Mark Sigal's Blog - The Network Garden

Apple’s Mobile Gaming Gold Rush

Today’s Wall Street Journal has a good article on the state of the iPhone/iPod touch mobile gaming segment. 

Netting it out: the data points suggest that iPhone/iPod touch is emerging as a classic low-end disrupter to the dedicated handheld gaming segment.

First and foremost, the raw numbers show that iPhone and iPod touch owners have downloaded about 50 million games, representing about 25% of the 200 million TOTAL apps downloaded from the iPhone App Store to date.

This level of uptake so soon after the launch of the iPhone 2.0 Platform is a testament to a few things.  One is pure diversity of gaming options, with more than 2,000 iPhone games available, virtually all of which have been created by the third-party developer ecosystem that Apple is cultivating. 

Two is cost.  Simply put, a disproportionate number of the downloads are for free games, and virtually every game is priced under $10, placing them well under half the cost of the games available on dedicated gaming consoles.

Three is the seamlessness of the App Store distribution model. Enticing pricing is great, but when you couple it with the impulse buy friendlessness of App Store’s wireless browse, click, buy, download, use & enjoy model, you really have a winning combination.

Finally, the fact that the iPhone/iPod touch is not a dedicated gaming console, and as such, lacks optimized physical input controls and is technically less powerful (in the hardware sense) than its dedicated competitors, is arguably its greatest virtue. 

Why?  iPhone’s sweet spot are casual gamers, and the early data suggests that everyone at some point of the day/week/month has a casual moment for which gaming is the antidote. 

Plus, because gaming is just one of the tasks that consumers use their iPhone/iPod touch for, the device is never far from their clutches – and their (virtual) pocketbook.

I see this truth play out several times a day, EVERY DAY, when my three and six year old sons ask if they can use my iPod to…play games, listen to music, view our photo albums, watch YouTube videos, use their favorite drawing program, etc.

The Developer Case Even More Compelling
On the developer side, the data is even more heartening.  Even with Apple keeping 30% of the proceeds of software sales through App Store, Simon Jeffery, the U.S. president of Sega notes that, "Games sold via the App Store are the most profitable in terms of any of the formats we work on."

(SIDEBAR: Sega has sold 500,000 copies of its middling “Super Monkey Ball,” although it's worth noting that Apple has heavily promoted the game and that while Sega sold 300,000 copies in its first month of release, it has ‘only’ sold 200,000 copies over the last three months.)

Part of the key here is that the combination of Apple’s built-in App Store marketplace for game review, purchase and distribution, and a stellar development platform (see my post ‘iPhone 2.0 - Swinging for the Fences’) has lowered distribution costs and made it possible to profit on games that sell for just a few dollars or are supported by alternative monetization models, such as advertising.

Thus, devotees of Clayton Christensen’s classic book on new market/product innovation, "The Innovator’s Dilemma" are entitled to smirk a bit when they read about Sony’s assessment of the potential of the iPhone/iPod touch to emerge as a serious threat to the Sony PSP:

"Sony doesn't consider Apple as big a threat because gaming is secondary to its devices," said John Koller, director of hardware marketing for Sony's PSP, adding that "The consumer is using the mobile gaming on the iPhone and iPod Touch as a time waster."

Good So Far, What's Next?
I won’t spend any more cycles on Sony-think for the moment.  Instead, I would like to close by noting some of the less obvious aspects of this evolution in mobile gaming. 

One example is Apple's support of elastic pricing models within App Store such that developers can test demand for their products by changing product pricing as frequently as they like. 

In fact, many a developer I know has tested pricing models for days or weeks at a time – some have even created event-oriented pricing, such as tying a temporary discount to the presidential election. 

All of this empowers developers to let the data tell them what the right pricing model is, in the process providing them oodles of near real-time user and usage data.

(SIDEBAR: In some respects, this hearkens back to the way Google disrupted the online advertising market by making the process of creating, selling, buying, monitoring and managing ad inventory a more malleable, transparent and market-driven process than the incumbent approaches afforded.)

A logical extension of this approach is product hybridization in the form of the embracing 'free-mium' product segmentation models, where a pared down version of the game is free (or ad-supported), and a premium/paid version supports deluxe functions or provides greater customization/personalization options.

It is not hard to imagine this model evolving to the point where complimentary product/solution providers bundle downloads of iPhone games with their products, similar to the way Apple did deals with Pepsi to offer free iPod song downloads with the purchase of Pepsi products. 

Similarly, how hard would it be with certain types of games to offer custom-sponsored, custom branded versions of a given game, similar to the way that Hasbro has created different city and theme-centered variants of Monopoly?

On a completely different front, this model changes the nature of the traditional six-month product development 'develop,' 'release' and 'update' cycle. 

Why? Because the App Store model provides built-in hooks for automatically notifying users when application updates are available, and makes it one-click easy to grab and apply the update.

As a result, I have seen many a developer release frequent updates of their product seemingly so that they can realize the marketing potential of such updates; namely, to use update cycles as a periodic opportunity to connect with their customers and affirm their value proposition in the form of new features and enhancements.

So where is all of this headed?  History suggests that some smart developer or gaming house will leverage a variety of these elements to build a new kind of mobile gaming suite that fosters deep engagement and creates brand loyalty in the same way that Microsoft collapsed word processing, spreadsheet and presentation building tools together to create the 'Office' category killer.

How will such a game developer accomplish these lofty suite goals?  By aggregating scores and accomplishments across all of the games that you play from them; by connecting you with like-minded or similarly-skilled players; by supporting head-to-head challenges with prizes and other recognition systems; and by integrating with your favorite social networks, media, utility and locative services in a value-added fashion. 

Namely, by embedding richer mobile, social and connected attributes into the gaming fabric's DNA, a construct that is only in its infancy today.  That said, it bears reminding that the iPhone 2.0 Platform launched less than six months ago (on June 9), so logic suggests that this 'infant' will grow up fast.

Related Posts:

1. iPhone 2.0 - What it Means to be Mobile: a detailed summary of my experience to date with the iPhone 2.0 platform.
2. iPhone SDK - Mobile Reasons for Optimism: why the iPhone Universe is a big deal.
3. iPhone 2.0 - Swinging for the Fences: an analysis of the WWDC Keynote by Steve Jobs.
4. iPod touch: the first mainstream Wi-Fi mobile platform?

Thought Streams – I'm Not Bush; What does JM see when he looks in the mirror?

“I'm Not Bush,” JM wails.

But what does that mean?

I think that we have to recognize that one essential truth of the past eight years is the importance of Prudence.

We must demand leadership that is well-organized and sweats the details.

It’s not too simplistic to say that Bush, independent of his other faults, didn’t sweat the details and we paid the price.

I believe that how each candidate has managed their campaign tells US a lot about how they will manage the country.

Politics aside, my take is that in this campaign, McCain has repeatedly shown that he hasn’t sweat the details. 

You see it in his message, his organization, how he carries himself and in his decision-making process.

So how would he be different than Bush?

Why do we want that?

In terms of living a credo, Obama is the Un-McCain.

That's a good thing.

RELATED POST: Crazy Wisdom as Rome Burns

Ringing Up Apple’s Earnings Call

So now we know.  Apple is first and foremost…a phone company!  It’s mind-boggling to think about it this way, but the numbers are jaw-droppingly clear. 

When you strip out the accounting mechanics required by GAAP, the iPhone represented 39% of Apple’s quarterly revenues, and Apple sold more phones than RIM (makers of BlackBerry) in the last quarter (6.9 million units versus 6.1 million). 

Measured by revenue, Apple is now the third-largest mobile phone supplier in the world, behind only Nokia and Samsung. And they are just getting started, with the iPhone having been in the market for only 15 months.

Other tidbits of note from the call:

1. Steve Jobs was on the Earnings Call: Jobs almost never participates in these calls, but in crisis times investors look for vision/leadership, and recently, Jobs has been more physically present in Apple events of all kinds, perhaps in recognition of recent fears and rumor-mongering on his health.  Plus, he had a story to share on deeper analysis of their numbers (see ‘Metrics Matter’ below). The bottom line is he sounded healthy, conveyed his usual fiery intensity, confidence in Apple’s future and was very much on top of his game.
2. Metrics Matter: we are obviously in a crappy economic environment, where jittery investors shoot first and ask questions later (e.g., Apple stock has dropped 43.8% in the past 60 days), so it was interesting to see Apple provide transparency to its non-GAAP financial results, inasmuch as they are an incredibly secretive company.  But metrics matter, especially in an environment where, once things settle out, the wheat will be separated from the chaff.  Hence, here was Steve Jobs framing the analysis of Apple’s quarter in deservedly glowing terms, “As you can see, the non-GAAP financial results are truly stunning. By eliminating subscription accounting, adjusted sales for the quarter were $11.68 billion, 48% higher than the reported revenue of $7.9 billion, while adjusted income was $2.44 billion, 115% higher than the reported net income of $1.14 billion. Adjusted net income that is more than double our reported income — if this isn’t stunning, I don’t know what is, all due to the incredible success of the iPhone 3G.  But even more remarkable is this — measured by revenues, Apple has become the world’s third-largest mobile phone supplier. I know this sounds crazy, but it’s true — as measured in revenues, not units, Apple has become the third largest mobile phone supplier. Let’s look at the ranking — Nokia is clearly number one at 12.7 billion; Samsung number two at 5.9 billion; Apple is number three at 4.6 billion; Sony Ericsson, number four at 4.2; LG, number five at 3.4 billion; Motorola, number six at 3.2; and RIM number seven at 2.1. Pretty amazing.”
3. Cash is King, and Apple has a lot of it:  In the most recent quarter, Apple added another $3.7 billion in cash to its coffers, so it now has $24.5 billion “safely in the bank, and zero debt.”   During the call, Jobs spoke of “extraordinary opportunities” for companies in a time of economic downturn “with the cash to take advantage of them, like Apple does.”   While this seems to suggest an accelerated M&A play, Jobs was non-descript, and specifically pushed back on a question about whether Apple would exercise a stock buyback program.
4. Apple’s Crystal Ball wrt the Economy is Cloudy:  If there is any cause for pause, it’s the simple fact that Jobs, COO Tim Cook, and CFO Peter Oppenheimer were quick to note that they are not economists, and as such, their forward view on earnings was not only very conservative but the best that they could do was to provide a range of revenue/earnings projections for the quarter ahead.  This suggests that Apple does not exist in a vacuum relative to the larger economic slowdown. They are prepared for both the short term and the long term, and as detailed in my many posts (see below), they are without peer in terms of roadmap/differentiation, but they are still subject to the rising/falling tide at home and abroad.  They called it straight, IMHO.
5. Apple TV remains a Hobby:  Those of us looking for Apple to pursue a more formidable assault on the digital living room (see my post, 'Apple, TV and the Smart, Connected Living Room'), were told to expect no big surprises in 2009. (Not that Apple would share a substantive change in strategy in a call like this anyway.)

Netting it out: In just 15 months, Apple has become a dominant force in the mobile phone space, generating more revenue from iPhone sales than from either the Mac or iPod.  And it’s not like Mac or iPod sales are down.  Quite the contrary.  As compared to the year-ago quarter, the Mac is up 21% in terms of units sold, and up 17% in terms of revenue, and the iPod is up 8% and 3%, respectively, so all three legs of their strategy are working. 

Moreover, in terms of the momentum of the iPhone Platform, bear in mind that the iPod touch is put on the books as an iPod, not an iPhone (even though it runs the same software), so the real momentum behind the platform is even greater than the numbers spotlight. 

A final anecdote on this last point is that with zero encouragement, my kids -- especially my three year old -- have taken to my iPod touch like fish to water, with my three year old playing games, listening to music, viewing photos and even using YouTube on a daily basis.  Recently, my six year old has started asking about downloading games (from the App Store).  Unscientific, but it bodes very well for Apple.

UPDATE 1: Andy M. Zaky of Bullish Cross has written an excellent post on AppleInsider called, 'Apple radically more undervalued than others tech heavyweights' that assesses Apple's stock price relative to Google, RIMM and Amazon on metrics like trailing P/E, EPS Growth, Total Cash and Price to Cash.  When you net it out, either Apple is grossly undervalued or its peers are grossly overvalued.  Click on the chart below to see what I mean but read his analysis, which is quite crisp.

Related Links:

1. 65 Million Reasons to be Bullish on Apple: analysis of the 'Let's Rock' event where iPod line refresh and iTunes 8.0 were announced.
2. Holy Shit! Apple's Halo Effect: how Apple has turned gravity into its friend.
3. iPhone 2.0 - What it Means to be Mobile: a detailed summary of my experience to date with the iPhone 2.0 platform.
4. The Chess Masters - Google versus Apple: why partners Apple and Google are without peers, and (seemingly) destined to become frien-emies.
5. iPhone SDK - Mobile Reasons for Optimism: why the iPhone Universe is a big deal.
6. iPhone 2.0 - Swinging for the Fences: an analysis of the WWDC Keynote by Steve Jobs.
7. iPod touch: the first mainstream Wi-Fi mobile platform?

DirecTV’s DVR Scheduler Rocks!

Sometimes, it’s the simplest ideas that are the biggest game changers.  Recently, I have been using DirecTV’s DVR Scheduler, which allows me to remotely schedule programs to be recorded by my DirecTV DVR box via my mobile phone (works great on my Blackberry and iPod touch) or Mac/PC.

Literally, I just type in m.directv.com (or directv.com/tvlistings), search for a specific program I want to record (or by channel or manual time/channel), choose whether I want it to override conflict any recording conflicts, and I am done.

How great is that?  I was out of town last week when I realized that I had forgotten to record the Dodger game.  No problem.

Then the other night, while still out of town, I saw a commercial for a PBS Frontline documentary which was scheduled to premiere before I returned home (see my post, The Choice: Three Weeks to Go).

Again, no problem, and the recorded program was waiting for me when I got home.

This got me thinking.  How cool would it be if DirecTV (or TiVo, etc.) added support for a social bookmarking function, whereby I could allocate a chunk of space for friends to record a program on my DVR box? 

Think: "I just saw a great movie. You have to see it," or "That game was a classic, and ESPN is re-broadcasting it later tonight so I grabbed it for you," or "You told me that you've never seen the movie, 'Kingpin.'  Well it was on last night so I recorded it for you."

You literally would need nothing more than a special “friend’s URL” and a delimiter UI screen in terms of time allocation and override rights. 

It would take video recommendations to the next level.

Apple iPhone & App Store: White Hat or Black Hat?

Back in March, I wrote a post, ‘The Scorpion, the Frog and the iPhone SDK,’ where I drew parallels between Apple’s mixed history with third-party developers and the fable of The Scorpion and the Frog.

In it, I wondered aloud whether Apple would recognize the importance of the ‘frog’ (developers) to its self-interest of crossing the proverbial river. 

Otherwise, they seemed destined to succumb to scorpion behavior, sting their base of third-party developers and drown themselves in the process.

My concerns were based on direct experience with Apple as a developer partner dating back to 1994, and the historical pattern recognition of how Microsoft outflanked Apple during the PC Wars.

As I noted in my original post, I believe that perception has a way of becoming reality.  In this case, I am asserting that serious developers will go where they believe they can garner the highest 'return' for their efforts; be that based on creative, collaborative or economic benchmarks.

And they will have viable alternatives.  You can bet on that.  Google's Android, RIM's Blackberry, Windows Mobile are three easy examples.  Does Apple want to secure the 'first string' position in terms of developer resource commitment, or are they willing to take a chance on being relegated to 'third string'?  We already know what that looks like from Mac versus Windows.

Let me say it.  From the moment that Apple ridiculously decided to block the third-party Podcaster application on the grounds that it was duplicative of functionality within iTunes, it bifurcated its brand moving forward.  White hat or black hat?

Yes, Apple can leverage its god-like control to anoint itself as the sole browser, media player, application mash-up or whatever toll road it wants to keep exclusively for itself.

But it stands to mint more coin if it can grow an ecosystem and really lead a mobile computing revolution.

Apple can continue their legacy of secrecy, capriciousness and deafening silence or have a ‘Come to Jesus’ moment and realize that sometimes simple, clear communication not only defuses perceptual landmines, but it’s just basic human courtesy and good karma.

One place to start is by recognizing that key to populating a star-filled universe of iPhone Platform application developers is encouraging communal spaces to form and developers to both share and accelerate best practices.  Gag-order inducing NDA’s aren’t consistent with such endeavors.

Of all the sound bites that I read on the Podcaster rejection, the one from ‘Harry McCracken on the App Store’ is the best:

"Way back when, if software distribution for the Mac had been handled via a Mac App Store with a don’t-duplicate-Apple-products policy, Photoshop might have been refused distribution on the grounds that it was too similar to MacPaint."

As Daring Fireball sagely notes (great coverage of this topic!), so long as App Store is the App Store and not an App Store, Apple is on shaky ground with its exclusionary practices.

Don't get me wrong. Apple is an insanely great company.  I have said repeatedly that I consider it and Google to be without peer. 

I can wax poetic on why I believe that the company has created some unfair advantages for itself.  Heck, we sold Me.com to them fairly recently so I feel like a 'dog' who is eating the 'dog food.'

But, Apple is also a company of many paradoxes.  That statement is sufficiently self-evident that it needs no further explanation.

So the matter of 'Apple v. Podcaster' raises a fair question.  White hat?  Or black hat?

Either way, perception has a way of becoming reality.

UPDATE 1: Mike Ash, an iPhone developer, has a good post that captures a painful, but ultimately productive, 22 steps to develop and launch a new iPhone application.

UPDATE 2: Silicon Alley article on Steve Demeter of Demiforce, makers of Trism, 'I Just Made $250K from App Store in Two Months."  Sidesteps the larger question of whether one boutique developer success in a segment (games) that has never been Apple's strong suit or focus overshadows Apple's land baron-like behavior.  My take: given that Apple has not only blocked Podcaster, but MailWrangler as well on premise of arbitrarily tag of 'insufficient differentiation,' a troubling behaviorial trendline is now clear.  Apple only wants innovation that doesn't step on its property lines.

UPDATE 3: So now Apple is labeling their App Store rejection letters to developers as being UNDER NON DISCLOSURE (i.e., governed by NDA they signed when they joined the developer program).  This means that it is a gag order against disaffected developers bitching to the blogosphere to plead their case in the court of public opinion.  I swear that this is the moment when Apple starts becoming the wearer of the black hat; the bad guy who would rather squash dissent than have reasoned debate, who would rather exert bullying control than see its community iterate to the best, most innovative solution, who seems to fear that if real community fosters they will organize and revolt rather than iterate and elevate this still nascent platform to new heights. If we simply switched the exact same storyline from 'Apple and iPhone' to 'Microsoft and Windows Mobile,' and said that Microsoft was not allowing email packages other than Outlook or browsers other than IE, everyone would be talking about Evil Empires, antitrust and bad karma.  Yes, this is Apple's platform, and they can technically do whatever the hell they please, but we all know the axiom of biting the hand that feeds you, and developers are that hand in a platform play.  Be the bully, at your own peril, as not only is this not defensible, it is a great way to tarnish the brand (ala how Dell irrevocably dinged its brand by attacking a prominent blogger who complained about their diminished product support).

UPDATE 4:  Well, Apple has happily removed the NDA gag order once you've released an app, but the fear of what's driving their actions threatens to scare away serious developers.  In a great post, 'The Fear,' Daring Fireball spells out what's going on from his perspective.  Here is an excerpt:

The problem is that the apps that are the most interesting, the most important, are the ones that take the most work to create. And the apps that take the most work to create are the ones that are most likely not even to be made in this environment, because the risk is greater. The more work it takes to create an app, the more you lose if Apple rejects it. Going back to the ladder analogy, the higher you’re trying to climb, the more you need to trust the ladder before you start.

So their rejection is problematic on three fronts. First, the submission process is such that an app rejected at the conceptual level — one that cannot be tweaked or fixed to gain entry upon resubmission, but whose fundamental premise is rejected by Apple — such an app is only rejected after it has been written. The developer does all of the work to produce the app and only then finds out it was all for naught.

Second, there are clearly rules which are not listed in the SDK guidelines. Third, in its explanations for the rejections, Apple is not stating what these actual unpublished rules are, and is instead offering as the reason this “it duplicates a built-in app” rule which, given all the aforementioned counterexamples that have been accepted into the App Store, isn’t actually a rule at all. The explanation is clearly false.

Taken together, these three factors lead to The Fear, which is that developers cannot trust the App Store process. You can spend all of the time and effort it takes to build an app, follow every known rule, and still get rejected.

Here is a complete list of what Apple must do to increase developers’ trust in the App Store system:

   1. State the rules.
   2. Follow the rules.

Related Posts:

1. The Scorpion, the Frog and the iPhone SDK: on Apple's mixed history with third-party developers.
2. Upward Mobility, Land Grabs and the iPhone Universe: Apple's mobile patent play and what it means to developers.
3. Apple Genius is Pure Genius: sometimes simplicity is pure elegance.
4. Holy Shit! Apple's Halo Effect: how Apple has turned gravity into its friend.
5. The Chess Masters - Google versus Apple: why partners Apple and Google are without peers, and (seemingly) destined to become frien-emies.

Apple Genius is Pure Genius

In my recent post, ‘65 Million Reasons to be bullish on Apple,’ I brought reference to the new Genius function that was added to iPhone/iPod touch in the 2.1 upgrade.

What is Genius? Genius is a music recommendation service that mines your existing song library within iTunes to build dynamic playlists around favorite songs, and no less important, to recommend songs that you don’t own that you might like to buy.

What I did not realize at the time was that this feature is not limited to iTunes on your PC or Mac but is also built right into the iPhone/iPod touch itself.

What this means is that when you hear a song that you are enjoying listening to right now, and would like to hear “more of the same,” simply click the Genius icon in the middle of the song progress bar section (see above) and in a single click, it builds a custom playlist of related music.

It works surprisingly well, and I found myself tapping ‘next song, next song, next song…’ materially less than usual, somewhat akin to my favorite music recommendation service, Pandora.

Great feature add, and the only wish list item is for Apple to bring the function to iPhone/iPod touch that recommends songs that you don't currently own so users can discover and buy new music in the process of listening to Genius-created playlists.

A final note.  More than ever, I believe that Genius can be grown to support all sorts of media, and that it’s a natural, simple, intuitive base from which to build recommendation services for photos, stories, people and products of all types, not just digital ones.  While I doubt that Apple will ever provide APIs to these functions in the iPhone SDK, I can still wish/hope, right?

Related Links:

1. 65 Million Reasons to be Bullish on Apple: analysis of the 'Let's Rock' event where iPod line refresh and iTunes 8.0 were announced.
2. Holy Shit! Apple's Halo Effect: how Apple has turned gravity into its friend.
3. iPhone 2.0 - What it Means to be Mobile: a detailed summary of my experience to date with the iPhone 2.0 platform.

65 Million Reasons to be bullish on Apple

There are many that will quibble that today’s “Let’s Rock” event, where Apple introduced the next generation of iPods (read: classic, nano and touch) and released iTunes 8, was somewhat of a yawner. 

After all, there was no breakthrough, singular game-changing product announced, and Apple has set a very high bar in this regard, so anything short of a “holy shit” crap your pants type of moment feels like a disappointment.

But, I see it differently.  Apple is a company with mammoth ambitions, who stands alone in their ability to deliver an unparalleled user experience by seamlessly integrating device, software and service/ cloud layers into various form factors (Mac, iPhone, iPods, Apple TV).

The risk, and fear, as evidenced by hiccups on MobileMe and niggling performance issues on iPhone 3G, is that in the almighty pursuit of delivering the next BIG thing, that the company is losing sight of executing on the niggling details that have made their user base so dedicated, translating into enviable operating margins and a growing halo effect that I have previously blogged about (see below).

So what does today’s announcement tell me?  Well for one thing, the company’s head is screwed on straight with respect to the importance of tactical execution.  Today’s presentation was, in many respects, a clinical delineation to current and would-be customers, as well as media and technology partners, that there is Apple, and there is everyone else.

Consider the fact that Apple has now sold a jaw-dropping 160M cumulative iPod units, in the process securing a commanding 73.4% of the market, with the number two market share holder being “Other” at 15.4% (actually, the real number two is Sandisk with 8.6% of the market; Microsoft has a measly 2.6%).

No less impressive, in just sixty days since Apple launched the App Store on iPhone and iPod touch, 100 million application downloads have been made, and over 3,000 applications have been released by third-party developers. This complements a rich media content library that now includes over 8.5 million songs, 125,000 podcasts, 30,000 television episodes, and 2,600 movies.

So while today was about music, and the noteworthy fact that Apple is now the #1 music distributor in any environment (not Wal-Mart, not Best Buy, not Amazon), the related takeaway is that the company has a rapidly evolving online presence to move digital products of all kinds.

The numbers don’t lie: 65M credit cards on account with iTunes account holders; a rapidly growing subset of these users can be reached anytime, anywhere via the iTunes wireless store (read: the 10M+ iPhone and iPod touch owners expected by year’s end) and a continuously evolving marketplace function that enables content and software creators of all sizes to plug in, and sell their wares, with Apple taking a slice for being the facilitator.

And legions of consumers have been taught that this stuff just works, like magic.  Today, that magic was augmented with Genius, a recommendation service that mines your existing library to build dynamic playlists around favorite songs, and no less important, to recommend songs that you don’t own that you might like to buy.

“The Genius function of iTunes 8.0 released today works by uploading -- anonymously and voluntarily -- a user's iTunes data to the iTunes 'cloud,' where it is then combined with knowledge of millions of other users' iTunes libraries. The more people that use Genius, the smarter it will get,” said Apple chief executive Steve Jobs.

Today, the fulcrum is music, but realistically the model can support any media, and over time can logically be extended to products of all types, not just digital ones.  Amazon, are you listening?  So, too should be the bricks and mortar retailers, as oh by the way, the Apple retail store is just around the corner.

Oh, and as to those rumors about Steve Jobs’ health, he flashed a message on the big screen that said, “The reports of my death are greatly exaggerated,” and in a later interview with CNBC noted that ‘I am healthy.”  He certainly looked and acted healthy too, in contrast to his physical appearance earlier this year.

By contrast, the competition should be feeling a bit sick shortly, if they aren't already.

Related Links:

1. Holy Shit! Apple's Halo Effect: how Apple has turned gravity into its friend.
2. The Chess Masters - Google versus Apple: why partners Apple and Google are without peers, and (seemingly) destined to become frien-emies.
3. iPhone 2.0 - What it Means to be Mobile: a detailed summary of my experience to date with the iPhone 2.0 platform.
4. iPhone SDK - Mobile Reasons for Optimism: why the iPhone Universe is a big deal.
5. iPhone 2.0 - Swinging for the Fences: an analysis of the WWDC Keynote by Steve Jobs.
6. iPod touch: the first mainstream Wi-Fi mobile platform?

Rhetoric: Why it matters

Listen to Obama’s acceptance speech.  It was brilliant in terms of its clarity of essential truths.  “This campaign has never been about me.  It’s about you.” 

It’s a very optimistic and direct concept of the rules of engagement.  Change.  It’s a more bottom up vision that speaks directly to the individual and articulates the role that government can and should play within people's lives.

It’s the promise of education, health care, job creation and a ten year plan to get us off our dependence on oil.   

“We can not turn back.”   It is very evangelical, but at the same time, it’s a very sincere perspective.

He defined himself, and his vision for the country very clearly, and drew a sharp contrast with McCain, Bush and the current politics of status quo.

David Gergen put it best, “It was less a speech than a symphony.”  Amen.  Please watch it.

UPDATE #1: Among the many commentators who analyzed the speech, one noted that the portion of Obama's speech where he stated, "It’s time for them (the Republicans) to own their failure.  It’s time for us to change America," is a 10 second sound bite that you can win on.  Worth watching how the narrative evolves over the remaining couple of months of the race, as we do live in the age of YouTubing, tweets and easy-to-consume info nuggets.  Hence, the ability to encapsulate the race down to the sound bite is no small accomplishment.

Related Posts:

1. Base motivations: The Matter of McCain v. Obama
2. Pit bull Politics - How Bush Stacks Up
3. Obama, Clinton and the 'Winner Take All'

Apple, TV and the Smart Connected Living Room

When Apple CFO Peter Oppenheimer said that margins were great for the last quarter, but warned about a "future product transition" adversely impacting Apple’s margins in the quarter ahead, the fundamental question suddenly became, “What’s Apple Brewing?” (For some excellent analysis, check out ‘What's Apple's Big Mystery Product?’)

Look at it this way.  Taking down margin puts some of the Apple magic ‘mojo’ on the line since it immediately leads to increased volatility of the stock. 

Apple is only going to do that for a solid bet that delivers knockout margins and market share over the long haul.

Theory One: Apple TV Upgrade
Initially, I had a theory about Apple TV getting a major upgrade, with the iPhone/iPod touch having a solid remote control application for managing it.

The application case I saw was reinventing the set-top box experience in the same way that Apple re-invented the mobile phone. 

Would Comcast want to be their partner?  How about DISH?  ATT?…..iPhone exclusive US partner, ATT.  Hmm! 

Apple has already got iTunes infrastructure set up, right, and have decided to focus on the rental market, but with a rev, maybe they could have a front end that literally overlays on top of the TV screen.

Think about it.  That would be a logical upgrade path for the Apple TV and it leverages their media and carrier relationships nicely.

Finally, the mass adoption price point feels like something that might take down margins in exchange for securing a major foothold in the living room. 

They could market it as ‘Web TV That Actually Works’ (dig at Microsoft intended).

Theory Two: Form Factor #3
It makes more sense that Apple is going to grow the iPhone 2.0 Platform into Form Factor #3 (iPod, iPhone, ??). 

My guess is that Apple builds a device targeted as the interactive TV, gaming and video services player for a wireless broadband living room; aka The Smart, Connected Living Room.

This theory ties in with the video chipset rumors and some pretty sage analysis by Robert X. Cringely beginning a full year ago (see 'The Eyes Have It: Last week's Apple mystery is all about video chips (I think)') that explains the video chipset imperative.

In this scenario, Apple needs to support media playback that runs in its own modal, concurrent sandbox so it can support overlays for things like dynamic ad units, in-line messaging, information feeds and other interactivity capabilities on top of video, gaming functions.

Why?  Media rich applications suck a lot of CPU power. If they do not have a dedicated path to get the job done, system performance degradation can occur.  One sees this with regularity if you attempt to multi-task (e.g., listen to music, surf the internet at the same time) on the iPod touch/iPhone.

Theory 2.5: Pursue the Universal Remote market
If Apple wants to think like Sony, they could delver further into the consumer electronics area and launch this new device as a true Universal Remote Control, and position it as a living room companion since it also does all of the familiar stuff that the touch and iPhone does. 

Side note: since it’s just a replicated version of their iPhone or iPod touch, this is another case that showcases where the integral-ness of Mobile Me lies -- synchronization and replication for owners of multiple iPhone 2.0 powered devices.

Again, I am guessing that the Universal Remote market is a relatively lower margin business, consistent with the announcement, but it is also a segment that probably could support its own form factor given potential market size.

Basically, pursuing the Universal Remote segment gets everyone to give the platform another “category” of regular usage, and ironically, where Universal Remotes suck these days – battery life – that is a strong suit of Apple’s platform. 

Netting it Out
With iPod, Apple secured the position as market leader for the “media player + media marketplace 1.0” segment.  With iPhone, they extended it with a mobile Internet experience which effective re-invented the mobile phone.  Now, with iPhone 2.0 Software they are converging and extending these capabilities with the first caveat-free mobile platform and marketplace 2.0 functions.

With that as a backdrop, it is easy to see where this type of living room ‘land grab’ would be harmonious with iPhone, iPod, AppleTV and Mac universe, while setting the stage for Apple to roll out increasingly specialized variants of the software and form factor over time.

Heck, they’ve got Apple Store capacity and they are building out strong channel partnerships, like Best Buy, so distribution and reach via-a-vis a highly trained sales organization is not a problem.

Finally, such a strategy has the potential to avoid carriers where it makes sense, embrace carriers where it makes sense and do ala carte deals where it makes sense (e.g., HBO to disrupt Comcast);

And, as a fixed broadband wireless play, it overcomes both battery and broadband limitations.

UPDATE 1: Union Square Ventures (Fred Wilson's fun) announces investment in Boxee, what he dubs as the Firefox of the media center software (i.e., derived from an open source software project).  Boxee also has a variant that runs on top of Apple TV, which is encouraging, since in the short term at least, it seems that Apple is not going to push Apple TV line as more than a hobby (I remain skeptical that this isn't head fake, but you never know).  Also, SGN releases iFun, which turns iPhone/iPod touch into Wii-like gaming controller of PC games.

Related Links:

1. iPhone 2.0 - What it Means to be Mobile: a detailed summary of my experience to date with the iPhone 2.0 platform.
2. iPhone SDK - Mobile Reasons for Optimism: why the iPhone Universe is a big deal.
3. iPhone 2.0 - Swinging for the Fences: an analysis of the WWDC Keynote by Steve Jobs.

iPhone Universe: Network Borders, Kill Switches and the Core Location

This is fascinating.  In ‘It’s a Core Location Blacklist,’ John Gruber of Daring Fireball provides some crisp analysis on the recent chatter that Apple has a backdoor 'kill switch' to shut down apps running within the iPhone 2.0 Universe if it deems it fit to do so.

Says Gruber:

"So there may well be some sort of kill switch that Apple can deploy to remotely disable an app that’s already installed. But this list is not it.

Apple has no reason to hide such a configuration in a sneaky place. If it’s “tucked away in a configuration file deep inside” the Core Location framework, doesn’t it seem more likely that this list has something to do with, say, Core Location? Even the URL of the file in question hints at this:

https://iphone-services.apple.com/clbl/unauthorizedApps

An informed source at Apple confirmed to me that the “clbl” in the URL stands for “Core Location Blacklist”, and that it does just that. It is not a blacklist for disabling apps completely, but rather specifically for preventing any listed apps from accessing Core Location — an API which, for obvious privacy reasons, is covered by very strict rules in the iPhone SDK guidelines."

Personally, what Gruber is putting forth makes total sense.  I would build upon his logic and throw two thoughts out there.  One is that if it’s going to realize its potential for commerce and enterprise adoption, the iPhone Universe needs to be a safe and secure place.  It just does.  You don’t want your phone, your data and/or your wallet exposed to be readily hacked.

Thus, kill switches (total application shutdown) and core location blocks make perfect sense.  Think of it as the cable descrambler box.  Apple is implementing a service layer that requires a special key to access certain core functions.  These are either functions internal to the device and/or those that connect to network functions.

It’s their form of Border Control, and as I believe that governance is part of the equation, I say hurrah!

Related Links:

1. iPhone 2.0 - What it Means to be Mobile: a detailed summary of my experience to date with the iPhone 2.0 platform.
2. iPhone SDK - Mobile Reasons for Optimism: why the iPhone Universe is a big deal.
3. iPhone 2.0 - Swinging for the Fences: an analysis of the WWDC Keynote by Steve Jobs.

Pursue the Highest Common Denominator

Here’s a riddle.  Is the strategic ideal to pursue ubiquity by serving the lowest common denominator (LCD)? 

Or, should you aspire to push the envelope on what is possible, and elevate the definition of the situation to a whole new level?

This latter realm is the Highest Common Denominator (HCD).  And, whereas LCD is all about simplicity, openness and an assumption of fairly loose couplings, HCD is about deep integration and more formal orchestration of use cases and workflows to serve a specific form-factor.

The iPhone/iPod, for example, delivers an HCD experience (bugs, notwithstanding) for communications, media, gaming and information services.

Paradoxically, being HCD also means being proprietary in that the hardware, software and service layers must be delivered as a unified, tightly integrated and co-dependent package to accomplish all of this goodness.

In the yin-yang scheme of things, if Apple is all about delivering HCD, then Google is all about LCD.  Its search and advertising cornerstones are simple, spartan and just work.  But they don’t get the heart pounding in the same way iPhones and Macs inspire the Cult of Apple.

Yet, both companies are pretty much are without peers in terms of their ability to play the disruptor role across the entirety of the media, mobile, PC and Internet segments; industry segments which once were impenetrably different, but no more.

So it’s not an EITHER/OR, but I would argue that Google-style LCD sensibility has taken hold more so than Apple-style HCD mindset, and that's a shame.

Why is this so? HCD is hard; it is complex; it is fraught with execution risk; and it takes real vision.  But we need more vision and we need more aspiration to be a game-changer if we are not only to disrupt and race industries to the bottom but rather, to re-invent them, and reach new plateaus.

Which brings me to local media and local advertisers.  Talk about delivering an LCD experience.  I am talking the local newspaper, local TV stations and yellow page-style listing guides.

They need to get on an HCD track if they are going to regain relevance, and thus have high value real estate to sell.

Currently, the newspaper is selling something that less and less people are buying – and to a predominantly  aging populace, no less. The local TV station is similarly squeezed.  And don’t get me started on yellow pages.

Revenue and/or margin contraction has driven these operators to shrink reporting, creative and editorial staffs.  This has ossified their product, creating a vicious cycle.  (Or maybe just not having a monopoly anymore has irrevocably changed the game, and they haven’t shown the resolve or vision to adjust in a value added fashion).

But things need not play out linearly.  Think about it this way.  Thanks to Google AdSense sensibility, brands now see the logic of paying different amounts for different access and engagement/performance levels.

In an HCD approach, a local media operator might give brands access to richer tools to express their uniqueness or to craft highly specific call-to-action campaigns that are nonetheless tightly integrated with the media property.

This would yield ad units that could be customized and interactive enough to facilitate finely honed brand engagement or lead generation activities.  Media units could be set up to systematically maximize audience reach and engagement levels.  And be priced accordingly.

This implies a quicker read format, more akin to the newsletter, that blurs the line for subscribers between the print and online portion of their accounts, can be chopped up into specialized, media-rich topics, easily customized, updated throughout the day, and which is organize-able and share-able to meet the whims of the subscriber.  It's about engagement, shelf-life and context, something that today's local paper is missing.

Learning to excel at delivering such high value integrated media and advertising units will not be easy, and it implies not only shedding a lot of legacy skin, but a more formal coordination of the media and advertising creation process than currently exists.

But it’s the HCD experience that AdSense can't deliver, and sometimes, necessity is the mother of invention.

Related Links

1. The Chess Masters: Apple versus Google: an assessment of why Google and Apple are without peer.
2. The Programmable Fan Site: a new media/ad unit model.
3. Comcast Buys DailyCandy For $125 Million*: snapshot of a newsletter success.

iPhone's Lingering Raspberry

I can't take my iPod touch seriously as a typing/text-based input device until I  can 'save drafts' and do 'copy and paste.'

I see this as pretty binary relative to the aspiration of being able to input fully formed, type-written thoughts.

What's the point if you can not easily edit your words?

For now, this segment of RIM's (Blackberry) business is safe. 

Love the iPhone 2.0 platform and my iPod touch, but my Blackbery 7130 'aint going anywhere.

Related Links:

1. iPhone 2.0 - What it Means to be Mobile: a detailed summary of my experience to date with the iPhone 2.0 platform.
2. iPhone 2.0 - swinging for the fences: an analysis of the WWDC Keynote by Steve Jobs.
3. iPod touch: the first mainstream Wi-Fi mobile platform?

iPhone 2.0: What it Means to be Mobile

(Note: As past posts of mine have underscored [see below – Related Links], the promise of a caveat-free mobile platform is a game changer on par with the advent of the PC.  I won’t re-state my arguments here.  Read some of the posts below if interested.)

On Friday, after about a dozen hours of trying, I was finally able to upgrade my iPod touch to iPhone 2.0 software (for those who don’t know, Apple servers were completely overwhelmed coping with what proved to be 1M iPhones purchased in the first three days of iPhone 3G availability.  By contrast, the original iPhone took 74 days to reach this same sales threshold). 

What follows are some random observations about the experience from a consumer perspective, how the reality post-upgrade lined up with the pre-upgrade promise/hype, and implications for the mobile universe moving forward.

1. App Store brings the concept of friction-free impulse buying into the mobile realm by making over the air purchase, download and installation of iPhone/iPod touch apps/services one-click (plus password) easy.  I expected as much, but the good news is that I have not been remotely disappointed. It's instant gratification, pure and simple, and an unqualified “AHA” moment.
2. I have bought three gaming applications (Trism – a very cool, highly-addictive ‘touch and motion’ based puzzle game; Crash Bandicoot – an entertaining racing game with excellent graphics and audio; and Motion X Poker – a simple, elegant, beautifully-crafted poker game using dice for $4.95, $9.95 and $9.95, respectively), and can only say WOW!  While Apple has obviously made some trade-offs relative to what dedicated handheld gaming systems offer – most basically, lack of a gaming controller/inputs – iPhone/iPod touch is simply awesome as a mobile gaming platform.  Obvious areas to watch from an innovation perspective here are games that leverage the social and connected attributes of the devices, and games that support multi-player.
3. There are a boatload of free applications accessible via the App Store (plenty of crap, too, I imagine), but so far I have only installed four free applications, all non-gaming apps.  They are: Apple’s Remote Control application for controlling your iTunes library on you Mac/PC/Apple TV (kind of cool, depending on your set-up); Pandora, the internet radio and music discovery service (incredible, a logical extension to your formal library on iTunes); AOL Radio (again, a logical extension, some of my favorite mainstream radio stations accessible wirelessly via my iPod touch); and Twitterific (a nice, but somewhat clunky, front end to twitter).  Given that the backlog of iPhone SDK developers is already in the thousands, it seems clear that Apple will need to come up with better filtration tools to enable consumers to recommend, rank and detail the good, bad and ugly of a given application.  This is the signal-to-noise ratio challenge, as you know the axiom about opinions being like assholes, and adding to the noise is the fact that there are already reports of developers trying to ‘game’ the system.  Apple should learn from Amazon here. 
4. While I have heard some lament that the iPhone 3G doesn’t add a lot of new functionality ‘other than 3G’ that kind of misses the point.  First off, for iPhone 1.0 owners, this is the prototypical early adopter conundrum.  New versions tend to be cheaper AND more powerful.  Get over it. If speed isn’t that important to you or 2G is good enough, the real magic is in the software upgrade anyway, and it runs on iPhone 1.0 and iPod touch devices, so don’t upgrade the hardware if you don’t need the speed.  If, however, you don’t have an iPhone, then faster speed, GPS support, improved enterprise-readiness and the ability to run iPhone SDK powered apps is manna from heaven.  Similarly, some have quibbled that the iPhone 2.0 Software does not add a ton of new features per se, but again, that misses the point.  The upgrade from a software perspective is essentially what enables the iPhone/iPod touch to work end-to-end from app creation (via iPhone SDK) to placement in App Store to the purchase, download and installation of new apps to the iPhone/iPod touch without breaking stuff.  Experientially, this just works in a seamless and simple fashion, no small accomplishment, to be sure.
5. Rumors of iPhone being a Blackberry killer are greatly overestimated, in my opinion.  For one, while Apple has made some serious headway in terms of enterprise-readiness, the reality is that its support for advanced IT functions, is somewhat lacking.  As such, individuals, workgroups or verticals that are pre-disposed to buy all things Apple will likely be the early adopters of iPhone in the enterprise, and yes, this will take a bite of out Blackberry’s business.  But, the lion’s share of enterprises are NOT pre-disposed to all things Apple, Blackberry is rock solid and already the standard in most of these companies, and legacy is hard to dislodge.  More to the point, what Blackberry is best at – being an INPUT device with a real keyboard – iPhone is only adequate at.  Conversely, as an OUTPUT device, iPhone is without peer so it is somewhat of an Apples and Oranges (nee Blackberries) discussion that will play out over time, not in a single act.

Before wrapping up, let me spend a few minutes on the Pandora application for iPhone/iPod touch, as I think that it is suggestive of the real power of mobile applications; they can be media rich, hybrid composites (of a device layer, a web front end and a service layer), leverage the ‘wisdom of crowds,’ easy to customize based on your direct feedback and be integrated with other services.

For example, the first time that I launched the Pandora app after installing it, I was prompted to paste a set-up key into the Pandora web site, which activated the service on my iPhone and provisioned a web-based custom dashboard on the Pandora web site.

From either the web site or my iPod touch, I could now create a custom radio station by simply typing in the name of an artist or song.  Pandora uses this 'seed' data to set an initial context for the type of music I like.  Typing in the band ‘King Crimson,’ for example, led to songs by King Crimson, of course, but also similarly psychedelic bands like early Genesis, Moody Blues, Pink Floyd, and plenty of others that I had never heard of.
 

Moreover, Pandora’s player controls make it easy to give any song that is playing a thumbs-up or thumbs-down, which refines subsequent song plays. 

Also, a thumbs-down automatically ends that song and takes you to the next song.  What is interesting is that while you can forward to the next song without rating it if you don’t want to listen to it, you can only jump without rating six times per hour in a give radio station. 

I am not sure if this is to force the integrity of rating songs you like/don’t like (versus just channel surfing) or if the long-term play is to make fast-forwarding a premium service.

Similarly interesting is the concept that Pandora is not designed to create one über station for you, but rather, a bunch of specialized music channels.  If you think of a custom radio station as an intelligent thread (i.e., a perpetually-optimizing related songs playlist), that would seem to have all sorts of applications relevant to product recommendations, news recommendations and/or social recommendations (people with similar interests). 

The key point is that if you can do the same thing with different information media types as Pandora proves that you can do with music that opens the door to recommendation systems as the next generation beyond search. 

From this perspective, one could very well imagine the day when I can pick a topic, provide some thumbs-up/thumbs-down feedback, and then follow the intelligent threads, archive the keepers and mine it when I need it later.

To be clear, this is not a new concept but mobile seems tailor made for such a model to take root.

A final note on Pandora in terms of other things that I like that are worth emulating:

1. Algorithmic transparency: you are just a click away from finding out why a given song was recommended to you.  A cool add in this regard would be to enable deeper engagement and introspection by allowing you to up-level from the media player playing an individual song to the full album and/or across to the other albums of the same performer.  There may be licensing restrictions that preclude this today, but this could also be the fork between a free service and a premium service.
2. Bookmarking of favorite songs: how many times do you hear a song you like, not know the name of it, and never find it again?  With Pandora, in a click you can bookmark the song for future listening.  Plus, I am a click away from buying the song or album at iTunes or Amazon’s MP3 store, thanks to integration with these services.
3. Sync to Web: Similarly, cool is the fact that all of the actions that you take on the iPhone/iPod touch sync back to your web front end, and vice versa, meaning that the service is a composite of all of your actions.  This is suggestive of an area that Apple can evolve its MobileMe service, inasmuch as if it is sync’ing all of your data, it can give you tools to better categorize and then magically do all of the sync’ing between Web, Mac/PC and iPhone/iPod touch, and provide recommendation buckets to you.

Bottom line: I love the Pandora concept of simply inputting a categorized favorite as a contextual starting point and then thumb-upping or downing your way to a ‘predictable’ recommendation filter.  I also love the fact that it feels like Pandora has found its true calling as a mobile application, as Internet radio is cool but not compelling in a PC environment, but in a mobile environment with a touch based controls, it feels akin to what TiVo did to TV.  It reinvented it.

UPDATE 1: App Store apps not really Apple Tested and Approved - While Apple is ostensibly the gatekeeper in terms of specific applications finding their way into the App Store, in practice it is not testing every app, delving into every nook and cranny.  To be clear, in a more open platform like Windows, MacOS, etc., you have NONE of these controls but the point is that consumers who assume that App Store apps are Apple tested and approved, are sleeping with a false sense of security, as underscored by the recent de-listing of the the multi-player gaming app, Aurora Feint.  The app has a community feature, which if turned on, delves into the user's Contacts List, sends it to the developer's servers in an unencrypted fashion and then uses that data to recommend other friends who might be available to play the game with.  The bugaboos are lack of transparency that the developer was doing this and the fact that personal data is being sent unsecurely.  In this case, more a by-product of an amateur developer working with limited time and resources than something nefarious but it suggests some measure of caveat emptor necessary as a consumer. See 'Network Borders' link below for more fodder on the topic of Apple's governance role.

UPDATE 2: Apple's App Store sees first month sales of $30 million (via AppleInsider) - Users of Apple's new App Store have downloaded more than 60 million programs, generating a total of about $30 million in sales since the service launched one month ago, according to Apple chief executive Steve Jobs.  In an interview with the Wall Street Journal published early Monday morning, Jobs revealed that while the majority of those applications were free, the App Store still raked in an average $1 million a day from pay-per-download programs -- or an estimated annual sales rate of $360 million.  "This thing's going to crest a half a billion, soon," he said. "Who knows, maybe it will be a $1 billion marketplace at some point in time. I've never seen anything like this in my career for software."

Related Links:

1. iPhone SDK - mobile reasons for optimism: why the iPhone Universe is a big deal.
2. iPhone 2.0 - swinging for the fences: an analysis of the WWDC Keynote by Steve Jobs.
3. iPod touch: the first mainstream Wi-Fi mobile platform?
4. Envisioning the Social Map-lication: where all of my stuff (contacts, music, content) converge into the cloud and back to Me.
5. iPhone Universe: Network Borders, Kill Switches and the Core Location: why Apple proactively governing third-party applications via backdoor kill switches and the like is a good thing.

Decomposing Google News and Making it Social

In my daily online travels, Google News is a regular, recurring destination.  Here’s a thought about how Google could make the news aggregation site even better, and in the process, make it more indelibly social.

Step One: Formally containerize story ‘buckets’ and expose (make visible) handles like tags, categories, view count data, ratings and like minds (people who liked this story, also liked that story). 

Some of this data Google captures today, some it requires Google either adding UI controls within Google News pages or creating IFrames so that Google can persist a meta-layer around the destination new page (for tagging, rating, categorizing).

Step Two: Integrate this functionality with Google Reader, which probably touches Web history and Bookmarks functions, and invariably gets Google down the path of a deeper, more unified user profile model. The key point here is that while Google does a reasonable job of tracking pieces of this data already, it is overly silo’d and simplistic when it could be integrated in a much more high-value fashion beyond just a consolidated view. 

A best practices way of doing this would be to work backwards from what YouTube does with providing filtered views of video data, personalization and social linkage options to consumers, and apply a similar model to third party news sources.

Step Three: Expose APIs to these functions so that third parties, including news publishers, can create applications and web services that leverage the goodness of Google’s depth and breadth. 

Clearly, not all news sources would opt to participate in all elements of this offering but so long as Google offered an opt-in/opt-out path for publishers, this feels like a natural way to turn consumers into information miners and reward them for their efforts (since they get better visibility to related stories and a path to connect with like minds). 

For publishers, it becomes part of a continuing breadcrumb strategy to increase the reach and engagement level that consumers have with their content.  Plus, if Google provides access to the underlying APIs that they are using, for smaller publishers at a minimum, it gives them pluggable, scalable tools to make the news content on their home web site both social and transparent.

Arguably, such a model could then be scaled out to Pictures, Documents and other like Google services.

Related Links:

1. Social Media - it's about Breadcrumbs and Conversations: a construct for thinking about how social media models work.
2. Googling Innovation - Seed, Select & Amplify: on Google's R&D culture.
3. The Chess Masters - Google vs. Apple: why Google and Apple are without peers, and destined for a market collision.

Can Apple Manage iPhone Developer Expectations?

It is obvious to the outsider that Apple is accepting a limited number of developers into its iPhone Developer program so it can focus on working out the bugs/workflow in AppStore and the whole, integrated surround. 

Unfortunately, it hasn’t been super transparent on that process nor has it set expectations with developers in terms of when they might get their pass.

Add to the mix Apple’s overly secretive culture, and that puts developers in a pickle. 

On the one hand they are being courted and counted as a part of a growing number of iPhone SDK 'developer downloads.'  On the other, they are told to wait their turn, or more accurately, being told nothing.

This understandably makes some of them feel like they are being jerked around.

Paul Kafasis of Rogue Amoeba talks about this conundrum in 'A Broken System.'  Here's an excerpt (thanks to Daring Fireball for the link to this story):

Ultimately, the problem here is with communications, or lack thereof, from Apple. When Apple first announced the SDK, thousands of developers rushed to apply for the development program, a flood for which Apple may not have been prepared. However, since then, Apple has bungled the processing these requests. Confusing emails and a lack of useful correspondence have left us waiting to hear the status of our application for a full three months and counting. Will we eventually be accepted to the program, or will we ultimately be rejected, and barred from providing software for the platform at all? At the moment, we simply have no way of knowing.

I talk a lot about the good side of Apple, but I have also talked equally about their poor history with developer relations (see links below). 

Good will once lost is not so easily replenished, a truism that will only pick up velocity as the RIMs/Blackberry and Googles/Android of the world respond to the iPhone challenge.

Meanwhile, an AppStore starts to take shape.

Related Links:

1. The Scorpion, the Frog and the iPhone SDK: on Apple's somewhat tortured history with third-party developers.
2. Upward Mobility, Land Grabs and the iPhone Universe: red flag warnings on Apple's patent portfolio strategy wrt iPhone?
3. iPhone SDK - mobile reasons for optimism: why the iPhone Universe is a big deal.
4. iPhone 2.0 - swinging for the fences: an analysis of the WWDC Keynote by Steve Jobs.