Month: September 2012

The Future of Apple’s Maps

It looks like the Apple Map story may dominate the conversation today, so I figured I would write something I have been thinking for a while. If you follow much of what I write or much of our focus at Creative Strategies, you will know that we like to look at the big picture. When you look at things from a big picture perspective, you rarely get stuck focusing only in the here and now. All roads lead somewhere and we can choose to look 5 ft ahead or we can look down the road trying to anticipate where it leads. I try to focus on the latter.

Most of the criticism I have seen is not that Apple created their own map software and experience. But that they deprived their customers of what was a superior experience with Google Maps. For iOS customers, Google Maps was the standard and even though it didn’t have turn-by-turn navigation, it sufficed as a map and location service.

The bottom line is, Apple is in transition, this is necessary for the future, and yes it could have been handled better. The open letter from Tim Cook to Apple customers says it all. I personally believe that Apple’s Maps, as it relates to the iOS experience will provide the best possible experience across the platform and is essential to the future of iOS. Many may reasonably suggest that Apple could have added their own map app and left Google Maps on the platform during transition. But as Tim pointed out in his column today, including Google maps would only be letting Google gather more valuable data from iOS customers and thus continue to help their competition.

With that in mind, it is interesting to think about where the Apple Maps road leads. Earlier today Tim pointed out why this move was necessary for Apple for their strategic future and to provide better experiences for Apple customers. I want to look at the future.

More Than Navigation

I used to use Google Maps on iOS as often as anyone. I commute all over Silicon Valley going to meetings at different tech companies all over the Bay Area. Turn-by-turn navigation was what I was missing most from Google Maps on iOS. In fact since I am sent many Android devices, I generally always kept an Android device with me so I could use the turn-by-turn feature. Then my behavior changed. I recently purchased a new car, the Kia Optima Hybrid, which has in-dash navigation included. All of a sudden turn-by-turn navigation is no longer that important to me. In fact I made an interesting observation while car shopping. The vast majority of entry level packages from most major car companies, include in-dash navigation as a feature.

This leads me to believe a strong case can be made that over the next decade, and as people get new cars all over the globe, turn-by-turn may not be the key feature of maps going forward. For Maps, it must be about more than just navigation to compete in the future.

Search, Discover, Decide

What then is the bigger picture task or job that we will be asking a map application to do for us, both now and in the future? Maps is an interesting application in this regard, because it is fundamentally different than a web search. When using a map application, I am desiring something relative to a location. How do I get somewhere from where I currently am? What is around me of interest? Have my friends said or done anything interesting relative to my current location? Are any establishments near me offering any special deals? What are others saying about an establishment near me? I want Dim Sum for lunch, what are the best places around me and what have others said or recommend? The list goes on.

Google handles this in a very interesting way and one that always frustrated me, specifically when it came to reviews or offers. Google Maps on Android prioritizes Google services. Google Maps on Android was recently updated to include Zagat official reviews but user reviews are still only from Google users. Apple’s Maps, however, integrates Yelp consumer reviews right into the map application. A quick search for my favorite BBQ joint near my house on Apple’s maps resulted in all several thousand Yelp reviews. While the same search on the latest Google Maps app yielded 30 reviews from Google users. This got me thinking that it appears Apple is building a map platform that will extend value to app developers to integrate their location based services and data into. This approach is fundamentally different than Google Maps and to be honest Apple’s approach is better for developers.

This is not to say that Google can not or will not take this direction in the future but I would point out that they would be following Apple in this regard if they do. From the short time I have been using Apple’s maps to search for places to eat or go near me, I have already found the experience more useful in making a decision then I ever did Google Maps. And I have been using Jelly Bean on the Galaxy Nexus exclusively for the past three months.

The future of Apple’s Maps looks to be something both consumers and app developers working on location based services can get excited about. Apple is taking an approach that looks to let developers integrate and extend the valuable services and data they are generating into the overall map experience. This approach is good for others, while the other is good for just one company and that companies services.

The Real Reason why Apple Dropped Google Maps

I have been fascinated with all the bluster and vitriol thrown at Apple since they tossed Google Maps in favor of their own Map app without these detractors trying to get to the bottom of why Apple made this move.

If you have followed Apple for a long time like I have, you know that Apple does not make rash decisions and in fact, all of their decisions are rooted in sound business reasons with an ultimate goal in mind. That is the case with the new iPhone Maps. Contrary to many peoples thinking, the move was not to punish Google in any way. Rather, the decision was a very pragmatic one that in the end will be good for Apple and really good for their customers.

One key reason for Apple dumping Google Maps is that Apple wanted turn-by-turn directions and for obvious reasons, Google did not want to license this feature to Apple because it gave them a competitive advantage over Apple. When it comes to iOS Map apps, turn-by-turn directions were at the top of the list of requests by Apple customers. We can debate Apple’s timing, how the transition was handled, etc., but my stance is that strategically this move is necessary for the future of iOS. Interestingly, Apple released a press release this morning re-inforcing their commitment to Maps and apologizing for what many are calling mis-steps. If it wasn’t clear before, this mornings release clearly stated that Apple’s goal is to ultimately provide the best user experience to their customers and they feel that can only happen if they design and control the future of their mapping software and that required a re-build from the ground up.

However there is an even more important reason Apple took this action. In a column I did for TIME earlier this year, I wrote a piece entitled “Why Google and Microsoft Fear Siri.” In it, I explained that at the heart of Siri lies a rich database of content that Siri can draw from to give users the answers to the questions they ask. However, when Apple introduced it they never even uttered the word “database” in explaining how it works. What they did say is that Siri was in its early stages of learning and over time, as people use Siri, it would get smarter. It was almost positioned as a beta release.

But this is consumer speak for the fact that Siri is based on a database of initial content and as it learns about what info people want, it adds it to its data base to make it smarter or more accurate. If you have tried Siri in the newest version of iOS, you know that indeed, Siri is smarter this time around. And as it continues to build its database as it learns what questions people ask, it will become better and even more accurate.

As I point out in the piece for TIME, what Siri is and will continue to become, is a voice front end to a very rich search engine that gets more accurate and useful as it adds info or content to its database. With that in mind, I suggested that Google and Microsoft, who’s search engines dominate the market today, could eventually be threatened by Apple if Siri gets smarter and develops a rich user contributed database that is really a search engine for at least 60,000 Siri capable iOS devices on the market today.

Over the years, we at Creative Strategies have done at least four major projects for companies with navigation software. As we dug into these projects, it became pretty clear that the navigation databases they use are at the heart of their real usefulness. However, getting the info for a mapping database is very difficult. While these companies do field work to add content to their maps as much as possible, their software only gets better when their users gave them feedback and helped them add more accurate data to their mapping database.

Google has done a great job of creating a rich database of mapping data, but like these other navigation companies, counted on users to feed them even more accurate data that continues to fine-tune Google maps’ accuracy. But what Apple understood a couple of years back is that Apple has delivered at least 70 million iOS users to Google who were feeding them map data and literally giving their competitor the ability to have a major edge on them especially with Android based smartphones.

As you can imagine, that did not make Steve Jobs, when he was still with us, very happy. So for solid business reasons and with a pragmatic approach to this problem, Apple made the important decision to create their own map app and with their users help, fine-tune their own database of Map data over time. TeleNav gave Apple the underlying Map database and Apple has been adding its own information to it for at least a year. More importantly, from this point on, Apple now owns their own custom mapping database and their customers will continue to help it become more accurate. This way it keeps Apple’s customers away from giving Google any more valuable data for their maps.

At the iPhone launch, Apple probably should have stated, as they did with Siri, that this new map app is a work in progress and more like a beta. That would have at least tempered the criticism to a point. But by praising it and then people finding a lot of inaccuracies, it comes off as a wounded product instead of what it really is; a mapping database that will become more accurate over time.

Interestingly, Google has said that they may not do an iOS version of Google Maps. But that is like shooting themselves in the foot. In fact, if they are smart, they rush an iOS Google Maps app to market quickly so that they can try and keep iOS users from using Apple’s Map app given its accuracy issues. If I were a betting man, I would put money on the fact that Google is not willing to give up the feedback they get from 70 million iOS customers that helps build their mapping database and we could see a Google apps map for iOS within the next 2 months.

Apple’s decision to jettison Google Maps was not an emotional one. Indeed, the decision was done to make sure they owned their customers data and did not give Google any help with Android. And as iOS users give Apple feedback on map data and accuracy, a very rich mapping database will emerge that could be even better than what Google offers today.

If you have time read Ben’s take on the Future of Apple’s Maps.

Confessions of a Reviewer: How the iPhone Maps Mess Was Overlooked

Sample Apple mapHow did they miss it?

If you go back and read the reviews of the iPhone 5  published on the first day that Apple allowed recipients of early samples to write, you would be stunned by the furor the soon broke out over the quality of Apple’s Maps app. Of the major early reviewers, only The Wall Street Journal‘s Walt Mossberg  noticed major flaws in Maps, noting its “big minuses” in his second paragraph. Others either failed to mention Maps at all, or praised the app. The New York Times‘s David Pogue may have set some sort of record by writing an initial column in which he called the Maps app one of the iPhone’s “chief attractions” and coming back a week later with a column calling that same app “an appalling first release.”

I spent 15 years reviewing tech products for BusinessWeek and the depressing truth is that oversights and errors like these are painfully easy to make. I wrote reviews of major products that had been in my hands for as little as 36 hours, which barely gave me enough time to figure out what the major features were, let alone test them thoroughly. (My best guess is that iPhone reviewers had their test units for five or six days before they had to write.)  I relied too heavily on the review materials and demos provided by the manufacturers, and these tend to steer reviewers to the features that work best and away from the ones that are dicey.

It’s hard to say whether the extreme time pressure facing reviewers is the result of a deliberate strategy by companies or a necessity of the product cycle; it probably varies from case to case. The companies are often working under very tight schedules themselves and the products, particularly their software, is often not final until just before release. I was always grateful to companies that provided products extra-early, even on the understanding that the hardware was a pre-production sample the software wasn’t quite finished. I could log the defects and see if they were fixed in the final product. (My favorite was very early in  my tech career, when I spent more than a year watching Windows 95 evolve through its testing.)

The Maps problems were particularly easy to miss. iPhone reviewers were focused on the new hardware and Maps is actually part of the general update of iOS software for iPhones and iPads. Testing mapping software is time consuming and the problems of the apple app are much more serious in some locations than others, so it depended on where you looked. I was lucky. I installed iOS on my iPad, opened up Maps, and discovered a glaring flaw right in my neighborhood: the main campus of the National Institutes of Health was missing. That got me looking and I quickly discovered lots of other problems.

I think the bottom line here is pretty simple: The pressures reviewers are under all but guarantee that mistakes will be made, though I can’t remember one quite as glaring or near-universal is this. Don’t put too much faith in the fevered first batch of reviews, especially of products that inspire a reviewer feeding frenzy. The problems will be discovered quickly enough.

 

Battle Of The Tablet Business Models: Samsung Galaxy Tab

RECAP

We’re looking at the tablet business models of Apple, Amazon, Google, Samsung and Microsoft. Today we focus on the Samsung Galaxy Tab.

4.0 Samsung Galaxy Tab

4.1 WHERE DOES THE SAMSUNG GALAXY TAB MAKE ITS MONEY?

When introducing the new Amazon tablets, Jeff Bezos said:

“We want to make money when people use our devices, not when they buy our devices.”

Samsung licenses its software for free from Google and, like Apple, they make their money when people buy their tablets. Unlike Amazon and Google, Samsung makes little or no money from the sale of content or apps. Unlike Microsoft, Samsung makes no money from the licensing of an operating system.

4.2 WHERE DOES THE SAMSUNG GALAXY TAB PROVIDE VALUE?

Samsung tablets provide value in (at least) three ways.

First, their hardware is generally very good. It may or may not be of the quality of Apple but it is certainly more than good enough.

Second, since Samsung gets their operating system software from Google for free, and since Samsung is an extremely efficient manufacturer, they can often offer their tablets for lower or comparable prices.

The above advantages are somewhat mitigated by the fact that Samsung has to pay Microsoft a licensing fee for the use of Android. Also, Apple’s supply chain prowess has allowed Apple to order supplies in such great quantities that they’ve been able to keep their prices quite low. Still, on the whole, Samsung tablets are almost always available at equal or lower prices than that of the competition.

Third, Samsung has excellent distribution. This should not be underestimated. The greatest device in the world is of no value to the consumer if it’s not sold in their country or if it’s priced out of their financial reach.

Samsung’s tablets provide value because they are well made, inexpensive (but not cheap) and available most everytwhere.

4.3 SAMSUNG GALAXY TAB BUSINESS MODEL ADVANTAGES AND DISADVANTAGES

Despite Samsung’s many strengths, their business model for tablets is a disaster and it must frustrate the life out of them. Samsung’s hardware, prices and distribution are excellent but it just doesn’t matter.

First, Samsung gets their Android operating system software from Google for free, and while Android has proven to be an excellent smartphone operating system it is not optimal for tablets. There is a fundamental difference between an app designed for a smaller (3.5 to 5 inch) screen and an app designed for a larger (9.5 to 11 inch) tablet screen. Google’s stubborn refusal to optimize their software in order take advantage of the tablet’s larger screen size has crippled the larger screened Android tablets. For more on this, please see my article entitled: “With Apps, Size Matters.”

Second, while Apple, Amazon and Google make money from the sale of content and apps, Samsung does not.

Third, since Google supplies the Android operating system to Samsung, Samsung has no control over the store and no control over the platform. Samsung can do nothing to make the store more attractive for their customers or make the platform more attractive for developers. Samsung is wholly reliant upon, and wholly at the mercy of, Google. This is even more unfortunate for Samsung because Google has proven to be an indifferent steward of the Android store and platform.

Fourth and finally, with the introduction of the Google Nexus 7, Google – the licensor of the Android operating system software – is now a direct competitor to Samsung. And since Google has decided to subsidize the price of their product, they’ve completly undercut Samsung’s tablet business model. Unlike Google, Samsung can’t make up lost sales revenues with the subsequent sales of content and apps. With Google selling the Nexus 7 for $200, Google has made it all but impossible for Samsung to sell their $400 to $500 tablets.

Summation

Samsung is a proud and powerful company but I don’t know how much longer they can continue to compete in the tablet market. They are being attacked from above by Apple, below by Amazon and Google and soon Microsoft will be entering the fray. And Samsung has no competitive advantages. They can compete against Apple on hardware and software but not on ecosystem. They can compete against Amazon and Google on hardware and software but not on price. And the things that Samsung needs to change in order to be competitive – content, apps, ecosystem – are entirely out of their control.

Samsung is simply in a no-win situation.

NEXT

We’ve now looked at the Apple, Amazon, Google and Samsung tablet business models. Next week, we look at Microsoft’s Surface tablet and wrap up the series.

Battle Of The Tablet Business Models: Google Nexus 7

RECAP

We’re looking at the tablet business models of Apple, Amazon, Google, Samsung and Microsoft. Today we focus on the Google Nexus 7.

3.0 Google Nexus 7

3.1 WHERE DOES THE GOOGLE NEXUS 7 MAKE ITS MONEY?

When introducing the new Amazon tablets, Jeff Bezos said:

“We want to make money when people use our devices, not when they buy our devices.”

Interestingly, the Google Nexus 7 has the very same business model as do the new Amazon tablets. Google gives away the Nexus 7 hardware at cost and then seeks to make its money by selling content and advertising.

3.2 WHERE DOES THE GOOGLE NEXUS 7 PROVIDE VALUE?

The Google Nexus 7 has excellent hardware and it sports one the world’s premiere mobile operating systems in Android’s Jelly Bean. But where Google really brings value to their tablet customers is in the Nexus 7’s low tablet price.

Google is able to keep their tablet prices low because they don’t intend to make any (or much) money on the initial sale of their devices. They can give their customers more tablet for less because they are making it up in content and advertisement sales. Google wants to lure you into their store with their tablet and then have you buy content there.

Do the above two paragraphs sound familiar? If you read yesterday’s article on the Amazon Kindle Fire, they should because they are almost word for word the same. (Battle Of The Tablet Business Models: Amazon Kindle Fire, section 2.2.)

The Google Nexus 7 and the new Amazon tablet share the very same business model so they will naturally compete head-to-head with one another. Which one is likely to prevail over the other? Understanding their similarities and their differences should give us the answer to that question.

3.3 GOOGLE NEXUS 7 BUSINESS MODEL ADVANTAGES AND DISADVANTAGES

The Google Nexus 7 has received many fine reviews for both its hardware and its software but I think the reviewers are missing the larger picture. When I look at the Nexus 7 business model, there is little there to like. The Nexus 7 business model has all the downsides of the Amazon tablet business model and few of the upsides. Despite the almost universal praise the Nexus 7 has received from analysts and pundits, I predict that the Nexus 7 will fail to have any long lasting impact on the tablet markets other than to eliminate other Android manufacturers from contention.

The Google Nexus 7 and the Amazon Kindle Fire business models share many of the same issues:

— It’s hard to make a significant profit solely from the sale of low margin content and mobile advertising.

— Devices can only be sold in countries where content can be made available via the Google Play store. Sales of devices outside of those countries are counter-productive.

— Tablet sales must be carefully targeted at only those customers who voraciously consume (and are willing to pay for) content or who positively respond to advertising. Tablets sold to non-consumers are a waste of time, money and effort.

— Subsidized tablets draw exactly the wrong type of customer. Bargain hunters are less likely than others to consume content and respond well to advertising.

— A subsidy business model thrives on low cost hardware and long refresh cycles. However, we live in a world where Apple, Samsung and Microsoft are rapidly iterating their tablet hardware offerings and pushing the barriers of what it is technologically possible for a tablet to do. It will be difficult, if not impossible, to pursue the contradictory goals of spending as little as possible on the tablet hardware while still remaining competitive with the tablet offerings of competitors.

— A content focused, ad driven tablet will have little or no appeal to government, business or educational entities.

— Online only distribution will be difficult and other methods of distribution are sparse and immature.

(For a further discussion of the difficulties inherent in pursuing a subsidized tablet business model, please refer to section 2.3 of my earlier article: Battle Of The Tablet Business Models: Amazon Kindle Fire.)

In addition to the issues it shares with the Amazon tablets, the Nexus 7 has problems all its own:

— The business model relies upon making a profit from content sales and content sales are not Google’s core strength. When it comes to online stores, Google Play is a distant third to Amazon and Apple.

— Open business models are good for many things, but the maintenance of a store is not one of them. While closed companies like Amazon and Apple run their stores with an iron fist, Google runs its store with abandon.

— Google is not known for its customer service. Its current customers are advertisers, carriers and manufacturers, not end users. The one time Google did sell directly to consumers with the Nexus, their efforts failed. Customer support is hard, Google has little experience in it and it would be a radical shift in their business model. There’s plenty of doubt about whether they can pull it off and until they prove otherwise, they don’t get the benefit of that doubt.

  • Google Nexus 7 v. Amazon Kindle Fire:

    • A head-to-head battle between the Nexus 7 and the Kindle Fire will not end well for the Nexus 7. The Nexus 7 probably has better hardware and software (although I know that Amazon would dispute that) and it also has a very strong and loyal user base. But the subsidy game is all about content and in content, Amazon shines.

    The Google Nexus 7 business model is like a coach taking a great athlete and playing them out of position – like taking a superior skater and having them play baseball instead of hockey, or taking a great baseball hitter and having them play soccer instead of baseball. Amazon is playing to their strengths. Google is playing to their weakness. In the long run, Google’s putative superiority in hardware and software will come to naught. In the battle of the business models, when Amazon and Google go head-to-head in the sale of content, Amazon will win every single time.

  • Content v. Apps:

    • I think Google pursued the wrong strategy. They have focused on the sale of content when, in my opinion, they should have focused on apps and the creation of a stronger app platform. I wrote about their abandonment of tablet optimized apps in my article entitled: “With Apps, Size Matters.”

    However, it’s too late to turn back now. Google’s failure to focus on tablet apps has all but doomed their already faltering tablet efforts.

  • Reversing The Business Model: Open v. Closed:

    • With the Nexus 7, Google abandoned their open business model and adopted a closed business model instead. Now they have none of the advantages of the open model yet they’ve gained few of the advantages of the closed model. Open allowed Google to focus solely on the operating system and to license that operating system to all comers which, in turn, led to the proliferation a wide variety of low cost, inexpensive hardware options. The Google Nexus 7 has none of those advantages. It is made by one manufacturer so its production numbers are limited. It is a single form factor. All of the things that make an open business model great – cost, choice, variety, distribution, ubiquity, etc. – are lost.

    And what is gained in its stead? Not much.

    — The original Android concept was to get Android everywhere in order to capture eyeballs in order to sell mobile advertising. As discussed above, a subsidized model LIMITS production to only those who are willing to buy content.

    — The closed Nexus 7 business model will gut the tablet efforts of the remaining Android manufacturers. How are they supposed to compete with a for-cost Google tablet when they do not share in the profits that Google garners from the sale of content or advertising?

    The change from an open model to the closed Nexus 7 business model will have dramatic long-term negative consequences for Google’s tablet efforts. For the reasons described above, the Nexus 7 will not sell well enough to garner large scale content and advertising profits but it will sell well enough to eviscerate the efforts of all other Android tablet manufacturers. For Google, it’s the worst of both worlds.

    Summation

    The Google Nexus 7 does not represent a coherent business strategy. It represents the abandonment of strategy. While others are singing the praises of the Google Nexus 7, I am singing a dirge.

    I predict that we’ll continue to hear a lot about Android tablet activations but we’ll continue to hear little about content and advertising profits, which is all that matters in a subsidized business model.

    I predict that the already moribund tablet efforts of the other Android manufacturers will simply give up the ghost altogether. (Caveat: I am not counting Amazon as an Android manufacturer since their operating system is so radically forked from Google’s version of Android.)

    I predict that – unless Google makes a dramatic change – the Nexus 7 will all but fade from sight.

    Bold predictions, I know. But they’re dictated, not be me but, by Google’s own flawed business model.

    Next

    We’ve now looked at the Apple, Amazon and Google tablet business models. Tomorrow, we look at Samsung and the Galaxy Tab.

    Battle Of The Tablet Business Models: Amazon Kindle Fire

    RECAP

    We’re looking at the tablet business models of Apple, Amazon, Google, Samsung and Microsoft. Today we focus on the Amazon Kindle Fire.

    2.0 Amazon Kindle Fire

    2.1 WHERE DOES THE AMAZON KINDLE MAKE ITS MONEY?

    When introducing the new Amazon tablets, Jeff Bezos said:

    “We want to make money when people use our devices, not when they buy our devices.”

    Bezos’s description of the Amazon tablet business model would have been slightly more accurate if he had said:

    “We want to make money when people BUY OUR CONTENT OR ACCESS OUR ADVERTISING, not when they buy our devices.”

    Not as catchy, perhaps, but a tad more honest.

    Bezos also said that he doesn’t believe in the razor/razor blade business model but I don’t know why because that is exactly the business model that the Amazon tablets are using. Amazon is selling their tablets (the razor) at or near cost and they are hoping to make their money from the sale of content and/or advertising (the razor blades).

    Of all the tablet makers, Amazon is uniquely situated to make such a strategy work. While tablet makers like Apple, Google and Microsoft are interested in selling tablet owners tablets along with content such as music, books, television shows, movies and apps, Amazon is interested in selling their potential tablet customers EVERYTHING. Amazon has THE largest and most successful online retail store in the world. If Amazon can get you into their store and get you to buy things from their store, they win. To Amazon, the Kindle Fire isn’t so much a tablet as it is a vehicle designed take you to the Amazon store, keep you there and encourage you to spend your money there. It is just another form of advertising, marketing or promotion for the Amazon online store.

    One of the brilliant “twists” to the Amazon strategy is that Amazon is saving money on software development by legally “poaching” their Amazon Kindle Fire operating system from Google’s open source Android. Google does all the work to create Android and then Amazon’s software engineers lift it whole and modify it to fit their specific needs. By the time Amazon’s software engineers are done modifying Android, their product barely resembles Android at all. In addition, they strip out all of Google’s money making properties and replace them with their own.

    It must be particularly galling for Google to know that as they toil to make the Android operating system better and better, they are also toiling make Amazon’s competing tablet efforts better and better too.

    2.2 WHERE DOES THE AMAZON KINDLE PROVIDE VALUE?

    Amazon’s tablet hardware and software is much improved from last year’s offerings but where Amazon really brings value to their tablet customers is in the one-two combo of low tablet prices and an unsurpassed online shopping experience.

    Amazon is able to keep their tablet prices low because they don’t intend to make any (or much) money on the initial sale of their devices. They can give their customers more tablet for less because they are making it up in content and advertisement sales. Amazon wants to lure you into their store with their tablet and then keep you there with their service and overall shopping experience.

    And while it’s true that Amazon is making money off of you when you shop in their online store, people LIKE to shop at Amazon. Amazon’s selection is world class. Their prices are rock bottom. And their Amazon store software provides customers with one of the finest online shopping experiences anywhere.

    A couple of quick analogies to drive home how the Amazon tablet business model works.

    — If Amazon were a movie theatre, they would sell the tickets to the movies for cost and make their money on the sale of popcorn, soda and candy.
    — If Amazon were in the game console business, they would sell their consoles at cost and make their money on the sale of the games.
    — If Amazon were in the clothing business, they would sell T-shirts at cost, but they would put them in the back of their store in the hope that you would buy more of their other merchandise as you went to and fro in their establishment.

    2.3 AMAZON KINDLE FIRE BUSINESS MODEL ADVANTAGES AND DISADVANTAGES

    The advantage of the Amazon tablet business model is that their tablet prices are very attractive to a very large portion of the population. Further, Amazon doesn’t have to provide their customers with the latest or greatest hardware or software operating system in order to be competitive. Customers will overlook the Kindle Fire’s rough edges because they know that they are acquiring the tablet at bargain basement prices.

    However, the Amazon tablet business model has some serious questions and some serious limitations too.

  • Business Model:

    • Does Amazon’s proposed business model even work?

    As we said above, Amazon is using the give away the razor (at cost) and make your money on the sale of razor blades business model. But that model presupposes that the razor blades are being sold at a PREMIUM.

    Famously, Amazon’s margins are razor thin (no pun intended) – as low as four percent. What good does it do Amazon to give away tablets for cost if they’re only making 4% profits on the sale of their content? It makes little sense. Yes, 4% is better than nothing and yes, they’ll make it up in volume but, as we’ll see, giving away tablets at cost is hardly risk free.

  • Who, Where, How and What:

    • WHO

    “The logic of selling a product which has a profit model unrelated to the cost of goods sold is tricky. The incentives are different. The risk is not selling too few but selling too many.” ~ Horace Dedeiu

    Apple, Samsung and Microsoft don’t give a damn about WHO they sell their tablets to. They make their money up front, at the time of the sale. But Amazon has to be terribly careful WHO they sell their tablets to, WHERE their potential customers live, HOW their customers use their tablets and WHAT kind of demographic that potential tablet owner hails from.

    WHERE

    The Amazon store is currently only available in the United States, France, Germany, Italy, Spain, and the U.K. This means that few people outside of those countries would have any interest in purchasing an Amazon Kindle Fire. More importantly, Amazon has no interest at all in selling an Amazon Kindle to customers who don’t reside in those countries. In fact, they have a strong interest in NOT selling their tablets to those who cannot buy their content.

    Remember, the Amazon tablets only make money from the sale of content or advertising. Contrary to the business models of Apple, Samsung and Microsoft, tablet sales numbers do not directly affect Amazon’s bottom line in any way.

    And don’t expect Amazon to suddenly expand their services into other countries any time soon The Apple App Store opened in 2008 and Apple currently sells Apps in some 150 countries. But after a decade of expansion, iTunes still only sells content in 62 countries. Content distribution is hard. If it weren’t, Amazon would already be selling their content in far more countries than they currently are.

    Simply put, Amazon’s geographically limited content distribution means that Amazon tablets can only compete with Apple, Google, Samsung and Microsoft in the United States and France, Germany, Italy, Spain, and the U.K. For those who are predicting that Amazon’s business model will destroy or put a serious dent in the business models of Apple and others, this should serve as a severe reality check. Even if Amazon does well in the geographic areas that they serve, Amazon tablets will do little to damage the overall sales numbers of their competitiors.

    HOW

    What Amazon tries to do with the brand is ensure that the Fire is in the hands of its most ravenous consumers. ~ Horace Dediu

    Amazon is also interested in HOW their customers use their devices. It you buy an Apple, Samsung or Microsoft tablet and throw it in a drawer and never use it, those companies still make their money. If you take an Amazon tablet and throw it in a drawer, Amazon makes no money. So it’s not enough for Amazon to get their tablets into the hands of consumers, they have to get their tablets into the hands of consumers who will continue to use their tablets and continue to buy Amazon’s other goods and services.

    This is analogous to the newspaper business. Newspapers could have dramatically increased their distribution by giving away their papers for free instead of charging for them. After all, newspapers made their money from the included advertisements and classified ads, not from the sale price of the newspaper. However, if newspapers were free, people who were not really interested in reading the newspaper would acquire them and use them for all sorts of unintended purposes such as lining bird cages or burning them for fuel.

    Newspapers had to charge enough to drive away those who weren’t going to read the newspaper but not charge so much that they drove away their target audience. The Kindle Fire has the same dilemma. It needs to be priced high enough to scare off the cheapskates but low enough to attract the bargain hunters. That’s a very tough, very tricky balancing act.

    WHAT

    Finally, the Amazon model of giving away hardware cheap does not attract the most desirable customers. It does Amazon no good to attract lots of customers if they are money-grubbing, coupon-clippers who refuse to later purchase Amazon’s products or respond to Amazon’s ads. It’s not enough for Amazon to sell their tablets. They have to sell their tablets to people who have money and who are willing to spend that money in the Amazon store.

  • Upgrade Treadmill:

    • During the Amazon Kindle Fire introduction, Bezos also said:

    “We don’t need you to be on the upgrade treadmill. If we made our money when people bought the device, we’d be rolling out programs left and right to try to get you to upgrade. In fact, we’re happy that people are still using Kindle Ones that are five years old.”

    Well, OF COURSE Amazon is happy that people are still using old Amazon Kindles. That’s their business model.

    Amazon makes no money from the sale of their hardware so they’re thrilled to have you continue to use their old hardware. They would like nothing more than for people to use their old hardware for as long as possible so that they don’t have to incur the expense of making and distributing newer hardware. However, this approach has some serious drawbacks and some serious risks.

    First, tablets are a fairly new device category. Tablets based upon Apple’s touch metaphor are only two-and a half years old. Accordingly, the hardware is still rapidly improving.

    While Amazon would like nothing more than to sell you a tablet and have you use it for 7 years — the same way that Microsoft, Sony and Nintendo sold their patrons game consoles and hoped that they would use them for 7 years — Apple, Samsung and Microsoft are following the exact opposite approach. They are iterating their hardware just as fast as they can.

    With tablets, as in smartphones, consumers have shown a willingness to rapidly upgrade their hardware and then sell or pass down their legacy devices to others. Bezos speaks of the “Upgrade Treadmill” as a negative but no one is forcing consumers to buy new tablets. They WANT to buy new tablets in order to take advantage of the latest and greatest hardware and software advances. Although it is in Amazon’s best financial interest to slow down the upgrade cycle, I doubt that consumers are going to stand for that. At this stage in the tablet’s evolution, upgrading is a boon, not a curse.

    Second, while a five year old device may be great for Amazon’s business model it’s terrible for Amazon’s platform efforts. Developers want to develop for a platform using a single operating system. (They never get that wish, but that’s what they want.) They want to provide their customers and potential customers with cutting edge software and they can’t do that if they’re forced to support 5 year old legacy devices. Amazon’s platform efforts are already far, far behind those of their tablet competitors and their business model makes it very unlikely that they will ever be able to catch up.

  • Apps:

    • Amazon may have more content that its rivals, but when it comes to Apps, they are woefully behind. Amazon is upgrading their App portfolio as fast as they can but the total number of apps available to Kindle Fire patrons is still relatively low.

    Further, Amazon has few large screen tablet optimized apps. Smartphone apps may be stretched to work on a 7 inch tablet but as tablet size increases, the need for tablet optimized apps increases too.

    Creating a thriving platform is hard. Ask Amiga in the eighties. Ask Windows Phone 7 now. Developers want to make money and they’re not going to make money if their platform is attracting penny-pinching scrooges who don’t want to buy content but do want to hold on to their tablet hardware for 5 years or more.

  • Limited Appeal:

    • The proposed Amazon tablets will be appealing to many consumers but it will also be unappealing to many more conservative groups. No government, business or scholastic organization is going to want to buy tablets that depend on advertising and which direct their constituents to the Amazon online store. Imagine, for example, legislators, or lawyers or students being given an Amazon tablet. It would be totally inappropriate for their purposes.

    Amazon’s business model lowers the price of its tablets and broadens its appeal to the masses. But Amazon’s business model also precludes it from ever being adopted by organizations. This is a significant limitation that seriously crimps Amazon’s potential overall market penetration.

  • Distribution:

    • Amazon’s distribution channels are extremely limited. Most of their sales comes from their existing online Amazon customers. While this is a large pool, it’s a finite pool and it makes it difficult for Amazon to reach out to new, potential customers.

    Further, Amazon’s distribution opportunities are actually becoming even more limited. Companies like Target and Walmart have recently stopped carrying Kindle devices because of perceived unfair competition.

    Many, many people will buy a tablet unseen, untouched, and online. But the vast majority of people will not. Amazon’s unique distribution channel might be viewed as both a blessing and a curse. But mostly, it’s an impediment to the growth of their tablet sales.

    Summation

    Jeff Bezos has made it clear that he’s all in with tablets. I admire him as much as anyone in tech and if anyone can make Amazon’s strategy work, he’s the man who can do it. But, as we’ve seen, Amazon’s business model holds more questions than it provides answers. Pundits will gauge Amazon’s efforts by the number of tablets sold but the number of tablets sold is meaningless. The only thing that matters to Amazon is how much content and advertising revenue those tablets generate. And since Amazon is notoriously stingy with its revenue and profit numbers, it may be a long, long time before we know whether the Kindle Fire’s business model was brilliant or just bizarre.

    We’ve now looked at the Apple and Amazon tablet business models. Tomorrow, we look at Google and the Nexus 7.

    Relax Everyone: The iPhone Is Just a Phone, Apple Is Just a Company

    iPhone 5 photoSeptember has been an unusually newsy month, and much of the news has centered on Apple’s introduction of the iPhone 5. The run-up to the announcement, the announcement itself on Sept. 12, and the first deliveries on Sept. 21 have sent the journalists, commentators, and analysts of make up the tech industry commentariat on a run of bipolar mood swings that have been a wonder to behold. Really, everybody, it’s time to take a deep breath and get a grip on ourselves.

    The Run-up. The days before the announcement we were actually fairly calm. The rumors mostly sounded reasonable and as the 12th approached, mostly converged. By the time Tim Cook and Co. had finished their presentations in San Francisco, what we got was pretty much what the rumors had led us to expect. In fact, the last few Apple product announcements have all been well telegraphed, either because the company is managing expectations through strategic leaks or Apple’s supply chain has grown so long that and its pre-announcement production needs so great that it is impossible to maintain the secrecy of the past. Most likely, it’s some mixture of the two.

    Announcement and disappointment. When Apple announced exactly what was expected, the immediate response in many quarters was crushing disappointment. It wasn’t quite clear what the iPhone lacked. The complaints seemed to mostly be that the new iPhone looked a lot like the old iPhone, even though iPhone design has been on an evolutionary course since 2007. The fact that the iPhone 5 was dramatically lighter and thinner with a much-improved display, seemed to count for little. What it really needed was a quad-core processor and near-field communications. The new Lightning connector was a disaster. The phone offered neither a hoverboard nor a jetpack.

    The disappointed missed some highly significant change because it wasn’t apparent and because Apple, which generally doesn’t talk much about internals, didn’t mention it. It took chip guru Anand Lal Shimpi to find out that the A5 system-on-a-chip inside uses an Apple-designed processor in place of the modified Samsung designs used in the past. The custom chip, closely matched to Apple’s software, also a big boost in performance with what looks like a small decrease in power consumption. The result was that Apple was able to use a relatively small battery with no loss in running time. This has important implications for future designs of both the iPhone and iPad, but it went largely unremarked.

    Order exhilaration  Despair turned to euphoria when Apple began taking preorders and promptly announce that it had a record 2 million orders in hand and had begun pushing out promised delivery times a couple of weeks. The always optimistic and often wrong Gene Munster of Piper Jaffray forecast first-weekend sales of 120 million units with a “worst-case scenario” of 6 million. After counting buyers standing in line at Apple Stores, Munster came down the middle with a forecast of  8 million.

    Maps, oh my. Then iOS 6.0 shipped on Sept. 19 and all hell broke loose. there were complaints that Passbook, a new service for storing tickets, boarding passes, loyalty cards, and the like seemed half-baked (In fact, I have yet to get it working at all on my 4S.) But the real furore concerned the new Apple Maps application, which replaced Google Maps.

    I think the Maps imbroglio is the one serious piece of all this back and forth. Apple, in most un-Apple-like fashion, shipped a new operating system with a core function that works, at best, somewhat erratically and is markedly inferior to the app it replaced. What we don’t know is why Apple made this move at this time, specifically, whether it was Apple or Google that forced the change. Chances are we never will know, not with any real certainty. But I think Apple could risk some real reputational damage if it cannot quickly improve an mapping app that cannot get me from my suburban Washington home to Dulles airport without climbing a fence and running onto a runway.

    But still, the anguish over maps, like everything else in this sequence, was overdone. Some writers said they would swear off the iPhone because Maps had lost transit instructions, somehow forgetting that Google Maps, with transit directions, worked just fine in a browser, so nothing was lost. (The bigger problem is that third-party location-based apps must use Apple’s inferior maps.)

    Shipping day. Except for the usual silly stories about people standing in line at Apple Stores, shipping day was a bit of an anticlimax. By then, everything about the iPhone was known. The only real new issue was that the aluminum case, which replaced the stainless steel band and much-reviled glass back of the iPhone 4 and $S, could scratch, especially along the finely chamfered bezel that surrounds the display. It remains to be seen how serious a problem this will be as the phones get used.

    The 5-million phone catastrophe. Then came the Sept. 24 news that Apple had shipped 5 million phones on the first weekend of sales. Although this was a spectacular number by any standard, it was widely seen as a disaster, coming in, as at least one headline put it “50% below expectations.” 

    It’s true that first-weekend iPhone sales were up only 25% over 4S sales for the comparable period, while 4S sales were roughly double sales of the iPhone 4. But it’s worth noting that a 25% growth rate is spectacular for a company of Apple’s size, and doubling could not have continued for long (see the wheat and chessboard problem.) Beyond that, we know very little about how sales are really going. Apple records a sale only when the phone is in the customer’s hands and we have no idea how many pre-orders are still in the pipeline. We have no idea the extent to which shipments were constrained by supply  (Bloomberg reported that Apple is facing a shortage of displays, but that’s based on a bunch of reports by analysts who may or may not know anything.) It will take some time to get a good idea of sales; there’s every indication they are strong and the question is just how strong.

    Nonetheless, Apple’s stock dropped 3% after the “disappointment.” This is still odd, since Apple is not priced like investors expect 100%, or even 25% growth.  It’s price-earnings ratio is just 16, about a point higher than IBM, a company that can thrill investors with 5% growth.

    Something about Apple just seems to inspire mass craziness. Much of this dates back to the days when the late Steve Jobs could seemingly pull miraculous products out of his hat and by the astonishing recent growth int he company’s sales, profits, and stock price. But it’s time for everyone to sit back, take a deep breath, and remember that Apple is a very big and very successful company. If it releases a revolutionary product every few years–I’ll argue the last was the iPad in 2010–it’s innovating better than just about anyone else on the planet. If it grows at just 15% a year, it is growing much faster than any other company its size. It operates the most successful retail stores anywhere. And it can be very successful for a very long time.

     

    Of Course HP Will Enter the Smartphone Market Again

    Two weeks ago, the industry was abuzz with discussion about Meg Whitman’s Fox Business interview on September 13. There, she said HP must ultimately offer a smartphones. This set off a chain of new stories, some aghast that HP would be considering something like this given HP’s last foray in phones. Most of the ire stems from HP’s exit and dismantling of Palm and webOS last year versus a strategic analysis. Upon closer analysis though, this makes perfect, strategic sense for HP.

    HP’s last foray in phones didn’t end pretty. In less 18 months, Palm and webOS was acquired by HP and then shuttered. In less than 60 days, the HP TouchPad was launched then discontinued. There was nothing positive about how this ended for HP, Palm, webOS, retail partners, employees or its app ecosystem. At this point, none of this matters in the future and it really is time to move on. The discussion must start at the value of the smartphone.

    I have been unapologetically bullish on where I see smartphones into the future. There is a credible scenario where the smartphone could take on most of our client computing roles. In this scenario, the smartphone is a modular device, which “beams” data to wireless displays and peripherals. Modular operating systems with modular development environments like Android and Windows will enable developers to write once and deploy to many different kind of form factors. Just imagine how much better this will be in five years. Even at IDF 2012, Intel showed this scenario in their WiGig video, albeit with a tablet, but there’s nothing to keep this from being a phone. I want to be clear that this (heavy modularity) will only happen if PC usage models stagnate to the point where they don’t need tremendously more compute performance or storage. If Intel is successful with their Perceptual Computing initiative, the probability of this scenario greatly decreases as the smartphone won’t be able to deliver the required performance. HP then must develop a smartphone if they want to be in the future client hardware business. Meg Whitman also talked emerging markets.

    Meg Whitman touched on this modularity potential when she talked emerging regions. She talked about how in some countries, the smartphone would be their first computing device and in some cases their only computing device, meaning they will never own a PC or tablet. The first point here is price. In many countries, people will only be able to afford one device, and that device will be a smartphone. Secondly, due to the modularity scenario described above, it will extend to other usage models, like desktop computing. I don’t think anyone can find fault in Meg Whitman’s logic. Let’s now look into enterprise.

    Today, two of the biggest buzzwords is “BYOD” or the “consumerization of IT”. Don’t confuse this with the ability to get corporate mail on your iPhone. That’s not BYOD. BYOD is getting full enterprise network, application, security, and management access. That’s a lot different than mail, but many “experts” do confuse this very important point. Imagine how important this is in a healthcare, financial, government, or even any business that develops any kind of IP. You get the point. This is where HP could meet a need for a phone and enterprise management system for that phone, so it is managed just like an enterprise PC. Given HP’s enterprise focus, it makes perfect sense for HP to offer an enterprise-class smartphone with enterprise security, manageability, and deployment capabilities. Does this mean it will be an ugly brick? No. I’m speculating a bit, but I think it will be an attractive phone, but it will be durable enough to be dropped once without shattering the screen or glass backing. As its designed for durability, it will be waterproof, too. HP has an opportunity, the one opportunity that RIM and BlackBerry missed, and that’s an enterprise phone.

    There are many strategic reasons for HP to offer a smartphone that are very logical, given the enterprise and emerging region needs explored above. Given HP’s enterprise focus and experience in managed client devices, they have a lot of value to add, too. Add that to the modularity scenario and it essentially would make HP look crazy not to get back into smartphones. I outlined here that PC makers cannot run away from smartphones, so I am very happy to see HP getting back in. As for execution? While fresh in the industry’s mind, I think it’s time for all of us to get beyond webOS and give HP another shot.

    Battle Of The Tablet Business Models: Apple iPad

    Introduction

    Today there are 5 titans battling to win the tablet wars: Apple, Amazon, Google, Samsung and Microsoft. When it comes to evaluating tablets, we often focus on the differences between the competing companies’ various tablet offerings in the hope that we will detect the little things that make a big difference. However, sometimes it’s best to step back and look at the big things that seemingly make all the difference. A company’s business model is one of those big things.

    A tablet business model can be quite intricate but, in essence, it can be broken down into three parts:
    — Where does the tablet make its money?
    — Where does the tablet provide value to its potential customers? (Why is the customer willing, even anxious, to pay for a company’s particular tablet product or services? What makes a tablet unique? Why does a potential customer choose one company’s tablet over that of another?)
    — How well does a company’s business model work overall? How well does it work in comparison to the competition’s business models?

    With the above in mind, over the next few days let’s take a look at the tablet business models for Apple, Amazon, Google, Samsung and Microsoft in order to see if we can find the patterns that will help us predict which tablet business models are going to be the winners and which tablet business models are destined to be the losers in the upcoming tablet wars.

    1.0 Apple iPad

    1.1 WHERE DOES THE APPLE IPAD MAKE ITS MONEY?

    When introducing the new Amazon tablets, Jeff Bezos said:

    “We want to make money when people use our devices, not when they buy our devices.”

    Bezos was purposely contrasting Amazon’s tablet business model to that of Apple’s. But was his characterization of Apple’s tablet business model accurate?

    Pretty much. But Bezos’ description of Apple’s tablet business model, while accurate, doesn’t quite tell the whole tale.

    Apple makes their money when people buy their iPads. Many think that Apple also makes a great deal of money from the sale of content and by taking commissions from the sales of apps, but this is a misnomer. True, Apple makes literally billions from those sales but that still only represents a tiny fraction of the revenues made from the sale of the iPad itself.

    Apple facilitates the sale of content and apps in order to make their iPads even more valuable and even more attractive in order to sell even more iPads in order to make even more money. Content and App sales are crucial to Apple but Apple makes its money from the sale of the iPad, not from the sale of content and apps.

    1.2 WHERE DOES THE APPLE IPAD PROVIDE VALUE?

    The Apple iPad provides good value in both its hardware and its software. Apple’s store is also excellent but it cannot match the prowess of the Amazon store which has far more content selection at equal or better prices.

    The iPad’s real strength lies in its apps and its app ecosystem. No competitor can touch the iPad there. The iPad has more than 250,000 (and counting) tablet optimized apps. More importantly, the iPad has a thriving app platform. Developers develop for the iPad first, developers are well paid for their services and customers see more value in the available iPad apps and readily buy more apps and pay more for them.

    However, in my opinion, an even greater strength of the iPad is how Apple makes all of the various elements — hardware, software, content, apps,iCloud, retail support, etc. — work together as one. Customers get (and are willing pay for) value from the seamless experience rather than from any one particular aspect of the iPad.

    1.3 APPLE IPAD BUSINESS MODEL ADVANTAGES AND DISADVANTAGES

    The Apple tablet business model is coherent and aligned. (Which is not the same as saying that their tablet business model is the only available business model or that it is always perfectly executed.) Their tablet hardware is the “ticket” that their customer’s buy in order to gain access to “Apple World”. Once customers enter Apple’s walled garden, they seldom want to leave.

    Apple’s primary mission is not to provide their customers with the best of any one thing but, instead, to provide them with the best overall user experience. This gives Apple a tremendous advantage. They don’t always have to be number one in hardware, software, content, apps, etc. So long as their overall user experience is excellent, that is enough, and more than enough, to keep their customer’s satisfied.

    This often baffles industry watchers, pundits and analysts alike. They look at the individual parts of Apple’s tablet offering, find them wanting, then wonder how Apple can continue to compete so very well against other devices that seem to offer more and better features.

    What they fail to understand is that Apple shouldn’t even be trying to add a hardware or software feature to their tablets unless those features perfectly integrate with, and add to, the whole. In a seeming paradox, Apple is not trying to make the best iPad, the best operating system or the best content and app store. Instead, Apple is trying to integrate all the pieces into one coherent whole and provide their customers with the best overall user experience. In this – as reflected by the iPad’s superb customer satisfaction numbers – they have been entirely successful.

    Summation

    Apple’s tablet business model is a very good. The results speak for themselves. However, it’s not the perfect tablet business model and it’s not the only tablet business model. It is now being assaulted from all sides by the entirely different business models of Amazon, Google, Samsung and Microsoft. How does the Apple tablet business model compare and contrast with those competing business models? We’ll see as the week progresses.

    Tomorrow we look at Amazon and the Kindle Fire business model.

    Business Models, Not Technology Distinguish NY Startups

    Last Friday, I headed to the headquarters of IAC in Manhattan’s Chelsea neighborhood for a the demo day for the New York Entrepreneurs Roundtable Accelerator’s third class of startups. Those of you who have attended Silicon Valley demos might be surprised by the difference. In New York, there was almost no talk of technologies. It was all about markets and business plans. The failure rate among these startups will, I am sure, be high, but it is good to hear early-stage companies talking of their plans for success rather than peddling themselves as features to be snapped up by another company.

    One theme that ran through many of the 10 companies was the aggregation of data–and not necessarily very big data–to consolidate

    Photo of Sandy Lin
    Juniper & Trade’s Sandy Lin pitches her service. (Photo: ERA)

    fragmented services. CaterCow, for example, collects information from restaurants, caterers, and others providing catering services to provide a one-stop for browsing, pricing,  and ordering food service for events. There’s nothing technologically novel about this, but it seems to meet a real need. The business model is one of the oldest in the world–an 11% cut of the value of transactions booked through the site. CaterCow is currently beta testing in New York, and the big problem I see with the service is that it is not likely to scale very well. Catering is a highly localized service and it seems to me to move to new markets will essentially require starting over in each.

    Juniper & Trade takes a similar approach to another fragmented market, custom made home goods. Currently, crafts people who make custom furniture and other home goods have unpleasant selling choices. If they are good and lucky, they might be represented by a gallery that will keep 50% of the retail price. The can drag their often-bulky works around to craft shows and fairs. Or they can hope customers discover their web site. Juniper & Trade is building an on-line craft show that can match buyers and sellers in this fragmented market. Like CaterCow, it is launching in New York and has scaling issues, though they are somewhat better because while the producers are highly local, their markets potentially are national.

    AngelPolitics is going for bigger data, trying to build a database of donors to the 87,000 candidates who run for office in the U.S. each election cycle. The task is daunting. The data exist in the records of the Federal Election Commission  (for everyone who gives more than $200 to a candidate for federal office) and in an assortment of state and local repositories of widely varying quality and formats. Campaign finance records are also notoriously dirty as donors, deliberately or otherwise, confuse things by using variations on their names and posting more than one address. The information is also subject to many different state and federal restructions on just how the data can be used and, especially, on how it can be resold. If AngelPolitics can pull it off, it will have succeeded in commoditizing data that campaigns now go to considerable effort and expense to create. There’s a market for that.

    mxHero was unusual among the ERA companies. For one thing, it offers services you can use today. It’s an enterprise infrastructure company with a focus on technology. And it is based in São Paolo, Brazil. mxHero’s business is creating services that enhance the functionality of Google Apps mail, the white-label, paid version of Gmail. One service, called Footers, lets companies using apps mail manage footers, like those annoying disclaimers that law firms love, that are automatically appended to email messages. Another, called Hero Attach allows files of any size to be attached to messages which are then delivered as links the recipient can click to retrieve the file from a  server. On the recipient end, this is much the same as getting a file sent through DropBox or YouSendIt, but the sender need only add it  like any other attachment, not go through a whole separate process. The company has partnerships with Box.net and Cloudmark and is bringing its tools to VMware’s Zimbra enterprise mail solution. Again, the business model is a simple one: a limited free services with a paid offering costing between $4 and $12 per mailbox per year, depending on services.

    There’s something refreshing about the straightforwardness of these East Coast startups. They’re not promising to change the world or even to reinvent much beyond some useful services. They may have something to be modest about, but their modesty is becoming.

     

     

     

     

     

     

     

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    Apple’s 4-Inch iPhone 5 vs. Android 4-Inch Plus Devices

    Since June I have been using the Galaxy Nexus 4.65 inch screen smart phone. Upon switching to that device from the iPhone 4S, I was instantly taken by the screen size. It was clear that gaining just over an inch or so in display size yielded a compelling experience. In fact, the screen size was one of the primary reasons I was able to withstand not going back to the iPhone 4S despite the things that frustrated me about Android.

    Bigger screen size is one of the features we hear constantly touted by Android handset makers as a core feature. By reading many of the comments from the Android enthusiast community it is clear that larger screens are something they clearly value. It is also clear that Android OEMs believe that having bigger screens is a clear differentiator over the iPhone. Coming off my experience with the larger screen size Galaxy Nexus I can understand why at the surface this seems to be true. This is why I was pleased that Apple made the iPhone 5 with a larger screen. One of the criticisms about the iPhone 5 I have heard was that the screen was still too small at 4-inches. It was clear from listening to the presentation at the iPhone launch event that Apple is convinced that from a design perspective 4-inches is the ideal screen size for clean one handed operation. So the question I want to tackle is whether there is clearly more value to be had in smart phones with screens larger than 4-inches. In essence, is bigger better?

    The initial assumption is that the larger the screen the more information I can see at one time. If this was not true, then I would have to question value that would be derived from the larger screen smart phones outside of perhaps games and videos, especially given the design and hardware tradeoffs necessary to make a larger screen as well as the compromise in efficient one handed operation.

    To test this I looked at key applications on both the iPhone 5 and the Galaxy Nexus to see if applications like email, text messages, viewing web pages, Twitter, Facebook, etc., were that much better on a 4.6″ screen. In all the scenarios I wanted to look at, I compared both devices with key applications and looked at how the information was displayed.

    Email

    For many email is still a critical application. Email support for Microsoft’s Exchange was one of my more frustrating experiences overall with Android. Email is critical to me in my workflow and I have always liked how Apple handled Exchange server and I prefer the UI of Mail as well to many other mobile email applications.

    As you can see from the below screen shot both the 4″ screen on the iPhone 5 and the 4.6″ screen of the Galaxy Nexus displayed roughly the same amount of information.

    On Android the app lets me see about 6.5 messages and the iPhone shows me 6 full messages, which is one full message more than the iPhone 4S. My conclusion is that the 4.6″ Galaxy Nexus provided no significant value with respect to email over Apple’s 4″ screen on the iPhone 5.

    Text Messages

    Not everyone may consider email as critical as an everyday application as myself or other professionals but text messaging is a different story. Text messaging may be one of the most important applications on any smart phone and I was curious to see if the larger screen provided any significant value when it came to text messaging.

    As you can see from the text message thread below, the iPhone 5 actually shows more messages as a part of each thread than Android. A key thing to note is that on the iPhone 5 I have a thread that is often more than one line per message, where as on Android there are more one line messages. When I looked at text message threads on the iPhone 5 that were more one line messages, I could see almost double the amount of messages on the screen than on Android.

    Conclusion: iPhone 5 with its 4″ screen does a better job displaying text messages than the 4.6″ Android Galaxy Nexus.

    Facebook

    Facebook is another key application that many consumers use regularly on their mobile devices. Both of the screen shots below were taken using the mobile application created by Facebook for each platform.

    As you can see both devices show roughly the same information with the iPhone 5 showing just a bit more of the timeline but not enough to consider it useful. My conclusion was the Facebook experience was generally similar with no significant value being derived with Facebook on the larger 4.6″ Galaxy Nexus.

    Twitter

    Not everyone uses Twitter. I do regularly and it is an important application in my every day smart phone use. The comparison screen shots below are Twitter’s official application on both iOS and Android.

    Here again we find very similar experiences between both devices with no real value being derived from the larger 4.6″ screen.

    Web Browsing

    Web browsing is another key application to a smart phone experience. Many sites are deploying mobile versions of their sites but to do this test I wanted to see if the larger 4.6″ screen on the Galaxy Nexus let me see more of a full web page than the iPhone 5’s 4″ screen.

    So I went to the full version of the NY Times to see how the experience compared on both devices.

    As you can see here again, both devices display about the same amount of information regardless of their screen size differences. Interestingly, however, even though the iPhone 5’s screen is smaller than the Galaxy Nexus, when viewing the full version of the NY Times on both sites, I still found the iPhone 5’s screen easier to read the text and key elements of the page. Thus, the full web experience was actually better on the iPhone 5’s 4″ screen than the Galaxy Nexus 4.6″ screen.

    Key Conclusions

    What I am pointing out in this analysis is in the same vein as the issue I brought up in my column last Friday, which was that customized apps, tuned to a screen size, are going to out-perform in terms of experience and value than apps that are simply scaled to match whatever screen size gets thrown on the market. Scaling an application just increases its size relatively but as I show above does not lead to more information and debatably a better experience.

    The one area where this may make a difference is with games and videos where a slightly larger screen may be pleasant. But those use cases are just one part of the overall device usage.

    We are already seeing the vast majority of iOS developers beginning to tune their apps just for the 4″ screen. This is not something we can say with Android development. It would be difficult to create custom applications for all of Android screen sizes in order to utilize the value of each screen size–if even possible at all. This is why Android is based on an app scaling philosophy.

    I am watching closely how iOS developers take advantage of the larger screen to see if the custom apps built for 4″ screens actually provide more value in terms of experience and value than scaled apps on Android to fit every screen size.

    Ultimately consumers will have to choose which tradeoffs they feel are most valuable as they evaluate what matters most to them in a smart phone experience. What performing this analysis proved to me was that I found no real significant value in terms of experience or information display with even the largest Android smart phones.

    In conclusion, bigger does not necessarily mean better.

    Integration Gives iPhone an Unbeatable Advantage

    A6 ,chip image (Apple)There was only one real surprise when iFixit.com did its by-now ritual teardown of the new iPhone 5. The phone sports a 1440 milliamp-hour battery just a hair bigger than the battery in the  iPhone 4S. Yet despite going to a bigger display, boosting processor performance, and using faster but more power-hungry LTE wireless, the new phone seems to deliver about the same battery life as its predecessor. And instead of having to go to a bigger battery, Apple was able to use improvements in case and display design to reduce the iPhone’s thickness and weight markedly.

    This is the result of obsessive engineering, not magic. Apple uses its control over every aspect of the iPhone’s design, from the silicon to the software, to fine-tune a device that squeezes maximum performance from minimal resources. This gives Apple an enormous advantage over all competitors save Research In Motion (whose severe problems are the result of its inability to read and respond to the changing market for BlackBerry, not its engineering.)

     In his detailed examination of the iPhone 5, the redoubtable Anand Lal Shimpi found compelling evidence that the iPhone 5’s A6 system-on-chip uses custom, Apple-designed ARM processor cores. In previous A-series SOCs, Apple had customized Samsung ARM designs, mostly by pruning circuitry that the iPhone and iPad didn’t need. No USB ports or SD card slots, no need to have controllers for unused devices (its then nature of chips the even unused circuits increase the power draw, not by much but significantly in a design where every microwatt counts.) With the A6, Apple takes the customization a step further, achieving complete control over the heart of this system.

    With a fully customized SOC, Apple could then fine-tune the software to wring out every microgram of performance while minimizing power consumption. Even the compiler used to generate  iOS code can be tweaked to optimize apps’ power consumption and performance. The tradeoffs between battery size and run time are still there–even Apple cannot escape the laws of physics–but the terms of trade are improved dramatically.

    There’s no way Android can match this. Google has to write code that can support a wide variety of SOCs, including those from NVIDIA, Qualcomm, Texas Instruments, and Samsung. Android devices use several graphics systems and provide support for assorted peripherals. Code designed to run on heterogeneous systems will never be as efficient as Apple’s singleminded approach. Things are somewhat better in the Windows Phone 8 world, where the initial offerings all use a Qualcomm Snapdragon SOC. We’ll see how that afffects battery life and performance when the phones ship.

    With Apps, Size Matters

    Ben Bajarin has written an important article entitled: “Windows 8 Tablet Fragmentation and the App Dilemma“. I highly encourage you to follow the link and read. it.

    His main thesis is so important that I’m re-stating it here in the hope that it will draw even more attention to his article and even more attention to this vital issue.

    “(Apps) are specifically designed for the current … screen size. (E)verything is placed where it is for a reason.” ~ Ben Bajarin

    There is a FUNDAMENTAL DIFFERENCE between an app designed for a smaller (3.5 to 7 inch) screen and an app designed for a 9.7 inch or larger tablet. The pundits don’t get this. Google doesn’t get this. Amazon may not get this. And Microsoft may be ignoring this fundamental truth because they simply have to. Let me explain.

    The Pundits Don’t Get It

    “And this size (7 inches) is useless unless you include sandpaper so users can sand their fingers down to a quarter of their size.” ~ Steve Jobs

    This Steve Jobs quote baffles many tech observers. There are literally hundreds of thousands of useful apps availabe for our phones and our phones are much smaller than a 7 inch tablet. Why then would Steve Jobs say that apps on a 7 inch tablet are useless when apps on the much smaller phone are perfectly usable?

    Steve Jobs wasn’t talking about EXPANDING 3.5 inch phone applications up to fit on a 7 inch screen. He was talking about SHRINKING 9.7 inch tablet applications down to fit on a 7 inch screen.

    You can blow up a phone app and make it run adequately on a 7 inch screen but if you take an iPad app running on a 9.7 inch screen and shrink it down to run on a 7 inch screen (which is only 45% the area of a 9.7 inch screen) it will be virtually unusable. As Steve Jobs said, you would need to sandpaper your fingers down in order to make them thin enough to interact with the app’s interface.

    Google Doesn’t Get It

    “Nonsense,” the critics cry. “Phone apps work perfectly well on tablets. Even Google’s Andy Rubin says so.”

    It’s true that he does say that. When the Nexus 7 was introduced, Andy Rubin made a point of saying that he was sticking with Google’s strategy of encouraging developers to write a single app for both phones and tablets. This same philosophy was reflected in one of his earlier quotes on the subject:

    “I don’t think there should be apps specific to a tablet…if someone makes an ICS app it’s going to run on phones and it’s going to run on tablets.” ~ Andy Rubin

    And there, ladies and gentlemen, is the exact reason why Android’s 10 inch tablet strategy lies in tatters and its partners tablet sales lie moribund. Google doesn’t get it.

    Optimized apps matter.

    iPad Developers Get It

    There are 700,000 apps in the iOS App Store. 250,000 of them – one quarter of a million – are specifically tailored to run on the iPad.

    Developers don’t develop tablet apps for their health and consumers don’t buy tablet apps for no reason. Some phone apps run adequately when blown up to fit on the iPad’s increased screen real estate. However, most phone apps are less than optimal. Some are virtually unusable.

    If you want an optimal phone or tablet experience, you have to tailor the app to the device’s specific screen size.

    Where Does This Leave Android?

    Until Google changes its philosophy on tablet apps, its tablets will merely run oversized phone apps and they will never have any success with the larger screen sizes and they will never seriously compete with any platform that has tablet optimized apps.

    Where Does This Leave Amazon?

    Amazon just introduced larger sized tablets. As smart as Jeff Bezos is, I think that he’s about to find out that there is a huge difference between a 7 inch tablet that can run stretched out phone apps and a larger tablet that demands apps optimized for the increased screen size(s). Without knowing a thing about the new, larger, Kindle Fire devices, I will predict that the larger form sizes will fall flat because they don’t add much in the way of content viewing over that of a 7 inch tablet and their lack of apps devoted to their form factor means that apps won’t add much to their value either.

    Where Does This Leave Microsoft?

    “In essence (developers) are not simply shrinking or expanding their apps to work on smaller or larger screens, they are in essence creating new app experiences for those screen sizes.

    …..

    Windows 8 touch based hardware will be so fragmented in screen size that we will see touch based Windows 8 hardware ranging from 10” all the way up to 27. If developers feel the need to optimize their software for a screen that is anywhere from a half-inch and even a 2” difference, what will they do when they have 4, 5, or 6 different screen sizes to target in the Windows 8 touch hardware ecosystem?” ~ Ben Bajarin

    Do you want to know the future of Microsoft’s tablet efforts? Then ask yourself: “How many apps are optimized for each of the various Windows RT and Windows 8 tablet form factors? If the answer is “a few” or “not many”, then that form factor is going to struggle.

    And while Windows 8 tablets run both Metro and desktop apps, what is the point of owning a tablet if the tablet apps are missing in action and it only ends up only serving as a lessor substitute for a notebook? You’d be better off buying a notebook instead.

    Conclusion

    Apple’s iOS has 250,000 9.7 inch optimized apps.

    — How many apps are optimized for the various Android large screen tablets?
    — How many apps are optimized for the large screen Amazon Kindle Fire tablets?
    — How many apps are optimized for the various Windows RT and 8 large screen tablets?

    Do you want to know the future of tablets? One of the keys is optimized apps. If you don’t got ’em, you don’t got no future.

    Read Ben’s article and enjoy. Understanding his article is essential if you want to fathom the future of tablets.

    Windows 8 Tablet Fragmentation and the App Dilemma

    I was having a discussion with an iPad software developer recently and we were discussing the iPad mini. Interestingly he was still a skeptic about the iPad mini and I thought his reason was interesting. He noted that the apps they develop, and primarily the user interface, are specifically designed for the current iPad screen size. He said that everything is placed where it is for a reason.

    His skepticism about the iPad mini was based on his conclusion that if a 7-8 inch iPad was to come out his current app would not work. His point was that 2 or so inches may not seem like a big difference but for many apps that have menu’s and touch based navigation interfaces, 2 inches is a lot of screen real estate to loose. Basically he had concluded that for many applications developers would target each tablet screen size independently.

    His points got me thinking. First of all I agree with him. If we have learned anything about Apple’s developers is that they are willing to take the time to make sure their app experience is ideal no matter what the screen size. The iPhone 5’s larger screen and app developers already starting to take advantage and optimize their apps for the new 4” screen. Interestingly Apple, during this transition, is faced with having apps with two different looks and feel in their app store for both 3.5” and 4” iPhones. So as developers look to tweak their UI for the iPhone 5 which app UI will we see in the app store? Apple is solving this elegantly but only showing consumers the new app UI for 4” apps only if they have an iPhone 5. That way consumers who don’t have the iPhone 5 will still see app preview screenshots of the 3.5” UI.

    Now with all of that in mind let’s turn our thoughts toward Windows 8. In all the above examples I mentioned we were talking about screen size differences ranging from .5 to 2 inches of difference. And within that extremely small range we should expect to see developers uniquely tweak their app experience and UI. In essence they are not simply shrinking or expanding their apps to work on smaller or larger screens, they are in essence creating new app experiences for those screen sizes. Windows 8 touch based hardware will be so fragmented in screen size that we will see touch based Windows 8 hardware ranging from 10” all the way up to 27.” If developers feel the need to optimize their software for a screen that is anywhere from a half-inch and even a 2” difference, what will they do when they have 4, 5, or 6 different screen sizes to target in the Windows 8 touch hardware ecosystem? And more importantly will they feel that their energy and resources will be worth the investment and hard work?

    Microsoft needs developers to be writing touch based applications but my concern with the touch based hardware fragmentation is that it will may cause them to target only specific screen sizes and not others. This would mean that the touch based software experience will be better on some Windows 8 hardware but not others. I can tell you right now that an application that is built for 10” Windows 8 hardware is not going to be a pleasant experience on a 27” all-in-one running Windows 8 with a touch screen.

    Some categories, like games for example, may work fine within this fragmentation. However, it would seem logical that even developers of many of the popular games may want to make tweaks for larger vs. smaller screens that may run their apps.

    The bottom line is that I expect developers who are looking to sell software to the masses to want their software to be the ideal experience on any screen size. To do that they will inevitably need to write software and create user interfaces that are specifically made for certain screen sizes. This is where I feel developers may feel the need to pause and truly evaluate the effort they put into Windows 8 touch based software.

    You can make the point that the screen size fragmentation I mention has existed for decades in the Windows ecosystem. This is true but I fundamentally believe that when it comes to mouse and keyboard software and UI this fragmentation is not an issue. Because of the unique way touch based software UIs are made, I believe fragmentation becomes an issue when it comes to touch computing in a way it never was with mouse and keyboard computing.

    I believe touch computing is the future, and so does Microsoft with the emphasis they are putting on touch. Microsoft’s challenge over the next twelve months is to convince developers who also believe in touch based computing that their platform is the one worth investing in.

    My Favorite Things About iOS 6

    Having used every version of iOS and Android since inception, I am always very excited to jump on the latest and greatest smartphone operating system.  You see, operating systems say as much about a company and about the future as it says about what’s important now.  While this isn’t a deep analysis on OS mind reading, I wanted to share with you my initial thoughts on Apple’s iOS 6 for the iPhone and iPad.

    There are elements about  Android and iOS that I like.  None of these operating systems is perfect, but each has things that I really like and is valuable to its different kinds of users.  iOS 6 is no different in that there are certain things I really like about it.

    1. Do Not Disturb: Ironically, my favorite thing about iOS 6 isn’t about what it enables me to do, but what it enables me not to do.  My phone is my alarm clock and it was very annoying at 2am when it would start buzzing due to someone in China posting on my Google+ wall or getting other notofocations.  Well, no more.. one button means bliss.
    2. VIP inbox: This is a special sort on important people.  Like many, I get about 200 emails a day but refuse to let it run my life.  The VIP mail “sort” enables me to instantly see the most important messages from the most important people, like my wife.  And clients, of course.
    3. Improved Message Sync– I have two iPads and my iPhone so iMessage synchronization is key.  iOS 5 was a bit spotty, but iOS 6 has been spot on so far.  Thank you Apple.
    4. Reply with Message: Like many, my work day includes bouncing between calls, desk time, and driving.  When I’m on a  call and a client calls, I want them to know that I will get right back to them.  With “Reply with Message”, its only two presses and I can SMS and message I like.
    5. Facebook Integration: Instead of opening the Facebook app to share something, it is now built into the core of the OS. This means saving time, clicks, and contacts integration.  Even though Android and webOS had this for a long time, it still doesn’t diminish it as a good feature.
    6. Shared Photo Streams- This will be huge in my family as almost everyone in the family has an iPhone or iPod and we love sharing pictures.  I will probably use this for more personal photo sharing versus pulling me away from Facebook, Twitter, or Google+.
    What about Maps, Siri, Camera, and Passbook?
    Apple made some changes to Maps, Siri and added a new app called Passbook.
    • Maps- I use both an Android and iOS phone (sometimes Windows Phone) at the same time to always compare and contrast the experiences.  I’ve always been happy with the maps on Android devices as it had turn by turn directions that were very accurate.  The Apple maps function so far has worked so-so (my kid’s school missing) in my little town of Austin and I have a heard a lot of chatter about others having some issues. Steve Wildstrom does a good job of covering some of the Apple maps challenges here.
    • Panorama Mode- I’ve been taking panoramic pictures for a long time.  Before adding the feature ti iOS 6, I just used Microsoft’s Photosynth app that’s been available in the App Store  for a long time.
    • Siri- There has been a lot of research done that says on the whole mainstream consumers are happy with Siri.  In my n=1 research, I have never been thrilled with Siri’s ability to determine what I am saying.  I haven’t yet noticed a sharp improvement in this capability, either, but others, like Tim Bajarin, have.  My bar is set quite high as I am in the car over two hours a day and want to do a lot of voice texting and dictation. Because of Siri’s lack of accuracy with my voice, I am not planning on using the additional database capabilities like sports score, movie times and restaurant reservations.  But I am sure others will love it.
    • Passbook- Think of Passbook as the one digital place for all those annoying paper items or bonus and discount cards that I always manage to misplace.  Apple says you can put airline tickets, movie tickets, coupons, loyalty cards and more.  I am very excited about this feature as I am paperless.  Unfortunately I cannot get it to work, and as of this writing, I keep getting error messages.  I’m not the only one with this challenge as I have seen many Twitter posts on the same thing.I have researched this and don’t have a fix yet, but will update this as soon as I do.
    All in all, I am happy with iOS 6 on my iPhone 4s.  No, it’s not “swing me around the room” amazing, but it didn’t have to be for me to still like iOS.  I prefer Android’s open content sharing mechanisms, notifications, and live pages more than what iOS has to offer, but not enough to switch my primary device off of my iPhone.

     

    The Terrible Tablet Tsunami Two

    On June 18, 2012, I wrote about the changeover from PCs (desktop and notebooks personal computers) to tablets in an article entitled “The Terrible Tablet Tsunami and the Future of Computing“. Today the trend toward tablets continues — only more so. OnlineClasses.org, has been kind enough to consolidate several tablet bullet points, with sources, into an infographic that can be viewed here. Let’s take a look at a few of their key findings.

    In The Beginning

    In April 2010, the tablet category was reborn with the launch of Apple’s iPad. People who compare the iPad to previous iterations of the tablet are comparing apples to oranges (all puns intended). The iPad had many features that made it successful but its true genius lay in the twin combination of an entirely touch user input combined with an entirely new, built-from-the-ground-up, operating system designed to take advantage of that touch input. As successful as the iPad has already been, we still don’t seem to fully grasp how quickly it has changed the face of computing and how rapidly the pace of that change is accelerating.

    Within 18 months, tablet penetration among U.S. households hit 11%. No other technology – not electricity, telephones, computers, mobile phones, internet or smartphones – has penetrated society so quickly.

    Fastest adopted technology EVER. Step back, take a moment and think about that for a second.

    Tsunami.

    Tablet sales are expected to edge out PC sales by 2016.

    The personal computer was introduced in the mid-seventies – some 35 years ago. The iPad was introduced in April 2010 – some 30 months ago. It will only take the tablet 6 to 7 years in order to match the annual sales of the 35 year old PC.

    Tsunami.

    77% of tablet users report that their desktop and laptop usage decreased after getting a tablet.

    In my article: “The iPad Put A Fork In Personal Computing“, I compared the PC to a knife and the tablet to a fork. I attempted to point out that the fork does not replace the knife – but it does decrease one’s use of, and reliance upon, the knife. The exact same thing is now happening with tablets and computers. The evidence is indisputable – but it’s being disputed anyway. (See “Beneath Contempt”, below).

    1 in 4 owners say their tablet is now their primary computer.

    One. In. Four.

    How many times have we heard – and will we have to hear – naysayers declare that the tablet cannot replace the PC as one’s primary computer? Here’s a clue for the naysayers: Not only CAN the tablet replace the PC for some computer users, it’s happening and it’s happening right now.

    And not only is it happening, it’s happening FAST. In my article: “The PC is the Titanic and the Tablet is the Iceberg.“, I focused on the the fact that the bulk of the tasks that the tablet excels at lies beneath the PC’s areas of expertise and competence. The tablet isn’t becoming the primary computer for many DESPITE its less sophisticated, simpler nature – it’s becoming the primary computer for many BECAUSE of its less complex and simpler nature.

    3 in 4 American enterprises have adopted the tablet in some way.

    The Enterprise is notoriously conservative and slow to adopt new technologies. You can always count on the Enterprise to adopt the newest technology – after they’ve tried everything else. The fact that three-quarters of American enterprises have already moved to adopt the tablet in its first two and a half years of existence is truly astonishing.

    Tsunami.

    Beneath Contempt

    “The next big thing is always beneath contempt.” ~Clayton Christensen

    Many of us are in denial about the rapid ascendency of tablets. Even as the shadow of the onrushing Tidal Wave blots out our sun, we insist that the PC will always be the center of the computing world.

    Analysis isn’t about proving who is right, it is about discovering what is right. It is not our job to have the facts on our side. It is our job to be on side with the facts.

    Most importantly, we need to stop the insults and the contempt for others. We should not assume that others are ignorant just because we don’t understand them. When we don’t understand others, we should assume that is is we who lack understanding.

    The Tablet Tsunami

    The tablet tsunami isn’t coming, it’s here. We can ride the wave…or we can wave goodbye any chance of understanding the future of computing.

    Oops! Apple Needs a Remapping [Updated]

    When I looked at the area around my house in the new iOS 6 Apple Maps app, I noticed something seemed to be missing. There was a big pink patch for the Bethesda naval hospital, but where was the very unmissable campus of the National Institutes of Health, located just across the street. Nowhere to be found. A closer examination of the neighborhood showed a county office building mislabeled as a school, while the actual school, a couple of miles away, was missing. A local high school is shown in two different places. A major road was misnamed and  the name of an Army facility was misspelled. This just in one small part of one Washington suburb.

    There has been a fair amount of early grumbling about the features,  such as street view and mass transit routing,  lost when Apple switched from Google maps to their own in iOS 6. But I was unprepared for just how bad the maps themselves are.

    The thing I associate most strongly with Apple is the extremely high standard for the fit and finish of its products. While the iPhone 6 may look and feel like a fine Swiss watch, Maps looks like a hurriedly thrown together term paper.

    Relations between Apple and Google have been deteriorating for some time and the tensions have heightened lately. So it’s not surprising that Apple felt compelled to rid itself of its dependence on Google for such a critical service. Nokia is the second0-best source of mapping data, but Nokia is very tight with Microsoft these days and Apple apparently couldn’t, or didn’t want, to go there. Apple turned to Tom Tom, with additional data from crowdsourced maps and navigation service Waze and others. The result is a big step down in quality.

    Fortunately for Apple, maps are maintained on servers, not devices, so improvements can be made quickly and out into effect instantly. It’s somewhat un-Apple-like, but the company ought to quickly establish a system for user reports of map errors, a system that worked very well for Google when it began offering bicycle routing a couple of years ago.

    I haven’t yet had a chance to test Apple’s new turn-by-turn navigation. But the fact the database doesn’t know where a lot of things are makes me wary (It relies heavily on Yelp for search; that’s great for restaurants, but not so helpful for government offices.) For now, I’d stick to searching for destinations by address, not by name.

    UPDATE: TechCrunch has a post on errors in Apple’s European maps. Sounds like things are a mess on that side of the Atlantic too.

    SECOND UPDATE: Jonathan Cartagena (@torah7000) reports via Twitter that there is a link to report problems, though being in dark text on a medium gray linen background, it’s not easy to spot. I tried reporting problems with mixed results. I couldn’t report the fact that NIH was missing because reporting a missing feature requires tapping the feature on the map, which you can’t do if it isn’t there. Just tapping the correct location doesn’t work. Other corrections can be entered by typing in a text box, but the text does not wrap properly at the end of a line but just scrolls off to the left. Still others show a satellite image of the problem area and ask you to drag the pin to the correct location. However when you try to do this, the whole map scrolls with the pin in place. The whole procedure feels a lot less than half baked.

    Windows 8 Tablets and Email: A Disaster in the Making

    Win 8 mail app screenshotI’m skeptical about Windows 8 as a desktop operating system, but I think it has a lot of potential on tablets. To win a good chunk of the market, however, Microsoft and its OEM partners have to convince buyers, both consumers and enterprises, that Windows serves their needs better than the competition, particularly the iPad. As the Oct. 26 launch of Windows nears, this venture is in danger of foundering on the shoals of email.

    I’ve written before about the awfulness of Windows 8’s built-in mail Metro-styles program. The more I use the version built into the finished version of Windows 8, the less I like it. Though it has a very clean touch-centric design, its lack of features long considered essential in any email client makes it a great leap backward. First and foremost, while you can have multiple accounts with support for Exchange, Outlook.com/Live/Hotmail. Yahoo, Gmail, and IMAP. there is no way to combine accounts into a unified inbox. There’s no message threading. You can’t flag messages or create smart  inboxes. It feels like a throwback to the bad old days of AOL mail.

    The Mail app has gotten marginally better through the Windows 8 beta process, but Microsoft isn’t promising that it will improve much any time soon. My inquiries yielded a bland and noncommittal statement: “The first-party Microsoft apps built for Windows 8, including Mail, will continue to receive updates and feature changes over time via the Windows Store.”

    This is an enormous challenge for ARM-based tablets running on Windows RT. because as of now, Metro Mail (sorry, I’m going to call it Metro until Microsoft gives us a real alternative) is the only mail client available for RT. Outlook 2013 has the same architecture and essentially the same user interface as Outlook 2010, and its computational, memory, and storage demands always made it unlikely as a component of Office on RT. Microsoft made this official in a somewhat backhanded reference in an Office Next blog post, that said that the Mail app does not support “certain [Office application] email sending features, since Windows RT does not support Outlook or other desktop mail applications (opening a mail app, such as the mail app that comes with Windows RT devices, and inserting your Office content works fine).”

    Unless some third party comes up with a more capable Metro mail client soon, I think RT tablets will effectively be disqualified for enterprise use. Yes, the Metro Mail app is an Exchange client, but it’s a wretched one, far worse than iPad Mail. Enterprise users may have to rely on Outlook Web Access (OWA) for a decent Exchange experience–but the current version requires an active network connection to do anything. Exchange Server 2013 will add offline access capabilities to OWA, but it is likely to be at least a couple of years before this versions is widely deployed by enterprise IT. The fact that Microsoft, which owns the back-end mail systems of the corporate and institutional world with Exchange, has failed to offer a first-rate mail client for a tablet it considers a key to the future is just baffling.

    Things are somewhat better for Intel-powered Windows 8 tablets, because they do not have to depend exclusively on the availability of Metro-style apps. Outlook 2013  is only sort-of touch optimized. The cleaner ribbor with larger icons and menu items in touch mode will work a bit better on tablets, but the program is still heavily dependent on cascading menus, which do not work at all well with touch.

    Still, it’s good to at least have access to Microsoft’s premier mail and collaboration application. In the enterprise world, Outlook is the program everyone hates and that everyone depends on to get through the day. The lack of a tablet-ready version of Outlook promises to be a huge impediment to the enterprise adoption of Windows tablets and could be a crushing blow to Windows RT.

     

     

    How 7-Inch Tablets Could Help Notebooks Make a Comeback

    If you follow much of what I write you may be familiar with the solutions based thinking approach I frequently mention. The fundamental aspect of a solutions based approach to personal computing understands that multiple screens working seamlessly in conjunction together will equal personal computing. Personal computing does not mean a single personal computer any longer. In the post-PC era it means many personal computers working together in a whole.

    I have used this philosophy when outlining how different screens in conjunction together pair well and equal a computing whole. For example when I wrote about the combination of desktops paired with tablets as a solution. I’ve even wrote about this with regards to 7″ tablets and their role with traditional notebooks–which is the focus of this column.

    There is ample data surfacing from different parts of the industry to support the claim that the iPad has been disrupting traditional PC sales. This is true and it is happening for reasons which I outline here in my column on why I believe tablets are the future.

    Yet there are segments of the market that still need and require a traditional notebook. To be entirely honest I am not sure which camp I am in yet, whether the tablet + desktop is the solution for me or 7″ tablet + notebook is the solution for me. Until I fully experience the latter the jury will be out.

    This brings up a key point and it relates to how product segments mature. Traditional PCs are mature and consumers are so familiar with their needs, wants, and desires with traditional PCs that when they buy them do so extremely intentionally to meet the needs, wants, and desires they have established for themselves.

    Tablets on the other hand are not a mature category yet with regards to the mass market and are therefore still maturing as a product segment. It will most likely take customers at least two generations of owning a tablet to fully establish their needs, wants, and desires for a tablet PC. This is where the 10″ v. 7″ tablet form factor will come into question.

    If you are like me, upon using the iPad I began using my notebook less. Due to its size, convenience, battery life, robust and simple interface, etc., I found and still find the iPad to be extremely efficient in both my work flow and my non-work based personal computing tasks. Like fellow TIME columnist Harry McCracken, I reserve my notebook for specific tasks and use my iPad for everything else.

    However, Harry and I, along with many others who find this solution suitable, may only represent one segment of the market. We are served with this solution but perhaps others will not be. This is where 7″ tablets will make the discussion that much more interesting.

    Upon getting the Nexus 7, I set my iPad aside and committed to using it as my primary tablet. Upon doing so, I found that I pulled my notebook out quite a bit more than when I used my iPad as my primary tablet. This was not a surprise for me since I had already had an assumption that 7″ tablets were not general purpose computing devices like 10″ tablets but instead are better suited for media and entertainment only. I still believe this is the case and will remain the case. If you have experienced the Kindle Fire or Fire HD you will probably feel similar. None of the products I just mentioned took much time away from my notebook like the iPad does. But this did re-enforce a point that I feel is important. Which is that 7″ tablets will help to rejuvenate the notebook market. At least in terms of notebook upgrades.

    Part of the reason tablets have been disrupting PC sales is because for many segments of the market there are more questions than answers around tablets. They are not sure yet how far a tablet can take them in terms of personal computing. Consumers need to experience tablets to fully come to a conclusion as to whether they can replace some or all of their computing needs and what other products they may need as a part of a solution. Some may conclude they still need a traditional PC some may not. But the question around tablets and the fact that we have heard from many notebook intenders that they are delaying the purchase of a notebook because they want a tablet only re-enforces this point.

    Many consumers are in the market for a tablet but are not quite out of the market for notebooks. As the tablet market matures and consumers come to conclusions about a tablet and the role a touch based computer will play in their personal computing ecosystem, it will allow them to make more informed decisions on the solutions they require. For many of those who have put off buying a new notebook perhaps once they realize they want a 7″ tablet but still need a notebook, they will then decide to upgrade. That being said, Notebook refresh cycles will no longer be the same with tablets and smartphones taking over the 2 year average life cycle.

    Although, I expect the next few years to be rough waters for Windows PC makers, I feel it is key that those who desire to continue making notebooks, develop a strategy for 7″ tablets.

    For Apple’s iOS Owners, It’s Christmas In September

    On Wednesday, September 19, 2012 iOS 6 will go live. For tech devotees, this is old news. But for the vast majority of iOS (iPod Touch, iPhone and iPad) users, iOS 6 will deliver about 200 gifts – some big and some small – to make their i-devices a bit more fun, a bit more useful, a bit more valuable.

    If adoption goes as it did with iOS 5, we can expect to see iOS 6 on 60% or more of all iOS devices – including the now three year old iPhone 3GS – within a month or so. Due mostly to hardware constraints, not every device will support all the additions but all the devices will support the vast majority of the additions.

    Compare that to Android. As of this date here are the adoption percentages for Android’s three most recent operating system updates:

    — 01.2% Jelly Bean
    — 20.9% Ice Cream Sandwich
    — 77.0% Gingerbread or older

    What good does it do Android to add great new features to their operating system if they can’t deliver those features to their users? It’s like buying Christmas presents and never letting anyone open them.

    Operating System adoption is one of iOS’s greatest strengths and one of Android’s greatest weaknesses. When it comes to operating system updates, Apple is a bit of a Santa Claus…and Google is a bit of a Scrooge.

    HumanToolz: Making the iPad a Bit More Usable

    Photo of HumanToolz iPad standAs much as I love my iPad, I have to admit it has a problem. Holding it gets tedious and is generally impractical while typing. And getting it to sit in a vertical position requires and external support of some kind.

    Apple’s solution to this is hopeless. The Smart Cover works very well to protect the screen, but is a miserable stand. It only works at one angle and at the slightest provocation, its magnetic strip detaches from the iPad, which then topples over. There are many other stands available, but they tend to be clumsy, ugly, inflexible, or all three.

    Enter the HumanToolz Mobile Stand, available for $65 as a preorder on Kickstarter; delivery is expected in November.) It’s a handsome aluminum device–the color on my preproduction model almost but didn’t quite match Apple’s–that supports a third-generation iPad or iPad 2 in positions from nearly horizontal to nearly vertical in landscape mode. (In portrait it is limited to a position 11 degrees off vertical.)

    The stand consists of two thin bars that snap firmly to the iPad’s corners. A support piece shaped like a broad U attached to the middle of these bars with a clever hinge that rotates smoothly, without detents, through nearly 180 degrees but remains securely in any position you put it.

    The stand weighs just 2.5 oz. (71 g) and is 5 mm thick at its thickest point, the hinge. It doesn’t really add appreciably to the iPad’s weight or bulk, a good thing since it is just hard enough to remove that you won’t want to put it on and off terribly often.

    I found I used the HumanToolz stand in a variety of settings: Propped near vertical on a desk for table for reading or for use with my ZAGGflex keyboard, a bit above horizontal for typing on the on-screen keyboard, propped at a comfortable angle on my legs while sitting, or at a slightly less comfortable angle on my belly while lying down.

    HumanToolz funded production of the stand by raising $88,600 on Kickstarter and it will be available online and in stores. Apple has kept stands other than the Smart Cover out of it retail stores, maybe on grounds of general ugliness. They ought to give the HumanToolz version a good look.

    The Significance of Motorola’s RAZR i Announcement with Intel Inside

    Today, Motorola Mobility announced the Motorola RAZR i for Europe and Latin America.  The phone is very similar to North America’s RAZR m, but instead of a Qualcomm, ARM-based SOC, it includes an Intel Atom-based X86 processor.   This announcement is significant for Intel and the industry for many reasons, including Intel’s first big brand phone in a unique industrial design and the increased use of Intel Inside which could become an industry disruptor.

    Background

    Intel had its challenges in mobility over the past few years with its Menlow and Moorestown products as there were many promises made but very few smartphone products shipped.  Things changed dramatically with the delivery of the Intel’s Medfield SOC and with the Infineon wireless acquisition.  Medfield shocked all industry watchers in that it was the first Intel mobile SOC that performed well and got good battery life. Shocking too was Intel’s ability to use binary instruction set conversion in Android to make specific applications that embedded ARM instructions work well on the X86 platform.  So far, so good on compatibility as I haven’t even heard of any meaningful compatibility challenges with Android apps.

    Medfield pulled in the first wave of phones from Lenovo and  ZTE in China, Lava in India, Orange in U.K. and France, and MegaFon in Russia. The phones were good at their price points, but not great, and the designs looked like derivatives of the Intel-designed phone. The phone industry watchers were pleased at a good start by Intel, but wanted to see a global brand in a unique phone.  This is where the Motorola RAZR i comes into play.

    The Motorola RAZR i

    In a discussion with Intel’s vice president and general manager of Intel’s Mobile and Communications Group, Mike Bell and Motorola, it was apparent that both sides were very excited.  I don’t mean the traditional “oh it’s a launch and I have to be excited” tone.  This was for real.

    Like the RAZRM m, the RAZR i has an edge to edge, 4.3” Super AMOLED display, Gorilla Glass, aluminum display frame, KEVLAR backing, and splash proof coating. Unlike the RAZR m, the RAZR i is powered by an Intel Atom SOC clocked at 2GHz.   It has a single core SOC and is “hyperthreaded”, meaning it can process two operations, or threads, at the same time.  On paper, this approach should save power as most phone operations are single threaded and you don’t have to burn a full second core to do this.

    Motorola and Intel said that the 2Ghz SOC will help with many different usage models, including web browsing, multitasking, games and imaging with its 8MP camera.  Without using the RAZR i or even reading detailed reviews, the faster web and multitasking messaging makes complete and total sense as Intel performs very well here and this can get only faster as they’ve boosted clocks to 2GHz.    The improvements on games makes sense, too, given it includes a very highly clocked Imagination Technologies graphics core and  should be even clocked higher with the CPU boost.  I will wait to use the phone and wait for reviews before commenting on the camera.  The features look very impressive as it can take 10 pictures in a second, but quality is key here, too, and I need to use a unit first.  These functions are primarily handled by the Hive-based ISP and don’t have a lot to do with a 2GHz processor anyways.

    Battery Life

    Motorola says that the RAZR i achieves “20 hours of combined usage time”.  The footnote says, “Battery life based on an average user profile that includes both usage and standby time.  Actual battery performance will vary and depend on signal strength, network configuration, features selected, and voice, data and other application usage patterns.”  I have to say that is quite vague.  What is more useful is what Apple discloses which comprises detailed talk time, web browsing, video, music, and standby.  I really cannot even comment on the RAZR i battery life until I see some of these figures broken out which I am sure will be available as reviewers put the phone through its paces.  As previous Intel-based phones have very respectable battery life in their class, I’d expect better battery life as Motorola has packed a 2,000 mAH battery inside but we will have to wait for reviews to see the impact of the Super AMOLED display and Motorola software load.

    Intel Inside Branding

    Intel has spent over $1B in marketing each year for at least the last 15 years.  They have built a highly-ranked brand on consumer awareness measurements, and amongst techies very high awareness and familiarity.  In the PC and server space they have high degrees of preference as well with the “processor-aware” crowd.  The smartphone market is different, though in that heavy-duty ingredient branding hasn’t been used… yet.  One major thing I noticed for this launch was the proliferation of Intel and Intel inside branding and sub-branding.  It is evident in the web, print and video assets shown at today’s event, even down to the Intel jingle at the end of the commercial. Below are are a few examples.

    razri
    Motorola’s Event

     

    razrintelinside
    Motorola Web Site Specifications, First Line

     

    razri intel logo
    Kevlar backing of the RAZR i
    razri on wood
    Motorola RAZR i Landing Page

     

    razri with intel inside
    Motorola RAZR i Landing Page
    razr i logo
    Motorola RAZR i Landing Page

     

    Ending to Motorola RAZR i U.K. TV Commercial

    This is a very significant industry dynamic as Intel is now running similar marketing “plays” in the smartphone as they have used in the PC market.  The impact on the PC market was pronounced as both the distribution channels and the PC makers became very dependent on Intel Inside dollars to fund their marketing operations. Imagine if this dynamic catches hold in the smartphone market.  It could be very disruptive to smartphone distribution, brands and consumers and could quite possibly give Intel the leg up they need to gain more handset design wins and sell even more phones.  Qualcomm, NVIDIA and TI will need to reevaluate how they combat something like this.

    Some phone brands look at the PC market and want to stay as far away from that brand dynamic as possible  as they see Intel’s brand as dominating theirs.  Others see this as a great opportunity to leverage Intel’s brand, potential gain share, and amplify their own marketing dollars.  Industry watchers need to keep their eye on this dynamic as it will be a potential disruptor in the smartphone ecosystem.

    Conclusion

    The Motorola RAZR i smartphone announcement with Intel is very significant on many levels.  First, Intel gets a big-named brand in Motorola, who, while has faded in share of late has a very solid brand profile.  Secondly, the RAZR I has a unique industrial design with unique features which set it apart from the Intel-designed skins from the previous launches.  I am very, very interested to see how well the phone performs and in battery life given a highly-clocked Intel Atom at 2Ghz combined with a 2,000 mAH battery while still only 8.3mm thin.  Finally, and most significant, is Intel raising the stakes in smartphone component branding.  This branding dynamic will have more of an industry impact than even the RAZR i itself and has the potential of being a major disruptor.

    The iPad Is Selling like Mad And Making The Competition Sad

    At the iPhone 5 event held on Wednesday, September 12, 2012, Tim Cook announced these facts regarding iPads:

    1) Last quarter, Apple sold 17 million iPads.
    2) Apple sold more iPads than any PC manufacturer sold of their entire PC lineup.
    3) Apple has sold a total of 84 million iPads since its launch in April 2010, less than two and a half years ago.
    4) Competitors have launched hundreds of tablets to compete with the iPad. One year ago, the iPad had 62% market share. Today the iPad’s lead has grown to 68% market share.

    Five Observations:

    First, all the action, all the growth in computing is in mobile devices. As for the future of computing, in my opinion, smartphones will have the bigger numbers, but tablets will have the bigger impact.

    Second, neither Apple, nor HP, nor Dell, nor Lenovo, nor Acer, nor any one else who makes a living selling computing hardware cares a whit about whether you call the iPad a PC, a computer, a media tablet or a toy. That’s all just meaningless semantics. What they do care about is that Apple is selling more and more $500 (and up) devices while they are selling less and less.

    “Airplanes are interesting toys but of no military value” ~ Marshal Ferdinand Foch

    Third, Apple is just crushing the competition in this all-important new category. Starting with nearly 100% market share in 2010, it was inevitable that Apple’s overall market share would drop as seemingly every other manufacturer on the planet started selling this new, and rapidly growing form factor. So to see Apple’s market share GROWING after a two and a half year span is simply mind blowing.

    Fourth, Google – and therefore Android – has, in my opinion, completely missed the boat in tablet computing. Andy Rubin and Google stubbornly refuse to acknowledge that there is a fundamental difference between smartphone apps and tablet apps:

    “I don’t think there should be apps specific to a tablet…if someone makes an ICS app it’s going to run on phones and it’s going to run on tablets.” ~ Andy Rubin

    Apple just announced that there are over 250,000 iPad specific apps in their store. Developers don’t create apps for kicks and buyers don’t buy iPad specific apps for no reason. There is a difference between a smartphone app and a tablet app. Apple gets it. Google doesn’t.

    Android tablet manufacturers have paid the price for Google’s misstep as the lack of tablet specific Apps has cut the ground out from under their tablet efforts.

    And with the introduction of the Google Nexus 7, Google has all but ended any hope that any Android manufacturer – other than Google – can make a profit on Android powered tablets.

    Fifth, when you see the above numbers, you can see how very desperately Microsoft wants and needs to be in this sector. Microsoft Windows rules the notebook and desktop markets but they have nothing going on in phones and tablets…yet.

    Conclusion

    The future of computing is in tablets. And right now, Apple owns that future.

    Mac Attack

    At the Apple Special Event held on Wednesday, September 12, 2012, Tim Cook announced these facts regarding Apple’s Mac Computers:

    1) Mac notebooks rank #1 in market share in the U.S. for the last 3 months.
    2) Mac notebooks had 27% market share in July.
    3) The Mac has outgrown the PC for 6 straight years.
    4) The difference in the rate of growth between the Mac and the PC for the last quarter was significant – 15% to 2%

    Four observations:

    First, I think we can somewhat discount points 3 and 4, above. The Mac is growing from a smaller base, so it’s mathematically easier for its percentage growth to be greater than that of the PC.

    Second, Apple is cherry picking their most favorable numbers here since this is only in the U.S. and it’s only notebooks. Still 27% notebook market share in the U.S. is significant. Notebooks are where the action is in PCs today and the U.S. is an important market. With 27% sales, the Mac should no longer be deemed a “niche” product.

    Third, there isn’t a Mac sold for less than $999. Apple’s critics are always harping on the fact that Macs are too expensive but consumers obviously don’t think that is much of an issue.

    Fourth and finally, if Mac notebook market share is #1 in the U.S. for the past 3 months, where does that leave, Dell, HP, Asus, Toshiba, Sony, Lenovo, Acer, etc? As noted before, the Mac is sold for $999 and up. It’s always maintained high margins while most other computer manufacturers have been involved in a profit destroying “race to the bottom”. If the Mac, which dominates in margins, is starting to take market share too, there will simply be no profits left for the other PC manufacturers. They’re surviving on crumbs already.

    The PC industry is losing unit sales to the iPad from below and having their profits skimmed by the Mac from above. Based on the facts that we currently have, that trend is only going to accelerate. What are the PC manufacturers to do?

    Ultrabooks have not been the answer…yet. So I can only assume that PC manufacturers are putting most of their faith in the various Windows 8 tablet form factors. That’s an awful lot of “eggs” in just one basket. Will customers “shell” out the big bucks for the new PC form factors? Or will the the “yolk” be on the PC manufacturers?

    Re-Thinking The iPod Touch And The iPad Mini

    Last week, my colleague Steve Wildstrom asked: “Is There Room in Apple’s Lineup for an iPad Mini?” I had the very same question and I was one of the very first to say so in the article’s comment section. However, after reading more on the matter and upon further reflection, I’m re-thinking my position.

    With the rumored iPad mini on the horizon, I would have said that Apple was going to de-emphasize – if not discontinue – the iPod Touch. Instead, Apple did a major upgrade. How major? In addition to significant spec bumps, they added:

    — 4″ Retina display
    — A5 Chip (same as in the iPhone 4S)
    — iOS 6
    — Siri
    — Airplay Mirroring
    — Shared photo streams
    — Dramatically improved, 5 megapixel iSight camera with autofocus, flash, Facetime HD and Panorama.

    But it was the pricing that was the most perplexing. The new Touch, which will ship some time in October, will be priced at $299 for a 32 gigabyte model and $399 for 64 GB. With the new iPad starting at $499 for a Wi-Fi-only 16 GB model and the iPad 2 priced at $399, where does the rumored iPad Mini fit in?

    I’m now speculating that the Ipad Mini will be priced the same, or nearly the same, as the iPad Touch. Counter-intuitive? Yes. Un-Apple like? Maybe not.

    Apple has never been afraid of cannibalizing their own products. But one thing they have always feared and avoided was category confusion. Except during times of transition, Apple is fanatical about keeping their product lines distinct.

    Marketing students and fans of the book: “The Paradox of Choice”, will understand Apple’s resolve in this matter. Confusion is the enemy of sales. Apple keeps its product lines far apart so that you know, almost intuitively, which device is the one and only one that will fit your needs.

    So how would that work with the new iPad Touch and the rumored iPad Mini? If they have the same price, wouldn’t that cause massive consumer confusion? Not really. Here’s why.

    Apple is clearly aiming the new iPod Touch at kids. In addition to all of the features described above, the new iPod Touch comes in kid-friendly colors and with a kid-friendly carrying Loop. Further, at the event where they announced the new iPod Touch, Apple heavily emphasisezed the iPod Touch’s ability to watch movies on its wide-screen display, the 1750,00 available games and the 150 million players made available via Game Center.

    Apple is positioning the iPod Touch as a device for kids.

    And the iPad Mini? It’s hard to know how Apple will position it since it doesn’t yet exist. But here are a couple of things that I think will differentiate it from the iPod Touch:

    — It won’t fit in your pocket
    — It won’t have a Retina Display
    — It will run iPad – not just iPhone – Apps
    — It will be 3G, and possibly LTE, capable

    I believe that Apple is going to position the iPod Touch as the device for kids and the iPad Mini (or whatever it might be called) as a personal iPad – useful for everything an iPad can do except for screen intensive Applications.

    I’ve always thought of the iPod Touch as Apple’s stealth iOS weapon. Virtually without competition, it gently ushers a younger generation into the world of iOS. And once they are there, what could be more natural than for those iPod Touch children to transition into iPhone and iPad carrying teens and adults?

    Apparently, Apple feels the same way. They’ve sent a strong signal that the iPod touch is here to stay. And the rumored iPad Mini? Well, we won’t be able to say for sure until it actually exists. But I no longer think that the iPod Touch and the iPad Mini have much overlap with one another. Even at the same prices, they serve two very different purposes and two very different markets.