The Network Garden - Mark Sigal's Blog

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

Mobile 'native' publishing: Why our concept of content must evolve in the post-PC era (O'Reilly @TOC)

One reason that industry disruptions prove so vexing to market leaders is that disruptive waves simultaneously barrel through assumptions about customer needs, industry economics and operational best practices.

Consider the case of the motion picture business, an industry that was disrupted when the “talkie” — once derided as a costly gimmick — subsumed the silent picture in the 1920s.

The takeaway from the film industry’s transition is instructive. The talkie not only changed how movies were made and the economics of the business itself, but critically, it changed our concept of what a movie could be.

In doing so, it transformed the medium forever (The Speed of Sound by Scott Eyman is an excellent book on this topic).

Disrupted by digital

As we move toward a post-PC universe of 10 billion mobile devices, a similar disruption is playing out in the publishing business.

Print media is patient zero in the ongoing saga of “disrupted by digital,” an unstoppable force that has decimated one time toll road businesses like newspapers, and is threatening to squeeze out the last breaths of magazine and book publishers.

That this occurs at a time when physical bookstores are also under assault is hardly a coincidence given the tight links between publishers and bookstores on book distribution, discovery and monetization. The brutal reality is that when an industry is disrupted, the entire ecosystem feels the pain.

The rise of dynamic content services

So if publishing must evolve, what does this mean for publishers?

Most basically, it suggests that whereas static text and pictures define our current concept of publishing, in the mobile era, we need to think about what is being “published” as a native app that re-configures itself based upon the content being served. Logically, this type of system autonomously generates data.

This has significant ramifications for how such content is made, what it can do, and the underlying systems required for delivering and receiving the same.

Read the full piece at O'Reilly Tools of Change for Publishing by clicking HERE.

Related:

1. You say you want a revolution? It’s called post-PC computing (O'Reilly Radar)
2. Rebooting the Book: One iPad at a Time (O'Reilly Radar)
3. Anatomy of an eBook App: Lessons learned building a Top 20 eBook App (O'Reilly Radar)

 

Picture Puzzles is the next app in the 'Play and Learn with Wallace' Series

Picture Puzzles is the latest app in the 'Play and Learn with Wallace' early learning series of apps. It joins existing apps, Counting Fun, My First App and First Spelling.

It features six different puzzle games that help develop a child's creative skills, test their visual sense and build spatial awareness. 

The games in Picture Puzzles are:

• Follow the Lines: Ten different mini-games where a child must navigate a series of dots to complete the game
• Noisy Zoo: Match the picture to the animal sound (eight different variations)
• Puzzle Pieces: Touch the puzzle piece that completes the puzzle (four different puzzles)
• Shadow Shapes: Find the shadowed object that matches the picture (15 different variations)
• Spot the Dot: Identify the falling dot that matches the requested color (eight different variations)
• Matching Twins: Find the matching twins hidden behind the cards (20 different variations)

Like all games in Play and Learn with Wallace, Picture Puzzles integrates with our Personalized Profile and Rewards Chart system, so kids can feel great about their progress.

Also, the content in the apps loads in randomly so kids don't get bored.

When you purchase two or more apps, the apps can be Super Shuffled together, giving kids the benefit of a blended learning experience. Learning professionals will tell you that blended learning is one of the best ways for kids to learn rapidly and retain more deeply.

As always, the full-featured trial is FREE.

To find our more about the system, watch the above video, read my original post on the topic, or better yet, download the software on your iPad.

To celebrate the launch, Picture Puzzles is 99 cents for a limited time only (it's usually $3.99).

Picture Puzzles Screen Shots

Introducing Play and Learn with Wallace

This short video is a superb encapsulation of what I have been working on for the past year with the good folks at Macmillan Children's Publishing, and their much beloved imprint, Priddy Books.

If you don't know them by name, Priddy is the maker of over 500 books, including First Words, ranked by Scholastic as one of the 100 Greatest Books for Kids. They have sold over 100M titles over the past decade so they really understand the early learning segment.

Working around a model known as co-creation, we called upon our own learnings from building dozens of ebooks, apps and games at Unicorn Labs, combined those learnings with the ethos and IP of Priddy, and a built that into a series of early learning apps.

These apps are delightfully fun for kids, to be sure, but in the process of play, kids develop cognitive, creative, spelling, math and drawing skills.

What's unique about the approach is that while each app can be used separately, the apps can also be "super-shuffled," or mixed together dynamically, to provide what is known as blended learning, a proven methodology that helps children learn more rapidly and more deeply.

I will write more about the system that underlies 'Play and Learn,' but in the interim, I would encourage you to watch the video, and download the app, which is free.

New titles in the series will be rolling out monthly. In fact, here's a teaser about our next title, Picture Puzzles, which launches at the end of the month.

Related:

1. Rebooting the Book (One iPad at a Time)
2. Kirkus Reviews gives Spot the Dot a Kirkus Star as a Book of Remarkable Merit

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?

Post-PC Dividend: Average household spend on Apple products was $444

Oh, and that number has grown prodigiously since 2007:

In 2011, the average amount U.S. households spent on Apple products was $444, according to Morgan Stanley analyst Katy Huberty. That figure has been rising smartly every year. In 2010 it was $295. Back in 2007, it was only $150.

(via Daring Fireball)

The Jobs Engine: On Indivisibility and Integrated Systems (GigaOM)

There is a looming sense, a dark narrative that America’s best days are behind it. Why? A clash of civilizations. A sense in many pockets of the country that we are living in a time of anomie, inequity and worry.

Everywhere you look, there is disaster. At ground zero are the remnants of a 100-year flood known as the 2008 financial crisis; it’s a flood that never completely receded.

Put another way, whether you are politically right or left, believe in trickle down or trickle up,  the hard truth is that there are few catalysts for significant job growth in America right now.

Take a look at that one great wonder and power of our age, broadband internet. In many ways it has been an engine of growth and created whole new industries. Yet it has also set off a wave of painful disruption, through the triumvirate forces of:

• Digitization: Anything that can be turned into bits, will be.
• Globalization: Where location can be rendered moot, it will be.
• Commoditization: When bits and logistics can commoditize, they will.

In its wake it has permanently broken or even destroyed multiple industries. In fact, Bureau of Labor Statistics data shows quite clearly how such industries that were rocking and rolling prior to broadband are now sucking wind, including electronics stores, book stores, electronic components, employment services and information services, to name a few.

Less obvious, but equally troubling, is the fact that when these industries break it also disrupts the ecosystems that surround them as well, cascading in a domino effect. 

Here’s how it works: When an industry like print media goes sideways, not only do publishers and the employees housed within them go away, but so too do printers, production houses, delivery trucks, book stores, newsstands, book reviewers, sales reps and publicists. Worse, this hits regional hubs especially hard. And we now know those jobs are not coming back. Ever.

The immutability of this dynamic hearkens to a signature line in Oliver Stone’s ever timely, ‘Wall Street,‘ when broken trader Bud Fox (Charlie Sheen) asks corporate raider Gordon Gekko (Michael Douglas), “Why do you need to wreck this company?” Gekko retorts, “Because it’s wreckable, all right?”

Read the full post HERE.

UPDATE 1: Kevin Kelly, author of 'What Technology Wants' (one of the more thought-provoking books of recent years), and long time Wired writer, has written an excellent article on what he calls 'The Post-Productive Economy.' Most fundamentally, he argues that sustaining growth waves take decades to reach full bloom, yet our measures are tailored to both the wrong kinds of metrics and the wrong sense of periodicity. I think that it further underscores the truth that the strongest counters to Commoditization, Digitization and De-Localization is Integration.

Related:

1. Retail Needs a Reboot to Survive (GigaOM)
2. HP, Dell and the Paradox of the Disrupted (GigaOM)
3. Assessing the Internet: Great Creator or Better Destroyer (GigaOM)
4. The Great Reset: Why Tomorrow May Not be Better than Today

Apple Event: It's Time for Evolution + Keeping Foot on the Pedal

This was a really excellent and interesting event, showing how Apple sees itself post Steve Jobs, and the role of different voices within the compay.

There was the basic message that, we are an execution machine. And this was BEFORE Apple actually got around to what they were announcing.

Then there was the usual table setting around a converged Mac + iOS Universe:

• 3M iPods sold since launch (includes Shuffle Nano, Touch)
• 200M devices running iOS 6
• 300B iMessages sent this year (28K per second)
• 160M Game center accounts
• Shared photo streams (I love this feature): 70M photos shared
• 700K apps (275K iPad apps)
• 35B app downloads
• Mac outgrowing the PC six years straight (#1 desktop + #1 notebook in US)

Evolutionary thinking

But, factoids aside, Apple is a company that can hang their hat on visionary thinking, great design and a strong execution culture focused on the customer and rapid evolution.

I loved Phil Schiller's sermon on how iMac's evolution is representative of how Apple embraces, then iterates, markets. Not a bad lead-in for announcing the next generation of the incredibly cool iMac.

It's fascinating to see the role of polymorphism within the company. Consider the Retina screen, which now serves two different MacBooks Pro segments, the iPhone, iPod touch and iPad.

Look at the evolving relationship between iOS and OSX and the natural symmetries between iCloud, iMessages and iTunes.

Case in point, it seems that the catalyst for the new iBooks App to gain continuous scroll is to better serve iPad mini users. 

I love how Apple is baking sharing into everything, and books are a natural for this.

I am happy to see them supporting iBooks Author, as I think that there is yet to be a desktop publishing equivalent for the post pc era. 

I would be remiss if I failed to mention the Fusion Drive (marries HDD and Flash) in the new iMac. If it works, it could really up the user experience.

Controlling all facets of the system, as Apple does, is what can make such a robust storage service truly standout.

iPad mini AND iPad 4!?

This was a shocker and also makes a lot of sense. Moreover, it sets up an interesting inflection, which I will get to.

Apple has now sold 100M iPads in just 2.5 years, which is faster than the rise of iPhone. iPad accounts for over 90% of the web traffic from tablets. Apple is very well positioned in education, which happens to be where the next generation is growing up.

When Tim Cook said, "We are not taking our foot off the gas," he wasn't kidding. It was a two-fecta. A new form-factor in iPad mini, and the newest iPad in time for Christmas.

This says something since heretofore, there was the March event to announce the new iPad.

To give that up (they have to, right?), they must: A) Recognize that the market is at a point of maturity and imminent competition (maybe); B) Be factoring that the competition aims for the holidays to release their newest gear, and not want to disappoint the 'new-seeking' customer; and C) Figure that since Apple's holiday quarter is generally nuts, why NOT swing for the fences?

Some takeaways:

1. iPad is 9.7" vs. the iPad mini at 7.9" diagonal. But since both devices share the same pixel count (1024 x 768) all software for iPad and iPad mini will work without modifications. As a developer, I can tell you that this is huge. We gained another BIG segment for free.
2. Apple gave Android a bunch of air time in the early portions of the call. As someone on Twitter noted, that doesn’t feel confident.
3. iPad mini is the first iPad that you can operate using one hand. Logical segments: education; women with handbags; porn. I jest.
4. I was a bit surprised that they didn't price the mini below $300 ($299). That seems to be a logical segmentation point for the market, right? Why leave a wedge for Android? Noneteless, this will kill during the holidays. Not Retina, though.
5. The fact that Apple killed the spring iPad event, to me that means Apple is planning to announce a NEW product that they feel is worthy of that calendar spot. Otherwise, they will disappoint the market, who has been spoiled to expect a spring event, g-d dammit!

Related:

1. If Apple is all about the devices, Amazon is all about the services (GigaOM)
2. HP, Dell and the Paradox of the Disrupted (GigaOM)
3. Apple vs. Google: Lessons from Bill Gates' playbook (GigaOM)

 

Pattern Recognition: Maps Mea Culpa; Marketplaces; Lesser Evils; Particularity

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. Maps Mea Culpa: Unless you were trapped in a bomb shelter all day, you probably read Apple CEO Tim Cook's 'owning' of the fact that the new Maps in iOS 6 is a poor replacement to the old Maps in iOS 5 (and before). First off, that's the textbook right way you do it. Accept full responsibility, without caveat, something that I blogged about regarding brands and trust. For good measure, Apple even created an App Store section for Maps Alternatives (meh). Second, as I blogged about a couple of weeks back, almost regardless of what Apple did in launching iOS 6 and iPhone 5, a backlash was inevitable. This just provided the match. Third, know this; while Apple was not perfect in the time of Steve (see Me.com, Ping, AirDrop, AntennaGate), this time is different. Those instances were new products, new features or instances that touched a tiny subset of users. Maps is a CORE feature, and this is the first time that Apple has taken users BACKWARDS based upon business goals conflicting with consumers' best interest. Consumers trust Apple because they have repeatedly protected consumers interests and by ensuring that the solution would always get better. In this context, sideways or backwards is not acceptable. COOK SPEAKS: "At Apple, we strive to make world-class products that deliver the best experience possible to our customers. With the launch of our new Maps last week, we fell short on this commitment. We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better."
2. Mobile’s Hidden Opportunity - Marketplaces: I love the evolution taken place in marketplace models (see: Kickstarter, 99Designs, Etsy). In fact, I blogged about the topic recently for O'Reilly with respect to my own experiences using 99Designs for design of a new logo; it's an article that pissed off a bunch of designers (see the comments section). This piece by Matt Cohler frames the role of mobile, and codifies what models are most interesting. MONEY SHOT: "The best opportunities for creating new marketplaces (or reshaping old ones) via mobile will be in markets where supply is inherently constrained and there are no viable (similarly priced) substitutes for that supply. Aggregate that scarce supply and the demand will follow. This playbook isn’t new to mobile. Mobile just makes it a whole lot easier."
3. The Lesser of Two Evils: A friend of mine noted that in recent times, elections seem to come down to a choice between the lesser of two evils. He notes, "If you play that one out, at the end, all that you are left with is evil." I thought about this in reading Matt Taibbi's excellent article, 'This Presidential Race Should Never Have Been This Close,' which forked me to a great article by Frank Bruni of the New York Times. Bruni suggests that the electoral process systematically generates (increasingly) shitty candidates. Regardless, of which candidate you are rooting for, the current scenario is pretty sad. I will, however, express a bit of schadenfreude for Mitt Romney, who if he had even one iota of intellectual honesty or personal humanity, and simply ran on his record and history, probably would have been electible by people like me. Instead, the '47 Percent' ads simply kill for the simple reason that it's a case of a man in his own words confirming how most people believe he thinks. JUST TRY SHRUGGING THIS OFF: "If this race had even one guy running in it who didn't take money from all the usual quarters and actually represented the economic interests of ordinary people, it wouldn't be close. It shouldn't be close. If one percent of the country controls forty percent of the country's wealth – and that trend is moving rapidly in the direction of more inequality with each successive year – what kind of split should we have, given that at least one of the candidates enthusiastically and unapologetically represents the interests of that one percent?"
4. Spray vs. Solve; AKA The Power of the Particular: In the movie 'My Big Fat Greek Wedding' there is a joke about Nia Vardalos' dad. He seems to think that Windex is a magic tonic for which the answer to every challenge is to spray some Windex on it; "it" being EVERYTHING. This is emblematic of what ails so much of tech where the ethos is to "spray," be it 'speeds and feeds,' lines of business, social, mobile, media, real-time, analytics, etc. when the answer instead is to "SOLVE." This is why I am such an acolyte of the Apple model (see 'HP, Dell and the Paradox of the Disrupted'). David Brooks ruminates on the outcomes that such particularity yields (''The Power of the Particular)'. EXCERPT: "It makes you appreciate the tremendous power of particularity. If your identity is formed by hard boundaries, if you come from a specific place, if you embody a distinct musical tradition, if your concerns are expressed through a specific paracosm, you are going to have more depth and definition than you are if you grew up in the far-flung networks of pluralism and eclecticism, surfing from one spot to the next, sampling one style then the next, your identity formed by soft boundaries, or none at all."

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: User Interface Design; OEM Roadkill; Cheesecake Logic; Quotable

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. The Principles of User Interface Design: Many, if not most, products deliver a poor user experience (see the excellent book 'The Inmates Are Running the Asylum' for more fodder on this topic). While it's easy to throw out terms like 'keep it simple' or 'minimalism,' that still doesn't answer the larger question about what the guiding principles are for sound user interface and interaction design. Having built a ton of products across: A) Type (hardware, software, service, tools); B) Segment (consumer, enterprise, developers, carriers); and C) User Environment (PC, mobile, Web, network device), I thought that this article provides an excellent compass for newbies and leathered veterans alike. EXCERPT: "To design is much more than simply to assemble, to order, or even to edit; it is to add value and meaning, to illuminate, to simplify, to clarify, to modify, to dignify, to dramatize, to persuade, and perhaps even to amuse."
   
2. OEM Roadkill Ahead: In 'The end of the road for OEMs,' Sebastian Anthony puts forth a compelling argument that the days of the hardware OEM are numbered. But, in doing so, he misses a key reason why. The simple fact is that in the post-pc era, software is a greater differentiation point than hardware. Software, as Marc Andreessen correctly notes, is eating the world, and today's hardware OEM doesn't understand software as anything other than a layer to be abstracted away. As such, this isn't the end of OEM's per se; just the end of OEM's that lack true software competency (see Acer's feckless attack on Microsoft for their hardware end-run). Bubbling under the surface, however, are hardware OEMs that natively grok software. Look to Kickstarter and other Maker-friendly spots to see the seeds of such innovation germinating.
3. Cheesecake, Chains and the Health Care Industry: In this excellent New Yorker piece, Atul Gawande looks at the processes  and management culture by which a restaurant chain like Cheesecake Factory can serve its 80M customers a year a diverse menu of fresh, high quality food at a reasonable price, and do so consistently, year-after year, and location after location. It makes Gawande wonder what the health care industry can learn from Cheesecake Factory, a great entry point to some illuminating writing. EXCERPT: "In medicine, too, we are trying to deliver a range of services to millions of people at a reasonable cost and with a consistent level of quality. Unlike the Cheesecake Factory, we haven’t figured out how. Our costs are soaring, the service is typically mediocre, and the quality is unreliable. Every clinician has his or her own way of doing things, and the rates of failure and complication (not to mention the costs) for a given service routinely vary by a factor of two or three, even within the same hospital."
4. Can I get a Quote? If you have ten minutes or an hour, Fred Wilson's Fun Friday post is a group thread on favorite quotes. There are many gems, but this dandy by Teddy Roosevelt stood out for me: "It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

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.