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An Interview by Eric Jackson: On Blogging, Apple And What's Next

My thanks to Eric Jackson for his thoughtful questions and post on Forbes.com. You can read full interview here but I repeat a few non-biographical questions and answers here for discussion:

An Interview With Horace Dediu: On Blogging, Apple And What’s Next

Q: Turning to Apple, where is it at right now as a company in this post-Steve Jobs period?

A: Still too early to tell. They seem to be cooking a lot of things and the great experiment of whether a company can be Jobsian without Jobs is still going on. I have been trying to put together a picture of how it operates. It’s hard because that’s their biggest secret. It’s also a picture that few people have ever seen, even those who worked there a long time. The glimpses so far are tantalizing but there is so much we don’t know and thus can’t assess how robust it is. One thing that is clear to me is that there is no absorption by mainstream observers of what makes Apple tick. It’s hiding in plain sight because what it is isn’t anything anyone can recognize. Case in point is the functional and integrated dimensions. It’s the largest functional organization outside the US Army and more integrated than Henry Ford’s production system. Just describing it sounds medieval and it’s so far outside convention that it’s not something reasonable people are willing to believe actually exists.

Q: Is Tim Cook the right CEO for the company at this time?

A: I hold the belief that he’s been CEO for much longer than it seems. Jobs was not a CEO in any traditional sense. He was head of product and culture and all-around micromanager. He left the operational side of the company to Cook who actually built it into a colossus. Think along the lines of the pairing of Howard Hughes and Frank William Gay. What people look for in Cook is the qualities that Jobs had but those qualities and duties are now dispersed among a large team. The question isn’t whether Cook can be the “Chief Magical Officer” but rather whether the functional team that’s around Cook can do the things Jobs used to do.

Look at it another way: I subscribe to the idea that any sufficiently large company is a system and needs to be analyzed using a lost art called “Systems Analysis”. This is a complete review of all parts and the way they inter-relate. However, since for most of its life Apple was personified as an individual, what came to pass for Apple analysis was actually the psychoanalysis of that individual. It makes for great journalism and best selling books. It’s also banal and almost certainly wrong. The proof is in the vastness of complexity and number of people involved. Engineers tend to think about constraints and the constraints on companies are innumerable.

Q: You’ve written extensively on the post-PC period, when will we come to the post-phone period – if ever?

A: I think less than 10 years. Maybe even five. A wristband today can have more processing power than the original iPhone. An iPhone has more power than a desktop did 4 years ago. The speed of change is incredible.

Q: What’s going to be the “next big thing” for Apple? Watches, TVs, something else?

A: I segment along “jobs to be done” which are basically unstated and unmet needs. Unstated because they are usually so deep and so pervasive that they’re taken for granted. We have the need to feel good about our lives, to be healthy and to be connected in meaningful ways to others. These jobs are very poorly served by technology today and there are many non-technology products that are hired as poor proxies to help. The speed with which technology changes means that the trajectory of improvement will undoubtedly intersect that of the job. Even a small job like losing weight and eating well is probably worth as much as half the mobile phone market. Imagine if someone gives us a magic tool that does that for us. How much would you pay? How many of us would pay? There are so many next big things that I cannot choose. (By the way think of the job Facebook is hired to do: make me feel good about myself because I can show others how good I am. Boom!)

Q: What’s your take on how they’re handling their expansion into China, India, and other emerging markets?

A: It’s depressing how slow things are moving on that front. We can draw lines on a graph but we don’t know the constraints. Again, the issue with adoption is that the timing is so damn hard. I was expecting smartphones to take off in mid 2004 and was disappointed over and over again. And then suddenly a catalyst took hold and the adoption skyrocketed. Cook calls this “cracking the nut”. I don’t know what they can do to move faster but I suspect it has to do with placement (distribution) and with networks which both depend on (corrupt) entities.

Q: As you look at the rest of the mobile internet competitive landscape, do you expect any big surprises from other players (good or bad) in the next 5 years?

A: The big question in my mind is the sustainability of the arbitrage models which underpin pretty much every internet business plan. Essentially we have two markets: one where everybody consumes but pays in metadata and another where everybody consumes aggregated analytics but pays in cash. An internet business is the arbitrageur who takes advantage of the inability of each market to price the other. History shows that arbitrage markets tend not be stable as information begins to leak across markets. Therefore what would blow the internet up is if consumers could become wiser about what they are giving up and advertisers would become wiser about aggregating consumer data. I imagine a system where each individual would allow bids on their consumption and a market mechanism where bidders competed for that data. This of course depends on users taking control and ownership of their own data. What might help is the realization of what mass state surveillance can do and the realization that internet giants have more information about us than the government could ever hope to possess.

It would create a new era which will have political dimensions. I imagine we’ll need an internet citizen’s bill of rights or some such movement which will reset expectations. Economically, could bode well for those who position themselves as protectors of the individuals and be a crisis for those who take advantage of consumer ignorance.

 

  • Sander van der Wal

    What about this scenario. I want a new car so I start reading about current models. The “system” notices this and start serving me car ads. At some point I buy the car. But the “system” doesn’t know that, and keeps showing me car ads. Which are mostly paid for by the competitors of the car company I bought the car from.

    And even if the people running the “system” know I bought the car, are they going to tell that to the other advertisers? The ones paying them good money?

    • katielips

      Great interview Horace,

      I believe the systems will evolve because the end user / customer has more control over their own data. New data systems will be built around ‘the user being in control of their data’ and potentially profiting directly from allowing access to it.

      In your scenario Sander, I hope you’d have the ability to inform “the system” that you have indeed bought the car. Far from putting the other car manufacturers’ noses out of joint, this information will help them to only target those who haven’t yet made a purchase decision.

      These companies may in the mean time explore many other ways to assess how best to attract you to their car brand next time (in +3-5 years). They could even use location data (that you are in control of and ‘sell access to’) to work out when your car’s likely done enough mileage that you may want a new one.

      New systems that win will likely offer an extremely high level of personal data control (profile, social graph, influence, purchase history, credit rating, location, attention etc) + the ability for people (data owners) to profit from it in new ways.

      In this “customer in control world” does the customer becomes the new arbitrager? Will analytics and loyalty businesses very soon need to disrupt themselves?

      • Sander van der Wal

        But what is going to prevent me from telling all kinds of lies to the advertisers? This kind of data gathering only works as long as people are ignorant.

        And secondly, the people making quality stuff know they will get their customers through word-of-mouth anyway. There’s a telescope building company with waiting lists up to 10 years. Why on earth would they want to pay for customers? The telescope ads I see are from companies building run-off-the-mill stuff, with higher prices than the competition.

        Essentially, the companies that would pay me for being their customer I have little intention to buy from. The ones that I would buy from, or aspire to buy from, do not need to pay me.

      • Bonegypsy

        Essentially, the companies that would pay me for being their customer I have little intention to buy from. The ones that I would buy from, or aspire to buy from, do not need to pay me.

        Well said.

      • sharrestom

        spend time searching for telescopes and then some more for women’t lingerie and see what kind of ads come up. It should be a laugh.

        I was looking at Futaba RC stuff, and now I’m inundated with RC Model airplane stuff. Recent searches must carry considerably more weight than my past searches.

    • robdk

      Something needs to be done to sort out the mess internet advertising is today…

      Two days ago I used several hours surfing on the net to find a hotel in Berlin. I eventually found one and booked it.

      Today EVERY single advert I see on ALL the homepages I visit (except asymco and daring fireball!) are showing me hotels in Berlin to book!!!

      It is crazy…

    • DarwinPhish

      If the “system” learns you bought a car, it will start feeding you ads for car accesories, car services and a whole boat load of things that other car buyers shop for.

  • vincent_rice

    A Bill of Rights for the internet is something I could definitely see some political heavyweights coalescing around in Europe and the US in the next few years. It’s a concept that will resonate with the public. The drip-feed of surveillance scandals to the media is unlikely to stop any time soon.

    I think Apple’s stance is pretty clear. The secure ‘walled garden’ on the A7 chip is almost a challenge to the NSA and other shadow organisations.

    • Sacto_Joe

      We won’t get an Internet bill of rights unless we demand one.

  • orcus_magnus

    “I imagine a system where each individual would allow bids on their consumption and a market mechanism where bidders competed for that data…the realization that internet giants have more information about us than the government could ever hope to possess.”

    This is a meaty idea.

  • Space Gorilla

    ” it’s so far outside convention that it’s not something reasonable people are willing to believe actually exists.” Great point. Much of the commentary about Apple is either a denial of the reality of Apple’s success, or attributing the success to things like marketing, fashion, lack of competition, and even dumb luck.

    • Sacto_Joe

      I’d say the talking heads predominantly consider it “dumb luck”….

  • hi

    -64 bit iPad with OS X Mavericks on it

  • JT

    Apple is the largest functioning organization outside the US military? Did Asia fall of the face of the earth? Both China’s and India’s military are much larger in terms of personnel than the US military. So Dedui is either

    a) ignorant of the scale of humanity in Asia, or

    b) suggesting that the Chinese and Indian armies are non-functional, or

    c) is dubiously suggesting the because it costs relatively more to feed and pay a US soldier than it does a Chinese or an Indian one, than the US military is therefore larger and somehow more complex in it’s “functional and integrated dimensions.”

    Nice interview, but that does not excuse playing sloppy with facts in order to make a point more “impactful.”

    • TheBasicMind

      To be fair there’s an unsaid “but that’s a military, not a business organisation so is quite different” in there. His intention is clearly not to compare and contrast the armies of various nations but to get the reader to sit up an think about the fact there is a business with an uncommon organisational structure.

    • http://www.asymco.com Horace Dediu
    • Walt French

      Perhaps there would’ve been a more nasty, hostile way to try to insult your host, but I won’t give much time to imagining it.

      I will ask, however: what motivates you to risk looking so anti-social over such a picayune point? Absent any obvious relevance to the thread that YOU did not originate, people could suspect you of intentional trolling.

  • Walt French

    Horace Dediu wrote, It’s depressing how slow things are moving on [expansion into China, India, and other emerging markets].

    Indoor plumbing plus sewers have been called the greatest public health advance of the late 19th and 20th centuries (http://www.plumbingengineer.com/july_10/designers.php),
    but IIRC, there are many places where cellphones are more pervasive. I’ve personally observed the incredible increase in happiness and well-being among my wife’s family in one of China’s poorest provinces over the past 30 years (including concrete instead of dirt floors and getting somewhat-sanitary running water).

    Of the dozens of family I know there, a couple have an XP-era PC. (Several use modern ones at work.) A shared, dialup PC is still a bit of a luxury, in a reasonably well-off family in the most successful of the emerging economies. The couple of members who fit the profile of being young, having a good income and mobility have iPads or iPhones. But I celebrate more the one who was taken out of elementary school to tend the goats, managing to teach herself to read and write as an adult, using one of those old clunkers.

    Emerging countries are now growing at an incredible rate but by definition, started way behind their developed counterparts. Most people have very different opportunities and resources for meeting the needs you identify. Even if 4G networks and free smartphones magically materialized, the cultural means of learning, sharing and communicating would still take years to figure out a societally-relevant means of exploiting tech.

    We often take for granted our “networks” of democracy, universal education, decades- or centuries-old institutions and even our notions of human rights that support the pluralistic societies in which individual freedoms and expressions—exactly why people use smartphones—flourish. While they’re not a human right themselves, we can take their presence as a good measure of people’s empowerment.