquire additional talent. So why? Why?

Throughout the years in business, I found something. I always ask why you do things. The answers you invariably get is, “That’s just the way it’s done.” Nobody knows why they do what they do. Nobody thinks about things very deeply in business, that’s what I found. ~ Steve Jobs

Being inefficient was one of the many prices Apple paid for having Steve Jobs as its CEO. Jobs notoriously didn’t tolerate “B” players on his team. He felt they infected the company and soon led to the proliferation of “C” players as well. Jobs wanted only “A” players and he was willing to have Apple be understaffed rather than to fill vacancies with anything less that what he deemed to be the best.

[pullquote]Some enjoy comforting the the afflicted. Steve Jobs enjoyed afflicting the comfortable.[/pullquote]

So you put the B team on this one, did you? ~ Steve Jobs

The result? Superb products that were always running on the edge, always running late; always in danger of not coming out in a timely fashion or in any fashion at all.

This is a very uncomfortable way to run a company. It’s a very inefficient way to run a company. But it also proved to be a very effective way to run a company.

Is Apple running smoother now? Undoubtably. But is that necessarily the good thing everyone seems to think it is? Perhaps not.

Apple Wants To Be The Developer’s Friend

John Gruber writes:

(Apple has) begun to act more magnanimously. They’ve given third-party developers more of what we have been asking for than ever before, including things we never thought they’d do. Panic’s Cabel Sasser tweeted:

My 2¢: for the past few years it’s felt like Apple’s only goal was to put us in our place. Now it feels like they might want to be friends.

It’s ironic (to me, at least) that John Gruber used the above tweet as an example of how well Apple is doing when, in my article entitled “Whither Apple or Wither Apple?“, I used that very same tweet as a cautionary tale. My take from that article:

You know who needs a friend, Cabel? End users, that’s who. Because when developers become more important than end users you get — Microsoft. Putting developers “in their place” — which is, to say, placed behind end users — is exactly what Apple should be doing.

Does the above mean that I want Apple to not have a good relationship with their developers? Not at all. I just don’t want that increased friendliness come at the cost of losing focus on the end user. Because if that focus is lost, Apple is lost as well.

Efficiency vs. Effectiveness

Undoubtably, Tim Cook is making the machine that is Apple run more efficiently. But efficiency is getting the trains to run on time. Effectiveness is getting the trains to the right stations. It doesn’t matter how fast you’re going, unless you’re going in the right direction.

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

Sure, what we do has to make commercial sense, but it’s never the starting point. We start with the product and the user experience. ~ Steve Jobs

Steve Jobs’s “North Star” was making a great product that provided the end user with a great experience. But what is Tim Cook’s guiding principle?

What is Apple’s mission? To make the very best products in the world that really deeply enrich people’s lives. ~ Tim Cook

Identical in word. That’s good. But identical in deed? That’s the hard part.

Creativity Is Fragile

I’ve found that the most creative people are confident about one thing: their doubts in themselves. ~ johnmaeda (@johnmaeda)

At the memorial service given on the Apple campus following Steve Jobs’ death, Jony Ive had this to say:

[pullquote]Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say “wow,” and soon you’re cooking up all sorts of ideas. ~ Steve Jobs[/pullquote]

Steve used to say to me (and he used to say this a lot), “Hey Jony, here’s a dopey idea.” And sometimes they were — really dopey. Sometimes they were truly dreadful.

But sometimes they took the air from the room, and they left us both completely silent. Bold, crazy, magnificent ideas. Or quiet, simple ones which, in their subtlety, their detail, they were utterly profound.

SJobs

As I re-watched the video and re-read the transcript of Ive’s speech, I was re-reminded of the fact that creativity lives on the edge.

[pullquote]This is the thing about creativity that is rarely acknowledged: Most people don’t actually like it. ~ @jessicaolien[/pullquote]

Creativity is the power to connect the seemingly unconnected. ~ William Plomer

Creativity is dopey thinking — right up until the moment when it suddenly becomes brilliant. It’s unimaginable thinking — right up until the moment that it suddenly becomes the only solution imaginable. It’s uncomfortable thinking, it’s dangerous thinking, it’s lonely, isolated thinking — right up until the moment when it’s embraced by all.

Artists often work within the uncomfortable space that precedes “Aha!” or “Oh, I get it!” ~ johnmaeda (@johnmaeda)

People listened to to the crazy, creative ideas of Steve Jobs because Steve Jobs was Steve Jobs and Steve Jobs was the CEO. And sometimes even that wasn’t enough. Sometimes, they STILL didn’t listen to Steve Jobs and they fired Steve Jobs, even from the company he had helped to found.

Human salvation lies in the hands of the creatively maladjusted. ~ Dr. Martin Luther King, Jr.

Genius is more often found in a cracked pot than in a whole one. ~ E. B. White

Now that Steve Jobs is gone, who is there at Apple to promulgate, and to promote and — most of all — to protect fragile new ideas?

The best CEOs try to make their companies a safe place for those with wild ideas, and a wild place for those with safe ideas. ~ Dr. Mardy

Conclusion

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

know how knowledge or education concept with button on computer keyboard

The thing that bound us together at Apple was the ability to make things that were going to change the world. ~ Steve Jobs

[pullquote]The art of progress is to preserve order amid change and to preserve change amid order. ~ Alfred North Whitehead[/pullquote]

Despite all my questioning and kvetching, I do believe that Tim Cook is — as Steve Jobs was — bound to Apple by his desire to make things that are going to change the world. And I believe that Tim Cook is just crazy enough to give the crazy people the run of the company. ((Updated language courtesy of Michael Glotzer @Mglo))

But I don’t know that for sure. It’s far, far too early to make that call.

Now don’t get me wrong. Based on all the available evidence, the verdict is clear — Cook and Apple are on the right track.

But that’s exactly the problem. There’s mounds of evidence in existence that we are not privy to. And there will be mountains more evidence produced over the next couple of years. So any verdict reached today will be terribly, terribly premature.

[pullquote]Do not seek to follow in the footsteps of the wise. Seek what they sought. ~ Matsuo Basho[/pullquote]

You can’t connect the dots looking forward you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something: your gut, destiny, life, karma, whatever. Because believing that the dots will connect down the road will give you the confidence to follow your heart, even when it leads you off the well-worn path. ~ Steve Jobs

images-100It’s as if Steve Jobs was speaking to us — and particularly to Tim Cook — from beyond the grave. Tim Cook has to be his own man and do his own thing. We know he’s got the know-how to do the job. We’ll have to wait and see if he, and Apple, still retain the know-why.

Disrupting Apple’s Tao

Clay Christensen’s Disruption Theory has been subjected to severe criticism this past week. If one’s aim is to criticize the predictive power of disruption theory, one of the best ways to do it is to point out Clay Christensen has consistently been wrong about Apple.

Christensen’s Apple Predictions

— In a January 2006 interview with Businessweek, Christensen predicted the imminent demise of the iPod. ((“During the early stages of an industry, when the functionality and reliability of a product isn’t yet adequate to meet customer’s needs, a proprietary solution is almost always the right solution — because it allows you to knit all the pieces together in an optimized way.”
—
“But once the technology matures and becomes good enough, industry standards emerge. That leads to the standardization of interfaces, which lets companies specialize on pieces of the overall system, and the product becomes modular. At that point, the competitive advantage of the early leader dissipates, and the ability to make money migrates to whoever controls the performance-defining subsystem.” ~ What Clayton Christensen Got Wrong)) Didn’t happen.

— In a June 2007 interview, again with Businessweek, Christensen reiterated the iPod was doomed and further predicted the iPhone would not be successful. ((The iPhone is a sustaining technology relative to Nokia. In other words, Apple is leaping ahead on the sustaining curve [by building a better phone]. But the prediction of the theory would be Apple won’t succeed with the iPhone. They’ve launched an innovation that the existing players in the industry are heavily motivated to beat: It’s not [truly] disruptive. History speaks pretty loudly on that, that the probability of success is going to be limited. ~ What Clayton Christensen Got Wrong)) REALLY didn’t happen.

— In a May 2012 episode of the Critical Path with Horace Dediu, Christensen again announced his pessimism about the iPhone. ((Christensen’s second concern is that although integrated approaches in technology can be quite successful for a period, in the end modular approaches to technology always defeat integrated approaches. Christensen said:
—
“The transition from proprietary architecture to open modular architecture just happens over and over again. It happened in the personal computer. Although it didn’t kill Apple’s computer business, it relegated Apple to the status of a minor player. The iPod is a proprietary integrated product, although that is becoming quite modular. You can download your music from Amazon as easily as you can from iTunes. You also see modularity organized around the Android operating system that is growing much faster than the iPhone. So I worry that modularity will do its work on Apple.” ~ What Clayton Christensen Got Wrong)) Really, really, really didn’t happen.

So, Is Disruption Theory Wrong Or Is Apple The Exception That Proves The Rule?

Well kinda sorta both. As I discussed yesterday in Disruption Corruption: What Disruption Theory Is And What It Isn’t, when Christensen created Low-End Disruption Theory (as opposed to his other theory: New Market Disruption) he may have focused a bit too much on business buyers and not enough on consumers. Business buyers tend to make cold, hard, rational decisions that over value cost cutting and devalue the end user experience. Consumers tend to make warm, soft, emotional decisions that under value long term costs and over value experience. As I put it yesterday:

We never desire strongly, what we desire rationally. ~ Francois De La Rochefoucauld’s

The PC Was Made For Businesses. The iPhone And iPad Were Made To Be Loved

The old, pre-Nadella Microsoft wouldn’t have know a warm fuzzy emotion if it had smacked them in the face. And when IT departments were the primary consumers of PCs, this served Microsoft well. As Microsoft’s near 95% market share attested, Microsoft was the near ideal company to make a product that appealed to the sensibilities of IT departments. Nearly everything about the PC played to Microsoft’s strengths.

However, as PCs became smaller with the introduction of notebooks and then became WAY smaller with the introduction of phones, Apple’s design strengths became more and more important. First, consumers purchased iPods from Apple, then they purchased iPhones from Apple, and then they started to insist the computer equipment they used at work be as good as the computer equipment they owned at home. IT departments — Microsoft’s unassailable bastion — were blindsided and the Bring-Your-Own-Device (BYOD) movement wrested power away from IT and put it in the hands of the less rational, less penny-pinching, more emotional, end user.

If Microsoft was the ideal company to sell PCs to IT departments, then Apple may have been the ideal company to appeal to the sensibilities of consumers. Why? Because Apple prioritized the end user experience above all else.

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

Let’s recap. Disruption theory eloquently explained why great companies that worked hard to serve their best customers ended up over serving — and over charging — the vast majority of the remainder of their customer base, thus making it possible for challengers to steal those customers away with products that seemed to be only “good enough” but which were, in reality, great in some way that really mattered.

The incumbent is faced with a dilemma – an unsolvable problem, as it were. If they maximize product benefits for their best customers and maximize product profits — which after all, is their job — they lose in the long run as hungry startups steal their low-level customers and, eventually, their mid-level customers with disruptive “good enough” products.

(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

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 competitors — and the competitors that don’t yet exist — do; and

2) Prioritize future profits over current profits.

Even if it were possible to predict the unpredictable and create a disruptive product within one’s own company, it’s tantamount to committing suicide to do so. I mean, what’s the point? Who wants to create a disruptive product that destroys the profits of an existing cash cow and replaces it with a seemingly inferior product that doesn’t generate nearly as much profit as the old, highly respected and highly valued product did? That’s just crazy talk.

The Innovator’s Dilemma, Redux

And that’s why it’s a dilemma — there are simply no good solutions, only choices between equally bad alternatives.

Doodle yin-yang symbol

Steve Jobs’ Attempt To Resolve The Innovator’s Dilemma

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

In order to overcome the Innovator’s Dilemma, Steve Jobs created a radically new way to run a company, structuring it entirely differently than any large company of the 20th century. Apple put 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 delight the customer and provide a great experience. Apple reinvents existing markets by making the user experience easier, richer, and more pleasant. Each time, they begin at the beginning and start with the user’s experience first, then drive back through their infrastructure to make that a reality.

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

Apple absorbs the complexity and presents the simplicity. They’re obsessed with details and sweat the small stuff so 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. ~ Craig Federighi

The Expected Result: Fanatical Customer Loyalty

Apple_Yin Yang_1

If user experience is Apple’s number one priority, it should come as no surprise Apple generates fanatical customer loyalty.

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

Apple’s customers love Apple. For some reason this baffles Apple’s critics. Apple’s critics are always referring to the ‘cult’ of Apple, or to Steve Jobs’ ‘reality distortion field’ or to Apple’s marketing prowess as if Apple has some mystical, Svengali-like power over their customers.

Worship

Why fall back upon supernatural explanations when the natural explanation so obviously explains the phenomenon?

If Apple’s first priority is the user experience, then OF COURSE Apple’s customers are going to be loyal to Apple. It’s not an enigma or some great mystery. Just the opposite. Apple’s high customer loyalty numbers are the logical and all-too-obvious result of Apple’s policies and priorities. Apple puts the customer first. Customers respond in kind. It’s that simple.

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

So What Does All This Have To Do With Disruption Theory Anyway?

Let’s re-review how Low-End Disruption is supposed to work.

(A)n integrated approach wins at the beginning of a new market, because it produces a superior product that customers are willing to pay for. However, as a product category matures, even modular products become “good enough” – customers may know that the integrated product has superior features or specs, but they aren’t willing to pay more, and thus the low-priced providers, who build a product from parts with prices ground down by competition, come to own the market. ~ Ben Thompson

Here’s why low-end disruption doesn’t seem to apply to Apple. Christensen was right when he said people aren’t willing to pay more for superior features or specs they don’t need. But consumers ALWAYS want and need a superior experience. And many of them are willing to pay top dollar to get it.

Conclusion

One of Clay Christensen’s great insights was that a business can OVER SERVE the vast majority of their customer base without even knowing they’re doing it. While over serving sounds like a great idea in theory, in practice it leads to massive disaffection as customers are made to pay for products and services they simply don’t want or need.

But here’s the thing — and this is the crux of the matter — while it is all too easy for a company to provide their customers with too many frivolous and unnecessary features and specs, it is impossible to over provide a great experience.

[pullquote]A company can not over serve their customers by providing them with too superior a customer experience[/pullquote]

Let me say that again. A company can not over serve their customers by providing them with too superior a customer experience. Too much is simply not enough. And since Apple is laser focused on providing the customer with a superior experience, the customer is not over served and Apple can not fall prey to Low-End Disruption.

Think of it as a game of Rock, Paper, Scissors. New integrated solutions beat old modular solutions. New modular solutions beat old integrated solutions. But superior customer experience beats new modular solutions. The theory is easy. It’s the execution of the theory that’s hard.

Excellence is never an accident. It is always the result of high intention, sincere effort, and intelligent execution; it represents the wise choice of many alternatives – choice, not chance, determines your destiny. ~ Aristotle

Apple Announces Nothing (New)

“Apple announces NOTHING at developer conference”.

No, seriously, I read it on the internets, so it must be true. You can read it for yourself, here:

images-94

Apple Announces Nothing at Developer Conference ~ By Paul “Comic Book Guy” Ausick

Admittedly, that is just one man’s opinion, and an extremely harsh assessment at that. The consensus seems to be a little more moderate. What most Apple critics seem to have concluded is not that Apple announced NOTHING at their developer conference but that Apple announced NOTHING NEW.

No, seriously. That’s what they’re saying. You can read it here.

Great artists steal: The iOS 8 features inspired by Android ~ by Ron Amadeo

“(M)any of Apple’s announced upgrades were things the Android OS has boasted for years.”

WLETyping suggestions
Third party keyboards
Inter-app communication
Hotwords, music recognition, and streaming voice recognition
Notification Actions
Videos in the App Store
Beta testing
Widgets
Photo backup and storage
CloudKit

Fetish For First

NTSHWhat is it with our fetish for first? Where did we ever get the notion being first was all that mattered and — perversely — that nothing that comes after “first” matters at all?

Tech is not a race. It’s not some Olympic event, where you run 100 meters, cross the finish line, everybody jogs to a stop, and then you get awarded a medal. No. In real life, the tech race goes on and on forever.

If anything, tech is more like catching a train than running a race. You have to stand on the platform and wait for tech to arrive before you can get on board. Try to get on board too soon and you’ll fall flat on your face. Try to get on board too late and you’ll be left at the station. At least, that’s what it’s like for the consumers of technology.

If you’re a company that’s CREATING the technology — like Apple or Google or Microsoft or Amazon — you still have to wait for the technology train to pull into the station. But if you want to control that technology, you might have to actually anticipate where technology is headed and BUILD the platform first. And you’d darn well better hope you guessed right and built your platform at the right place and at the right time. Otherwise you’re going to be as lonely as a developer at a Microsoft Kin convention.

Maybe an even better metaphor is a wave. Tech is like many waves coming together to form one massive wave. To ride that wave, you have to time it perfectly. Too soon and it crashes on top of you. Too late and you are left behind. But catch the tech wave — catch it just right — and you can ride it all the way to wealth and fame.

Take, for example, the iPod:

People think of the iPod as just the iPod. But what people call the iPod was really three things: iPod, iTunes, and the iTunes Store. ~ Tony Fadell ((Excerpt From: Max Chafkin. “Design Crazy.”))

The iPod was introduced in 2001, but it didn’t take off until the hardware (iPod), the software (iTunes Store) and services (iTunes internet services) all came together to create a groundswell that flooded the market and washed the competition away.

First To Fail

QR Codes. NFC. JOYN. MMS. Infrared. Haptics. Projectors. So many dead ends in mobile. ~ Benedict Evans (@BenedictEvans)

The tech graveyard is full of failed “firsts,” right?

— Apple’s Newton;
— Microsoft’s Windows Tablets;
— Samsung’s Smartwatches.

Here are some more examples:

The First Wheel:

Wheel

The First Convertible Automobile:

FirstCar

The First Electric Automobile:

FirstElectric

The First Highway Hi-Fi (1956):

HiFi

The First Pedal Skates:

Pedal

The First Motorized Roller Skates:

Motorized

The First Vending Machine With Pre-Lit Cigarettes:

PreLit

The First Automated Hot Dog Machine:

HotDog

The First Picturephone:

lady-bird-picturephone

The First Notebook Computer:

Notebook

Let’s face it, being first ain’t always a good thing. Sometimes, when you get too far ahead on the road you’re traveling, you find you’re no longer on solid footing.

RoadR

How Are We Not Getting This?

How are we not getting this? I mean, it’s not like this is new or anything. It has always been true, since the dawn of man.

The Greeks invented the Phalanx, but the Macedonians perfected it. They didn’t call him Alexander The “Late”, they called him Alexander The Great — and with good reason. ~ John R. Kirk ((That’s right. I cited myself. So sue me.))


images-95And it’s not only geeks like Comic Book Guy who are getting this wrong. A lot of people — people who should know better — are getting this wrong too. Take, for example, a look at this March, 2014 interview with a Steve Ballmer:

Ballmer also took shots at Microsoft’s rivals, waving off Apple as a company that was “quote, cool, unquote” that has “had a good run lately,” and in tablets, (Apple) only commercialized the idea that others, including Microsoft, had originated. ((Emphasis added.))

What.
The.
Heck.

I don’t stinking believe Steve Ballmer even thought those thoughts, more less said those words out loud, more less said them out loud to a reporter.

Apple ONLY commercialized the ideas? ONLY?

EXCUSE ME. Isn’t being a commercial success the frizzing POINT? Isn’t that Apple’s job? And Microsoft’s job too, for that matter? Tech pedants are so obsessed with “first” they’ve completely taken their eyes off the prize. They’ve forgotten the goal is not to be the first, but to be the FIRST TO GET IT RIGHT.

  1. You don’t want to be the first one to sail the high seas.
    You want to be the first one to sail the high seas and RETURN TO PORT SAFELY.
  2. You don’t want to be the first one to fly an airplane.
    You want to be the first one to fly an airplane and LAND IT SAFELY.
  3. To use a D-Day analogy, you don’t want to be the first one ON the beach.
    You want to be the first one OFF the beach…ALIVE.

There’s “First” And Then There’s “First”

There are many kind of firsts, my friend, and first in time is not always first in value to either the producer or the consumer of technology.

You say Android is the first to offer third party keyboards? iOS is the first to do it without allowing all of your keystrokes to be read by those self-same third-party developers.

You say Android is the first to offer inter-app communications? iOS is the first to do it without exposing your mobile device to a “toxic hellstew” of computer viruses.

You say Android is the first to allow Widgets? iOS is the first to make them a seamless experience.

You say Android is the first to allow photo backup and storage? iOS is the first to let you do it effortlessly.

You say Android is the first with a slew of other features? iOS is the first to do those same features without bringing your operating system to its knees.

It means much more to us to get it right then to get it first. ~ Tim Cook

SERVICES - word cloud - colored signpost - NEW TOP TREND

Customer, services, support, care, help, trust, advice, guidance — these are assigned ZERO value by Apple’s critics. Apple announces NOTHING, they say, and Apple announces NOTHING NEW, they say, despite the flood of new services and developer tools announced at Apple’s World Wide Developer Conference (WWDC). Why the discrepancy?

You can’t teach a color blind man to appreciate a Monet and you can’t teach a person who discounts the importance of privacy, security etc, to appreciate what Apple does either.

Giverny Bridge on the Water Lily Pond

First To Market Or First Priority?

Apple employs a whole different definition of “first” than Apple’s critics do. It’s not about shipping first; it’s not about getting to market first; it’s about getting it right BEFORE it ships and BEFORE it gets into the hands of Apple’s valued customers.

It is key to understand that Apple puts the experience first. Everything else flows from that priority. ~ ßen ßajarin (@BenBajarin)

Security First

Box

Privacy First

    — “Google can periodically turn on mic, Wi-Fi, Bluetooth, & similar features on all your current & future devices” ~ Android Police

    — TouchID is being used by 85% of iPhone 5S owners

iOS 8 now requiring apps reconfirm authenticity of background location periodically. Steve Cheney (@stevecheney)

Reliability First

    — Steve had been absolutely against opening the App Store early on, because he didn’t want the phone to crash. You have to be able to call 911 on the phone anytime, so we couldn’t trust our operating system to a bunch of crazy stupid developers without putting them in a huge sandbox first. ~ Andy Grignon ((Excerpt From: Max Chafkin. “Design Crazy.”))

User Experience First

Ketchup

Ease Of Use And “Invisibility” First

In iOS 8, you’ll be able to AirPlay to Apple TV with zero configuration. Don’t even have to be on the same network! ~ Chris Marriott (@chrismarriott)

    — If your customer has to think about it, you’re not done designing the user interface.

Mail attachments up to 5GB in size are not a problem anymore. ~ Horace Dediu (@asymco)

    — There was a debate [on the Lisa] team about the mouse. Was it going to have a mouse, and how many buttons should it have? Steve and I wanted one button, because if there’s one button, you never have to think about it. One of the former Xerox guys argued for six buttons. He said, “Look, bartenders have six buttons on those drink dispensers, and they can handle it.” But that was a failure to understand what Steve was trying to do with user experience. ~ Trip Hawkins ((Excerpt From: Max Chafkin. “Design Crazy.”))
    — There is a huge difference between a learning curve, a low learning curve and NO learning curve. When you get to NO learning curve, everybody uses the feature, no matter how complex it is technically or how geeky it used to seem.
    — According to Teller (head of Google X), the truly innovative projects should become perfectly transparent in our lives. He started off his keynote by talking about car brakes and ABS systems. When you put your foot on the brake of the car, you’re not actually activating the brakes. It’s just an interface. You are actually making a request to a robot.

    “That is a wonderful technology moment. We don’t have to mess with it. We just say here’s what we want,” he said. “When technology reaches that level of invisibility in our lives, that’s our ultimate goal. It vanishes into our lives. It says: ‘you don’t have to do the work, It’ll do the work.’”

Design First

    — “Jobs unveiled the so-called Bondi Blue iMac—named for a beach in Sydney, Australia—at a special event in May 1998. “It looks like it’s from another planet,” Jobs said. “A planet with better designers.” ((Excerpt From: Max Chafkin. “Design Crazy.”))

Integration First

    — Google loves to characterize Android as open, and iOS and iPhone as closed. We find this a bit disingenuous and clouding the real difference between our two approaches. […] In reality, we think the open versus closed argument is just a smokescreen to try and hide the real issue, which is, “what’s best for the customer?” Fragmented versus integrated. ~ Steve Jobs

(T)oday’s additions are pieces in a larger puzzle, not the whole puzzle by themselves. ~ @BenBajarin

Benefits (not features) First

    — The competitors, like Commodore and Kaypro, were all doing speeds and feeds, whereas Steve always wanted things like “What is the significance in the world? How might this change things?” ~ Steve Hayden ((Excerpt From: Max Chafkin. “Design Crazy.”))
    — I find speed is typically the least interesting feature of a new phone. I’ll run a benchmark on a new phone out of dumb obligation (and noting how many times the maker used the word “speed” during my briefing). Fine. Yes. I find the numbers that are supposed to be higher and the numbers that are supposed to be lower are higher and lower, respectively.

    But how, precisely, does the faster CPU make a phone better? Bravo for being the first to get the latest Snapdragon processor in a handset, but after people like me file our reviews and move on, who notices or even cares?

    Here’s why I love Apple: speed actually matters. To Apple, there’s no point in putting in a faster CPU unless it makes the phone better. And “it’ll do things faster” isn’t necessarily a good enough reason. ~ Andy Ihnatko

Performance First

Battery Life First

Apple is opening up iOS to extension in the same way it added multi-tasking: controlled and sandboxed, retaining security & battery life. ~ Benedict Evans (@BenedictEvans)

Evaluation

Conclusion

So, am I saying iOS is superior to Android? No, I am not. “Superior” is a subjective term. Each consumer gets to decide for themselves what product best suits their needs. That’s the beauty of the free market.

What I AM saying is it’s time to stop contending Android is copying iOS and iOS is copying Android because it’s a damn lie. The WAY both operating systems create their features and the WAY those features are implemented makes their respective experiences totally unalike.

An original artist is unable to copy. So he has only to copy in order to be original. ~ Jean Cocteau

images-98images-96I can order chicken nuggets from McDonalds or chicken cordon bleu from a five-star restaurant. Both meals are made of chicken but that’s where the similarities end. HOW something is prepared is often as important — and often more important — than WHAT that something is.

It’s the same in mobile technology today. Even if the ingredients were the same — and they’re not — the way Apple and Google “bake” their products is as different in style and substance as would be the same meal prepared by Chef Ramsey and Chef Boyardee.

Tomorrow

Tomorrow, in my Insider’s article (subscription required), I’ll focus on how Apple is making use of different “ingredients” to make their phones, tablets, notebooks, and desktops and how those different “ingredients” both differentiate their products, and make them competitor-proof.

Join me then.

Back To The Past With Oculus Rift

The pundits tell us Facebook’s purchase of Oculus VR is proof virtual reality has arrived, at long last. The future is now.

Except all I can think about is the past.

That’s what I mostly want from Oculus, or from Sony’s Morpheus or any similar device: the past. Not virtual reality or virtual presence, but a virtual time portal, a way to explore — to feel fully a part of — the events that shaped this world, this country, my life.

I was there with Jobs and Woz when they first started Apple!

Full disclosure: I was not there with Jobs and Woz when they first started Apple.  

Imagine putting on your Oculus headset and instead of playing the most amazing, immersive game of Halo, you are tasked with parachuting onto a Normandy beach. It’s D-Day. You are there as it happens. Understand, this is not at all to diminish anyone’s effort or sacrifice, or confuse reality with imagination, but to enable each of us to viscerally, visually behold great moments in history in all their nasty, sweaty, dull, grinding, vicious glory.

Let’s explore not just the building of the Great Pyramid but the discussions on its construction. Watch the burning(s) of the library of Alexandria. Witness our own birth.

With the amount of documentary video evidence now at our disposal, and all our computing power, social media data, location-based tweets, check-ins and other information, soon we will be able to reconstruct the momentous events of our present in such a way our children really can use VR to transport themselves back to today’s equivalent of the founding of Apple, or, yes, go inside the deadly flights of 9/11.

Imagine how much better we might understand people and cultures, events, greatness, failure and chance if we focused the development of Oculus not on virtual realities but on very human ones.

Oculus Rift

We have arrived at a point that is, for real this time, only a short distance from making virtual reality a reality. Let’s not blow this chance.

I’m not that old. Despite what my son thinks, I’m not. My parents are still alive. My grandmother died a few years ago — after being struck by a car. I can remember what it was like pre-iPhone; hell, before everyone had a PC in their home. It’s taken a long time to get here, to a future we expected would happen by the 1990s, which makes me uneasy that nearly all the focus and all the cash behind VR is centered on gaming.

This is exactly what Facebook founder Mark Zuckerberg stated when he bought Oculus:

When you put (Oculus) on, you enter a completely immersive computer-generated environment, like a game or a movie scene or a place far away. 

and…

The (Oculus) Rift is highly anticipated by the gaming community, and there’s a lot of interest from developers in building for this platform.

Ugh, gaming.

It’s not just Zuckerberg, of course. The computer industry seems intent on constructing virtual reality mostly for gaming. So much, in fact, the tech press accepts this vision without comment. The Verge:

Nothing delivers a feeling of immersion better than VR. VR has been a dream of many gamers since the computer was invented. 

In discussing their VR headset, Sony Studios president Shuhei Yoshida noted it was the “culmination of our work over the last three years to realize our vision of VR for games, and to push the boundaries of play.”

Explaining the amazing potential of virtual reality, Wired similarly focused almost exclusively on gaming.

In a traditional videogame, too much latency is annoying—you push a button and by the time your action registers onscreen you’re already dead. But with virtual reality, it’s nauseating. If you turn your head and the image on the screen that’s inches from your eyes doesn’t adjust instantaneously, your visual system conflicts with your vestibular system, and you get sick.

Videogame pioneer John Carmack is CTO of Oculus.

Oculus received major venture backing from Andreessen Horowitz, after the product was demoed at a gaming conference.

Really, I could not care less about games or gaming.

Imagine, instead, being ‘there’ the very first time the Beatles performed at the Cavern Club. Or witness a father watch the last of his six children die as the plague sweeps across western Europe.

Is it wrong to embrace the future yet be so utterly fascinated by the past?

How can any game compete with actual human history?

The pace of VR technology is accelerating. Delivering sight, sound, motion have nearly all been solved. But let’s not have the potential of this technology become so limited.

I have hope. Many developers are working on building immersive non-gaming experiences for Oculus and similar devices. Though not currently practical, this large-scale D-Day simulation points, ironically, to a rather stunning future.

d-day

Can such efforts succeed? That’s up to us, I suppose, and what we desire from our very best technologies.

Zuckerberg has also said “one day, we (at Facebook) believe this kind of immersive, augmented reality will become a part of daily life for billions of people.” I believe him. But instead of billions of us being entertained, which I understand is enticing, what if we could (almost literally) experience the reality of someone thousands of miles away, a person we will never otherwise meet, one who is so much unlike us?

Or, perhaps, following a nasty spat at work, HR makes us (virtually) experience the demands, deadlines and plainly different personal outlook of the boss we think we can’t stand because she refuses to understand our situation.

Virtual reality could soon become the very best way for businesses, clubs, universities, and start-ups to tell if you are the right ‘fit’ for their organization: “your resume is amazing, Mr. Hall, but let’s see how you interact with our staff and customers first before we make our decision. Here, wear this headset for the next 60 minutes.”

Call someone a forbidden word at school and the principal may require you don the VR headset to better understand how those slings and arrows do wound. Messy? Yes. But also transformative.

The Oculus Rift headset

I am not sure we can even begin to fathom how ontologically disruptive this technology will be, even though it is on the cusp of becoming our new actual reality.

With virtual reality, we will connect with people in profound new ways. We can also connect with times and places. Ecotourism is a massive industry but I am far more excited about historical tourism — visiting a specific place not because it’s restful or beautiful but because of who was once there and what the place once meant.

I completely understand why Oculus and the others, including Microsoft’s Project Fortaleza, are starting first with gaming. Yes, I know there will be porn. But there can be so much more, and that’s what I most look forward to. Keep your high score. Take me to where and when our today was made possible.

Whither Apple Or Wither Apple?

“Whither” means “to what place or state: whither are we bound?” Wither means “dry up; wilt, droop, go limp, fade, perish; shrink, waste away, atrophy.” Following Apple’s World Wide Developer Conference (WWDC), we now know “whither” Apple is headed. Their base is strong and they seek to expand it by stealing share from Android and up-selling the Mac. Is that enough to make Apple’s base grow? Or is it a strategy that all but guarantees Apple’s base will stagnate and wither?

Base

Apple’s base is incredibly deep and strong.

IOS

Over 100 million iPods;
Over 500 million iPhones; and
Over 200 million iPads.
Over 800 million iOS devices sold overall.

Over 230 million iOS devices sold in the past 12 months, alone.
Over 130 million of those 230 million iOS devices went to new users. That’s a lot of new users and that’s the polar opposite of “stagnation.”

89% of iOS users are running Apple’s latest iOS 7 operating system. By way of contrast, only 9% of Android users are on Android’s latest operating system, Kit-Kat.

OS X

Over 80 million Macs sold. Note that 80 million Macs is only a tenth of the 800 million iOS units that have been sold.

Over 40 million of those 80 million Mac users are running the latest Mavericks operating system. That’s a 51% adoption rate, the fastest PC adoption rate in history. By way of comparison, after two years, Windows 8 adoption is at 14%.

While overall PC sales have declined by 5% over the past year, Mac sales have actually increased by 12%. Again, this growth is important for our later analysis, so please make a mental note of it.

iOS and OS X

iOS and OS X users combined are rapidly approaching one billion users.

Base

Apple will easily reach the milestone of 1 billion iOS devices sold this year. ~ Horace Dediu (@asymco)

Developers

Over 9 million registered developers, up 47% since 2013. Let me repeat that. Apple’s registered developers have increased by an astonishing FORTY-SEVEN PERCENT in the last year alone. Again, this is the very opposite of stagnation.

Summary

Everyone keep in mind that Apple Is Doomed ~ Alex Wilhelm (@alex)

Undoubtably, Apple is doing better than well today. However, that still leaves unanswered the question of tomorrow. Where will Apple’s future growth come from?

Social Media Growth

Whither growth?

iPhone ShareApple has a lock on the premium MP3 ((The MP3 Market is fading fast.)), Smartphone, Tablet and PC ((Desktops and Notebooks)) markets. Apple’s grip on these market is very stable and not being seriously challenged. However, growth, not stability, is what one strives for. How then is Apple going to grow?

In his excellent analysis, “GROWING APPLE AT WWDC“, Ben Thompson of Stretechery breaks down the only two ways Apple can grow — either by stealing share from others or by up-selling to their existing client base. Today we’ll examine how Apple is trying to steal share from Android. Tomorrow, in my Insider article (subscription required), I’ll take long look at how Apple is trying to up-sell the Mac.

Stealing Share From Others

There are three ways for Apple to steal share from Android. The first is to expand sales into areas where only Android is for sale. That means expanding its base of carriers. Apple is doing that, so I won’t dwell on it here. The second way is marketing and the third way is to reduce barriers to entry — to eliminate “deal breakers” that might prevent Android users from switching to Apple devices.

Marketing

Half the money I spend on advertising is wasted, and the trouble is I don’t know which half. ~ Lord Leverhulme

During the World Wide Developer Conference (WWDC), Apple went out of their way to trash Android. This was not an accident. If Apple wants potential customers to switch from Android to Apple then Apple has to highlight where Android’s problems lie and how Apples products serve as the solution to those problems.

— Apple pointed out that Android users were often unable to upgrade to the latest operating system and over one third of Android users were still using an operating system four or more years old. These users are not getting great new features, not running the latest apps and not getting security updates (and it shows.)

— Apple highlighted their own spectacular (97%) customer satisfaction ratings.

— Apple harped on the many privacy concerns that surround Android and Google products.

— Apple hammered Android on their lack of security, and in so doing, added the term “toxic hellstew” to the computing lexicon.

Renee Richie, has written an excellent article wherein he notes that Apple wants to be seen as number one where it matters most: engagement, affluence and value. This is not a new message. Apple has hammered home this theme over and over again.

We are unique position of having world class hardware, software and service skills under one roof, which enables us to provide an unparalleled user experience to hundreds and millions of customers. Working with our vibrant developer community we have built a large and thriving ecosystem. 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

Removing Barriers

With iOS 8, Apple battles Android on its own turf, allowing its users more choice. ~ Gigaom (@gigaom)

In addition to marketing Android’s weaknesses and iOS’ corresponding strengths, Apple can steal share from Android by making it easier for Android users to switch. One way to do this is to remove barriers; to eliminate “deal breakers”; to annex popular, but unique to Android, features and make them their own. Apple did this, with a vengeance, at WWDC 2014. A few examples:

  1. Notifications
  2. Widgets
  3. Messaging
  4. Quicktype
  5. Third-Party Keyboards
  6. Exstensibility

Looks like the big news at WWDC is iOS becoming a power-user operating system. ~ Harry McCracken (@harrymccracken)

Tim Cook and Craig Federighi’s Apple?

Apple’s efforts to add geeky Android features to their own products may just be a market response — an attempt by Apple to attract more Android users. However, I think it may also be an area where the current management of Tim Cook and Craig Federighi diverge from their predecessors, Steve Jobs and Scott Forstall. Steve Jobs was a purist and I’m guessing he wouldn’t have wanted to use scarce resources to create features that he didn’t think were important to mainstream users. And make no mistake about it — because this mistake IS being made all across the Technosphere — many of the features Apple added on Monday are totally unnecessary to mainstream users.

One of the unique aspects of Apple has been its willingness to embrace counter-intuitive realities. For example, Apple alone seems to understand that the more you limit what a computer can do, the more likely it is that it can reliably do the things it can do. Another example is choice. Apple knows that simplifying a product has nothing to do with eliminating features and everything to do with eliminating the burden of decision making from its users.

[pullquote]The features we clamor for most are the features that normals use least[/pullquote]

This is, of course, heresy to the Technoratti. We live in our own little geeky bubble and don’t realize that the features we clamor for most are the features that normals use least. Being un-empathetic is a human condition, but neckbeards like us have raised obliviousness to an art form.

Apple is doing the things we told ourselves they’d never do in their stubbornness. ~ Gabriel Visser (@gvssr)

Hmm. Stubborn, ey?

When a person stands their ground and we agree with them, they are principled. When a person stands their ground and we disagree with them, they are stubborn. It’s all a matter of perspective and if there’s one thing the tech crowd is lacking, it’s perspective.

All we know is that the power features we so dearly love are essential TO US. Therefore, we assume these features must be essential TO EVERYONE. As Apple has demonstrated over and over and over again — it just ain’t so. Normals buy Apple products, not despite the geek features they lack, but BECAUSE they don’t have to deal with all that geekery.

Steve Jobs was a fanatic and we loved him or hated him for it. Tim Cook strikes me as a more practical sort of man. I’m told Craig Federighi is a bit more geeky than Scott Forstall was. It should, therefore, have come as no surprise to us that Apple was bending a little and becoming a little bit more Android-like.

It should have come as no surprise — but it still did.

Whither Apple or Wither Apple?

So, is this a good thing or a bad thing for Apple?

In the short run, it is great for public relations. The pundits and the techheads and the acolytes of “open” are eating this up. Google the words “Apple” and “WWDC” and “open” and you’ll find a dozen or so articles praising the “new” more “open” Apple.

My 2¢: for the past few years it’s felt like Apple’s only goal was to put us in our place. Now it feels like they might want to be friends. ~ Cabel Sasser (@cabel)

You know who needs a friend, Cabel? End users, that’s who. Because when developers become more important than end users you get — Microsoft.

Putting developers “in their place” — which is, to say, placed behind end users — is exactly what Apple should be doing.

So in the short-run, developers and geeks are loving the new friendlier, more open Apple. But how is that going to play in long run? Will the “new” Apple be a better Apple; a more successful Apple? Or has Apple begun to lose their way, betraying the very core of their being?

The Argument Against

There are a couple of very good arguments against Apple’s new approach. And, ironically, they come from no less a source than Tim Cook himself:

We believe in the simple, not the complex. ~ Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings Call

We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us. ~ Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings Call

We don’t believe we can do things at the level of quality and link things as we want to between hardware, software and services so seamlessly if we do a lot of stuff. So we’re going to stick with our knitting with only doing a few things and doing them great. ~ Tim Cook

The Argument For

On the other hand, there’s this:

It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. ~ Steve Jobs

Can we make a product that we all want? We think we’re reasonable proxies for others. So those are things we’d ask about any new product category. ~ Tim Cook

The Verdict?

Steve Jobs, Scott Forstall, Tim Cook and Craig Federighi all believed or believe that they were or are “reasonable proxies” for others. The proxies have changed. The products will too.

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

As Steve Jobs said, the hard part is knowing who your customer is. So long as Tim Cook and Craig Federighi keep the customer in mind, no one will much mind if they make Apple just a tiny bit geekier.

Tomorrow

Tomorrow, in my Insider’s article (subscription required), I will take a hard look at the second part of Apple’s growth strategy: up-selling the Mac. It’s very counter-intuitive to seek growth in a shrinking market and one has to question how much of an impact this strategy can have. However, without question, up-selling the Mac is completely aligned with Apple’s business model and it may have much more upside that one would initially think.

UPDATE: The follow-up article, entitled: “Up-Selling The Mac” is now available, here. Subscription required.

Losing My Apple Religion. Seeking Salvation At WWDC.

I have crazy-high expectations for Apple’s worldwide developer conference. I expect, at minimum:

  • An iPhone phablet
  • iPad split-screen multi-tasking, necessary for the enterprise, awesome for gaming
  • Touch ID APIs to support mobile payments
  • Seamless inter-app communications
  • Apps that can actually push data onto the home screen — because we are adults and this is the 21st century
  • 25GB free iCloud storage per device

That’s just for starters.

What I mostly expect from WWDC is neither new products nor long-overdue enhancements but rather, affirmation. Too often of late it appears that:

  • Ecosystem trumps product
  • Brand usurps technology
  • Growth precedes usability
  • Margin before accessibility

Does anyone else feel this way?

The creeping doubts refuse to leave — even as I happily work on my MacBook, play on my iPad and yearn for that large screen iPhone.

WWDC Pilgrimage

Today, we mark our annual pilgrimage to WWDC. We learn of the many new products, the updates to Apple’s operating systems, extensions to the platform, the new and better paths to monetize content and services. Everything, no doubt, will be better than before, better than what can be had anywhere else.

That should be enough. Why is it not?

Because we long time users — the Apple faithful — have always held Apple to a higher, more personal standard. Apple is more than a business, even as it has become the world’s biggest business. Why else would we care so much about a developer’s conference?

Apple will never again be run by Steve Jobs. Pirate Apple has become Corporate Apple. Understood. Nonetheless, we want Apple, more so than any other company, and no matter how big, how global, how rich it becomes, to stay motivated not by profits but by an absolute and unwavering:

  • commitment to innovation

Even as iPhone implants itself at the center of our computing life, we expect Apple to:

  • disrupt everything

Is this true of today’s Apple? WWDC will affirm our faith, or dash it.

Clearly, we hold Apple to an impossible standard, not merely a higher one. If Elon Musk can build a reusable space capsule capable of ferrying astronauts and supplies to the International Space Station, why can’t Apple? Why must Apple spend the equivalent of 150 Dragon V2 spacecraft on a single headphone company?

dragon v2

These are the wrong questions.

Apple cannot do everything, cannot be everything. It’s simply unfair and unproductive to make Apple our litmus test upon which to judge all technological advancement and innovation. They make computing products and services. Nonetheless, we can’t help but demand Apple, especially Apple, relentlessly innovate, incite countless new revolutions, lift humanity to ever greater heights, with little more than screens that connect us to the world and connect us to our talents, the parts known and the parts yet-to-be discovered.

Believe Different

Belief sustained the Apple faithful through the dark times. It is this same belief that is now called into question. We want badly to believe in today’s Apple, and not merely admire its many products.

We want to believe blocking our messages was a bug, not hubris.

We want to believe China is not just about more billions, but about bringing the best of American technology to the world.

We want to believe CarPlay and “HomePlay” and “HealthBook” and Passbook are about making our lives simpler, better, not merely add-ons to enrich the ecosystem.

We want to believe that positioning the iPhone at the center of our digital life is empowering, not lock-in.

We come to WWDC to be inspired.  

WWDC faithful

One Of A Trillion

As Apple continues along its inexorable path toward a $1,000,000,000,000 valuation, we hope the company remains personally connected with each of us, somehow.

In a world of big data and globe-hopping algorithms, driverless cars and autonomous bots, we expect Apple, more than any other organization, to power personal connections and accelerate human ingenuity throughout the world. We want it all to just work, exactly as we desire, even as the company extends across a billion customers.

That Apple will introduce more and better devices and services at WWDC is a given. Success is assured. The iOS moat is already so wide, so deep, as to make the company practically unassailable. The company’s shimmering glass headquarters will soon rise over Cupertino, its future set for decades to comes.

It’s not enough. Not for me, not for many of us, I suspect.

Fair? Of course not. But past performance influences present expectations. Which is why I say: Be a crazy one once again, Apple. Show us you are fully prepared to disrupt yourself just as you gleefully disrupt the world. Make us believe that you do now and always will think different.

WWDC has begun. The floor is yours, Apple. No pressure.

The Terrible Tablet Tantrum: Part 1

Anger

In the first quarter of 2014, Apple sold 16.4 million iPads, a 16% drop compared to the number of units sold in the same quarter one year ago. Apple CEO, Tim Cook, explained the news away, but the tech press was having none of it.

Flat

HangingSales of iPad were flat. Sales were less than flat. Sales were depressed. Sales were depressing. Sales were awful. Sales were catastrophic. The Tablet world was about to come to an end! The iPad was hanging on by its finger tips!

You think I’m exaggerating, right? Employing hyperbole? I’ll let you be the judge. Here are some typical headlines and comments that have been written about Tablets generally and the iPad specifically over the past two weeks — many of them by some of the finest and most respected names in tech.

Headlines

Apple’s iPad Business Is Collapsing ~ Jim Edwards

Are the iPad’s go-go years over? ~ Jean-Louis Gassée

Contention: people are discovering that tablets are not really a thing, and that in general, the gap between phone and PC barely exists. ~ Peter Bright (@DrPizza)

Giving Up On The iPad ~ Jared Sinclair

Have we already reached peak iPad? ~ Brad Reed

I can’t find a way out of an uncomfortable conclusion. In order for the iPad to fulfill its supposed Post-PC destiny, it has to either become more like an iPhone or more like a Mac. But it can’t do either without losing its raison d’être. ~ Jared Sinclair

There is, however, a growing perception that the iPad growth could continue to stall. ~ Ryan Faas

Tablet demand hits a wall ~ Jon Fingas

I don’t think tablets will ever disappear, but for mass-market use, they’re going to keep getting squeezed from both sides: larger-screened phones and smaller, lighter laptops. The percentage of people whose primary computing device is a tablet may have already peaked.

Over the next few years, I suspect an increasing number of people will choose not to replace old tablets, instead just choosing to use their phones for everything… ~ Marco Arment

As battery life gets better and screen sizes grow, it’s likely tablets and smartphones will eventually just converge into one device that can be simply slipped into a pocket, instead of two devices that overlap each other in many areas. ~ Owen Williams

Young people are growing up on the mobile phone as their primary computing device, which has fundamentally changed the way they use and think about the internet. Tablets are simply unnecessary for them… ~ Dustin Curtis

I think the future of the iPad is for it to disappear, absorbed at the low end by iPhones with large displays and at the high end by Macs running a more iOS-like flavor of OS X. Perhaps it won’t disappear completely. After all, for certain niche uses – especially those listed above – the iPad is great because it’s neither a phone nor a PC. But these are still niche uses and can’t possibly sustain the long, bountiful future that many hope the iPad has. ~ Jared Sinclair

The iPad is dead. ~ Steve Kovach (@stevekovach)

The iPad is so over, even Apple seems to be moving on. ~ Galen Gruman (@MobileGalen)

The iPad may already be past its prime. ~ Brad Reed

While good at some of the things and pretty to look at, iPad (and other tablets) aren’t particularly useful. ~ Javed Anwer

Why Apple’s iPad Is in Big Trouble ~ Adam Levine-Weinberg

Young people don’t use tablets because they don’t see them as necessary ~ Owen Williams

Get Real

Whenever you find yourself on the side of the majority, it is time to pause and reflect. ~ Mark Twain

I cannot agree with the tablet doomsayers and I would respectfully suggest the facts don’t agree with them either.

1) PREMATURE: Talk about resting your entire argument on a thin reed. We’re talking about a single down quarter in a non-holiday period that has already been explained away as a glitch in the supply chain. Much of this speculation rests on a foundation so fragile a single robust quarter of sales will blow it into the dustbin of history.

2) AGE: The iPad is only four years old — FOUR YEARS — and has sold 210 million units.

3) PCs MANUFACTURED: If you count the iPad as a personal computer (and you should) Apple is, even excluding the Macintosh, the largest manufacturer of PCs in the world. For those of us who remember the days of Windows domination, that statement is absolutely mindblowing.

In 2013 alone Apple sold nearly as many iPad’s as they did Mac’s between the years 1991-2010. ~ Ben Bajarin (@BenBajarin)

4) STANDALONE BUSINESS: Based on the last 12 months of revenue, the iPad would be in the top 100 companies in the Fortune 500. ~ via MG Siegler

AppleIncome
CAPTION: The iPad is only 17% of Apple’s revenues, but if it were split off, it would be a Fortune 100 company.

5) REVENUE:

In 2006 — the year before the iPhone — Apple had revenue of 19.32 billion.

In 2009 — the year before the iPad — Apple had revenue of 36.54 billion.

In the first 90 days of 2014 — the quarter that generated all of the angst-filled headlines — the iPad generated revenue of approximately 11.5 billion.

In other words, using back-of-the-envelope calculations, it appears that last quarter’s disappointing iPad revenues were twice as large as the revenues generated by all of pre-iPhone Apple and larger than the revenues generated by all of pre-iPad Apple. Most companies would kill for such disappointing results.

6) NEW USERS: Tim Cook reported over two-thirds of people registering an iPad in the past six months were new to the iPad.

Let me repeat — over two-thirds of the people buying iPads are NEW to the form factor.

Sounds like the opposite of stagnation to me.

7) EDUCATION AND ENTERPRISE: The iPad has captured an overwhelming 91% of the Education market and 95% of the Enterprise purchases. And yet we think the sales of the iPad are going to stagnate? With kids being handed iPads in their schools? With adults being handed iPads at their place of work? Seriously? Am I the only one who thinks that conclusion runs counter to all the evidence and is completely bonkers?

St. Paul schools dumps Dell after one year; students to get iPads

8) ANECDOTAL: A middle school teacher recently caught a student with this:

BookPad

If you think a product that inspires kids to hollow out their books so they can sneak it INTO class is generating no interest amongst the young and is on the verge of extinction, then you are mad, I tell you, STARK RAVING MAD!

Psychotic Woman
CAPTION: Picture of the typical analyst, trying to kill the iPad.

Adoption

Tablet naysayers are totally ignoring the existence of the adoption cycle.

A) The adoption rate of tablets has been extraordinary.

— The iPad is selling at nearly twice the rate the iPhone did during the iPhone’s first four years.

— The install base of tablets worldwide is almost as much as the install base of desktops. ~ Ben Bajarin (@BenBajarin)

— It took the PC approximately 15 years to reach one billion units sold. It will likely take the tablet 5-6 yrs. ~ Ben Bajarin (@BenBajarin)

— On its current trajectory, the iPad, by itself, will soon eclipse the entire PC market in terms of sales. The broader tablet market, of course, already did that some time ago. (Remember, this was all done in only four years.)

slide-7-1024

B) Rapid Adoption is highly predictive.

Historically, products which become ‘mainstream’ or widely adopted follow an S-curve during that adoption. The curve is remarkably predictable given a limited set of points….We are fortunate that data also exists for Tablets. ~ Horace Dediu

s-curve-adoption

It is highly improbable that tablet penetration would rise from 0 to 42%, in a mere four years and then suddenly come to a screeching halt (more or less reversing itself). Such a claim is so out of keeping with historical norms the proof required to sustain it would have to be extraordinarily strong.

Exceptional claims demand exceptional evidence. ~ Christopher Hitchens

C) Some tablet naysayers claim the tablet market is saturated. I’ll let Mary Meeker respond to them:

We think tablets can be nearly pervasive but only six percent of people have one today. ~ Mary Meeker

Tomorrow

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

Tomorrow, I take a deep dive into the two questions that seem to be perplexing Tablet naysayers the most:

— Is the Tablet good enough to replace the PC?
— Is the Smartphone good enough to replace the Tablet?

Turns out, the logic used to explain why the tablet deserved to be a category separate from the PC is also the very same logic that can be used to explain why the tablet will remain a separate category from the smartphone. Join me tomorrow and I’ll explain why. (INSIDER ARTICLE, Subscription Required.)