iPhone 5S surprises

 

I will withhold judgment on the new iPhone until I have a chance to play customer, buy the product (my better half seems to like the 5C while I pine for a 5S), and use it for about two weeks — the time required to go beyond my first and often wrong impressions”.

I wrote those words a little over a month ago. I’ve now played customer for the requisite two weeks — I got an iPhone 5S on October 3rd — and I’m prepared to report.

But first, some context.

iPhone launches always generate controversy, there’s always something to complain about: Antennagate for the iPhone 4, the Siri beta for the 4S, the deserved Maps embarrassment last year – with a clean, dignified Tim Cook apology.

(Whether these fracas translate into lost revenue is another matter).

As I sat in the audience during the introduction of the original iPhone, back in January, 2007, I thought the demo was too good, that Steve was (again) having his way with facts. I feared that when the product shipped a few months later, the undistorted reality would break the spell.

We know now that the iPhone that Steve presented on the stage was unfinished, that he trod a careful path through a demo minefield. But the JesusPhone that Apple shipped — unfinished in many ways (no native apps, no cut-and-paste) — was more than a success: It heralded the Smartphone 2.0 era.

iphone 5s

This year, Tim Cook introduced the riskiest hardware/software combination since the original iPhone. The iPhone 5S wants to be more than just “new and improved”, it attempts to jump off the slope with its combination of two discontinuities: a 64-bit processor and a new 64-bit iOS. Will it work, or will it embarrass itself in a noisome backfire?

First surprise: It works.

Let me explain. I have what attorneys call “personal knowledge” of sausage factories, I’ve been accountable for a couple and a fiduciary for several others. I have first-hand experience with the sights, the aromas, the tumult of the factory floor, so I can’t help but wince when I approach a really new product, I worry in sympathy with its progenitors. The 5S isn’t without its “aromas” (we’ll get to those later), but the phone is sleek and attractive, the house apps are (mostly) solid, and the many new Application Programming Interfaces (API) promise novel applications. Contrary to some opinions, there are fewer warts than anyone could have expected.

Surprise #2, the UI: I had read the scathing critiques of the spartan excesses, and, indeed, I feel the drive for simplicity occasionally goes too far. The buttons on the built-in timer are too thin, too subdued. When I meditate in the dark I can’t distinguish Start from Cancel without my glasses. But I’m generally happy with the simpler look. Windows and views get out of the way quickly and gracefully, text is neatly rendered, the removal of skeuomorphic artifacts is a relief.

The next surprise is the fingerprint sensor a.k.a. Touch ID. Having seen how attempts to incorporate fingerprint recognition into smartphones and laptops have gone nowhere, I had my doubts. Moreover, Apple had acquired AuthenTec, the company that created the fingerprint sensor, a mere 15 months ago. Who could believe that Apple would be able to produce a fingerprint-protected iPhone so quickly?

But it works. It’s not perfect, I sometimes have to try again, or use another finger (I registered three on my right hand and two on my left), but it’s clear that Apple has managed to push Touch ID into the category of “consumer-grade technology”: It works often enough and delivers enough benefit to offset the (small) change in behavior.

A personal favorite surprise is Motion Sensing.

When Apple’s Marketing Supremo Phil Schiller described the M7 motion processor, I didn’t think much of it, I was serving the last days of my two-month sentence wearing the JawBone UP bracelet mentioned in a previous Monday Note. (A friend suggested I affix it to his dog’s collar to see what the data would look like.)

Furthermore, the whole “lifestyle monitoring” business didn’t seem like virgin territory. The Google/Motorola Moto X smartphone introduced last August uses a co-processor that, among other things, monitors your activities, stays awake even when the main processor is asleep, and adjusts the phone accordingly. A similar co-processing arrangement is present in Moto X’s predecessors, the Droid Maxx, Ultra and Mini.

But then I saw a Twitter exchange about Motion Sensing apps about a week after I had activated my iPhone 5S. One thumb touch later, the free Pedometer++ app asked for my permission to use motion data (granted) and immediately told me how many steps I’d taken over the past seven days.

I went to the chauffeured iPhone on my wife’s desk and installed the app. I did the same on friends’ devices. The conclusion was obvious: The M7 processor continuously generates and stores motion data independent of any application. A bit of googling shows that there are quite a few applications that use the motion data that’s obligingly collected by the M7 processor; I downloaded a number of these apps and the step counts are consistent.

(Best in class is the ambitious MotionX 24/7. Philippe Kahn’s company FullPower Technologies licenses MotionX hardware and software to many motion-sensing providers, including Jawbone and, perhaps, Apple. Wearable technologies aren’t just for our wrists…we carry them in our pockets.)

My wife asked if her iPhone would count steps from within her handbag. Ever the obliging husband, I immediately attended to this legitimate query, grabbed her handbag, and stepped out of the house for an experimental stroll. A conservatively dressed couple walked by, gave me a strange look, and didn’t respond to my evening greeting, but, indeed, the steps were counted.

A question arises: Does Apple silently log my movements? No, my iPhone records my locomotion, but the data stays within the device — unless, of course, I let a specific application export them. One must be aware of the permissions.

Other 5S improvements are welcome but not terribly surprising. The camera has been smartly enhanced in several dimensions; search finally works in Mail; and, to please Sen. McCain, apps update themselves automatically.

All of this comes with factory-fresh bugs, of course, a whiff of the sausage-making apparatus. iPhoto crashed on launch the first three or four times I tried it, but has worked without complaint since then.  A black Apple logo on a white background appeared and then quickly disappeared — too brief to be a full reboot, too sparse to be part of an app.

I’ve had to reboot the 5S to recover a dropped cellular connection, and have experienced hard-to-repeat, sporadic WiFi trouble that seems to spontaneously cure itself.(“How did you fix it?” asks my wife when her tech chauffeur gets the sullen device to work again. “I don’t know, I poke the patient everywhere until it responds.”)

From my admittedly geeky perspective, I’m not repelled by these glitches, they didn’t lose my data or prevent me from finishing a task. They’re annoying, but they’re to be expected given the major hardware and software changes. And I expect that the marketplace (as opposed to the kommentariat) will shrug them off and await the bug fixes that will take care of business.

So, yes, overall, the “discontinuous” 5S works.

[I'm also using a pre-release of Mavericks, the upcoming 10.9 version of OS X, on two Macs. There, I wonder if I'm not seeing the opposite of the iPhone 5S: less risk, more bugs. I hope things straighten out for the public release. I'll report if and when warranted.] [I can't resist: The Washington Post's Wonkblog calls the iPhone's third color... Dignified Gold. I wonder: Is it a compliment to Sir Jony's unerring taste? Or a clever, indirect ethnic slur?]

JLG@mondaynote.com

The Quartz Way (2)

 

Last week, we looked at Atlantic Media’s business site Quartz (qz.com) from an editorial and product standpoint. Today, we focus on its business model based on an emerging form of advertising. 

The Quartz business model is simple: it’s free and therefore entirely ad supported. Why? Doesn’t qz.com target a business readership that shouldn’t mind spending nine dollars a month? “It was part of the original equation: Mobile first, and free, embracing the open web”, explains publisher Jay Lauf, whom I met in Paris a couple of weeks ago. Jay is also an Atlantic Media senior vice-president and the group publisher (he once was Wired’s publisher).

jay-lauf-head-shot

Jay Lauf, Publisher (Photo: Quartz)

According to him, launching Quartz was the latest iteration of a much grander plan. Four years ago, Atlantic Media held a meeting aimed at defining their strategy: “What we will do, but also what we will not do”, says Jay Lauf. The group came up with three key priorities: #1 being a growth company (as opposed to passively manage the shift from print to digital). That idea was greatly helped by Atlantic’s ownership structure controlled by David Bradley. #2 “Digitally lead for everything”, which was not obvious for a ancient publication — Atlantic Monthly was created in 1857. #3 Atlantic must focus on “decision makers and influential people”.

Today, the goals set four years ago translate into a cluster of media brands reaching every month a highly solvent readership of 30 million people:

  • The Atlantic, the digital version of the eponymous magazine.
  • The Atlantic Wire aimed at a younger generation mostly relying on social media.
  • The Atlantic Cities, that focuses of urban centers and urban planning.
  • The National Journal that itself includes several publications, mostly about politics and society.
  • Government Executive Media, which operates a number niche publications covering the federal government (including its use of technology)
  • Atlantic Media Strategies, an independent division offering a full catalogue of advertising and marketing solutions. These range from analytics, social media campaigns and content creation, such as this one with General Electric in which a dedicated site features America’s economic futures – according to GE.

quartz_graph

All this brings us to Quartz’s business model. It relies entirely on native advertising also known as branded or sponsored content (see a previous Monday Note What’s Fuss About Native Ads?). Quartz’s implementation is straightforward: a small number of advertisers, served with high yield campaigns.

Below is yesterday’s screenshot of Quartz’s endless scroll, featuring regular displays of branded content (in this case Boeing):

qz_scroll_ads

Most of the time, the content is made or adapted especially for Quartz with a variable involvement of its advertising division (the branded content operations are kept segregated from the editorial department.) Quartz staff involvement goes from collaborating on the ad content to setting up HTML5 integration. On purpose, Quartz maintains a staff of copywriters and graphic designers assigned to assist brands in their communication. While ad spaces are clearly identified, their content is never completely dissociated from surrounding articles. Quite often, it reflects the newsroom’s “Obsessions“. Such precautions, plus the Quartz layout, warrant good click-rates and high prices. Quartz people are discreet about the KPIs, but sources in the ad community said that CPMs for its native ads content could be roughly ten times higher than traditional display ads.

Atlantic Media’s weight and bargaining power helped jumpstart the ad pump. A year ago, the site started with four brands: Chevron, Boeing, Credit Suisse and Cadillac. Today, Quartz has more twenty advertisers from the same league. Unlike other multi-page websites, its one-scroll structure not only proposes a single format, but also re-creates scarcity. (Plus the fact that Quartz does not have any mobile apps greatly simplifies the commercial process.) Still, it can be a double-edged sword: scarcity could indeed translate into high prices, but it also limits the number of available slots, therefore capping the revenue stream. Quartz’s publisher and head of sales made a tough choice — high rates vs. high volume — and so far it seems to work fine as the site is close to break-even ahead of schedule.

How far it can go remains to be seen. Quartz is a relatively small operation (50 people altogether, including 25 journalists producing 35-40 stories a day and a nice location in NYC’s Soho district.) My guess is it shouldn’t burn more than $10m a year. By extrapolating from the site’s audience, profitability sounds in reach of Quartz’s current “value model”. But the asymptote — factoring ads rates, number of slots, advertisers’ “dimension”, and traffic — could also be near and therefore constrain Quartz’s ability to scale up. That’s why the publication is now entering the crowded sector of conferences with its “Quartz Live”, featuring its customary exclusive attendance and editorial-rich ways. Will Quartz escape the temptation to launch paid-for products? Its journalistic content leaves open many opportunities in that field. For example, a mixture of semantic-assembled, high-end briefings, tailored to carefully profiled segments of its audience could generate a nice revenue stream, or ebooks and long-form features.
To be continued next year…

frederic.filloux@mondaynote.com

 

Microsoft Mission Impossible

 

You’re Microsoft’s new CEO. How do you like staring at the abyss between two mutually exclusive ways of making money? The old business model, Windows and Office licensing, is going away. The Devices and Services future puts you in direct competition against the likes of Google and Apple as well as former licensing vassals such as HP and Dell. Can you take the company to the other side, or will you fall to the bottom of the business model transition canyon?

Life used to be simple and immensely profitable at Microsoft. As its name implies, the company started as a supplier of microcomputer software. Simplifying a bit, it all started with the BASIC interpreter, which found its way into many early personal computers including the Apple ][. After that came DOS, the operating system for IBM’s Personal Computer; and Multiplan, an early foray into desktop productivity. DOS begat Windows, and Multiplan was succeeded in steps by the full Office suite. Through a series of astute business and lawyerly maneuvers, the Windows + Office combo eventually spread to virtually all PC clones.

This made Microsoft the most successful software company the world had ever seen, and its founding CEO, Bill Gates, became the richest man on the planet. In 2000, the company’s market capitalization reached $540B (approximately $800B in today’s dollars). As this Wikinvest graph shows, Microsoft dwarfed all other tech companies:

msft_graph1

(At the time, the NASDAQ index of mostly tech stocks stood a little above 4,000, it closed at 3,792 this past Friday.)

Back then, Windows + Office licensing was the only money pump that really mattered. Everything else — all other software products and even sales of enterprise servers — either depended on Microsoft’s huge PC installed base, or didn’t move the needle. Hardware and entertainment lines of business were largely immaterial; online activities weren’t yet the money sink we’ve seen in recent years.

According to the company’s 2000 Annual Report, the combination of the “Windows Platforms” and “Productivity Applications” accounted for $19.3B in revenue ($9.3B and $10B, respectively). That’s 84% of the company’s $23B total revenue and, even more important, 98% of Microsoft’s Operating Income!

Moving to Q1 2013, the market capitalization picture has drastically changed:

msft_graph2

Google is in many ways becoming Microsoft 2.0, Oracle has grown nicely, and Apple is now on top.

What happened?

Mobile personal computing happened. Smartphones and tablets are displacing conventional PCs, desktops, and laptops.

To put it even more succinctly: the iPhone did it.

When Steve Jobs stepped onto the stage at MacWorld in January, 2007, there were plenty of smartphones on the market. Windows Mobile, Palm Treo, Nokia, Blackberry… But Apple’s iPhone was different. It really was a personal computer with a modern operating system. While the iPhone didn’t initially support third party apps, a Software Development Kit (SDK) and App Store were soon introduced.

Android quickly followed suit, the Smartphone 2.0 race was on, and the incumbents were left to suffer grievous losses.

Riding on the iPhone’s success and infrastructure, the iPad was introduced, with Android-powered tablets not far behind. These new, mobile personal computers caused customers to Think Different, to re-examine their allegiance to the one-and-only PC.

As these products flooded the market, Microsoft went through its own version of the Stages of Grief, from denial to ultimate acceptance.

First: It’s Nothing. See Steve Ballmer memorably scoffing at the iPhone in 2007. Recall ODM Director Eddie Wu’s 2008 predication that Windows Mobile would enjoy 40% market share by 2012.

Second: There is no Post-PC…”Plus is the new ‘Post’“. Smartphones and tablets are mere companion devices that will complement our evergreen PCs. The party line was eloquently asserted two years ago by Frank Shaw, Microsoft’s VP of Communications:

“So while it’s fun for the digerati to pronounce things dead, and declare we’re post-PC, we think it’s far more accurate to say that the 30-year-old PC isn’t even middle aged yet, and about to take up snowboarding.”

Next comes Bargaining: Microsoft makes a tablet, but with all the attributes of a PC. Actually, they make two Surface devices, one using an ARM processor, the other a conventional Intel CPU.

Today comes Acceptance: We’re indeed in a Post-PC era. PCs aren’t going to disappear any time soon, but the 30-year epoch of year after year double digit growth is over. We’re now a Devices and Services company!

It’s a crisp motto with a built-in logic: Devices create demand for Microsoft services that, in turn, will fuel the market’s appetite for devices. It’s a great circular synergy.

But behind the slick corpospeak lurks a problem that might seriously maim the company: Microsoft wants to continue to license software to hardware makers while it builds a Devices business that competes with these same licensees. They want it both ways.

Real business model transitions are dangerous. By real transition I don’t mean adding a new line of peripherals or accessories, I mean moving to a new way of making money that negatively impacts the old one. The old money flow might dry up before the new one is able to replace it, causing an earnings trough.

For publicly traded companies, this drought is unacceptable. Rather than attempt the transition and face the ire of Wall Street traders, some companies slowly sink into irrelevance. Others take themselves private to allow the blood-letting to take place out of public view. When the curtain lifts some months later, a smaller, healthier outfit is relaunched on the stock market. Dell is a good example of this: Michael Dell gathered investors, himself included, to buy the company back and adapt its business model to a Post-PC world behind closed doors.

Microsoft can’t abandon its current model entirely, it can’t stop selling software licenses to hardware makers. But the company realizes that it also has to get serious about making its own hardware if it wants to stay in the tablets and smartphone race.

The key reason for Microsoft’s dilemma is Android. Android is inexpensive enough (if not exactly free) that it could kill Redmond’s mobile licensing business. (Microsoft might get a little bit of money from makers of Android-powered hardware thanks to its patent portfolio, but that doesn’t change the game.) This is why Microsoft offered “platform support payments” to Nokia, which essentially made Windows Phone free. And, now we have the belated, under duress acquisition of Nokia’s smartphone business, complete with 32,000 angry Finns.

(Microsoft is rumored to have approached HTC with an offer to dual-boot Windows Phone on HTC’s Android handsets. It’s not very believable rumor — two competing operating systems on the same smartphone? But it has a satisfying irony: In an earlier incarnation I saw Microsoft play legal hardball against anyone who tried to sell PCs with both Windows and another OS installed at the factory…)

Another example of trying to keep one foot on each side of the abyss is the Surface tablet. Microsoft tried to create a hybrid “best-of-both-worlds” PC/tablet, complete with two different UIs. I bought one and found what many experienced: It doesn’t have the simplicity and agility of a genuine tablet, nor does it offer the classic workflow found on Windows 7. We’ll have to see how helpful the upcoming Windows 8.1 is in that regard.

So… What about our new CEO?

  • S/he finds a company that’s in the middle of a complicated structural and cultural reorganization.
  • The legacy PC business is slowing down, cannibalized by mobile personal computers.
  • Old OEM partners aren’t pleased with the company’s new direction(1). They have to be kept inside the tent while the Surface tablets experiment plays out. Success will let Microsoft discard Legacy PC makers. Failure will lead Redmond to warmly re-embrace its old vassals.
  • The Windows Phone licensing business lost its clients as a result of the Nokia acquisition.
  • Integrating Nokia will be difficult, if not a slow-moving disaster.
  • The Windows Phone OS needs work, including a tablet version that has to compete with straight tablets from Android licensees and from Apple.
  • Employees have to be kept on board.
  • So do shareholders.

How would you like the job?

JLG@mondaynote.com

(1) HP’s Meg Whitman now sees Microsoft as a competitor — and introduces a Google-powered Chromebook. What we think this will do for HP’s Personal Systems Group revenue and profit is best left unsaid.

The Quartz Way (1)

 

Quartz, a web-only business publication, just turned one year old. On both editorial and business dimensions, Quartz features all components of a modern media venture. Is this a formula for the long run? To answer the question, in the first of two articles, we take a closer look at the editorial product.

Quartz (qz.com) is the kind of media most business writers would love to be part of. It’s smart, fun, witty, basic and sophisticated at the same time. Like Jony Ive design at Apple, its apparent simplicity is the combined product of deep thought and of a series of bold moves by its owner, the Atlantic Media group, publisher of the eponymous monthly. From all standpoints, content, organization or even business model, Quartz came up with innovations (see the Monday Note I wrote for the launch in September 2012).

Ten days ago, my phone interview with editor-in-chief Kevin Delaney, started with a discussion of his newsroom of 25 writers and editors. On Tuesday September 24 at 9pm Paris Time, Quartz had this piece at the top of its infinite scroll:

Quartz illustr

Editorially, this epitomizes (in a way) what Quartz is about: topics addressed through well-defined angles (in this case, the idea that if Amazon hit large book retailers hard, it didn’t have much impact on small independent bookstores.) The story was short but right to the point — taking the opposite side of the now worn tale of Amazon devastating the book-selling landscape. To illustrate his piece, instead of using yet another photograph of Jeff Bezos haranguing a crowd, the writer picked this weird image of a girl showing off at a bookstore event.

Yes, at Quartz, journalists are the ones who get to select the pictures that go with their article. Most of the time, this yields better audience numbers.

Actually, explains Kevin Delaney, the staff is supposed to produce a complete package, ready to be processed by editors, with links, headline, photos (lifted from Reuters, Getty, AP or sometime the Creative Commons trove) properly cropped and adjusted. Everything is done within a WordPress interface, chosen for its versatility, but also because most journalists already know to use it. As for headlines (the task usually handled by editors), the Quartz newsroom relies on team chats to quickly and collaboratively work on pieces.

kevin_delaney
Kevin Delaney (photo: Quartz)

The same goes for graphics like in this snapshot of Tweeter’s IPO prospectus, a part of the magazine’s comprehensive coverage of the upcoming event. To further encourage the use of graphics and charts in stories, Quartz engineering director Michael Donohoe (a NYT alumni) ChartBuilder, a bespoke, easy to use tool.  [Correction : as pointed out by Quartz'global news editor Gideon Lichfield, ChartBuilder has been developed by David Yanofsky, one of Quartz journalist/coder/data hackers...] As an internet-native company, Quartz threw its software in the open-source world (see how it looks in Github) — an unthinkable move in the close-to-the-vest legacy media world…

While listening to Delaney describing his organization, I couldn’t help but mentally itemize what separates its super-agile setup from traditional media. A couple of months ago, I met the digital management of a major UK newspaper. There, execs kept whining about the slow pace evolution of the news staff and the struggle to get writers to add links and basic metadata (don’t even think about pix or graphics) to their work product. By and large, most legacy media I know of, in France, UK and the United States, are years behind swift boats such as Quartz, Politico or the older but still sharp Slate.

I used to think the breadth and depth of older large newsrooms could guarantee their survival in a digital world plagued by mediocrity and loose ethics. But considering great pure players like Quartz — which is just the latest offspring of a larger league — I now come to think we are witnessing the emergence of a new breed of smaller, digital-only outlets that are closing the gap, quality-wise, with legacy media. In the context of an increasingly segmented and short-on-time readership, I can only wonder how long the legacy newsroom’s strategic advantage of size and scope will last.

Quartz editorial staff has nothing to do with the low-paid, poultry farm newsrooms of many digital outlets. Most of the 25 journalists and editors (out a staff of 50) were drawn from well established brands such as Bloomberg, The Economist, Reuters, New York Magazine or The Wall Street Journal (Kevin Delaney, 41, is himself a former WSJ.com managing editor). “Our staff is slightly younger than the average newsroom, and it is steeped in the notion of entrepreneurial journalism”, says the Quartz editor-in-chief. “With Quartz, we had many opportunity to rethink the assumptions of traditional media”.

The original idea was to devise how The Economist would look like if it had been born in 2012 rather than in 1843, explains Delaney. It would be digital native, mostly for mobile reading, and focus on contemporary economic engines such as digital, globalization, e-commerce, the future of energy, debt, China, etc. Instead of abiding by the usual classification of business news that looks like a nomenclature from the Bureau of Labor Statistics  (Industry, Services, Markets, Trade, etc.), Quartz opted for a sexier taxonomy; its coverage is based on an evolving list of “Obsessions“, a much more cognitive-friendly way to consider the news cycle than the usual “beat” (read this on the matter). As an avid magazine reader, Delaney said he derived the idea from publications like New York Magazine.

The challenge is connecting this categorization to audience expectations… Hence the importance of the social reverberation of Quartz treatments. They translate into stunning numbers: according to Kevin Delaney, 85% to 90% of its traffic is “earned” and social referrals account 50% of the site’s traffic. In other words, the traffic coming from people typing http://qz.com in their browser accounts for only 10-15% of the volume. To put things in perspective, on a legacy media site, social traffic weighs about 5% — in some rare cases 10% — and around 40% to 50% of the pages views are generated via the home page.

Since the site is nothing else but an infinite rolling page of stories, there is no classic jumping board home page. Another obsession of Quartz founders: “We wanted to minimize friction and encourage readers to share our stories. We designed the site first for tablets, then for mobile and as a classic website, in that order,” insists Kevin Delaney. No apps in sight, but a site built in HTML5 and responsive design that adjusts to screen size. At first, the no-app choice sounded weird for a media aimed at a mobile audience, but considering the rising costs and complexity of building, managing, and maintaining native apps on multiple platforms, a single HTML design was probably the best approach.

I’m not through talking about Quartz. Next week, we’ll examine the venture’s business aspects, its bold ways of dealing with advertising.

frederic.filloux@mondaynote.com

Apple Under Siege

 

Two years after Steve Jobs left us, Apple now wears Tim Cook’s imprint and, for all the doubt and perpetual doomsaying, seems to wear it well. One even comes to wonder if the Cassandras aren’t in fact doing Apple a vital favor.

Last Friday, Tim Cook issued a somber remembrance to Apple employees:

Team-
Tomorrow marks the second anniversary of Steve’s death. I hope everyone will reflect on what he meant to all of us and to the world. Steve was an amazing human being and left the world a better place. I think of him often and find enormous strength in memories of his friendship, vision and leadership. He left behind a company that only he could have built and his spirit will forever be the foundation of Apple. We will continue to honor his memory by dedicating ourselves to the work he loved so much. There is no higher tribute to his memory. I know that he would be proud of all of you.
Best,
Tim

I am one of the many who are in Steve’s debt and I miss him greatly. I consider him the greatest creator and editor of products this industry has ever known, and am awed by how he managed the most successful transformation of a company — and of himself — we’ve ever seen. I watched his career from its very beginning, I was fortunate to have worked with him, and I thoroughly enjoyed agreeing and disagreeing with him.

I tried to convey this in an October 9th, 2011 Monday Note titled Too Soon. I just re-read it and hope you’ll take the time to do the same. You’ll read words of dissent by Richard Stallman and Hamilton Nolan, but you’ll mostly find praise by Barack Obama, John Stewart, Nicholson Baker in the New Yorker, and this elegant image by Jonathan Mak:

steve_silouhette

Two years later, we can look at Apple under Tim Cook’s leadership. These haven’t been an easy twenty-four months: Company shares have gone on a wild ride, execs have been shown the door, there was the Maps embarrassment and apology, and there has been a product drought for most of the last fiscal year (ending in September).

All of this has provided fodder for the Fox Newsstands of the Web, for netwalkers seeking pageviews. The main theme is simple and prurient, hence its power: Without Steve, Apple is on the decline. The variations range from the lack of innovation — Where’s the Apple TV?, the iWatch?, the next Big Thing? — to The Decline of The Brand, Android Is Winning, and Everything Will Be Commoditized.

Scan Philip Ellmer-DeWitt’s Apple 2.0 or John Gruber’s Daring Fireball and treat yourself to intelligent repudiations of this incessant “claim chowder“, discredited pontifications. I’ll extract a few morsels from my own Evernote stash:

Apple’s press conference showed a brand unraveling, or so said VentureBeat in March, 2012. Eighteen months later, Apple passed Coca-Cola to become the world’s most valuable brand.

How Tim Cook can save himself (and Apple), subtitled, for good measure: What the confused Apple CEO can do to avoid getting canned and having to slink away with nothing but his $378 million compensation package as comfort. Penned by a communications consultant who “teaches public relations at NYU”, the article features an unexpected gem: Cook should buy a blazer. You know, “to break the deleterious chokehold of the Steve Jobs’ [sic] legacy”.

Apple: The Beginning of a Long Decline? (note the hedging question mark.) This LinkedIn piece, which questions the value of the fingerprint sensor, ends with a lament:

There was no sign of a watch. So those of us in Silicon Valley are left watching, wondering, and feeling a little empty inside… Jobs is gone. It looks like Apple’s magic is slowly seeping away now too.

Shortly thereafter, Samsung’s iWatch killer came out…and got panned by most reviewers.

Last: Apple’s Board of Directors are concerned about Apple’s pace of innovation, says Fox Business News Charlie Gasparino, who claims to have “reliable sources”.

Considering how secretive the company is, can anyone imagine a member of Apple’s Board blabbing to a Fox Business News irrespondent?

Despite the braying of the visionary sheep, Tim Cook never lost his preternatural calm, he never took the kommentariat’s bait. Nor have his customers: They keep buying, enjoying, and recommending Apple’s products. And they do so in such numbers — 9 million new iPhones sold in the launch weekend — that Apple had to file a Form 8-K with the Security and Exchanges Commission (SEC) to “warn” shareholders that revenue and profits would exceed the guidance they had provided just two months ago when management reviewed the results of the previous quarter.

In Daniel Eran Dilger’s words, Data bites dogma: Apple’s iOS ate up Android, Blackberry U.S. market share losses this summer:

Apple’s increase accounted for 1.5 of the 1.6 percentage points that Android and Blackberry collectively lost. This occurred a full month before the launch of Apple’s iPhone 5s and 5c and the deployment of iOS 7.

Regarding the “Apple no longer innovates” myth, Jay Yarow tells us why Apple Can’t Just ‘Innovate’ A New Product Every Other Year. His explanation draws from a substantial New York Times Magazine article in which Fred Vogelstein describes the convergence of company-wide risk-taking and engineering feats that resulted in the iPhone:

It’s hard to overstate the gamble Jobs took when he decided to unveil the iPhone back in January 2007. Not only was he introducing a new kind of phone — something Apple had never made before — he was doing so with a prototype that barely worked. Even though the iPhone wouldn’t go on sale for another six months, he wanted the world to want one right then. In truth, the list of things that still needed to be done was enormous. 

It’s a great read. But even Vogelstein can’t resist the temptation of inserting a word of caution: “And yet Apple today is under siege…” 

This is something I heard 33 years ago when I signed up to start Apple France in 1980, and I’ve heard it constantly since then. I’ll again quote Horace Dediu, who best summarizes the concern:

“[There's a] perception that Apple is not going to survive as a going concern. At this point of time, as at all other points of time in the past, no activity by Apple has been seen as sufficient for its survival. Apple has always been priced as a company that is in a perpetual state of free-fall. It’s a consequence of being dependent on breakthrough products for its survival. No matter how many breakthroughs it makes, the assumption is (and has always been) that there will never be another. When Apple was the Apple II company, its end was imminent because the Apple II had an easily foreseen demise. When Apple was a Mac company its end was imminent because the Mac was predictably going to decline. Repeat for iPod, iPhone and iPad. It’s a wonder that the company is worth anything at all.”

I recently experienced a small epiphany: I think the never-ending worry about Apple’s future is a good thing for the company. Look at what happened to those who were on top and became comfortable with their place under the sun: Palm, Blackberry, Nokia…

In ancient Rome, victorious generals marched in triumph to the Capitol. Lest the occasion go to the army commander’s head, a slave would march behind the victor, murmuring in his ear, memento mori, “remember you’re mortal”.

With that in mind, one can almost appreciate the doomsayers — well, some of them. They might very well save Apple from becoming inebriated with their prestige and, instead, force the company to remember, two years later and counting, how they won it.

JLG@mondaynote.com

 

News: Personalized or Serendipitous?

 

Every digital news designer faces the question: should the traditional serendipity of contents be preserved or should we go full steam for personalization? It turns out Google is already working on ways to combine both — on its usual grand scale.

Serendipity always seemed inseparable from journalism. For any media product, taking readers away from their main center of interest is part of the fabric. I go on a website for a morning update and soon find myself captured by crafty editing that will drive me to read up on a subject that was, until now, alien to me. That’s the beauty of a great news package.

Or is it still the case? Isn’t it a mostly generational inclination? Does a Gen Y individual really care about being drawn to a science story when getting online to see sports results?

Several elements concur to the erosion of serendipity and, more generally, curiosity.

First, behavioral among digital readers are evolving. These extend far beyond generations: Regardless of her age, today’s reader is short on time. At every moment of the day (except, maybe, in the loo or in bed at night), her reading time is slashed by multiple stimuli: social teases, incoming mail, alerts or simply succumbing to distractions that lie just one click (or one app) away. That’s one of the tragedies of traditional news outlets: When it comes to retaining the commuter’s attention, for instance, Slate or The Washington Post are in direct competition with addictive products such as Facebook or Angry Birds…

Second, the old “trusted news brand” notion is going away. Young people can’t be bothered to leaf though several titles to get their feed of a variety of topics; that’s why aggregators thrive. The more innocuous ones, such as Mediagazer, mostly send traffic back to the original news provider; but legions of others (Business Insider, The Huffington Post…) melt news brands into their own, repackage contents with eye-grabbing headlines and boost the whole package with aggressive marketing.

Below, see how BuzzFeed summed up the New York Times story on the NSA monitoring social traffic: 80 words in BF that capture the substance of a 2000 words article by two experienced journalists who collected exclusive documents and reported from Washington, New York and Berlin. buzzfeed nyt

(Note that BuzzFeed is serving a more appealing headline and a livelier photograph of general Keith Alexander, head of NSA.) How many BuzzFeed glancers did click on the link sending back to the original story? I’d bet no more that 5%. (Anyway, judging by the 500 comments that followed it, the NYT did well with their article.) This trends also explains why the Times is working on new digital products that take into account both time scarcity and the Gen Y way with news.

This leads us the third reason to wonder about personalization: the economics of digital news. In the devastated landscape of online advertising, it became more critical than ever to structure news content with the goal of retaining readers within a site. That’s why proper tagging, use of metadata, semantic recommendation engines and topic pages entries are so important. More pages per visit means more ads exposure, then more revenue. Again, pure players excel at providing incentives to read more stuff within their own environment, thus generating more page views.

Coming back to the customization issue, should we turn the dial fully to the end? Or should we preserve at least some of the fortuitous discovery that was always part of the old media’s charm?

Let’s first get rid of the idea of the reader presetting his/her own preferences. No one does it. At least for mainstream products. Therefore, news customization must rely on technology, not human input.

Last week, I spoke with Richard Gingras, the senior director of news and social products at Google (in other words, he oversees Google News and Google + from an editorial an business perspective). Richard is a veteran of the news business. Among many things, he headed Salon.com, one of the first and best online publication ever.

gingras

According to him, “Today’s news personalization is very unsophisticated. We look at your news reading patterns, we determine that you looked at five stories about the Arab Spring and we deduct you might like articles about Egypt. This is not how it should work. In fact, you might be interested in many other things such as the fall from grace of dictators, generation-driven revolutions, etc. These requires understanding concepts”. And that’s a matter Google is working on, he says. Not only for news, but for products such as Google Now which is the main application of Google’s efforts on predictive search. (Read for example With Personal Data, Predictive Apps Stay a Step Ahead in the MIT Technology Review, or Apps That Know What You Want, Before You Do in the NYTimes).

The idea is to connect all of Google’s knowledge, from the individual level to his/her social group context, and beyond. This incredibly granular analysis of personal preferences and inclinations, set in the framework of the large macro-scale of the digital world, is at the core of the search giant’s strategy as summed-up below:

google infos2

On the top of this architecture, Google is developing techniques aimed at capturing the precious “signals” needed to serve more relevant contents, explains Richard Gingras. Not only in the direct vicinity of a topic, but based on center of interests drawn from concepts associated to individuals’ online patterns analyzed in a wider context. In doing so, Gingras underlines the ability of Google News to develop a kind of educated serendipity (term is mine) as opposed to narrowing the user’s mind by serving her the unrefined output of a personalization engine. In other words, based on your consumption of news, your search patterns, and a deep analysis (semantic, tonality, implied emotions) of your mail and your posts — matched against hundreds of millions of others — Google will be able to suggest a link to the profile of an artist in Harper’s when you dropped in Google News to check on Syria. That’s not customized news in a restricted sense, but that not straightforward serendipity either. That’s Google’s way of anticipating your intellectual and emotional wishes. Fascinating and scary.

frederic.filloux@mondaynote.com

 

Microsoft Directors Have Much Explaining To Do

 

Blaming Steve Ballmer for Microsoft’s string of mistakes won’t do. Why did the Board of Directors keep him on the job for thirteen years, only to let him “retire” in the midst of several dangerous transitions — without naming a successor? What does this say about the Board’s qualifications to pick Microsoft’s next CEO?

For more than a decade, a team of physicians has been ministering to a patient who was once vital and robust, but now no longer thrives. Recurring diagnostic errors, stubborn inattention to symptoms, improper prescriptions haven’t yet killed the object of their care but, lately, the patient’s declining health has become so obvious that the doctors, now embarrassed and desperate, have scheduled a heart transplant.

Now comes the test: Would you entrust the patient’s future to such a confederacy of dunces?

With this metaphor in mind, let’s contemplate the record of Microsoft Directors since Steve Ballmer assumed the mantle 13 years ago, and ask if they’re qualified to appoint a successor.

Consider the Directors’ obdurate passivity while they watched the company miss opportunities, take one wrong turn after another, and fail to execute crucial transitions. Search was conceded to Google; digital music (players and distribution) is dominated by Apple; social networking belongs to Facebook, Twitter, and LinkedIn; the smartphone market is handed over to Google’s Android and Apple’s iPhone; tablets from the same duo are now bleeding the Windows + Office Golden Goose; Windows Vista and now Windows 8; Surface tablets… Even the once mighty Internet Explorer browser has been displaced by Google’s Chrome running on all desktop and mobile platforms.

Blaming (and forgiving) the CEO for one or two mistakes is reasonable. But if these missteps were entirely Ballmer’s fault, why did the Directors keep him at the helm? This raises the question: How much of the company’s value did the Directors themselves let Google, Apple, and others run away with? Is Microsoft’s Board a danger to the company?

The latter question comes in sharper relief when looking at the timing and manner of Ballmer’s exit.

ballmer

On July 11th, Ballmer announces a major company reorganization. More than just the usual medley of beheadings and redistribution of spoils, Microsoft was to restructure itself away from its old divisional arrangement and move towards the type of functional organization used by companies such as Apple. In addition, the new company motto became Devices and Services, evoking a virtuous circle: Best-of-class branded devices would sell more great Microsoft services, while the latter would give a boost to Microsoft devices.

A week later, on July 18th, Microsoft releases pedestrian quarterly numbers, the lowlight of which is a $900M write-off attributed to very poor sales of Surface PC/tablets

On August 23rd, Ballmer announces his sooner-than-planned retirement — sometime in the following 12 months. No word of a successor.

And, to top everything off, on September 3rd, with Ballmer on his way out, the Board approves the emergency acquisition of Nokia’s handset business, complete with 32,000 angry Finns. (We’ll discuss their misdirected anger in a future Monday Note.)

A drastic company reorganization makes sense. Instead of one more turn of the optimizing crank, Microsoft acknowledges that it needs to Think Different.

Writing off unsold inventory is the sensible recognition of a problem; it removes an impediment by facilitating a fire sale.

There was a clear and present danger for Nokia’s handset business to fail, or to become the walking dead. Microsoft bought it to avoid the possible collapse of the Windows Phone platform. In theory (i.e., ignoring cultural realities), the acquisition gives Microsoft more control over its smartphone future.

All rational moves.

But letting Ballmer go right in the middle of two huge and complicated transitions — and without immediately appointing a successor? On its face, the timing and manner of Ballmer’s exit defies common business sense. It also raises questions about the Board’s failure to adequately plan for Ballmer’s succession. Supposedly, Succession Planning is a key component of good Corporate Governance. In plain language, a Board of Directors is obligated to identify and groom successors for key positions, starting with the CEO.

Which raises a few more questions.

Microsoft undertakes two risky, company-redefining moves: a profound structural and strategic reorganization, followed by its most foreign, most people-intensive acquisition ever. What was the overwhelming need to announce Ballmer’s departure – without naming a successor – right in the middle of such instability?

Considering its résumé, what makes Microsoft’s Board qualified to pick a new CEO?

And what are the parameters of the search for Mr. Right? Assuming Microsoft hires an industry heavyweight, will this individual be given the space and power to be his own woman or man, that is to reshuffle the Board? And what about the freedom from deferring to the company’s Founder?

And what must the mood be like at Microsoft? “When you receive an order, do absolutely nothing and wait for the countermanding directive.” This ancient Army saying must now be popular in Redmond. It’s not that people working there don’t care, but they just don’t know what the next CEO will want, and they certainly don’t know when. How can one not expect damaging paralysis and politicking when the CEO is let go without a successor?

All interesting questions.

JLG@mondaynote.com

————————-

[I'll leave alone rumors such as Ford's CEO Alan Mullally replacing Ballmer. Notwithstanding the obligatory congratulations, there would be much giggling in Mountain View and Cupertino. Competent management is a necessary but not sufficient condition...see Ballmer.]

Memo #3 to Jeff — Data & User Profiling for The Washington Post

 

For customer-related technologies, the financial and intellectual backing of Jeff Bezos, and his Amazon experience can give The Post a huge competitive advantage. Here is what should be at the top of the to-do list. 

Every digital manager must plan to tap into Amazon’s fantastic engineering firepower. (Even though Bezos bought the newspaper out of his own pocket, the first thing he’ll do — if he hasn’t already — will be drafting some of his techies as “advisors” to The Post.) The key point being: the influx of engineering brainpower must not be limited to the digital side of the house, or to the newspaper’s IT infrastructure. It should impact all activities: editorial, marketing, subscriptions and paid-for products. Let’s dive into details.

Turbo-boosting the editorial. Let’s start with the basics: What characterizes media outlets playing in The Washington Post’s league? It is their ability to line up top journalistic resources to cover stories that matter, in-depth, with multiple angles and treatment modes (text, features stories, photographs, graphics, multimedia storytelling, live blogging, opinions, etc.), while deploying the best expertise on topics covered. These are the five items that make the difference between the bulk of pure players and true legacy media.

In many ways, the above is anti-economic, it is loaded with inherent inefficiencies — dry holes, dead ends, waste of time on promising leads –  that drive nuts “quant zealots” obsessed with KPI’s and productivity measurements. At this point, the difference between great newsroom managers (i.e. editors) and average ones lies in their ability to make some room for “managed inefficiencies”. An editor’s key, delicate duty is weighing the purpose of resource-intensive tasks such as flummoxing the competition, pursuing a worthy story, or launching a months-long journalistic project aimed at a Pulitzer prize. Unfortunately, weak leadership, balking at tough choices and yielding instead to a sorry attempt to spread an even level of (dis)satisfaction among constituencies causes inefficiencies to grow like weed.

The foremost goal of technology-enhanced news content is smartly weaving together all components of a topic. The idea is to keep the reader aboard by encouraging multiple levels of reading, with different angles for a subject, calls to essential archives or to other forms of journalism such as blogs or infographics. In this field, Amazon is light-years ahead of the news industry. By raising the number of editorial treatments seen by the reader, almost twenty years of Amazon’s e-commerce recommendation engine refinements will undoubtedly benefit The Post.

Another key item will be the level of news personalization. What should a Post reader see mostly? News that matters to him or her, or everything the paper’s staff collects? How to define mostly? Fully tailored contents based on past navigation? Stated preferences combined with the preserved serendipity that together make the core of news construction? This is a deeply involved problem — and the subject of a future Monday Note.

Reader profiling. All digital publishers dream of knowing exactly what reader sees what content, where, at what time of the day and on which vector: web, smartphone, tablet. The finer the granularity, the better. Slicing and dicing readership in segments of age, professions, residence, income, interests yields three types of uses:

  • increasing news content stickiness by serving customized content as mentioned earlier
  • smarter customized advertising, as opposed to dumbly drowning users into a flood of ads for months by using data collected during the shopping season. This practice, known as “retargeting”, is one of the internet “seven plagues” and the most potent repellent to advertising
  • channelling the reader to the catalogue of ancillary products any news outlet should operate. For example: once a reader is identified (even anonymously) as working in the legal field, for a media group struggling to fill the last seats of its conference on privacy laws, why not show this loyal reader a one-time only, 50% discounted ticket, valid for 24 hours only? Simplistic as this example might seem, its large scale application is far from trivial: it requires super-accurate analytics, the deployment of “event engines” that will trigger the display of the right offer, at the right time, to the right segment of the population. Fortunately, this is the kind of work Amazon geeks are particularly good at.

For The Washington Post, the benefits are numerous. Research shows that serving the right ad to the right profile can raise its value by a factor of 1.5x to 2x. And the performance of ancillary products (conferences, business events, news-related ebooks or professional products, education packages, etc.) will become easier to measure.

Impact on paywall and subscription models. Paywall theory can be summarized as follows:

  • deploying a wide range of tactics all aimed at significantly raising the number of news contents items (not necessarily articles) a reader watches every month. Let’s make no mistakes: the main dial is under the newsroom’s control, marketing wizardry won’t do the trick
  • finding readers most likely to convert to a paid-for subscription and, week after week, serving them (I write serving, not bombarding) offers they can’t refuse: an extended test-period, or a news-related bonus that reflects the breadth of the company’s line of products.

As with most theories, practice is much harder. A paid-for system is a long-term, investment-intensive, staffing-critical effort. Two legacy media did it particularly well: The Financial Times and The New York Times. The former built a subscription base that now surpasses the paper’s; the latter added $100m a year in revenue that did not exist three years ago. Most paywall strategies underperform for two reasons: first, an error in predicting the editorial contents’ ability to retain readers beyond a free threshold of 10, 15, or 20 stories a month; second, a failure to build the data-driven infrastructure that is mandatory for any paid-for product. The Washington Post does relatively well with the first test. For the second, the backing of Amazon tech brains will give it the best chances to succeed.

frederic.filloux@mondaynote.com

64 bits. It’s Nothing. You Don’t Need It. And We’ll Have It In 6 Months

 

Apple’s A7 processor, the new iOS 7 and “house” apps are all industry firsts: genuine, shipping 64-bit mobile hardware and software. As we’ve seen before with the iPhone or the iPad, this new volley of Apple products is first met with the customary bursts of premature evaluations and counterfactual dismissals.

On September 10th, Apple revealed that the new iPhone 5s would be powered by its new 64-bit A7 processor. The initial reactions were less than enthused. We were treated to exhumations of lazy bromides…

“I don’t drink Kool-Aid. Never liked the stuff and I think we owe it to ourselves to collectively question whether or not Apple’s ‘reality distortion field’ is in effect when we consider how revolutionary the iPhone 5S is and if Apple’s 64-bit A7 processor under its shiny casing will be all its [sic] cracked up to be when the device hits the market in volume.” [Forbes]

…and equally lazy “markitecture” accusations…

“With current mobile devices and mobile apps, there really is no advantage [to 64 bits] other than marketing — the ability to say you’re the first to have it…” [InfoWorld]

…and breezy brush-offs, such as this tweet from an industry expert:

“We’ll see just how good Apple’s marketing team is trying to leverage 64-bit. 64-bit add more memory and maybe registers. Period.” [Twitter]

Rather than wonder what these commenters were drinking, let’s turn to AnandTech, widely regarded as one of the best online hardware magazines.

Founded by Anand Lal Shimpi when he was all of 14-years-old, AnandTech is known for its exhaustive (and sometimes exhausting) product reviews. The 14-section September 17th iPhone 5S review doesn’t disappoint. Among other things, it provides detailed iPhone 5S vs. iPhone 5 performance comparisons such as this:

5S GeekBench Anand Edited

There are many other charts, comparisons, and considerations of the new 64-bit ARMv8 instruction set, the move from 16 to 32 floating-point NEON 128-bit registers, the hardware acceleration of cryptography operations… It’s a very long read, but not a boring one (at least not for interested geeks).

The bottom line is plain: The A7 processor is a substantial improvement that’s well supported by the 64-bit iOS7. (And I’d like to meet the author and bow to his encyclopedic knowledge.)

Was it because of AnandTech’s cool analysis that the doubters have changed their tune?

As I predicted, Apple A7 benchmarks well due to CPU arch (for IPC), new GPU, ARM v8′

Now that the A7 had become a Benchmarking Beast, the author of the previous week’s brush-off tweet (“more memory and maybe registers. Period”) has revised his position [emphasis mine]:

“The improvements Apple made with the A7 are truly incredible, and they really went against the grain in their choices. With an industry obsessed with more cores, they went with fewer, larger and efficient cores. With people expecting v8 and 64-bit ARM in late 2014, Apple brings it out in 2013 with full Xcode support and many performance optimizations.” [...] “Apple has done it again, but this time in unexpected fashion.”

That all-purpose defense, unexpected, provides a key to the wrong-footing of many “experts”.

When Apple entered the microprocessor field a mere five years ago with its acquisition of Palo Alto Semiconductor, the move was panned: Apple had no future competing with established industry leaders such as Intel, Qualcomm, Nvidia, and Samsung.

But with the successive, increasing refinement of the A4, A5, and A6, the designs were ultimately viewed as good, very good, roughly on par with the rest of the industry. What these processors lacked in raw power was more than made up for by they way they were integrated into Apple’s notion of a purposeful, usable mobile device: Enhanced UI responsiveness, reduced power consumption, obeisance to the unique requirements of media and communications.

The expectation was that Apple would either fail, or produce a “competent” (meaning not particularly interesting) iteration of previous A4-5-6 designs. No one expected that the processor would actually work, with all in-house apps running in 64-bit mode from day one.

But let’s back up and rewrite a bit of history, ourselves:

On September 10th, Samsung announced its flagship 64-bit Exynos processor, supported by Android 5.0, the 64-bit version of Google’s market-leading mobile OS. The new Galaxy S64 smartphone, which will ship on September 20th, features both 64-bit hardware and software components. Samsung and Google receive high praise:

“Supercomputer-class processor… Industry-leading performance… Tightly integrated 64-bit software and hardware open a new era of super high-performance applications previously impossible on mobile devices…”

And Apple gets its just deserts:

“Once again, Apple gets out-innovated…This confirms the trend we’ve seen since Tim Cook took over… iPhones have become second-class devices… The beginning of a long decline…”

Apple can be thankful this is fantasy: The real world would never treat it like this (right?).

My fantasy isn’t without basis: Within 24 hours of Apple’s September announcement, Samsung’s mobile business chief Shin Jong-kyun said his company will have its own 64-bit Exynos processor:

“Not in the shortest time. But yes, our next smartphones will have 64-bit processing functionality…” [The Korea Times]

As for Android support, no problem: 64-bit versions of the underlying Linux kernel already exist. Of course, the system software layer that resides on top of the Linux kernel — the layer that is Android — will also need to be converted to take advantage of the 64-bit processor, as will the Software Development Kit (SDK) that third-party developers use to create apps. It’s a sizable challenge, but one that’s well within the Android’s team skills and resources; the process has certainly been under way for a while already.

The real trouble starts outside of Google. Which 64-bit processor? Intel’s (the company says it will add 64-bit “capabilities” to Android)? Samsung’s? Qualcomm’s?

Who writes and supports device drivers for custom SoC modules? This sounds a lot like Windows device driver complications, but the complexity is multiplied by Google’s significantly weaker control over hardware variants.

Apple’s inherent control over all of the components in its platform will pay dividends in the speed and quality of the transition. There will be glitches — there will always be new, factory-fresh bugs — but the new 64-bit hardware is designed to run existing 32-bit apps, and it seems to actually do so in practice.

Now let’s go beyond the iPhone 5S. In his September 10th presentation, Phil Schiller, Apple’s Marketing Supremo, called the A7′s performance “desktop class”. These words were carefully calibrated, rehearsed, and approved. This isn’t a “Can’t innovate anymore? My asssaeta, blurted while seized by religious fervor at last Spring’s Apple Developers Conference.

Does “desktop class” imply that Apple could use future versions of its 64-bit processor to replace Intel chips in its Mac devices?

In the AnandTech post quoted above, several benchmarks compare Apple’s A7 to a new x86 chip, Intel’s Baytrail, with interesting results:

AnandTech Baytrail A7

So, yes, in theory, a future Apple 64-bit processor could be fast enough to power a Mac.

But let’s consider a 3GHz iMac running a high-end media creation application such as Photoshop or Autodesk. The processor doesn’t want to be constrained by power consumption requirements, it’s optimized for performance (this even ignores the upcoming MacPro and its thermal management prowess).

Can we see a split in the Mac product line? The lower, more mobile end would use Apple’s processors, and the high-end, the no-holds-barred, always plugged to the wall desktop devices would still use x86 chips. With two code bases to maintain ß OS X applications to port? Probably not.

Apple could continue to cannibalize its (and others’) PC business by producing “desktop-class” tablets. Such speculation throws us back to a well-known problem: How do you compose a complex document without a windowing system and a mouse or trackpad pointer?

We’ve seen the trouble with Microsoft’s hybrid PC/tablet, its dual Windows 8 UI which is considered to be “confusing and difficult to learn (especially when used with a keyboard and mouse instead of a touchscreen).”

The best suggestion I’ve seen so far comes from “a veteran design and management surgeon” who calls himself Kontra and proposes An interim solution for iOS ’multitasking‘ based on a multi-slot clipboard.

If Apple provides a real way to compose complex documents on a future iPad, a solution that normal humans will embrace, then it will capture desktop-class uses and users.

Until such time, Macs and iPads are likely to keep using different processors and different interaction models.

JLG@mondaynote.com

 

Memo #2 to Jeff Bezos: Let’s talk about news products and design

 

Should the new owner of The Washington Post dump the print edition? What should its digital online strategy and tactics look like, both in terms of contents and platforms? 

The questions stated above might not fall into Jeff Bezos areas of sharpest expertise. But there is no shortage of smart people within The Washington Post — at least a core group eager to seize their new owner’s “keep experimenting” motto and run with it.

What can he do? For today, let’s focus on editorial products.

#1. The printed newspaper. Should The Washington Post dump its print product altogether? The short answer is no. At least not yet and not completely. Scores of digital zealots, usually with a razor-thin media culture, will push for the ultimate sacrifice. But in every market — Washington, London, Paris — there still exists a solid base of highly solvent readers that will pay a premium for the print product. This very group carries two precious features for newspaper economics: One, they are willing to pay almost any price to have their precious paper delivered every day. For a proof of that statement, see how quality papers repeatedly hiked prices in recent years, $2 or €2 is no longer a psychological threshold. Hefty street prices helped many to offset the decline of advertising revenues. Keeping the printing presses running offers a second advantage, the ads themselves: They gave lost ground, but the remaining print ads still bring 10 or 15 times more money per reader than digital versions — which is, let’s be honest, a complete economic failure of digital news products.

How long will it last? I’d say around five years. It actually depends of the evolution of the print product. Look at this weekend paper’s layout:

wapo pages

Is there anyone at The Washington Post who seriously believes this paleolithic visual will help retain readers?

Bezos should bring in a team of modern art directors from abroad. One such example is Innovation Media Consulting, an organization that works in many countries and has a great track record (I know one of Innovation’s partners well, Juan Señor, but I have no interest whatsoever in the firm.) Visually, the Post should consider a new layout (the Berliner format is a much better fit for tomorrow’s print than the old broadsheet). Also, to get a much-needed glimpse on what’s going on outside the Beltway, management should use their Amazon account to buy copies of the excellent Best Newspapers Design compilation.

Regarding the national vs. local/regional question, to me, the debate is settled: There is no point at having a physical daily newspaper with a national reach, period. (This could change if, one day, the Post is down to just one thick weekend edition.) Last August, in a remote trading post of Northern New Mexico, I found a fresh copy of the New York Times, most likely printed in Denver or Santa Fe, four hours truck drive from where I was (just have a look at this Google Map featuring the NYT printing plants locations to see my point). National + global scope belongs to digital.

#2. Digital products. The plural is important because, for a news company such as the Post, no single focus will do. At least three avenues ought to be considered: Web, mobile and tablets. (For the moment, we’ll put the Web aside, where The Post is doing great.)

For all publishers, mobile is way more tricky than initially imagined: as long as we can’t integrate content subscription in cell carrier billing, it will be difficult to have people pay for it — except if we consider some kind of in-app purchase for specialized contents. As for advertising on mobile, it now grows in “spectacular” fashion — going from the infinitesimal to insignificant. Furthermore, when comparing their product line to pure players such as Circa, we see how legacy media experienced difficulties in catching the mobile wave (see a previous Monday Note) or Pocket. The Post better work in that direction.

Tablets promise much better monetization. For this, assess the rate of iPad ownership among the Post’s readers (I bet it must be around 60%). Unfortunately, in the old press, the current rationale calls for flavors of print replicas, usually based on a PDF. As I’m writing this paragraph, I’m trying to download this morning’s Sunday edition of the Post for their iPad app; I’m stuck at about 20% of the download. (I certainly won’t ridicule the Post’s occasional glitches since it still occurs too often at my own paper– and I’m the one responsible…)

Why are digital publishers like us still struggling with this? It’s because we are stuck with a technology — namely PDF — that wasn’t designed for low download times, nor for interaction with the user, enhanced contents, social sharing, etc. Plus, many of us can’t depart form the idea that readers need to find on our apps the exact page look and feel, column structure and general layout of the print version. That assertion becomes less and less valid as the number of online readers keeps growing. That audience can become several orders of magnitude larger than the print edition’s readership: Simply consider that the NYT has 50 million people who are in contact with its online version one way another (including the very long tail), that’s more than fifty times it’s print circulation on any weekday.

Granted, a news product must have a visual identity, recognizable in every possible form, but that certainly doesn’t mean sticking to a 1993 technology with guys like us trying to keep outdated stuff alive, like a Havana car repairman nostalgically tinkering with a 1956 Chevrolet Bel Air

Jeff Bezos must keep one important things in mind: The modernization of print media has always been driven by the magazine industry, not by newspapers: From graphic design, to marketing, to advertising, weeklies and monthlies have lead innovation for decades. Now, as their print vector is dying, many of them tend to innovate on digital. They’re not doing it equally well, of course: a large group such as Condé Nast is pathetically backward — most of its titles offer only ultra-basic and unstable apps — but many publications (Fast Company, Business Week) made the leap forward with digital magazines really designed for the tablets. Even the NYT is about to launch a digital magazine for tablets that will feature great productions such as the Pulitzer Prize winning Snow Fall. So will ProPublica, I’m told.

fastco app

The Post should get rid of the cumbersome PDF legacy and switch to a full blown e-newspaper for iPad, generic Android tablets and Kindle Fire. There is no shortage of inspirational works available in the AppStore and in Apple Newsstand: Longform for the curation (my favorite weekend readings), The Magazine, TNW and more, all filled with interesting ideas or features…

To further stimulate innovation Jeff Bezos should call in firms able to genuinely think outside of the box such as Ideo or smaller shops who design great selling apps like Caroline+Young (the dataviz app mem:o), the people who did the sketching app Paper53… Personally, I’d even go as far as picking up the brain of great architects like Norman Foster, Rem Koolhas or workspace specialists NBBJ who have been commissioned to build Amazon new headquarters… It would be the most enthralling experiment to mix such great and diverse design talent pool with the Post’s journalistic excellence…

frederic.filloux@mondaynote.com