mobile internet

Steve, Please Buy Us A Carrier!

We’re at the end of the 2011 iPhone 5 launch. The demos went well; Steve Jobs has come back on stage to thank everyone and conclude the proceedings, “…but before you go, just One More Thing. I’d like you to meet someone.” And the CEO of Deutsche Telekom walks onstage. “Deutsche Telekom owns a company you know as T-Mobile USA, but let’s start calling it by its new name: Apple Wireless.”

An audible gasp — louder than the one when Jobs announced the $499 price for the iPad – and then the room erupts in applause. At long last, iPhone users will enjoy the level of carrier service and support that is their birthright.

This is fiction, of course, wishful thinking. But bear with me…

The idea came up during a “what if” conversation with my wife Brigitte, while walking along University Avenue in Palo Alto. What should Apple do with its almost beyond comprehension $76B in cash? The COO of the Gassée family is creative and practical, an abstract painter turned “lumber VAR”–she builds or rebuilds houses in Palo Alto. She’s not enthralled by technology and takes a utilitarian view of computers, phones, navigation systems, tablets…an attitude that provides a useful counterpoint to my sometimes overly-enthusiastic embrace of anything that computes.

She immediately nixes a big acquisition that could dilute Apple’s culture, an aspect of the company that’s integrally important to Steve. She has no interest in financial engineering and concludes that Apple will continue to make small acquisitions that pose few cultural challenges–but small buyouts won’t solve the cash “problem”. What to do with all that money?

As we chat, we walk by the wireless carrier stores: T-Mobile, a couple AT&T retailers (one is shutting down), Verizon and, next to the Apple Store, Sprint, a big store with a bored sales staff that easily outnumbers the customers. “Why doesn’t Jobs buy a carrier?” she asks, “He’d easily do a better job than these people….”

As befits our well-debugged relationship, I immediately launch into a critique of her suggestion: “This is a terrible idea, on so many counts!”.

First, there are regulatory problems. Getting FCC approval for a new iPhone is one thing; wrestling with Washington bureaucrats for spectrum allocation is another.  Apple’s maverick culture, its blatant spite for government bureaucrats and Congress windbags won’t do well there.

Second, carriers are capital intensive: Their return on equity (the profit-per-dollar invested in the business) is way below what Apple enjoys, in spite of its having “way too much cash for its own good.” For example, last quarter, AT&T’s Net Income was $3.6B for $113.8B in Equity, a ratio of 3.16%. Apple’s numbers were $7.3B for $69.3, a ratio of 10.5% — more than 3 times AT&T’s.

And just imagine the other carriers’ reactions. Not only would they kick Apple products from their networks and stores, Apple would find itself in court for anticompetitive practices, for unfairly favoring its own wireless arm.

One can see Apple’s stock losing 10% on the day of the announcement and critics would have yet another field day: “Apple does it again, their Walled Garden™ just grew taller walls!”.

But it’s also a beguiling idea. Let me count the ways.

Imagine the dancing in the streets. Apple would be finishing the job it started when it broke AT&T’s err… back, when it took over content distribution with iTunes. We don’t like carriers; we experience their service as both poor and expensive, to say nothing of their impenetrable and ever-changing contract pricing:

(Not to pick on AT&T. Every carrier offers a similar, bewildering array of entrapping offers.)

By contrast, imagine Apple’s simpler pricing. Three tiers to fit your appetite for data: $49, $79, $129 per month. No gimmicks, no SMS surprises, no fees piled up at the bottom of the bill: Just the price in your contract, plus taxes. If you approach the data limit for your plan, you get an SMS offering to upgrade you to the next level–but only for this month. No underhanded up-sell.

With $76B in cash and another $10B or so per quarter, a carrier is certainly within Apple’s budget. AT&T, with its $167B market cap, is probably out of reach (and too complicated, too many businesses), and Verizon ($97B), with its dying landline business and unionized workforce, isn’t in keeping with Apple’s ways.

But consider another carrier, T-Mobile USA. It no longer offers landline services, it’s non-union, and it’s affordable—it got a $39B offer from AT&T. Acquiring T-Mobile from its parent company Deutsche Telekom offers several advantages.

To start with, it prevents an abomination before the lord: It kills AT&T’s predatory acquisition attempt. Furthermore, as my friend Peter Yared noted, Apple might very well have big mounds of cash sitting outside the US, potentially subject to taxation if repatriated. Problem solved. Peter Oppenheimer, Apple’s CFO, shows up at Deutsche Telekom’s HQ in Bonn bearing a smile and an RSA dongle: “You have a Mac I can use to make the wire transfer?” No, they don’t. But a nice 30-year Anniversary Lenovo PC will do for the transaction.

Once the deed is inked, the hard work starts. This will probably be a two-year exercise.

Decisions will have to be made. Tactfully convert existing T-Mobile users to iPhones or free them go elsewhere? (The competition will, of course, welcome these ‘‘victims’’ with open arms.) Retrain employees or offer them a decent exit package?

But the big task, the goal of the acquisition: Play the Apple vertical integration game and adapt the network to support one and only one type of smartphone, Apple’s.

Other cellular networks have to serve a wide range of devices — from basic phones to gluttonous high-end smartphones — and support a mess of protocols: Ancient ones with layer upon layer of patches, more modern ones with their factory-fresh bugs. Contrast this with Apple Wireless’ simpler task of serving one type of phone, one type of protocol. Given the two-year time frame, let’s assume the protocol will be a stable variant of what markitects call LTE or 4G. And, from there, voice and data coexistence, smoother video calls, voice-mail on iCloud, and so on.

And that’s just T-Mobile. Need more spectrum? $10B, three months of net cash flow, gets you Sprint.

Another possibility, admittedly remote, is to use tight wireless network integration with iCloud to create an inexpensive “smart dumbphone”.

What I mean is: Today’s iPhone is an app phone. It has enough hardware oomph to run a wide range of applications, all “wired” to a screen size. Because of this, cutting the iPhone’s bill of materials in half is well-nigh impossible — an “iPhone Nano” would be a much more difficult proposition than the iPod Nano. Apple would need to send developers back to their Xcode.

A better alternative would be to jettison native apps altogether, to go back to the Summer of 2007, when Steve Jobs promoted Web 2.0 apps for the first iPhone. Today, the pitch would be HTML5 Web Apps. We can already see a few good ones on iPhones and iPads, such as the new HTML5 Kindle app:

Or the nicely interactive iPhone manual, which feels like a “real” app:

A putative iPhone Nano on the no-less putative Apple Wireless network would be a dumbphone with HTML5 smarts and tightly integrated (I’ll use the P-word) proprietary services to make it sing and dance.

(As it happens, someone else already came up with the name Cloud Phone, see Trevor Sheridan’s post on the Apple’N’Apps site.)

As for the reaction from competing carriers, one has only to turn to the history of Apple Stores to get an answer. Existing retailers didn’t ditch Apple products when the company started its own retail chain. In fact, Apple Stores set a new standard in pre- and post-sale service. As a result, competing retailers raised their game. One can expect a similar reaction from AT&T and Verizon when faced with Apple Wireless.

So, yes, it’s a beguiling idea, but…

Would buying a carrier make sense financially? Look at AT&T’s iPhone ARPU, reported at more than $100/month. For Apple Wireless, this translates into more than $1B per million iPhones on its network. In 2010, T-Mobile’s ARPU was approximately $50/month for its 33.7 million customers. It’s tempting to look at the potential billions in service revenue and pronounce Apple Wireless the next big revenue opportunity.

But service isn’t Apple’s way of making money. Their one and only goal is selling devices. Everything else is in support of that goal. Execs, starting with the CEO, will wax poetic about the crystalline purity of software, more/better/faster content, new iCloud services; but what really counts is device revenue and profit. In the iPod days, iTunes didn’t make money, but it boosted device volume and margin. For today’s $100B Apple, a couple of billions in iTunes revenue is nice, it pays the bills, but it doesn’t move the needle. The iPhone is what does.

A wireless carrier owned, operated and integrated by Apple would only take two or three years to generate (much) more revenue than iTunes. But would it sell twice as many iPhones? Probably not.

It’s a nice fantasy, a carrier with the service quality and simplicity we get today when we enter an Apple Store. But for the fantasy to become reality, Apple Wireless would need to give birth to services that generate significant new hardware opportunities – opportunities that would need to be unavailable through Verizon and AT&T (otherwise, what’s the point?).

Another way to deflate the fantasy is to consider the US-only nature. Apple can’t and won’t go around the world and buy wireless carriers. With China soon to become Apple’s largest and most profitable market, the company isn’t about to lose sight of that prize, to be distracted by the complicated task of acquiring and integrating a US carrier.

That was the reverie…

Back to reality, why can’t carriers stop playing their games and show us some decency?

JLG@mondaynote.com

The New Faces of Digital Readers

First of all, note the evolving language: the term Online Readers is now passé as it morphed into Digital Readers. The shift reflects two trends: a broader range of device types and, in news consumption, the spectacular rise of mobility. Today, we’ll focus on a recent set of surveys that quantify these trends. And we’ll take a look at their impact on business models and strategies.

The first survey was released last week in Paris by Havas Media, a major European advertising player with a 25% market share in France. Last May, the polling company CSA surveyed a panel of 600 people reading 20 major French publications: national dailies and weeklies. Because the French rate of ownership for digital devices is comparable to what happens in other markets, the survey’s findings can be safely extrapolated outside of France.

Here are the key findings:

Respondents declare spending 37 minutes a day on digital publications as opposed to 22 minutes a day on print press. This number is astonishingly high. It shows the switch to digital has occurred – at least for readers of large national medias. It also confirms the segmentation of digital audiences. More broadly, when Nielsen finds that, on all mature markets, internet users spend no more than 30 minutes a month on digital newspapers, it also proves how important it is to go after the most loyal customers as opposed to collecting eyeballs – and flybys – for the sake of raw audience numbers that carry less and less economic meaning…)

How media consumption is distributed: according to the Havas Media survey, 51% of the respondents prefer web sites, 31% go for electronic editions, and 17% use applications. In these numbers, the web’s dominance reflects (a) the high volume of contents that are still free as many publications keep playing both sides of the fence, meaning both ad-supported and paid-for models, and (b) the importance of real time news.
In contrast, the lower score of digital editions stems from the fact most still use a basic PDF format. This doesn’t deliver the best reader experience, nor does it fit the needs of mobility: download speed and reading comfort on a smartphone screen. (I’ll come back to the future of digital editions in a next Monday Note by talking about the ePresse.fr kiosk we launched last week in France).
As for the poor scoring of apps, it can be explained by the lack of great interfaces for smartphones, and the still relatively small penetration of tablets.

When do people actually read their news on digital devices? Mid-morning breaks constitute the first of two prime times during which web consultation is favored by most users (36% of respondents), while digital editions and apps account each for 21-22%  (apps are doing quite well at lunch time). The second prime time occurs in the evening, after work, when use is evenly distributed between devices.

The Havas Media / CSA survey also points to the prime motives in news consumption:

#1: Real Time information, mentioned by 48% of the respondents.
#2: Free access. Not really surprising, it will be difficult to get people to pay for news. But there is hope: 29% say they’d be willing  to buy a digital edition. Interestingly enough (and sweet to Havas’ ears): 72% of respondents would be ready to trade a digital subscription in exchange for advertising, and 54% would trade the ability to get free downloads of digital contents in exchange for more advertising.
#3: Availability. A notion that encompasses accessibility and ease of use.
#4: Selectiveness is seen as print’s privilege and a key factor of for liking it.

As for the tablets, 56% of their use involves reading the branded press; that’s behind internet usage (77%), email (66%), or watching videos (62%). Respondents are not apps freaks: they have downloaded only 7 free apps and a bit less that 4 paid-for apps in their devices. These surprisingly low figures appear to be specific to the French market.
In the United States, according to recent Nielsen survey, the picture is different: iPhone/iPad users have an average of 48 apps of all kinds in their device, vs. 35 for Android users and 15 for RIM users (read Jean-Louis’s recent Monday Note to understand the Blackberry’s problem).
But if you factor the actual use of these apps by counting people who open them several times a day (68% of the users for iOS, 60% for Android and 45% for RIM), you’ll see what provides the best return on effort in the application business. In terms of numbers of app loaded and used, if we take a base of 100 for iOS,  Android will score 64 and the Blackberry 21.
Of course, the picture needs refinement: on the tablet market, Apple still dwarf Android by 100 to 2 but in the smartphone business, Android enjoy a 38% penetration (according to Nielsen), vs. 27% for the iPhone and 21% for RIM. Altogether, between a higher Android penetration and more usage by iPhone users, building apps for each platform will yield the same result in terms of market reach.

In conclusion, what does this mean for our media business?

1 / There is still a long way to go for applications to match browser adoption; it is mostly a question of interface quality.
2 / People expect real-time news, including in applications, or the added value needs to be outstanding.
3 /  Digital editions carry more of the brand attributes; but as long as they are not supported by better applications, and able to provide real time news updates, they will remain a relatively small market.
4 / The advertising model needs a bigger dose of creativity: a large chunk of readers would agree to more ads as long as their publication remains free — which paves the way to reinventing the sponsoring model for digital editions or for encapsulated contents.

frederic.filloux@mondaynote.com

iCloud: How vs. What

Once a year in San Francisco, Apple summons its third-party application engineers to the World Wide Developers Conference. Since Steve Jobs’ return to the company the event has grown in attendance and importance. One turning point was the 2002 introduction of OS X, a genuinely modern Mac OS, built on a Unix foundation. Then there was the 2008 WWDC featuring iPhone native apps and the epoch-making iOS App Store. (Yes, “epoch-making” sounds a bit grand, but it really was the birth of a new era.)

This year’s program was more loaded than usual, offering three main topics: A major OS X release, dubbed Lion, slated for this Summer; a new version of the iPhone/iPad/iPod Touch for the fall (iOS5); and iCloud.

The two-hour keynote is worth your while. Always entertaining, Steve and his co-presenters convey the massive effort that went into moving Apple’s engineering armies on these three fronts — with a mere 2% of revenue in R&D expenses.

But let’s focus on iCloud.

Apple has often been involved in feature-list schoolyard squabbles of the Mine-Is-Longer-Than-Yours type. Two years ago, Steve Ballmer, our favorite rhetorician, scoffed that the MacBook is an Intel laptop with an Apple logo slapped on the lid. He might as well have noted that all cars have wheels — round and black, mostly — and then gone on to sneer at brands commanding higher prices than your basic Chevrolet. (I’ve owned half a dozen of the latter.) In the world of cars, the value of the How is well understood: All cubic inches aren’t born equal.

For computers, we’re getting there. The PC market is in the doldrums: Shipments are stagnant, Apple claims a 1% drop in Q2 2011 vs Q2 2010 while, during the same time period, Mac shipments grew 28%. It can’t be the Intel processors, it is How they are driven.

Unsurprisingly, Apple’s iCloud announcement has been met with the same type of misunderstanding: ‘OK, after all these years, Apple finally makes the plunge into the Cloud. The Cloud is the Cloud. Or, rather, Google is the Cloud. What’s the BFD?’

A strong dose of skepticism is warranted. Even Steve calls MobileMe, his company’s previous effort, ‘Not our finest hour’. Both What and How fell frustratingly short of the standards of polish, simplicity and agility Apple is known and financially rewarded for. MobileMe’s 2008 vintage was plonk. This led to apologies, subscription extensions, and management changes. Improvements followed, including the well-regarded Find My iPhone service.

But both What and How remained deficient.

The feature list barely differentiated MobileMe from other services. Mail, Calendar, Address Book, Photo Galleries, Web Hosting, File Storage are offered elsewhere on the Web by a long list of companies: Google, Yahoo!, Microsoft, DropBox, Flickr… Google, followed by Microsoft and others, also offer Web Apps, Google Docs being the best known example, an “Office Suite” in the Cloud, accessible anywhere, from any computer with a Net connection and a decent browser. This led many, yours truly included, to wonder: Does Dear Leader “grok the Cloud”? Does Apple have it in its DNA to do be a serious participant in the Cloud Computing revolution.

MobileMe’s reliability remained subpar, often showing evidence of “silos”, of poorly interconnected modules, a Cloud Computing cardinal sin, as recounted in the What I Want for my Mac Monday Note.

Against this tattered backdrop, iCloud walks on stage. The most striking difference with MobileMe and other Web-based offerings already mentioned, is the shift away from the browser. I’ll use a word-processor document to illustrate. In both cases we’ll assume you’ve already stated your credentials, login and password for Google, Apple ID, and password for iCloud. With Google Docs, you fire up your browser, enter the URL for your service, compose or edit a document, file it in a folder in Google’s Cloud, and it’s ready for you from any computer anywhere.

With iCloud, you fire up your word processor, Pages for the time being, and compose. No saving, no URL for a Web service. You get up and leave. In the queue at the airport you remember something, you fire up Pages on your iPhone and add the brilliant idea that just came to you. But how do you access the Pages document from your Mac at the office? You don’t have to “access” it, it’s already there on your iPhone, your iPad or, sitting at the gate after security, on your MacBook. Your document was automagically saved and pushed to your device. No hands, the system does it for you — and propagates the edits you just made.

(This is why, the week before the WWDC, Apple published “universal” — meaning iPhone + iPad + iPod Touch — versions of Pages, Numbers, and Keynote. I’m not sure I would want to write this Monday Note on an iPhone but, in a pinch, I can fix a mistake using the small device.)

This is the BFD, this is the How. Such behavior is available or will be extended to all applications and content.

The Google model sees everything through a browser. Apple’s iCloud model uses local apps transparently interconnected through the Cloud. Browsers Everywhere vs. Apps Everywhere.

Another important feature is the demotion of the PC as the media hub or, if you prefer, the untethering of our iDevices from the personal computer. From now on, content and apps are purchased, downloaded, updated wirelessly, PC-Free. And seamlessly propagated to all devices with the same Apple ID.

The demos look good, the iCloud technical sessions at the WWDC went well. But the full-scale implementation remains to be field-tested. For the document editing example, Apple used an iPad to iPhone and back example, and merely mentioned the Mac as a participant later in the presentation. Annoying details such as iWork file format incompatibilities between Macs and iDevices need closer inspection as they might make reality a little less pristine than the theory.

For developers, the new APIs just released will enable more applications to offer the seamless multi-device updates just demonstrated.

If iCloud works as represented, it will be very competitive — and the price is right: free for the first 5Gb of documents. (Content such as music or video and apps don’t count in those 5Gb.)

The “free” iCloud reminds us of Apple’s real business model. They want to sell lots of devices, everything else supports this goal. It seems iCloud’s easy, executive-proof How will sell a lot nicely interconnected Apple hardware. For competitors, weaving together a Brand X laptop, a Brand Y smartphone and a Brand Z tablet won’t be as easy or inexpensive.

To be continued as competitors takes Apple’s theory apart and as both developers and the company move the iCloud story into reality.

JLG@mondaynote.com

For further perspective, a few links:
- A prescient (April 15th, 2011) “Cutting That Cord” piece by John Gruber.
- A 10,000 feet overview by Philip Ellmer-Dewitt, in Fortune’s Apple 2.0.
Pascal-Emmanuel Gobry thinks iCloud annoys Google and humiliates Microsoft.
- John Paczkowski’s take in All Things D: iCloud: The Mother of All Halos.
- Business Insider thinks Microsoft had a service “just like iCloud” for Windows Mobile.
Walt Mossberg’s iCloud take, interviewed by Charlie Rose.
- Steve Jobs’ “It Just Works”, as seen by MG Siegler on TechCrunch.

AT&T Buys T-Mobile: Farce or Retro-Metamorphosis?

Four weeks ago, we got the bad news: AT&T will acquire T-Mobile USA for $39B. An already bad carrier will get worse by gobbling a competitor, thus gaining more pricing power and reducing competitive pressure. Higher prices, lower service levels. The transaction leads us into a de facto oligopoly: AT&T and Verizon. (From the Wikipedia article just linked to: “Oligopolies are price setters rather than price takers.”)

Am I forgetting Sprint and other carriers such as Metro PCS and Leap?

Not at all. They’re merely too small to matter. They don’t have enough money for spectrum purchases and infrastructure build-up. Today, they don’t prosper, they merely survive. Tomorrow, with higher prices dictated by the two Big Guys, they’ll be thrilled to get a little bit of breathing room in exchange for their presence as token competitors on PowerPoint presentations to the Justice Department’s Antitrust Division.

Speaking of slides, feast your eyes on AT&T’s merger pitch at a special site, MobilizeEverything. You’ll see the “fiercely competitive landscape” and the gigantic increase in data volume: 8,000% since 2007.

No mention of the iPhone. Surely an innocent omission.

Coincidentally, “Mobilize Everything” is the title of an interview with AT&T CEO Randall Stephenson in the Brunswick Review, a PR mouthpiece. The interview, focused on “Strategy, Technology And Trust”, treats us to a collection of corpospeak platitudes such as:

“Leaders are people who get things done, and that takes courage…And above all, leaders never miss in terms of integrity.”

Very reassuring for this AT&T customer whose calls in the middle of the Palo Alto desert get disconnected several times a day.

Unsurprisingly, reactions to the projected acquisition have been negative. The overall sentiment is “everybody loses”. Well, not everybody: Wall Street sees the opportunity for more pricing power and cheerfully granted “T” (a single-letter stock symbol signals that you’re genuine Blue Blood) a 10% bump since the announcement.

Politicians, various government agencies, and the competition are jumping on the posturing opportunity. Sprint, with their expression of concern, is probably angling for concessions that will facilitate “regulatory approval.”

This is a farce. Compared to developed–and not-so-developed–nations, we have a terrible wireless infrastructure. Go to Europe, Japan, Korea, parts of China, and weep. With less competition, what incentive will AT&T have to improve coverage and service? Instead, AT&T will continue to milk its customers, parade its record $100 monthly ARPU for the iPhone…and continue to be the butt of jokes for its legendary bad service.

The regulatory review will unfold as an elaborate Kabuki script that will culminate in a pre-ordained approval. There will be congressional hearings, protests, and much handwringing but, in the end, we’ll hear sonorous but toothless concessions. AT&T is a company with deep knowledge of legislative and regulatory processes. In plain English: They know how to buy votes. Surely, they didn’t propose the acquisition without assurances it would go through, albeit at a (small) price, such as shedding assets or assuming new compliance obligations.

End of story? Not quite. More

What I want for my Mac

by Jean-Louis Gassée

I was a happy man. After twelve years of Windows use at work — the usual Outlook excuse — I was about to be saved by Vista.

On January 30th 2007, 8:00 am, the doors opened at Fry’s in Palo Alto. I showed up early to claim my prize, a 17” HP laptop with Vista factory-installed. I walked in and found that I was more than first in line — I was alone. Unfortunately, I didn’t take this as a warning. I bought the macho machine and completed the expedition with a $400 Office 2007 DVD.

That same morning, I flew to an industry conference, sat in the last row (as usual) so I could play with my new machine — and began to realize my mistake. I had become comfortable with Windows XP, deriving geek pride from my ability to juggle firewall settings, virus and malware countermeasures, I answered the Genuine Windows Advantage challenges and made coffee while the system checked for updates.

But Vista defeated me. I cracked. I walked down University Avenue to the Palo Alto Apple Store and bought a black MacBook (and Parallels software so I could still run Windows XP during the detox period).

The following Monday, my VC partners did a double take when they walked into the conference room: They saw the big Apple logo on the laptop and Microsoft Outlook projected on the big screen. Four years later, one by one, my partners are moving to the Light Side. (I also have a Dell netbook running Windows 7 — but it’s for “research.”)

During those four years, (some of) my Apple prayers have been answered: I have a new 11” MacBook Air, a neatbook I can really use on an airplane — even when the large gentleman sitting one row ahead suddenly reclines the back of his seat. Some days I wish I had a Mac as small and pocketable as my 2001 Toshiba Libretto but, all in all, my 11” Air is the most pleasant laptop I’ve ever owned, even more so than my dearly departed (stolen in Paris) 1991 PowerBook Duo.

Enough nostalgia, I also have unanswered prayers. We’ll start with two easy ones.

My iPad, which I use less often now that I have the MacBook Air, has 3G connectivity. On my laptop I have to use a modem, the Verizon MiFi 3G. It converts the cellular data connection into a WiFi hotspot in my pocket and can support up to five ‘clients’. I use a similar but even smaller device from Orange when I’m in France. I could, of course, use my Android phone as a hotspot (again, for ‘‘research’’), and there are recurrent rumors that someday AT&T will let my iPhone play the same role, but I’d like to cut out the middle man. Now that we know the Verizon iPhone 4 uses the bi-sexual ecumenical CDMA/GSM radio chip, there is hope that all future mobile devices from Apple, MacBook Air included, will have worldwide cellular connectivity.

Less important, but still helpful for this klutz who breaks toes in the dark against furniture, I’d like Jon Ive, Apple’s design guru, to take a weekend afternoon and whip up a black envelope for my laptop. The one he designed for the iPad spares me embarrassment and money every time I drop my tablet.

More difficult: I’d like a MobileMe that works.

MobileMe is erratic, the Back to My Mac feature works, then stops working, and then works again for no apparent reason. Synchronization between machines is so haphazard I finally switched to DropBox — it’s free for up to 2GB of impeccably Cloud-synced files, and a mere $10/month for 50Gb. DropBox hasn’t always worked well on OS X, but the latest version seems to be stable and manages to sync data for a large number of platforms and applications. As an example, it syncs my 1Password passwords across all my desktop and mobile devices, including Android and Windows.

As described in a previous Note, I bought the family pack for OS X and iLife updates even though the ‘’single” version can be installed on any number of machines. That alone probably gets me into the lower tier of the Friendly Idiot database somewhere in Apple’s Cloud, but the fact that I also pay $100/yr for MobileMe upgrades me to Platinum status.

Two days ago, I left a Word file open on my office iMac. At home, when I realized my mistake, I thought I could reach into the office using Back to My Mac, close the file and then open the copy that had been stored/synced through DropBox. Back to My Mac refused to work that night, but I could still open the file from DropBox and continue writing.

At the office the next day, the “old” document was tagged for deletion when I opened the newer version from DropBox. It sounds complicated and it is: Subtle conflicts of timing and location can make syncing difficult for normal humans.

I thought that’s why we have Apple, the non-IT company that caters to The Rest of Us, but, unfortunately, its Cloud services are messy, unpredictable, and filled with rigid silos. The Apple Cloud is supposed to smooth the seams of synchronization but fails to do so because information isn’t properly shared between its various functions.

I experienced another example of Cloud rigidity when I bought a new $99 Developer subscription. I used the Apple ID and the credit card I use all the time for MobileMe and iTunes purchases. The sale went through, Apple took my money…

…but right after the successful cashectomy a cranky algorithm complained about inconsistencies and refused to activate my subscription. Instead, I got an email message asking me to send a notarized copy of my ID by fax:

I’m sure the robot meant well; perhaps its poorly-fed algorithm causes it to bark at shadows. I emailed twice, requesting help and conceding that I may have contributed to the problem. But, ahem, why did you take my money? And why resort to such antiquated means to resolve the situation? Can’t a human use judgment and an email or phone call to correct the misunderstanding?

24 hours later, no one had gotten back to me.

So, why am I enrolling in the Apple Developer Program? I want to test an early version of the next OS X release, Lion, which is rumored to borrow some of the look and spirit of the iPad. In last November’s Monday Note, I criticized the Finder for being too complicated. I’m curious to see if Lion will simplify the UI, fulfill its promise of moving to a more intuitive way of organizing and navigating the content of our machines.

[Apple Insider just published a neat series of posts covering many of Lion’s new features.]

(Interestingly, the new developer release is distributed through one of Apple’s Cloud services, the Mac App Store, the one that continues to enthusiastically embrace my Apple ID — and credit card.)

Still, if I could have only one wish, what would it be?

Without a doubt, it’d be a working MobileMe. Free? Nice, but I’ll take working over free.

[This isn’t my lucky week. After I wrote the above, I bought the $0.99 FaceTime app for Brigitte’s Mac and for mine. This turned into another obstacle course of inconsistencies in Apple’s Cloud, to say nothing of UI trouble. Who tests these things? Engineers or mere mortals?]

JLG@mondaynote.com

Tear down this PDF

The PDF document format is digital publishing’s worst enemy. For a large part, the news industry still relies on this 18-year-old format to sell its content online. PDF is to e-publishing what the steam locomotive is to the high-speed train. In our business, progress is called XML and HTML5.

Picture today’s smartphone reading experience. We’ll start with a newspaper purchased on a digital kiosk. For a broadsheet, a format still largely used by dailies, the phone’s “window” covers 1/60th of the paper’s page. Multiply by 30 pages of news. You’ll need 1800 pans and zooms to cover the entire publication (plus, each time time you pinch out, you can take a leisurely sip of your coffee as the image redraws).

Next, we have two iPhone screen captures of American Photo, purchased on Zinio. The more compact magazine format doesn’t help. Note that you need to scroll laterally to read a full line (as for the “Text” function, meant to insure easier reading, it is ineffective) :

Am I being too derisive, or can we say this is not the best way to read?

The battle for online news will be won on mobility. We’re just at the beginning of the smartphone era. We can count on better screens, faster processors combined to extended battery life, more storage, better networks… The bulk of news consumption will come from people on the move, demanding constant updates and taking a quick glance at what is stored in their mobile device — regardless of networks conditions. Speed, lightness and versatility will be key success factors. There won’t be much tolerance for latency.

In that respect, PDF is just a lame duck.

Back in 1993, the Portable Document Format was a fantastic digital publishing breakthrough. All of a sudden, using a sophisticated mathematical description of images, texts, typefaces, layout elements, the most complex graphic creation could be encapsulated into a single file. Large font sets and dedicated software were no longer needed. The PDF reader, licensed from Adobe Systems under the name of Acrobat, soon became free or pre-loaded in various OS platform. PDF became an open standard in 2008. As for the performance, it was stunning: see a 6400% magnification below:

Great for high-quality book publishing… And a completely pointless stunt for a mobile news product.

The newspaper industry jumped on PDF. The new format let a production crew send the full publication to the printing plant using huge, high definition PDF files directly transferred to the printing plates. When the web arose, the industry kept using the same format to make the publication available for downloading. After years of file optimization, a newspaper or a magazine still weighs 20 to 50 megabytes. The download is manageable over ADSL or cable, but impractical on a mobile network. But wait, it can get worse: on the Android platform, for example, the reader can actually ad weight to the original PDF file. This is the consequence of a good intention: giving the publisher the choice between a finished product that is easier to leaf through, but requires a heavier file, and one that downloads faster, but is more difficult to read.

Publishers’ inclination to keep using PDF is based on one idea: the graphical elements of a publication — layout, typefaces — are an essential component of a printed brand. By extension this visual identity is seen as a “label of trust” for the news brand, with the design-perfect PDF being the medium of choice.

Now, three things:
#1, this widely shared assertion is not supported by strong facts. There is no survey (to my knowledge) that links visual identity to reader loyalty, to feelings of trust;
#2, on this matter, if there remains any lingering bond with readers, it will fade away with the new generation of news consumers: they are much less sensitive than their elders to the notion of “trusted brand”, let alone to any design associated to it;
#3, the web has evolved. The HMTL5 standard has shown the ability to render any graphic design without the PDF format’s downsides (see this previous Monday Note: Rebooting Web Publishing Design).

Why not, therefore, jumping off the PDF train? The short answer is XML management. Our techiest Monday Note readers will forgive this shortcut: the Extensible Markup Language is a version of the web language readable by both machines and humans. An article encoded in XML is not an image but a set of character strings associated to various “tags” that describe what they are, where they belong; the description also provides contextual information to be retrieved at will. In theory, any publishing system, big or small, should be able to produce clean XML files. It should also be able to generate a “zoning file” that maps the coordinates of a story, or any other element in the page (see the red box below that indicates the position of the story in a newspaper front page). Armed with such position data, smartphone software can provide the right reading experience, limiting the need for the painful panning and zooming I mentioned above.

Unfortunately, no one lives in theory’s wonderland.

In fact, very few newspapers are able to produce usable XML or zoning files. Part of the reason lies in outdated editorial systems that were not designed (not upgraded either) to handle such sophisticated, web-friendly files. IT managers have been slow to embrace the web engineering culture and it didn’t occur to publishers than a “human upgrade” was badly needed deep in the bowels of their company…  (This, by the way, leaves another wide open field to internet pure players and their web-savvy tech teams).

This backwardness has created its own ecosystem… in low-wage countries. Every night, all over the world, highly specialized contractors collect the PDF files of hundreds of newspapers and send them to India, Romania or Madagascar. Down there, it takes a few hours to electronically dismantle the image files and to convert them to dynamic XML text files, with proper tagging and zoning. Thanks to the time difference, the converted static newspaper is sent back to the publishers by dawn, ready to be uploaded on an internet platform, right before the physical version hits the streets.

Many will find these shortcomings appalling. For a large part it is. The good news is the evolution has merely begun. Still, very few publishers realize that upgrading of their production chain is a crucial competitive asset. As for the PDF, it remains immensely useful for many applications, but it is no longer suitable for news content that thrives on nomadic uses.

frederic.filloux@mondaynote.com

iPad publishing: time to switch to v2.0

There is no way around this fact: the first batch of magazines adapted to the iPad failed to deliver. Six months after the initial excitement, the mood has turned turned sour. See the figures below, they show the downturn in circulation for the much publicized iPad versions of a few American magazines:
- Wired: 100,000 downloads in June, 22,500 in October and November : down 78%. According to the Magazine Publishers Association, that’s not even a meager 3% of the average print copy circulation for the first half of 2010 — for an iconic tech magazine…
- Vanity Fair: 10,500 in August, 8,700 in November, down 17% and less 1% of the print sales.  (These numbers include single copy sales and subscriptions, which represent the bulk of the print revenues for US magazines).

According to WWD, using figures from the Audit Bureau of Circulation, several high profiles glossies show the same pattern: iPad downloads are in sharp decline everywhere.

For this regular user, such numbers do not come as a surprise. I’ve been reading Wired and Vanity Fair in paper form for years. As a non-US reader, the benefit of the iPad version was obvious: instant availability, no need to look for a higher-end newsstand providing international fodder. Plus a serious discount: at a European kiosk, a glossy can fetch €9 or $12; on the iPad, it’s $3.99, I was getting a bargain for my monthly fix. Plus extras such as the occasional video, and the convenience of back issues loaded in the memory chip of my tablet…

What went wrong, then?

1 / Comparison kills. I began to harbor some doubts when traveling to the United States: I realized that, instinctively, I was picking up the very same magazines at newsstands. With the product available at the right combination of time, price and location at nearby kiosks, having it on my iPad suddenly lost its appeal.
A (retroactively obvious) fact emerges: a magazine designed for print is much better on, ahem… paper than on bits. The browsing experience, the photographs, even the sensation of reading long form articles are all more enjoyable on a physical glossy. Publishers lured themselves into thinking electronic convenience plus a dash of add-ons would fill the gap between paper and tablet. Nope, they didn’t. Once ubiquitous availability removed the storage advantage (which only appeals to the road-warriors segment), the magazine on paper won. (Newspapers are a different story).

2 / Convenience. OK, videos or interactive graphics are fun, but they can feel gadgety, creating a kind of visual noise that detracts from the reading experience. Also, the convenience of back issues stored on the device is oversold: in the paper world, when it comes to retrieving an old article, no one will dive into a pile of magazines anymore, that’s the internet’s job. Similarly, due to the rigid browsing experience on a tablet, very few will be tempted to leaf through back issues stored on their device. Carrying a year’s worth of non-searchable issues is therefore useless.

3 / Execution. As I write this column, I download the January 3rd edition of the New Yorker. At least, I’m trying to. The mostly black & white weekly weighs about 100 megabytes and the download stream is erratic. The latest issue of Vanity Fair took several days to finish downloading. (To be fair, the 700 Mb of the latest Wired issue, loaded with videos, was done in a matter of minutes, while the previous one took a solid hour).
Here is what is acceptable: The Economist. Wether I pop up my iPad or my iPhone, the app knows I’m a subscriber and prompts me, showing with the latest issue’s cover. One button. Download. Twenty seconds on a wi-fi, less than two minutes on a 3G network. No login, no purchase confirmation. In addition, my subscription grants me constant and seamless access to the magazine’s web site.

4 / Price. Asking the consumer to pay the same price for an electronic product with a debatable advantage is a bad idea. Two ill-advised concepts (also applicable to newspapers) are at stake here.
Even if they deny it, many publishers are still in the “let’s defend the paper” mode. From a theoretical strategic perspective, a bold move would call for accentuating the decline of the doomed part of the business to give more oxygen to the promising one. Even though a measure of caution is understandable when going through such a transition, the dominant sandbag posture is by no means justified. Its effect is simply to delay the inevitable.
The second idea reflects a related tendency to yield to short-term financial pressures: an electronic magazine costs less to produce? Let’s first and foremost restore our depleted margins. This will have two dangerous consequences: for one, it discourages true innovation; and second, it opens a wide field for pure players unburdened by the past. Until now, publishers have been somewhat preserved by the high barrier to entry into their business: their financial power and business acumen notwithstanding, tech companies have been consistently unable to build a serious editorial venture. This might not last as traditional publications are shrinking and as a new breed of journalists will be more than happy to forgo some of their elders’ prestige in exchange for the freedom to create new and exciting publications.

It would be unfair to blame publishers such as Condé Nast for the the disappointing performances of their iPad first steps. Six months to adjust to a completely new medium seems acceptable. And the current experiences still produce some helpful lessons.

#1 Don’t try and replicate old concepts. Go for new ones. The balance between text and photographs, for instance, needs to be reinvented. The way images are presented and even produced must also be adapted to the new medium. This would be a better use of an art director’s team than, month after month, redesigning a landscape version of a magazine originally intended for a page, like Wired or Time have been doing.

#2 Make up your mind. For tablets, the choice will be between rich media magazine — again, yet to be invented – and content centric, Economist-like, i.e. less sexy but efficient. Ideally, news content for nomad devices should come in two flavors: one, loaded with multimedia, dedicated to tablets that will mostly connect through wi-fi, and another lighter version designed for the mobile phone’s small screen, which relies on low-speed cellular networks.

#3 Encapsulate the web. Personally, right before catching the subway, for a speedy and efficient offline reading, I’d love to have my iPad quickly download a set of 200 URLs of my favorites newspapers web sites. (In real life, cellular data networks still are painfully clunky). With the web, we take for granted things such as multi-layer reading, search and recommendation engines. Unless tablet publishers find a way to offer a unique e-magazine-like experience, these features will be missed.

#3 Price wisely. Don’t expect a wide adoption for the e-version of a magazine (or a newspaper) priced at the same level as the paper version. The pricing structure for online news content begins to emerge. In its recent report (PDF here), the Pew Research Center released data consistent with most publishers’ estimations. People who regularly buy content on the net are willing to spend about $10 a month, which could translate to a yearly ARPU of $100-$120.

If you thing that’s small, just consider the ARPU of advertising supported websites: very few are above the $10/year water line. Another conclusion of the Pew survey: the paid-for market remains highly segmented. Have a peek at this table:

Those who are willing to pay for content are definitely the richest and the most educated. Not necessarily bad news: after all, many businesses thrive in luxury markets….

frederic.filloux@mondaynote.com

Rebooting Web Publishing Design

Let’s start by reviewing the basic ingredients of a successful online publishing operation:

1 / Quick load.
2 / Ease of operation and update
3 / Consistent visual identity
4 / Platform independence
5 / Open to the rest of the web
6 / Geared for transactions
7 / CRM and marketing-friendly

Why am I scrutinizing this? Because we are not there yet. But stay tuned: the future looks bright, it’s called HyperText Markup Language version 5, in short HTML5. (No worries, no program code in this column, just a few ruminations).

Back to our list:

1 / Quickly loading contents. So much work to do! I’m currently working on an evaluation of the loading speed of major news websites. Compared to e-commerce websites their performance is just appalling. Most of the news sites I measured are painfully slow to load, especially the ones with ads-saturated home pages. (We will publish the results sometimes next year, once we’ve validated our data).
Speed matters of applications as well. I have 100+ apps in my iPhone 4; about 40 are news-related, including many subscription-based ones. There, too, speed varies — with consequences. Over time, I saw my usage becoming directly related to the app’s swiftness: start-up time, fluid updates and content navigation. Intense competition for user time on the smartphone scene makes speed a key success factor.

2 / Smooth Operation. Only Rupert Murdoch can plan a digital newspaper updated once a day. I bet this feature won’t last. Way too un-internet. Except for the online magazine business, there is no way to think of digital news other than as being permanently updated. The medium demands it. If a production system is too complicated to be fed with fresh content (text, pictures, video), to link to other components (archives, related stories) that will generate page views, or to generate news alerts, that pig won’t fly.

3 / Visual ID. News brands are largely built on strong graphic designs. Right away, everyone is able to spot the cover of a magazine or a newspaper, even if its reduced to a thumbnail. Smartphones/tablets applications are good at displaying sophisticated graphics. On the traditional web, designers were — until now –  limited by HTML fonts and other display constraints.

4 / Platform independence. Ten days ago, I was in Boston at an INMA gathering where Filipe Fortes’ presentation gave me the idea for this column. Filipe is the CTO of Treesaver, a web design startup involving the renowned designer Roger Black. In his presentation, Filipe Fortes sums up the issue in two slides:

Combine all of the above, multiply the number of versions — either functional upgrades or bugs fixes — divide by market reach, apply monetization parameters and you get an idea of e-publishing’s hurdles.

5 / Openness. Social features, Facebook, Twitter, bookmarking etc., will keep growing as contributors to reading habits as well as to audience traffic. As far as we can see today, most of news related apps ignore this trend and are closed to the rest of the web (even sometimes to their own archives)

6/ The transaction issue. In this field, apps remain vastly superior by allowing many forms of friction-free payments. And even if Apple’s business model is open to questions (see previous Monday Note Key Success Factors for a tablet-only “paper”), it allows publishers — for subscriptions — to bypass their closed system and call the shots on pricing and customer relationship. It’s unclear how long this bypass will last, but this toleration is good news: the publishers destined to succeed in the online news business will be the ones able to convert most of their customers into subscribers (unlike with the physical kiosk model which with fluctuating one-at-a-time purchases).

7/ CRM. (For a complete definition of Customer Relationship Management, see here.) In the e-news business, CRM is another key success factor. Using “all means necessary”, publishers must retain and nurture the relationship with their customer. Big internet players such as Google or Apple, armed with their ability to manage large datasets, are very well positioned to profit from CRM. Fortunately, CRM vendors are many and competitive, able to serve businesses of all sizes, ranging from Open Source solutions such as SugarCRM, to SaaS offerings such as Salesforce.com, and more traditional products such as Oracle’s.

For most of the requirements in our list, HTML5 looks promising. In short, HTML5, is the latest iteration of the web language invented by Tim Berners-Lee in 1994. The new version of the language makes wider use of JavaScript, a well-regarded scripting system that enables a world of features that, until now, were exclusive to Flash. I can’t add much to the debate between the respective merits Flash and HTML5, I’ll just suggest a visit to  this site, and a run through the demos in order to get an idea of newly advanced HTML5 capabilities. (A great story on the MIT Technology Review sums it up: The Web Is Reborn. The article is subscription-based, but it’s worth it. Previous free articles on the same topic here and here.)

To get a glimpse of HTML5’s potential for digital publishing, point your browser to Nomad Editions. It’s a small, e-publishing company that is also a Treesaver launch partner (story in Wired and in the NY Times). You’ll see a set of magazines, that load fast and display in crisp graphics, pictures and typefaces. And they works quite well on an iPad. Big media companies are showing interest: the Associated Press is getting a stunning prototype which merges the advantages of the richest news content with a magazine look and feel.

In Friday’s conversation, Treesaver’s CTO Filipe Fortes explained the advantages of HMTL 5 and his startup’s goal: “The main idea is to lower the cost of producing content and to display it in a attractive fashion. If you take applications such as Time, Wired, or The New Yorker, they are all done by hand in Adobe InDesign:  they do one version for portrait orientation, one version for landscape (like here for Time)…”:

“… They might have the internal resources to make two versions of their magazine, but what if they want to go to the upcoming Blackberry tablet or the rumored 7” iPad? Therefore, the idea is to retain branded design elements but make sure they’ll run in a low cost fashion on any platform”. Filipe Fortes mentioned apps for magazines where, today, costs range between $100,000 and $600,000, like the one developed by WonderFactory.

The spread of HTML5 depends on the creation of powerful Software Development Kits (SDKs). Unlike Apple’s controlled environment, development tools for HTML5 are still immature and barely organized. This scattered sector provides an opportunity for young companies such as SproutCore, Sencha or jQuery Mobile to build frameworks that could lead to a real ecosystem. But they’re still quite behind the sophistication of Apple’s proprietary development tools. On another hand, the emerging HTML5 playing field will lead to the creation of a new layer: pre-built graphic design components. Today, layouts are hand-coded, tomorrow they’ll be assembled using existing blocks. It will change the way apps are produced. That’s TreeSaver’s pitch.

Creating web sites or apps, or websites encapsulated in an app will soon be done for a fraction of the cost of developing an app today; the result will work across platforms and be easier to handle. In enabling such new development methods, HTML5 could combine advantages from both worlds: the Web’s ubiquity and openness and the performance of applications.

frederic.filloux@mondaynote.com

LimpingMe: Apple’s Cloudy Service.

by Jean-Louis Gassée

Friday morning, I stop at Il Fornaio to get my last caffeine fix of the morning. Once arrived at the office across the street, I realize I “lost” my iPad. Not to worry, I’ve done this before. Find My iPhone will tell me where it is. It worked a couple of months ago when I left an earlier 3G iPad at a California Street burger joint. When I came back, 10 mins later, the iPad was gone. I fired up the iPhone app and saw the lost puppy still was in neighborhood. I got in my car as I saw the iPad move South on El Camino Real, ending up around a Hobee’s restaurant. Going there and asking around got me nothing. I remotely locked the iPad, displayed a message asking to call me. No joy. I then wiped it, that is erased its contents from my iPhone. Only a consolation, but an important one.
Still, thanks to the presence of mind of an IT consultant who was asked to unlock an iPad “found in a bus”, I was reunited with my tablet a few weeks later.
Interestingly, Apple recently made Find My iPhone a free service. Before, you had to be a $99/year MobileMe subscriber. This is another confirmation of Apple’s business model focus, anything and everything in the service of the real margins engine: hardware.
Still on the positive side, Back to My Mac, another MobileMe service, was recently and discreetly improved: it now works through (most of) aggressively firewalled corporate networks. This makes Screen Sharing (an Apple VNC implementation) even more useful.

So, MobileMe works, right?

Let’s see, I must have forgotten this iPad on the counter as I picked up my latte. It’ll be just a minute, I’ll log on MobileMe and confirm its location. No such luck, the system doesn’t know me anymore. Breathe three times, slow down, this is just a typo. Nope.
Same on my iPhone. Foraging around, I notice the App Store update tells me something like my password is locked because of a security problem.
Sigh. I go back to my computer and click on the Lost Password link. I land on a page offering to email a link to a password update page to my alternate email address. Done. I answer questions, set up a new password, log out and back in to my Apple ID account. No problem, I’m recognized again.
But back to MobileMe, no joy. I’m still locked out.
Another path to the Apple ID password restoration page, answering more questions. Success. New password. Out and back in. Success.
But no, I’m still locked out of MobileMe and can’t locate my iPad.
I still get MobileMe mail. But not for long. When I try and change the password to the latest one, I’m out. And reverting to the old one doesn’t work either.

One could see this as a banal security incident. Perhaps someone tried to log into my account and tripped the alarm system. I ended up on the phone and on email with a competent and pleasant support person and, around dinner time, I was back in business with a fresh temp password, changed to a new one of mine and a new secret question this morning. What’s to complain about?

Unfortunately, many things.

Let’s start with iDisk. A great idea if you want to share and synchronize files between machines. In practice, things can turn mystifying as some but not all files stubbornly refuse to synch between computers. I went to Apple’s support pages on the matter for guidance and to related discussion forums for empathy and reassurance about my mental state. Those dives weren’t entirely comforting. I tried progressively aggressive remedies and ended up having to nuke the entire set up — after careful backups — and rebuild the connections. Today, things work nicely, but I no longer try to sync “the most recent version” of a file, the burns still hurt. I just store and retrieve as I move from one machine to another as I write pieces like this one.
Unnamed Apple friends roll their eyes and tell me to go Dropbox myself. Not the Drop Box in my Public folder but the very successful backup and syncing service. The company is well-financed, supported by noted philanthropists such as Accel and Sequoia.
Still on Cloud services, we have iWork.com, not to be confused with the iWork suite for Macs and iPads. Not even a hobby. Contrary to the likes of Google Docs, Office Live and other Zohos, iWork.com won’t let you edit documents online.

MobileMe other offerings involve photo galleries. They work nicely but expensively. For $200/year one gets MobileMe and 60Gb of storage. For $100/year, Google will get you 400Gb and the free Picasa/PicasaWeb combo, which also works nicely. Actually nicer as it accepts bigger uploads than MobileMe.
For Web sites, MobileMe can be combined with the free iWeb desktop application, they work really well. But iWeb was left behind in the latest iLife iteration, no update. And, contrary to Google, MobileMe won’t host your domain name.

iTunes is a terrific product. Without iTunes there would be no iPhone, no App Store, no Ratatouille on my iPhone. And yet, it gives us a glimpse of how disjointed Apple’s Cloud services are. From time to time, for no stated reason, I’m asked to reenter the security code on my credit card. A security precaution or a bug? Amazon asks once and my credentials are valid in the US as well as on Amazon.fr, for example.
Not with MobileMe. This morning, after a full update of my Apple ID account, including the credit card security code, I’m asked again for it on iTunes when I re-synced my Apple TV which started by declaring my Mac wasn’t authorized. This got me a “This Mac is already authorized” message when I asked iTunes for the connection. Same trouble on my iPad when I updated an application. The new and improved password was accepted, but I had to state credit card security number again, for a free update, mind you.

Continuing to iCal. In the Mac, there is a Preference panel for MobileMe. You state your Apple ID, a mac.com or me.com adress and your password. (It used to be you didn’t need the suffix, just the first part, luser rather than luser@me.com, but that was too simple, let’s leave it to Google to accept spj for spj@gmail.com.) OK, you might think you’re done, you’re authorized. But no, if you have a MobileMe account in iCal, it doesn’t work. Hello iCal account, it’s me@me.com again and my password is moimême.

In the process of working with the Apple support person, I got another peek at how disjointed things appear to be in MobileMe. This individual explained that the new password validation process didn’t do anything. Yes my Apple ID account appear to work with the new password but, for unexplained reasons, the update didn’t propagate. I got a couple of emails to verify my information and was (no longer) surprised to see that the screen snapshot the support tech emailed me had obsolete information. I also fell into a Secret Question trap: Yes, you can design the question and the answer. But better make sure you remember everything down to the last detail. In particular, the answer recognition is case-sensitive: “boarding school” will get you locked out if the correct answer is “Boarding school”. Making progress in the obstacle course, I now have a simpler one word answer with an unforgettable capitalization.

MobileMe was launched in 2008, with a little bit of grandiosity: the new service was offered as Exchange For The Rest Of Us. That proclamation was quickly withdrawn. In August 2008, I wrote a less than laudatory Monday Note piece on the new service’s difficult beginnings. Sacrebleu! I shouldn’t have done that, such an infraction got me a robust personal attack from a Guardian of the Apple Faith who frequently posts on one of the dedicated Apple blogs. The individual, who otherwise produces very good, thoroughly researched pieces, applied his skills to a long litany of my misdeeds. That was good for my soul but didn’t do anything for the disquisition. So it goes: slam the man if you can’t take the argument apart.
In this vein, as an experiment, David Pogue, the NY Times tech expert, once wrote a two-part review of an Apple product, one laudatory, the other critical. You can guess what happened: rabid Apple fans latched on the negative half and labeled him anti-Apple; others, who object to Apple’s products or ways, focused on the positive half and accused him of having sold his soul to Apple. (See David’s piece here. A little tip of the hat to the NYT geeks, and to their bosses who didn’t get in the way: when you hit the Shift key twice on a NYT page, you see paragraph signs, like this ¶. A right click will get you the URL to that paragraph, as the relevant one on Pogue’s piece. Neat. Well… It doesn’t always work.)
Back to the MobileMe early days, Steve Jobs apologized to MobileMe users a bit later and extended their subscriptions.

Two and half years later, things are better, but MobileMe still looks disjointed, half-hearted, not very competitive. And certainly devoid of the flair and finish of most other Apple offerings.
When Steve returned to Apple, the difference between Mac 1.0 and Mac 2.0 was the team of computer scientists Jobs brought with him from Carnegie Mellon, Xerox Parc and Inria. They successfully remade the Mac OS into a modern operating system. Today, much engineering effort seems to go into securing the lead Apple got with iOS. Think hardware margins.
It would be a shame for Apple to leave its Cloud flank unguarded by not enforcing the high standards of OS X and iOS in its Cloud services.
Steve secured Apple’s independence from carriers for iTunes, the App Store and installed apps on its devices. A similar independence or preeminence in Cloud services is equally strategic.
Put another way, it’s a great opportunity.

We’ll review Google’s array, or disarray, of such products in a future Monday Note once the dust from this past week’s three announcements (books, Chrom Web Apps and Chrome OS) settles.

JLG@mondaynote.com

Measuring the Nomads

The more diverse and ubiquitous the internet gets, the harder it becomes to measure. Especially with the mobile version’s rapid growth. A few weeks ago, my friends from the International Newsmedia Marketing Association (INMA) asked for a presentation discussing audience measurements for smartphones and tablets. The target was a conference held last Friday in Boston. Since I didn’t have a clue, I assumed I could work on the presentation in a journalistic way, by reaching out to people in the trade and by doing my own research. Only to realize the mobile internet is well ahead of any of today’s usage measurement tools.

Audience measurement is much more complex on mobile devices than it is on PCs. The world of personal computers is relatively simple. PCs surf through a well-documented set of browsers: Internet Explorer, Firefox, Chrome and Safari (see their respective market shares here). The connection happens either through an ISP wire or via wifi. On the server side, each request is compiled into a log for further analysis.

In the mobile world, there are many more variations. The first dimension is the diversity of devices and operating systems. The real mobile ecosystem extends well beyond the pristine simplicity of the Apple world with its two main devices — the iPhone and the iPad, only one screen size for each — powered by iOS.

Android, the ultra fast growing mobile OS made by Google, is found on 95 170 (!) different devices. Each comes with its (almost) unique combination of screen size and hardware/software features; “small” differences translate into a nightmare for applications developers. There is more: the mobile ecosystem also comprises platforms such as Windows Phone devices, the well-controlled Blackberry, Palm’s WebOS (now in HP’s hands), Samsung’s Bada and the multiple flavors of Symbian, to be followed by Meego. Each platform sprouts many devices and browsing variants.

Then, we have applications. Apps are fantastic at taking advantage of the senses of smartphones and tablets. An app can see (though the device’s camera), hear (with the microphone), understand language, talk back; it can search — the Yellow Pages for a location or the web for an explanation; it can feel motion thanks to the smartphone motion detectors and gyroscopes ; it can navigate through GPS or cell tower/wifi triangulation; and of course, it can connect to a world of other devices. This results in an unprecedented canvas for the creativity of app developers. According to recents studies, apps account for about half of the internet connections coming from smartphones. It is therefore critical to analyze such traffic. But, to say the least, we are not there yet.

One example of the measurement challenge: a news related application. The first measure of an app’s success is its downloads count. In theory, pretty simple. Each time an app is downloaded, the store (Apple’s or any other) records the transaction. Then, things gets fuzzier as the application lives on and gets regular updates. Sometimes, updates are upgrades, with new features. At which point should the app be considered new — especially when it’s free, like most of the news-related ones? Second difficulty: a growing number of apps will be preloaded into smartphones and tablets. Rightly or wrongly, Apple nixes such meddling with its devices. But, outside of the iOS world, cellphone carriers do strike deals with content providers and preload apps on Android devices. That’s another hard to get number.

We might believe the app’s activation provides a measurable event that settles the issue. It doesn’t. Let’s continue with the news app example. When launched from a smartphone or a tablet, the app sends a burst of “http” requests to the web server. How many? It depends on the app’s design and default settings. There could be 20, 30, or more streams loading in the background. The purpose is instant gratification: when the user requests the most likely item, such as “hottest news”, the content shows instantly for having been preloaded. This results in several uncertainties in the counting process.
From the server standpoint, the pages have been served. But how many of those have been actually read and for how long? What if I tweak my app’s setting, selecting some items and removing others? In an ideal world, a tracking task running inside the application would provide the accurate, up-to-date information. Each time the app runs, the tracker records every finger stroke (or swipe) and, whenever possible, feeds everything back to the publisher.  But the OS gamut and other technical permutations makes this difficult. As for Apple, tracker code inside its apps is a no-no (although there are signs of an upcoming flexibility in that matter).

Even a well-implemented tracker module isn’t the perfect solution, though. For example, it doesn’t solve the issue of apps running in the background and downloading streams of data, unbeknownst to the user. Such requests are recorded as page views by the server, but the content is not necessarily seen by the user.

The French company Mediamétrie Net Ratings (in partnership with Nielsen), came up with a solution that might pave the way to useable hybrid measurements. Nielsen Net Ratings, NNR, is known for its technology built around panelsof users (details here) who agree to have trackers running on their PCs. To improve mobile measurement, NNR recently teamed up with the three French cellular carriers and built a new massive log analysis system. The structure looks like this:

The (simplified) sequence follows:

1 / Cell carriers. They compile millions of logs, i.e. requests coming from their 3G/Edge networks to websites (no distinction between a request coming from an Android web browser or an iPhone application). Basically the log ticket says: P. Smith, number ###, sent this http://www… request on Dec 3rd at 22:34:55.

2/ The third party aggregator. Its main job is to anonymize data thanks to an encryption key it gets form the carriers. France’s privacy authority is very serious about data protection. Neither the cell carrier, nor the measurement company can have a full view on what people do on the internet.

3/ The audience analysis company. Here, Nielsen Net Rating France. In our example, along with cell numbers for its 10,000 others panelists, NNR sends the third party aggregator John Doe’s number.

4/ The aggregator encrypts the John Doe’s number in a “fdsg4…” sequence and sends it back to NNR.

5/ The carriers then send huge log files to NNR.

6/ NNR’s job is to retrieve its encrypted panelist from within the logs haystack. When it does spot the “fdsg4…” sequence, it can tell that John Doe, whom NNR knows everything about, has gone to xyz websites via its cell phone at such and such dates, times and, perhaps, locations.The rest of the log remains encrypted, therefore useless.

This system has only been in operation for a few months. And it is not perfect either. For instance, it tracks only requests going through cell phone networks; it ignores web requests sent through wifi — that account for 30% of total usage! The new system also ignores Blackberry users using RIM’s proprietary network. And the NNR algorithms need help from a huge database of URLs provided by the sites publishers. These URLs will be used to differentiate web browser requests from the ones generated by an app; we are talking of millions of URLs here, growing by the thousands every single day. A daunting task. In addition to this complication, large amounts of data still reside in the publishers servers. Hence a certification issue, as for all site centric measurements.

So much work ahead. The future lies in a deeper merger of site centric (log analysis) and user centric (panel) techniques. And also in a wider deployment of HTML 5 apps. We’ll explore the new web Lingua Franca’s potential in an upcoming Monday Note.

frederic.filloux@mondaynote.com