Pattern Recognition: Twitter's Betrayal; Apple's Set-Top Box; 30 Years of Bull

My goal is to write one 'Pattern Recognition' a week. Just the top 3-4 stories that stayed under my skin. Here's what stuck this week:

1. Twitter's Betrayal: There is no sugar-coated way to put what Twitter did to its developer ecosystem this week (see Marco Arment's write up here). Although in the company's defense, they sure tried to put lipstick on that pig of an announcement. It's a betrayal and an intellectually dishonest one at that. As John Gruber put so well, so much of what we think of as "Twitter" was created by third-party developers. A key selling point of the platform to developers was its simplicity, flexibility and win-win ethos. But, we get it. As Hunter Walk notes, when you raise hundreds of millions of dollars at an $8 billion valuation, investors want to you to focus on making money, and so that is what Twitter is going to do. But, I must say that in 20+ years in tech, I can not think of a more blatant case of a company pulling the carpet on its developers (okay, maybe Apple comes close - when Steve Jobs unceremoniously killed hardware clones upon his return to Apple), but as litmus tests go, consider this. If it was Apple who suddenly woke up and started co-opting its developer ecosystem, then created rules to ensure that none of them could compete with Apple or get large enough to be relevant, people would be clamoring for the Department of Justice. And that's the biggest bummer. Some of us thought that Twitter was like Apple, that it stood for something. That is the biggest bullshit sandwich about this announcement. One the other hand, if I was Microsoft, Google or Facebook, now would be golden time to reverse-engineer Twitter's API, and go on the attack with developer friendly rules. All's fair at this point.
2. Apple's Set-Top Box: The rumor mill is heating up with respect to Apple's ambition in the living room. In this latest go around, the banter is that Apple is focused on building a set-top box, and working through cable and satellite providers versus trying to route around them. My take, which I blogged on earlier this year, is that this path makes a heck of a lot more sense than Apple building a TV. For one thing, history suggests that Apple's greatest successes (in music and mobile) have come about by working through the incumbents, NOT by trying to dislodge them. Why would TV be any different? Whether through 'de-bundling' (individuals songs from complete albums), 'surrounding' (apps, web, communications) or 're-thinking' (touch), the Apple Way has been to embrace and extend. In mobile, this has lead to greater customer loyalty and higher ARPUs for the carriers, the antithesis of wholesale disruption. As such, the Comcasts and DirecTV's of the world would be wise to embrace what Apple has to offer. Their boxes aren't very good, anyway.
3. 30 Years of Bull Market: Our economy and our society is stuck in a stagnant place. Yet, Andy Kessler raises an excellent point in his piece on the durability of the stock market over the past three decades. He suggests that the reason for our impressive run is that in the past 30 years "the market and economy has transitioned from funding fixed assets (oil, gold, land) to funding ideas." When I think about it that way, it's hard not to be a believer in our future. Our society has no shortage of ideas, and I can construct scenarios where new "job creating" industry seeds take root. My thesis is this: Amazon and Google have commoditized that which can be commodatized, but what rises in response is companies born of the Apple ethos - integrated, differentiated and delightful. That's the wave that is going to drive industry for the next 30 years.

Comments

[AshuJoshi]

Mark: Great post! And thanks for the link to Andy Kessler's post. I read his post, and then re-read yours again. Like the summation and the inference.
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Amazon and Google have commoditized that which can be commodatized, but what rises in response is companies born of the Apple ethos - integrated, differentiated and delightful. That's the wave that is going to drive industry for the next 30 years.
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Although I do feel that even Amazon & Google are creating value - especially with AWS, and the constant (but may be commercially inviable) experiments Google keeps carrying out. Without AWS - many startups would have had a harder time getting off the ground!

[Mark Sigal]

@Ashu, thanks for the comment. To be clear, I am not suggesting that Amazon and Google are not in the business of innovating; they most certainly are.

Just that their primary business models are all about bringing once high margin market segments into lower margins or free buckets.

In Amazon's case, this is to capture a high percentage of the consumer's spend, loyalty, and get the consumer (or developer) to lock themselves into Amazon goodness.

In Google's case, they happen to have one of the highest margin businesses on the planet and a very broad landscape in search. They can afford to play defense or offense as they see fit unless and until that primary business is disrupted.