apps

News on mobile: better be a Danish publisher than a Japanese one

 

This is the second part of our Mobile facts to Keep in Mind (see last week Monday Note – or here on Quartz). Today, a few more basic trends and a closer look at healthy markets for digital news. 

Last week, we spoke about the preeminence of mobile applications. Not all readers agree, of course, but I found more data to support the finding; among many sources, the remarkable Reuters Institute Digital News Report (PDF here) is worth reading:

47% of smartphone users say they use mainly apps for news

According to the report, this figure has risen by 6 percentage points in just one year. By contrast, 38% of the news consumption is made via a browser — which is losing ground: -4% in just a year.

The trend is likely to accelerate when taking in account demography: On smartphones, the most active groups are the 18-24s and the 35-44s; on tablets the most active group is the 45-54 segment.

Platform usage varies in accordance to local market share, but when it come to paying for news, Apple leads the game:

iOS users are x1.5 likely to pay for news in the US
and x2 likely to pay in the UK than Android or other users

Here is the bad part, though. Again based on the Reuters report, the use of smartphones does narrow the range of news sources. More than ever, the battle for the first screen is crucial.

Across the ten countries surveyed,
37% of users rely on a single news source
vs. 30% for PC users

In the UK, the trend is even stronger with 55% of mobile users relying a single news source. This goes along with good news for those who still defend original news production: mobile news consumption is quite focused on legacy media. The BBC app crushes the competition with 67% of respondents saying they used the app the previous week, vs. 25% for Sky, MSN and Yahoo are trailing with respectively 2% and 7%.

If you want to survey a healthy digital news market, go to Denmark

MN_328_vikings_logo

A Viking logo (from the TV Series) as viewed by the Brand New blog;
note the ancient reference to technology…

Not only does Denmark rank among the best countries to live and develop a business in, but when it comes to digital news, it leads the pack in several of ways:

Despite the digital tsunami, Denmark retains many strong media brands. As a result, legacy media are the prime way for accessing digital news. And since Danish media did well embracing new platforms, they enjoyed similarly success on social, funneling readers to their properties.
The opposite holds for France and Germany where the transition is much slower; in those countries digital users rely much more on search to reach news brands. Two side effects ensue: News readers are more accidental and therefore generate a much lower ARPU; and the greater reliance on Google is problematic (hence the call to arms in France and Germany against the search engine giant.)

– Because of the strength of its traditional media brands, the Denmark news market has left very little oxygen to pure players: They weigh only 10% of weekly digital news, vs. 39% in the US and 46% in Japan were legacy media have been severely hit.

– Danes are the heaviest users of both smartphones and tablets to access news.

– They use mobile apps more than anywhere else: 19%, vs. 15% for US and 12% for Germany.

– They are mostly Apple users : 58% say they use an iOS device to access news in the last week (vs. 28% in Germany), hence a better ARPU for mobile publishers.

–  Danish news consumers generously overlap their devices way more than in any country. 79% use a PC, 61% a smartphone and 39% a tablet. Only 24% use only a PC for news. In Japan by contrast, 58% admit using only a PC for their news diet; up there, the use of smartphone and tablet to access information is respectively one half and one third of Denmark.

– In Danish public transportation, smartphones has overtaken print as the main news vector by 69% vs. 21% of the usage.

We all know where to seek inspiration for our digital news strategies.

frederic.filloux@mondaynote.com

The App Store: Good Deeds, Poor Communication

 

Apple does the right thing when striving to keep its App Store free from promotional trickery – but fails to shed light on the process and, as a result, damages its reputation.

Earlier this month, the Apple App Store removed the popular AppGratis application from its shelves. Then, last week, the App Store censors delivered a decisive blow by suppressing AppGratis’ push notifications to installed apps.
Apple’s reason for the ban: “… the app circumvented App Store rules preventing applications promoting other apps and direct marketing.”

AppGratis CEO Simon Dawlat took to the airwaves, loudly protesting his innocence. The aggrieved entrepreneur criticized Apple’s arbitrary and inconsistent approval process and “out of the blue” removal of AppGratis. He launched an online petition that gathered 571K signatures in just a few hours. He convinced Fleur Pellerin, France’s Minister of Digital Technologies, to run to the wounded company’s bedside and join the protest. Minister Pellerin added a bit of saber-rattling, calling Apple’s actions “brutal” and hinting at plans to ask the EU to examine the takedown.

But then the PR tide turned. An AppGratis document leaked to Business Insider by a “source in the developer community” hints at the company’s unspoken business model: AppGratis will raise your app’s rating in the App Store – for a fee.

Specifically, AppGratis gives developers an estimate of where in Apple’s App Store rankings an App can land based on how much the developer is willing to pay… [The] document shows AppGratis estimates a ~$300,000 buy will land an app in the top five slot in the US version of the App Store.

$300k is a lot of money for a small app developer, but the promise is that the higher ranking will result in increased revenue that will more than cover AppGratis’ “service fee”.

Before the e-dust could settle, Dawlat posted a long-winded blog entry that I assume was meant as a rebuttal. Here’s an excerpt:

People have “accused us” of gaming the top. But the reality is that with or without the “rankings,” our community will still drive millions of installs for the apps we feature. Independently from the App Store. We have never based our business on ranking exposure, because we’ve always expected Apple to chime in at some point, and change that. 

He then went on to announce AppGratis’ “crazy cool” old-yet-new direction [emphasis mine]:

And even more exciting, we’re back to our roots. A crazy cool daily newsletter with millions of subscribers, that will very soon be complemented by the newest and nicest HTML5 WebApp you’ll ever see. Two things we fully own, and that no one can take away from us. So when I stated a week ago that the reports of our death were greatly exaggerated, I wasn’t kidding. Not kidding at all. AppGratis is just getting started.
Because from the bottom of our hearts, we know we add value to this whole ecosystem.
And we intend to keep doing just that.

To shed light on this complicated situation, let’s use an analogy. And since this about a French company, Apple will be represented by Carrefour, the hypermarché giant — something like Walmart, but less polite. If you ask to have your groceries packed up, the cashier throws a plastic bag at you and tells you to do it yourself. You’ll be playing Simon Dawlat.

You approach Carrefour with your unique line of heirloom yogurts made from free range goat milk. It’s an interesting product, but is Carrefour obligated to give you shelf space? Of course not. The store may be inelegant and the staff is rude, but the company has its standards. Carrefour offers to take you on if you agree to its rules concerning shelf displays and promotional activities.

One day, a store manager notices the coupons you’ve enclosed in your yogurt packs. These coupons promote other products that Carrefour stocks, offered at lower prices when purchased on-line. When asked about it, you finally admit that, yes, some of the other manufacturers pay you to include their coupons with your yogurt. Carrefour management throws a plastic bag at you and tells you to pack up and go home. Their store, their rules.

(The analogy is both transparent and flawed. There’s no perfect physical retail analogue for AppGratis’ virtual schtick — getting paid to bubble an app up the App Store rankings. And the App Store doesn’t have a great real-world analogue, either. The App Store’s raison d’être is to make iPhone and iPads more valuable; it’s not a business in itself. But you get the idea.)

To touch on the obvious, Apple isn’t obligated to publish AppGratis or any other app, regardless of a developer’s adherence to the rules.

As for the rules themselves, I read through the App Store Review Guidelines, bracing myself for Apple’s usual hauteur. What I found was a personable, (mostly) well-written document that addresses a number of complicated issues while (mostly) avoiding the opaque legalese found in the licensing agreements we all stopped reading long ago.

The rule that’s most pertinent to the AppGratis case is this [emphasis mine]:

If you attempt to cheat the system (for example, by trying to trick the review process, steal data from users, copy another developer’s work, or manipulate the ratings) your Apps will be removed from the store and you will be expelled from the developer program.

There seems little doubt that AppGratis crossed this line: Its business model is precisely one of artificially enhancing an app’s ratings.

This isn’t a new issue. In September 2012, Apple added a clause (section 2.25) to the Guidelines:

Apps that display Apps other than your own for purchase or promotion in a manner similar to or confusing with the App Store will be rejected.

A good deal of discussion ensued, most of which made clear what awaited AppGratis and others such as FreeAppADay, AppoDay, Daily App Dream, and App Shopper. As explained in a PocketGamer post [emphasis mine]:

The wording is typically vague, but clause 2.25 appears to give Apple carte blanche to put any app that promotes titles from a different developer out of action.
At the moment, we understand Apple’s likely prime targets are pure app promotion services, such as (but not necessarily including) FreeAppADay, AppoDay, AppGratis, Daily App Dream and AppShopper, amongst others.

That clause 2.25 was introduced more than six months ago puts Dawlat’s claim that Apple acted “out of the blue” and Minister Pellerin’s accusation of “brutality” in a different light: Dawlat had ample notice of Apple’s intent.

(Minister Pellerin might now be wondering if her staff performed sufficient research before letting her run to Dawlat’s rescue…or maybe not. Half-baked technopolicy is becoming politics-as-usual in France. Last year, the newly-elected government ran afoul of high-tech entrepreneurs when it announced legislation that would greatly increase taxes on their equity gains, only to beat a hasty half-retreat, leaving the tax question muddier than ever. Perhaps the AppGratis snafu was perceived as an opportunity to earn back some of the lost credit, especially when portraying the situation as a French David vs. an American Goliath.)

Ultimately, Dawlat’s cry of foul will probably be seen as disingenuous and tiresome, not to mention a wasteful distraction… Do the critics of the App Store approval process consider the noise level that approvers must endure? To get to the current 700,000 apps, the company has to scrutinize more than 3,000 new entries a week plus revisions of existing apps. Mistakes will be made. Some apps will be approved only to be yanked when their scheme becomes obvious. Developers will be incensed, and Apple, sensibly, has anticipated the backlash:

If your app is rejected, we have a Review Board that you can appeal to. If you run to the press and trash us, it never helps.

So it’s case closed, right?

Not quite. There remains the problem of perception.

I can’t provide a link to the Guidelines in this Note because the document is only accessible to dues-paying developers (of which I am one). There’s nothing mysterious, secret, or dangerous about these words, they provide no competitive insight that could work to Apple’s disadvantage. Charging a developer just to read the rules gains nothing, and contributes to Apple’s negative image. Attempting to keep them out of the public eye is insulting and futile – developers freely leak and comment on the content.

Far worse is that Apple appears to have a policy (with very few allowances) of refusing to publicly explain its App Store decisions. I realize that some judgments are ineffable, matters of taste, as explained in the Guidelines:

We will reject Apps for any content or behavior that we believe is over the line. What line, you ask? Well, as a Supreme Court Justice once said, “I’ll know it when I see it”. And we think that you will also know it when you cross it.

Apple isn’t wrong to reserve the right to make such decisions. Although insiders may depict the company as obsessive control freaks, “normal” customers seem to appreciate Apple’s efforts to keep the App Store a Clean, Well-Lighted Place.

But maintaining a stony silence when imposing a judgment call is a bad choice, it distances developers, and it inevitably triggers controversy. A few words of explanation would invite respect for having courageously taken a difficult stance.

As already discussed in a recent Monday Note (Apple is Losing The War – Of Words), I find the company’s refusal to engage in more public debate harmful and disrespectful. While the AppGratis incident in itself isn’t overly important, it could be an opportunity for Apple to reconsider its ways.

JLG@mondaynote.com

 

Growing Forces in Mobile

 

As seen last week in Barcelona, the mobile industry is red hot. The media sector will have to work harder to capture its share of that growth.

The 2013 edition of the Mobile World Congress held last week in Barcelona was as large as the biggest auto-show in the world: 1500 exhibitors and a crowd of 72,000 attendees from 200 countries. The mobile industry is roaring like never before. But the news media industry lags and will have to fight hard to stay in the game. Astonishingly, only two media companies deigned to show up: Pearson with its huge education business accounting for 75% of its 2012 revenue (vs. 7% for its Financial Times unit); and Agence France-Presse which is entering the customized application market. No other big media brand in sight, no trade organizations either. Apparently, the information sector is about to miss the mobile train.

Let’s begin with data that piqued my interest, from AT Kearney surveys for the GSM Association.

Individual mobile subscribers: In 2012, the worldwide number of mobile subscribers reached 3.2 billion. A billion subscribers was added in the last four years. As the world population is expected to grow by 1.1% per year between 2008 and 2017, the mobile sector enjoyed a 8.3% CAGR (Compound Annual Growth Rate) for the 2008-2012 period. For the 2012 – 2017 interval the expected CAGR is 4.2%. The 4 billion subscribers mark will be passed in 2018. By that time, 80% of the global population will be connected via a mobile device.

The rise of the machines. When machine-to-machine (M2M) connections are taken into account, growth becomes even more spectacular: In 2012, there were 6.8 billion active SIM cards, 3% of them being M2M connections. In 2017, there will be 9.7 billion active SIM cards and the share of M2M connections will account for 13% with almost 1.3 billion devices talking to each other.
The Asia-Pacific region will account for half of the connection growth, both for individual subscriptions and M2M.

We’ll now turn to stats that could benefit the media industry.

Mobile growth will be mostly driven by data usage. In 2012, the volume of data exchanged through mobile devices amounted to .9 exabytes per month (1 exabyte = 1bn gigabytes), this is more than the all preceding years combined! By 2017, it is expected to reach 11.2 exabytes, that’s a 66% CAGR!

A large part of this volume will come from the deployment of 4G (LTE) networks. Between now and 2017, deploying LTE technology will result in a 4X increase in connection speeds.

For the 2012 – 2017 period, bandwidth distribution is expected to grow as follows:

M2M:......... +89% 
Video:....... +75% 
Gaming:...... +62% 
Other data:...+55% 
File sharing: +34% 
VoIP:........ +34%

Obviously, the huge growth of video streaming (+75%) points to a great opportunity for the media industry as users will tend to watch news capsules on-the-go in the same way they today look at a mobile web sites or an app (these two will be part of the 55% annual growth).

The growing social mobility will also be an issue for news media. Here are the key figures for today in active mobile users

Facebook:...680m 
Twitter:....120m 
LinkedIn:....46m 
Foursquare:..30m

Still, as important as it is, social usage only accounts for 17 minutes per day, vs. 25 minutes for internet browsing and a mere 12 minutes for voice calls. Most likely, the growth of video will impact the use of social networks as Facebook collects more and more videos directly uploaded from smartphones.

A large part of this growth will be driven by the rise of inexpensive smartphones. Last week in Barcelona, the largest stand was obviously Samsung’s. But a huge crowd also gathered around Huawei or ZTE showing sophisticated Android-powered smartphones — at much lower prices. This came as a surprise to many westerners like me who don’t have access to these Chinese devices. And for emerging markets, Firefox is coming with a HTML5 operating system that looked surprisingly good.

In years to come, the growing number of operating systems, screen sizes and features will be a challenge. (At the MWC, the trend was definitely in favor of large screens, read this story in Engadget.) An entire hall was devoted to applications — and software aimed at producing apps in a more standardized, economical fashion. As a result, we might see three approaches to delivering contents on mobile:
- The simplest way will be mobile sites based on HTML5 and responsive design; more features will be embedded in web applications.
- The second stage will consist of semi-native apps, quickly produced using standardized tools, allowing fast updates and adaptations to a broad range of devices.
- The third way will involve expensive deep-coded native apps aimed at supporting sophisticated graphics; they will mainly be deployed by the gaming industry.

In upcoming Monday Notes, we will address two majors mobile industry trends not tied to the media industry: Connected Living (home-car-city), a sector likely to account for most machine-to-machine use; and digital education taking advantage of a happy combination of more affordable handsets and better bandwidth.

frederic.filloux@mondaynote.com

Google’s Red Guide to the Android App Store

 

As they approach the one million apps mark, smartphone and tablet app stores leave users stranded in thick, uncharted forests. What are Google and Apple waiting?

Last week, Google made the following announcement:

Mountain View, February 24th, 2013 — As part of an industry that owes so much to Steve Jobs, we remember him on this day, the 58th anniversary of his birth, with great sadness but also with gratitude. Of Steve’s many achievements, we particularly want to celebrate the Apple App Store, the venerable purveyor of iPhone software. 

Introduced in 2008, the App Store was an obvious and natural descendant of iTunes. What wasn’t obvious or foreseen was that the App Store would act as a catalyst for an entire market segment, that it would metamorphose the iPhone from mere smartphone to app phone. This metamorphosis provided an enormous boost to the mobile industry worldwide, a boost that has benefitted us all and Google more than most.

But despite the success of the app phone there’s no question that today’s mobile application stores, our own Google Play included, are poorly curated. No one seems to be in charge, there’s no responsibility for reviewing and grading apps, there’s no explanation of the criteria that goes into the “Editors’ Picks”, app categorization is skin deep and chaotic.

Today, we want to correct this fault and, at the same time, pay homage to Steve’s elegant idea by announcing a new service: The Google Play Red Guide. Powered by Google’s human and computer resources, the Red Guide will help customers identify the trees as they wander through the forest of Android apps. The Red Guide will provide a new level of usefulness and fun for users — and will increase the revenue opportunities for application developers.

With the Google Play Red Guide, we’ll bring an end to the era of the uncharted, undocumented, and poorly policed mobile app store.

The Red Guide takes its name from another great high-tech company, Michelin. At the turn of the 20th century, Michelin saw it needed to promote automotive travel in order to stimulate tire sales. It researched, designed and published great maps, something we can all relate to. To further encourage travel, Michelin published Le Guide Rouge, a compendium of hotels and restaurant. A hundred years later, the Michelin Red Guide is still considered the world’s standard; its inspectors are anonymous and thus incorruptible, their opinions taken seriously. Even a single star award (out of three) can put an otherwise unknown restaurant on the map — literally.

Our Red Guide will comprise the following:

- “Hello, World”, a list of indispensable apps for the first time Android customer (or iPhone apostate), with tips, How-To guides, and FAQs.
- “Hot and Not”. Reviews of new apps and upgrades — and the occasional downgrade.
- “In Our Opinion”. This is the heart of the Guide, a catalogue of reviews written by a select group of Google Play staff who have hot line access to Google’s huge population of in-house subject matter experts. The reviews will be grouped into sections: Productivity, e-Learning, Games, Arts & Creativity, Communication, Food & Beverage, Healthcare, Spirituality, Travel, Entertainment, Civics & Philanthropy, Google Glass, with subcategories for each.

Our own involvement in reviewing Android apps is a novel — perhaps even a controversial — approach, but it’s much needed. We could have taken the easy path: Let users and third-parties provide the reviews. But third party motives are sometimes questionable, their resources quickly exhausted. And with the Android Store inventory rapidly approaching a million titles, our users deserve a trustworthy guide, a consistent voice to lead them to the app that fits.

We created the Red Guide because we care about our Android users, we want them to “play safe” and be productive, and we feel there’s no better judge of whether an application will degrade your phone’s performance or do what it claims than the people who created and maintain the Android framework. For developers, we’re now in a position to move from a jungle to a well-tended garden where the best work will be recognized, and the not-so-great creations will be encouraged to raise their game.

We spent a great deal of time at Google identifying exactly the right person to oversee this delicate proposition…and now we can reveal the real reason why Google’s Motorola division hired noted Macintosh evangelist, auteur, and investor Guy Kawasaki as an advisor: Guy will act as the Editor in Chief of the Google Play Red Guide.

With Guy at the helm, you can expect the same monkish dedication and unlimited resources we deployed when we created Google Maps.

As we welcome everyone to the Google Play Red Guide, we again thank Steve Jobs for his leadership and inspiration. Our algorithms tell us he would have approved.

The Red Guide is an open product and will be published on the Web at AppStoreRedguide.com as well as in e-book formats (iBookstore and Kindle formats pending approval) for open multi-platform enjoyment.
——– 

No need to belabor the obvious, you’ve already figured out that this is all a fiction. Google is no better than Apple when it comes to their mobile application store. Both companies let users and developers fend for themselves, lost in a thick forest of apps.

That neither company seems to care about their online stores’ customers makes no sense: Smartphone users download more apps than songs and videos combined, and the trend isn’t slowing. According to MobiThinking:

IDC predicts that global downloads will reach 76.9 billion in 2014 and will be worth US$35 billion.

Unfortunately, Apple appears to be resting on its laurels, basking in its great App Store numbers: 40 billion served, $8B paid to developers. Perhaps the reasoning goes like this: iTunes served the iPod well; the App Store can do the same for the iPhone. It ain’t broke; no fix needed.

But serving up music and movies — satisfying the user’s established taste with self-contained morsels of entertainment — is considerably different from leading the user to the right tool for a job that may be only vaguely defined.

Apple’s App Store numbers are impressive… but how would these numbers look like if someone else, Google for example, showed the kind of curation leadership Apple fails to assert?

JLG@mondaynote.com

Apps Features: Social vs. “Related”

Mobile application design is hard. For websites, we have well-established graphic rules. For PC screens, the tolerance for interface mishaps is fairly broad. Mobile apps are the  opposite: space is much scarcer, every pixel counts. Try shrinking a tablet app screen down an to a smartphone size: homothecy (linear reduction) rarely works. This is the reason why we often see fine iPad applications turn into flunked smartphone ones. It sometimes takes a while for a successful iPad app turn in to a well-adapted iPhone one: Flipboard, Zite and Bloomberg BusinessWeek were wise enough to take as much time as needed to roll-out great apps for the small screen.

When designers (and marketeers) perform user tests for a small screen app, they realize their design will have to adjust to many new circumstances and constraints. Reading time and general use conditions change substantially from a tablet to a smartphone: while the former is definitely a lean-back device, the latter will be used in many different ways, often including uncomfortable settings — I glance at my phone in a lobby, a waiting line, in the subway, etc. All this deserves thoughtful consideration when designing an application. The same applies to advertisers: they can’t expect to capture the same level of attention when moving from tablets to the smartphones.

With this in mind, I made a quick list of mandatory features for mobile applications.

Social vs. “Related”. Today’s hype leaves no other option but making an application as “social” as possible. This being the certitude du jour, allow me to think differently.

True, some apps are inherently social: when it comes to rating a product or a service, the “crowd factor” is critical. Beyond that, it should be a matter of personal choice — an antinomic notion to today’s the “Social” diktat. When you enroll into Spotify, the default setting is to share your musical taste with your Facebook friends and to suffer theirs in return. I personally can’t stand such obligation: I quickly dumped the application and cancelled my account.

The social idea’s biggest mistake is the belief in a universal and monolithic concept everyone is supposed to be willing to embrace with a similar degree of scope and enthusiasm. That’s a geeky, super-cartesian, Zuckerberg-esque view of society. Among my friends, some like opera (the singing, not the browser), others prefer heavy metal and I’m more into jazz tunes; some are tech-minded like me, others are more inclined towards literature. When it comes to sharing news, I tend to be naturally selective about the people I send a link to: I don’t want to swamp everyone with stuff they don’t care about. I might be wrong, but this is the way I see the social cyberspace: segmented and respectful of each other.

Where am I getting with this: When I read news online, I care about what is related (i.e. recommended by editors) as much as what is social (recommended by the crowd). Of course, Trending, is a good indicator of what’s hot. Here is a good example on TechCrunch iPad app, by any measure a thoughtfully designed one. Its Trending sidebar cleverly displays what’s hot and how it evolves:

Even better: when you dive into a story, the app will give you a better-focused “Trending” indicator on a particular company, in this example Buddy Media….

… will send you to the Crunch Base repository of people and companies:

TechCrunch’s social treatment is mostly Twitter-based. Subjects are connected to relevant tweets with the underlying story shown in a web view:

Related contents come in different flavors. Take the Bloomberg way shown in its remarkable BusinessWeek application. Companies mentioned in a stories can pop-up in a black sidebar drawn from the Bloomberg financial app.

Similarly, ProPublica’s application uses a lateral “drawer” to display related contents in an efficient way:

These features are by no means secondary. Providing related contents or a supplement of data, such as financial of biographical information, is the best proven way to retain users.

Finally, a word about graphics. Apple and the iPad have set the bar pretty high and very few apps takes fully advantage of their graphics power. One company rises way above the crowd: Roambi, in a class in itself when it comes to visualizing information. My take is, someday, most business sites will borrow from Roambi’s spectacular way of displaying graphics (part explanation of its design sophistication: the core of Roambi’s designers comes from the video game industry).

One last world about the ongoing debate between open web-apps and proprietary ones such as iOS or Android: The gap is narrowing. The FT.com, which pioneered the genre two years ago, made tremendous progress in its app. Periodically, a new release comes up with slight improvements in fluidity and ease of use. The iOS system and its software development kit remain a must for games and 3D intensive applications, but for news and data apps, HTML5 is getting closer.

One feature, though, is missing in most of these apps: the ability to use them offline. 3G coverage and cellular data transfers are more unstable than developers tend to believe; users should have more leeway in configuring their apps to download content in the background, ready for later offline use.

frederic.filloux@mondaynote.com

Twitter, Facebook and Apps Scams

Here is the latest Twitter scam I’ve heard this week. Consider two fictitious media, the Gazette and the Tribune operating on the same market, targeting the same demographics, competing fort the same online eyeballs (and the brains behind those). Our two online papers rely on four key traffic drivers:

  1. Their own editorial efforts, aimed at building the brand and establishing a trusted relationship with the readers. Essential but, by itself, insufficient to reach the critical mass needed to lure advertisers.
  2. Getting in bed with Google, with a two-strokes tactic: Search Engine Optimization (SEO), which helps climb to the top of search results page; and Search Engine Marketing (SEM), in which a brand buys keywords to position its ads in the best possible context.
  3. An audience acquisition strategy that will artificially grow page views as well as the unique visitors count. Some sites will aggregate audiences that are remotely related to their core product, but that will better dress them up for the advertising market (more on this in a forthcoming column).
  4. An intelligent use of social medias such Facebook, Twitter, LinkedIn and of the apps ecosystem as well.

Coming back to the Tribune vs. Gazette competition, let’s see how they deal with the latter item.

For both, Twitter is a reasonable source of audience, worth a few percentage points. More importantly, Twitter is a strong promotional vehicle. With 27,850 followers, the Tribune lags behind the Gazette and its 40,000 followers. Something must be done. The Tribune decides to work with a social media specialist. Over a couple of months, the firm gets to the Tribune to follow (in the Twitter sense) most of the individuals who already are Gazette followers. This mechanically translates into a “follow-back” effect powered by implicit flattery: ‘Wow, I’ve been spotted by the Tribune, I must have voice on some sort…’ In doing so, the Tribune will be able to vacuum up about a quarter or a third — that’s a credible rate of follow-back — of the Gazette followers. Later, the Tribune will “unfollow” the defectors to cover its tracks.

Compared to other more juvenile shenanigans, that’s a rather sophisticated scam. After all, in our example, one media is exploiting its competitor’s audience the way it would buy a database of prospects. It’s not ethical but it’s not illegal. And it’s effective: a significant part of the the followers so “converted” to the Tribune are likely stick to it as the two media do cover the same beat.

Sometimes, only size matters. Last December, the French blogger Cyroul (also a digital media consultant) uncovered a scam performed by Fred & Farid, one of the hippest advertising advertising agencies. In his post (in French) Cyroul explained how the ad agency got 5000 followers in a matter of five days. As in the previous example, the technique is based on the “mass following” technique but, this time, it has nothing to do with recruiting some form of “qualified” audience. Fred & Farid arranged to follow robots that, in turn, follow their account.  The result is a large number of new followers from Japan or China, all sharing the same characteristic: the ratio between following/followed is about one, which is, Cyroul say, the signature of bots-driven mass following. Pathetic indeed. His conclusion:

One day, your “influence” will be measured against real followers or fans as opposed to bots-induced accounts or artificial ones. Then, brands will weep as their fan pages will be worth nothing; ad agencies will cry as well when they realize that Twitter is worth nothing.

But wait, there are higher numbers on the crudeness scale: If you type “increase Facebook fans” in Google, you’ll get swamped with offers. Wading through the search results, I spotted one carrying a wide range of products: 10,000 views on YouTube for €189; 2000 Facebook “Likes” for €159; 10,000 followers on Twitter for €890, etc. You provide your URL, you pay on a secure server, it stays anonymous and the goods are delivered between 5 and 30 days.

The private sector is now allocating huge resources to fight the growing business of internet scams. Sometimes, it has to be done in a opaque way. One of the reasons why Google is not saying much about its ranking algorithm is — also — to prevent fraud.

As for Apple, its application ecosystem faces the same problem in. Over time, its ranking system became questionable as bots and download farms joined the fray. In a nutshell, as for the Facebook fans harvesting, the more you were willing to pay, the more notoriety you got thanks to inflated rankings and bogus reviews. Last week, Apple issued this warning to its developer community:

Adhering to Guidelines on Third-Party Marketing Services

Feb 6, 2012
Once you build a great app, you want everyone to know about it. However, when you promote your app, you should avoid using services that advertise or guarantee top placement in App Store charts. Even if you are not personally engaged in manipulating App Store chart rankings or user reviews, employing services that do so on your behalf may result in the loss of your Apple Developer Program membership.

Evidently, Apple has a reliability issue on how its half million apps are ranked and evaluated by users. Eventually, it could affect its business as the AppStore could become a bazaar in which the true value of a product gets lost in a quagmire of mediocre apps. This, by the way, is a push in favor of an Apple-curated guide described in the Monday Note by Jean-Louis (see Why Apple Should Follow Michelin). In the UK, several print publishers have detected the need for independent reviews; there, newsstands carry a dozen of app review magazines, not only covering Apple, but the Android market as well.

Obviously there is a market for that.

Because they depend heavily on advertising, preventing scams is critical for social networks such as Facebook or Twitter. In Facebook’s pre-IPO filing, I saw no mention of scams in the Risk Factors section, except in vaguest of terms. As for Twitter, all we know is the true audience is much smaller than the company says it is: Business Insider calculated that, out of the 175 million accounts claimed by Twitter, 90 million have zero followers.

For now, the system stills holds up. Brands remain convinced that their notoriety is directly tied to the number of fan/followers they claim — or their ad agency has been able to channel to them. But how truly efficient is this? How large is the proportion of bogus audiences? Today there appears to be no reliable metric to assess the value of a fan or a follower. And if there is, no one wants to know.

frederic.filloux@mondaynote.com

What I want for my Mac

by Jean-Louis Gassée

I was a happy man. After twelve years of Windows use at work — the usual Outlook excuse — I was about to be saved by Vista.

On January 30th 2007, 8:00 am, the doors opened at Fry’s in Palo Alto. I showed up early to claim my prize, a 17” HP laptop with Vista factory-installed. I walked in and found that I was more than first in line — I was alone. Unfortunately, I didn’t take this as a warning. I bought the macho machine and completed the expedition with a $400 Office 2007 DVD.

That same morning, I flew to an industry conference, sat in the last row (as usual) so I could play with my new machine — and began to realize my mistake. I had become comfortable with Windows XP, deriving geek pride from my ability to juggle firewall settings, virus and malware countermeasures, I answered the Genuine Windows Advantage challenges and made coffee while the system checked for updates.

But Vista defeated me. I cracked. I walked down University Avenue to the Palo Alto Apple Store and bought a black MacBook (and Parallels software so I could still run Windows XP during the detox period).

The following Monday, my VC partners did a double take when they walked into the conference room: They saw the big Apple logo on the laptop and Microsoft Outlook projected on the big screen. Four years later, one by one, my partners are moving to the Light Side. (I also have a Dell netbook running Windows 7 — but it’s for “research.”)

During those four years, (some of) my Apple prayers have been answered: I have a new 11” MacBook Air, a neatbook I can really use on an airplane — even when the large gentleman sitting one row ahead suddenly reclines the back of his seat. Some days I wish I had a Mac as small and pocketable as my 2001 Toshiba Libretto but, all in all, my 11” Air is the most pleasant laptop I’ve ever owned, even more so than my dearly departed (stolen in Paris) 1991 PowerBook Duo.

Enough nostalgia, I also have unanswered prayers. We’ll start with two easy ones.

My iPad, which I use less often now that I have the MacBook Air, has 3G connectivity. On my laptop I have to use a modem, the Verizon MiFi 3G. It converts the cellular data connection into a WiFi hotspot in my pocket and can support up to five ‘clients’. I use a similar but even smaller device from Orange when I’m in France. I could, of course, use my Android phone as a hotspot (again, for ‘‘research’’), and there are recurrent rumors that someday AT&T will let my iPhone play the same role, but I’d like to cut out the middle man. Now that we know the Verizon iPhone 4 uses the bi-sexual ecumenical CDMA/GSM radio chip, there is hope that all future mobile devices from Apple, MacBook Air included, will have worldwide cellular connectivity.

Less important, but still helpful for this klutz who breaks toes in the dark against furniture, I’d like Jon Ive, Apple’s design guru, to take a weekend afternoon and whip up a black envelope for my laptop. The one he designed for the iPad spares me embarrassment and money every time I drop my tablet.

More difficult: I’d like a MobileMe that works.

MobileMe is erratic, the Back to My Mac feature works, then stops working, and then works again for no apparent reason. Synchronization between machines is so haphazard I finally switched to DropBox — it’s free for up to 2GB of impeccably Cloud-synced files, and a mere $10/month for 50Gb. DropBox hasn’t always worked well on OS X, but the latest version seems to be stable and manages to sync data for a large number of platforms and applications. As an example, it syncs my 1Password passwords across all my desktop and mobile devices, including Android and Windows.

As described in a previous Note, I bought the family pack for OS X and iLife updates even though the ‘’single” version can be installed on any number of machines. That alone probably gets me into the lower tier of the Friendly Idiot database somewhere in Apple’s Cloud, but the fact that I also pay $100/yr for MobileMe upgrades me to Platinum status.

Two days ago, I left a Word file open on my office iMac. At home, when I realized my mistake, I thought I could reach into the office using Back to My Mac, close the file and then open the copy that had been stored/synced through DropBox. Back to My Mac refused to work that night, but I could still open the file from DropBox and continue writing.

At the office the next day, the “old” document was tagged for deletion when I opened the newer version from DropBox. It sounds complicated and it is: Subtle conflicts of timing and location can make syncing difficult for normal humans.

I thought that’s why we have Apple, the non-IT company that caters to The Rest of Us, but, unfortunately, its Cloud services are messy, unpredictable, and filled with rigid silos. The Apple Cloud is supposed to smooth the seams of synchronization but fails to do so because information isn’t properly shared between its various functions.

I experienced another example of Cloud rigidity when I bought a new $99 Developer subscription. I used the Apple ID and the credit card I use all the time for MobileMe and iTunes purchases. The sale went through, Apple took my money…

…but right after the successful cashectomy a cranky algorithm complained about inconsistencies and refused to activate my subscription. Instead, I got an email message asking me to send a notarized copy of my ID by fax:

I’m sure the robot meant well; perhaps its poorly-fed algorithm causes it to bark at shadows. I emailed twice, requesting help and conceding that I may have contributed to the problem. But, ahem, why did you take my money? And why resort to such antiquated means to resolve the situation? Can’t a human use judgment and an email or phone call to correct the misunderstanding?

24 hours later, no one had gotten back to me.

So, why am I enrolling in the Apple Developer Program? I want to test an early version of the next OS X release, Lion, which is rumored to borrow some of the look and spirit of the iPad. In last November’s Monday Note, I criticized the Finder for being too complicated. I’m curious to see if Lion will simplify the UI, fulfill its promise of moving to a more intuitive way of organizing and navigating the content of our machines.

[Apple Insider just published a neat series of posts covering many of Lion’s new features.]

(Interestingly, the new developer release is distributed through one of Apple’s Cloud services, the Mac App Store, the one that continues to enthusiastically embrace my Apple ID — and credit card.)

Still, if I could have only one wish, what would it be?

Without a doubt, it’d be a working MobileMe. Free? Nice, but I’ll take working over free.

[This isn’t my lucky week. After I wrote the above, I bought the $0.99 FaceTime app for Brigitte’s Mac and for mine. This turned into another obstacle course of inconsistencies in Apple’s Cloud, to say nothing of UI trouble. Who tests these things? Engineers or mere mortals?]

JLG@mondaynote.com

Bloggers, publishers and the Apple lockdown

Bloggers like simplicity. They view themselves as computer industry geniuses, as the embodiment of a fantasied future, vectors for all forms of intellectual life, culture, news, entertainment… Bloggers believe in a world where traditional publishing will soon meet a well-deserved death.

Last week, this Manichaean worldview reached a paroxysm: many self-proclaimed digital pundits were celebrating Apple’s move to lock the tablet business down, at the expense of the ever-caricatured “old media”. I’m of course referring to Cupertino’s new policy on subscriptions.

This “us vs. them” is both exasperating and completely misguided.

Last Thursday in London, I attended an INMA conference on tablets strategies — focused on dealing with Apple new rules. About fifty people, all of them using at least one Apple device, all of them eager to make their contents available on the iPad and the iPhone — as long as it is economically tolerable.

For traditional media, the transition to digital boils down to a simple equation. The industry needs to mutate from a business models that used to generate a revenue of 100, to a new one that will only yield 30 — while preserving its core product features and values.

Today’s problem is not one media versus another, it’s the future of journalism — it’s finding the best possible way to finance the gathering and the processing of independent, reliable, and original information. This is emphatically not the blogosphere’s mission statement.

We all agree: for anyone, the no-intermediary ability to reach a global audience is an exhilarating revolution. And, for old-fashion journalism, it’s been the most beneficial kick in the butt ever. Having said this, I don’t buy into the widespread delusion that legions of bloggers, compulsive twitterers or facebookers amount to a replacement for traditional journalism. No question: these new the tools accelerate the news cycle in a stunning fashion — as we can see today with Libyan tentative to cut the internet off, something the Egyptian government did with frightening efficiency ten days earlier. Social networks and microblogging services helpfully supplement the work of journalists when those are no longer able to do their job. But they can’t replace professional reporting. The echo chamber’s sound volume should not be confused with journalism’s unique combination of skills and resources.

Reporting is a métier. No one could become a decent magistrate after reading a couple of law books. In a similar way, good journalism can’t happen without training and experience. Nothing is trivial: handling sources, avoiding manipulation, watching out for ethical traps, managing the distance from facts, and their context…

Without five major newspapers lining up dozens of editors and foreign affairs specialists able to redact and contextualize the Wikileaks trove, the “cablegate” would still be a 300 million words useless swamp –  while still putting at risk the life of hundreds of people. (If you want to grasp the complexity of the operation, read Open Secret, War and American Diplomacy published by the New York Times, or the symmetrical Guardian account Wikileaks, Inside Julian Assange War on Secrecy.)

Blogging zealots will object: Julian Assange could have used the vast powers of crowdsourcing to retrieve and analyze the assembled material. Sure thing. Just consider how the “collective wisdom” would have handled cables pertaining to Middle East politics. Assange knew what he was doing when he decided to work with professional news organizations.

Similarly, consider last week’s investigative piece in the NY Times. It uncovers Google’s strange blindness to JC Penney “black hat” practices. The NY Times described some of the cheating used to unnaturally push a company or a product towards the top of ordinary, “unsponsored” search results. Such an exposé is the product of painstaking journalistic legwork. It didn’t come from the many blogs covering the search business.

This isn’t an exception, it is the rule: talented as they may be, bloggers can’t provide this type of service to society.

How does this relates to the business model of news? One word: Costs. Maintaining and nurturing competencies in a large newsroom costs millions…. which have yet to materialize in digital media. In the transition to the new internet-based world, the failure of advertising and of paid-for models both threaten to make digital journalism insolvent.

Which brings us back to Apple subscription policy. Why were my colleagues at the INMA conference so upset?

Five reasons

#1  The introduction of the iPad led publishers to believe that Steve’s tablet could — finally — be the magic trick to get readers to pay for news. They’re not so sure now.

#2  As we discussed in a previous Monday Note (see Apple’s bet on publishing), subscription is the model of choice for digital publishing, as it is for most of the content industry.

#3  Arguing that publishers who pay 40%-50% in printing and distribution costs should be elated to see Apple charging “only” 30% fee is ludicrous. For one, the true number is 39% here in Europe after taking in account the Luxembourg VAT. Secondly, readers expect (rightfully so) a big discount over the price they used to pay at their newsstand. A lower price tag combined with advertising yielding a third or a fifth of the dead-tree model would call for a platform costing no more than 10%-12%.
For that matter, I totally agree with James McQuivey’s analysis published by PaidContent who says the cost structure of a digital platform should be closer to the credit card processing business (McQuivey, a Forrester analyst, predicts distribution platforms fees falling below the 10% mark at some point).
A 30% rate could be acceptable for managing complex applications such as games that requires sophisticated development tools and technical approval; but not for contents-based apps such as newspapers.
No one says Apple should have left a backdoor for digital subscriptions open, but the Cupertino guys should probably consider a more flexible approach based on real costs.

#4 The same blogosphere misconception applies to the collection of customer data. Many digital pundits praise Apple’s Opt-In for allowing the release of customer data, arguing that medias are responsible for the deluging mailboxes with unwanted mail. That, again, is nonsense. A newspaper or a magazine subscriber costs as much as $300 to recruit. Does anyone really believe that a subscription department will try to squeeze a few dollars per record by leasing its precious database ? Of course not.

And by the way, I find quite funny to see such idea propagated by those who lay socially naked on Facebook, enjoy sharing their breakfast menu on Twitter or flock into email sucking engines such as Groupon.

#5  The least acceptable part of Apple subscription policy is the impossibility for a publisher to propose a cheaper subscription elsewhere. This is probably the most legally challengeable aspect of the newer terms of service. It goes against one of the most basic laws of retail: prices reflect the cost of the distribution platform. The Korean convenience store open 24/7 is more expensive than WalMart.
In itself, this restriction could be the main motive for publishers to quietly exit an overly constraining App Store.

At last week’s INMA conference in London, most the people I spoke with were considering alternatives to Apple’s lockdown. Others solutions are emerging. The most obvious ones rely on HTML5. Today, a set of pages and UI functionalities reproducing the deepest iOS features (such as GPS or sensors management) can be downloaded with a single http request and allow 15 or 20 megabytes of offline reading — sufficient for a digital publication with no video. Of course, such wizardry is still in its infancy and development requires a great deal of tinkering, but it’s improving fast.
There is no such thing as a durable lockdown in the internet world.

frederic.filloux@mondaynote.com

What future for the Macintosh?

With Apple’s smartphones and tablets making so much money and taking up so much media bandwidth, one has to wonder: Is there a future for the Macintosh?

We’ll first take a look at broad trend numbers and try not to molest them too much. As we saw last week, they’ll confess to anything when under torture. After that, we’ll explore the significance of recent changes in the Mac ecosystem: the new MacBook Air and the Mac App Store. Finally, we’ll extrapolate a bit and attempt to answer the question in this note’s title.

Mary Meeker, the Wall Street analyst who recently left her Morgan Stanley pulpit for a Kleiner Perkins perch, just updated her highly-regarded Mobile Internet Trends presentation. From her 56 slides I extract this one:

2011 is the year when PCs will cede the market momentum lead to smartphones and tablets. The disparity between the old guard and the new Really Personal Computers become huge in 2012 and 2013.

This comes sooner than expected: Only four months ago, while she was still at Morgan Stanley, Meeker had this forecast:

The takeover wasn’t supposed to happen until 2012, but, as this review of Gartner and IDC numbers shows, the growth of mobile devices far outpaced the PC in 2010.

For Apple, the smartphone/tablet takeover happened even earlier. I just looked at the Q1 2010 numbers (for the September to December 2009 period):

And this was before the iPad.

For the same quarter this fiscal 2011 year, the iPhone and iPad brought in $15B vs. a “mere” $5.4B for the Macintosh line:

Let’s not forget the iPod Touch. It represents about 50% of the iPod’s $3.4B, with the total for all iOS devices representing 65% of Apple’s revenue. (I have no Apple TV numbers.)

This past year, the Mac business went down percentage-wise, from 28.4% of Apple’s total to 20.3% this past quarter, and operating margins are certain to be smaller than the almost obscene 60%+ Apple gets for its iPhone ($620 ASP against an estimated $180 BOM).

With these numbers, why bother with the Mac? Last October, Apple held a Back to the Mac event whose purpose was to answer that one question: Why bother?

In the first place, the Mac is a $22B business, #110 on the Fortune 500 list. Second, it’s growing nicely. See the numbers above: +23% in dollars (and 22% in units), with a stable ASP of $1313. That last number is the envy of the PC industry. Because of netbook sales, the industry-wide ASP hovers slightly above $530. (This is the net revenue to the manufacturer, not the retail price.) That’s why the largest PC maker, HP, makes only 5% in operating profit on their $10B quarterly sales. For HP, the Why Bother question applies. I’m curious to see what the new CEO, Leo Apotheker, will do about the low-margin commodity parts of HP’s lines of business.

Macintosh products, on the other hand, have avoided the ‘‘race to the bottomthat plagues  PC clones. The business is big, it’s growing faster than the rest of the industry, and it makes more money.

Then, last quarter, something changed:

Desktop unit sales were flat (-1%) while laptops took off (+37%). Compare this to the 2009 vs. 2010 units numbers in Apple’s 10-K (the yearly filing):

Back then, desktops were growing faster than laptops. So what happened last quarter? The answer appears to be the new MacBook Air.

To confirm this, let’s transport ourselves to a typical Apple Store. We’ll start in September 2010. The older MacBook Air is relegated to a low-traffic area of the store. It’s not “moving.”

Now look at the same store today. The Science of Shopping says the ‘‘high-value” area must be the first table on the left, because, statistically, that’s how we navigate stores. There we see six MacBook Airs: four 11” models and two 13” configurations.

Why the change?

The attractive price is part of the answer: The base 11” model sells for $999, low by Apple standards. But performance is the more important factor. The older generation Air was considered neat but sluggish. For the new machines, the slow hard drive was replaced with an SSD (Solid State Drive), and the word of mouth quickly spread: The new MacBook Air is fast! It boots up (and wakes up) quickly, plus it has a longer battery life, improved display… The former also-ran was transformed into a best-seller, especially the smaller 11” model (I’ll call it a neatbook in reference but not deference to Apple’s edict against using the n-word: netbook.)

Thinking of the Mac’s future, we don’t risk much when we assume SSDs will replace hard drives on laptops. Apple is on a drive to drive the drives out — at least in the mobile segment of the Mac line. (We’ll see how this manifests itself when the “Pro” configurations get refreshed later this year.) SSDs are still expensive but for how long? And how will Apple’s billions ($3.9B at last count) in advance purchase agreements with its suppliers impact prices?

We now move to the Mac App Store.

The Mac App Store was launched on January 6th and, but for a few bugs, appears to be a success. My first impression: Nice…it helps the small-scale developer who otherwise can’t get shelf space.

True, the App Store is a boon to developers — the creators of Pixelmator, a well-crafted, easy-to-use Photoshop subset, made one million dollars in revenue in three weeks. But that’s not the Store’s only — or even most important — benefit.

Let’s start with the convenience for the user. As with iTunes tracks and iOS apps, the Mac App Store circumvents the usual e-commerce obstacles. The site, the download, the payment system, the installation and updates…the workflow is smooth. No serial numbers, no DVDs, no waiting. And you can install the same applications on more than one machine by simply confirming your Apple ID, no further payment required.

And let’s talk price… Mac software prices are coming down. A sharp-tongued friend of mine “hopes” Adobe opens a 24/7 War Room. Why? “Because the market price for Mac software just got divided by three.” Nuance and exaggeration aside, he’s right. When Pixelmator was launched in the second half of 2007, it was priced at $59. Now, much improved, it sells for $29 on the App Store (albeit “for a limited time”) with a free upgrade to an upcoming 2.0 version.

Apple sells its own productivity apps (word processor, presentation, and spreadsheet) for $19.99 each. It’ll be interesting to see if, how, and when Microsoft or even Adobe use the App Store and how they’ll price their products.

Now, an IQ test. This…

…or this…

Both are available today. Which do your prefer? The $199 DVD (protected by a serial number) that you buy at the physical store and install on a single machine, or the $79 product you download and install as you see fit on any of your machines?

The difference in price is, of course, the main attraction, but freedom from serial numbers is also important. When I switched machines using the Migration Assistant, everything moved over without a hitch, files, applications, settings, even the desktop background…or so I thought. A few weeks later, I fired up Aperture and, unlike the rest of my applications — even Microsoft Office — it demanded a serial number. A foraging expedition produced the Aperture 3 DVD, but that didn’t placate the cerberus because that was an upgrade DVD. I needed to come up with the SN for Aperture 2. I erased the program and bought Serial Number Freedom — and legal multi-machine installs — for $79.

All of this leads one to wonder if Apple will rid its stores of “boxed” software, thus fulfilling another of their goals: fewer SKUs, a simpler store.

So, what’s the future for the Mac?

There’s the promise of “regularity,” apps that only use published APIs. This is both a controversial topic and a way for Apple to redeem past sins. Restricting hacks could mean less room for developer creativity, but it will also mean a more reliable system and, for Apple, more freedom to make changes “under” the applications once enough of them are “regularized.”

This takes us to a more speculative train of thought: Moving to the ARM architecture.

When you experience the 11” MacBook Air on a relatively slow 1.4 GHz Intel processor, you can’t help but wonder how it would feel on multi-core ARM hardware. Porting an OS to a new processor is no longer rocket science, but moving third-party applications is much harder — unless they’ve been distributed and regularized in such a way that makes the transition smooth and transparent.

Then we have the next OS X version, dubbed Lion. Last October, Steve Jobs emphasized the point that Lion’s simplified UI borrows the “magic” of the iPad. We’ll have to wait for the product, slated for a Summer ’11 launch, but that didn’t stop my friend Peter Yared, a serial entrepreneur and sharp blogger, to offer a suggestion: “Take that iPad-ified MacBook Air one step further. Look at the Toshiba Tablet PC; there’s a pivot inside the display’s hinge:

Twist the display and it becomes a tablet:

Imagine what Apple could do with this!”

As I was writing this note, I found Andy Ihnatko, a respected technology journalist, appears to be thinking closely related thoughts in this MacWorld piece.

I worry about the complications: OS + UI + mechanical challenges but…Apple might have the people and guts to pull it off. We’ll see.

End notes:

No MicroNokia kremlinology today. I’ll write about it in a few weeks, after the dust settles. In the meantime, you can look back at past Monday Notes such as last September’s Nokia’s New CEO: Challenges or last February’s Mobile World Clusterf#^k. And, of course, Elop’s Burning Platform memo, highly unusual in its brutal frankness.

As always, look for penetrating analysis on Horace Dediu’s Asymco. And for another type of “penetrating” commentary and BS detection, see Brian Hall’s The Smartphone Wars — they both rose to this week’s challenge.

JLG@mondaynote.com

Mac App Store: Soon But Controversial

by Jean-Louis Gassée

This year, three wishes were on top of my list: A smaller, lighter MacBook, an app store for the Mac, and a curated iOS app store. I got two out of three. The 11” MacBook Air works quite well when the passenger in front of me fully reclines his seat; and Apple, following its own iOS example, did indeed launch a Mac App store. We’ll have to wait for curated help finding our way through the hundreds of thousands of apps for iPhones, iPads, and iPod Touches, but there’s always next year.

The Mac App Store, announced October 20th, is still in the Coming Soon state, likely to open its ports mid-to-late January 2011. Mac developers have been able to bring their offerings to Apple’s altar since the beginning of November and, last week, we got a new set of Mac App Store Review Guidelines (see the PDF here). No real surprise, and a nice conclusion I’ll quote in full:

Thank you for developing for Mac OS X. Even though this document is a formidable list of what not to do, please also keep in mind the much shorter list of what you must do. Above all else, join us in trying to surprise and delight users. Show them their world in innovative ways, and let them interact with it like never before. In our experience, users really respond to polish, both in functionality and user interface. Go the extra mile. Give them more than they expect. And take them places where they have never been before. We are ready to help.

Except for the tired “surprise and delight” marketing BS, it’s a crisp envoi, a sendoff to a fresh set of tasks and opportunities. And, as befits anything Apple does, the Mac App Store kicks up a new and improved set of arguments.

Unavoidably, we have the C-word heat: ‘Steve Jobs is a Control freak. After Closing the iPhone ecosystem, he wants to exert the same dictatorial control over the Mac. Yet another Walled Garden’. The following Fair and Balanced extract from the Wikipedia Mac App Store article lays it out:

The centralization of downloads in the Mac App Store have caused controversy among apple developers in the blogosphere. It has been criticized for creating a monopoly since users are encouraged to get their applications from one specific place. This creates a hard situation for programmers that might feel like they can’t afford to stay outside apple store. Apple also charges a fee for programmers to publish their applications in the store. In order to host an application a user need to give 30% of the applications sales price. This is way more than the 8% that software providers like Kagi, eSellerate, or FastSpring charges. The developers doesn’t only have to pay for selling their apps but also to develop them. Special tools are needed that can only be licensed from Apple. Developers have also criticized Apple for cutting their connections with the customers when App store is being used, since they have to follow Apples rules it’s impossible to use for example Shareware versions and control how updates are done.

This hasty, one-sided—and badly written—piece is a good illustration of Wikipedia’s limits. As a counter, I’ll hasten to point you to the much more complete App Store article. The latter exemplifies Wikipedia at its best: Wide, deep, accurate, filled with numbers and links to other sources.

The main beef against the Mac App store seems to be that it will hurt developers. In an extension of the iOS App Store authoritarian regime, developers will lose the freedom to sell their software as they please.

That’s simply unfounded, and counterproductive paranoia: Mac software will continue to be sold (and sellable) on shelves and on Web sites. But who gets to approach these venues? Small, independent app developers have a terrible time getting shelf space in retail stores. Making money by selling one’s wares on the Web isn’t an easy task either. See here a 1995 Dilbert strip that depicts the hard life of an application developer trying to raise VC money. Fifteen years later, having moved to The Dark Side, I can assure you VCs haven’t gotten more generous…unless you write code for the Apple or Google app stores. In 2008, Kleiner Perkins, the famed Sand Hill Road VC firm, launched a special $100M iFund dedicated to iPhone apps. Two years later, the iFund has doubled in size. Knowing we VCs aren’t non-profit charities, one has to assume we see the victims of app store monopolies making lots of money, of which we’ll get our customarily modest share.

When the Wikipedia piece professes to lament Apple’s 30% take, it shows a deep misunderstanding of the money one needs to sell application software on the Web. You must build and run a commercial site, and, if you’re too small to get a commercial Visa or PayPal account, you also pay a commission to Kagi and similar agents. Then you have to attract customers by spending advertising dollars and buying Google AdWords. That’s why Google’s rich and you’re not.

Microsoft can afford to get shelf and Web space for Office, but a small developer who’s written a neat text editor, or a Website design tool, or a small $10 UI-tweaking utility has a hard time making a living.

At least for today.

Tomorrow, just like with Android and Apple smartphones, the most expensive process will be writing the app, and the occasionally irritating part will be the review process.

Yes, there will be a loss of “freedom.” Today on Macs (and PCs) you can sell code that modifies the machine at any level. It can yield very useful results, or it can wreak havoc, there are (almost) no limits. Tomorrow, the Mac App Store will impose restrictions. Some will irritate, some will be acceptable. We’ve seen Apple back down from some of the more aggressive interpreter restrictions for iOS apps, for example. But your neat $10 utility will find customers, updates will be managed, payment processing won’t be a problem.

And there will be other beneficial effects. Most Mac applications install with a simple drag and drop to the Application folder or icon on the Dock. Uninstalling is equally simple: Drag the app to the Trash and you’re done…most of the time. I won’t name the apps that are, in my experience, the worst offenders but suffice it to say that they sprinkle my system with bits that are very hard to cleanly uninstall. And, just like in Windows, removing one application might maim another program from the same vendor because they both rely on the same module. This is likely to disappear over time as Mac users contrast and compare app installation and updating behaviors inside and outside the walled garden.

It’ll be interesting to watch how prices evolve, if they do. The iPad version of Pages, Apple’s Word processor, sells for a mere $9.99. On the Macintosh, Pages is part of the iWork suite which includes Numbers (a spreadsheet) and Keynote (Steve Jobs’ own presentation software) and sells for $79, or a Family Pack (5 licenses) for $99. Will those prices stand? Perhaps, especially if Apple wants to make room for Scrivener or DevonThink, to name but two examples.

And what about Microsoft? Today, Microsoft Office for Mac 2011 retail prices ranges from $149 to $279, depending upon the version and number of licenses (two for the priciest).

Do we think Microsoft gives less than 30% margin to the total wholesaler + retailer food chain? Of course not, the distribution network’s take is traditionally much higher, sometimes exceeding 50%. Which is to say even Microsoft will like the Mac App Store “strictures”. We’ll have to see how they whine if they’re rejected for infringing some arcane guideline…

This is a good moment to remind ourselves of Apple’s true nature and goals: Apple is a hardware company. For all the beautiful noises they make about software, they don’t care much about making money from it. Software is a means to an end: Hardware margins.

Microsoft puts a code on the Windows disk to protect its OS revenue. Have you seen a license number on an OS X disk? No, you can install it on as many machines as you like…Apple machines, that is. A multiple install from a “single” disk might be in breach of the formal licensing agreement, but unless you’re manufacturing Mac clones, I doubt Apple’s attorneys will be looking for you. (They seem to be very busy fighting patent wars.)

The “blogosphere controversy” blithely ignores the only source of money that matters: The paying customer. Does the new Mac App Store benefit the user? Easier everything: buying, installing, updating. On the iOS platform, there have been more than 7 billion downloads from a library of more than 300,000 apps. We’re probably not going to see such numbers on the Mac version. There are far fewer applications, a smaller installed base (in approximate quarterly numbers, think 3 million Macs versus 15 million iPhones), and alternate venues for selling applications. Nonetheless, even if the new app store has a more modest debut and subsequent growth, it’ll be a good vehicle for smaller developers who struggle with the inconvenience and cost of today’s channels. It might even have the effect of attracting new developers to the OS X platform.

A controversial idea indeed.

And as for Steve Jobs’ controlling manners, who’s complaining? Customers, shareholders?
Oppressed employees? See the Stockholm Syndrome at work below:

JLG@mondaynote.com