What to Watch For

The intro to my latest post on Medium:

It’s easy to trivialize wearables by saying things like “their only benefit is saving your hand a trip to your pocket,” but there are vast implications of saving that trip our hand makes dozens of times per day. Not only can it make our existing uses for smartphones more efficient, it could make everything we do more efficient.

In truth, there’s no such thing as saving time — only optimizing how it’s spent. The Apple Watch appears to be the first wearable device that holistically attempts to reallocate our time: from screens that absorb our attention to devices that distribute it. This is a story — a theory — about how the Apple Watch is designed to refocus our attention on the world around us by augmenting our physical-world experiences.

Look forward to re-examining this theory in 5 years.

Anticipating Surprise from Apple

Yours truly, on Medium:

In general, Apple’s past behavior is an excellent indicator of its future behavior, which makes many aspects of its events quite predictable. But Apple’s famous secrecy has one main purpose: to create a sense of wonder and surprise during announcements. Keeping future products secret enables announcements to feel like “major leaps forward.” The alternative, complete transparency during development, can make each update seem merely incremental. A new hardware product category, new size formats for the largest existing category, and a new service make for more potential surprise than we’ve seen in nearly a decade.

What are the potential surprises? Assuming the 3 announcements above, here are 16 big questions:

Chipotle’s ‘The Scarecrow’ – and Other Ideological Brand Videos

Brilliant, beautiful, haunting.

Deeply ideological brands are powerful and rare. Deeply ideological founders help. That may be the driver for this one too, in some ways even more explicitly positioning Steve Ells as the hero of the respective stories.

One critique of ‘The Scarecrow’: the story seems to lack a pivotal moment of catharsis like ‘Back to the Start’ has. The consumer’s role in the narrative also seems absent – the message is a bit too much “we’re heroes, line up and get some of our heroic work” rather than “Chipotle is a movement you can be a part of.”

It seems sure their brilliant ideological narratives will continue (unlike fleeting brilliance). Maybe the next one will even be more inclusive, with a community-driven narrative using the same formula: ideological story + nasty cover of a classic song.

(Thanks to Zack for helping codify thoughts on this.)

 

My concerns about Apple’s potential advertising business

My second post on Medium:

99.98% of Apple revenue can be attributed directly to the end user experience
I’m not convinced the potential increase in developer support is worth even the smallest risk of compromising the end user experience that drives their core business. And the risk doesn’t seem all that small.

Ads never enhance the user experience. At best, they avoid ruining it.

Animation manipulation

There are too many animations shown in the new iPad commercials. Too many because they leave no room for demonstrations of direct manipulation of on-screen objects.

The obviousness and clarity of interfacing with technology through direct object manipulation with your fingers has always been the iPad’s primary differentiator among personal computers. And the smoothness of those interactions is the primary differentiator among post-PC devices.

Seems fishy.

“Make no mistake about it. Our nation is under attack.”

David E. Sanger, David Barboza and Nicole Perlroth, reporting for The New York Times:

An unusually detailed 60-page study, to be released Tuesday by Mandiant, an American computer security firm, tracks for the first time individual members of the most sophisticated of the Chinese hacking groups — known to many of its victims in the United States as “Comment Crew” or “Shanghai Group” — to the doorstep of the military unit’s headquarters.

The big question: how useful could the things they’re gaining access to be?

While Comment Crew has drained terabytes of data from companies like Coca-Cola, increasingly its focus is on companies involved in the critical infrastructure of the United States — its electrical power grid, gas lines and waterworks.

Staff at Digital Bond, a small security firm that specializes in those industrial-control computers, said that last June Comment Crew unsuccessfully attacked it. A part-time employee at Digital Bond received an e-mail that appeared to come from his boss, Dale Peterson. The e-mail, in perfect English, discussed security weaknesses in critical infrastructure systems, and asked the employee to click a link to a document for more information. Mr. Peterson caught the e-mail and shared it with other researchers, who found the link contained a remote-access tool that would have given the attackers control over the employee’s computer and potentially given them a front-row seat to confidential information about Digital Bond’s clients, which include a major water project, a power plant and a mining company.

But the most troubling attack to date, security experts say, was a successful invasion of the Canadian arm of Telvent. The company, now owned by Schneider Electric, designs software that gives oil and gas pipeline companies and power grid operators remote access to valves, switches and security systems.

Telvent keeps detailed blueprints on more than half of all the oil and gas pipelines in North and South America, and has access to their systems. In September, Telvent Canada told customers that attackers had broken into its systems and taken project files. That access was immediately cut, so that the intruders could not take command of the systems.

Far too useful. Chris Sacca: “Make no mistake about it. Our nation is under attack.”

Mr. Obama alluded to this concern in the State of the Union speech, without mentioning China or any other nation. “We know foreign countries and companies swipe our corporate secrets,” he said. “Now our enemies are also seeking the ability to sabotage our power grid, our financial institutions, our air-traffic control systems. We cannot look back years from now and wonder why we did nothing.”

Mr. Obama faces a vexing choice: In a sprawling, vital relationship with China, is it worth a major confrontation between the world’s largest and second largest economy over computer hacking?

“You lend entirely on the basis of character”

From Adam Lashinsky’s excellent interview with the founding partners of a16h:

Ben Horowitz, on venture capital:

It’s not an asset class. It’s not an industry. It’s the very small number of firms that the best entrepreneurs in the world are willing to take money from.

And Marc Andreesen:

The classic quote was JP Morgan himself testifying in front of the Senate, and he said, it doesn’t matter how much collateral anybody has […], you lend entirely on the basis of character.

Worth reading the whole thing.

Google Retail Stores

Seth Weintraub, writing for 9to5Google:

An extremely reliable source has confirmed to us that Google is in the process of building stand-alone retail stores in the U.S. and hopes to have the first flagship Google Stores open for the holidays in major metropolitan areas.

The mission of the stores is to get new Google Nexus, Chrome, and especially upcoming products into the hands of prospective customers. Google feels right now that many potential customers need to get hands-on experience with its products before they are willing to purchase.

Smart move. The go-to-market strategy for the Nexus device line seems non-existent right now.

I had terrible experiences trying out the Google TV a couple years ago and the Nexus devices last year in Best Buy stores. I know Google can create a far better experience better than that, and I don’t know anywhere else to go play with a Google device.

While Microsoft has struggled to create products that deliver on the “sell the experience rather than specs or features” vision, Google is getting much closer. If Google is going to continue investing in device design and manufacturing, they need far more people to feel that experience.

NOTE: Google Glass – which I’m reserving judgement on until I have the device – seems like a particularly difficult product to try/play with in an indoor space. IF the product is impressive in a retail store, though, I’d guess it will be their biggest sales channel by far.

The future of department stores?

Emily Jane Fox, writing for CNN Money:

Ten years ago, groceries made up a little more than 20% of Wal-Mart’s net sales, or about $48 billion. In 2012, groceries accounted for 55%, or roughly $244 billion. …

The grocery push gets customers in the door — and opening their wallets — more often, according to Burt Flickinger III, managing director of Strategic Resource Group.

“Our research has shown that over the last ten years, the average number of shopping trips a customer makes to Wal-Mart has gone from 12 per year to 52 or more,” he said. “Since customers spend on average between $50 and $60 in total per trip, that’s an extra $2,000 per customer each year that Wal-Mart is bringing in.”

333% growth in shopping trips per customer by adding grocery? Brick-and-mortar retail success is all about driving traffic. Why not pick up milk at Macy’s?

NOTE:
In the US, grocery broke 50% of Wal-Mart’s sales in 2009 according to The Wall Street Journal.

The make-your-own-monopoly era

Jon Mitchell, writing for ReadWrite:

Though this hasn’t happened yet, the announcement of the Files API makes possible a future App.net story that would be the most interesting so far. By providing the 10GB of cloud storage to paid accounts, App.net makes a new tier of pricing possible that could allow social-only accounts to be free. In that scenario, App.net would be just like Twitter, only with a thriving ecosystem of client apps, the possibility of upgrading to a powerful, cloud-backed service, and no ads whatsoever.

This model has a serious shot, especially as we transition from the startup-a-product era to the startup-a-business era of software: provide a free service that’s so good (and networked) it actually gives you a nascent monopoly on all the paid services built on top.

Twitter wasn’t mentioned in 50% of Super Bowl ads after all – hashtags were

Matt McGee, writing about Super Bowl XLVII commercials for Marketing Land:

According to my count, Twitter was mentioned in 26 of 52 national TV commercials — that’s 50 percent of the spots that aired during CBS’ game coverage. Facebook was mentioned in only four of those commercials — about eight percent. Google+, which is reportedly the No. 2 social network in the world, wasn’t mentioned at all.

YouTube and Instagram were even mentioned once each, by Hyundai and Oreo, respectively.

His definition of “mentioning Twitter”?

Commercials that had some mention of Twitter — a hashtag, a logo, a URL or something else.

All 26 of his “Twitter mentions” included hashtags. But many of the hashtags were platform agnostic: not accompanied by a Twitter logo.

In fact, by my count only 3/26 of the hashtags were accompanied by a Twitter logo. That means the other 88% (23/26) could just as easily be credited to Instagram, Google+ or, most appropriately, all three major hashtag-supporting platforms.

Our author, Mr. McGee, doesn’t mention this detail of his methodology in his “How I Counted Super Bowl Commercials & Social Mentions” section. Nice headline, too: “Game Over: Twitter Mentioned In 50% of Super Bowl Commercials, Facebook Only 8%, Google+ Shut Out.” Rubbish reporting.

How about this? “Social Game On: Hashtags Included in 50% of Super Bowl Commercials, Facebook Mentioned In 8%, Twitter In 6%, Instagram In 2%”

Perhaps the most important thing to recognize about native advertising

Matt Cooper, writing for Pando Daily:

This is perhaps the most important thing to recognize about native advertising. Done right, native doesn’t merely fit into the stream of a publisher’s user experience in terms of design – it fits with the publisher’s value proposition in terms of content.

Great piece.

Google Fiber: the brilliant intersection where Google and consumers both win

David Talbot, writing for the MIT Technology Review:

A Google spokeswoman says the company “expects to operate profitably” and that Google Fiber is neither a loss leader nor a PR stunt. …

The cable distribution giants like Time Warner Cable and Comcast are already making a 97 percent margin on their “almost comically profitable” Internet services, according to Craig Moffet, an analyst at the Wall Street firm Bernstein Research. As Levin points out, “If you are making that kind of margin, it’s hard to improve it.” And most Americans have no choice but to deal with their local cable company. …

Google has a good reason to experiment: its long-term corporate fortunes are closely tied to heavy Web usage. At the end of the day, more Web traffic—and more eyeballs on that traffic—means more ad revenue for Google.

Google Fiber is the only thing I can imagine that could get me to use Google TV, a Nexus device, Google Drive, or even Google+. Fiber could be Google’s iTunes/iCloud: a profitable but invisible platform that enables an exceptional experience throughout the rest of the company’s product ecosystem. Going a step deeper to the ISP level impacts the product integration and end user experience even more fundamentally.

Google has surprisingly never had a product that unites and integrates all their services together. Google Fiber is it.

The way that we’re going to ratchet up our species

Steve Jobs, 1995:

“The way that we’re going to ratchet up our species is to take the best and to spread it around to everybody, so that everybody grows up with better things.”

UPDATE:
Pretty much the opposite of Sam Walton’s ideology for another one of the largest companies ever: “If we work together, we’ll lower the cost of living for everyone…we’ll give the world an opportunity to see what it’s like to save and have a better life.” –Sam Walton

Why Apple Only Needs One TV Content Partner

Apple doesn’t need to convice all the major media companies to offer their channels as a la carte options though an app-like setup. They simply need one channel (one piece of one company) to try it.

If Apple can convince one popular channel, say just ESPN (Disney) or Comedy Central (Viacom) or MTV (Viacom), to try a single subscription model through an in-app purchase, they’ll revolutionize the TV market. I think Apple is rightly convinced that a successful launch of one channel in an a la carte model would demonstrate the economic feasibility to everyone. Once successful, the test channel is certainly not going to back out of the popular and successful new business model, and others who want to grow their business will join in. That’s how you disrupt an old business model.

My money’s on ESPN because of Disney’s relationship with Apple, their status as the most popular channel on TV, the fact that they show a lot of live content, and that they’ve repeatedly proven themselves as an innovative and risk-taking media company.

Now let’s just hope Eddy Cue can negotiate that one all-important partnership.

“Then of course they can go off and make it happen.”

Steve Jobs, 1995:

You know, one of the things that really hurt Apple was after I left John Sculley got a very serious disease. It’s the disease of thinking that a really great idea is 90% of the work. And if you just tell all these other people “here’s this great idea,” then of course they can go off and make it happen.

And the problem with that is that there’s just a tremendous amount of craftsmanship in between a great idea and a great product.

Steve Jobs was able to put The Medici Effectinto practice. He got individuals to measure their own success solely by the project’s success.

Also: if you haven’t watched Steve Jobs: The Lost Interview in its entirety, you should. He is remarkably prescient about today’s computing landscape – 18 years ago.

How Your Listening Behavior Pays Artists On Spotify

My first post on Medium:

If you’re a music fan and listen to Spotify two hours each day:

• Each day you listen to about 30 songs
• Each day you distribute over $0.13 to artists
• Each year you listen to about 10,950 songs
• Each year you distribute over $49 to artists

If you played music on Spotify 24/7 for the whole year, you’d play about 131,400 songs, giving you over $591 to distribute to artists.

By these estimates, it takes 156 listens to equal per-track-purchase artist compensation of $0.70.

 

Amazon Prime Is Still The Best Subscription

Subscription services provide unlimited access to stuff. Unlimited means stress-free, never-think-about-it convenience. What types of things are subscriptions good for?  Amazon Prime is the best thing I subscribe to, with Rdio, Flickr, Netflix and HBO in a 4-way tie for second.

The $79/yr price for Amazon Prime is a steal for free 2-day shipping (often 1-day in practice) if you buy more than 15-20+ things each year. I don’t even use the included free Amazon Instant movie streaming very much, and the Prime price is worth it just for fast, free shipping.

Amazon wants to be the first place you go to buy anything. Universal Wish Lists that let you add any item, whether Amazon sells it or not, got them close. Amazon Prime solidifies their pole position, and it’s a delight.

Christmas shopping is a good reminder of just how nice it is to have convenient, inexpensive, fast shopping.

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What if Samsung Had Accepted Apple’s Smartphone Patents Licensing Offer?

Just for fun, I looked at the hypothetical impact on Apple’s iPhone profit and Samsung’s mobile unit profit if Samsung had accepted Apple’s offer to license its smartphone patents to Samsung for $30 per device sale. Based on Samsung smartphone unit sales of 21.25 million smartphones over the period, they would have paid Apple $637.5 million in licensing fees for smartphones. The impact, over the 8 quarters from Q3 2010 through Q2 2012:

Apple’s total iPhone profit would be 1% higher, increasing from $47.95B to $49.59B.

Samsung’s total mobile unit profit would be 4.98% lower, decreasing from $13.43B to $12.79B.

Not a world-changing impact on either unit’s profitability, but much bigger impact on Samsung than Apple. This calcuation assumes such a licensing agreement would not have impacted consumer demand, which seems reasonable. Mass market consumers may have cared for the week the deal was announced, but never again.

Calculation data:
https://docs.google.com/spreadsheet/pub?key=0AjSGTQ_Ti9JVdEREbzZJNmlUMExwVEk4SDBRc05IblE&output=html

 

Facebook Off Facebook

Facebook blog:

We’re working with operators around the world to minimize the number of steps needed to complete a transaction in mobile web apps, which will make it easier for hundreds of millions of people worldwide to purchase apps on their device via operator billing. This will be automatically enabled where carriers support it when you integrate the Pay Dialog into your app.

Facebook is taking another step toward enabling the web to be a first-level hardware platform. Developers are willing to give Apple a 30% cut of app and in-app sales as payment for providing users through better discovery. Facebook is trying to use the same strategy. Though Facebook doesn’t own the web like Apple owns iOS, they can enable even better discovery than Apple can, through social data.

Right now, Facebook only helps users find developers’ apps that are built on Facebook, and only through ads. This signals a shift in both of those, opening up substantial new revenue streams for Facebook. Facilitating payments across the web means Facebook will have strong business reasons to drive web-app usage, which they can do by providing better discovery. Eventually they’ll allow developers to pay to promote their web-apps through that discovery mechanism, in the same style as their current “sponsored stories” ad products. Two new streams of revenue for Facebook, both driven by a competitive advantage no one is close to matching: social data.

Two final notes:

  1. Facebook seems to finally understand the web is mobile first.
  2. This is “f-commerce” that actually exists.

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The Simple First Rule of Branding and Marketing

Seth Godin:

Not a secret, often overlooked:
“Keep your promises.”

This is why marketing is now the job of entire organizations, not just marketers.

Marketers have always been good at making promises, but historically it has been the rest of the company’s responsibility to actually deliver on those promises. The mark of a good marketer was the ability to understand company or brand’s promise and the consumer well enough to communicate the former to the latter.

Marketers promise how a product is supposed to benefit the consumer, but the product itself determines whether that promise is kept. Now software products and digital services are critical to every marketing plan because they help continuously reinforce the promise, but also because they take the first step in actually delivering on the promise.

Example: Lowe’s promises to help you improve your home. Lowe’s has always sold products in their stores that help you do that. Now they’re offering the MyLowe’s, which is a digital service that helps you manage your home. Users of MyLowe’s are taking a step beyond understanding the promise Lowe’s is making, they are beginning to actually derive value. As soon as the user is deriving value, the brand is delivering on its promise – before the user ever enters the store or buys a product.

Finally marketers have a hand in keeping their own promises. Now imagine the power marketers have when the entire product line of the brand the work for is made up of software and digital services. The product itself is an even more important piece of the marketing.

It’s time for entire companies to think like marketers by making every decision based on making the right promises and keeping them. How does a brand come up with the right promises to make? By understanding consumers really well. How do marketers know how to communi

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Comcast’s 10-Year Deal With Disney Includes Out-of-Home Viewing

Amy Chozick and Brooks Barnes for the New York Times:

Comcast and Disney said Wednesday they had agreed to a 10-year deal that will allow the cable provider to distribute Disney content via television and streaming on iPads and other devices.

But it’s not exclusive in any way.  So Disney (which owns ABC and ESPN) can still allow other content distributors, like other cables companies or Apple or Google, to distribute Disney/ABC/ESPN content as well.

Comcast customers will have access to ESPN sports on multiple devices. That network earns more money from cable and satellite companies than any other channel, about $4.69 a month, according to SNL Kagan. Combined with ESPN2 and ESPN Classic, the ESPN networks take in about $6.50 a subscriber each month.

So imagine Disney agrees to let Apple distribute those same ESPN networks  to consumers, as an a la carte option, for $9.99 per month.   If every content provider did this, I’d buy ESPN, FX, HBO and the basic networks.  Let’s say the basic networks cost $4.99 each, the “premium” network groups like ESPN are $9.99 and the “exclusive” network groups like HBO are $14.99.  My monthly TV bill would be around $60, compared to the $175 I pay today for it to be grouped with Internet service and a phone line.

The only question for me is how much the price of Internet-only service would go up.  The only question for Disney is what percentage of cable subscribers would subscribe to ESPN as an a la carte choice.  That’s likely where Apple’s negotiations are hitting some snags.

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The New Plug-and-Play: Why Apple Must Fix Apple IDs

Apple must fix their device setup process to make it easier again.For most of Apple’s history, they’ve been famous for their plug-and-play devices.  You pull a computer out of the box, plug it into the wall, and start doing things you love.

I spent most of the last two days helping my family setup new Apple devices (2 iPhone 4Ss, 2 iPad 2s, 1 Apple TV, 1 iMac).  None of these devices were plug-and-play.*  And for the non-Mac items, it wasn’t even close.

The core of the problem is Apple IDs.  When setting up Apple devices, you must enter or create an Apple ID to download any new content (music, apps, books, movies, TV shows, newspaper or magazine subscriptions, etc), to get content from your other devices, to use FaceTime and iMessage, or just to sync your contacts, calendars and other basic data.  These are a few of the tasks every user wants to perform immediately when they start using their device.  They are the features that Apple pushes hardest to sell their devices – (can you even remember the last Apple ad you saw that didn’t focus on apps, FaceTime or both?).  But you need your Apple ID before you can do any of that, and there are a few major problems with device setup using Apple IDs:

  1. The term “Apple ID” isn’t common enough for the average consumer to know what it is (“iTunes email” seems to be common name for it among my friends).
  2. All 6 people who I helped setup devices this weekend have more than one Apple ID (I’ll explain why this is such a serious problem in a moment).
  3. Apple IDs cannot be deleted.
  4. Entering an Apple ID into your device upon setup or from device settings does not sign you in persistently across the device.

Alone, none of these (except maybe #4) are all that problematic.  But together they make it a huge headache to setup new Apple devices, especially the ones that run iOS.  These are verbatim quotes from new Apple device owners in my family over the last two days:

  • “Apple hates me”
  • “This technology is way to complicated for my life”
  • “Can’t I just start fresh?”
  • “Why is this so complicated?”
  • “I don’t care anymore, I just want to play with my iPad”
  • “I’m too old for technology”
  • “I know you have way-above-average knowledge about Apple, but how is the average customer supposed to figure this out?”
Steves Jobs would cry if he heard any of those.  They represent the exact opposite of what Apple stands for and what Apple has consistently delivered for the past decade.  All these setup frustrations boil down to the Apple ID issues I pointed out.  The solutions may be technical challenges for Apple, but conceptually they’re very simple:
  1. Dedicate the initial login screen to explaining what the user’s “Apple ID” is.  This can be as simple as “this is the email address you use for iTunes purchases”.
  2. Make it easy to merge multiple Apple IDs.  This is extremely important because:
    • It appears many people have multiple Apple IDs (I have 3)
    • If your email address is associated with one Apple ID, it cannot be associated with another.
    • For communication tools (iMessage and FaceTime) you want to associate your account with the email address that your contacts already know.
    • Apple IDs can currently not be deleted or merged, forcing users to either make fake email addresses to replace their real ones on the Apple IDs they no longer use or to choose one of their old Apple IDs and surrender any content they purchased on the newer one.
  3. Make entering or creating your Apple ID the first step to setting up your device, and the only time you ever need to enter it.  iOS 5 does as you for your Apple ID right away, but it doesn’t sign you in across all the functions of your device:
    • On iPad you must setup and sign into iMessage and FaceTime even after you’ve logged into the App Store or iTunes.
    • On Apple TV you must sign into “Home Sharing” after you’ve signed into your Apple ID for the rest of the device.
    • On Macs you must sign into the App Store and iTunes Store separately.
    • On iPhones you must manually add “Receive at” email addresses for iMessage and FaceTime, and make sure they’re first deleted from other Apple ID accounts.

Steve Jobs understood the importance of introductions, especially the first introduction of a person to the computer he’s just hired.  Setting up an Apple device wasn’t even deserving of the name “process” for most of the past decade, but now it deserves “arduous setup process”.  A significant part of iOS 5 is dedicated to a “PC-free” setup and experience through iCloud.  Hopefully Apple polishes this system in iOS 6 so every user truly can buy any iPhone, iPad, Mac or Apple TV, type in their Apple ID and password and begin using it like it’s their own.  This will be the new plug-and-play.


*I’ll caveat that both iPads were running iOS 4 out of the box because they were purchased a couple months ago, but weren’t opened until Christmas.  iOS 5 would have made this easier but doesn’t solve the root problem.

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iPhone Sales Estimates: Pay Attention

Philip Elmer-DeWitt on Katy Huberty’s note covering an AlphaWise survey of U.S. consumers conducted for Morgan Stanley the week after Thanksgiving:

“Surprisingly,” she writes, “US consumers expect to buy more iPhones in C1Q12 than C4Q11” (emphasis hers). Even discounting the survey results 10%, that suggests Apple could sell 13 million iPhones in the U.S. and 41 million worldwide next quarter. Morgan Stanley’s model has Apple selling 30 million iPhones in calendar Q1 2012.

Kary Huberty, mind you, is Morgan Stanley’s “cheif Apple analyst”. We continue to see almost every “business analyst” who covers Apple have no idea what’s going on with Apple’s business. Morgan Stanley’s 30 million estimate is actually not terribly off the mark, but it shouldn’t be surprising at all that consumers expect to buy more iPhones in Q1 of next year than Q4 of this year – especially if you’re an Apple analyst.

Obviously holiday sales are huge and intuitively it makes sense that Q4 would be the strongest for iPhone sales every year. But if you’ve been paying any attention, you’ll know every year since the iPhone launched Q1 sales have gotten closer to matching the Q4 they follow, and Q1 of this year actually beat Q4 for last year. And this year we’re even closer to the beginning of the iPhone refresh cadence than usual.

Also remember: as of Q2 of this year, Apple brings in more revenue from each iPhone sale than each iPad sale.

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Apple TV Predictions

My predictions:

  • Apple will release a TV set in 2012
  • Apple’s TV set will have only two wire inputs: a power cord and ethernet (in other words no HDMI, no coax, no other ports)
  • No coax input means the Apple TV will be incompatible with cable
  • Apple will have content deals with major networks and channels (NBC, ABC, ESPN, CNN, etc.) to have their live TV content available on Apple TV from day one with a “in-app subscription” like model
  • On Demand content will still be available directly through iTunes
  • Airplay input from iOS devices will override what ever is playing directly from the TV set and will automatically “turn on” the TV if selected as the output on the iOS device
  • The TV system will interact seamlessly with iOS devices as wireless game controllers
  • Apple will launch a gaming platform or drastically updated GameCenter to become a live-gaming and social gaming network
  • The first or second generation Apple TV set will have a front-facing camera for FaceTime
  • Apple TV will not have a built-in web browser, but you’ll still be able to Airplay your screen with Safari from iOS devices
  • Apple TV set hardware will be similarly priced to current TV sets of the same size
  • 32 GB of flash storage will be standard (iCloud storage of content will be focus)
  • Apple will also continue offering a “set top box” TV product that plugs into the TV you own and offers a similar interface but misses some of the key functionality

I have absolutely no information or sources, these are predications based simply on thinking about what Apple is trying to do and what they’ve done in the past.  There are a few primary thoughts/insights/beliefs my predictions are based in:

  1. TV hardware itself doesn’t need fixing, it’s cable service that needs fixing.  It’s impossible to make a good TV with cable service.
  2. Apple tightly integrates its products together.
  3. Apple dominates mobile gaming, but Microsoft dominates living room gaming with its best platform and its best opportunity to regain computing prominence with consumers: the XBOX.
  4. Every site and page on the web to date has been built to view at no further than arm’s distance from the screen.  The vast majority will stay that way.
  5. The TV is an inherently communal device, not a personal one.  Every device Apple has ever made has been personal.
  6. Apple would’ve killed some of this buzz by now if they didn’t have something like this in the pipeline for release soon
Let’s look back at this list if/when Apple announces their next TV product.

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Quote of the Day

Yves Behar, designer, founder & CEO of fuseProject in response to a question from Om Malik at Le web:

“Steve Jobs gave designers credibility in the business world.”

Exceptional companies apply design principles to every aspect of their business. The principles of design that Steve Jobs espoused are very important when designing a business strategy, and organization structure, a marketing plan and almost any other aspect of business:

  • “Deciding what not to do is as important as deciding what do to.   That’s true for companies, and it’s true for products.”
  • “Design is not just what it looks like and feels like. Design is how it works.”
  • “A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem. The broader one’s understanding of the human experience, the better design we will have.”
  • “Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things.”


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Apple Obscures Future Device Hints with Fake References

One file in particular, USBDeviceConfiguration.plist, had formerly listed about two dozen different device variants. As discovered by 9to5Mac’s Mark Gurman, that list has now ballooned to well over 100 such entries as Apple has seeded it with dozens of new fake references to such future products as “iPad10,1”, “iPhone11,3”, “iPod11,1”, and “AppleTV8,3”.

Apple TV version 8,3? iPad version 10,1? Am I the only one who finds this hilarious?

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Understanding the Future of “Le Internet” (as the French say)

Forrester CEO George Colony gave a great presentation at Le Web last week. Ironically, he predicts the death of the “le web”. Because the web was the first widely adopted way for people to use the Internet, it’s easy to forget that the web and the Internet are not the same thing. As Colony reminds us, “The web is a software architecture that we all decided to put on the Internet 20 years ago.” Maybe we didn’t clear that confusion up in 2002, but it’s vital to understand it today.

Colony makes a compelling case for “App Internet” as the next dominant software architecture to replace the web, and we’ve already seen trends toward this with the popularity of iOS, Android and recently Amazon. What makes Internet-connected apps better than the web? Colony says “Faster, simpler, more immersive – a better experience.” Bingo. It will be many, many years before it’s possible to create web experiences that offer the same quality of expereince as Internet-connected apps. Why? Again, Colony explains:

Storage is getting cheaper – twice as much space for the same amount price – every 12 months. Processor power is doubling a bit slow, every 18 months (Moore’s Law). Networks are improving at an even slower pace, probably doubling in speed every two years or more. (To see this illustrated, see the chart at 3:22 of Colony’s presentation.) This means that an architecture built only around the network (like the web) wastes all this progress and improvement in processor power and storage. Remember that 95% of web executable is at the server, not at your PC – you’re wasting all the power of the computer in your hands by relying on the least powerful and slowest component of the technology we all have in our hands: the network. (paraphrased from the video)

This is why Apple, and subsequently Google and Amazon, are investing so heavily in apps. Apps allow us to use the extremely powerful and fast-improving processing power and storage of the devices in our hands, while still tapping into the Internet network when needed. The web is the opposite. The web forces us to use the relatively low power network, enabling us tap into the extremely powerful local device very little. This is why Forrester is predicting the app market will grow at about 85% next year from the $2.2B market it is today.

So far, this all makes sense. Apps provide users with a better experience than the web because they leverage local power, which is faster and cheaper than network power.  But Colony predicts the death of the web because of this.

I disagree, mostly because the web has two things app platforms can’t offer:

  • Openness (all modern platforms support it and can access it)
  • Linking (it’s easy to direct users between different pieces of content)

These are two extremely important pieces that the fragmented app Internet platforms can’t support.  The short-term future does belong to apps because of the power benefits Colony discussed.  But the long-term future belongs to a web that can better leverage local power.


*partial credit for the title to Brendon Mason
**video brought to my attention by Fred Wilson

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Amazon Will Pay You $5 to Check Price, Order from Amazon Instead

Tricia Duryee for AllThingsD:

Amazon is offering consumers up to $5 off on purchases if they compare prices using the online giant’s mobile phone application in a store.

The promotion goes live Saturday and will serve as a way for Amazon to increase usage of its bar-code-scanning application, while also collecting intelligence on prices in the stores.

Smart promotion of an already great app. I use the Amazon Price Check app frequently and they usually have a lower price than the brick and mortar retailer I’m in even without the $5 discount.

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Great Companies Must Change

There are a lot of elements required to make a company great. I’ll save the list of my favorites for another day, but the most important element in my view is change.  Companies must disrupt their own business and industry in order be great, or even to continue being good. In short, they need to innovate.

From Booz & Company’s Global Innovation 1000 study, as covered in their publication strategy+business by Barry Jaruzelski, John Loehr, and Richard Holman:

There is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues. Many companies — notably, Apple — consistently underspend their peers on R&D investments while outperforming them on a broad range of measures of corporate success, such as revenue growth, profit growth, margins, and total shareholder return.

My hypothesis for explaining this: serious innovation – the kind of stuff that goes down in an R&D lab – scares the shit out of most companies and their leaders. Companies unintentionally (and maybe sometimes intentionally) ignore launching products, services or platforms that are extremely innovative to the point of industry disruption.  Most companies are scared of cannibalizing their own business or creating more work for themselves by unnecessarily disrupting an industry they’ve already “figured out”. This leads to two serious problems:

  1. If you don’t disrupt your own industry, someone else will.
    • It’s getting easier and easier for anyone to disrupt any business.  The Internet is the greatest democratizing force in decades, maybe centuries or longer.  There’s almost certainly a new, more efficient and more effective way to fulfill the need your business satisfies.
  2. Business is the best way to progress, solve serious global challenges and advance as a society.
    • We know governments can’t get anything done.  There is no competition and no real reward for governments or policymakers who bring about change or tangible societal advancement.  The private sector made up of companies is, conversely, designed to handsomely reward companies and business leaders who provide value to people, and thereby society.*

The takeaway: there is no such thing as unnecessarily disrupting an industry.  If you can do it, you must do it.  As the Booz & Company piece goes on to explain, company culture determines whether decisions are made in favor of disruptive change.

The results suggest that the ways R&D managers and corporate decision makers think about their new products and services — and how they feel about intangibles such as risk, creativity, openness, and collaboration — are critical for success. As part of this year’s study, we surveyed almost 600 innovation leaders in companies around the world, large and small, in every major industry sector. As noted, almost half of the companies reported inadequate strategic alignment and poor cultural support for their innovation strategies.

Only “almost half”?  Probably so low because (1) they’ve lumped “inadequate strategic alignment” (what does that mean?) in with “poor cultural support” and (2) these companies are reporting on their own shortcomings (???).   My guess is about 99% of the Fortune 500 have poor cultural support for disruptive innovation.  I haven’t studied large cap companies in nearly the depth the authors of this study have, but anecdotally I know it’s difficult to find examples of companies that have ever truly disrupted their own industry (though there’s one company that’s done so twice).

A company must have a culture for change – a culture for innovation.  This is what makes innovation from outside a company – whether through one-off services, acquisitions, or external consulting – just as difficult as internal innovation: consultants and small acquisitions aren’t going to change the culture of a company.


* Profitability usually indicates people believe a company is providing value.  Of course this isn’t always true, but the vast majority of the time.  Even more importantly, companies that are truly providing value are almost always profitable.

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I Don’t Understand What Anyone Is Saying Anymore

Dan Pallotta writig for the Harvard Business Review blog network:

I’d say that in about half of my business conversations, I have almost no idea what other people are saying to me. The language of internet business models has made the problem even worse. When I was younger, if I didn’t understand what people were saying, I thought I was stupid. Now I realize that if it’s to people’s benefit that I understand them but I don’t, then they’re the ones who are stupid.

Just speak in plain english. You can tell a lot about a person (or company) based on how simply they speak. Explaining ideas simply requires deep understanding – and we already know many business people don’t have a very deep understanding of the concepts they work with.

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