What happened to the iPad?

 

On October 23rd, Apple announced the widely expected iPad mini. The company also surprised most by also introducing a faster “4th generation” iPad, swiftly replacing the one launched on March 7th this year, seven and a half months ago.
That same day, Tim Cook proudly proclaimed a an iPad milestone: 100 million shipped since its April 2010 debut. Impressive.
No less impressively, Wall Street analysts quickly did their subtractions and concluded Q4 iPad shipments — to be officially announced two days later — were going to miss expectations.
They were right.
Where seers expected somewhere between 15 and 16 million iPads, the actual Q4 number was 14 million. Using the Average Selling Price (ASP) we’ll discuss in a moment, a “miss” of 2 million units translates into more than $1B in missed revenue.

Compared to the 17 million iPads shipped in Q3 (ending in June), Q4′s 14 million units look like a steep decline. This isn’t in keeping with the fast growth the iPad had shown since its 2010 beginning. On a “Quarters After Launch” basis, the iPad used to grow faster than the iPhone. Now, we see a decline from the 15.4 million units shipped in Q1 (ending December 2011), and only a modest 26% increase from last year’s Q4. Where are the go-go days of 70% or even 100% year-to-year growth?
Two days later, at the October 25th Earnings Conference Call, Apple’s CEO tried to put a better face on that strangely anemic 26% growth. As noted by Horace Dediu, Tim Cook pointed to a different number: sell-thru, units actually delivered to customers, grew by 44%. Not great, but not as tepid as 26%.
(See Philip Ellmer-Dewitt’s detailed explanation here. In essence, when product ships, it “changes hands”: the channel partner “takes title”, meaning it moves from Apple’s books to the reseller’s. For Apple, the items thus shipped count as revenue, even if they’re not sold-thru, that is sold to end customers. When the volume of products Apple ships to retailers is less than the volume sold-thru, channel inventories decline, more sales out than shipments in. This is how Apple sees revenue go up by 26% while sell-thru increases by 44%. A likely explanation for last quarter’s depletion of channel inventory is making room for the two new iPad models.)
Resorting to sell-thru numbers as a way to put iPad numbers in a better light could be habit-forming, it could force Apple’s management to provide more detailed inventory numbers more regularly.
On the end-customer demand side, Apple execs attributed the low Q4 iPad number to several months of intense and detailed rumors ahead of the iPad mini launch.
So, the iPad story could look this: Last year, the yearly iPhone refresh moved from June to October; as a result, Q4 iPhone shipments disappointed; but fast growth resumed once the new model shipped; the pattern now applies to the iPad as well.

No, the iPhone and the iPad behave more differently than in the above scenario. I went back to SEC filings and extracted data for the following graph tracking iPhone and iPad ASP’s for the past eight quarters:

The iPhone ASP is stable. Carriers keep indulging in (wooden) saber-rattling, complaining about “excessive” iPhone subsidies. Here, subsidy means the difference between the price carriers pay for a handset and the typical end-user price: $199 for the phone with a two-year contract. In such a $199 arrangement, for the past five years, Apple has been able to extract more money from carriers than any of its competitors. Paraphrasing Horace Dediu, the explanation for such an enduring advantage is a simple one: For carriers, the iPhone is a better salesman, it generates more revenue, a higher ARPU (Average Revenue Per User). As a result, carriers pay the iPhone salesman a higher commission, meaning a higher handset price. (And they sound like the grouchy bosses who complain their star sales person makes too much money…)

For the iPad, there is no such arrangement, no two-year contract, no subsidy. For example, AT&T will sell an iPad with a no-commitment, month-to-month wireless data contract. Without a two-year commitment, carriers have no incentive to sell the iPad at a particularly attractive price, causing customers to face the price without a subsidy fig-leaf. (One might argue smartphone contracts lead customers to borrow money, the $400+ subsidy, at usurious rates, but such habits are hard to break. Rare is the carrier that will offer a cure, a lower monthly contract if you pay full price for the phone.)

How do iPad customers react to the cold price truth? All we know is the ASP has been falling for five quarters. And we can also surmise price figures more actively in competitive situations than it does with smartphones. Or, for that matter, with notebooks and desktop computers: ASP for Macs is stable or growing a little, from $1282 last year to $1344 last quarter. These prices don’t prevent Apple from being number one on desktops and notebooks in the US — as Tim Cook reminded everyone on October 23rd.

The surprise iPad refresh can be seen as a reaction to competitive pressures, existing or upcoming ones. And, for the iPad mini, we have an interesting combination: premium price and an avowed lower gross margin, ‘significantly below our cooperate average‘ says Apple’s CFO during the October 25th Earnings Conference Call.

The iPad definitely behaves differently, neither a bigger smartphone, nor a smaller PC, thus confirming it belongs to a new category whose rules are still being established. The next few quarters will be even more interesting than recent ones: Google, Amazon and Microsoft have new products worth watching, they all intend to fight for a dominant role in the new space.

JLG@mondaynote.com

The Internet Split

 

Web sites will soon fall into two categories: high audience low yield, low audience higher yield. Such a divide will impact digital advertising.

This Autumn, whomever you talk to will tell you this: internet advertising yields are taking a dive. CPMs (cost per thousand page views), now down to single digits, keep falling. This you hear on both sides of the Atlantic. Economic conditions, concerns with the level of debt (both private and public), business-hostile tax policies (see Jean-Louis’ Monday Note on French Entrepreneurs Revolt), the upcoming fiscal cliff in the United States, the fragility of the Eurozone are all pointing in the same direction. Even Google’s cash machine is showing weakness.

In such times, advertising budgets are usually the first ones to get the ax. Slowing down an industrial production line can get complicated, but slashing an ad campaign can be done with a mouse click. In the Fall, when everyone struggles with next year’s projections, a marketing director is inevitably tempted to hit the delete key to embellish his/er spreadsheet (remember: we are all short-termists.)

According to ZenithOptimedia’s recent forecasts, Eurozone ad expenditures will end this year in the red: -3.1% overall. But all countries are not equal: Just to illustrate the reactivity of advertising expenditures to economic conditions, consider three regional economies badly impacted by Europe’s downturn:

Italy:       -6.5% in ad spending vs. 2011
Spain:       -12.2%
Portugal:    -12.2%

And just for the sake of it, let’s award a special prize to the Greek economy: its advertising expenditure will be down 33.2% this year and it will be off its 2007 peak by… 63%! This shows how the ad market reacts and amplifies an economic crisis. (For 2013, Zenith predicts +0.9% growth in the Eurozone, but has since it downgraded its entire Western Europe 2012 projections from +0.4% in June to -0.7% in September. As a result, no one seriously believes Zenith’s projection for upcoming year.)

For digital media, such a trend will be the underlying cause of three evolutions:
- A rise in paid-for-performance advertising
- A rise in alternate formats beyond traditional display — for better or worse
- And a split between volume-driven and quality-driven digital properties.
To an extent, the third trend is a consequence of the other two. Let’s give it a closer look.

First, this graph:

A quick disclaimer: To avoid offending anyone, note there is no scale, nor any proportions between media outlets. The point is to map out clusters among various brands, to see who sits where relatively to others.

On the top left part of the chart, high audience but low yield: The Guardian (£40-50m in revenue for a stunning 60+ million uniques visitors), Business Insider, The Huffington Post and TV networks web sites. However, they have different ways of gathering huge audiences: The Guardian does it thanks to its fantastic journalistic machine and its unabated investment in digital (read this interesting story in last summer’s GQ); as for the Huffington Post, it has elevated clicking-techniques to an art.

Business Insider has become a class in itself. In the last two or three years, it drifted from a good tech/business blog to a compilation of eye-grabbing-headlines (a rather profuse one: I counted more than 90 items on BI’s home page this weekend.) Having said that: it remains interesting reading, and its crew sometimes gets scoops. But the entire editing is built on grabbing attention. And it works beautifully, so to speak. Here are some examples of stories and how they score:

12 Long-Dead Brands That Are Ripe For Resurrection:
55,000 views
Stunning Images From The Best Wildlife Photo Competition Of The Year:
78,000 views
19 Chinese White Collar Criminals Who Were Handed The Death Sentence :
104,000 views
There Is Simply No Other Plane In The World Like Air Force One :
650,000+ views
These Pictures May Give You Nightmares About Canada’s Oil Sands :
1.17 million views

Buried deep inside this accumulation of SEO-dreams-come-true items, there are some serious stories, but their scores are paltry:

Here’s The Big Mystery With Google’s $8 Billion Mobile Business :
7000 views
Jeff Bezos: People Who Are Right Are People That Change Their Mind A Lot :
6400 views

Well, you get my point. Again, I’m not judging here. With incredibly hard work, Henry Blodget and his team have built a great franchise, and I’d wish more business sites would learn — just a little bit, say 5% — how to stage business news and catch readers. And to be fair with Business Insider, let’s underline that its must-read 139 slides about The State of the Internet, attracted nearly 5 million viewers in three weeks.

Coming back to the chart above: on the bottom left, web sites like Slate or Salon (there are many others) enjoy strong reputation, loyal readership… but — as unfair as it sounds — tiny ones. On the upper right corner, we have the exception(s), lead by the New York Times: high audience, high ARPU (about $160m-200m in advertising revenue, recently supplemented by a $60-100m in subscription revenue that didn’t exist 15 months earlier.)

Let’s wrap up with advertising formats. Bottom line: ad agencies and their clients will always seek to blur the distinction between editorial and commercial contents. In that respect, the future lies, again, in the Business Insider model, which pushes the envelope pretty far (in my own, probably conservative opinion.) On this weekend’s home page, you can see how BI morphs its editorial team into sales reps with this story : 15 Tips For Getting The Perfect Tailored Suit, an advertorial for a wannabe hip Manhattan tailor. The package looks entirely like news coverage and it comes into two stages. Linked to the We-Give-You-Great-Tips treatment, you get the full monty: The secret suit shop underneath Mazza’s swank Chelsea sports bar, complete with a 20 pics slide-show and a glowing profile of the owners. The two stories gathered more than… 100,000 views (including mine — note that I linked to the stories because I’m pretty sure you’ll click on it…) But it’s pocket change compared to the rather straightforward Here’s Why Peter Luger Is The Best Steakhouse In New York City which collected an amazing 244,000 views. (Business Insider wins on both ends: for the advertorial — Henry, please, don’t tell me you do that for free — and the ads surrounding it.)

With very few exceptions, the editorial independence of lifestyle and consumer sections is now long gone (this includes “respectable” legacy media.) But this obvious violation of the separation between Church and State is bound to percolate into more pernicious “brand content” (see this earlier Monday Note) for more serious subjects than food or clothing. That’s where the credibility issue will set in.

frederic.filloux@mondaynote.com

 

Apple, ARM, and Intel

 

Apple and Samsung are engaged in a knives-out smartphone war, most infamously in the courts but, more importantly, in the marketplace. In its latest ad campaign, Samsung has cleverly “borrowed” a page from Apple’s own marketing playbook, posturing the iPhone as the choice of autumn-aged parents and brainwashed queue sheep.

But when it comes to chips, the two companies must pretend to be civil for the sake of the children: Samsung is the sole supplier of ARM-based processors for the iPhone.

Something has to give.

Since no one sees Samsung getting out of its booming smartphone business, the conclusion is that Apple will assume full custody, it will take its iDevices processor business elsewhere.

But where? There are rumors (which we’ll get to), and none of them so much as hint at Intel.

Except for the rare cameo appearance, Intel is nowhere in the Post-PC world (or, as Frank Shaw, the literate and witty head of Microsoft’s corporate PR obdurately insists, the “PC Plus” world). Becoming Apple’s ARM source wouldn’t just put the Santa Clara company in the race, it would vault them into the lead.

They’ve been there before: Intel scored a coup when Apple switched to the x86 architecture for its Macintosh line in 2005. An iDevice encore would mark an even bigger score as smartphones and tablets have already reached much higher volumes and grow much faster.

So… Why hasn’t Intel jumped at the chance?

The first explanation is architectural disdain. Intel sees “no future for ARM“, it’s a culture of x86 true believers. And they have a right to their conviction: With each iteration of its manufacturing technology, Intel has full control over how to improve its processors. They can reduce x86 power consumption by using smaller building blocks (they’re already down to 22 nanometers wide). They can micro-manage (literally) which parts of a complex chip will be turned on, off, or somewhere in between, in a kind of hibernation.

A further problem is that Intel would need to change roles. Today, the company designs the microprocessors that it manufactures. It tells PC clone makers what these chips will do, how many they will get, when, and for how much. Its development model (called Tick Tock in industry argot) essentially defines the schedules and finances of hardware makers.

This dictatorial model won’t work for iDevices. Apple crossed the border into Intel’s chipset empire back in the Macintosh era, but, today, it has far too much invested in its ARM design to again surrender complete control. As evidenced by the A6 processor running inside the iPhone 5, Apple goes to great lengths to customize the basic ARM cores, adding graphic processors, memory, and large amounts of support logic, and even resorts to aggressive hand-optimization of the silicon layout — as opposed to just letting CAD software tools do the job.

Intel would have to accept Apple’s design and “pour” it into silicon — it would become a lowly “merchant foundry“. Intel knows how to design and manufacture standard parts, it has little experience manufacturing other people’s custom designs…or pricing them.

Which leads us to the most likely answer to the Why Not Intel question: Money. Intel is a sophisticated business entity that expertly balances both terms of the profit equation. On the one hand, they use brand identity, marketing incentives, and a little strong-arming to keep prices “acceptable”, while on the other, the Tick Tock technology and product development pushes its costs down.

The company meticulously tunes the price points for its processors to generate the revenue that will fund development as well as the Intel Inside campaigns that have cost hundreds of millions of dollars over the years, to say nothing of the more recent $300M Ultrabook fund.

One way to visualize Intel’s money pump is to think of what the industry calls a Wafer Start. Here, “wafer” refers to the basic silicon “galette” that will go through the manufacturing steps and emerge with thousands of chips ready to be diced out. For Intel, profit comes from the difference between the cost of running a wafer through the $5B manufacturing unit (a “fab” in our argot) and the revenue that the marketplace will grant each chip.

Intel’s published prices range from a “low” $117 for a Core i3 processor to $999 for a top-of-the-line Core i7 device. Of course, these are the publicly advertised price tags, so we can assume that Acer, Lenovo, and HP pay less… but compare this to iSuppli’s estimate for the cost of the A6 processor: $17.50.

Even if more A6 chips could be produced per wafer — an unproven assumption — Intel’s revenue per A6 wafer start would be much lower than with their x86 microprocessors. In Intel’s perception of reality, this would destroy the business model.

In the meantime, the rumor of the day is that Apple will use TSMC, a well-regarded Taiwanese foundry, the world’s largest. TSMC is known to have made test runs of the A4 last year, and is now reportedly doing the same for the A5 processors that power the new iPad. Furthermore, “industry insiders” have reported that Apple attempted to secure exclusive access to TMSC’s semiconductor output but were rebuffed. (Qualcomm tried, as well; same result.)

This raises a big Disruption question for Intel: In the name of protecting today’s business model, will it let TSMC and others take the huge mobile volume, albeit with lower profit per unit? Can Intel afford to shun ARM?

For all of Intel’s semiconductor design and manufacturing feats, its processors suffer from a genetic handicap: They have to support the legacy x86 instruction set, and thus they’re inherently more complicated than legacy-free ARM devices, they require more transistors, more silicon. Intel will argue, rightly, that they’ll always be one technological step ahead of the competition, but is one step enough for x86 chips to beat ARM microprocessors?

JLG@mondaynote.com

 

Losing The Plot

 

It’s a beautiful sight when, year after year, a company stays true to its original idea. But when a business loses the plot, we witness a sorry spectacle, an expensive slide into mediocrity. Every wayward company is wayward in its own way: Accountants masquerading as product planners; wannabe visionary execs jealousy trying to prove that they, too, can put a dent in the universe; board members panicking over bad press. But the result never varies: Customers leave.

A few weeks ago I was in France, enjoying the benefits of the French Paradox and happily testing its limits: Lots of duck fat washed down with an ethanol tincture of polyphenols. It was in this fulfilled state that I watched the launch of the latest iteration of an iconic product. There was a little stretch in one dimension, a little squeeze in another, measurable weight loss, more power better utilized, bigger screen for navigation…

The kommentariat were unanimous, the sum of the improvements equals a blockbuster.

I’m not talking about the boring iPhone 5. The occasion was the seventh iteration of the Volkswagen Golf, introduced at the 2012 Paris Motor Show (or, in the modest French appellation, the Mondial de l’Automobile).

The praise is deserved. Golf 7.0 comes with plenty of new features, yet stays backwards-compatible with previous releases…it’s still recognizable as a Golf.

Born in 1974, the Golf (then dubbed the Rabbit in the US) managed to stay true to Volkswagen’s overall corporate brief — its “People’s Car” mandate — while giving the idea new life by walking away from the Beetle’s design. The engine and drive wheels moved upfront; Giorgetto Giugiaro, the legendary and extraordinarily prolific designer, outlined the hatchback’s iconic silhouette, still recognized and loved 38 years later.

Admittedly, the Golf strayed a bit over the years, it gained weight, developed haunches. At one point, it grew to nearly twice its original mass. Worse, reliability was up and down, as were the experts’ opinions of its drivability.

But despite the swerves and cul-de-sac design details, Volkswagen managed to return to the original concept of a sexy, functional hatchback. And the customers didn’t leave — more than 30 million Golfs have been sold.

The Honda Civic story isn’t nearly pleasant. The Civic was introduced in 1967 as a tiny kei car hatchback called the N360 — for the 360 cubic centimeters of its motorcycle engine. In 1972, the little hatchback grew a pair of additional cylinders and became an auto industry icon, the first for Honda.

Year after year, Honda lovingly improved the Civic: Larger, smoother body; more comfortable interior; cleaner, more powerful engine; smoother suspension. For about twenty years, the Civic was a model of neat progression, of staying true to the original hatchback idea.

But in the mid-nineties, the Civic lost its unmistakable identity. No longer satisfied with being a versatile, dependable transportation machine, the Civic wanted to be treated with respect, it wanted…valet parking. A few years later, the Civic suffered a midlife crisis and tried to become a sports car.

What happened? Was it because of a change of the guard inside the company? Honda was often taken to task for being too much of a maverick; did the Japanese company try too hard to placate critics and become more “normal”?

The parallel Golf and Civic stories show a sharp contrast between the two companies. In many respects, the Civic started as a technically superior product. It had a better engine, better manufacturing, and legendary reliability. But Volkswagen stuck to the original concept and is well rewarded as a result.

There are even sorrier examples of lost plots in the auto industry — think Citroën — but it’s time to turn to our industry.

Regard Hewlett-Packard, serial plot loser.

In the early 70’s, HP owned the PC market (and forgive the anachronism…back then they were called “desktop computers”). Using the technical and financial might it had earned with its late-sixties “programmable calculator” line, HP developed a range of “discrete logic implementations” (integrated circuits) of their 2100 series minicomputer instruction set. It was a clean, visionary strategy. Very quickly, HP’s 9800 series of desktop computers flattened every competitor in its path: Wang, Olivetti, Tektronix, Seiko…

Then, in 1972, Intel introduced the 8008 microprocessor. HP looked down its nose at these  cheap, woefully underpowered 8-bit gizmos…there was no way these toys could compete with HP’s fast, powerful, 16-bit desktop devices — why, even HP’s old 9810A calculator used a 16-bit brain.

We know the rest of the story: The inexpensive devices Pac-Manned their way into HP’s PC business. The 9800 series was displaced by a crowd of entrants, many powered by Microsoft software, including the Apple ][, whose Basic Applesoft interpreter came from Redmond.

It wasn’t until 2002 that HP regained the PC industry’s top spot — and it only did so by acquiring Compaq, the deposed king of PCs. (Ironically, Compaq’s history is similarly predatory: It vaulted to the top when it acquired DEC, another erstwhile king, albeit of the  minicomputer industry. DEC missed the PC revolution entirely.)

Ten years later, after a sorry successions of CEOs, HP’s PC business has become a lackluster, low-margin (5%) endeavor, and Lenovo (or will it be Acer?) is about to assume the number one position in sales.

There is more.

HP was once the king of “mobile computing”. Starting with the HP 35 pocket device (1972), the company grew a phenomenally successful range of iconic devices such as the HP-80 and the HP-12C, the darlings of financial users.

In 1974, the HP-65 topped the range with its magnetic stripe reader for external program storage. The HP-80 had such high margins it provided most of the company’s meager profits during a mid-70‘s financial downturn. (Or so I, lowly HP trenchworker at the time, was told by “upper management”. I’ve researched the record but haven’t been able to confirm the factoid.)

HP owned the pocket-sized form factor, but they’ve since lost the mobile computing plot. There have been a few spasms — the iPaq devices, an iPod dalliance, the amazingly botched $1.2B Palm acquisition– but now HP plays no part in the mobile revolution.

HP CEO Meg Whitman knows this is a problem, that it must be fixed. She tells us that the company must “offer a smartphone because in many countries of the world that is your first computing device.” Her solution? HP won’t have a smartphone in 2013. (Whitman has also announced losses for this year, more losses for next year, and plans to lay off 29,000 people.)

Indeed, for more and more people, in both developing and developed countries, the smartphone has become the first computing device, the really personal computer. So what does “No Smartphone In 2013″ say?

There’s no dearth of Taiwan companies ready with customizable designs. That’s how Nokia got its first Lumia phones from Compal. So why isn’t HP coming up with a Windows Phone 8 device in the next few months? There’s only one possible answer: margins. The smartphone business, dominated as it is by Samsung and Apple, is now in a clones race to the bottom. For HP, this is an all-too-familiar plot line.

How can HP, with its new Make it Matter slogan, continue to lose its key plots? Waiting until 2014 to re-enter the smartphone race won’t help. And competing against Lenovo, Acer and others in the Windows 8 PC-cum-tablet space won’t make HP’s clone business more profitable.

JLG@mondaynote.com

 

Brand x Device = Reach

 

Combine the enduring strength of media brands with emerging mobility reading habits: the result could boost digital news.  

The equation in the headline is based on a simple, important fact: By and large, digital users still trust old news outlets. In the new world, media brands are far from dead, predictions of their extinction have been vastly exaggerated. In fact, we can see an opportunity for the new reading patterns seen in smartphone and tablet to provide welcome help to legacy media in their painful transition.

Last week, the Poynter Institute released interesting data Surveying Americans who define themselves as news consumers:
=> 53% get their primary digital news from web native outlets (Huffington Post, portals like Yahoo, AOL, or shallow verticals like Drudge or TMZ — the celebrity news-breaker).
=> 83% seek a secondary source for confirmation or amplification right after getting breaking news.
=> 60% do so by relying on established media brands such as the digital version of newspapers, TV networks, etc.

Let’s pause for a moment and reflect on the latest figure, the six-out-of-ten who go for the trusted brands.

Traditional media missed the train for digital breaking breaking news; this is barely a surprise. We know the factors only too well: newsrooms were too slow to catch the wave; publishers didn’t foresee the audience battle; they didn’t invest in relevant technologies, they got swamped in the battle of free vs. paid; they stayed fixated on avoiding cannibalization of the (dying) flagship product, newspapers, broadcast news, etc. In doing so, legacy outlets left an open field for more agile, less scrupulous, traffic-obsessed young ventures. The new entrants started with a blank slate which, indeed, cannibalized the old league thanks to their speed and ubiquity.

As a result, a new vulgate emerged: newcomers would eat “old” brands alive. They would do this by capturing every segment of news:  the “commodity” format (near-live news, same everywhere for everyone, and free); the sophisticated treatments (long forms, in-depth reporting, profile…). Pundits speculated the Yahoos and the Googles of the new Digital World Order would soon hire talent and build newsrooms giants from scratch.

Fact is: it didn’t happen. Some internet brands did a great job addressing niches in politics, society or business. But, broadly speaking, once the predictions dust settled, ancestral brands seems to have been able to salvage the quality part of their franchise. Unfortunately, this one is the costliest and the less audience-driving segment. The HuffPo might have a huge audience, its readers are essentially looking for snapshots of news. For serious complement, they go for the New York Times or the trusted brand of their preference.

As for social media, the Poynter survey reframes the debate in a rather blunt way:

Despite all the social sharing buttons littering news sites, the study finds the top methods of sharing news are still word of mouth and email. (See earlier:Limited use of sharing buttons Sharing buttons look “a little desperate“.)

Having said that, for the younger generation, social networks are a key source of primary news: 35% of the Generation Y, 23% of the Gen X and 11% of the Boomers find their news there. As they get older and better educated, they could, supposedly, rely more on traditional media.

Let’s now talk about the Grand Disruption, namely how the rise of the smartphone and tablet impacts the news. According to the Poynter survey, established media benefit more from mobile devices than web native sources do. It goes like this:

The prime reason is reader engagement. The Pew Research Center for the People and the Press, exposes this in two 90-page surveys : The Future of Mobile News, produced in collaboration withe the Economist Group (PDF here), and the Trends in News Consumption 1991-2012 (PDF here).
First, the 11-years evolution of how people “got their news yesterday”:

The rise of the mobile is obvious (So is the free fall of the newspaper.) According to the Pew survey:
=> Among smartphone users (44% of the US adults) : 62% get their news weekly and 36% daily.
=> Among tablet users (22% of the US adults): 64% get their news weekly and 37% daily.

In addition, numbers reveal a high level of engagement among tablet users:
=> 78% read more than one in-depth article during a sitting (nine times out of ten for personal interest).

… and the tablet appears to be a remarkable vector for serendipitous use:
=>  72% of users end up reading in-depth articles they were not initially looking for.

More broadly, the tablet format induces further reading:
=> 69% end up reading a full article after checking headlines.

And more than one device equals more time with news:


To close the loop, the Pew survey confirms the Poynter’s findings on the preeminence of trusted brands on mobile — and more specifically on tablets as 60% of tablet users read long form journalism from publications they regularly keep up with.

The tablet is indeed the next bing thing for media. Apple is no longer the only one (I put my hand on the €200 Google Nexus 7 and it’s an excellent product). The market is now poised for a real takeoff. The tablet is the most favored vector for more in-depth news — which is legacy media’s core value proposition. And since device and media both address the most solvent segment of the population, a sustainable model is bound to emerge.

frederic.filloux@mondaynote.com

 

French Entrepreneurs Revolt

 

Not against their VC overlords, mind you. No, calling themselves “Pigeons” (The Fleeced) they staged a highly visible protest  (Google translation) against their government’s latest stroke of the money pump. In a nutshell, the new Socialist administration proposed to tax an entrepreneur’s capital gains as ordinary income. In very rough numbers, the tax rate would go from 19% to 60% or, some say, 80% in extreme cases.

The outcry, obligingly amplified by the media, forced the Minister of Finance to meet with a delegation of the aggrieved and to beat a hasty, muddy, non-retreat retreat with the customary weasel words of caring for entrepreneurship, competitiveness, social justice and the country’s much-needed financial sanity.

This isn’t the first time the French government makes moves that hurt both the facts and the perception of its economy. It is, I believe, yet another manifestation of its perverted, ambivalent relationship with money.

Allow me to explain.

I’m at the Café de Flore, my Parisian neighborhood, what I call the World Centre for the Caviar Left. There, my café-crème drinking companions sometimes question my having left France to go live in the epitome of materialism, Silicon Valley. I point to the double-parked Porsches, the Louis Vuitton, Dior, Armani, Berlutti and Ralph Loren stores nearby. The answer, uttered in utmost sincerity, never varies: ‘It’s not the same…’

In a way, they’re right. Considering sex and money, Americans and French cultures exhibit truly polar opposite behaviors. The French see nothing wrong with a President having a wife, a mistress and a love child, they revel in sexual and often sexist jokes. But, if you ask someone how much they paid for their apartment, they’ll react as if you’d touched them in boundary-breaking ways. Conversely, they perceive us Americans as demonizing sex — think a past President and his “oral” office — while being obscene with money.

If, as I believe, the most honest statement of country’s values is its tax code, the French government has time and again clearly stated where it stands.

One such declaration is the ISF, the Wealth Tax. It’s not a gains tax (on income or capital), or a transaction tax (sales tax or VAT), this is a levy on your assets after you’ve paid all taxes on the path to your owning said assets. I can be seen as  a cultural indictment of the “haves”. The ISF comes with bizarre (or revealing) exclusions: You own a business, that asset is not taxed; the same goes for your expensive art collection; 75% of the forest you own is ISF-free. (I’ll stop there and warn readers the Wikipedia ISF article is woefully out of date on details, but right on the concept.)

The ISF keeps exerting a perverse influence on the country.
First, too many people with substantial assets fled the country, often to nearby Belgium and UK where they were welcomed as they were going to enrich the local economies. I personally know high-tech executives who, after paying good-size income tax bills for decades, decided to protect their savings and moved out. A loss for the French, from grocers to cab drivers and teachers.

Second, companies with European HQs in France moved out, their execs paying income tax on their wages didn’t want to pay additional levies on their assets. Apple is but one such example. Its Euro HQ is now in London. And, of course, no other company will now expose its execs to the ISF by locating a headquarter in France. Another loss in money and, just as important, in reputation, in making France look business-hostile.

Last May, France elected a new President, François Hollande, a leader of the Socialist Party who successfully presented himself as an alternative to the somewhat conservative and definitely abrasive Nicolas Sarkozy. On the stump, Hollande promised more fiscal justice and went for a new low in demagoguery, saying: ‘I hate rich people’.

Once he got in office, needing more revenue in a sinking economy, he announced he’d raise the ISF percentage, and tax incomes above 1M€ at a new 75% rate. Plus the new tax rate for capital gains discussed at the beginning.

Interestingly, besides the Pigeons’ protest (an example here, so-so translation by Google here), high functionaries in the Ministry of Finance indict their administration’s latest moves. In Le Monde (the semi-official daily) these well-informed technocrats publish a damning opinion piece (translation here) under a nom de plume, Les Arvernes. In it, they remind us that, with the rarest of exceptions, their government bosses never held real jobs. These apparatchiks have no intellectual and, most important, no emotional connection to what building a business is, to putting money and reputation at risk. When you get a wage, you don’t put money at risk. When you build a company, you do. Taxing two different risks at the same rate shows dangerous ignorance of what building a business is — and of the consequences of making France less attractive to business builders.

Here in the Valley, once we’re done slapping our foreheads, we look forward to seeing more talent flow in, looking for a friendlier ecosystem. Paradoxically perhaps, entrepreneurs moving to the Valley shouldn’t worry the money pump operators back in France. As the Israel and India examples uncontrovertibly establish, emigrating entrepreneurs end up doing a lot of good for their country. They send back money, jobs, savoir-faire, technology, culture and optimism. To them, Silicon Valley is a new Villa Medici. This is much better than the Maginot Line French politicians sometime fantasize about in order to prevent individuals to move to better business climates.

JLG@mondaynote.com

 

Quartz: Interesting… and uncertain

 

Atlantic’s new digital venture named Quartz is aimed at global business people. It innovates in many radical ways, but its business model remains dicey.

Two years ago, Atlantic Media’s president Justin Smith was interviewed by the New York Times. The piece focused on the digital strategy he successfully executed:

“We imagined ourselves as a Silicon Valley venture-backed startup whose mission was to attack and disrupt The Atlantic. In essence, we brainstormed the question: What would we do if the goal was to aggressively cannibalize ourselves?”

In most media companies, that kind of statement would have launched a volley of rotten tomatoes. Atlantic’s disruptive strategy gave birth to a new offspring: Quartz (URL: qz.com), launched a couple of weeks ago.

Quartz is a fairly light operation based in New York and headed by Kevin Delaney, a former managing editor at the WSJ.com. Its staff of 25 was pulled together from great brands in business journalism: Bloomberg, The Wall Street Journal, The Economist and the New York Times. According to the site’s official introduction, this is a team with a record of reporting in 119 countries and speaking 19 languages. Not exactly your regular gang of digital serfs or unpaid contributors that most digital pure players are built on.

This professional maturity, along with the backing of the Atlantic Media Company, a 155 years-old organization, might explain the set of rather radical options that makes Quartz so interesting.

Here are a few:

Priority on mobile use. Quartz is the first of its kind to deliberately reverse the old hierarchy: first, traditional web (for PC), and mobile interfaces, second. This is becoming a big digital publishing debate as many of us strongly believe we should go for mobile first and design our services accordingly (I fall in that category).

Quartz founders mentioned market research showing their main target — people on the road interested in global economy — uses 4.21 mobiles devices on average (I love those decimals…): one laptop, one iPad, and two (!) Blackberrys. (Based on multiple observations, I’d rather say, one BB and one iPhone.)

No native mobile app. Similarly, Quartz went for an open HTML5 design instead of apps. We went through this before in the Monday Note. Apps are mandatory for CPU intensive features such as heavy graphics, 3D rendering and games. For news, HTML5 — as messy as it is — does the job just fine. In addition, Quartz relies on “responsive design”, one that allows a web site to dynamically morph in response to the specific connected device (captures are not to scale):

Here is how it looks on a desktop screen:

… on an iPad in landscape mode:

 

…on an iPad in portrait mode:

on a small tablet:

..on an iPhone:

and on a small phone:

(I used Matt Kerlsey Responsive Design Test Site to capture Quartz renderings, it’s an excellent tool to see how your site will look like on various devices).

A river-like visual structure. Quartz is an endless flow of stories that automatically load one below the other as you scroll down. The layout is therefore pretty straightforward: no page-jumps, no complicated navigational tools, just a lateral column with the latest headlines and the main windows where articles concatenate. Again, the priority given to mobile use dictates design purity.

A lightweight technical setup. Quartz does not rely on a complex Content Management System for its production but on WordPress. In doing so, it shows the level of sophistication reached by what started as a simple blog platform. Undoubtedly, the Quartz design team invested significant resources in finding the best WP developers, and the result speaks for itself (despite a few bugs, sure to be short-lived…).

Editorial choices. Instead of the traditional news “beats” (national, foreign, economy, science…), Quartz went boldly for what it calls “obsessions”. This triggered a heated debate among media pundits: among others, read C.W. Anderson piece What happens when news organizations move from “beats” to “obsessions”? on the Nieman Journalism Lab.  Admittedly, the notion of “beats” sounds a bit old-fashioned. Those who have managed newsrooms know beats encourages fiefdoms, fence-building and bureaucracy… Editors love them because they’re much simpler to manage on a day-to-day basis; editorial meetings can therefore be conducted on the basis of a rigid organizational chart; it’s much easier to deal with a beat reporter or his/her desk chief than with some fuzzy “obsession” leader. At Quartz, current “Obsessions” appear in a discreet toolbar. They includes China Slowdown, The Next Crisis, Modern States, Digital, Money, Consumer Class, Startups, etc.

To me, this “obsessive” way of approaching news is way more modern than the traditional “beat” mode. First, it conveys the notion of adjustability to news cycles as “obsessions” can — should — vary. Second, it breeds creativity and transversal treatments among writers (most business publications are quite boring precisely due to their “silo culture”.) Third, digital journalism is intrinsically prone to “obsession”, i.e. strong choices, angles, decisions. For sure, facts are sacred, but they are everywhere: when reporting about the last alarming report from the World Bank, there is no need to repeat what lies just one click away — just sum up the main facts, and link back to the original source! Still, this shouldn’t preclude balanced treatment, fairness and everything in the basic ethics formulary. (Having said that, let’s be realistic: managing a news flow through “obsessions” is fine for  an editorial staff of 20, certainly not so for hundreds of writers.)

Quartz business side. Quartz is a free publication. No paywall, no subscription, nothing. Very few ads either. Again, it opted for a decisive model by getting rid of the dumb banner. And it’s a good thing: traditional display advertising kills designs, crappy targeting practices irritate readers and bring less and less money. (Most news sites are now down to single digital digits in CPM [Cost Per Thousand page views], and it will get worse as ad exchanges keep gaining power, buying remnant inventories by the bulk and reselling those for nothing.) Instead, Quartz started with four sponsors:  Chevron, Boeing, Credit Suisse and Cadillac, all showing quality brand contents. It’s obviously too early to assess this strategy. But Quartz business people opted for being extremely selective in their choice of sponsors (one car-maker, one bank, etc.), with rates negotiated accordingly.

Two, brands are displayed prominently with embedded contents instead of usual formats. Quartz is obviously shooting for very high CPMs. At the very least, they are right to try. I recently meet a European newspaper that extracts €60 to €100 CPMs by tailoring ads and making special ads placements for a small list of advertisers.

Again: such strategy is fine for a relatively small operation: as it is now, Quartz should not burn more than $3-4M a year. Betting on high CPMs is way more difficult for large websites — but niches can be extremely profitable. (For more on Quartz economics, read Ken Doctor’s piece also on Nieman.)

To sum up, three elements will be key to Quartz’ success. 

1 . Quickly build a large audience. Selected advertisers are not philanthropists; they want eyeballs, too. Because of its editorial choices, Quartz will never attract HuffPo-like audiences. To put things in perspective, the Economist gets about 7M uniques browsers a month (much less unique visitors) and has 632,000 readers on its app.

2 . Quartz bets on foreign audiences (already 60% of the total). Fine. But doing so is extremely challenging. Take The Guardian: 60 million uniques visitors per month — one third in the UK, another in the US, and the rest abroad — a formidable journalistic firepower, and a mere £40m in revenue (versus $160m in advertising alone for the NYTimes.com with half of the Guardian’s audience, that’s a 5 to 1 ratio per reader.)

3 . Practically, it means Quartz will have to deploy the most advanced techniques to qualify its audience: it will be doomed if it is unable to tell its advertisers (more than four we hope) it can identify a cluster of readers traveling to Dubai more than twice a year, or another high income group living in London and primarily interested in luxury goods and services (see a previous Monday Note on extracting reader’s value through Big Data)

4 . In the end, Quartz is likely to face a growth question: staying in a niche or broadening its reach (and its content, and increasing its staff) to satisfy the ad market. Once its audience levels off, it might have no other choice than finding a way to make its readers pay. It should not be a problem as it focuses on a rather solvent segment.

frederic.filloux@mondaynote.com

Apple’s $30B Maps

 

A short week after releasing the iPhone 5, Apple’s CEO publicly apologizes for the Maps fiasco and the company’s website updates its description of the new service. As the digital inspirations blog found out, the unfortunately emphatic description that once read:

Designed by Apple from the ground up, Maps gives you turn-by-turn spoken directions, interactive 3D views, and the stunning Flyover feature. All of which may just make this app the most beautiful, powerful mapping service ever.

becomes more modest:

Designed by Apple from the ground up, Maps gives you turn-by-turn spoken directions, interactive 3D views, and the stunning Flyover feature. All in a beautiful vector-based interface that scales and zooms with ease.

In his letter of apology, Tim Cook also reminds everyone of alternatives to his company’s product, and of easy ways to access Google and Nokia maps:

While we’re improving Maps, you can try alternatives by downloading map apps from the App Store like Bing, MapQuest and Waze, or use Google or Nokia maps by going to their websites and creating an icon on your home screen to their web app.

And Consumer Reports, after trying the new Maps found that, warts and all, they weren’t too terrible:

Apple uses maps from TomTom, a leading navigation company. We suspect many criticisms pointing to the map quality are misguided, as we have found TomTom to provide quality maps and guidance across multiple platforms. Instead, the fault may be Apple’s software applied to the TomTom data. […] Either way, in our experience thus far, this is a minor concern.
Bottom line:
Both the free Apple and Google navigation apps provide clear routing directions. Apple feels like a less-mature product. But as seen with the initial competing applications for the iPhone, we would expect updates to this new app over time–and Apple has promised as much. When getting down to the nitty gritty, Google provides a better overall package, but we feel that both provide a good solution for standard software. We expect the competition between the companies will benefit customers with ongoing improvements.

So… Normal teething problems, forgivable excess of enthusiasm from proud Apple execs, the whole media fireworks will blow over and everything will be soon forgotten — remember Antennagate?

One would hope so, especially if Apple’s Maps keep improving at a good pace.

But look at this graph:

Since the iPhone 5 release, and the Maps fracas, Apple shares lost about 4.5% of their value, that’s about $30B in market cap.

Fair or not, it’s hard not to fantasize about another course of events where, in advance, a less apologetic Tim Cook letter would have told Apple customers of the “aspiring” state of Apple Maps and encouraged them to keep alternatives and workarounds in mind. And where Apple’s website would have been modest from day one.

We’ll never know how Apple shares would have behaved, but they certainly wouldn’t have gone lower than they stand now — and Apple’s reputation as a forthright, thoughtful company would have been greatly enhanced.

This is more than piling on, or crying over spilled maps. We might want to think what this whole doing the right thing — only when caught — says about Apple’s senior management.

First, the technical side. Software always ships with fresh bugs, some known, some not. In this case, it’s hard to believe the Maps team didn’t know about some of the most annoying warts. Did someone or some ones deliberately underplay known problems? Or did the team not know. And if so, why? Too broad a net to cast and catch the bugs? Too much secrecy before the launch? (But Maps were demoed at the June WWDC.)

Second, the marketing organization. This is where messages are crafted, products are positioned, claims are wordsmithed. Just like engineers are leery of marketeers manhandling their precious creations, marketing people tend to take engineers’ claims of crystalline purity with, at best, polite cynicism. One is left to wonder how such a hot issue, Apple Maps vs. Google Maps, wasn’t handled with more care — before the blowup. And why, with inevitable comparisons between an infant product and a mature, world-class one, the marketing message was so lackadaisically bombastic.

And last, the CEO. Was trust in his team misplaced, abused? Were the kind of checks that make Apple’s supply chain work so well also applied to the Maps product, or was some ill side-effect of team spirit at play, preventing the much-needed bad news to reach the top?

We don’t need to know. But Apple execs do if they want the difficult birth of Apple Maps to be written in history as a wake-up call that put the top team back on track. I don’t want to think about the alternative.

JLG@mondaynote.com

Facebook’s Gen Y Nightmare

 

GenerationY will — paradoxically — pay a high price for giving up its privacy to Facebook.                  

Taos, New Mexico, Fall 2012. At 18, Tina Porter has been on Facebook for four years. Duly briefed by her parents, a teacher and a therapist, she takes great care not to put contents — remarks on her wall, photos, videos — that could expose her in a unwanted manner.

Still. Spending about 30 hours a month on the social network, she has become as transparent as a looking glass. It will impact the cost of her health insurance, her ability to get a loan and to find a job.

Denver, Colorado, spring 2018. Tina is now 24. She’s finishing her law degree at Colorado State University. She’s gone through a lot: experimenting with substances, been pulled over for speeding a couple of times, relying on pills to regain some sleep after being dumped by her boyfriend.  While Tina had her share of downs, she also has her ups. Living in Denver she never missed an opportunity to go hiking, mountain biking, or skiing — except when she had to spend 48 gruesome hours in the dark, alone with a severe migraine. But she remains fit, and she likes to record her sports performances on health sites — all connected to Facebook — and compare with friends.

Seattle, winter 2020. In a meeting room overlooking the foggy Puget Sound, Alan Parsons, head of human resources at the Wilson, McKenzie & Whitman law firm holds his monthly review of the next important hires. Parsons is with Marcus Chen, a senior associate at Narrative Data Inc., both are poring over a selection of resumés. Narrative Data was created in 2015 by a group of MIT graduates. Still headquartered in Cambridge, Massachusetts, the startup now helps hundreds of corporations pick the right talent.

Narrative Data doesn’t track core competencies. The firm is more into character and personality analysis; it assesses ability to sustain stress, to make the right decision under pressure. To achieve this, Narrative Data is staffed with linguists, mathematicians, statisticians, psychologists, sociologists, neuroscientists. What they basically do is data-mining the social internet: blogs, forums, Twitter, and of course Facebook. Over the years, they’ve drawn a map of behaviors, based on language people use. Thanks to Narrative Data’s algorithm, everyone aged above 20, can have his or her life unfolded like a gigantic electronic papyrus scroll. HR people and recruiters love it. So do insurance companies and banks.

Of course, in 2015 no one will be dumb enough to write on his Facebook wall something like “Gee, bad week ahead, I’m heading to my third chemotherapy session”. But Narrative Data is able to pinpoint anyone’s health problems by weaving together language patterns. For instance, it pores over health forums where people talk, openly but anonymously, about their conditions. By analyzing millions of words, Narrative Data has mapped what it calls Health Clusters, data aggregates that provide remarkable accuracy in revealing health conditions. The Cambridge company is even working on a black program able to “de-anonymize” health forum members thanks to language patterns cross-matching with Facebook pages. But the project raises too many privacy issues do be rolled out — yet.

Tina Porter’s resumé popped up thanks to LinkedIn Expert, the social network’s high-end professional service. LinkedIn, too, developed its own technology to data-mine resumés for specific competences. Tina’s research on trade disputes between Korea and the United States caught everyone’s interest at Wilson, McKenzie. That’s why her “3D Resumé” — a Narrative Data trademark — is on the top of the pile, that is displayed on a large screen in the meeting room.

Narrative’s Marcus Chen does the pitch:
“Tina Porter, 26. She’s what you need for the transpacific trade issues you just mentioned, Alan. Her dissertation speaks for itself, she even learned Korean…”
He pauses.
“But?…” Asks the HR guy.
“She’s afflicted with acute migraine. It occurs at least a couple of times a month. She’s good at concealing it, but our data shows it could be a problem”, Chen said.
“How the hell do you know that?”
“Well, she falls into this particular Health Cluster. In her Facebook babbling, she sometimes refers to a spike in her olfactory sensitivity — a known precursor to a migraine crisis. In addition, each time, for a period of several days, we see a slight drop in the number of words she uses in her posts, her vocabulary shrinks a bit, and her tweets, usually sharp, become less frequent and more nebulous. That’s an obvious pattern for people suffering from serious migraine. In addition, the Zeo Sleeping Manager website and the stress management site HeartMath — both now connected with Facebook –  suggest she suffers from insomnia. In other words, Alan, we think you can’t take Ms Porter in the firm. Our Predictive Workforce Expenditure Model shows that she will cost you at least 15% more in lost productivity. Not to mention the patterns in her Facebook entries suggesting a 75% chance for her to become pregnant in the next 18 months, again according to our models.”
“Not exactly a disease from what I know. But OK, let’s move on”.

I stop here. You might think I’m over the top with this little tale. But the (hopefully) fictitious Narrative Data Inc. could be the offspring of existing large consumer research firms, combined to semantic and data-mining experts such as Recorded Future. This Gothenburg (Sweden)-based company — with a branch in… Cambridge, Mass. –  provides real time analysis of about 150,000 sources (news services, social networks, blogs, government web sites). The firm takes pride in its ability to predict a vast array of events (see this Wired story).

Regarding the “de-anonymizing” the web, two years ago in Paris, I met a mathematician working on pattern detection models. He focused on locating individuals simply through their cell phones habits. Even if the person buys a cell phone with a fake ID and uses it with great care, based on past behavior, his/her real ID will be recovered in a matter of weeks. (As for Facebook, it recently launched a snitching program aimed at getting rid of pseudonyms — cool.)

Expanding such capabilities is only a matter of refining algorithms, setting up the right data hoses and lining up the processing power required to deal with petabytes of unstructured data. Not an issue anymore. Moore’s Law is definitely on the Inquisitors’ side.

frederic.filloux@mondaynote.com

Apple Maps: Damned If You Do, Googled If You Don’t

While still a teenager, my youngest daughter was determined to take on the role of used car salesperson when we sold our old Chevy Tahoe. Her approach was impeccable: Before letting the prospective buyer so much as touch the car, she gave him a tour of its defects, the dent in the rear left fender, the slight tear in the passenger seat, the fussy rear window control. Only then did she lift the hood to reveal the pristine engine bay. She knew the old rule: Don’t let the customer discover the defects.

Pointing out the limitations of your product is a sign of strength, not weakness. I can’t fathom why Apple execs keep ignoring this simple prescription for a healthy relationship with their customers. Instead, we get tiresome boasting: …Apple designs Macs, the best personal computers in the worldwe [make] the best products on earth. This self-promotion violates another rule: Don’t go around telling everyone how good you are in the, uhm…kitchen; let those who have experienced your cookmanship do the bragging for you.

The ridicule that Apple has suffered following the introduction of the Maps application in iOS 6 is largely self-inflicted. The demo was flawless, 2D and 3D maps, turn-by-turn navigation, spectacular flyovers…but not a word from the stage about the app’s limitations, no self-deprecating wink, no admission that iOS Maps is an infant that needs to learn to crawl before walking, running, and ultimately lapping the frontrunner, Google Maps. Instead, we’re told that Apple’s Maps may be  “the most beautiful, powerful mapping service ever.

After the polished demo, the released product gets a good drubbing: the Falkland Islands are stripped of roads and towns, bridges and façades are bizarrely rendered, an imaginary airport is discovered in a field near Dublin.

Pageview-driven commenters do the expected. After having slammed the “boring” iPhone 5, they reversed course when preorders exceed previous records, and now they reverse course again when Maps shows a few warts.

Even Joe Nocera, an illustrious NYT writer, joins the chorus with a piece titled Has Apple Peaked? Note the question mark, a tired churnalistic device, the author hedging his bet in case the peak is higher still, lost in the clouds. The piece is worth reading for its clichés, hyperbole, and statements of the obvious: “unmitigated disaster”, “the canary in the coal mine”, and “Jobs isn’t there anymore”, tropes that appear in many Maps reviews.

(The implication that Jobs would have squelched Maps is misguided. I greatly miss Dear Leader but my admiration for his unsurpassed successes doesn’t obscure my recollection of his mistakes. The Cube, antennagate, Exchange For The Rest of Us [a.k.a MobileMe], the capricious skeuomorphic shelves and leather stitches… Both Siri — still far from reliable — and Maps were decisions Jobs made or endorsed.)

The hue and cry moved me to give iOS 6 Maps a try. Mercifully, my iPad updated by itself (or very nearly so) while I was busy untangling family affairs in Palma de Mallorca. A break in the action, I opened the Maps app and found old searches already in memory. The area around my Palma hotel was clean and detailed:

Similarly for my old Paris haunts:

The directions for my trip from the D10 Conference to my home in Palo Alto were accurate, and offered a choice of routes:

Yes, there are flaws. Deep inside rural France, iOS Maps is clearly lacking. Here’s Apple’s impression of the countryside:

…and Google’s:

Still, the problems didn’t seem that bad. Of course, the old YMMV saying applies: Your experience might be much worse than mine.

Re-reading Joe Nocera’s piece, I get the impression that he hasn’t actually tried Maps himself. Nor does he point out that you can still use Google Maps on an iPhone or iPad:

The process is dead-simple: Add maps.google.com as a Web App on your Home Screen and voilà, Google Maps without waiting for Google to come up with a native iOS app, or for Apple to approve it. Or you can try other mapping apps such as Navigon. Actually, I’m surprised to see so few people rejoice at the prospect of a challenger to Google’s de facto maps monopoly.

Not all bloggers have fallen for the “disaster” hysteria. In this Counternotions blog post,”Kontra”, who is also a learned and sardonic Twitterer, sees a measure of common sense and strategy on Apple’s part:

Q: Then why did Apple kick Google Maps off the iOS platform? Wouldn’t Apple have been better off offering Google Maps even while it was building its own map app? Shouldn’t Apple have waited?

A: Waited for what? For Google to strengthen its chokehold on a key iOS service? Apple has recognized the significance of mobile mapping and acquired several mapping companies, IP assets and talent in the last few years. Mapping is indeed one of the hardest of mobile services, involving physical terrestrial and aerial surveying, data acquisition, correction, tile making and layer upon layer of contextual info married to underlying data, all optimized to serve often under trying network conditions. Unfortunately, like dialect recognition or speech synthesis (think Siri), mapping is one of those technologies that can’t be fully incubated in a lab for a few years and unleashed on several hundred million users in more than a 100 countries in a “mature” state. Thousands of reports from individuals around the world, for example, have helped Google correct countless mapping failures over the last half decade. Without this public exposure and help in the field, a mobile mapping solution like Apple’s stands no chance.

And he makes a swipe at the handwringers:

Q: Does Apple have nothing but contempt for its users?

A: Yes, Apple’s evil. When Apple barred Flash from iOS, Flash was the best and only way to play .swf files. Apple’s video alternative, H.264, wasn’t nearly as widely used. Thus Apple’s solution was “inferior” and appeared to be against its own users’ interests. Sheer corporate greed! Trillion words have been written about just how misguided Apple was in denying its users the glory of Flash on iOS. Well, Flash is now dead on mobile. And yet the Earth’s obliquity of the ecliptic is still about 23.4°. We seemed to have survived that one.

For Apple, Maps is a strategic move. The Cupertino company doesn’t want to depend on a competitor for something as important as maps. The road (pardon the pun) will be long and tortuous, and it’s unfortunate that Apple has made the chase that much harder by failing to modulate its self-praise. but think of the number of times the company has been told You Have No Right To Do This…think smartphones, stores, processors, refusing to depend on Adobe’s Flash…

(As I finished writing this note, I found out Philip Ellmer-DeWitt also takes issue with Joe Nocera’s position and bromides in his Apple 2.0 post. And Brian Hall, in his trademark colorful style, also strongly disagrees with the NYT writer.)

Let’s just hope a fully mature Maps won’t take as long as it took to transform MobileMe into iCloud.

JLG@mondaynote.com