The Network Garden - Mark Sigal's Blog

Ruminations on Retail: Why We Launched BrightStreet Ventures

(Guest Column: Western Real Estate Business - July 2014)

Consider the plight of the retailer: the rise of Amazon has attacked the margins that local retailers count on for survival.

As a result, numerous segments, including video stores, music stores, computer stores, bookstores, electronics and office supplies are either dead or dying. Sadly, this is a trend that is permanent and accelerating.

Meanwhile, the ascendance of the smartphone, led by Apple’s iPhone and Google’s Android is changing everything.

There are about five billion devices creating universal experiences that are social, real time, data smart, perpetual, personal and just-in-time capable via millions of mobile apps.

This emerging reality gets to a universal truth of our time; namely, that software is ‘eating the world,’ and in the process, reshaping virtually all industries.

It’s given rise to Uber, Amazon, Airbnb, Google, iTunes, Facebook, Maps, and Yelp, but can there be any doubt that retail, media, marketing, manufacturing, transportation and telecom are being forever changed in the process as well?

In retail, for example, mobile has given the consumer the power of all knowledge at their fingertips. With this power, he or she can discern fair price or pursue a better deal – often online – in very few clicks.

It’s also empowered consumers to act as social amplifiers of reputation and experience. An extra half-star rating on Yelp can cause restaurants to have a full house 19% more frequently.

Critically, though, mobile plays a game-changing role in what is known as omni-channel. In the world of omni-channel, the consumer’s frame of reference encompasses online, bricks-and-mortar and mobile possibilities.

When done right, omni-channel can yield a 6X sales lift from the customers that engage with the merchant on all channels, including online, via mobile and in store. Such has been the experience of Walgreens.

Similarly, the rise of big data and data science is changing the means of analyzing, targeting and customizing the field of play that exists between retailers, consumers and shopping center owners.

Mobile has also disrupted the traditional ways that merchants acquired and connected with customers.

The customer acquisition tool kit used to consist of yellow pages, direct mail and newspaper ads. While your eyes can tell you that these marketing segments are decidedly unhealthy, there’s an even more obvious barometer: ask yourself if your children have ANY connection to yellow pages, paper mail, or print newspapers?

This is the new reality for retail. Mobile, when combined with data and the cloud, completely changes the game.

This is also why is a shopping center developer decided to launch a technology affiliate like BrightStreet Ventures.

The simple truth is that we are working backwards from the consumer, what they expect and what is possible in this new era. We are also looking at the challenges that retailers face, and our role as owners and operators of shopping centers in fostering their success. That’s the defensive side of the equation.

In terms of offense, we believe the convergence of bricks and clicks represents one of the great opportunities of the next decade.

That is why every venture that emerges from our model needs to make sense as business offering enduring value.

We also believe that by sharing what we learn with our peers, a rising tide will lift all boats, which is very much in our interest.

That’s the backstory on why we created BrightStreet Ventures. The larger market has validated where we’re headed with mobile marketing innovation and real estate business intelligence (our company portal, powered by our Datex Property Solutions affiliate, garnered an ICSC MAXI nomination).

We had the opportunity to unveil this vision, and formally launch our new venture at ICSC RECON in Las Vegas, and the response was incredibly encouraging.

Mark Sigal is the Managing Director of BrightStreet Ventures in Woodland Hills, California.

Related

1. Understanding Retail's Reboot: Four 'Big Picture' Trends
2. Retail Needs a Reboot to Survive
3. How Uber is like Southwest Air - The Art of Reinventing an Industry

Understanding Retail's Reboot: Four 'Big Picture' Trends

Jeff Jordan of Andreessen Horowitz has written in a compelling piece that we are in the midst of a profound structural shift from physical to digital retail.

Having written about the need for the retail industry to undergo a reboot myself, he's preaching to the choir.

What the above graphic (from the article) illustrates are the segments of the market getting most disrupted by online.

Between 2007-2011, in these segments online gained $35B in sales, while bricks and mortar lost $30B in sales.

In the big picture, there are four trends that are transforming everthing in retail:

1. Ecommerce: Push button purchasing, payment and physical delivery is alive and real;
2. Mobile Cloud: Post PC is mobile, social, client, cloud and context. It's growing to 10 billion devices. The field of play has changed dramatically.
3. Generational Shift: The generation that read the paper, used the yellow pages and eagerly checked the mail is fading. That irrevocably changes how merchants connect with consumers. How could it not?
4. Big Data: The data 'firehose'' from back office to market facing is wide and deep. The ability to visualize the flow of a business and tune its mechanics will yield many new and interesting personalization, marketing and marketplace experiences.

Not to long ago, Marc Andreessen astutely observed that "Software Is Eating The World."

What's playing out in retail is emblematic of this truth.

Related

1. Retail needs a reboot to survive (GigaOM)
2. The Mobile Native Cloud (SlideShare)

Ruminations on The Mobile Native Cloud: An Extensible Computing Model for Post - PC

 

The Mobile Native Cloud (via slideshare)

Each wave of computing changes not only how applications are MADE, and the economics behind them, but our very concept of what the medium can BE. 

Consider the Post - PC computing era. It is defined by the rise of 10B mobile devices, which are converging in a globally connected cloud that is social, service oriented and massively scalable.

It's every bit the sea change for computing that the Web was to the PC, and the PC was to the Mainframe and Minicomputer that came before it.

Simply put, Post - PC computing opens the door to new forms of native experiences that are dynamic, data-driven and media rich. 

This presentation above looks at the ramifications of this wave, including key industry trends and a real-world case study of a series of applications built upon this model.

I'd love your thoughts on whether you agree with the assertions in the presentation, if there are specific use cases particularly resonant for you, any 'gotchas' that you see, or areas where clarification is needed.

UPDATE: Paul Adams has written an excellent article called 'Why cards are the future of the web' that is highly complimentary to the concepts espoused in my SlideShare, and worth a read. The always-excellent Benedict Evans has also written on the topic.

Related:

1. You say you want a revolution? It's called post-PC computing
2. The Middleband Project: Re-Thinking Mobile Native Content
3. 3 Takeaways from the WWDC Keynote: How Apple Got its Groove Back
4. 6 Takeaways from the Google IO Keynote

NIKEiD and the Uber-ization of Global Logistics

"Any sufficiently advanced technology is indistinguishable from magic." - Arthur C. Clarke

"You mean, I simply push this button, and it just shows up?"

**It**, in this case, is the magical Uber Black Car; magical being relative to the pedestrian, unreliable yellow taxi.

What Uber did in re-thinking the gray space between taxis and private car services is instructive.

Logistically speaking, they rejiggered the following:

1. The Ordering Process (it's push-button simple via an app; no interminable waiting on hold for a dispatcher)
2. The Transparency of Availability (you can literally see how many cars are nearby, and how quickly your car will arrive)
3. The Nature of the Transaction (no money ever comes out of your pocket; you never have to think about the tip again)
4. The Reliability of Your Order (you are notified on your mobile when Uber arrives, the driver confirms that you are indeed the orderer; no more pickups that don't show up, or taxis 'stolen' by pedestrians on the street)
5. Your Relationship to the Driver (most drivers feel like entrepreneurs; Uber is a new revenue source for them; all drivers are identifiable, and subject to being rated and reviewed)

Part of the magic of Uber is that the company is able to create this transformative experience without owning any of the cars or hiring a fleet of drivers.

Given the above, is it any wonder then that "uber-ization" has become my go-to term for industry re-invention through new combinations of design, user experience, workflow and logistics -- as enabled by broadband, mobile and the cloud. 

NIKEiD: Re-Thinking What a Shoe Can Be

The power of great technological waves and re-invention in general is not merely that they change how things are made, or what they cost. 

Rather, it's that they change our concept of what is possible, and what a given medium can be.

In the realm of motion pictures, adding sound (and talking) to films, completely transormed the industry.

In the case of ecommerce, the boundarly-less and friction-free nature of Amazon, has completely disrupted retail.

In the realm of mobile, building a unifed platform around iPhones, iPads, iTunes and iOS, has catalyzed the post-PC era. 

I thought about this truth yesterday, as the pair of fully customized NIKEiD shoes showed up at my door.

Not only were they beautiful (okay, beauty is in the eye of the beholder), but what left me feeling awed was the fact that what had begun as a series of push-button simple clicks in San Francisco, had traveled across the globe, navigating an unimaginably intricate manufucturing and logistics process to find its way back to my front door.

The UPS route home alone (see above) shows stops in China, Hong Kong, Taiwan, Philippines, back to China, Alaska, Kentucky, Oakland, and finally, San Francisco. 

Simply magic, and I wonder how many other products, services and industries are ripe for such reinvention. 

If you are sitting in an industry where commoditization and/or disruption is your future (through de-localization, re-invention and digitization, you need to heed the words of Google CEO Larry Page.

His guidance? "I encourage more companies to do things that are outside their comfort zone. It gives you more scalability."

Food for thought.

Related:

1. Uber-ization: The art and science of reinventing an industry (GigaOM)
2. Retail needs a reboot to survive (GigaOM)
3. You say you want a revolution? It's called post-PC computing (O'Reilly)

6 Takeaways from the Google IO Keynote

"I was frightened...I was excited."
- Bono (on the vibe in England + Dublin in the '70s)

We are at the end of a cycle, and approaching the beginning of a new one.

It's post-global, post-digital, and post-commoditization.

The new cycle is about making the inefficient more efficient, and creating differentiation where commodization exists. 

That we can stare at the rot that consumes so many industries, and simultaneously cheer a record stock market and wonder, "What replaces all of those jobs?" is BOTH terrifying and exciting (READ: 'The Jobs Engine' for thoughts on this topic).

Keep these dual truths in mind in reading this assessment of today's keynote. (Btw, a good capture of the transcript from the keynote is HERE.)

Six key truths stuck in my craw:

1. The Single Biggest 'Tell' of the Keynote: To date, there has been exactly one company that could stop the world when they held an event, and that company is Apple. While Jeff Bezos and Amazon has been pretty close in this regard, when it comes to Google, these events have been easy for the non-Google acolyte to skip. That has now changed, based upon the sheer number of NEW folks who followed the keynote today -- including a significant legion of Apple devotees...myself included.
2. Google is Stealing Apple's PR Mojo: One of the more interesting questions I take from the above is this. If you are Apple, how much do you care that Google is stealing your PR Mojo? What is that worth? Google is grabbing key PR inspiring narratives, be they Glass as the potential game-changing device, Android adoption numbers, self-driving cars, Google fiber, etc. It's translating into an inflated Google stock price, a deflated Apple stock price, and a fundamental shift in the number of stories being written about Google (relative to Apple). In terms of real business, these things are optics, but in the equation of 'perception has a way of becoming reality,' it's also not just pure noise to be ignored. Illustrative of this point is the fact that on StockTwits, the one-month change in message volume for Google is up 55%. For Apple, it's down 25%. It's a not-too-subtle reminder that the battle for all things post-pc is being played on a multi-dimensional chess board, and PR touches the perception domain. A side thought: Google's next thrust on the PR war front should be doing Brand Advertising around Google Maps, as it's illustrative of how Google thinks about and executes services that are great at web, great at mobile, deliver truly native experiences in either environment, and an exercise in composited logic, big data, the cloud, and great workflows. Plus it's the app everyone uses, and the best single example of what Apple does NOT do well. Food for thought.
3. Developer Mindshare: A primary focus of the keynote was on increasing the love and attention that Google is able to secure from software developers. While there was nothing earth shattering announced (although plenty of holes filled, to be sure), it is reflective of Google grokking the seminal truth that developers make or break a platform play. As one twitter commenter noted, "Google is basically shipping everything iOS devs have been asking for since the beginning." That stated, the event was also completely devoid of developer demos (save for Google's own demos), making this feel a bit like Google's passion is reserved for Google services alone. This truth is perhaps why Google really doesn't care what Amazon or Facebook is doing with Android. Nonetheless, it raises the question of how Apple will respond at WWDC? Same question when Amazon announces whatever they are up to next with Kindle Fire.
4. Get in My Belly: On twitter, I quipped, "Should we be concerned that Google's new slogan is, 'Come on, get in my belly!' or that this is the new spokesman?" I am only being slightly tongue-in-cheek, for the simple truth is that for all the platitudes about Google being so open, sometimes it seems that open is just another way of saying, 'onboarding.' After all, Google's openness is generally focused on the areas that they want to compete with and commoditize, whereas where they want to differentiate remains proprietary and protected. Where is the open sourcing of Google Search, Maps or AdWords, anyway? One observation here is that it feels like the big potential loser of all of these initiatives in Music, Play, Maps, Offers, Photos, and Conversations is...wait for it...Facebook! Why? Simply put, Google is getting better at the things Facebook does well quicker than Facebook is getting good at the things that Google does well. Similarly, for Google, social is just one job that you'll hire G+ for, whereas for Facebook, it's job one. Hence, the more Facebook feels compelled to fill your feed with suggested content (ads) or flood it with unrequested crap every time you 'like' something, the worse that Facebook's user experience becomes. Netting it out: Google is getting better at context, design, and compositing of user experience quicker than Facebook is figuring out discovery, dollars, and search. In the big picture, the bottom line is that if your product CAN be enhanced via an algorithm, Google will complete with you eventually. Daring Fireball's John Gruber deliciously picks apart this reality in assessing Larry Page's comment on the 'negativity' of everyone focusing on who Google is competing with.
5. A Unified Theory of Google: While there is a tendency to look at G+ as Google's lame attempt to compete with Facebook, I tend to view it differently. My take is that G+ is ground zero in Google's end-game to figure out: A) How its various services composite together; B) What those integration points look like on the inbound, outbound and metadata side; C) What the user wants to DO within those service containers; and D) How such services run natively in different user environments (iOS, Android, Chrome, Web, or Glass). Similarly, efforts like Play, Offers and Music are best seen as the company finally being ready to make a frontal assault on a billing relationship with consumers (ala Apple and Amazon). It's logical, and it speaks to the company's unlimited ambition, but for Google partners, it should be a clear reminder that the company aims to consume all. Having recently written my assessment of the prospects for Google Glass, it's also worth noting the symmetry between what I heard today and what I saw baked into the Glass user experience. Specifically, I am referring to three things. One, the company's growing arsenal of Knowledge Graphs on the backend. Two, how such graphs feed user Experiences in the form of Answering queries with richer context; Conversing with users via natural language (it's like Siri, but it's useful and it works really well); and Anticipating intent. Three, the use of a dynamic cards model in Google Now for things like reminders, public transit, music, TV, movies, books and recommendations. Everything with Google at this point is about context, meaning and flow.
6. Larry Page is Intense: Google CEO Larry Page closed out the keynote with a meandering sermon that encompassed a vision that was simultaneously frightening and exciting. The man is destined to either win a Nobel Peace Prize, or end up as the 'villain' in a future James Bond film -- maybe both in the same year. While it was a bit too Atlas Shrugged for my taste (it took on 'Who is John Galt?' proportions), I liked the spirit of what amounts to: A) Sensors, Sensors Everywhere; B) Want to run away and join my country? C) Optimism over Negativity and D) A killer quote: "I encourage more companies to do things that are outside their comfort zone. It gives you more scalability." Larry Page rocks, in a mondo, mega-billionaire sort of way, and I mean that as the highest compliment, I think.

Related:

1. Google Glass will soon be invisible – and the new normal (GigaOM)
2. The Jobs Engine: On Indivisibility and Integrated Systems (GigaOM)
3. Mobile Native Publishing: The Rise of Dynamic Content Services (O'Reilly)

 

Why Netflix is betting on Apps over Channels: It's All About Being 'Native'

"Look at the bigger picture." 
- Francis Underwood, House of Cards

Netflix CEO Reed Hastings has written an 11-page essay that's embedded below. It's quite excellent, and lays out his vision for the future of Internet TV (Peter Kafka of AllThingsD has a crisp summary of the key bullet points HERE). 

In particular, it underscores why Hastings' Netflix deserves to be mentioned in the same reverential tones as Apple, Amazon and Google.

For one, there is the clear articulation of a 'North Star' that guides the company forward; namely, winning more of their members 'moments of truth' - i.e., those times when a consumer could play a game, read a book, chat on the phone or watch conventional TV, but chooses Netflix instead.

The virtue of having a North Star is that it instructs clear narrative-driven thinking, tightening focus, process and execution. It is one reason that we readily associate Apple, Amazon and Google as the gold standard companies of their industry, and so few others.

It's also one reason that it almost feels inevitable that at some point, Google (4.3% of their market cap), Apple (2.8% of their market cap) or Amazon (10.3% of their market cap) will **need** to acquire Netflix (I'd add Disney as a dark horse candidate).

After all, TV viewing captures a billion hours a day of consumers' time, and Netflix has created a model whereby 30 million of these consumers are paying a monthly subscription fee for access to the service.

In other words, despite all of the various activities that fight for consumers attention, Netflix is winning at: A) securing members; B) monetizing those members; and C) growing their base through differentiation. 

Talk about **earned attention.**

Netflix is Betting BIG on Apps

It is with that backdrop that I took particular interest in Hastings' assertion that Apps -- not streams -- but Apps --will replace Channels as the primary construct for delivering Internet TV. He mentioned the term 25 times in the document, no less.

I think that there are two things that one needs to keep in mind relative to the "apps" versus "channels" topic. 

One is that a channel is simply a payload, and an app is simply a wrapper for delivering that payload.

It's no different in that context from saying that Apple turned the phone into an app. We don't need to think about it in that context because the phone app does what a phone is supposed to do.

Quite the contrary. We now think of the iPhone as much more than a phone, right?

Two, is the unlike a simple envelope, the wrapper of an app can actually enable to DO stuff; namely, show you related content, extend the context with communications, enable you to share the content, rate it, excerpt it, roll it into a play list, etc.

The point is that an app can do things that a simple stream can not, and Hastings clearly groks that this is about delivering **native experiences.**

This is also why a show like 'House of Cards' launched with the entire Season 1. In Netflix, binge viewing is a native behavior, right?

Along these lines, Hastings specifically dispels the idea of Netflix even having a fixed notion of what constitutes a 'season' in their model.

It's all about being native, something that I have written extensively about, most recently HERE.

Related:

1. Apple’s North Star vs. Earth’s Gravity: Four Takeaways from Apple’s Earnings Call
2. Built-to-Thrive - The Standard Bearers: Apple, Google, Amazon
3. Mobile 'native' publishing: Why our concept of content must evolve in the post-PC era

Netflix Ir Letter

Reading the Tea Leaves of Apple's Q2, 2013 Earnings Call -- Four Takeaways

"It's not real, you know, the fame thing."- Anna Scott (Notting Hill)

The hardest thing for the beleaguered Apple investor to wrap their head around is the fact that Apple exists on a schizophrenic plane like no other.

On the one hand, there is 'THE STOCK' -- i.e., the broken stock price.

It rests in the same Bargain Bin as Dell Computer, a company selling undifferentiated offerings in a commoditized segment that quite literally shrinks by the day.

On the other, there is 'THE REAL COMPANY,' an innovating, selling, marketing, leverage and cash-generating machine that has now dropped almost $100 billion dollars in revenues and $22 billion dollars of profits in just the first two quarters of Apple's fiscal year.

That this engine has fattened the company's coffers to the tune of $145 billion dollars (another $12.5 billion added this quarter) does not satisfy.

That this harvest comes from six different multi-billion dollar product lines (iPhone, iPad, Mac, iPad, iTunes & Services, Accessories) manages little more than an acknowledging shrug.

That the company has repeatedly proven its ability to create massive new markets in a quasi-predictable, highly-levered fashion (now known simply as the iOS platform), yields but a yawn.

"Where's my divvy," bitch the disappointed investors, seemingly ignorant to the fact that not only have spirtual peers, Google and Amazon, never offered up a dividend, but they've never even let the topic so much as brush the top of the table. 

"Apple has an identity crisis," utter the dumbest of the dumb media, blind to the power of Apple's unique position in the market as an integrated hardware, software, services, media, tools and marketplace solution provider.

Ever clear on their North Star - i.e., delivering great consumer experiences that change people's lives - Apple has neither changed their identity, nor lost their focus, as evidenced by the best customer satisfaction and customer loyalty ratings, and consistently, the industry's highest profit margins.

Know this. If it was even remotely easy to approximate the 'Apple Way,' we'd be talking about the multiple multi-billion dollar product lines that Apple's competitors have created; we'd be talking about the breakout success of the Apple Retail Store copycats; and we'd be talking about the multitudes of developer success stories that have dropped out of the Google, RIM or Microsoft mobile ecosystems.

We aren't, and it's not (easy).

It's with this fundamental schism between THE REAL COMPANY and The STOCK that I attempted to make sense of the takeaways from Apple's earnings call.

There are four conclusions that stood out to me:

1. Tim Cook wants Apple to be Liked by Investors in a way that Steve Jobs never did: In the call, Cook had an almost apologetic tone with respect to how Apple has failed to beat the guidance, growth and margins expected by analysts and media. In increasing the dividend and upping buybacks, the tone was more akin to "we're trying harder" than "get on the bus or get left in the dust." By contrast, even when Apple's stock was cratering into the $80's following the crush of the 2008 financial crisis, Jobs embodied a healthy irritation for the capriciousness of investors, and the ignorance of many analysts and the media. The truth here is that no good deed goes unpunished, and far from appreciating Apple's olive branch to investors, the narrative is likely to be spun as Cook's Apple is trying to buy time, and is in defensive mode. Me personally, I wanted a bit more "F-U," and a bit less, "we're sorry."
2. Margins will Remain Contracted for the Foreseeable Future: If there are two product-related narratives that stood out for me, they are: 1) iPad mini unleashed an absolute torrent of first-time tablet device buyers (personally, it's their best tablet device), and if the sacrifice is lower margins (relative to the larger iPad), it's worth the trade-off. If the tablet is the replacement device for many a 'job' that users previously hired PCs for -- as I believe it is -- then any way that Apple can capture this market share is a zero-sum type of win that they must secure. Here, Cook and Apple CFO Peter Oppenheimer were quite clear that Apple executed a similar strategy in winning the media player market with iPod, so what's past is prologue; and 2) iPhone 4/4S is the smartphone device that Apple is counting on to capture market share outside of the US with first-time smartphone buyers. Unsurprisingly, these devices may be where the highest volume comes from on iPhone (especially, until the next iPhone comes out), eroding margins in the process. The alternative is to give that ground to Android based devices, a calculus between market share, revenue, user experience and the bottom line that the company has repeatedly shown the acumen to manage through. Honestly, I am not even remotely concerned that they will find the right balance here.
3. The New Product Pipeline will Likely Remain Dry until Fall at the earliest: Given the extreme secrecy by which the company launches new products, and manages expectations around same, Cook spoke with a metaphorical bull-horn in flatly stating that new product **categories** and new services are not expected until this Fall and throughout 2014. Needless to say, the absence of new products combined with the absence of seasonal catalysts, explains why Apple's outlook for Q3 was a flat quarter, and why the quarter behind that may not be much better.
4. iOS Usage Rates are Staggering in their Differential relative to Competing Platforms: If the downside of the current Apple story is absence of true catalysts to carry it aloft to new heights, the upside is that iOS stands alone in generating 75 cents of every dollar of ecosystem commerce in the mobile universe. Simply put, Apple is paying developers $1 billion dollars in revenue share every quarter, iTunes is on a $16 billion dollar run rate, and the actual usage of these devices in terms of web traffic is of a different degree than the competition. Keep that in mind next time Google touts generic Android unit count numbers. Again, that's not to say that there aren't clear scenarios where Apple gets attacked on the margins, but their core differentators, and the depth of engagement and loyalty with users is unlikely to be threatened any time soon. That's the bottom line.

So, netting it out, should you Buy, Sell, or Do Nothing? And what will Apple stock do in the intervening months ahead?

This, unfortunately is a riddle without a clear answer, a stark reminder of the famous quote that the market can stay irrational far longer than most investors can remain solvent.

Related Posts:

1. Cry Babies: The Strange, Confusing Path of the Apple 
2. Apple's North Star: Four Takeaways from Apple's Q4 Earnings Call
3. OMG, WTF is going on with Apple Stock
4. What is Apple Worth: The 'Gold Standard' Thesis
5. Get ready for the Apple + iPhone backlash

Why the mobile web vs. mobile apps debate is a false dichotomy (GigaOM)

The mobile web versus mobile native “grudge match” rages on, with over 300 comments to Super VC Fred Wilson’s post on whether now is the time to invest in mobile web apps (and services) over mobile native ones.

But the arguments presented in favor of the mobile web over mobile native represent a false dichotomy. Simply put, there is no universal truth in the mobile web vs. mobile native debate, and no “one right way,” despite what the pontificators would have you believe.

The argument in favor of mobile web goes like this: The web is open, ubiquitous, requires no special software, is globally searchable and algorithmically discoverable. As such, it is agile, extensible and readily manageable. Plus, there are lots of proven models for development, discovery, distribution and monetization. And, of course, mobile web development offers a higher degree of symmetry to PC browser-based web development than mobile native app development does.

The argument is favor of mobile native goes like this: There are over 400 million iOS devices and over 500 million Android devices, representing almost 1 billion devices worldwide. In the case of iOS, Apple has built a well-managed development, distribution and monetization platform that has yielded tremendous innovation and user engagement in areas ranging from photography to gaming, social networking, entertainment, education, music and other rich media.

On some level, the argument comes down to “good enough” and “universal” vs. the “richest possible experience” on the device type that is subsuming the PC.

Read the full article at GigaOM.

Related:

1. The iPhone, the Angry Bird and the Pink Elephant (O'Reilly)
2. The short 'half-life' of apps and the App Store 
3. OMG, WTF is going on with Apple Stock?

Get ready for the Apple + iPhone backlash post iPhone 5 announcement

Tomorrow, Apple is poised to announce its newest iPhone, the iPhone 5 (or whatever they call it). And while there has been no mobile device more successful, more inspired and more game-changing than the iPhone, I can't help but feel that the sentiment post announcement by the media and bloggers will range from, "That's it?" to "Apple blew it."

Mind you, I say this NOT because of anything that the product will or will not do, but more because, if you think about it, it's the Perfect Storm in terms of media sentiment.

One, the "WOW" bar is pretty high with Apple to begin with, so anything that's not absolutely game-changing is destined to register with story writers as a disappointment.

Two, the big new feature of iPhone 4S, Siri, is widely perceived to be a bit of a disappointment, so there is already the easy narrative that Apple's lost its iPhone mojo.

Three, the media loves hero takedown stories, and has been waiting for the right moment to write the "He's not Steve Jobs" story about Tim Cook. I'm guessing this is that moment.

Don't get me wrong, I am not saying this is a conspiratorial effort or even that it's fair, just that the narrative machine works this way.

Four, Apple is coming off a "disapppointing" quarter in terms of its earnings (relative to its ridculously lofty standards), so the pieces fit if you want to construct dark, but ultimately meaningless, narrative.

As such, I will be shocked if the sentiment is not dour post announcement, and if there aren't at least a handful of "Apple's in trouble" stories tomorrow.

Put on your raincoat. A storm's afoot!

Then again, the last disappointing iPhone blew the door off the barns in the one place it matters - the market - so I expect a similar outcome when the faux clouds disperse. 

Govern yourself accordingly.

UPDATE 1: Watching today's stock ticker during the Apple event and leading up to the close of the market, you could see a debate going on with dollars, as the stock teetered between being down $4 and up, before rocketing to a close up $9.  In the end the stories were actually pretty measured like these two:

• The iPhone 5 Is Completely Amazing and Utterly Boring (Wired)
• Apple's iPhone 5 bigger, faster but lacks "wow" (Yahoo Finance)

UPDATE 2: MG Siegler at TechCrunch has written an entertaining read, 'Apple’s Magic Is In The Turn, Not The Prestige,' that takes an apt metaphor from the movie 'The Prestige' to explain the magic of what Apple has done with iPhone, and specifically disappointing to some of the Apple faithful at this point.

UPDATE 3: I may have been a bit ahead of the curve, but since the launch, Apple is getting dinged left and right for dissatistfaction with Maps, "disappointing" iPhone 5 sales, an un-Apple like launch of Passbook, and an unheard of drop in device satisfaction, to name a few. Some even wonder if the company has peaked.

UPDATE 4: In the four weeks since I wrote this post, Apple is down $22, or 3.39%. By contrast, Google is up a shade under 10%, and the Dow is up 2%. Of, Andy Zaky (my favorite analyst of Apple), thinks the rank and file are clueless and will miss Apple's run up to $1,000.

Related:

1. What is Apple worth? The Gold Standard Thesis
2. The Paradox of the Disrupted
3. Apple’s North Star vs. Earth’s Gravity: Four Takeaways from Apple’s Earnings Call

Amazon 'kindles' the competitive fire: “We’re the elephant in the room” (GigaOM)

“Here endeth the lesson.” —Jim Malone, “The Untouchables”

There is a great moment in the movie “The Untouchables,” when street-smart cop Jim Malone (played by Sean Connery) explains to federal agent Elliot Ness (played by Kevin Costner) the laws of the urban jungle that was 1920s Chicago, culminating his sermon by saying, “Here endeth the lesson.”

In his own way, Amazon CEO Jeff Bezos delivered a similar message today about the laws of the post-PC jungle when he unveiled the next generation of all things Kindle. In doing so, he accomplished two things.

One, he firmly anchored the precept that other than Apple, Amazon is the elephant in the room when it comes to tablet and media devices, aka the post-PC universe.

After all, there is no company out there (other than Apple) that can so seamlessly combine ecommerce, digital media, publishing, cloud computing and hardware know-how — and do so at wafer-thin margins.

Read the full post at GigaOM by clicking HERE.

Related:

1. Amazon's "Prime" challenger to the iPad (O'Reilly)
2. You say you want a revolution? It's called post-PC computing
3. Built-to-Thrive: The Standard Bearers: Apple, Google, Amazon
4. Existential Threats: Google v. Apple v. Amazon - who fares best?

HP, Dell and the Paradox of the Disrupted (Guest Post @GigaOM)

If a picture is worth a thousand words, what story does the above picture tell? It tells the story of one of the most dominant coalitions of our time — Wintel — coming apart at the seams.

In quantitative and qualitative terms, it suggests that if this is the best that the four horsemen of the PC industry have to offer going forward, this tale won’t be ending too well. And things are looking particularly grim for Hewlett Packard and Dell, the two best-known faces of the personal computing industry (see also, “HP: The Garage is Closed”).

As much as anything, it’s a stark reminder that disruption doesn’t give a crap about legacies. This is something that I have seen again and again in my twenty years as an entrepreneur in network infrastructure, Web-based services and mobile applications.

Read the full post HERE.

Related:

1. Pattern Recogntion: Differentiate or Die
2. HP: The Garage is Closed
3. Pattern Recognition: OEM Roadkill Ahead

Pattern Recognition: Apple Vindicated; Retail Schadenfreude; Disruptive Paradox

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

1. Apple Vindicated: What protection does the industry's innovator merit against shameless knock-off artists? Does anyone really want to argue that what Apple has created is NOT uniquely proprietrary? That it merits less consideration than a Gucci bag or a new erection pill? Yes, I get it. Our patent laws suck, and there are ridiculous numbers of frivolous lawsuits, but Apple v. Samsung is not one of them. Feel free to pick apart this aspect or that of the IP that Apple is claiming, but know this. Apple has built proprietary differentiation, and by simple sniff test logic, they've earned the right to protection. It's not a god-given right that I can enter your house, eat from your refrigerator and not pay for it. To me, there is justice in this ruling; and vindication for The Legacy of Steve Jobs. No less, it's one year to the day from when he resigned as CEO of Apple. Talk about tributes!
2. Retail Schadenfreude: I love retail. My first career was in retail real estate. My brother is a shopping center developer. I can wax poetic about the magistry of Cheesecake Factory. But, I also love Amazon, and feel that they are a great retailer, and consistent innovator. Obviously, bricks and mortar has a place, wherever it can create differentiation. Otherwise, it will get Amazon'd on price. That's why I have little pity for Staples, just as I had little pity for Circuit City or CompUSA before that. These are businesses that either never had heart (CompUSA and Circuit City), or simply lost it (Staples); who killed the Mom and Pop just because they could. Now, Amazon is killing the Big Box. Karma's a bitch, isn't it? 
3. The Disruptive Paradox: In the movie 'Joe Strummer: The Future Is Unwritten,' a documentary about the life of the founder of The Clash, there is a great line uttered by Bono talking about the vibe in England and Dublin in the 70s. Bono says, "I was frightened...I was excited." That sentiment is applicable to our present time. Many, many industries in a deeply screwed mode. A completely unhealthy, ineffectual political system. Oh, and institutionalized conflicts of interests between Big Business and the government apparatus (I am intentionally distiguishing between Policy Creation and Policy Adminstration). Yet, something HAS to give. The patient will not simply get better with time. You can look at this pessimistically, and with cynicism. Or, you can be a little scared, but also be excited. Because we are at the end of a cycle, and approaching the beginning of a new one. It's post-global, post-digital, and post-commoditization. The new cycle is about making the inefficient more efficient, and creating differentiation where commodization exists. This is the 'stop the film and discuss' portion of the program. It stands to reason that some companies will figure this one out, providing the essential case studies for many others to get to the higher ground of re-invention. Be scared. But also be excited.

Pink Elephants, Zombie Software and the App Store

Man, I hate when valid macro arguments (there **is** lots of zombie software in the App Store) are mucked up by clear bias and self-interest.

Writing in GigaOM, David Meyer, quotes a startup analytics founder's assertion that an estimated 400,000 out of 650,000 apps in the App Store are zombie software. Why so many zombies, pray tell?

“This is based on Apple’s closed system — it’s tough to discover those kinds of apps. You don’t have proper search, so the only way to discover new apps is through the top listing,” says Adeven CEO, Christian Henschel.

Really? This is based on Apple’s closed system? What data supports that conclusion? The greater success of apps in other more 'open' app stores?

I mean is there even a scintilla of data that suggests less zombies on Google Play or the Amazon Android app store?

Let's get real. More probably, app store economics are stilted towards few big hits, and the longer tail pool of utility & productivity perennials that get updated, cared and fed for, marketed beyond the app store, etc.

Think: Instapaper, GoodReader.

Everything else either has an orthogonal business model, venture funding, or both (e.g., Dropbox, Yelp, Path, Instagram).

Beyond that, it's debatable whether the preponderance of zombies is a BUG or a FEATURE of App Store economics.

After all, with 650K apps, 90%+ will ultimately fail, just as 90% of businesses in the real world fail, right?

The larger question, what I refer to as the pink elephant in the room in my O'Reilly Radar piece, 'The iPhone, the Angry Bird and the Pink Elephant,' is whether ANY form of app store economics support the kind of vibrant software industry that promulgated during the PC era, and even during the web era.

Let's talk about pink elephants, and not so much about personal biases, is my take.

Is Netflix for eBooks a Winning concept?

Mike Shatzkin has written an excellent post evaluating subscription models in the ebook space, concluding that they make sense more for ebook niches (i.e., specific segments) than as a general offering.

His main point is that in contrasting the success stories at Spotify and Netflix with the prospects for eBooks, one has to look at the concept of granularity; namely, the fact that there are far fewer total movies and songs produced each year (measured in the thousands) than books (measure in the hundreds of thousands).

Read the whole piece, as it covers the history of such business models in the book space, success stories, and how the evolution of online has changed the equation.

My core actionable takeaways from the piece are three-fold: 

1. MEDIA MATTERS: The distinctions between different media types drives their consumption patterns, which in turn drives monetization paths. After all, it was an easy evolution to unbundle the song from the album because the unit of value still worked (arguably better) at the level of the song. Even watching a movie is only a two-hour commitment. Both of these exercises naturally occur in lean back mode. By contrast, reading requires an engaged user, and a book takes days-to-weeks to consume, constraining the types of users and use cases where subscription is compelling. 
2. UNITS OF VALUE: With books, the challenge is to define the unit of value whereby the whole book can be 'systemically un-bundled' into smaller units, and then aggregated into a larger library so as to create the kind of deeper value that supports a subscription model. Reference books are logical places for these things, as are segments like education and business where there are new types of media/engagement units that can be cobbled together to create value (e.g., cliff notes, best practices 'recipes,' quizzes, etc).
3. CATCH-22: The challenge for most publishers contemplating this path is that there is both a material cost to re-factor content AND an income risk that new ventures in this arena don't cost-justify. As such, it's a bit of a Catch-22 for these folks. Why? On the one hand, the clear trend is for publishers to get increasingly squeezed by Amazon (especially if/when there is no more B&N). On the other, the individual stakeholder at a publisher who goes out on a limb to make this type of investment has to fight internal friction to play it safe, and thus faces career risk if things go awry, doubly challenging in an industry where lateral moves are scarce.

Such truths favor upstarts over incumbents (or Amazon, of course), but this is one story whose book has not yet been written.

Related:

1. The Five Keys to a Successful eBook Production: The Story of Spot the Dot
2. Anatomy of an eBook App (O'Reilly Radar)
3. Creating a Top 10 eBook with Corona (Ansca Website)
4. Rebooting the Book: One iPad at a Time (O'Reilly Radar)
5. Ruminations on last week's Book Expo America: What it means for the Book Biz

Amazon Prime as a 'gateway drug' - Subscribe & Save

Last week in my weekly 'Pattern Recognition' column, I looked at the disruptive potential that same-day delivery will bring once Amazon launches it, as is widely-rumored.

Add to the mix their Subscribe & Save service, which I stumbled upon when ordering a case of protein drinks earlier today.

Once again, this underscores the 'gateaway drug' nature of Amazon Prime.

First, it removes a perceived friction of ordering online - namely delivery cost and delay - by bundling free two-day delivery with orders of any size (on applicable products).

Now, with Subscribe & Save, I can pick off a category of products (bulk size orders) that heretofore were in the domain of Costco.

Side thought: What if Amazon built user-facing analytics me around these products (or enabled third-parties to do so)? Then, their lock in potential for getting consumers to single-source becomes really huge.

Related:

1. Pattern Recognition: Amazon the Assassin; Late Bloomers; Dream Team Disssage
2. Amazon's 'Prime' challenger to the iPad (O'Reilly Radar)
3. Existential Threats: Google v. Apple v. Amazon - who fares best?