The Network Garden - Mark Sigal's Blog

Apple Q3, 2014 Earnings Call: It's About Continuity and Gratification

"Friends say he has a gift for delaying gratification."

Facebook CEO Mark Zuckerberg once attributed a chunk of his success to delaying gratification. Where he could have monetized Facebook sooner - at the cost of building a bigger audience - he resisted the temptation.

Where he could have sold the company, and cashed out, he kept pursuing the "BHAG" (big, hairy audacious goal) of building the next Google, Apple or Microsoft.

Such was the narrative playing in my head, listening to the Apple's Third Quarter Earnings Call.

While others may see a company that can't possibly keep selling more devices, quarter after quarter after quarter, I see a company that has continually avoided the gratification of going for market share and sales at all costs (i.e., at the price of margins, profits and cashflow).

This is no small task when one considers that investors, the media and virtually every pundit in the blogosphere is not so adept at delaying gratification.

Give them a beautiful suit, and they'll see only a loose thread. 

Failure to seize a market - margins be damned - and the company gets dinged.

Unwillingness to be all things to all people - Amazon, Google and Facebook all rolled into one - and the company gets dinged.

Apple CEO Tim Cook is simultaneously unwilling to be his own man, and guilty of doing things that Steve would never do ("This would have never happened if Steve Jobs was still around).

But Apple in the iOS Era has always been about playing the long game. How else do you create a massive ecosystem of 800M devices that fit the lifestyle, daily flows and physical spaces of people at home, work, school and on the go? 

How else to catalyze an explosion of Apps, Accessories and Services, that are not only immense in scale, not only deliver a superior user experience, not only drive unparalled loyalty, but unfathomable sales margins.

How many multi-billion dollar lines of business can one company create before they inevitably, unquestionably go out of business?

But, there must be an end-game, right?

Ultimately, all of this delaying of gratification, of withholding the child-like joy of chasing every market, usurping every partner, and competing with any and all who enter its universe - read: Amazon, Google, Facebook - has to come at a price, right?

Isn't it written in the Torah somewhere that Apple ALWAYS loses because they fail to be a commodity, as God, Jesus and Mohammed demand?

Well, the end is near, and it's called Continuity.

Continuity is the idea that from Mac to Mobile to Tablet to Home to Health to Car to the Enterprise, there is a unity of experience, that is contiguous; it flows. 

Driving in your car? CarPlay kicks in. Walk into your living room, and HomeKit kicks in. Going for a jog, or visiting the doctor, and HealthKit kicks in. Walk into a Costco, and WalletKit kicks in (or whatever eWallet strategy Apple will set loose soon).

My point is this. UIltimately, the payoff of Post PC is that the devices get embedded to the point of invisibility...wait for it...because they just WORK. All the time.

Some believe that that renders the device moot, so Apple must lose.

I hold to the belief that the devices must be terrific, and the edge must be smart, specifically so we don't have to blindly trust a cloud to watch over us; to surveil us; and separate us from our data when things go haywire.

That's not to say that the Cloud doesn't matter, or that there aren't multitudes of problems that can't be solved when you intelligently bridge smart devices with a smarter cloud.

That's the big idea behind Continuity after all. 

But, it's the not so subtle distinction between the notion - captured in every Apple Ad and Apple Store experience - that the INDIVIDUAL is at the center of the universe, that the consumer is the centerpiece; and an alternate vision that we are destined to all be PAWNS in some sentient, faceless borg that calculates, decides and dictates on our behalf.

It's no coincidence then that along with a runaway successful device business, that the App Store (and the iTunes Software and Services business line that underlies it), is the fastest growing segment of Apple's business, and the linchpin of a Continuity play that has been baking for seven years, since iOS was announced.

It's the notion that Ecosystems matter, that the Consumer, the Developer, the Accessory Partner, the Corporate Customer, the Book Publisher, the Car Maker and the Enterprise are all motivated by their own need to not only survive, but to individuate.

And that's a good thing.

Related

1. iPhone: The first 'personal' computer
2. Apple's segmentation strategy, and the folly of conventional wisdom
3. No good deed goes unpunished at the iPhone company

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)

No good deed goes unpunished at the iPhone company

The moral of the story when it comes to the Apple investor is that no good deed goes unpunished. Expect Apple stock to get hammered on Tuesday for what is a very real shortfall in the projections of analysts. 

Of course, the moral of the story here is that Apple specifically told its investors a year ago that it was no longer going to "manage" earnings expectations with pre-ordained beats.

So what happened in the most recent quarter? Apple hit its own sales projections, which if you take the company's specific proclamations at face value, was the real, achievable goal.

Given Apple's unparalleled track record, you'd think that they've earned some benefit of the doubt. Namely, that they actually know what they are doing.

But, purely as a stock, Apple is seen as the iPhone company.

And the picture there is decidedly more complex. At a minimum, iPhone sales growth is flattening (for now). China Mobile could be anything from a moonshot to mediocre.

Footnote: China Mobile is the largest network in the world, with over 750 million customers.

From the tenor of the call, it seems clear that the company misread consumer sentiment (and demand) for the iPhone 5c. What does that say about the Apple innovation engine post Steve?

Domestic sales were very strong, but flat, and there were some rumblings of carriers stretching out the time periods on consumer refresh cycles.

A lot of the attention shifts to emerging markets and Asia driving growth. Very possible, but not guaranteed.

At the same time, you have to be pretty dense to diminish what 51M iPhones in a quarter means in terms of the depth of the iOS platform.

This completely discounts the potential for Apple to culitvate an ewallet (read this story on Starbucks $1.4 billion in quarterly gift cards).

I'm starting to feel pretty strongly that mobile payments will be a front seat item for Apple very soon.

Oh, and there's iPad, which did pretty well too. If there's a device that embodies post pc computing, it's the iPad.

I would love to see the company put more energy towards developing integrator channels.

That way it can penetrate more enterprise-scale verticals, like medical, pharma, field sales, retail and training, where it already has footholds. 

The other big variable is that the Apple retail stores are still humming along.

They host 144 million visitors at their stores each quarter, or about 21,000 visitors per store, per week. 

With ~420 stores open, average revenue per store was $16.7 million, compared to $16.3 million in the year ago quarter. 

By design, Apple's end-to-end-ness remains its biggest advantage.

The company with $158.8 billion in cash (or equivalents), after adding $12 billion in the quarter should get hammered on Tuesday.

It's small thanks for being transparent, disciplined, prolific and purpose-driven.

Speaking of which, let me end this post with this answer from Apple CEO Tim Cook on whether the company is actively pursuing the Mobile Payments space:

"Let me sort of avoid the last part of your question, but in general, we’re seeing that people love being able to buy content, whether it’s music or movies or books, from their iPhone, using Touch ID. It’s incredibly simple and easy and elegant, and it’s clear that there’s a lot of opportunity there.

The mobile payments area in general is one that we’ve been intrigued with, and that was one of the thoughts behind Touch ID. But we’re not limiting ourselves just to that. So I don’t have anything specific to announce today, but you can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices versus the competition that it’s a big opportunity on the platform."

Seems near term.

UPDATE: With rumors heating up about Apple’s Mobile Payments plans, PayPal wants in as an Apple partner (highly unlikely to happy). 

Related

1. 9 logical applications for iBeacons
2. NIKEiD and the Uber-ization of Global Logistics
3. Cry Babies: The Strange, Confusing Path of the Apple Investor

9 logical applications for iBeacons

As much as anything, the Internet of Things is about the rise of smart, connected sensors. Apple's iBeacon harnesses smart phones and super-cheap Bluetooth Low Energy (BLE) sensory 'beacons' to bring location-aware services into a bunch of new categories.

They include: 

1. Get a coupon for 10 percent off a TV because you stood in the TV department.
2. Your home will automatically react to you.
3. Your phone will give you a tour of museums.
4. Organize neighborhood pick-up games for kids.
5. Tickets that automatically load as you enter sporting events.
6. Win something for visiting a car dealership.
7. Toys that are aware of each other.
8. Get a free cup of coffee or snack while pumping your gas.
9. Be warned that your bike or car is no longer in the garage.

'How iBeacons could change the world forever' is an excellent article on this topic. Well worth a read. 

Perpetually Synced Services: Ruminations on Ubiquity, Persistence and Composition

We are getting to the point where you and I can take for granted that our content, context and conversations are perpetually and autonomously synced across all of our devices.

Today, this means Photos, Contacts and Calendar. In many cases, it extends to Songs, Mail, File Sharing, Text Messages, Apps, eBooks, Maps and To-Do Lists. 

The systems that drive such syncronizations are part Client and Cloud.

At some point, we will build meta-platforms and marketplaces on top of this layer that give rise to entirely new categories of applications.

Owing to the rich strata that such systems will be able to mine and refine, the applications that emerge during this wave will for the first time, be built around Me, My Interests, My Content, My Recurring Workflows and My Extended Networks.

Phase one (happening now) is the emergence of these 'Perpetually Synced Services' as a utility that is every bit as reliable, boring and invisble as electricity.

Phase two is the rise of new vehicles that harness this utility.

My bet is that such systems will be built upon the backs of smarter messaging systems, a bit like the example of WeChat, where consumers can hail a taxi and pay for it while chatting with friends.

Every time you ride an Uber, and appreciate the seamless, almost magical, nature of that experience, or delight in the elegant simplicty of Dropbox, know that you are staring squarely into the future.

It's a fractal of a greater truth yet to be revealed.

Related:

1. The Mobile Native Cloud - An Extensible Model for the Post PC Era
2. How Uber is like Southwest Air - The Art of Reinventing an Industry

My Presentation at AppNation San Francisco on Product Lifecycle + Iteration

If you jump to 6:50 in this video, you will see the presentation that I did as part of a panel discussion on Mobile App Development at AppNation. The two salient points that I was trying to convey are:

1. The product lifecycle, especially on apps, is all about iteration, and having an agile, high-touch development model for supporting same;
2. How you launch and how you seed the market for an app is often as important as what you build.

In any event, check it out, and let me know your thoughts.

Two Thoughts on 'The Hardware Revolution Is Upon Us And Why It Matters'

Jon Callaghan of True Ventures has written an excellent article where he argues that a new hardware revolution is upon us, and that it is destined to be a game-changer. It's a great piece, and well worth a read. 

Here is an excerpt:

Almost exactly six years ago, Apple launched the first iPhone. It was a small device that many dismissed as a toy. In reality Steve put a supercomputer in our pocket — we just didn’t know it. And like super computers before, it came with immense capabilities and brought about an opportunity to rethink, reimagine and reinvent how we live, work, create and consume. Today, smartphones (and tablet devices) sell by the hundreds of millions.

Cheap processors, cheaper memory, and even cheaper sensors means it’s a great time for people who like to tinker with hardware to tinker. Platforms like Kickstarter and Quirky de-risk production, identify features and customers, and do so before the first tool is made. Wireless broadband is ubiquitous, and military grade technology is available at RadioShack. The manufacture and design of products and devices has changed forever. Building factories is no longer a prerequisite for building products. Add to the mix emergent technologies such as 3D printing and inexpensive laser cutters that put prototyping capabilities onto a kitchen table, and we suddenly are facing an extraordinary revolution in hardware-based innovation.

I wholeheartedly agree with his assertions, but I do want to put a bow around one of Jon's most salient points; namely, that building hardware is hard. Make that HARD with capital letters.

Specifically, there are two key 'gotchas' about the hardware business that most aspiring entrepreneurs get blindsided by.

Before I get into them, let me establish my "hardware chops." In my career, I have:

• Hand-built my own hardware systems (CafeNet: Internet access terminals)
• Worked in the network hardware business (Tribe Communications: Internet infrastructure)
• Invested in hardware startups (Whistle Communications: Internet appliances)
• Advised hardware startups (Square Connect: Universal remote control gateways)
• Founded a hardware device management software company (Rapid Logic: unified device management tools)
• Built a cross-platform system for creating native mobile apps (Unicorn Labs) 

In other words, my take is based upon a 360-degree perspective on the hardware business, and it's lifecycle from a make, bake and take to market perspective. 

So why hardware is so...HARD?

One is the simple truth that hardware guys speak a different language and come from a different planet than software guys, and vice versa.

This generally translates into each party trying to abstract out the other, which often leads to lowest common denominator solutions, or worse, products where the target user credulously wonders, "Were these things designed to work TOGETHER, or just to irritate the user?"

The next wave implies developers having a sense of there being one composite whole (hardware, software, service, tools, manageability), and the team, culture and ecosystem being oriented accordingly. One can see this dynamic at work in Apple's iOS vs. Google's Android.

Two is that specifically because you are dealing with physical devices (as opposed to the wholly digital 1s and 0s of software), the question of channels for discovery, selling, distribution and support are inordinately more complex, with many more points of failure, than with software alone.

This underscores an indelible truth about indirect channels (like retail, amazon, etc.) that many fail to grok; namely, that the channel can NOT solve your selling and support challenges until YOU figure them out first. It's like trying to tell the blind how to see when you can't see yourself.

Food for thought.

Related:

1. Three Takeaways from the WWDC Keynote: How Apple Got its Groove Back
2. Six Takeaways from the Google IO Keynote
3. Ruminations on The Mobile Native Cloud: An Extensible Computing Model for Post - PC
4. Innovation, Inevitability and Why R&D is So Hard

 

Meta-Thesis: How Google vs. Apple is like a great NBA playoff battle (GigaOM)

"Talent wins games, but teamwork and intelligence wins championships." - Michael Jordan

Watching Google announce Chromecast (their assault on Apple TV), Nexus 7, gen 2 (their assault on iPad) and Android 4.3 (their assault on iOS) literally the day after Apple announced their quarterly earnings, I was left with a sense of wonder.

What is the right metaphor for understanding the game that Google and Apple are playing to emerge as the kings of the Post PC era? Is it the “Shock and Awe” of war? Is it “Microsoft vs. Apple”? Is it “The Moat”? Is it “Vertical Integration”?

Sure, it’s all of these things, but after ruminating on this a bit, I have a meta-thesis on the game that Google and Apple are playing.

It's professional sports, specifically the NBA Playoffs. 

In the NBA Playoffs, each team has a style that they want to play, that leverages their unfair advantages, and exploits the competition's weaknesses, and there are a multitude of 'games within the game,' and adjustments over the course of the series.

So much of winning vs. losing is enforcing your desired style of play on the competition, thereby forcing them to forsake their competitive advantage.

We can argue whether "Open" is better than "Integrated Experience," or whether "Subsidized Pricing" (via Ads or Adjunct Business Models) is Preferred to "Direct Pricing" (i.e., Pricing is a Direct Reflection of the Product).

But, what is absolutely fascinating to watch is one team (Google) trying to **force** the other team (Apple) to abandon or water down their strategy, so as to play Google's game. 

Read the rest of the piece HERE.

Related:

1. Five reasons iPhone vs Android isn't Mac vs Windows
2. Apple vs. Google: Lessons from Bill Gates’ playbook
3. You say you want a revolution? It's called post-PC computing

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

3 Takeaways from the WWDC Keynote: How Apple Got its Groove Back

“If you guys were the inventors of Facebook, you'd have invented Facebook.” – Mark Zuckerberg, The Social Network

Early in Apple’s WWDC Keynote, it began. Proving that fanboi-ism is not a uniquely Apple dynamic, the Android acolytes erupted on Twitter:

“Watched a little #WWDC on a break. Excited for iOS users to have some of the things we've had on Android for years,” chimed in one. “iOS 7 looks like Jelly Bean,” snarked another. “Feel like iOS 7 has taken many many design queues from what Google's apps have been doing over the past year," griped yet another.

Because we seem incapable of parsing nuance; and because paradoxical truths are apparently more blinding to the human eye than the sun itself, the Post-PC wars have always been presented as a zero-sum, winner-take-all narrative.

I mean, come on, remember Windows versus Mac?

It ALWAYS ends with one dominant winner, and a bunch of losers.

That is, unless of course, you have paid attention to the web, where Google’s stranglehold on search and ads has not bothered Amazon one bit; where Facebook remains uniquely different from Apple, Amazon and Google; where Twitter and LinkedIn just seem to be hitting stride.

Meanwhile, in smartphones and tablets, is Google’s Android really killing anyone, other than its own hardware partners?

And who's winning in the Android camp anyway, save for Samsung and ‘forkers,’ like Amazon?

Having now sat through both the Google IO and Apple WWDC Keynotes in the past few weeks, I am left with a sense. While we can argue about what winning **looks** like, in the battle for Post-PC dominance, the two bellwethers – Apple and Google – are rightfully judged as much by what they have in common as by where they diverge.

With that in mind, these three items stood out for me in today’s keynote:

1. Composition and Unity: Apple’s strength has always been about the power of making a choice, and how that instructs a myriad of other decisions, from design and workflow, to delight, and critically, what you don’t do. Heretofore there was a sense that within the body Apple, was a company fighting a low-simmering battle between its various selves across hardware, software and service layers. With Jony Ive taking charge of all design following the unceremonious putsch of Scott Forstall, that feels like its changed for the better. Beyond the not-so-subtle digs at Forstall's skeumorphic design sensibilities, the unveiling of iOS 7 is reflective of a company operating with a sense of their being one composite whole, trending towards system-wide symmetry and lightness. Sure, the obvious takeaways are on the flatness of the icons and how much simpler much of the user interface appears. But, design is less about how something looks, and far more about what it does. I expect that in the days and weeks ahead, the consensus will be that iOS 7 powered devices remain the most beloved, most deeply engaging and most perpetually used devices out there. In other words, while Android can legitimately tout market share numbers, Apple will continue to be able to tout their share of heart, mind, pocketbook and profits. The videos that Apple created around their vision of the experience of a product, how it makes users feel; the delight it inures; and why that instructs the company to embrace very few ideas, is great brand advertising. I hope to see the company attack this idea just as fervently as Google wraps itself in geekiness, choice and fearlessness -- both companies SHOULD play to their core strengths.
2. Lies, Damned Lies and Statistics: Google boldly, and ridiculously, once proclaimed that open always wins, sidestepping the gray truth that even within Google, sometimes closed is the rule of the land. They railed against forcing users to choose, born of a fervent sense that breadth and diversity is better. That is, until it came time to anoint the Nexus device class; or create Glass, for that matter. Similarly, Apple has mocked and litigated against the Android ‘imitators,’ but there is legitimate truth that in iOS 7, Android’s influences can be seen far and wide. I reference this point to underscore the fact that both Apple and Google are winning in their own way, but not in completely different ways. Google can credibly tout the importance of 900 million Android devices, but how much better is that than the 600 million iOS devices, especially knowing that the iOS base is qualitatively and quantitatively ranked number one in areas like raw usage, web usage, mobile-based commerce, loyalty and overall satisfaction? Similarly, what is the power of a platform when only 33% of the devices are using the latest version (in the case of Android Jelly Bean) vs. 93% for Apple (in the case of iOS 6)? As a developer, I can tell you that dealing with a bunch of form-factors fragmented across a number of OS variants is the proverbial death by a thousand cuts. And don’t even get me started on the goodness of knowing that the vast majority of Apple’s 575 million iTunes account holders are backed by a credit card and one-click purchasing. In the case of Android?  Not so much. It’s one reason that Apple has paid $10 billion to developers -- $5 billion in the past year alone – a full 3X the amount of all of the other platforms combined. Then again, Google is not only betting on Android. They have a dominant play on the web, and an equally strong footing on iOS. 
3. Embrace, Integrate and Improve: The best line of the keynote was when Phil Schiller, in announcing the new Mac Pro quipped, “Can’t innovate anymore, my ass.” Indeed, Apple showed real innovative fervor in the new Mac OSX Mavericks, which was bolstered by both a new Mac Book Pro (super cool - targeted at designer and developers) and a revamped MacBook Air. But, of course, the main entree was a complete re-design of iOS -- the largest re-think of iOS since iPhone. In so many ways, big and small, iOS changes the way that an iOS device works and the way it looks, while managing the balancing act of not breaking familiarity for users. I was struck repeatedly with a sense of coherence and consistency of structure and flow. One simple example is the new Maps app in Mac OS X where in a click, you can push a map to your iOS device. This is a very holistic way of thinking about synchronized flows from desktop to mobile. Similarly, Apple’s new iTunes Radio service, is positioned first and foremost as a music discovery tool. Towards that end, it generates 'breadcrumbs' to full histories and song buying. It factors logical tie-ins with iTunes Match (the service is ad-free for iTunes Match customers; ad-supported for everyone else; and yes, Pandora just crapped themselves). An initiative called iOS in the Car extends the goodness of hands free integration of phone and music to messaging and directions. In the process, it usurps one of the primary use cases for Google’s Glass. A complete rethink of the camera embraces the goodness of Instagram while autonomously adding intelligent contexts. Plus, the ability to shift in natural touch flow from video to standard camera, square shot and pan view screams delight. Think of this as the "more than the sum of the parts" release.

Conclusion: This was the first post-Steve Jobs Apple event that felt unapologetically like the new, new Apple. One can imagine that somewhere out there, Steve is smiling proudly, knowing in his heart of hearts that his baby just got its groove back.

UPDATE 1: Daring Fireball's John Gruber has some excellent thoughts on iOS 7. Well worth a read.

UPDATE 2: Craig Hockenberry (Twitterrific) has written a perspective piece that is terrific, no pun intended.

Related:

1. 6 Takeaways from the Google IO Keynote
2. You say you want a revolution? It's called post-PC computing
3. Apple's segmentation strategy, and the folly of conventional wisdom
4. Google Glass will soon be invisible – and the new normal

 

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)

 

Google Glass will soon be invisible – and the new normal (New Post @GigaOM)

“There are three sides to every story: Your side, my side, and the truth. And no one is lying.” 
– Robert Evans (“The Kid Stays in the Picture”)

I recently met up with my friend and one-time business partner, Steve Lee, who is product director on the Google Glass project, and before that, ran product management on Google Maps for Mobile.

Other than a quick tour of the device, Steve basically let me dive in, so as to experience Glass with a beginner’s mind. I won’t bother reviewing the basic capabilities and specs, which have been covered exhaustively already.

Instead I want to focus on some of the points that are in debate, and whether I believe that Glass is destined to succeed.

Glass is translucent; designed to be invisible

In “Waves of Power,” David Moschella shows how new disruptive industries begin as verticals, since the complete product solution requires one provider to deliver the whole enchilada.

The new industry continues on this path until the solutions finally reach the “good enough” stage, when the larger trend becomes horizontal orientation, so as to achieve ubiquity, commoditization and the broadest possible ecosystem. (In passing, one can see the battle between Apple’s iOS and Google’s Android in this light.) The endgame, so to speak, is that the technology becomes persistent, embedded and ever-present to the point of being “invisible.”

It’s a paradoxical concept to be sure. On the one hand, the technology is everywhere; how can it be invisible? On the other, it’s because it’s everywhere that we no longer think about it as exceptional – and, equally, grand solutions can anticipate and incorporate its ever-presence.

Read the full post HERE.

UPDATE: This piece has obviously struck a chord with the rank and file at GigaOM, based upon the storm of comments. Check it out.

UPDATE 2: Google just announced a bunch of third-party apps coming to the platform, including Facebook, Twitter, Tumblr, CNN, Elle and Evernote. 

Related:

1. You say you want a revolution? It's called post-PC computing
2. Apple's segmentation strategy, and the folly of conventional wisdom
3. Horizontal, Vertical and the Google Path to Riches

 

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