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From Heaven: iTV

Search for the word ‘‘cracked’’ in Walt Isaacson’s biography of Steve Jobs (or flip to page 555 if you have the bricks-and-mortar version). The second hit yields the following:

It will have the simplest user interface you could imagine. I finally cracked it.

“It” is the mythical Apple iTV. Even though Walt’s report of the July 2011 conversation didn’t hint at Steve’s solution, the eleventh hour revelation has rekindled old rumors and set the blogosphere on fire. “If Steve said he ‘cracked’ the problem, it must be true!”

At first, I had impure thoughts: I imagined Dear Leader, taking a moment away from redesigning Saint Peter’s abode, had foisted a prank upon us abandoned mortals: “That’ll keep ‘em busy…and will take their attention away from embarrassing topics such as the incompatibility between iOS and Mac file formats.”

A few days later, however, I read two posts that made me rethink my dismissive views.

First, in “Apps Are the New Channels”, John Gruber floats the idea of channels-as-apps (powered by iOS, of course):

Imagine watching a baseball game on a TV where ESPN is a smart app, not a dumb channel. When you’re watching a game, you could tell the TV to show you the career statistics for the current batter. You could ask the HBO app which other movies this actress has been in.

Second, in his good-natured pout post “Fine. I will talk about Apple Television or iTV or whatever it will be or will not be called.”, Brian Hall led me to a Nielsen Wire article that contains this graph:

40% and 42% of smartphone and tablet users, respectively, use their devices while watching TV — on a daily basis. The statistics themselves are hardly surprising, particularly to parents who have watched their multimedia-tasking children grow into young adults. But as I looked at the charts, a retroactively-obvious connection, a compatibility, struck me: Smartphones, tablets, and the iTV all use apps. [I’ve given up using the precautionary “putative” when speaking of iTV, and I use the present tense with license.]

With this in mind, what will the iTV look like?

As discussed in a previous Monday Note, if the iTV is an integrated device, the computer inside will become outdated long before the monitor does. Once you’ve graduated to Full HD (1920 by 1080 pixels) any other “improvements” –“240 Hz” display frequency and the like — are markitecture gimmicks that are invisible to most users. In other words, you won’t want to upgrade your TV after 18 months the way many of us do with laptops, tablets, and smartphones. (One could imagine a replaceable iOS computer module inside the iTV, but it sounds clunky, a source of problems.) Even more important, an integrated iTV would orphan the millions of HDTV sets already in place.

Furthermore, I still don’t see a 50” TV set walking out of an Apple Store. It’s hard enough to carry a 27” iMac out — or back in when trouble strikes. And I don’t see battalions of Apple field service people coming to our homes to fix these things.

If there’s no integrated iTV, let’s consider the iTV as a separate module, the next-generation Apple TV. In order to really work in the marketplace and achieve an iPod-like status, the module would have to “swallow” the set-top box, DVR included. If it didn’t, we’d still have to fight the multiple device/multiple remote battle: The set-top box, the primary source of TV fodder, has to be connected to the Input 1 HDMI connector, relegating iTV to Input 2. Certainly not the elegant solution Steve had in mind.

However, swallowing the set-top box and its DVR would entail making agreements with cable operators, business that are more numerous, less sophisticated, and more afraid of Apple than are the wireless carriers. While the wireless carriers have seen how smartphones can increase their ARPU, cable operators know only too well what would happen to their barely legal and definitely distasteful program bundling schemes once Apple gets in the game. (Try adding a single channel to your existing Comcast bundle: in Palo Alto, with Comcast, you must fill and email a form. It can’t be done on the phone, even if you manage to get to a human after a 20 minute wait.)

Ah, but maybe there is a way: Connect the set-top box to the HDMI input on the iTV, then connect the iTV to your HDTV’s prized Input 1. That gets us partway there, but it still doesn’t solve the multiple remote problem.

That’s where apps come in for the first but not last time: Download Apple’s iRemote application to your iOS, Android, or Windows Phone smartphone or tablet and you’re done.

Smartdevice-as-remote has been attempted before, of course. One example is the Xfinity iPad/iPhone app. You prep each set-top box in your home, download the program guide to your iDevice, and you’re good to go. When you issue a channel-change command from your smartphone, it’s sent through the Net to the Comcast cloud, and is routed back to your set-top box via Comcast’s cable:

Why the detour through Comcast? Because your smartphone/tablet and your set-top box don’t understand each other. The former speaks WiFi and Bluetooth; the latter only understands infrared.

Unfortunately, in my case, it worked once and never worked again.

Judging from the comments in the App Store, I’m not alone.

Furthermore, counting on the cable operator – and there are more than 25 in the US — to let the smartphone/tablet app control a multitude of set-top box models via the circuitous route described above probably isn’t the type of elegant solution Jobs had in mind.

How about translating between the smartphone/tablet and the set-top box by inserting a mediating device, a WiFi or Bluetooth-to-I/R converter? With the iTV connected to the set-top box and TV via HDMI, you still end up with a complicated arrangement: Your home WiFi base station provides a Net connection to your smartphone and iTV, and the WiFi-to-I/R converter listens to your smartphone and speaks I/R to your TV and set-top box:

This looks ugly, and it gets uglier: Since there’s no two-way connection between the TV/set-top box and the “remote,” the remote has no idea whether the TV is on or off, which input it’s using, which channel it’s tuned to. As a result, it’s easy to have a system in an unknown state, frustrating most mortals and forcing ‘‘harmonizing remote” makers such as Logitech to use complicated workarounds.

For most users, chances are slim that the set-up I just described will work and keep working.

Now let’s consider channels as apps. Why should TV on an iTV be like the TV we get through a set-top box? Newspapers and magazines on tablets (and smartphones for some publications such as the NY Times) aren’t mere replicas of the paper-based product. The adaptation to the new medium isn’t always pretty, but there are some great examples: See Bloomberg Businessweek or The New Yorker Magazine on a tablet.

The same will apply to TV. Not all channels will adapt equally well or equally quickly, but as “channel apps” evolve, we’ll see new ways of using the medium. As Mr. Gruber pointed out, imagine a football game as an app on an HDTV screen with the on-demand stats he mentioned plus the Twitter and Facebook streams we’ve grown to expect. (Personally, I’m not crazy about having too much “other” content on the screen as I watch a game, but I might be in a minority.)

Delivering channels as apps liberates our “viewing experience” in two ways: It breaks today’s narrow channel delivery format and it bypasses the set-top box. Today, I can watch the “straight” version of 60 Minutes on my TV (in real time or from my DVR), or I can go to my computer and watch a recent episode plus the additional “60 Overtime” content…or I can buy the $4.99 iPad app and get all of that through a much better UI that includes great navigation to the vast library of past episodes. Port that iPad app to the iTV device and you’re done. With channels as apps, all you need is a net connection (sometimes provided by the cable operator). You can throw the set-top box away.

Will consumers pay for iTV apps/content as I did for 60 Minutes? Probably, and we won’t have to pay for everything, just as with today’s TV with its combination of free and pay-per-view programs.

Of course, there’s the notorious “simple matter of implementation,” here: Someone has to write the apps that encapsulate the channels. But once the movement gains strength and tools become widespread and understood, it will be easier than you might think. 500,000 iOS apps attest to the availability of institutional knowledge.

In the meantime, if you don’t have an iPad, borrow one, spend $4.99 for the 60 Minutes app, and imagine the experience on an HDTV. Is this the TV future Jobs had in mind?

JLG@mondaynote.com

[In a future Monday Note and/or in comments on our site, I’ll cover variants to the approach described above, infrastructure issues, and also potential reactions from carriers/operators and competitors.]

Steve’s Bio: A Personal Perspective

Let me jump to the conclusion: This is an extraordinary book on many levels: informative, entertaining often, insightful, sympathetic but not indulgent; it rises to its unusual subject and manages to render its complexity in a straightforward manner that attests to the biographer’s talent.
Get thee to a physical bookstore, if you can find one, or to Amazon’s or Apple’s online dispensers, you won’t regret it. And if you don’t have the time or patience, start with Chapter Thirty-Six: The iPhone, Revolutionary Products in One (page 465 on paper, easily searched on electrons).

Last year, Walt Isaacson called to talk about the bio Steve had asked him to write. No surprise there, Dear Leader always wanted the best, and Isaacson had written world-class biographies of Ben Franklin, Einstein, and Henry Kissinger.

I told Isaacson how sad this felt, how I perceived Steve’s decision as ‘‘putting his affairs in order’’ before leaving this Earth. Walt didn’t answer directly, but he did say something shocking: Steve had relinquished all control over the book, all decisions were Walt’s. I didn’t believe it. I couldn’t see Steve giving up control on anything. His fanatical attention to detail is, sorry, was a key ingredient of his success. But Steve’s editorial grip on the book went no further than his picture on the cover. In Isaacson’s words:

“He had never, in two years, asked anything about what I was putting in the book or what conclusions I had drawn. But now he looked at me and said, “I know there will be a lot in your book I won’t like.” It was more a question than a statement, and when he stared at me for a response, I nodded, smiled, and said I was sure that would be true. “That’s good,” he said. “Then it won’t seem like an in-house book. I won’t read it for a while, because I don’t want to get mad. Maybe I will read it in a year—if I’m still around.” By then, his eyes were closed and his energy gone, so I quietly took my leave.”

To be sure, this isn’t your typical CEO encomium where the slightest achievements are remembered as world-changing deeds, and unseemly details are airbrushed into endearing idiosyncrasies.

The arc of Steve’s life is the stuff of legends: Abandoned at birth; raised in Silicon Valley; an acid-dropping, ashram-dwelling college drop-out, hacker, and co-founder of the most iconic of personal computer companies; fired at age thirty; re-inventor of animated movies at Pixar; the struggle to create the NeXT big thing; the return to Apple in the most stunning turnaround the industry had ever seen; reshaping the music industry; building a world-class retail network in his own image; re-inventing the smartphone industry and grabbing half of its profits; and, finally, after thirty years of false starts, making tablets a reality and grabbing iPod-like market and profit share as a result. An arc that saw the unmanageable hippie become the head of one of the world’s best-managed companies. And he died just as he reached the pinnacle.

This could tempt both subject and his biographer to produce a statuesque book, a North Korean monument to Dear Leader’s achievements. But instead of The Life and Miracles of Saint Steve, we get the gift of truth. We are forced to stare at the reality, or realities of the actual man. Thinking of his children, for whom Steve said the book was, so they got to better know him, this book is a great present. Judging oneself only by comparison to the better side of a parent is a terrible burden. Walt’s book gives them an independent look into the incredibly luminous Steve as well as into his sometimes repulsive dark side. Steve’s must have hoped to free them from his legend.

On the one hand, Isaacson shows the man who thrilled us with his (almost) unerring taste, with his sense that computers of various sizes and forms were more than merely utilitarian, that they were the objects, the vehicles of an evolving culture. Visionary, artist, leader, innovator… the list of meliorative words goes on, and rightly so: Steve was all these.
On the other hand, Isaacson manages the feat of being, by turns, empathetic, even affectionate and, in the next sentence, unblinkingly factual. The book will confirm everything you’ve heard about Steve’s unpleasant sides, and then some. When learning of his truly pathological eating habits, for example, you’ll wonder about his sanity. I don’t use the word pathological lightly: you’ll see how delusional Steve was when, for eight months, he refused surgery for his diagnosed pancreatic cancer, choosing instead a strict vegan diet, acupuncture and “herbal remedies, and occasionally a few other treatments he found on the Internet or by consulting people around the country, including a psychic”.

In a similar vein, you’ll read what Jony Ive, Apple’s Sr. VP of Design, Steve’s soulmate had to say about his dark side:

“… his way to achieve catharsis is to hurt somebody. And I think he feels he has a liberty and a license to do that. The normal rules of social engagement, he feels, don’t apply to him. Because of how very sensitive he is, he knows exactly how to efficiently and effectively hurt someone.”

Yes, that’s also the way Steve was. With everyone, family included.

Knowing or having known many of the characters in the book, I can vouch for its accuracy. But, even more important, I can vouch for its voice. Walt Isaacson got Steve right. He didn’t get intimidated, he wasn’t seduced into being a groupie, he didn’t get nauseated or angry. Instead, he delivered the truest rendition I’ve read of one of the most complicated people I’ve known.

His subject’s complexity didn’t rob Isaacson of his dry wit, such as this when observing Jobs after his liver transplant:

“As Jobs got better, much of his feisty personality returned. He still had his bile ducts.”

Or from recording memorable Bill Gates quotes such a this one:

“I’ve been predicting a tablet with a stylus for many years,” he told me. “I will eventually turn out to be right or be dead.”

(Not so fast, Bill, we love to have you and Ballmer around.)

In my view, the only way to keep one’s sanity when dealing with Steve was to stay ambivalent, to force oneself to harbor contradictory feelings about him. Easier said than done. In my case, over time, feelings of admiration and affection have taken over when watching the feats and the struggle. Reading Walt’s book was a helpful and, at times, painful reminder of who Jobs actually was.

JLG@mondaynote.com

[For a small compendium of Walt’s best-selling Steve Jobs bio reviews, look here.]

You Cheat. We Cut Prices

Surprise: To boost its circulation, Rupert Murdoch’s Wall Street Journal Europe engaged in massive channel stuffing. No kidding. It sounds like everyone discovers, all of a sudden, how medias (old and new) actually work. Granted, when it comes to cheating, News Corp is in a class all by itself. The phone hacking scandal pushed the practice of checkbook journalism to the pinnacle of massive corruption. As for the circulation scheme unveiled last week by the Guardian, WSJ Europe has pushed the envelope of bogus circulation numbers much farther than any other newspaper in the world.

From May 2009 to April 2011, the WSJE had a deal with a Dutch company called Executive Learning Partnership by which ELP purchased thousands of copies of the Journal for a price as low as 0.01€. If such deal is not uncommon, the scale was: 41% of the WSJE’s total audited circulation was inflated via this little scheme. The deal also involved a positive coverage of ELP. On Tuesday October 11th, Andrew Langhoff, the publisher of the Wall Street Journal Europe handed his resignation out.

The next episode is likely to unfold inside the soundproof walls of News Corp’s boardroom. While the phone hacking scandal might still hold more juicy bits in reserve (Guardian’s full coverage here), the circulation scandal involving the Murdoch empire’s most prestigious asset could be the one transgression too far. The board could be tempted to demote the aging boss. The rationale behind their putative decision would point to the rigid, top-down News Corp chain of command. In such an environment, practices such as this amazing circulation scheme must have been directed or, at the very least, tolerated by top management.

More broadly, this scandal raises another question: What is the real value of an audience, print or digital, when it is artificially bought — instead of naturally sold?

In the newspaper business, inflating circulation is hardly new. In fact, it is standard practice. The way copies are counted is a soft encouragement to blur the line between loyal and occasional readers. Officially, audit organizations across the world make subtle distinctions between distribution channels. They break down paid/unpaid circulation, mass subscriptions, types of deliveries, etc. On most Western markets, roughly 20% to 35% of the circulation for supposed paid-for newspaper is actually free.
Beyond that, we have what I’d call “near-free” circulation, i.e, copies that are paid a fraction of the cover price, usually just above the minimum rate imposed by audit organizations to be counted as paid distribution. This includes copies made available in airline lounges and hotels. In the end, this circulation is free. First of all, end users won’t disburse a dime for their newspaper (it is part of the service). Second, the price paid by the corporate distributor will likely be offset by side arrangements such as logistics fees charged by airlines or hotel chains (let alone advertising deals that could also be part of the package). Taking in account such arrangements, the share of free distribution can rise well above 50%. More

Premature Evaluation: The iPhone 5 Introduction

On October 4th, after months of speculation, Apple finally introduces the iPhone 5. The kommentariat are ecstatic and approvingly list the new smartphone’s strongest points: Twice the processor speed; seven times the graphics oomph; a new camera with an Apple-designed lens, 8 megapixels and improved image processing; the power of the new iOS 5; iCloud integration and synchronization with all your iDevices; a new smart antenna; Siri, the innovative intelligent assistant. And, courageously resisting the temptation of capricious cosmetic changes, the iPhone 5 stays with Jony Ive’s elegant, timeless design that was unveiled only last year.

The preternaturally modest Apple execs cringe at the gushing praise, but what can they do? It’s their cross to bear.

That’s what we expected. Now let’s consider the reality: Same phone, same features, same design, but it’s now called 4S instead of 5. This changes everything. The pundits are indignant: The iPhone 4S is a lame, evolutionary product; management’s presentation (video here) is flat, uninspiring. This dog won’t sell. Apple has lost its mojo.
(Regarding the “flat” presentation, Apple execs knew Steve Jobs was just a few breaths away from his last, but they got on stage and delivered anyway. When news of Steve’s demise came out the following day, many critics, such as blogger Robert Scobble, had the good grace to apologize to Cook & Co. for railing about their subdued performance.)

Despite these lamentations, strong pre-order numbers start circulating (more than 1 million on day one), followed by the first batch of reviews. Apple 2.0’s Philip Elmer-DeWitte obligingly provides a neat compendium of these first impressions, which range from “fair and balanced” to unabashedly enthusiastic. More

The Teacher

Steve Jobs taught us so many things… To us whose professional life strides tech, ads and media, his way of fostering innovation, of creating an obsessive culture of perfection remains both inspirational and enigmatic. For those who like design and engineering, there isn’t a single field Apple hasn’t entered — or at least influenced. When I fumble with the appalling multi-function display of my Prius, when I struggle with the remote control of my office A/C, or when I wonder why in hell the $2000 battery-assisted bicycle I consider buying doesn’t have an programmable memory chip to upgrade software that looks forever stuck in version 1.0, I wonder how the Cupertino guys would have handled it. Needless to say, I do the same when I look at media applications or newspapers/magazines designs, many of which seem to have succumbed to a sad mélange of sloppy execution and a lack of decisiveness in design.

For years, I have been reading everything I could about Apple from the management/innovation perspective. As a business journalist, I find Apple being the most frustrating company to follow. Very little comes out. The culture (and the cult) of secrecy extents way beyond any employee tenure; even the usually profligate academic literature is rather bare when it comes to Apple.

Front page of Liberation

However, over a span of fourteen years, as it impacted so many sectors, Apple’s unprecedented turnaround yielded a few clues. I tried to isolate some with potential applications outside the tech world. What interests me in Apple ranges from their choice of frosted-glass for my MacBookPro’s trackpad (instead of cheaper plastic), to the use of its immense cash hoard, to the way the company prepared itself for the post-Steve Jobs era. More

Too soon…

‘Humor is the politeness of despair’, an approximate, googlish translation of l’humour est la politesse du désespoir, a saying attributed to noted post-WWII Left Bank jazzman, writer, and engineer, Boris Vian, So, let’s start with the reverent, despairing humor of Chris Calloway in Wired Magazine’s memorial to Steve Jobs:

“Heaven got a major upgrade today…”

Yes, I can see Dear Leader in his new abode. Having climbed his last mountain, he summons Saint Peter and utters the words that he has heard throughout his life: “You’re doing it all wrong.”

“Look at the name above the door, the typeface sucks, the kerning is off. The furniture is out of style — get something cleaner, fresher. And the stairs… We need something airier…I don’t know, glass? Come to think of it, one of the founding partners of the architecture firm that designed the Apple Store moved in here a few months ago. Bernard Cywinski; look him up get to work.”

…and then it’s Saint Peter’s turn to mourn Steve’s untimely demise, and his own lost tranquility.

[Update: I just found this picture of the New Yorker’s upcoming October 17th cover. Obviously, this is before Steve starts to take matters into his own hands.]

Back in our Valley of Tears, this Onion article provides just the right amount of serious thought wrapped in knowing derision. I can’t resist but quote the entire piece, it’s too good and, in a way, it’s a consolation:

Last American Who Knew What The Fuck He Was Doing Dies

Steve Jobs, the visionary co-founder of Apple Computers and the only American in the country who had any clue what the fuck he was doing, died Wednesday at the age of 56. “We haven’t just lost a great innovator, leader, and businessman, we’ve literally lost the only person in this country who actually had his shit together and knew what the hell was going on,” a statement from President Barack Obama read in part, adding that Jobs will be remembered both for the life-changing products he created and for the fact that he was able to sit down, think clearly, and execute his ideas—attributes he shared with no other U.S. citizen. “This is a dark time for our country, because the reality is none of the 300 million or so Americans who remain can actually get anything done or make things happen. Those days are over.” Obama added that if anyone could fill the void left by Jobs it would probably be himself, but said that at this point he honestly doesn’t have the slightest notion what he’s doing anymore.” More

Dreaming at the Kindle Potential

With each introduction of a new reading device publishers around the world are overcome with the same recurring same fantasy: What if it worked, this time around? Could a reliable business model emerge for news publishing companies?

Last week’s launch of new Kindles is no exception to the cyclic fantasy. For those who where on Mars last Wednesday, here is a look at the revamped family:

To sum up: the new lineup features the widely expected Kindle Fire (full color display, multimedia capabilities and the clever, cloud-accelerated Silk browser — see Jean-Louis’ column). In addition, Amazon redesigned its e-Ink based Kindle with two models, including a small 6 inches version that fits in a pocket. All of them priced aggressively, below their production cost.

A lot has been written comparing Apple’s iPad and Amazon Kindle devices. Exciting but not relevant. The two companies’ strategies can’t be more diametrically opposite. Apple is in the hardware business and all other product lines — software, media offerings — exist for the sole purpose of raising perceived value and units volume. Then, great product execution and streamlined operations help maximize margins. Apple’s gross margin on iPads is about 30%.
By contrast, Amazon is a digital retail company in which all forms of media — books, videos, music, games –  account for about 40% of its sales. Its hardware strategy is designed to funnel customers to its retail business.

This explains why Amazon doesn’t care much about Kindle hardware margins, and is much keener to strike deals with content providers than Apple is. In parallel to the launch of its news Kindles, Amazon has harvested a large set of deals with media companies. Its Kindle Fire Newsstand is already impressive and features a 3-months free trial for a selection of magazines. Symmetrically, a growing number of publishers keep complaining about Apple harsh terms; as a result, in the coming months, we’ll see many prominent publishers exit the Apple ecosystem and switch instead to web-based apps (a move that is actually more complicated than it appears). More

Google’s “Interesting” Week

Let’s start gingerly, with Nokia. You’ll recall the indignation when Nokia threw Symbian under the Windows Phone 7 bus and osborned its existing product line. Nokia dead-ended Symbian handsets, causing sales to plunge while everyone waited for the new MicroNokia smartphones.

The company didn’t stop there.

It then presented Meego, the offspring of Intel’s Moblin (as in Mobile Linux) and Nokia’s own Maemo (also Linux-based), as their weapon of the future. This was their killer smartphone OS.

But Nokia gave up on Meego. The result was a risky but greatly simplified product strategy: One OS, WP7, instead of three or four versions of Symbian, S40, S60, Symbian^3, and Meego.
Such simplicity couldn’t last.

We now hear that Nokia is developing an operating system called Meltemi, the name of a Greek wind (I’m not making this up). The new OS targets the low end and intends to replace the S40 engine for Nokia’s dumbphones, a.k.a. feature phones.

A few thoughts.

First, both Meego and WP7 were, and are, too heavy for entry-level phones.

Second, Nokia sees a future in low-cost, low-margin products. Today’s smartphone BOM is excessive, north of $100, and that’s before the handset maker, Nokia in our case, gets a slice of the pie. More

Steve: Who’s Going to Protect Us From Cheap and Mediocre Now?


Not so fast.

Until the last sinew, the last synapse gives up, Steve will continue to influence the company he co-founded and later recreated. Seeing he could no longer ‘‘meet [his] duties and expectations as Apple’s CEO’’, Jobs kicks himself upstairs and becomes Chairman, director, and “mere” Apple employee. In a distant future, I see him haunting the circular hallways of Apple’s Cupertino spaceship, the Commendatore hunting the clock punchers and damning the linear thinkers straight to Hell.

Let’s review. In 1983, Apple’s Board of Directors felt that Steve required “adult supervision’’. John Sculley, the designated grownup, replaced Jobs as CEO and eventually pushed him out of the company.

Fast forward a decade and a half. In 1997, Steve returns to run his company unchallenged…but not unassisted. The Apple 2.0 management team, hand-picked, well-groomed, isn’t so much a stroke of genius as it is an emblem of the enfant terrible all grown up. As the Fortune chart below shows, Apple has no lack of ‘‘bench strength’’– and who’s providing the adult supervision now?

With Steve as Chairman, Tim Cook, Apple’s long-time COO, moves to the center of the chart. He joined the company 13 years ago, has always reported directly to Steve and saw his responsibilities increase over time. He now drives the team that made Apple the most valued and valuable high-tech company in the world.
As for ourselves: No whining. It’s our job, as consumers, to protect ourselves, to vote with our wallets against the bean counters, the Paint by Numbers product planners. It’s our place to provide ‘‘constructive feedback’’ when Apple products fail to meet the combined aesthetic and functional standards Dear Leader drilled into the marketplace. From MobileMe to “skeuomorphic” calendars, address books and bookshelves — to say nothing of fresh Lion bugs. Steve’s Apple may not be perfect, but…

A portentous example: The 1998 Bondi Blue iMac, the first visible re-assertion of Steve’s style — and of Jony Ive’s portfolio in the making:

Immediately iconic, users adored their iMacs. The unexpected shape and color set a new standard for high-tech products, so much so Apple competitors tried to rub the amulet for luck — and showed us what they really stood for: Cheap, imitative mediocrity. I recall going to Palo Alto’s Fry’s store and seeing beige PC clone boxes with candy-colored plastic inserts that approximated the iMac palette.

As a Forbes article put it, speaking of Dell’s similar fig-leaf attempt:

“Dell, ever concerned with keeping its inventory low, seems to be approaching colored notebooks in a much less risky way, using cheaper plastic inserts. Of course, the appearance of the Inspiron doesn’t inspire the way the first iMacs and iBooks did.”

The aesthetic knockoffs weren’t just cheap, they were ugly. The inserts looked even worse than the faux-wood ‘‘accents’’ on Chrysler dashboards. No cojones, no imagination, no taste.

Fast forward a bit more: Steve introduces the Apple Store. We’ll pass over the record-beating numbers and address the two messages the store imparts.
First, the architecture, an expression of the Apple ethos, says: ‘This is what we think of ourselves’.
Second, once inside the store, the experience states: ‘Here’s what we think of our relationship with you, our customer’.
In comparison, I see carriers trying to spruce up their store fronts with shiny metal appliqués — but go inside and you find cheap trade-show modular furniture.

Taste matters. Let’s turn to this YouTube video of the opening of an Apple Store clone. Not a Chinese counterfeit but a Microsoft Store in Scottsdale, Arizona. It starts much like the “real” thing: Happy customer, rows of high-fiving employees, a decor that looks familiar.  But 40 seconds into the one minute video, we get the “tell”, the killer detail that gives the imitation away.  Here we get the men in suits and ties:

Still more evidence of Steve’s influence: Just as HP decides to spin off its PC business (or perhaps not), PC clone makers demand an additional $100 subsidy per ‘‘ultra-portable’’ laptop from Intel. Why? They want to compete with Apple’s increasingly popular MacBook Air. It seems that the “Apple tax”, the premium we’re willing to pay for quality, isn’t enough to dissuade us.

PC clone makers can’t match Apple’s cost or its Bill Of Materials (BOM). The way Apple procures parts and subsystems, the way it runs contract manufacturing and stays on top of complicated but delicate distribution logistics is evidence of the company’s aggressive Supply-Chain Management (SCM). Steve – and thus Apple – understands that the channels need to be fed Just So, neither starved nor stuffed.

I found the BOM story interesting and looked up current ultra-portable prices. Who better than Sony in that product category? I went to their site and got this:

A nice MacBook Air competitor starting at $1969. The real thing starts at $1299.
Quite a reversal of the old world order and, I hope, a source of satisfaction for Jobs.

Spanning an amazing arc of thirty years, the company with the anti-establishment image has become the most disciplined, best-managed high-tech giant — and arbiter of taste.

When I first met Steve, in February 1981, he was sitting cross-legged on a credenza in the Apple board room, picking his toes. Since then I’ve watched with glee as he went against received wisdom, causing pundits to have fits at every turn. I picture them as a gaggle of eunuchs standing around the caliph’s bed, braying in high-pitched voice: ‘Steve, you’re doing it wrong!’

For a long time, I’ve seen him as having an animal inside him, the one with the desires, the instinct, the drive. In 1985, that animal threw Steve to the ground. He picked himself up at Pixar — you’d be a captain of industry for doing no more — and NeXT. Then, in 1997, armed with Pixar’s success and Next’s technical prowess, he came back to run Apple and make it really his.

He had learned to ride the animal.

Steve and Tim both speak, rightly, of Apple being at the crossroads of technology and humanities, liberal arts. In tribute to Jobs’ aesthetic sense, and why it deeply matters, I’ll conclude with a quote from Herman Hesse’s Steppenwolf:

‘’Before all else, I learned all these playthings were not mere idle trifles invented by manufacturers and dealers for the purposes of gain.  They were, on the contrary, a little or, rather, a big world, authoritative and beautiful, many sided, containing a multiplicity of things all of which had the one and only aim of serving love, refining the senses, giving life to the dead world around us, endowing it in a magical way with new instruments of love, from powder and scent to the dancing show, from ring to cigarette case, from waist buckle to handbag.  This bag was no bag, this purse no purse, flowers no flowers, the fan no fan.  All were the plastic material of love, of magic and delight.  Each was a messenger, a smuggler, a weapon, a battle cry.’’

JLG@mondaynote.com

Next week: Recipes don’t a chef make.
And, for a good laugh, Macalope’s view of this week’s worse pundits.

Getting More Bang For Our Bucks

(Includes correction with the right 3rd graph)

Two important questions in our times of large public debt and lagging economies: Is it effective to inject public money in support of the ailing media industry? And, in order to ensure the best readers’ bang for the taxpayer’s buck, are some models better than others?

Last week, I chatted with Rasmus Kleis Nielsen, a Research Fellow at the Reuters Institute for the Study of Journalism at the University of Oxford, and a communication professor in Denmark. With Geert Linnebank, a former editor-in-chief at Reuters, Rasmus wrote a compelling report on the subject: Public Support for the Media, A Six-Country Overview of Direct and Indirect Subsidies (PDF here). Together, they review public support systems for Finland, France, Germany, Italy, United Kingdom and the United States. A large part of the report looks at the funding of public radio and television channels, which varies widely from one country to another. In this column, I’ll limit myself to public sector funding for the print media.

When it comes to supporting its print press, Finland is a big spender. It invests 22 times more public funds per capita than the United States, nine times more than Germany, five times more than the United Kingdom, four times more than Italy, and three times more than France, see below:

Supporting the press sector is a big deal in Finland, then. In theory. Because, in Finland, like in all Scandinavian countries, newspapers enjoy a huge reach: 79% of the population. This might tempt you into thinking there is a direct relationship between subsidies and penetration. Actually, there is none: According to the report, Germany, which spends 11% of what Finland does, has a newspaper reach of 72%.

Using readership stats provided by the World Association of Newspapers, the picture looks like this:

Combining the two sets of numbers leads to a compelling result: While spending much more than any other country, the Finns get a much better performance. According to the Reuters Institute report, they perform 13 times better than Italy and France, the clear losers of the subsidies systems, as shown here:

We can draw three conclusions from these data sets.

1 / There are no Keynesian mechanisms in evidence when it comes to correlating public spending with print media penetration. The US spends only 16% more per capita than Italy, but have 94% more readers per thousand people. As for Germans, they spend 40% of what the Italians do, but have almost three times more readers. Practically, it means there is no hope to reverse the declining trend by beefing up subsidies.

2 / The Finnish performances is more a matter of editorial product than of public policy. I happen to know quite a bit about the kind of journalism practiced in Nordic countries. It is a fiercely independent, aggressive (in the best sense) kind or reporting. A couple of years ago, I was a jury member for the Schibsted Journalism Award (see my June 2009 column about it). I saw editors making choices, strategizing their coverage, assigning substantial resources to it, and striving to beat their competition. In addition, they provide very efficient public service journalism, lifting the veil on administrative shortfalls and occasional abuses by officials.

From a pure industrial perspective, Scandinavian media companies have once and for all decided competition had to stop right after the newsroom doorstep. For a long time, printing and distribution have been mutualized. Newspapers and magazines have not been spared by erosion, but they are in a much better shape than in most countries.

3 / Contrary to the cliché, internet growth doesn’t cause a decrease in print press penetration. Finland (again) and the UK have both strong readerships and a high number of online users (respectively 57% and 37%).

The Rasmus Nielsen report explains in great detail the complexity and diversity of public funding for media. In passing, it kills long lasting prejudices such as European media being massively state-funded, or an American public sector unsupportive of the media industry.

And there is no one-size-fits-all model.

Still, some ideas emerge — as long as you think media ought to be somewhat subsidized. Which I do, for several reasons:

  • Quality information plays a critical role in democracy.
  • Good reporting remains quite expensive to produce. Remaining able to preserve non-commercial formats (such as NPR or the BBC) leaves no choice but public support.
  • The industry — especially the print press — is in the midst of a radical and costly transformation, and many organizations don’t have enough capital to undertake it.
  • We are facing an historical wave of mediocrity in the information business with wealthy aggregators eager to repackage anything that fits their obsession with eyeballs. (I’m appalled to hear Le Monde is about to strike a deal with the Huffington Post.)

Having said that, for public support to work, critical conditions must be met:
1 / Tight management. Sounds obvious, but too often public money means outrageous waste (as often seen in public broadcasting).
2 / No open-bar. Meaning: no open-ended funding. If money is supposed to help a precise restructuring, it must be tied to measurable results.
3 / Sanitization. Subsidies should rather be indirect than direct. For instance, a tax break as opposed to a grant for a specific company falling below a certain level of advertising (as is the case in France).
4 / No life-support funding. Only support for transformation.

frederic.filloux@mondaynote.com