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Month August 2013

The Meanings of Appleiness

I’ve never worked at Apple and know very few people who did. Nevertheless, I read Adam Lashinsky’s book and enough Folklore.org that I think I can get away with replying to the Meaning of Googliness with the following:

Googliness means Appleiness means
Doing the right thing Doing the best thing
Striving for excellence Striving for greatness
Keeping an eye on the goals Keeping both eyes on your task
Being proactive Being obsessive
Going the extra mile Going to the moon
Doing something nice for others, with no strings attached Doing everything for the user
Being friendly and approachable Keeping your mouth shut
Valuing users and colleagues Valuing functions other than your own
Rewarding great performance Punishing failure
Being humble, and letting go of the ego Keeping your mouth shut
Being transparent, honest, and fair Keeping your mouth shut
Having a sense of humor Never writing a post on what Appleiness means

Airshow coming to New York

I’m delighted to once again have the sponsorship of IBM for the presentation of Airshow. This time it’s in New York City on Wednesday, 25 September at the IBM Building, 590 Madison Ave. My thanks again to Paul Brody for being so gracious and earnest in his support.

Seating is limited but there are still 25 20 3 available.

This will be the third Airshow, having started in June in San Francisco and rolling into Chicago in July. The event keeps getting better with a plan to introduce a hands-on module allowing participants to build cinematic data-driven presentation during the afternoon.

Airshow is intended as both an exhibition of technique and as an explication of   the methods for creating persuasive presentation enabled by new technologies.

Without revealing too much, the gist of the theory espoused is that presentations can benefit from:

  • The use of directly manipulated visuals
  • Cinematic effects honed by cinematographers over a century
  • Aristotelian presentation principles

Together, these techniques solve the “job to be done” of persuasion—a job universally in demand but deeply underserved by current tools and techniques.

The participant should come away from the event with the ability to:

  • Use the iPad as their primary presentation tool, with or without a projector to large and small audiences
  • Use a cinematic technique of presentation where a layer of implicit yet easily sensed meaning is overlaid upon the words spoken and images viewed
  • Appeal with empathy, logic and credibility to all audiences.

You can register for Airshow New York here.

See also: The end of the projector.

 

It's a wonder

My responses to questions from Juliette Garside of The Guardian newspaper:

Q: Will noise from Icahn distract the Cook from focussing on product?

A: Investors may think that they can influence management but they do so only when companies are in distress. It’s only then that shareholders can affect some change with their votes as they have a common purpose. The voice of investors carries little weight or distraction when a company is successful. At first glance it seems that Icahn thinks he can unlock value in Apple by getting management to accelerate share buybacks. That’s a modest goal and not one which needs to distract managers.

Q: What will do most for the share price – a buyback or a blockbuster new device?

A: Neither. What will do most for the share price is a change in the perception that Apple is not going to survive as a going concern. At this point of time, as at all other points of time in the past, no activity by Apple has been seen as sufficient for its survival. Apple has always been priced as a company that is in a perpetual state of free-fall. It’s a consequence of being dependent on breakthrough products for its survival. No matter how many breakthroughs it makes, the assumption is (and has always been) that there will never be another. When Apple was the Apple II company, its end was imminent because the Apple II had an easily foreseen demise. When Apple was a Mac company its end was imminent because the Mac was predictably going to decline. Repeat for iPod, iPhone and iPad. It’s a wonder that the company is worth anything at all.

How will iPhones 5S and 5C be priced?

The answer may lie in the way the iPad mini has been marketed. The pattern for iPhone pricing is pretty regular but that for the iPad shows a marked difference. The reason is, of course, that the iPad has already gone through a portfolio broadening. The following graphs tell the story.

Screen Shot 2013-08-12 at 8-12-11.30.09 AMScreen Shot 2013-08-12 at 8-12-11.49.19 AM

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Signs of US Android net user decline

ComScore’s latest survey  for US smartphone users showed that Android had 52% share of about 142 million users. That amounts to 73.84 million Android devices in use.

ComScore’s previous such survey showed that Android had 52.4% of about 141 million users. This amounts to 73.88 million Android devices in use. It also means that Android usage in the US went down for the first time.

Screen Shot 2013-08-08 at 8-8-10.10.39 AM

The Anti-Apple

Building a successful business is hard. Many try, few succeed and those that do tend not to thrive for long. So success in business it should be respected. Especially in highly competitive industries like technology. The fragility of success however should also give one pause to think about how delicate a business model is.

The presumption that companies can shift business models at will is usually false. Businesses are balanced on a knife’s edge of dependency on multiple variables. Almost all resources are expended on preserving this balance.

This being my observation, I take issue with assumptions that large companies can “pivot” on a dime or that they can change their business models “when conditions are right”. Consider Microsoft’s dilemma. They have all the resources in the world and yet they could not pivot to take advantage of a change so mundane as a low power microprocessor (which enabled a mobile computer and hence a new ecosystem and profit model for software.)

Or consider the dilemma of Apple which after building a successful computer business which included system software, could not pivot to license that system software so others could build computers with it.

Or consider the dilemma of Nokia which had an early and large leadership in smartphones including having its own OS and platform and large volumes and users bases. It could not pivot to allow into an ecosystem and had all its advantages disappear.

Each company thought they could manage change but none of them actually did.

It’s with this thinking about inertial navigation that came to consider the idea that Amazon has a flexible business model which, though unprofitable today, will be profitable some day.

The premise that Amazon can, on a whim, change its business model from selling other people’s products at a razor thin margin while investing in capital-intensive distribution to selling other people’s products at a large margin while not investing in capital-intesive distribution is not credible.

I would argue that Amazon’s existing business model is a direct consequence of the market it’s in: that it could not be anything else given the circumstances it finds itself in. Enlightenment may be an illusion.[*]

That’s not to say that there is no wisdom in the management of Amazon. Quite the contrary; recall the respect that’s called for in creating a great business. Managing the business to this point was a work of decades of vision and creativity.

What I take issue with is the premise that Amazon is the “anti-Apple” in its hunger for growth and patience for profits. Apple has its own “Amazon-like-business”: iTunes has been growing at a steady 25% or more and it also has its ancillary zero-profit hardware analogue to the Kindle called Apple TV.  iTunes is a great business in the Amazon vein, harvesting hundreds of millions of users (and their credit cards.) Presumably iTunes could also some day “flip the switch” and become profitable, but something magical needs to happen. Something like becoming a payments processor or retailer of other things. Analyst beware however. There might be conditions that make such switch flipping extremely difficult.

At an even deeper level, Apple and Amazon are much more alike than they are different. They are both hired for similar jobs (convenience, ease of use and a controlled, predictable environment for average users interacting with technology). They both focus on delighting customers and controlling all the variables which come into contact with that delight. They both have long-term views and are driven by vision rather than competition.

Where they differ is in others’ perception of sustainability. Whereas Apple is perpetually given an expected lifespan of less than a decade, Amazon is expected to have an indefinite lifespan. This is because Amazon is seen as having no competition and Apple is seen as having infinite competition. In other words, Amazon is perceived as a monopoly and Apple is perceived as the  innovator that is in a permanent state of being disrupted by the low end.

I disagree with both assumptions. I’ve always thought Apple fragile but dedicated to moving into new markets as older markets are disrupted. It’s a tough strategy and one which (literally) nobody believes possible. But I’ve also thought Amazon’s monopoly status fragile. This too is not a popular idea but the company depends on many variables.

Retail is hard and it is being disrupted by technology wielded well by Amazon. But it’s also subject to further disruption. Amazon’s job to be done can be done by alternatives. Buyers are typically hiring Amazon for convenience, not just price and ease of use is where the value is. But again, new information technology which makes shopping, discovery and delivery of products directly from the vendor, bypassing the aggregator (i.e. retailer) could shift value along the value chain yet again.

By the time Amazon reaches some point of monopoly in distribution it could be too late to make the switch to profit generation.

I don’t want to suggest that failure is inevitable, but I want to point out that success is not certain by any means. Disruption happens.

* It’s possible that Enlightenment is also an illusion at Apple. Even if they once had it, there are forces which act on companies that make them lose their wisdom.

iTunes Update

In the latest quarter the iTunes group top line grew by 25%.

Additional newly reported items:

  • Quarterly revenues dipped slightly to $4 billion (second highest after $4.1 billion last quarter).
  • iTunes Stores billings (i.e. gross content revenues) were $4.3 billion
  • Reached the best month and best week ever for App Store billings at the end of the quarter.
  • iTunes billings translated to quarterly revenue of $2.4 billion, up 29% from the year ago but flat q/q. Company reports “strong growth in revenue in both content and apps.”
  • New content added includes HBO GO and WatchESPN available on Apple TV. Apple TV catalog now includes over 60,000 movies and over 230,000 TV episodes.
  • Users have downloaded more than 1 billion TV episodes and 390 million movies from iTunes to-date. They are purchasing over 800,000 TV episodes and over 350,000 movies per day.
  • iOS developers have now created more than 900,000 iOS apps including 375,000 apps made for iPad. Apps created grew by 50,000 overall and 25,000 iPad apps.
  • Cumulative app downloads have surpassed 50 billion.
  • App developers are being paid at the rate of $1 billion per quarter.
  • App developers have been paid over $11 billion for their sales through the App Store (half of which was earned in the last four quarters.)
  • There are now over 320 million iCloud accounts
  • There are 240 million Game Center accounts
  • Almost 900 billion iMessages have been sent
  • Over a 125 billion photos have been uploaded and over 8 trillion notifications were sent.

Some observations and estimates:

  • Music revenue growth remains at around 15% while video revenue growth remains around 25%
  • Apps continue to accelerate with a near doubling of revenues
  • Book revenues are contracting as pricing pressure is being felt
  • The software group grew moderately at 15% as Apple’s apps are reaching saturation within the iOS user base and as Mac sales stagnate.

As a reminder, you can order the iTunes Business Review from the Asymco Store.

 

Screen Shot 2013-08-05 at 8-5-4.21.54 PM

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Asymcar 2: Is Tesla Disruptive? Also Segway, Multiair, Winglet, Organ Donors & Regulation

Podcast 2: Is Tesla Disruptive? Also Segway, Multiair, Winglet, Organ Donors & Regulation Über Alles | Asymcar.

Horace Dediu and Jim Zellmer discuss the odds of disrupting the present automotive club via Tesla. We further dive into the regulatory and cultural environment that sustains the current players, while reflecting a bit on Segway, Toyota’s Winglet, organ donors and the Fiat “multiair” engine. Finally, we preview a larger discussion on apps in and around the car. [24MB 57 minute mp3]