apple

The Meaning of Droid

Literally, Droid is the new Motorola phone sold by Verizon and running Google’s latest Android 2.0 release. The early reviews are good and, cleverly, Google issued a new turn-by-turn navigation application for the platform, also well received, complete with voice control and street view pictures. The Droid starts selling later this week, on November 6th, I’ll get one ASAP and report.

Earlier Android-powered phones weren’t so great, I bought a T-Mobile G1 exactly one year ago and wasn’t overwhelmed. I then called it “just a first effort” and wrote: “It’s only a question of time before most phone makers and cellular carriers offer an Android model, 12 months or less.  Motorola, for example, is building a “social networking” Android phone.  This is precisely the beauty of the Android Open Source, it lets phone makers and carriers try different implementations, specialized models, vertical applications.”

One year later, we have a new situation, a real contender for the lead position in the exploding smartphone market. How will Android impact the rest of the industry: Motorola, Garmin, TomTom, Palm, Nokia, Microsoft, RIM and, of course, the iPhone’s meteoric rise?

For Apple, the short answer is: the iPhone will continue to apply the Macintosh method, that is controlling all or most of the user’s experience, with similar results: smaller market share, disproportionally larger profits than the separate hardware-software crowd. More on this later.

Let’s start with a tip of the hat to Motorola. Last year, I questioned Motorola’s strategy and even its survival. Their “mobile devices” business was going to be spun off, the smell perhaps, from the more dignified “institutional” business, selling communications gear to government and enterprise customers. Fortunately, the new co-CEO for the mobile devices business, Sanjay Jha, came in, saw the on-going wreckage, dumped everything, starting with the Windows Mobile anchor. Then, listening to his techies’ advice, Jha bet on Google’s Android. The result is the Droid smartphone, making Motorola a strong contender again. More

Microsoft ambivalence

Lots of earnings reports this week, mostly good ones. Apple did better than expected, even by the most enthusiastic earnings seers, so did Amazon whose shares went up 26.8% today, adding more than $10B to its market cap in one day. I’m happy to see a quality company, one that treats its customer better than the vast majority of short-term oriented businesses, reap rewards for a combination of long-term vision and everyday attention to detail. We’ll get back to Amazon in a future Monday Note, when we discuss the flurry of e-book readers.

You might have heard Microsoft just launched Windows 7 this past Thursday, to good reviews and newish Apple ads, more installments of the ‘I’m a PC, I’m a Mac’ age-old campaign. The gent who plays the PC, John Hodgman, is much more than the character he’s become known for. See the speech he wrote and delivered at the June 2009 White House Correspondents dinner: he roasts the newly elected Barack Obama, calling him the first nerd president. This YouTube video won’t bore you, I’m not sure I can say the same for the latest, somewhat repetitious Apple ads.

As for Windows 7 itself, I haven’t updated any of the four candidate computers I mentioned last week. In part because I want to hear from early upgraders before I take the plunge, I still have the expensive and painful memories of being a Vista early adopter in 2007. I was the first one in line at Fry’s, in Palo Alto, at 8:00 am on January 30th — and proud of it. When the door opened, I turned around and saw I was also the only one in line. Instead of taking the hint, I forged ahead, bought a big HP laptop and the full Office 2007 Professional DVD. I had grown reasonably adept at running Windows Xp machines and couldn’t imagine how painful the Vista experience would turn out to be. I’m more careful, this time.
There is also the money. Upgrading the four machines, including a first install on a Linux netbook will cost me about $800, plus some application software, plus my time. Upgrading five Macs in my family cost me $49 and not too much time as the process was, for me at least, uneventful.
(This said, I plan to write a few short subjects on strange bugs, UI caprice or ergonomics non-sense in Apple’s products. Being a polite optimist, I’ll marvel: if the products sell so well in spite of these kinks, imagine what would happen if these problems disappeared!) More

One Bit

This is going to be a busy week. Monday we have Apple’s earnings and, later in the week, Windows 7’s release. The deafening noise will make it hard to understand the real, lasting consequences of these events. Fortunately, deep into the bowels of a server, a smaller happening, a bit flipping from 0 to 1 portends more fun, more intelligible things to come.

The Apple Q4 (fourth quarter) 2009 numbers matter less than the volume of comments will make it appear. If the numbers are good, fans will sing ‘I told you so’ and naysayers will object the good times won’t last. If the revenue and profit indicators are less than stellar, the ‘I told you so’ and ‘it won’t last’ will switch sides.

A similar pattern applies to Windows 7’s launch: this is the greatest thing since Vista, just kidding; this is disappointing; this works; this doesn’t; this threatens Apple; this is very good for Apple. (Apparently, Apple is intent on channeling the Windows 7 noise to its own uses with an aggressive campaign, likely targeting the pain Xp users who, supposedly, will endure a particularly arduous upgrading experience. We’ll keep this for later: I’ll upgrade a few computers from Xp, Linux, Vista Ultimate and Vista Home Premium and report back.)

Sages have already offered their obligatory contributions to each part of the libretto. And, things on the Web being immortal, wags have dug up equally authoritative 2 1/2 years-old claims from the same business and tech gurus when Vista was launched. Said wags invented a term, “claim chowder”, for such an amusing or embarrassing confrontation between past and present pronouncements. If you google the phrase, you won’t get much because the ever-obliging search engine thinks you mean New England’s “clam chowder”. Fortunately, Google Reader, the blog-reading engine, is more forthcoming and offers a bevy of examples such as this one, or this one.

The confusion and contradictions are understandable: I believe the computer industry is in a transition that makes divining the future by reading today’s tea leaves more difficult than usual. For example, how and how much will Cloud Computing really change the landscape? Or, what about netbooks, a fad or a lasting trend encouraged by a bad economy pushing consumers and business towards the bottom of the price range? Will smartphones continue to eat into PC “face-time”, into out use of desktop and laptop computers and, if so, how quickly? More

Inhale, it’s Free

“Free”, as a business model, is a figment of the imagination. In itself, “Free” is not a business model, it is only a component of broader revenue system. Unlike Chris Anderson, author of the book “Free” ($18.00) — a bestseller not a bestfreebie — I happened to actually practice the free “model”. Between 2002 and 2007, I was the editor of one of the most successful free quality daily newspapers in the world.  20 minutes is now the most read newspaper in France with 2.7m readers, every single day, in eight major cities.

To put things in perspective, the US equivalent would be a free daily distributed in about 20 cities, with 13 millions readers. More than Japan’s Asahi Shimbun. 20 minutes is not a mere compilation of newswires. It is a “real” newspaper, with original content provided by an 80+ journalists newsroom. And readers love it. Free it is. But so costly.  When we reached our cruising altitude, we needed about €200,00 ($280,000) in advertising to break even (which the paper eventually did achieve). In Spain, too, 20 minutos, became the largest daily in its market with 14 different editions and a good profit margin — that was before the recession struck hard. (The Norwegian group Schibsted owns 100% of Spain’s 20 minutos and half of the French edition, in joint ownership with the regional group Ouest-France).  

I was then an advocate for the “free” press and I still am. Applied to the print media, the free concept brings many great things. 20 minutes’ readers turned out to be :

  • New : 75% of them didn’t read a newspapers before.
  • Young : they were about 10 to 15 years younger than the average French reader.
  • More gender balanced: we had an equal proportion of male and female readers.
  • More professionally active (almost no retired people, for instance).

This was no accident, it was the result of a well-crafted strategy. More

Kremlinology For Fun and Profit

I’m quite fond of kremlinology, the metaphorical one, not the literal sort. For me, it started as a hobby and ended up making me decades of fun and money. Allow me to explain before we proceed with an attempted decryption of recent Apple events and statements.

Working in Paris in the seventies, I struck an acquaintance with a Gideon Gartner analyst called Aaron Orlhansky. He came to lunch with a bunch of markitecture papers from IBM and I had fun untwisting the real meaning behind sonorous statements coming from “The Company”. That was my amateur kremlinology stint. One day, he casually mentioned his acquaintance with Tom Lawrence, Apple’s top gun in Europe. And he added: ‘Tom’s looking for someone to start Apple France’. I said I was that man, an introduction was made, Tom and I “clicked” immediately and I was hired on December 12th 1980.
Almost three decades later, I’m in the Valley, a kid let out in the candy store, watching wave after wave of exciting entrepreneurs, ideas, technology, products, cultural changes…

On to a bit of Apple kremlinology.

The biggest news was Steve’s appearance at the iPod event last week: ‘I’m vertical’, he said and proceeded to acknowledge his gratitude to the liver donor who allowed him to be there. He also thanked the Apple teams who kept the ship going while he wasn’t so even-keeled. And he encouraged us to become donors. In California, you do that with a code on your driver’s license. Nothing to decode here, everyone is happy to see Dear Leader back in the saddle. He was met with a heartfelt standing ovation.
Now, we hear complaints he’s back lording over details, putting people under tremedous pressure. Good.

Let’s turn to the iPod announcements and to the howls of disappointment over the lack of camera in the new and improved iPod Touch. How could He do this to us, His faithful followers? When questioned, the spinmeister lets its be known the absent camera makes a lower entry price possible, $199. The iPod Touch has emerged as a major game console, you see, and you don’t need a camera on such a device.
I’d say two out of three.
Yes, the games on the 20 million iPod Touches (and 30 million iPhones) shipped so far surprised everyone, Apple first. Games aren’t a side show on the platform, they’ve become a big money maker for developers and a threat to the likes of Nintendo’s DS and Sony’s PSP. Commenting this graph, from Apple’s presentation, Business Insider says ‘the iPhone platform has almost five times the number of game and entertainment titles that Sony and Nintendo’s portable systems have combined.’
Removing the camera to get to a price point? Not convincing, camera modules cost very little, they’re everywhere on cheap cell phones. More

War in the Valley: Apple vs. Google

It was long overdue: Eric Schmidt (Google’s CEO) finally resigned from Apple’s Board of Directors. Usually, these resignations are handled in the smoothest of ways: Thanks for the distinguished service and the like. This time, Steve Jobs issued a pointed statement: “Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple Board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest.” Full officialese here.

This is the Valley and its cozy relationships. By which I mean executives and directors sitting on one another’s board, competitors enjoying the same directors, venture firms “sharing” their partners around portfolio companies. For example, besides Eric Schmidt sitting on both Apple’s and Google’s boards, we have Arthur Levinson, head of Genentech, a director of both companies. Or partners at Sequoia (a very successful venture capital firm)
 sitting on boards at YouTube and Google, which might have help a successful “exit”, that is the sale of YouTube to Google.
Back to Apple, there are also lingering allegations of a no-poach agreement, one by which the companies agreed no to hire each other’s workers.
Closer to home: Be, Inc., the operating system company I founded with a few friends from Apple and elsewhere. For a while, one of our investors (and director) also sat on Microsoft’s board. Microsoft executives were investors in his firm and we ended up with Bill Gates (indirectly) owning a piece of Be. Ah well… That was a decade ago, the statute of limitations ran out.
The SEC (Securities and Exchange Commission), the stock market regulator, has become more aggressive in watching out for companies engaging in collusive behavior through cross-directorships. See here .

Back to Dear Leader’s words: Google enters more of Apple’s core business. More

Apple’s Jesus Tablet: What For?

If you went on vacation and renounced Internet access for the duration, you might not have heard the latest rumors concerning the iTablet a.k.a. the Jesus Tablet, Apple’s eagerly awaited entry into the putative bigger than an iPhone but smaller than a MacBook segment. I’m avoiding the n-word: for Apple, this is the no-book category…
As for the religious nickname, let’s go back to MacWorld, in January 2007. Steve Jobs walks on stage and demonstrates the “iPod of phones”. The audience reacts with such religious fervor that, for a while, wags call Steve’s latest miracle the Jesus phone. (I could go on and call AT&T’s network the iPhone’s cross, but I won’t.)

Back to 2009, for the past week, we’ve had the strongest wave to date of rumors and speculation regarding Apple’s second coming (after the Newton, see below) into the tablet space. Putting such froth down would be ignoring the desire, the hope behind the agitation. The Greater We seems to want something bigger than and iPhone and smaller than a 13” MacBook, currently Apple’s smaller laptop.

Great, but what for? More

Web video: Microsoft, Adobe or HTML 5?

We have yet another standards battle on our hands — you might say screens, as it concerns Web video. Or we might watch our wallets, as the fight is about who gets the biggest share of the money spent delivering multimedia on our computers, smartphones and, soon, TVs.

My money is on HTML 5, co-opted and promoted by Google and Apple.

First, do we really care about standards? Does it matter that YouTube uses Flash or H.264, that Microsoft is trying to promote Silverlight or that Apple, more prominently, and Google, less vocally, are pushing an open standard called HTML 5?

The answer comes in two parts: we need standards like trains need a single track width across the network, first, and, second, standards are often abused, made into a way to pick pockets.
There is no charge for a train track width standard, but a license fee is required for building cell phones using the CDMA standard. (I won’t go again over well-covered ground, over the history of Windows, Office and Wintel.) The secret, there, is to create critical mass for a way to do something, for said manner to become a standard. Then, you charge for the right to use the method itself or, less directly, for something needed to benefit from it.
For example, if Microsoft manages to make Silverlight a or the Web video/multimedia standard, good things will happen and bad ones will be avoided – from Microsoft’s perspective, that is. More

The Real iPhone 1.0

Saint Peter offers a choice of hells to a recently dematerialized high-tech tycoon (pick your favorite sinner) with a long list of transgressions. The basic one, fire, floggings, and the premium one, plenty of music, drink, food and other pleasures of the flesh. Said tycoon picks the fun venue, Saint Peter pulls a lever, the industrialist falls to the one and only fiery hell. Agitated, feeling cheated, the sinner demands to know about the other hell, the eternal party.
Saint Peter: It’s a demo!

The joke comes to mind as I watch Steve Jobs introduce the iPhone on stage at San Francisco’s MacWorld Expo, on January 9th, 2007.
It is too good to be true, especially the part about running OS X. The demo looks magical, as with most of Steve’s acts. The iPhone looks like one shocking product. But is it real? Nothing specifically aimed at the demonstrator, I’ve seen – and given – too many demos, it’s a sinner speaking.

Six months later, I’m relieved. The first iPhones ship, enterprising programmers manage to inspect the firmware’s insides and, yes, it is OS X. A trimmed-down version, of course, but the core of the iPhone’s software engine is the genuine article. More

The Apple Tax

Today, let’s have a little fun with Microsoft’s latest attempt at countering Apple’s “Get a Mac” campaign. Their premise is simple: for the same amount of computing power you pay more for a Mac, you pay an Apple Tax. As Steve Ballmer, Microsoft’s CEO, puts it: You pay $500 to slap an Apple logo on a laptop.
Microsoft is right: Macs cost more.
Pundits and advocates on both sides use contorted arguments to make a point either way, but the point remains: Macs cost more – at the time of purchase.

But, before we go on, a few words on the color of my skin. Especially the operating system layer.I’ve been in the high-tech industry for 41 years this coming June and I’ve used (or even caused at Apple and Be) system software of many flavors. Regarding Microsoft, I’ve been a DOS and, later Windows user; a happy customer, an occasionally proud one as I acquired the skills to fix or quickly re-install systems in my family or at the office. Naturally, after leaving Apple, I continued to use Macs, even after my company, Be, lost the Apple opportunity to Steve Jobs’ NeXT. More