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The Critical Path #111: Man of Arts and Letters and Science

Feb 11, ’14 1:47 AM
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Horace and Moisés discuss the excitement surrounding Microsoft’s hire of new CEO/poet Satya Nadella, Apple’s recent numbers announcement, and yet more on Google (and their sale of Motorola to Lenovo).

via 5by5 | The Critical Path #111: Man of Arts and Letters and Science.

  • stefnagel

    Wow. Apologies ahead of time for wandering.

    Re: Horace’s point about what new markets Apple might enter. At about a billion self selected users, which Apple may claim within a few years, don’t we need to rethink our perceptions of growth? (I think Apple does.)

    * Wall Street grasps growth only in a linear sense? All Wall Street can think of as growth is how many more billions are ahead? And after that, what, martians?
    * Organisms don’t just grow to survive; they must also develop, as in grow limbs, hearts, lungs, brains. Or like ants, develop workers, warriors, and nurses.

    As Horace suggests, Google knows this. It is searching for ways to develop the company, not just grow it. It must; it’s de facto a monopoly in search. In ten years, Google has arrived to where Microsoft got in twenty. It is at that Now what? moment.

    Apple is the antimonopoly. Perhaps Steve Jobs watched from his wilderness and saw Microsoft in its huge, deep hulled, many sailored ship built to hold treasure, headed for rocks. Apple has another idea maybe. Here’s what it might look like:

    Apple corrals a billion self selected, credit card carrying “citizens,” in the largest “polis” ever, if we define them/it as a gathering of folks who are willing subscribers to a system. And in fact, more willing participants than many citizens who are captive audiences within political borders and systems.

    This is not a club, not the Masons or Elks. Clubs share particular, even peculiar bits of information in static, unchanging identity rituals.

    Rather than a political or cultural gathering, or even an economic grouping, Appopolis is an education driven community, based on information and communication, i.e., on literacy. But now, literacy including text, visuals, numbers, music, motion. Digiteracy?

    Might this be a new organization with health, wealth, education, social, vocation, vacation, and political dimensions? And couldn’t this billion be a self-aggregating, developing entity? Isn’t it already? Think beehive. Apps as pollen; developers as bees; iOS the colony. And honey. Lots of honey.

    • berult

      A be-Ive for sired eclecticism.

      No quixotic Queen; be she…just a daring Dame…

      • stefnagel

        Sorry about that. I feel free to keep riffing away until comments show up. Dropped that analogy in favor of the last statement.

    • Space Gorilla

      Well said. When Apple has a billion customers, will the talk of doom end? I doubt it. The cry I hear now from the anti-Apple crowd is that Apple can’t possibly get to a billion users, even as Apple steadily marches towards a billion users. The anti-Apple crowd reminds me of a young child on a playground stomping his/her feet and yelling “No fair!”

  • http://twitter.com/matthewwanderer matthew

    Hi Horace,

    You mention Apple’s iPhone strategy in the podcast, comparing it more closely with Apple’s Macintosh strategy than to Apple’s iPod strategy. I’ve long been under the impression that Apple hasn’t followed the (perhaps more logical) iPod model because of the iPhone’s different “job to do”, and therefore very different BOM costs.

    Unlike Apple’s mass market iPods (Nano, currently), a “mass market” iPhone is wholly dependent on a dramatically lower cost cellular modem and display component pricing. The estimates (iSupply, etc) have the Qualcomm modem at roughly $32 and the display at $40 in the 5S and 5C, far and away the two most expensive components in the BOM.

    Until those component costs drop significantly – and I’m thinking mainly the modem, as it’s the one immovable component in a mobile phone – a mass market iPhone is simply not possible given Apple’s typical margins.

    Am I off track here?

  • http://twitter.com/matthewwanderer matthew

    Further grist for the Google-can-do-no-wrong mill:

    “Investors take dim view of Lenovo’s spending spree”

    http://money.cnn.com/2014/02/04/investing/lenovo/

  • Samrobinson

    Honest question….

    Some people think that Horace and the 3 Bens are Apple supporters or Apple fans.

    I disagree, and believe Apple is a focus bc they are one of the few companies that release numbers, and they are so profitable that they deserve a thorough analysis.

    My question???

    Are there any “deep thinking” aka business analysis blogs or podcasts with a similar business analysis focused on Google or MS?

    I’m looking for writers or podcasters with a business background, not tech journalists.

    I’d much appreciate any links.

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

      Google does not supply enough information about its business to make analysis possible. Microsoft has provided more information but the business model is not difficult to understand. Apple provides a challenge in understanding and sufficient data to make some progress toward that understanding.

  • http://ValuingDisruption.com/ Bill Esbenshade

    Horace – amazing podcast, as usual! You talked about how Apple may skim indefinitely with the iPhone, and how the iPhone may never become a mass market device. I understand Apple may do this, but it seems prudent to create/design a simpler, more affordable product as the iPhone becomes good enough for many people. The iPhone 5c may ultimately be that device if Apple cuts price at some point.

    Apple’s got the best ecosystem — it seems like such a wasted opportunity not to create a more affordable version of the iPhone (for unsubsidized markets that can support the broadband needs of a quality iPhone experience). Jony Ive himself has noted that good design improves accessibility, leading to great products that lots of people can afford, not just the rich (he implied as such in the recent Charlie Rose interview of Ive for the Red auction).

    I also think Apple is best positioned to provide the best user experience, since their hardware business model doesn’t rely on data collection, proprietary services, or ads, all of which compromise the overall user experience. The success and dramatic growth of WhatsApp shows how many customers truly value an ad free user experience. Given that inherent advantage, I can’t understand why Apple has been so slow in delivering a truly affordable unsubsidized iPhone — it seems like they could take significant sales from competitors that cannot provide an equivalent user experience.

    The fact is that really great design is consistent with accessible, affordable products. I wish Apple would act a little more consistently with this. If they do, they’ll be able to grow and thrive indefinitely. With the best ecosystem and the best user experience, I’d argue that this is a great time to go for volume instead of margins, locking in millions of new customers. At a minimum it seems like they should segment the market more effectively than they did with the 5s and 5c — they need a truly affordable 5c type product that can sell well in unsubsidized markets with the technical infrastructure to support a quality experience.

    Just my opinion! Sorry for the rant!

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