mobile internet

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

The Carriers’ Rebellion

Before the Steve Jobs hypnosis session, AT&T ruled. Handsets, their prices, branding, applications, contractual terms, content sales…AT&T decided everything and made pennies on each bit that flowed through its network. Then the Great Mesmerizer swept the table. Apple provided the hardware, the operating system, and “everything else”: applications, music, ringtones, movies, books… The iTunes cash register rang and AT&T didn’t make a red cent on content.

In the eyes of other carriers, AT&T sold its birthright. But they didn’t sell cheap. The industry-wide ARPU (Average Revenue Per User per month) is a little more than $50. AT&T’s iPhone ARPU hovers above $100. Subtract $25 kicked back to Apple, and AT&T still wins. More important, AT&T’s iPhone exclusivity in the US “stole” millions of subscribers from rivals Verizon, Sprint, and T-Mobile—more than 1 million per quarter since the iPhone came out in June, 2007.

(Legend has it that Jobs approached Verizon before AT&T, but Apple’s demands were deemed “obscene”. If the story is true, Verizon’s disgust lost them 10 million subscribers and billions in revenue—much more than it would have made in content sales putatively under its control. Another theory, unprovable but preferable, is that Apple went for the worldwide “GSM’’ standard, hence AT&T.)

To the industry at large, the damage had been done. Jobs disintermediated carriers. Consumers woke up to a different life, one where the carrier supplied the bit pipe and nothing else. Yesterday’s smartphones became today’s mobile personal computers and carriers devolved into wireless ISPs, their worst fear.

Enter Android.

Android is like Linux, it’s Open Source, it’s free. And it’s very good, and rabidly getting better. But with two important differences. Android is Linux with money, Google’s money. And Android is Linux without a Microsoft adversary. There’s no legally—or illegally—dominant player in the smartphone/really personal computer space. Nokia, Palm, Microsoft, and RIM were and still are much larger than the Disintermediating Devil from Cupertino.

Handset makers and software developers love Android, new handsets and new applications are released daily; see the Android Market here. The current guess is that Android will grab the lion’s share of the handset market by 2012. Nokia, RIM, and Microsoft may disagree with that forecast, and Apple is certain to stick to its small market share/high margin, vertical, bare-metal-to-flesh strategy.

Carriers get excited about Android, too. For two reasons. First, Android (and the very good bundled Google apps) allows handset makers to make inexpensive devices. Carriers and Google both encourage a race to the bottom where handsets are commoditized, but smart.

Second, because Android is an Open Source platform, carriers can work with handset makers, they can dictate the feature set and, as a result, revitalize the revenue stream. They can promote their favorite apps, content, and services sales that have been choked by disintermediation.

But it’s not a straight shot. Android lays out the playing field for a contest between Google and carriers. More

Nokia’s New CEO: Challenges

by Jean-Louis Gassée

Here we are, back from last June’s Nokia science-fiction romp. The company has finally elected a new CEO to replace OPK, Olli-Pekka Kallasvuo. 43-year-old Stephen Elop’s bona fides are in order: As President of Microsoft’s Business Division (since January 2008) he was in charge of the Microsoft Office money machine and was part of the company’s “Leadership Team”. He was well-paid (the 2009 proxy pegged him at $4.8M, excluding longer-term items) and rumor placed him at the top of the short list to succeed Ballmer…

So what possessed Elop to take the Nokia job?

The answer must be that he’s been given the opportunity to make his mark. Having seen Microsoft from the inside, he must have realized that he was being groomed to be no more than a competent caretaker. He might even have decided he wouldn’t get, or wouldn’t want, the big prize, the CEO crown. So, I speculate, he went for the challenges of a turn-around situation.

The goal is clear: Restore Nokia to its former glory as the ne plus ultra of smartphones. But the path to this renaissance isn’t a straight shot—it’s an obstacle course.

Numbers

Mr. Elop’s most immediate challenge lies in Nokia’s financial performance. During the last three years of OPK’s tenure, Nokia lost 75% of its market cap, plunging from $40/sh in 2007 (the year the iPhone came out) to less than $10 today, although with a nice 2% uptick following the CEO announcement:

A more direct way to look at the numbers challenge is a single datum: Today, Nokia gets about €155 ($196) per smartphone, down from €190 last year. In the meantime, Apple gets more than $600 per iPhone. (See the June 2010 Financial Times story here.)

It gets worse when the total average number is considered, smartphones and not-so-smartphones together. That average now hovers around €60, which means Nokia sells very large numbers of low-end phones that yield very little profit. They’re in great danger of being squeezed by the incoming low-end Android horde.

But the numbers are a mere proxy for the bigger trial: The product itself, the smartphone.

Once the category leader, Nokia is now struggling to catch up with HTC, Motorola, Samsung and, of course, RIM/Blackberry and Apple. Pugnacious Nokia die-hards adhere to the company’s sisu, but the market has spoken—and it enunciates more distinctly every quarter. See this Business Insider chart:

Given today’s market turbulence, one can’t help but admire the charter’s ability to “see” as far as 2014—but the trend is obvious. Will upcoming products such as the N8 reverse it? Early reviews are mixed. For Nokia, the N8 isn’t likely to do what the Razr did for Motorola in 2003 or what the latest Droids are doing now. Motorola’s conversion to Android seems to have righted the ship and Sanjay Jah, the Co-CEO in charge of the company’s mobile business, is on his way to leading a self-sustaining entity, one that could finally be spun off as planned.

Software

Today, Nokia pushes devices that use older Symbian S60 stacks, newer Symbian^3 and Symbian^4 engines, as well as a mobile Linux derivative: Meego. Imagine the chuckles in the halls of Cupertino, Mountain View, and Palo Alto. Even with plenty of money and management/engineering talent, updating one software platform is a struggle. Ask Apple, Google, or HP, and the chuckles quickly become groans. Nokia thinks it can stay on the field when it’s playing the game in such a disorganized fashion? More

Science Fiction: An Apple-Curated App Store

In an alternate universe, Apple has announced the App Store Guide and Blog. Choice morsels from the PR material follow.

“We came to realize that a quarter million apps meant worse than nothing to Apple users”, said Apple’s CEO. “I get confused too! Reviews are often fake, lame, or downright incompetent. PR firms have been caught astroturfing reviews, publishers have resorted to flooding the App Store with shameful clones of successful applications. I won’t let one of Apple’s most important, most imitated innovations sink into anomie.”

[Remember, this is sci-fi.]

“So…Today we’re proud to introduce the Real App Store Guide, written and maintained by Apple experts. We’ll review new and existing iOS apps. We’ll tell you which ones we grok (and that grok us) and give you the straight dope on the offerings you shouldn’t touch, even if they’re free. In our Guide, you’ll find a series of paths: For the Traveler, the Gamer, the Music Lover, the Graphic Artist, the Oppressed Enterprise Windows User, Teachers, Parents, Doctors… The Guide will also feature a blog, a running commentary on the iOS App landscape with intelligent answers to cogent questions. And in keeping with our usual standards for decorum and IQ, the blog will be moderated…”

And so it is, the App Store is fully curated, at long last.

As always, this doesn’t please everyone…at least on the surface. In reality, the usual naysayers are thrilled: More pageviews! Ryan Tate jumps on the opportunity and frenetically fires at Steve Jobs’ inbox, trying to start another late night email séance. But this time the Emailer In Chief doesn’t bite.

Customers, on the other hand, like the Real App Store Guide. Users can finally find their way through the twisted and confusing maze of programs. They learn to adjust for a particular writer’s opinions, much as we’ve all learned to compensate for the biases of, say, movie reviewers. The blog gives civilians a forum where they can argue (politely) with the named authors of the reviews—there’s no anonymous corpospeak here.

App authors…some of them aren’t so keen on the idea. The ones that get tepid reviews are understandably furious and threaten lawsuits (in vain…their attorneys are told to re-read the App Store T&Cs). With a modicum of care with words, that’s what the Guide’s editors are for: Safe negative opinions. More

A Toolkit for the Cognitive Container

We now live in an apps world. “The web is dead” shouts Chris Anderson, Wired’s editor-in-chief. To make his point, he teamed up with Michael Wolff, a Vanity Fair writer. According his latest theory, the internet is taken over by mobile applications, and the web as we know it, will be soon dead. Wired produces a Cisco-originated graph (below) showing the decrease in “web” traffic, down to a quarter of the traffic of the internet. The other 75%, says Anderson, include video, peer-to-peer, gaming, voice-over-IP telephony, a large part of it encapsulated in apps, blah-bla-blah.

Well. Two things. To begin with, Chris Anderson isn’t the first to notice the rise in applications used to access the internet. Every news outlet’s digital division witnesses a sharp increase in its apps-related traffic. Here in France, Le Monde just said its iPhone apps now contribute about 20% of its entire traffic; its iPad application (a bit crude but efficient reader) has been downloaded 150,000 times. This is just the beginning as publishers are working on new apps, for the iPhone, the iPad, but also for Android, Windows 7 for Mobile and even Bada, Samsung’s proprietary OS. Many publishers forecast a share of 30% of their traffic originating from mobile devices. This is consistent with Morgan Stanley’s predictions of smartphones shipments overtaking the PC two years from now (see below).

Such trends, when repackaged in Chris Anderson’s craft, ascend close to papal encyclical status (that Anderson’s particular skill; in a recent lecture, the British journalism professor George Brock calls him “a professional exaggerator”). Never mind the data he presents are not of the utmost rigor. As we can see here, he magnifies the demise of the web.

But byte-flow analysis is misleading. A more accurate measure would be time spent on the traditional web versus apps. For instance, neither Anderson nor the graph say in which category Facebook traffic falls. Is it an app? A web-based service? All we know is American users spends a quarter of their time on it. I wouldn’t dare wrecking such an attractive intellectual scaffolding with mere facts, but we can’t compare video and text-based pages on the basis of their byte-stream. I did the test: a 3 minutes of You Tube video weighs 16 megabytes; the same time spent on text will only require a 20 kilobytes page, 800 times lighter. (The 8000 words Anderson/Wolff story — devoured in 15 minutes at a normal reading speed, weighs only 117 kilobytes). When measuring things, the metric does alter the perspective…

Nevertheless, Anderson’s fatwa is gaining traction, as did, in its time, his Long Tail theory. Later, Anderson amended the postulate, using the concept of “strong head” (mandatory if you expect to make money with the tail). His “Free!” edict was also updated with the Freemium notion – a paid-for model tied to an incentive. But no more sarcasm, such silicon snake oil is a charming ingredient of our e-times.

Caution with Anderson’s theory aside, there is no doubt the app phenomenon will significantly impact the way we consume news: apps might become their main cognitive container. More

Curious Summer

by Jean-Louis Gassée

Nothing much happens in August, we thought. Wrong. Our three-week break has been filled with a number of “interesting” events.

Curious Yellow

Let’s start with Mark Hurd’s exit from HP after five years of great financial performance as CEO. If you missed the fireworks, you can get a refresher in this Business Insider post by Henry Blodget, or this excellent NYT piece by ace columnist Joe Nocera.

In twitter terms, it looks like this: A “marketing contractor” claims Hurd sexually harassed her; an inquiry fails to substantiate sexual harassment but finds “an inappropriate close relationship”; the investigation also reveals that expense reports were fudged in order to conceal a tête-à-tête with the female. Mistakes were made, Hurd is fired. End of story.

Not quite.

When a CEO gets the boot, a modicum of decorum is usually observed . Not this time. From HP’s General Counsel we hear that “Mark demonstrated a profound lack of judgment that seriously undermined his credibility and damaged his effectiveness in leading HP”. And that’s on the record.

In her memo to the troops, Cathy Lesjak, HP’s CFO and now interim CEO, accuses Hurd of “misusing corporate assets,” referring to the illegitimate expense reports and alleged payments to the erstwhile soft-porn actress for work not performed.

But forget the salacious details; there’s always Google for that. What puzzles most of us is the exit package story. HP maligns Hurd, accuses him of what lay people call fraud… and then grants him an exit package worth tens of millions of dollars, $35M according to unverified estimates. Attorneys, less puzzled than supercilious, sue HP’s Board on behalf of despoiled shareholders.

In the next few weeks we’re certain to get a clearer picture of the inside animosity directed at the cost-cutting, Wall Street-pleasing CEO. His alleged misconduct may turn out to have been nothing more than a convenient pretext, a word that resonates in HP’s history.

Curiouser and Curiouser

This one’s harder to explain: Intel’s acquisition of McAfee. If you own a Windows PC with Intel Inside, there’s a good chance your computer came with bundled anti-virus/anti-spam/anti-spyware software from companies such as Symantec or McAfee. Microsoft entered the fray a few years ago and provides what they call Security Essentials—for free (Microsoft also offers a free safety scan here). PC Tools, AVG, Kaspersky Labs and many others provide the now customary combination of free and paid-for software security products.

In short, this is an active, thriving scene: Symantec’s revenues are at the top of the $5B range and McAfee’s are close to $2B, despite the competition with “free” products from Microsoft and others.

So what possessed Intel’s CEO Paul Otellini to risk his reputation—and more than $7B of his shareholders’ cash—by wading into such a complex, competitive sector? Seasoned Valley observers such as the WSJ’s Don Clark are politely puzzled (see here and here). Otellini intones a new mantra: Security Is Job One. This marks “Intel’s move from a PC company to a computing company”. Sonorous words, certainly, but without a story of higher revenue and profit for the combined companies, there’s not much to back them up.

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