Category Archives: apple

Can I have my money back Steve?

Apparently a federal judge ruled that Apple violated anti-trust law and conspired to raise prices for e-books.

http://www.latimes.com/business/technology/la-fi-tn-apple-judge-conpiracy-20130710,0,3253817.story

For those of us who bought e-books, that is not a surprise. I remember when e-books cost 9.99 not 14.99.

All this proves is that large companies with infinite budgets will use their market power to screw over the consumer. And that things like the anti-trust act still add value.

Take that libertarians.

And I want my money back.

Damn you iOS

One of the coolest and amazing parts of the Android system is how trivial it is to create content in one application and share that content with another application.

I can trivially take a picture, and then use smugmug to upload it and wordpress to blog about it.

With iOS it’s a pain-in-the-ass to get the content out of the device onto the app I want.

Why iOS which is built on top of a BSD kernel has such an unbelievable and crappy file system abstraction layer is an enduring mystery to me.

edit: Why am I using an iOS device, you ask? Because I was given as a gift an iPad Mini. I am planning to replace that eventually with an Android tablet.

How ATT and Verizon turned mobile software into the new growth industry

Yesterday, I had the misery of replacing of my phone.

When I originally bought my Nokia cell phone, I bought it with the expectation that I would get an early upgrade in about a year. Given that the phone was free – thanks to a bug in the OS – the theory was that in one year I would buy a better phone at a reasonably discounted price to replace my aging and dying Nokia E71

Except ATT, and now Verizon, changed the rules of the game and the early discount no longer applied.

Which sucked for me… but it really sucks if you are hardware manufacturer…

In the hardware business, you really need to get people to upgrade to the next model to make money. If they don’t upgrade, then you make less money. It’s really that simple.

Storage as a hardware business is awesome because storage is like a consumable… as long as you are creating data you are buying more storage. Once you use storage it’s no longer re-usable for another purpose without deleting data and data never gets deleted.

But to upgrade to a new cell phone you need a compelling value proposition at a reasonable price.

With the early discount model the carriers had turned what could have been a two-year upgrade cycle into a one year upgrade cycle. And had allowed more share of wallet to go from software vendors to hardware vendors… Folks who could spend were spending more on hardware over two years than on software.

The carriers have now reversed that policy which means that the prices after one year have gone up.

This is really unfortunate for hardware manufacturers. To deal with the sudden increase in price, hardware vendors must either make the product more valuable through faster innovation, or figure out how to make the hardware cheaper or accept slower growth.

Changing the rate of innovation is hard. In fact, I would almost argue is impossible. Hardware rate of innovation is ultimately tied to Moore’s law. So you have to cut prices which is also sucks because it affects margins. Or you accept slower growth which isn’t so bad … other than the part where your shareholders ask you to do things like hand over your cash hoard and demand a dividend … and let’s not get into the employee retention thing.

All this means less profit for hardware vendors which means less innovation etc…

A slower hardware innovation adoption rate, however, is fantastic for software vendors. Unlike hardware, software vendors are able to continuously add value to devices without an upgrade cycle. In addition,for subscription services as long as the vendor adds incremental value the average sales price doesn’t have to drop …

So what does this mean?

If you consider the amount of money that the median first world person has as fixed or slightly declining over the next 10 years, then software vendors can capture a bigger share of the wallet.

Let’s be very specific:

Suppose a customer is will to spend 600$ very two years on a phone. In the old world, the customer could buy a 200$ one year, and a 400$ the next. With the new policies the customer spends 200$ and 600$ the next year because there is no discount. So the customer – unless he sees a compelling value proposition decides to not buy the 600$ phone which frees up 400$. That 400$ is available to spend on incremental software services on his phone. Although it’s certainly true that not all that money will go to software, but some of it will. And the really cool piece of news is that folks who were buying early upgrades have enough disposable income to actually want to buy more software services to extend the value of the device they already own.

If I was a software service vendor like Evernote or Google or Microsoft this is the best piece of news I have heard in a very long time… More money to spend on services.

If I was a hardware vendor this would suck. And the market agrees which explains the collapse of Apple shares.

And if I was Microsoft trying to grow my platform this would also suck because

  1. It means that growth of Windows Mobile will be slower as it takes longer for people to buy new phones.
  2. Given the investment consumers are making  in services, the stickiness of  incumbent platforms may increase over time.

My only hope if I am Microsoft is that they can somehow create faster software innovation that motivates people in the next upgrade cycle to switch … This is possible … in principle (bing is number #1 in search – right?) … 

And if I was blackberry, I would pray there were a lot of people who loved me…

And if I was anyone else trying to build a cell phone platform, I might be looking for a new strategy…

Nokia has chosen to die or The end of the Nokia affair.

Today is truly a sad day. After an almost 15+ year love affair with Nokia phones, I am moving on.

I feel lost and adrift, but it is time…

Nokia’s value prop was that the damned things never died and the audio quality is the best in the business. So in spite of their crappy UX, I loved the fact that my phone always worked, and provided perfect sound. In the early days of the iPhone (and to this day), I would get frustrated at the audio quality of their phones. Much like iPhone snobs hated my pictures, I hated hearing their muffled, distorted crappy voices.

But my Nokia 900 (edit: originally said 820 which is easy to replace) died a few weeks ago. And that is not okay. And it died because the internal and irreplaceable battery died. And I lost some pictures because I can’t get the pictures without tearing the damn thing apart … thankfully iFixit has ways of doing that.

I was thinking about buying another Nokia, but…

I found myself, before the phone broke, getting increasingly frustrated with the lack of apps, the poor quality of the photos, my inability to do things that my android device made easy.

And then I looked at the call log on my phone, and I realized that I barely used the phone as a phone. I have 14812 minutes on my cell phone. Seriously who need 14812 minutes on their phone (need to fix that bill at the next opportunity)…. That’s 10 days of continuous talking.

Heck I barely used it for SMS.

I mostly used it as a web-browsing device and an email device.

At work I have an Android device, and realized I was using this massive collection of apps that neatly integrated with each other (something the Apple iPhone experience works so HARD to make a frigging nightmare)… and found myself increasingly reaching for my work phone instead of my personal phone…

So good-bye dearest Nokia, Like many things in life, time has passed you by… Even this fan-boy bids you a not so fond farewell…

I never would have guessed that you would have pissed away such an amazing, and awesome strategic opportunity through colossal and spectacular business mismanagement.

As for you dearest Microsoft, love your desktop PC, love your mobile OS, won’t bet against you but you’re increasingly looking like OS/2 …

 

 

Apple has learned nothing and neither have their fan boys

Over the last 30+ years, what has become apparent is that it’s all about the applications and not about the hardware.

In the 1980’s Apple pissed away it’s lead because it never knew how to court developers the way MSFT did.

And in the cell phone market, Apple has shown how to make a market for applications, and MSFT intends to demonstrate that they know how to make money for application developers and how to treat application developers.

http://www.businessinsider.com/reality-check-most-people-dont-care-about-how-apple-treats-developers-2009-7


The good news for Apple is that the reasons this backlash exists are completely meaningless to most normal people. That doesn’t make it right. But it should not affect peoples’ purchasing habits or their enjoyment of the iPhone’s standard features.


So it goes.

20 years ago the importance of applications was lost on Apple. More importantly the importance of a rich development community, and apparently 20 years later, the lesson is still lost.

Am I Mac?

So after almost two years of irritating ads by Steve Jobs and Co, I finally bought myself a mac-mini. Well, my wife bought me a mac-mini.

And it’s kind of fun.

New software to learn and what not.

Not sure if I am mac, yet.

The danger of software

My wife has bought a mac. And yes in my house, I am PC and she is Mac.

 

 

 

 

 

 

 

 

 

 

 

 

One of the dangers of the mac is that makes digital video editing too easy.

Why is that a problem?

Because now everyone thinks they are a movie director! Having tools that are easy allows anyone to make a movie.

So…

Over the last twenty minutes, while I was watching the Olympics and blogging, she was crafting this video (complete with audio soundtrack) …

On a PC this would have been nightmarishly hard to do… but then again anything that is worthwhile should be hard to do!

iPhone: This changes nothing

It’s happened. My Apple friends, you know the ones who run around proclaiming the Mac’s greatness, have gotten their hands on iPhones. Now I will be subjected to claims about how great the iPhone is and how it changes everything in the cell phone market. Already they are asking whether, Nokia, the global leader with 400 million phones sold per year and approximately 50 000 employees devoted to exactly one market is doomed, doomed I tell you.

Let us, for a moment, exit the Steve Job’s reality distortion field. So I’ll make two seemingly contradictory statements:

  1. The iPhone’s success is critical to Apple.
  2. Even if the iPhone succeeds it is irrelevant to and will barely affect the broader cell phone market.

Let me start with (1).

Apple has consistently occupied a niche in the broader general personal compute market. A market I define to include all devices that people use to browse the web, message, entertain themsevles and generate content with. If you exclude the biggest segment, the cell phone, Apple’s global share of the PC market is an almost irrelevant 5%. The problem for Apple is that the 5% Apple owns is absolutely irrelevant to the emerging personal compute platform that is the cell phone. In other words, regardless of whether Apple owned 10 or 15% of the laptop market without some kind of cell phone strategy the long term prospects of the company were questionable. The thesis for this argument is that as more and more users migrate to cell phones to do most of their laptop activities, the value of the laptop declines and the value of the cell phone as their dominant personal compute platform increases. In other words, over time, the cell phone becomes the laptop, the laptop becomes the desktop, and the desktop becomes the mainframe. Why this is important to Apple, is that Apple’s market tends to self select among people who are willing to adopt newer and more exotic technologies. There was always the possibility that the right phone may affect Apple faster than the broader Microsoft market.

Furthermore, the reality is that unlike Microsoft, who after 6 years of trying finally has finally produced a credible cell phone OS that actually runs on a non-trivial amount of cell phones Apple had zero presence in the market. Vista and Mobile Windows are fairly well integrated and that the integration creates the possibility that the Mobile Windows may drive Windows OS sales over time. This could, in theory, impact Apple’s long term (tiny) position in the computer market.

Apple had two strategies open to it. One was to try and get cell phone manufacturers to adopt the Mac OS or Apple applications preserving some kind of presence in the cell phone market. The second was to build their own custom designed cell phones. Proving, again, that Apple is a hardware and not software company, the strategy they chose to adopt is to build their own phone with their own OS. In effect, Apple decided that Apple needed to build their own device so as to provide a home for their fans so as to preserve Apple’s overall share of the personal compute market.

In fact, the iPhone’s success is critical to Apple. If the iPhone flops, this may create an oppening for some of those Apple users to migrate to other computer platforms. The reason may be better integration with their dominant compute platform, namely the cell phone. Thankfully, for Apple, the early news is that the ancient hardware platform they built has been a smashing success with their fans, thanks to the rather clever software interface they built. So kudos to Apple!

Having just congratulated Apple on their first phone, I am worried that the first cell phone they produced was already ancient in terms of hardware technology. The cell phone market is not the mature PC market. The cell phone is a rapidly evolving hardware platform. There is an open question as to whether Apple can simultaneously sustain the level of innovation in both the PC and cell phone market necessary to compete over the long haul. An iPhone that is always two years behind the rest of cell phone market becomes less interesting over time.
Now let me address point (2):

Even if the iPhone succeeds it is irrelevant to the broader cell phone market and will barely affect the broader cell phone market.

The most irritating aspect of the Apple fan is his belief that the iPhone will somehow change the dynamics of cell phone market or perhaps even disrupt the dominant player in the cell phone market, Nokia. The central thesis of the argument is the following:

  1. The iphone is like the ipod, a disruptive technology, that the major players will be unable to react to
  2. Because the iphone is like the ipod, a disruptive technology, Apple will become the dominant cell phone player
  3. The cell phone manufacturers will go out of business and Apple will finally rule the computer market!

Before I even point out why I think this argument is deeply flawed, let me observe that the iPhone is irrelevant to the broader cell phone market.

The total cell phone market is approximately 1 000 000 000 cell phones (http://www.ipsnews.net/news.asp?idnews=36161) per year. If the iPhone sells 5 million per year that’s 0.5% of the global market. As a point of comparison, Nokia sold 106 million phones in the quarter ending Jan 1st 2007 (http://www.infoworld.com/article/07/01/25/HNnokiasalesup_1.html)

Heck even in the United States there are approximately 120 million subscribers between verizon and att. Assuming 1 cell phone per subscriber, if the iPhone sells 10 million units it will have hit ~8% of the verizon/att market and less than 4% of the total US market.

Practically speaking the iPhone may eventually own a tiny market of the global market, but is utterly irrelevant in the places where the growth in phones is most dramatic (the emerging markets of China, India and Africa) because of the cost and form factor of the device.

The most optimistic scenario for the iPhone for it’s impact therefore, is the following:

I think in the most optimistic scenario,the iPhone is to the general mobile cell phone market what the Mac is to the PC: pushing a few trends faster but generally irrelevant.

Of course, anyone who believes in disruptive technology will gladly point out that the dominant players are never weaker than when they appear strongest.

So is the iPhone like the iPod, disruptive to the rest of the cell phone market?

I think the answer is no. The iPod was disruptive to the personal media market because it was the first device that had enough capacity to carry most of your music as well as an elegant form factor. The iPod was, therefore, able to take advantage of the transition of media to digital form. The reason no one else was able to respond was that the players in the market at the time were either too small to compete with Apple or (cell phone manufacturers and Microsoft) completely missed the boat.

The iPhone has a pretty UI on top of a marginal hardware platform. Apple has not invented the first usable cell phone. Apple may have invented the first usable cell phone based web browser. However, the problem is that the cell phone vendors are not some puny players that are incapable of reacting and Apple’s global share is too small to make their current advantage meaningful. The most reasonable claim is that Apple’s disruptiveness is tied to the fact that they do software and they understand industrial design. The problem is that cell phone vendors understand industrial design (Motorolla RAZR) and increasingly understand the value of software (possibly because of Microsoft). The major cell phone manufacturers are aware of the importance of the software platform and have been aggressively investing and re-organizing to become software players. If you combine their ability to innovate in hardware, their manufacturing capacity, their global reach and their new found focus to create software the most likely outcome is what I said earlier:

I think in the most optimistic scenario,the iPhone is to the general mobile cell phone market what the Mac is to the PC: pushing a few trends faster but generally irrelevant.

I just don’t see the cell phone vendors falling asleep and giving Apple the time necessary to build the capacity necessary to compete with them. Of course, I could be wrong, but it seems extraordinarily unlikely.

I still believe the largest long term threat to the cell phone manufacturers and in particular Nokia is Windows Mobile because of the increasing integration between the cell phone and the laptop. Having said that, the laptop may become irrelevant over time, making that integration a niche part of the overall personal compute market.

In short, bravo to Apple for introducing a good phone. But unlike Steve, I believe this changes nothing.