Mark Sigal's Blog - The Network Garden

Holy Shit! Apple’s Halo Effect

Churning through the analysis of Apple’s earnings call yesterday, there was one bit of data that evoked a “Holy Shit!” moment. 

The data pertained to year-over year Mac sales, and the fact that they are up 51% this year compared to last - a rate of growth that is 3.5X better than the PC industry. 

Think about that one for a moment, and what it means to Apple’s execution of their strategy. 

On the one hand, it is tempting to caveat this data by noting that Apple is growing from a relatively tiny base of the PC market (they have a six percent market share). 

But, the fundamental truth of the matter is that growth is growth, and the bigger the ripple, the bigger the wake. 

Even more, when that ripple is GOOD GROWTH (i.e., high margins, product differentiation, customer lock-in/leverage via multi product buys, Apple's penetration into real and virtual sales channels), look out as true ‘halo effects’ start to play out that are self-affirming (i.e., success in one area feeds success in another).

In other words, the more the Mac business grows, the more gravity becomes Apple’s friend in mobile, media, online services and the like.  And vice-versa (growth in those areas drives people to buy Macs). 

This got me thinking about the fundamental TREND BETS that Apple made and has executed on.  Why?  When you can get in front of the right trends and actually execute, gravity has a strange way of becoming your friend. 

I would summarize these trend bets as follows:

1. Make mobile Internet caveat-free. EXPLANATION: Before iPhone, mobile Internet was the proverbial dog walking on its hind legs.  Impressive that it could be done at all but not compelling.  No more.
2. Rich media is the ‘MY STUFF’ bucket that matters.  EXPLANATION: What we personalize, choose to listen to, watch, save or digitize is what we keep.  As a result of this fact, iPod (and now iPhone) have established a hard to emulate position as part of our online DNA, and this can be grown into all sorts of interesting product directions.
3. Everything is a platform.  EXPLANATION: Having specific methods for extending and integrating your offerings, as well as providing tools that enable an ecosystem to coalesce around your platform trains customers that investments today will be rewarded in spades over time, creating customer loyalty and enabling high margins.  This used to be Microsoft 101 (before they started chasing Yahoo’ish windmills to Vistas unknown), but now it's Apple’s domain (read: iPod and the music industry; iPhone and mobile carriers; and soon, iPhone SDK).
4. Everything is integrated from device to PC to online service.  EXPLANATION:  When you have the ability to look at an application as the optimal composite of what a general-purpose PC does well, combined with what a highly specialized iPod/iPhone/Apple TV does well and can weave in the dynamism of online services, you can operate in three dimensions, which is a beautiful thing.  When you are adept at things like workflow and usability, as Apple is, it is breathtaking; a game-changer.
5. Everything is derivative.  EXPLANATION:  Understanding the different “jobs” that customers hire your products for and segmenting your offerings accordingly enables you to provide optimized solutions while maximizing leverage.  This, in turn, enables domination of specific segments while delivering the economy of scale needed to build high margins.  The latest wrinkle to this is that Apple is starting to get good at taking innovations from one product (e.g., Multi-Touch on iPhone) and baking it into others (Multi-Touch on MacBook Air).  Cross-pollination in an innovative company like Apple bears all sorts of unanticipated fruits.

Now if only Apple can figure out how to get in front of the social media/social networking trend, my Facebook page might start to hyperventilate.  :-)

Related Links (from my blog):

1. iPhone SDK: Mobile reasons for optimism
2. The Chess Masters: Apple versus Google
3. Comparing Microsoft's challenges to the fall of Communism

Related Links (other sites):

1. Gone Indie: an excellent post by an ex Apple engineer both affirming what makes Apple great and why it was time to leave.  Also, supports my comment on Apple being slow on social networking uptake.  His post was written some time back so not suggesting our comments influenced one another just connecting dots from an Apple insider to an Apple outsider (me).
2. Valleywag: On BusinessWeek story indicating that out of 250 surveyed companies, 87 percent report owning Apple computers. That's up from 48 percent in 2006.

Envisioning the Social Map-lication

eMarketer predicts that the number of people who create "user-generated" content will rise from 77 million in 2007 to 108 million in 2012.

On the one hand, that is a big number.  On the other, this is the information age, and the Internet is a two-way media so it makes sense that this increasingly becomes a medium where we both consume AND generate/create content.

Towards that end, it also seems logical that applications will emerge that help us take a more unified approach to organizing, managing and publishing our profusion of posts, pictures, videos, comments, tracked discussion threads, playlists and profiles.

Some people think of this bucket as a social map, the amalgam of social media, our network of connections and online breadcrumb paths.

Recently, on GigaOM, I wrote a guest column that expands on the concept of social maps, and envisions some application kernels that support it.

Here is an excerpt from the post:

Isn’t this the moral of the story regarding iTunes, iPhoto and the iPod/iPhone? Namely, that whether blogging, YouTube’ing, Flickr’ing, Digg’ing or tweet’ing, the “forever” bucket is the bucket consisting of my content, my contacts, my contexts and my conversations.

This suggests that regardless of where any of these informational breadcrumbs may originate, each of us needs to think of ourselves as the center of our respective social map universes. In other words, the social map — in order for it to be considered a map – needs to systematically connect the dots between me, my content and my network. A map-lication of sorts.

Check out the full post HERE.

Related Links:

1. Social Media: Breadcrumbs and Conversations
2. Why I Blog: It's about Brand not Bread

Social Media Marketing: What does it mean to me?

In conjunction with ad:tech San Francisco, which is going on right now, my company, vSocial, is running a microsite called The Answer where consumers can upload a video or picture and description of what social media marketing means to them.

Here is my video.

Related Posts:

1. Online community building: three critical ingredients
2. Vespa Go Green Campaign and Interactive Agencies
3. Don’t Subordinate your Brand
4. Social Media: it's about Breadcrumbs and Conversations

'Whaling': Larger Prey As Targets of Phishing Scams

You receive an email message appearing to be an official subpoena from the United States District Court in San Diego.

Visually, the message looks official, includes your name, company name and phone number, and commands the recipient to appear before a grand jury in a civil case.

What do you do?

Unlike most e-mail phishing scams, this one passes the sniff test.  “I think that it was well done in terms of something people would feel compelled to respond to,” said Steve Kirsch, the chief executive of Abaca, an antispam company based in San Jose, Calif, and a recipient of one of the 'subpoenas'. “Even the U.R.L. to find out more looked legitimate at first glance.”

Clicking on the link embedded in the message (which purports to offer a copy of the entire subpoena) results in the recipient who tries to view the document unwittingly downloading and installing software that secretly records keystrokes and sends the data to a remote computer over the Internet. This lets the criminals capture passwords and other personal or corporate information.

Scary stuff specifically because it does pass the sniff test, and according to the New York Times article spotlighting this, well targeted too (whaling is a play on the phishing term):

Thousands of high-ranking executives across the country have been receiving e-mail messages this week that appear to be official subpoenas from the United States District Court in San Diego. Each message includes the executive’s name, company and phone number, and commands the recipient to appear before a grand jury in a civil case.

Several security researchers said that the real danger of the attack lay in a second level of deception, after the hidden software provided the attackers with digital credentials like passwords and electronic certificates.

Despite the seemingly easy-to-trace domain name, the feds guess this originates from China, and as such will be hard to stop.

Membership has its privileges, I guess.  Welcome to the underbelly of the global economy.

Life's Lessons: Let others pull you higher

Life is hard enough. Whenever you can leverage others to make gravity your friend, you should try to do so.

Yet, too often the mental tape plays, "I can do it myself."  Or, control dramas kick in and you think, "I want to do it MY way."  Sometimes, it's pride chiming in with, "I don’t want to appear weak." 

Recognize these psychic utterances as discursive thoughts.  There is no special award for solitary accomplishments, and there will be plenty of days when the road ahead will be lonely. 

Take comfort in the strength of others.

Staring into the Abyss: What Really Matters

There is a Buddhist axiom about Crazy Wisdom. Sometimes from standing on the edge and staring into the abyss, there is a moment of clarity and understanding.

From this place, catharsis can occur, new muscles can flex and the bearer can find themselves able to carve wholly new paths that heretofore were sight unseen.

What brings me to this sensibility are two articles.  One, a post written by my friend, Om Malik (of GigaOM), codifying lessons learned in the past 90 days since his heart attack. 

The other, a recent article by Randy Pausch, a professor at Carnegie Mellon University, who is dying of pancreatic cancer.  The article summarizes his ‘final lecture’ about what really matters in life.

Hopefully, none of us will have to find ourselves on such a finite dead-end road before we get clarity on what matters to us most in life; but, with that perspective in mind, put yourself in Randy’s shoes for a moment, and consider what HE considers the indispensable truths of life. 

(The video from the lecture is below this summary, and a link to the full article is HERE.)

Always Have Fun
I came to an early realization. Each of us must make a decision, best captured in A.A. Milne’s Winnie-the-Pooh characters. Am I a fun-loving Tigger or a sad-sack Eeyore? It’s clear where I stand.

Dream Big
Give yourself permission to dream. Fuel your kids’ dreams too. Once in a while, that might even mean letting them stay up past their bedtimes.

Ask for What You Want
Ask. More often than you’d suspect, the answer you’ll get is, “Sure.”

Dare To Take a Risk
Experience is what you get when you don’t get what you wanted. And it can be the most valuable thing you have to offer.

Look for the Best In Everybody
I got this advice from Jon Snoddy, my hero at Disney Imagineering. “If you wait long enough,” he said, “people will surprise and impress you.” When you’re frustrated with people, when you’re angry, it may be because you haven’t given them enough time. Jon warned that this took great patience, even years. “In the end,” he said, “people will show you their good side. Just keep waiting. It will come out.”

Make Time for What Matters
Time is all you have. And you may find one day that you have less than you think.

Let Kids Be Themselves
My job is to help my kids foster a joy for life and develop the tools to fulfill their own wishes. My wishes for them are very exact and, given that I won’t be there, I want to be clear: Kids, don’t try to figure out what I wanted you to become. I want you to become what you want to become. And I want you to feel as if I am there with you, whatever path you choose.

UPDATE (July 25, 2008): Randy Pausch passed away today.  Say a prayer for his family, and hope that he is in a better place.

Sub $200 Wi-Fi Touchscreen iPods by Fall?

AppleInsider is reporting that Investment bank Piper Jaffray expects Apple to release new Wi-Fi enabled, touchscreen iPods in the sub-$200 range by September. 

Yowza!  Talk about mainstream, entry-level price point.

The PJ analyst goes further, noting, “In fact, we believe the concept of the iPod will change in the next 12-18 months from a standalone music player to a mobile Internet device that fits in your pocket."

Two quick comments to this story. One is that beyond the obvious top line objectives to keep growing the iPod business, this is as much about converting the 100M iPod base into the iPhone SDK-powered platform.

Apple can generate serious coin by wooing developers to build apps if the reach of the platform is 100M devices. They can secure a big time halo effect for their Mac business by increasing the integration and leverage between these devices and the Mac. And they can extend their reach into other segments and device form factors if they pull this off.

Two is that beyond the potential market segmenting confusion as price and functionality lines blur between iPhone and iPod touch, they already have branding and messaging challenges.

The platform is called iPhone SDK but if they execute, there will be as many if not more of these devices running on iPod touch (as iPhones).

It is a mouthful to have to write every reference as 'runs on iPhone and iPod touch devices' and it is certainly less crisp, which limits the effectiveness of marketing messages that leverage viral, word of mouth strategies.

Here is a link to the full article.

Related posts:

1. Mobile Reasons for Optimism: The iPhone SDK
2. Mobility Lives! The iPhone SDK looks awesome
3. iPod touch: the first mainstream Wi-Fi mobile platform?

Obama, Clinton and the 'Winner Take All'

While Republicans have long understood the WINNER TAKE ALL nature of presidential elections, Democrats have tended to feel 'dirty' about the dog fight-like nature of process, and fought lamely as a result.

This has yielded vanilla candidate after vanilla candidate (think: Dukakis, Gore, Mondale, Kerry), and defeat after defeat (save for two-time heavyweight champion, Bill Clinton).

With that as a backdrop, some sage clarity  and exposition from Maureen O'Dowd in today's New York Times:

One of the most valuable lessons the gritty Hillary can teach the languid Obama — and the timid Democrats — is that the whole point of a presidential race is to win.

It’s not to share power, or force the squabbling couple into an arranged marriage.

The winner wins, even if it’s only by a fraction of a percentage point or one Supreme Court justice.

Winning has no margin of error, as the Democrats should have learned by now. And the winner gets to decide his or her running mate.

Read the full article HERE.  It is extremely crisp and well articulated.