The Network Garden - Mark Sigal's Blog

Digital media, being an entrepreneur, intelligent investing and other interesting nuggets

About

My Photo
View Mark Sigal's profile on LinkedIn
See how we're connected

WHAT HAVE I BUILT?

ASK ABOUT THE 9 TRUTHS

JOLLY & ROGER'S EBOOK VIDEO TRAILER

Chatopic Book Series

  • Chris Anderson: Makers: The New Industrial Revolution

    Chris Anderson: Makers: The New Industrial Revolution

  • Clayton M. Christensen: How Will You Measure Your Life?

    Clayton M. Christensen: How Will You Measure Your Life?

  • Daniel Kahneman: Thinking, Fast and Slow

    Daniel Kahneman: Thinking, Fast and Slow

  • Phil Lapsley: Exploding the Phone: The Untold Story of the Teenagers and Outlaws who Hacked Ma Bell

    Phil Lapsley: Exploding the Phone: The Untold Story of the Teenagers and Outlaws who Hacked Ma Bell

  • Rachel Maddow: Drift: The Unmooring of American Military Power

    Rachel Maddow: Drift: The Unmooring of American Military Power

  • Daniel H. Pink: A Whole New Mind: Why Right-Brainers Will Rule the Future

    Daniel H. Pink: A Whole New Mind: Why Right-Brainers Will Rule the Future

  • Susan Cain: Quiet: The Power of Introverts in a World That Can't Stop Talking

    Susan Cain: Quiet: The Power of Introverts in a World That Can't Stop Talking

  • Patricia S. Churchland: Braintrust: What Neuroscience Tells Us about Morality

    Patricia S. Churchland: Braintrust: What Neuroscience Tells Us about Morality

  • Daniel Imhoff: Food Fight: The Citizen's Guide to the Next Food and Farm Bill

    Daniel Imhoff: Food Fight: The Citizen's Guide to the Next Food and Farm Bill

Categories

  • Advertising (4)
  • Amazon (28)
  • Android (29)
  • Apple (72)
  • Basketball (2)
  • Books (21)
  • Branding (4)
  • Coaching (155)
  • Current Affairs (61)
  • Design (11)
  • Digital Media (261)
  • Economy (14)
  • Education (4)
  • Entertainment (6)
  • Facebook (3)
  • Film (6)
  • Games (3)
  • Google (26)
  • Humor (9)
  • Ideation (164)
  • Information Management (56)
  • Investing (197)
  • iOS (47)
  • Local (1)
  • Marketing (5)
  • Media (10)
  • Metrics (16)
  • Mobile (39)
  • Music (2)
  • Pattern Recognition (98)
  • People Connections (8)
  • Policy (6)
  • Politics (4)
  • Post-PC (65)
  • Religion (1)
  • Retailing (7)
  • San Francisco (1)
  • Spirit (23)
  • Sports (22)
  • Streams and Nuggets (424)
  • Television (9)
  • Travel (2)
  • Values (3)
  • Weblogs (1)
See More

Grab my RSS feed

ANALYSIS: Retail needs a 'reboot' to survive (My latest @GigaOM)

“Customers will not pay literally a penny more than the true value of the product” — Ron Johnson, former senior vice president, Apple Retail, and J. C. Penney’s new CEO

Profit margins of Wal-Mart, Amazon, Best Buy, Target, Home Depot and Apple over the past decade.

While some may view the wholesale destruction of numerous brick-and-mortar segments as inevitable, we all have a vested interest in seeing the retail industry reboot itself for the modern age. Because as Main Street goes, so does America.

This is no mere platitude when you consider that 13.3 percent of all jobs in the U.S. are in retail (that’s 14.7 million jobs in all, according to the Bureau of Labor Statistics), and retail is deeply tied to consumer spending, the same spending bracket that accounts for two-thirds of the U.S. economy. This doesn’t even factor in the natural synergy between our domestic manufacturing base and Main Street retail as a sales channel for that base.

Read the full piece at GigaOM, and let me know what you think.

UPDATE: There's a nice write up in the San Francisco Chronicle on The Candy Store, one of the mini in-store boutiques that Target is featuring as part of their store-within-a-store strategy. I really like these guys. Great products, and nice operators.

Related:

  1. Assessing the Internet: Great Creator or Better Destroyer? (GigaOM)
  2. The Great Reset: Why Tomorrow May Not be Better than Today (O'Reilly)
  3. Pattern Recognition: Makers, Marketplaces and the Library of the Commons
  4. Apple's Segmentation Strategy, and the Folly of Conventional Wisdom (O'Reilly)

 

February 27, 2012 in Amazon, Apple, Investing, Retailing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

Existential Threats: Google v. Apple v. Amazon - who fares best?

Existential-Threats

If Apple, Amazon and Google ⎯ my tech industry standard-bearers ⎯ were each confronted with an existential threat, who would fare best, and why?

What is an existential threat? In short, it's a doomsday scenario that threatens one's very existence, changing the rules of the game for survival going-forward.

I came to ponder this topic after I read Andy Zaky's excellent analysis of Apple's stock price performance, where he convincingly argues that Apple is the single most undervalued large-cap stock in America.

Reading it, I struggled how to wrap my head around why a dollar of Apple earnings were worth only 68 cents relative to the Google earnings dollar, and a truly feeble 14 cents relative to the Amazon earnings dollar (based upon each company's price-to-earnings ratio).

Don't get me wrong, intellectually I get it, having written on investor dead zones many times over the years.

That stated, it simply begged the question of whether Apple's investors are so skittish on the company's future prospects that they are blithely willing to dismiss its current performance, especially in light of Apple's tremendous acccelerated earnings growth.

Then, I read a Wall Street Journal piece on how Google is planning to compete with Amazon Prime via a one-day shipping program to be orchestrated in tandem with third party retailers.

This brought me back to the myriad of Google initiatives over the years that while seeming to have a larger purpose in the company's core business, lack the rigor of experiential focus and more pointedly, the 'show me' factor of direct pressure to produce real oxygen in the form of sales and profits.

The juxtaposition of these two stories transported me back to a conversation I'd had years back with one of my co-founders in a company that we'd recently sold to the '800 pound gorilla' of the segment.

Ruminating on whether we should hold onto our stock from the sale or cash out, my partner raised a question that I'll never forget.

"Do you think that if XYZ (name witheld) faced a major disruptive threat, that they have the DNA, secret sauce and intestinal fortitude to re-group and rebound?"

I didn't believe that they did, and that was that.

Rise to the Challenge, or Wither Away?

The lessons of the past is that there is no 'one right way' when faced with overcoming existential threats, as evidenced by how differently Intel, Microsoft and Apple responded when faced with potential doomsday scenarios.

In the case of Intel, the strategy when confronted by the commoditization of their original DRAM business was to re-invent themselves as a Microprocessor company.

In the case of Microsoft, threats such as the emergence of network operating systems, the rise of TCP/IP as a global communications protocol and the ascendance of the Web-browser and web-based apps were reconciled via an "embrace and extend" platform-centric strategy.

In the case of Apple, the strategy was highly pragmatic. First, they shored up the 'mother ship' Macintosh business by embracing their tight integration of hardware and software, and then they leveraged this position to invent the future via a 'halo effect' approach of self-cannibalization, new product creation and derivation, coupled with managed distribution channels (e.g., Apple Store, iTunes, App Store).

Most companies, however, lack the necessary combination of acumen and ego attenuation to make such reboots, and as such, the tech industry is littered with the remains of once-great companies that are either dead or strategically irrelevant, such as WordPerfect, Novell, Borland, Nortel, Motorola, Netscape, AOL, Sony and Yahoo, to name a few.

Where do Apple, Amazon and Google Fit in this Mix?

To the extent that Apple has faced multiple existential threats in its history, and A) has emerged bigger and stronger than ever from its experience; and B) has multiple members of its management team who remember the dark days, common logic says that the company has both the DNA and culture to overcome such threats.

Similarly, the company's strong track record of R&D is anchored by a rigorous focus on only pursuing new product initiatives that have a long-term path to economic durability, which bodes well for them relative to their peers, Steve Jobs or no.

What about Amazon? Interestingly, the company has been repeatedly battle-tested in segment after segment as a e-commerce provider, each time emerging stronger than ever.

Moreover, the company has been pronounced dead by investors more than once in its history, toughening its skin, and equally important, fomenting a culture of continuously improving the core business, while expanding into new domains. 

And while the company's R&D acumen is not quite to the level of Apple, Amazon has been able to accomplish its moves in a segment where wafer-thin operating margins are the norm, shielding it somewhat from the 'fat and lazy' mindset that has undermined many a company.

Where does that leave Google? The short answer is that we don't know. The company has never faced material risk to its primary revenue-generating ad business, and even though many (most?) would agree that the core Google search service is less magical and a bit long in the tooth, there are, for the moment, no direct threats to that business either.

Simply put, the company has never been battle-tested for operating in adverse environments, and frankly lacks both the R&D proof points that they can create new product lines which generate material sources of revenue and/or a cohesive sense of how the various piece parts fit together holistically. I would, however, give them credit for getting better on that latter point under Larry Page, as I wrote about here.

Netting it out: If a company's stock is a reflection of its current performance relative to its past, measured against its prospects and risks for managing for a better tomorrow, it seems clear that Apple is the gold standard in managing through existential threats, Amazon is the silver, and Google is the great unknown.

Related:

  1. Built-to-Thrive - The Standard Bearers: Apple, Google, Amazon
  2. Amazon's "Prime" Challenger to iPad
  3. You say you want a revolution? It's called post-PC computing

December 02, 2011 in Amazon, Apple, Google, Investing, Metrics, Pattern Recognition, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

Four things I heard at the Apple Earnings Call that caught my attention

IPad-Ramp

In Tim Cook's first earnings call as CEO, Apple reported earnings that missed analyst estimates (but not Apple's stated guidance - they always sandbag), a rare event for a company who makes it standard practice to 'delight.' 

As you might expect, the stock is trading down today (3.9% = $16.38). So should you look at this minor disappointment as a buying opportunity? Or, see it as an early warning that, relative to their own high bar, Apple's heady growth is slowing?

These four things gave me varying degrees of concern and cause for optimism:

  1. Apple Retail could be shaky: I have stated it many times before, but it's worth noting again that Apple Retail is the one piece of the company's strategy that I look at as both brilliant and a potential achilles heel. Why? On the brilliant side, the ability to have a controlled environment from which to engage, educate, sell, support and upsell Apple products is something that is both hard to replicate, and the one thing that Google, Microsoft, RIM, Amazon don't have. It's the reason that a tweener 'missionary sell' type of device like iPad can achieve breakout success by virtue of having experts at the ready to explain the solution, and a great environment to play with it. The downside to retail is that it is expensive, stores can lose their cache very quickly if upkeep or service slips, and a retail presence becomes a self-fulfilling prophecy -- It's great when stores are busy, but death if they are not. Hence, every quarter I listen intently to Cook and company talk about retail, what same store numbers look like, and what expansion plans look like. What I heard gave me some cause for pause. In the most recent quarter, aggregate sales at Apple Retail were up only nominally (1% year-over-year) to $3.6B, but the average store itself is generating 9.3% less revenue year-over-year (down to $10.7M from $11.8M). All of the iPhone rumors leading up to the release of iPhone 4S were blamed for a serious drop in iPhone sales at Apple Retail, but the fact remains that 9% is a material drop, compounded with the statement by Cook that of the 40 stores planned in the year ahead, three-quarters will open outside of the US. Taken together, this can be interpreted as Apple Retail is reaching saturation in the US, and as US is the biggest market, that at least gives a basis for concern.
  2. China emerges as Apple's #2 market: Tim Cook couldn't be more clear in stating that China is Apple's clear #2 country focus, and an enormous opportunity for which the company is applying all of its strategies from the US. The results are staggering. A country that generated 2% of the company's revenue in fiscal year '09 is now generating 12% of the company's revenue in the current fiscal year, and hit a run rate of 16% of the company's revenue in the most recent quarter. They will do $13B of revenue in China for FY '11. Here, Cook was very pointed that he's never before seen so many people rising into the middle class, and that factor catalyzing a massively growing base of aspirants to buy Apple products. One suspects that Apple is way ahead of the competition in China. Just look at their manufacturing relationship with China.
  3. Pricing overhang avoidance could create margin erosion: One of the questions asked by the analysts was whether the iPhone sales programs that are designed to avoid leaving 'pricing overhang' to get outflanked by Google, et al could create a scenario where in the coming quarters, Apple starts to see margin erosion. Here's how it happens. As Apple starts to broaden their market penetration on a product like iPhone, deals like a FREE iPhone 3GS phone (with new contract) or a $99 iPhone 4 (with new contract) start to drive meaningful unit volumes. This is great for Apple's market share story, but as such units offer materially lower margins than the latest iPhone, it has an adverse impact on operating margins. If you play that strategy into tablet devices, and potentially vertical solution bundles, you see an Apple that has massive revenues, incredible unit volumes, but quite probably eroded margins. That could be good, that could be neutral or that could be bad. Regardless, it's a new piece of narrative for modeling the company.
  4. iPad could be bigger than the PC: Tim Cook sorta blew my mind in suggesting that he believes that the opportunity for the iPad could be even bigger than the PC. Why? I had two thoughts on this. One is that if you envision a future where there are 10B post-pc devices, it's not hard to construct a scenario where the iPad evolves into a set of form-factors, and a couple billion devices. The graphic up top is by Mary Meeker showing the insane growth of the iPad relative to iPhone and iPod, pretty damn successful products, right? Two is that I take some solace knowing that this type of strategy is very much a core competency of Tim Cook.

Apple is in an amazingly interesting space, but there are certainly minefields to navigate, and this is Tim Cook's first go around in the director's seat. But then again, not really. He's driven these meetings and the underlying operations for a long time.

Related

  1. Apple just became IBM of the Post-PC Era: Thoughts on Apple’s 'Q3 Earnings Call
  2. Head to Head Stock Performance: Amazon since Kindle; Apple since iPod; Google since Android 

 

October 19, 2011 in Apple, Investing | Permalink | 0 Comments | TrackBack (0)

Head to Head on R&D: Amazon since Kindle; Apple since iPod; Google since Android

Chart-AMZN-GOOG-AAPL

If you believe that the market is a discounter of all known information, then in my interpretation the market seems to be saying that Kindle and iPod are emblematic of companies operating on offense to create new sources of revenue; whereas Android, for its impressive market share numbers, is perceived as a defensive move to protect existing revenue sources.

Related:

  • Built-to-Thrive - The Standard Bearers: Apple, Google, Amazon

October 18, 2011 in Amazon, Android, Apple, Investing, iOS, Metrics, Pattern Recognition | Permalink | 0 Comments | TrackBack (0)

Curse of the Business Units: One Reason the 'Apple Way' Eludes the Competition

Steve_Jobs Last week, in a piece for O'Reilly Radar, I contemplated the legacy of Steve Jobs.

In it, I concluded that Jobs' greatest technology innovation may actually be bringing humanity "back into the center of the ring," in terms of putting users and user experiences at the core of product ideation and realization.

This ethos, which is so fundamental to the "Apple Way," is a by-product of a corporate culture that embraces a unity of technology and liberal arts, seemingly orthogonal constructs, that Apple nonetheless finds a way to harmoniously, "magically" institute together.

Of course, there is more to it than that, which Jean-Louis Gassée' beautifully written, 'Steve: Who’s Going to Protect Us From Cheap and Mediocre Now?' brought to the fore.

Here is an excerpt, where Gassée envisions Jobs' evolution from visionary-mad man to industry god:

For a long time, I’ve seen him as having an animal inside him, the one with the desires, the instinct, the drive. In 1985, that animal threw Steve to the ground. He picked himself up at Pixar — you’d be a captain of industry for doing no more — and NeXT. Then, in 1997, armed with Pixar’s success and Next’s technical prowess, he came back to run Apple and make it really his. He had learned to ride the animal. 

Great stuff, but what struck me from the piece was looking at this Apple org chart (from Fortune), and thinking about how different it is from most of the org charts that I am used to seeing.

Apple_org_chart_large1 

The Power of Organization Alchemy

Have you ever wondered why, despite quarter after quarter of hard data and eyeballs full of proof, there just aren't more (any??) tech vendors that embrace the Apple ethos of delivering an end-to-end integrated experience?

Why can't anyone but Apple seem to deliver a complete product that surprises and delights, that is a reflection of an OBSESSION on the user and his/her aspirations?

The hard truth is that corporate politics plays a huge part in this equation.

Let me explain. Most companies are organized into "business units," and these organizational structures effectively threshold the who, what and why of a product built by that company.

Why? Because business units formalize operational "silos" within a company, which is a sure-fire recipe for delivering products that are, instituitionally-speaking, less than the sum of the parts creations.

(SIDEBAR 1: Microsoft has five business units:  Windows & Windows Live; Server and Tools; Online Services; Microsoft Business; Entertainment and Devices. Talk amongst yourselves.)  

(SIDEBAR 2: This silo logic is one reason that Yahoo, despite its typical user using 4-7 Yahoo services, could never actually get their own products to talk to each other.)

That's why even when you see the occasional re-org of one of these companies along the lines of "logical" buckets, like Consumer, Enterprise and Carrier, it still misses the elemental truth that users are defined by their aspirational jobs, outcomes & constraints, and not by artificial thresholds, like attributes.

It's the difference between delivering "The One" and delivering a bunch of derivative instances that are never quite as good or as complete as The One.

In other words, changing the tenor within the tech business requires more than just a different product creation process, but rather, it requires an organizational re-think.

Nail-Hammer The challenge there, of course, is that the last thing that management in 99% of the companies EVER wants to give up is organizational power, budget and direct reports.

And therein lies the challenge. To a hammer, everything looks like a nail, and even when a screwdriver is what is needed, the hammer can still convince itself that it's "just like a screwdriver." Such is the persusasive powers of self-interest's will to survive and persist.

Related Posts:

  1. Ruminations on the legacy of Steve Jobs
  2. Apple's segmentation strategy, and the folly of conventional wisdom
  3. Five reasons iPhone vs Android isn't Mac vs Windows

August 29, 2011 in Apple, Coaching, Investing, Pattern Recognition | Permalink | 0 Comments | TrackBack (0)

Apple just became IBM of the Post-PC Era: Thoughts on Apple’s 'Q3 Earnings Call

 

Apple logo blue 

"What would I do? I'd shut it (Apple) down and give the money back to the shareholders." – Michael Dell

“Amateur hour is over.” – RIM

“No one ever got fired for buying IBM.” – IT Buyer

With Apple’s stock surging towards $400 in after-hours trading, let me just say that I guess all of those 'Apple can't win' naysayers should have a cold, hard one with Michael Dell about now.

"Not open enough." "Too vertical." "It’s Windows versus Mac all over again." "The iPad is just a really big iPod touch." As if that last one is even an insult.

If anything, we are seeing the last vestiges of Apple being undervalued and under-appreciated - both as a stock and as an entrepreneurial institution - and the realization/capitulation that the company is the second coming of IBM, as in "No one ever got fired for buying IBM."

The good news in that is that the company has earned it through laser-like focus, brutally precise execution and a coordinated balance between short-term goals and tactics, and long-term planning.

There just is no other comparable in terms of this level of innovation, diversification, market penetration, corporate culture and eye on the money-making machine.

As such, like IBM in the good old days, companies big and small will want to gain access to some of the Apple magic, investors will pad their portfolios, and who knows, the next great job creation stimulus might come out of the elixir that engaging with Apple brings forth.

All that said, I like my Apple with a bit of a chip on its shoulder, surrounded by legions of skeptics, confidently, but with a bit of a bruised ego, needing to show 'em what they can't see from the highest heights.

I need good, scary competitors keeping the company hungry and lean of mind, and fear that in absence of same, sloth, arrogance and the easy path might water down true greatness.

To be clear, though, I heard zero in today's earnings call that gives me cause for pause, as these blowout numbers and jaw-dropping highlights suggest:

  1. The Law of Big Numbers? Yeah right: Apple posted $28.57B in revenues for the quarter, an 82% year-over-year bump. But the company has never been one to confuse market share or even raw sales with profits and cash, and this quarter was no different. In terms of profits, Apple netted $7.31B for the quarter. That means that profit growth (up 125%) outpaced revenue growth. Imagine a quarter that drops $10.4 billion in new cash reserves (up 131% year-over-year), and you have a picture of Apple, which now has a tidy hoard of $76.2 billion. Oh, and they actually grew gross margins in accomplishing this (41.7% vs. 39.1% a year ago), spotlighting the single-mindedness of their assault. Good thing the board didn’t listen to Dell when they had the chance. I jest.
  2. Victory over the Tyranny of the "One Right Way": One knock on Apple is that they are trying to do too much, and be too integrated, which is a false dichotomy in the same way that Apple winning doesn’t mean that Google has to lose, or even that the King of Old PC, Microsoft, will die anytime soon. Strategy that is well-planned and even better orchestrated is simply magical, and validates itself through measurable, repeated results. Were Apple to do nothing more than sell 20.34M iPhones in the quarter (representing 142% year-over-year growth, double the 67% growth rate of IDCs smartphone segment) it would warrant Lion-izing Jobs & Co (pun intended - it ships tomorrow). But it’s beyond shocking to see that on top of that performance they took the iPad, a product that did not even exist five quarters ago, a tweener device, and one for which there remains no viable competing solution, and sold 9.25M units in the quarter - a whopping 183% increase year-over year. Apple management was magnanimous in stating plainly that they literally sold every single iPad that they had to sell. Put another way, the iPad is now selling almost 2.5X the number of Macs sold quarterly in just its fifth quarter of life. Imagine the kid in diapers down the block, storming onto the court, and whupping LeBron James without breaking a sweat. It's that astounding. I am sure some analyst will find a dark cloud in Apple's "disappointing" Mac and iPod numbers, since the former is only growing 14% year-over-year and the latter actually contracted 20% year-over-year, but this is akin to a parent with a family full of prodigies lamenting that one of her kids was merely top of class, and not top of the world. Mac, after all, still sold 3.95M units to outpace the growth of the larger PC business by 5X, the 21st consecutive quarter its growth has outpaced the larger PC market. And the iPod, where Apple still commands a 70% market share, is somewhat of a hodge-podge. After all, almost half of the 7.5M devices sold were the non-iPod touch variety, and thus, a long-term dead end on the street of smart devices. Meanwhile, the other half - iPod touch - is subsuming the legacy iPods on one side, and being subsumed by the god-device iPhone and the big daddy iPad on the other. 
  3. When You Look Like the Safe Choice, You’re IBM: One hard takeaway throughout the call is how the one-two punch of iPhone and iPad, when combined with everything else that Apple has done right (Apple Retail, iOS unity, the SDK play, iTunes) has made Apple look like the "safe choice" in Post-PC computing. Consider emerging markets, like Asia-Pac where the iPhone business quadrupled year-over-year. Even the Mac is up 57% year-over-year there. Similarly, China, Mexico, Brazil and the Middle East were cited by Apple management as the mega-drivers of iPhone growth in the quarter.  And if you think that China is a bellwether, consider this. It generated $3.8B for Apple in the quarter, constituting 13% of Apple’s revenue. Moreover, in the K-12 educational segment, typically a laggard in new technology adoption, Apple sold more iPads than Macs in the most recent quarter. You wrap hard numbers like this with 'soft data' of iPhone and iPad pilots in the enterprise (91% and 86% of the Fortune 500, respectively, about half that amount in Global 500 companies), and the picture is clear. Apple looks like the safe choice, which history suggests has a way of becoming a self-fulfilling prophecy, as both IBM and Microsoft proved before them.
  4. Masters of their (Channel) Domain: Now what’s scary in all of this is that the company is hardly at their apex from a market penetration standpoint. First and foremost, the almighty Apple Retail halo-effect creation engine, which no other device vendor has, is a business that is humming along with 36% year-over-year revenue growth, but equally important, one where Apple is seeing 20% Y-O-Y growth at the individual store level (now at $10.8M per store). Moreover, I took note of the assertion by Apple COO Tim Cook that the company is ready to move from “pilot stage” to “adoption phase” in the enterprise, something they plan to do vis-à-vis the dual leverage of: A) Piggybacking off of carrier’s sales forces that target enterprises to sell them voice and data solutions (where RIM’s inattention to their core competency, and obsession with chasing consumers will be business school fodder for years to come); and B) Building overlay sales organizations that co-sell with other enterprise solution providers (although details were fuzzy at best, and no mention was made to their recent B2B licensing programs). When you surround this gauntlet with an additional existing 115K outlets for Apple products, another 228 carriers (in 105 countries), and of course, the 225M account strong iTunes ecosystem (all backed by credit cards), and you’ve got something that is, dare I say, borg-like.

A side observation in trying to digest all of these numbers is that for all of the puffery about Apple being a "closed" company, if you compare their metrics breakouts in earnings calls to a more "open" company like Google, it’s laughable. Google, like a lot of companies, gives the flyover view, whereas Apple allows the interested to get fairly surgical in their understanding of Apple’s business.

I could go on and one, but the key point is..."Holy Crap!" And you can quote me on that. :-)

Related Posts

  1. Apple's Segmentation Strategy (and the Folly of Conventional Wisdom)
  2. Five reasons iPhone vs Android isn't Mac vs Windows
  3. Holy Sh-t! Apple's Halo Effect
  4. Is the enterprise dead as a tablet strategy?
  5. Apple announces 'Custom B2B Apps for Business' Program...but there's a catch

 

July 19, 2011 in Android, Apple, Google, Investing, iOS, Metrics, Mobile, Post-PC | Permalink | 0 Comments | TrackBack (0)

Is the Enterprise Dead as a Tablet Strategy? (Guest Post @ O'Reilly Radar)

 Is-the-enterprise-dead

In 'HP’s Tortured WebOS Positioning,' Jean-Louis Gassée makes the assertion that the consumerization of IT renders the “enterprise-only” pivot null and void.

I disagree, but first some clarity for those who aren't familiar with the term 'consumerization of IT.'

The Puss-ification of the Enterprise

Once upon a time, large enterprises (think: Fortune 2000 companies) were widely perceived to be the ideal customer, owing to their large size, well-defined and massive IT budgets, wide range of solution needs, and target-ability from a sales perspective.

All sorts of hardware, software, hosted services and consulting services companies - not to mention a significant chunk of the venture capital industry - fed off of this massive ecosystem, the impact of which meant that innovation began in the enterprise, and trickled down to the consumer.

However, when the dotcom bubble blew up at the end of 2000, coinciding with the end of the over-hyped Y2K project 'pig trough,' enterprises lost the impetus to spend aggressively on IT.

In parallel, they began to (rightly) question the ROI (return on investment) for the many projects they had funded.

In broad terms, this led to a reclassification of IT from being a strategic asset, and core differentiator, to being a liability, and a necessary evil.

Basically, the CFO trumped the CIO going forward.

Read the full post HERE.

Related:

  1. Apple's Segmentation Strategy (and the Folly of Conventional Wisdom)
  2. PlayBook: Confusing a Bag of Chicken Parts with a Living, Breathing Chicken
  3. The iPhone, the Angry Bird and the Pink Elephant
  4. Holy Sh-t! Apple's Halo Effect
  5. Post-PC, Tablets and the iPad: BGC Investor Call Keynote (Podcast)

July 12, 2011 in Digital Media, Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

Even Superman had his Kryptonite: Apple's missteps in online services (iAds, MobileMe, Ping)

Apple-Superman-Kryptonite
On news that Apple is cutting prices on iAds, and hopefully re-working their approach in toto, it's worth asking, are the core services that we think of as as 'native to the web' - i.e., browser-based services, online ads and social networking - the company's kryptonite?

And if so, why is that the case?  Are their other more fundamental narratives and takeaways on this one?

July 07, 2011 in Digital Media, Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

The iPhone, the Angry Bird and the Pink Elephant (Guest Post @ O'Reilly Radar)

pink elephant

Will Post-PC battles lead to a war of attrition for developers?

I am firm believer that he who wins the hearts and minds of developers wins the platform game.

Case in point, in today's mobile/Post-PC universe, we see clearly how major companies like Microsoft, HP, Dell, RIM and Nokia are struggling to remain relevant in the face of developer apathy.

Meanwhile, Apple and Google have left the competition in the dust by virtue of their tremendous success in courting application developers.

But, there is a "pink elephant" in the room that no one is really discussing, and it gets to the nut of what investing time and energy in a software platform is all about.

Read the full piece HERE.

UPDATE: Interesting article in today's AllThingsD, where Android co-founder Rich Miner says that developers can now afford to wait on iPhone (i.e., they should focus first on Android). Beyond the eye-rolling, "Well, what do you expect him to say?" I personally welcome the topic of which platform developers should develop on first, and why. After all, as flagged in the article that I wrote, I am for anything that better spotlights the core question of who is making money, how much and which vendor (Google, Apple, RIM, HP, MS) has come up with the best model for developers to make serious coin in the Post-PC era.

Related:

  1. Apple's Segmentation Strategy (and the Folly of Conventional Wisdom)
  2. Understanding Apple's iPad
  3. Five reasons iPhone vs Android isn't Mac vs Windows
  4. The Chess Masters: Apple v. Google

 

 

July 01, 2011 in Digital Media, Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

Thoughts on 'Open Letter' to RIM's Senior Management, and RIM's Public Response

112923_blackpad-big If you haven't heard, Apple and Android are beginning to suck the life out of RIM, makers of Blackberry, arguably the creators of the smartphone.

As a long-time (now, former) Blackberry owner, I blogged about the inevitably of such as outcome as early as 2009 and again, earlier this year.

Well, now the rank-and-file within RIM are beginning to get restless, and so it's no surprise that an anonymous employee wrote a public 'open letter' (published on BGR) asserting what ails the company.

It is well written, reasoned, constructive and actionable (i.e., worth a full read). Here is an excerpt:

We simply have to admit that Apple is nailing this and it is one of the reasons they have people lining up overnight at stores around the world, and products sold out for months. These people aren’t hypnotized zombies, they simply love beautifully designed products that are user centric and work how they are supposed to work. Android has a major weakness — it will always lack the simplicity and elegance that comes with end-to-end device software, middleware and hardware control. We really have a great opportunity to build something new and “uniquely BlackBerry” with the QNX platform.

It's also not surprising that RIM chose to respond publicly to the letter, for reasons that I will get to. Here's an excerpt:

It is obviously difficult to address anonymous commentary and it is particularly difficult to believe that a “high level employee” in good standing with the company would choose to anonymously publish a letter on the web rather than engage their fellow executives in a constructive manner, but regardless of whether the letter is real, fake, exaggerated or written with ulterior motivations, it is fair to say that the senior management team at RIM is nonetheless fully aware of and aggressively addressing both the company’s challenges and its opportunities.

My take? One, I feel for RIM in that the toughest part of responding to a letter like this is that you are damned if you do, damned if you don't.

Two, the incredulous tone only reinforces the wide market perception that RIM is tone deaf, either oblivious, defensive or in denial about the shift in market gravity from "feature phones" to "smart phones" to "app phones," and the company's weak position in that crucial latter bucket.

Case in point, marketing campaigns like "Amateur Hour is Over," which were launched in the face of deeply successful, well-reviewed and well supported (by developers) products like iPad, only accentuate the sense of an emperor wearing no clothes.

One suspects that until the company embraces a different narrative like, "we hear you, we get it and we are committed to working on it until we get it right," gravity won't become RIM's friend anytime soon.

That's the unfortunate truth for the good folks in Waterloo.

Related:

  1. PlayBook: Confusing a Bag of Chicken Parts with a Living, Breathing Chicken
  2. iPhone Killers, Blackberries and Chicken Parts (O'Reilly Radar Post)
  3. Post-PC, Tablets and the iPad: BGC Investor Call Keynote (Podcast)

 

June 30, 2011 in Digital Media, Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

Google+ (Wake me up when I should care)

Google-Sleeping-Man
Dave Winer puts in best in 'Google Yawn,' deconstructing how efforts such as Google's new social project, Google+, are born.

They are the bastard child of seeing every successful competitor as a new front on a war for global domination, youth and sexiness, but instead, only result in mediocrity and sloth.

I would (and will) certainly try the service before reaching the hard conclusion that Dave does, but we've seen this film enough times, haven't we? 

More to the point, as I noted when Google launched it's once-ballyhooed Buzz project ('Google Buzz: Is it Project, Product or Platform?'), Google's track record of shipping the idea, fixing it, and iterating to a winnable finish line is very un-Microsoft like.

You see, Microsoft's lethal-ness back in the day was knowing that 1.0 would lead to 1.1, 2.0 and finally something reasonably compelling by 3.0. Once they were in, they were ALL IN.

By contrast, Google tends to ship the idea, be fuzzy about their intent, and if it doesn't work, they kill it, and start over again.

It's harder to win in categories with serious, disciplined competitors if you keep launching 1.0 solutions (Buzz, Wave, Froogle, Latitude), and then killing them when they fail to achieve liftoff.

I think that that's the folly of their labs mentality, and why folks like me that actually have something better to do than beta test, ignore the latest Google frosting until it's clear that there's some cake beneath it.

So, Google, tell me when I should care.

Related:

  1. Google Buzz: Is it Project, Product or Platform?
  2. The Chess Masters: Apple versus Google
  3. Open "ish": The meaning of open, according to Google

 

June 28, 2011 in Digital Media, Ideation, Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

I enjoyed Joshua Topolsky's piece on iCloud and Apple's Truth but think it presents a False Dichotomy

via thisismynext.com

When it comes to Apple, it feels to me like the company views the web as a technology which undermines rather than enriches its products. It wants you to talk to the cloud, but only through its portals and its gateways, in closed loops and private networks. Is it possible that for the company Apple has become — the lock-in PC-maker, the gatekeeper, the retailer — there’s still a little too much Wild West in the web? Is Apple’s failure with or aversion to web services a byproduct of the desire for complete control over its ecosystem and products? Or is the gang in Cupertino just not that good at the internet?...Instead of pulling up the stakes here, Apple should be doubling down. The internet is not just going to go away.

XLNT piece by Topolsky, but I think that it presents a false dichotomy.  By his articulation, Apple is EITHER playing a zero-sum game to try and reinforce its Walled Garden; OR, it needs to embrace the Web browser as universal client, and invest aggressively in Web versions of its native apps. The truth, however, is more nuanced.

For almost 20 years, we have been promised that the Web will swallow up the PC, and yet PCs haven't quite gone away, most people aren't exclusively using Google Docs or Gmail, and the browser, as impressive as it is, kind of sucks.

Apple sees this, and is focused on delivering the best user experience, which in their world means native, integrated and a leveraged platform.  iCloud is a continuation of that truth. In parallel, they have delivered a very strong web experience, especially in their Post-PC devices.

I do think, however, that his larger question of whether there is a "gotcha" at the end of the rainbow is fair and reasoned, but I hold that same question front and center for Google, Facebook, Microsoft and Amazon, as none of these companies exist solely to make me happy.

They want my data, my dollar and my dedication, and use various means, fair and unfair, to lock me into giving it to them.

June 14, 2011 in Digital Media, Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

Four core takeaways from Apple's WWDC keynote (O'Reilly Radar)

WWDC-Jobs-Keynote

The Worldwide Developers Conference (WWDC) keynote by Apple CEO Steve Jobs was pure "shock and awe," a showcase of the overwhelming power that has been assembled and orchestrated by Apple, the industry's emerging Post-PC gorilla.

Most impressively, the event and the specifics presented (iOS 5, iCloud, OS X Lion) during it were clearly staged to deliver an inspiring but chilling message: Whether you're a prospective customer, developer, channel partner, or competitor, "resistance is futile."

What follows are my four core takeaways from the keynote.

No. 1: The halo effect

Three years ago, I wrote that Apple had made, and was brilliantly executing on, a handful of trend bets that left it uniquely positioned within the marketplace.

These bets included:

  1. Making the mobile Internet caveat-free.
  2. Harnessing rich media as the "my stuff" bucket that matters.
  3. Treating everything in their arsenal as an integrated platform (from PC to device to online service).
  4. Leveraging and deriving core technologies from one product family to cross-pollinate another.

At the WWDC keynote, Jobs and company repeatedly asserted that "it just works" (the ultimate caveat-free mantra) when presenting this feature or that. They noted that no one else can assemble all of these pieces to deliver this type of solution.

Similarly, a heavy emphasis was placed on extending the utility, reach, and integration of:

  • Personal media: Via camera enhancements, which use Apple's Core Image camera technology, and a new Photo Stream service, which will run on iPhone, iPod Touch, iPad, Mac and the Apple TV.
  • Personal documents: iWork now runs on everything from the iPhone and iPod Touch to the iPad and the Mac, and it'll soon be cloud-enabled via Documents in the Cloud.
  • Messaging/scheduling/contacts: Via the new iCloud service, which revamps and subsumes the company's disappointing MobileMe service. The new iMessage offering is poised to disrupt the SMS business.
  • Professional media: Via iTunes in the cloud and a new iTunes Match service; a new magazine and newspaper subscription service called Newsstand, which complements its iBookstore; and unique to Apple, liberal rights to use the same media now and into the future on multiple iOS devices.

Read the full post on O'Reilly Radar by clicking HERE.

Related

  • Apple's Halo Effect
  • Apple's Segmentation Strategy (and the Folly of Conventional Wisdom)
  • Understanding Apple's iPad
  • Five reasons iPhone vs Android isn't Mac vs Windows
  •  

    June 13, 2011 in Digital Media, Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

    Guest Column @ O'Reilly Radar: In Google's "glass house," a battle with Bing looms

    Summary: Copy or theft? Is Google's recent war of words with Microsoft a case of calling a thief out by name, or a matter of pot calling kettle black? This article looks at how Google set themselves up to get Bing’d. 

    Okay, so now Google and Microsoft officially hate each other, with Google complaining about Bing stealing their ideas, and Microsoft chiming back, "grow a pair."

    All of this is, of course, very funny because isn't Google's whole business model about imitating, co-opting and commoditizing? 

    Read the full post HERE.

    Related:

    • Open "ish": The meaning of open, according to Google
    • Five reasons iPhone vs Android isn't Mac vs Windows
    • Apple's segmentation strategy, and the folly of conventional wisdom
    • Facebook Mountain ("I wish I knew how to quit you")

    February 03, 2011 in Digital Media, Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

    The 'Force' is With Us: Making Sense of Apple's Q1, 2011 Earnings Call

    Juxtaposition and Duality were in session at today's Apple Earnings Call.

    On the one hand, there was the onslaught of "crap your pants" ungodly numbers and pattern recognition moments that frame so beautifully why Apple stands alone, not just in computers or mobile phones, or even High-Tech, but in Industry at Large.

    Consider:

    • 71% gain in Revenue from the prior year's quarter ($26.7B v. $15.7B)
    • 78% gain in Profits from the prior year's quarter ($6B v. $3.4B)
    • $8.7 billion increase in Cash/Cash Equivalents from the prior quarter ($59.7B v $51B)
    • 95% increase in sales at Apple Retail ($3.85B v. $1.97B), with average store sales up 69% year-over-year ($12M v. $7.1M), and visitor counts up 49% (75.7M v. 50.9M)
    • 160M cumulative iOS devices sold, a now dominant platform that didn't even exist a couple of years ago

    To appreciate the "Why" and "How" side of this equation, consider this slice from Apple COO, Tim Cook. Talking about how the different product groups within Apple not only like each other, but actually talk to each other, leveraging ideas and best practices across product groups Cook noted that, "If the Mac group and iPad group were separate companies, what would the Mac group build to compete with the iPad?

    Probably, a MacBook Air," adding that Apple is not spending one minute worrying about the cannibalization of the Mac by iPad, the cannibalization of which they acknowledged is 'probable.'  

    Why the non-chalance? Because the flip-side of cannibalization is a halo effect across products, something that I blogged about two years ago HERE. Case in point, if iPad cannibalizes Mac, it's because Post-PC is accelerating, which Apple is incredibly well-positioned in.  

    At the same time, the learning curve that Apple has mastered within mobile, media and tablet devices is feeding back into PC design, resulting in Instant-On, App Stores and sleek new form factors -- all of which explains why Apple is growing 8X Faster than its peers in the PC industry (24% v. 3%, according to IDC), and has outpaced industry growth for 19 straight quarters running.

    Quipped Cook, "If this is cannibalization, it feels pretty good." Damn straight, inasmuch as Apple has positioned themselves in a way that they have at lot less to lose in a legacy segment, and a lot more to gain in the hottest market segments of the decade ahead.

    But here's the thing. Culturally-speaking, Apple is the antithesis of the business unit (BU) oriented corporation (think: Yahoo), where separate units are politically-charged, functionally silo'd fiefdoms, such that sibling units are viewed minimally as clueless annoyances, and more typically, as competition -- for resources, rank and recognition. 

    This seemingly obvious human capital innovation is every bit part and parcel of the Apple Magic, in the same bucket as multi-touch, iTunes, iOS and Retina Displays. 

    Steve wasn't there, but the Force was with Us

    But this event, while a total celebration of the fact that you can indeed go home again and make good (in the case of Jobs), was nonetheless a bit melancholy.

    Of course, the 800 pound elephant in the room was whether Steve Jobs most recent health sabbatical is to be his final swan song.

    Sadly, my gut is that the answer is yes. I say this based upon a few things. One, is Steve Jobs own words in yesterday's announcement that, "I love Apple so much and hope to be back as soon as I can," words which are decidedly different, more reflective and more resigned than the definitive pledge last time he needed to take care of his health.

    If you know Jobs, you know that there is little wishy-washy in the way he communicates the definition of the situation, as he sees it.

    Two, was Cook's own repeated words of admiration for Jobs during the call, almost eulogizing the man ("...the culture of innovation that Steve has driven in the company is such that excellence has become a habit).

    Three is the way that Cook handled the call, less sounding like a COO and more like The Guy. It just felt different that past calls.  

    Probably not a coincidence either is the fact that not a single analyst question addressed the topic of Steve's health. Either they know or the ground rules for the call were that it was off-topic.

    Either way, circling in my head was the Stars Wars moment (see above video) when Obi Wan knew that Luke Skywalker was ready, that the Force was ready to be released, and that triumph was in sight.

    With iPhone on Verizon imminent, and iPad 2 just around the bend, the Force is definitely working on Apple's behalf, and if Jobs were to time the moment, this would be the time.

    Put in business terms was Cook's (well-founded) proclamation that "We're in some great markets, some fast moving markets, we have the best products we've ever done, and an incredible product pipeline. We feel very confident."

    Therein, lies the duality of the situation. As the Sun sets, it also rises.

    Final Thoughts and Bits of Pattern Recognition

    • iPhone is unstoppable: Apple sold 16.24 million iPhones in the quarter, representing 86 percent unit growth over the year-ago quarter (8.7M units), which is relative to 70% industrywide sector growth. Their biggest gate on growth is production, NOT demand, and all of their historical data suggests that when they open up a second carrier, not only does ASP hold (currently, it's $625), but market share takes off. They are clearly expecting gonzo adoption by Verizon's 93M strong customer base, and with CDMA activated and iPhone 5 around the corner, it's clear this train is not slowing down one bit. Extreme confidence conveyed here.
    • iPod touch is now 50% of iPod device sales: Apple sold 19.45 million iPods during the quarter, representing a 7% percent unit decline from the year-ago quarter. However, 50% of those units were iPod touches (growing 27% year-over-year), suggesting that Apple is rapidly converting the media player CATEGORY into smart programmable devices, in the same way that iPhone turned single-purpose mobile phones into programmable smart phones.
    • iPad is a monster hit: The company sold 7.33 million iPads during the quarter at a $600 ASP (vs. 4M units the previous quarter), and if anything, the presence of competing tablets, only will accelerate their momentum, as Cook noted the level of vaporware and market-needs-mismatch that the "competition" presents today, and will present for at least the next 2-3 quarters.
    • Apple is absolutely killing it in China: The Great China region, as they call it, includes Mainland China, Hong Kong and Taiwan, and here they did $2.6B last quarter. This is up 4X from the prior year's same quarter (they did $3B for the prior ENTIRE year). In fact, their four China stores are the top traffic and top revenue producing stores companywide. In general, International is outpacing US performance, with Asia-Pac leading the way. 
    • Enterprise Halo Effect: The one-two punch of iPhone and iPad has at the very least gotten Apple on Approved Device lists across corporate America, with over 80% of the Fortune 100 companies either deploying or testing the device.  Given the level of care, feeding and customization that the Enterprise typically expects, and Apple's traditional focus on delivering a homogeneous solution, I still see this segment as more opportunistic than strategic for the company.
    • There was zero mention of Apple TV in the call: Read into it what you will.

    Related Posts

    1. Holy Sh-it! Apple's Halo Effect
    2. Apple's segmentation strategy, and the folly of conventional wisdom 
    3. Integration versus Fragmentation: Making Sense of Apple's Q4, 2010 Earnings Call

     

    January 18, 2011 in Investing, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

    « Previous | Next »

    FIRST-TIME VISITOR?

    FOLLOW MY TWEETS

    READ MY COLUMN

    PLAY AND LEARN WITH WALLACE

    Twitter Updates

      follow me on Twitter

      WHAT I'M READING

      • Grantland
      • Fred Wilson (A VC)
      • kottke.org
      • AppleInsider
      • Daring Fireball
      • Felix Salmon
      • Forum Blue and Gold (Lakers)
      • GigaOM

      Recent Posts

      • Life Lessons: Always Be Teaching
      • Find Your Purpose
      • Ruminations on The Fountainhead vs. Atlas Shrugged: When Does Personal Integrity Become Narcissism and Sociopathy?
      • Ruminations on the Test Drive: If you want to see how it ENDS, look at how it BEGINS
      • Ruminations on Curiosity
      • Understanding the "Vampires" Among Us
      • On Bias, False Dichotomies (and other Four Letter Words)
      • Two of the biggest truths about understanding the power of Incentives
      • Ruminations on an Amoral Company
      • If it Matters, Write it Down

      Archives

      • December 2021
      • November 2021
      • October 2021
      • August 2021
      • July 2021
      • May 2021
      • April 2021
      • March 2021
      • February 2021
      • January 2021

      More...

      Enter your email address:

      Delivered by FeedBurner

      Subscribe in a reader
      Blog powered by Typepad
      Member since 07/2005