About Jean-Louis Gassée

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Posts by Jean-Louis Gassée:

Apple’s Jesus Tablet: What For?

If you went on vacation and renounced Internet access for the duration, you might not have heard the latest rumors concerning the iTablet a.k.a. the Jesus Tablet, Apple’s eagerly awaited entry into the putative bigger than an iPhone but smaller than a MacBook segment. I’m avoiding the n-word: for Apple, this is the no-book category…
As for the religious nickname, let’s go back to MacWorld, in January 2007. Steve Jobs walks on stage and demonstrates the “iPod of phones”. The audience reacts with such religious fervor that, for a while, wags call Steve’s latest miracle the Jesus phone. (I could go on and call AT&T’s network the iPhone’s cross, but I won’t.)

Back to 2009, for the past week, we’ve had the strongest wave to date of rumors and speculation regarding Apple’s second coming (after the Newton, see below) into the tablet space. Putting such froth down would be ignoring the desire, the hope behind the agitation. The Greater We seems to want something bigger than and iPhone and smaller than a 13” MacBook, currently Apple’s smaller laptop.

Great, but what for? More

The Trojan Horse: Web Apps

Web Apps are the future: modern, light, run and updated in the Cloud, they will progressively replace the antiquated, bloated, expensive to buy and manage desktop “client” applications.
So says Google. And walking the talk, they put their Google Apps against the reigning champion of desktop applications: Microsoft Office.
Microsoft never gives up and, as expected, announced a Web-based, a Cloud version of their upcoming Office 2010 along with the classical desktop suite, more feature-rich than ever.

Google Apps are free? Office 2010 on the Web is free. With the advantage of a familiar UI, User Interface, their brand, the desktop version as a fall-back, it would seem Microsoft is staying on top. Google Apps might be free (in most cases) and somewhat fashionable, if only for being “not-Microsoft”, but with the combined desktop and Web versions, Microsoft covers all needs.

Case closed? Not quite. More

Google OS: Chrome-Plated Linux or Microsoft 2.0?

Here’s what I think its taking place:

Microsoft executives and Board members are no dummies: they know Cloud Computing threatens the Windows + Office + Exchange gold mine, the biggest in our industry’s history. They know the future is Office + Exchange running in dual-mode. From the Cloud when a Net connection is available; locally when the Cloud is out of reach. Everything synched back when the connection is restored.
 Imagine Outlook in Cache Mode, just with a browser, without a local client, generalized to all Office applications.
 Their delicate mission, should they choose to accept it, is to move Office and Exchange into the Cloud, into dual-mode applications. The challenge is to get there before Google Apps gain acceptance but without prematurely cannibalizing the existing Office + Exchange profit stream.

On its side, Google wants to protect the search-based advertising gold mine. To do so, they need to hurt Microsoft’s ability to finance a broad-front attack against Google’s core business. That’s why Google wants to offer an alternative to “Office in the Cloud”: with Microsoft no longer able to dictate prices, the Office profit stream would dry up and so would Microsoft’s ability to finance an attack against Google’s core business.

This, I surmise, is the context for last week’s Google Chrome OS announcement — and for a rumored Microsoft event this coming week.

With this in mind, let’s look at Google’s pronunciamento. More

Cars, computers and politicians

Last time we had a big, big problem with cars, computers came to the rescue. This was after the second embargo, in 1979. The long gas lines scared us and we thought this was the end of an era, the end of the car as fun. Time to repent and mend our profligate ways, time to rid ourselves of our addiction to Foreign Oil. The dour Jimmy Carter was right for these penitent times.

We know what happened: the car flourished as never before. More models, more brands, faster, safer, bigger, smaller (not too often), more fun. The main culprit for this break with our vows? The computer.
First, computers made design faster, totally virtual. Then, databases, network and more software integrated the heretofore separated, if not adversarial, design and manufacturing processes. Then, computer struck again and invaded the cars themselves, sneaking into engine management systems, steering, braking, suspensions, climate control, entertainment, displays, navigation, correcting drivers’ mistakes, protecting them with restraints and airbags. Recently, the tech servicing my car proudly told me he’d loaded a new revision of software in my (car’s) transmission.
Many mistakes were made on the way, we had splendid failures, but, in the end, cars did get more reliable, safer and more fun than they were thirty years ago.

But computers had help. With contrition came penance in the shape of CAFE, the Corporate Average Fuel Economy number. In order to foreswear our dependence of Foreign Oil, our cars had to use less gas. Gas guzzlers got taxed with the tax of the same name, and our government told car manufacturers they’d have to pay huge fines if their output didn’t meet the mandated fuel economy number.
Begotten by lobbyists and raised by our elected officials, the CAFE regulation was true to its genes and nurturing: it featured a loophole big enough to drive the proverbial truck through it. Pun intended: light trucks got exempted from CAFE. You see, we can’t punish our farmers, our country needs them and they need their trucks.
This exemption gave rise to our addiction to SUVs. Arguing they were light trucks, using the same chassis, Detroit made tons of money building CAFE-exempt vehicles with big engines, four-wheel drives, all manners of creature comforts, seating 5 to 9 people, with trunks to match. More

Web video: Microsoft, Adobe or HTML 5?

We have yet another standards battle on our hands — you might say screens, as it concerns Web video. Or we might watch our wallets, as the fight is about who gets the biggest share of the money spent delivering multimedia on our computers, smartphones and, soon, TVs.

My money is on HTML 5, co-opted and promoted by Google and Apple.

First, do we really care about standards? Does it matter that YouTube uses Flash or H.264, that Microsoft is trying to promote Silverlight or that Apple, more prominently, and Google, less vocally, are pushing an open standard called HTML 5?

The answer comes in two parts: we need standards like trains need a single track width across the network, first, and, second, standards are often abused, made into a way to pick pockets.
There is no charge for a train track width standard, but a license fee is required for building cell phones using the CDMA standard. (I won’t go again over well-covered ground, over the history of Windows, Office and Wintel.) The secret, there, is to create critical mass for a way to do something, for said manner to become a standard. Then, you charge for the right to use the method itself or, less directly, for something needed to benefit from it.
For example, if Microsoft manages to make Silverlight a or the Web video/multimedia standard, good things will happen and bad ones will be avoided – from Microsoft’s perspective, that is. More

The Real iPhone 1.0

Saint Peter offers a choice of hells to a recently dematerialized high-tech tycoon (pick your favorite sinner) with a long list of transgressions. The basic one, fire, floggings, and the premium one, plenty of music, drink, food and other pleasures of the flesh. Said tycoon picks the fun venue, Saint Peter pulls a lever, the industrialist falls to the one and only fiery hell. Agitated, feeling cheated, the sinner demands to know about the other hell, the eternal party.
Saint Peter: It’s a demo!

The joke comes to mind as I watch Steve Jobs introduce the iPhone on stage at San Francisco’s MacWorld Expo, on January 9th, 2007.
It is too good to be true, especially the part about running OS X. The demo looks magical, as with most of Steve’s acts. The iPhone looks like one shocking product. But is it real? Nothing specifically aimed at the demonstrator, I’ve seen – and given – too many demos, it’s a sinner speaking.

Six months later, I’m relieved. The first iPhones ship, enterprising programmers manage to inspect the firmware’s insides and, yes, it is OS X. A trimmed-down version, of course, but the core of the iPhone’s software engine is the genuine article. More

Fun AT&T numbers

by Jean-Louis Gassée

AT&T can’t seem to catch a break. A couple of weeks ago, at All Things Digital, an industry conference, Randall Stephenson, AT&T’s Chairman, got the audience to snicker and roll eyes. The conference is held by the Wall Street Journal, led by its digital guru, Walt Mossberg and, “by invitation only”, $5K a pop, gathers movers, shakers and wannabes of what is now broadly called the digital media industry.
Mr. Stephenson was on stage, answering Walt Mossberg apparently softball questions. But, when you look more closely, Walt applies a trial attorney’s precept: Only ask questions for which you already know the answers, let the jury see how the witness responds. We were the jury as Walt asked the AT&T top dog about its wireless network performance problems. The witness got off to a decent start: “Yes, when the iPhone 3G came out we weren’t ready.” Then, he proceeded to claim things had significantly improved. That’s when the snickering started. In Silicon Valley, we all know the blank spots, the bad 3G coverage, right in the heart of high-tech’s garment district. See the full interview here.

Later, Stephenson committed a faux pas of Detroit proportions: he claimed everything (phone, Internet connection, TV) worked well when he moved to his new home in Texas. Really? AT&T’s Chairman, CEO and President gets a good connection? In a further misguided attempt to connect with his audience, he even mentioned his Apple TV. Clearly, he’s one of us, a discerning Apple customer… More

Brilliant insights at the NYT

“If they start making products people don’t want, and start losing users, then Apple’s strategy will run into problems.” You can see the full NYT Business section story here. My wife and I love to read the papers in the morning. French-born, we still marvel at this American icon: the newspaper route, the nice deliveryman in his beat-up truck throwing the paper on our doorsteps in the wee hours.

But enough Norman Rockwell.

‘Who is this guy?’ My spouse is pointing at the NYT story. I had avoided it because we’re a couple of days away from Apple’s WWDC. Every year, in San Francisco, Apple holds the Worldwide Developers Conference for individuals and companies writing programs (applications) for its computers and, now, its smartphones. The rumor mill makes too much noise. Writers, bloggers, anal-ysts, pundits and kremlinologists attempt to top one another with predictably bad results.
Still, who is this guy? Is Brigitte referring to the article’s author, Brad Stone, a respected writer, or to Benjamin Reitzes, the Barclays Capital analyst quoted above? The doubt points to an all-too-common problem with business writing in our Valley: Cut-and-Paste stories, formulaic and, if not content-free, bland and devoid of insight or explanatory value. More

The VC Money Pump: NAV

The acronym stands for Net Asset Values. Be forewarned: this is the more boring installment in the VC Money Pump series of columns (see part 1 and part 2 ). Worse than spreadsheets and compound interest calculations, today’s topic forces us to deal with FASB (Federal Accounting Standard Board) regulations. Expensive futility as far as we are concerned.

For perspective, let’s go back to the previous crisis: the Internet Bubble. Fortunes were lost when Cisco’s stock went down by 90% — with the entire high-tech sector. But new fortunes were about to be made.
First, there were the political fortunes of posturing solons. Seeing the damage done by accounting fraud at Enron and WorldCom, canny politicians seized the opportunity to harness the public’s ire to their career’s progress. Paul Sarbanes and Michael Oxley begat what we now call Sarbox (the Sarbanes-Oxley Act of 2002), a new set of much stricter accounting rules. To the angry investing public, to the recently fired as a result of the downturn the senators’ message was clear: We’re here for you, we’ll throw the Armani-suited thieves in jail and we’re putting in place the safeguards needed to avoid a repeat of such catastrophe. More

Inside a Venture Capital fund: Reserves

Last week, with Excel’s help, we looked at the “simple” computation of a VC fund’s rate of return. This week: Reserves, a most important sets of numbers.

As a rule, for every dollar initially invested in a company, we immediately set aside an additional $2 or even $3 as a reserve for future rounds, future injections of capital. Entrepreneurs often tell us they’ll only need one round, this round of financing before reaching the cash-flow positive nirvana. I know, when an entrepreneur, I did it (to) myself, several times… We don’t argue, we smile, nod and enter the appropriate reserve amount in a spreadsheet.
Next, we try to forecast the additional rounds: one round in 15 months, perhaps, and another one 18 months later.
As we do this for every company in our portfolio, the spreadsheet tells us how much capital we’ve invested so far and, as companies develop and need more capital, how much will be required and when.

Then, the hard work starts. More