Curious Stuff About the New iPods
Daniel Eran DilgerApple's iPod Event introduced a flurry of new features that raises some interesting questions and uncovers some new information on Apple’s worldwide plans to expand the iPod’s reach. The Standard iPods.The entire existing iPod lineup got a revamping, with the Shuffle simply getting new colors, the Nano getting video playback, video games, and Coverflow, and the 5.5G iPod, commonly called the "video iPod," getting more capacity, a facelift, and new official designation as...
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Will Google's Android Play DOS to Apple's iPhone?
Daniel Eran Dilger Today's broad array of smartphone operating system contenders are offering lots of potential answers to a problem that only requires one. It appears the market has two options ahead: either pool generic hardware makers behind a single operating system and deliver a smartphone marketplace that resembles the Windows PC market, or watch them fall to a dominant leader and have a smartphone market that resembles Apple's iPod ecosystem. This decision isn't going to be made by a class of intellectual elite, or by government mandate. it's going to be made by the market itself. Here are the factors that will influence the outcome, either marginalizing Apple's iPhone into a niche as the company has twice experienced previously at the hands of DOS in 1981 and Windows in 1991, or positioning it as the dominant leader as Apple has achieved for itself with the iPod since 2001. The third segment in this series looks at Google's Android and the Open Handset Alliance as a possible “DOS-attack” against Apple's iPhone. Subsequent segments will look at Nokia's newly opened Symbian and other mobile contenders challenging the iPhone. Will the iPhone Meet its Match from a Modern Day DOS? Will Windows Mobile Play DOS to Apple’s iPhone? Will Google's Android Play DOS to Apple's iPhone? Will Symbian Play DOS to Apple's iPhone? Google Acquires Android. In 2005, Google purchased a startup named Android, which had been in business for nearly two years. The secretive startup was known only to be working on software for mobile phones. It was being run by a who's who of mobile industry veterans, including Andy Rubin, the founder of Danger. Rubin had earlier worked at WebTV along with Chris White and Andy McFadden, both of whom had also joined Android. Richard Miner of Orange and Nick Sears of Tmobile also brought their mobile provider experience to Android. At the time of the acquisition, Google didn't announce any plans for Android and instead only told BusinessWeek, “We acquired Android because of the talented engineers and great technology. We're thrilled to have them here.” It appeared that Google was only going to be expanding its search services for mobile phone users, along the lines of the Google SMS answer system it had recently released. Google Buys Android for Its Mobile Arsenal - BusinessWeek Windows XP Media Center Edition vs Apple TV: The Fall of WebTV The GPhone Myth. As reports began to leak out about talks between Google and hardware makers throughout 2007, rumors began to fly about “the GPhone,” a competitive offering that was supposed to take on the iPhone. Some phone enthusiasts hoped Google would jump in to rescue the struggling OpenMoko project and turn it into a viable project that could attack Apple's new smartphone. In October 2007, I printed the Great Google GPhone Myth, taking apart the idea that Google would be directly competing against the iPhone, and describing that Google was really working on a free alternative to Windows Mobile as a conduit for getting its search and related services on a broader variety of mobiles. Google's services were already on the iPhone. In November, Google played its hand: it had organized a consortium of companies called the Open Handset Alliance to develop open standards for mobiles. The first product from the group would be Android, a mobile operating system built on the Linux kernel. Google wasn't getting into the phone handset business at all; it was only making sure that its mobile search products would not risk being marginalized by the threat of Windows Mobile on phones in the same way Microsoft had been working to leverage its PC monopoly to push Google search off the Windows desktop. The Great Google gPhone Myth Introducing Android: Leader of Linux. Two weeks later, Google released an early version of the Android software. On top of a Linux kernel, Android uses a specialized version of a Java Virtual Machine that takes Java language code and turns it into what Google calls “Dalvik bytecode” rather than Java bytecode as a standard JVM would. This allows Google to leverage existing and familiar Java language tools without paying Sun for a Java license. Like Mac OS X and its fraternal iPhone OS, Android includes a variety of open source libraries, including SQLite and WebKit. On top of that, Google developed a series of frameworks that handle the tasks Cocoa Touch does on the iPhone. Android also bundles a set of applications. While Apple adapted its existing Mac OS X to work in a mobile environment to create the iPhone OS, Android is more like a customized Java environment running on a specialized mobile Linux variant: elements of maturity in an otherwise experimental new platform. What is Android? -Google Android was by no means the first mobile OS using Linux. Both Palm and its amputated ACCESS software arm have Linux-based mobile platforms. Nokia has Maemo, which it uses in its Internet Tablets, and also recently acquired Trolltech and its Qtopia mobile Linux platform. Motorola has teamed up with MontaVista Software to use its Mobilinux. Intel created the Moblin project for mobile Linux, aimed at Internet devices. Google's OHA also isn't the first consortium to attempt to standardize a mobile Linux platform. The OSDL started the Mobile Linux Initiative to define requirements for hardware; the Consumer Electronics Linux Forum (CELF) then worked to define various phone profiles aimed at the Japanese market; the Linux Phone Standard (LiPS) Forum tried to do the same thing in Europe. In 2007, LiPS was folded into the new LiMo Foundation, along with the OSDL. All of these committees have had some overlap and some complementary features. Several of Google's OHA partners are also LiMo members, including NTT DoCoMo, Wind River, and Motorola. So why didn't Google just join LiMo? “LiMo, very candidly, wasn't moving fast enough,” OHA board member John Bruggeman told CNET. Google hopes to herd the Linux cats into a progressive, structured platform that can battle against Symbian and Windows Mobile to succeed as the new DOS of smartphones. Will Google fracture or unify mobile Linux? The Presumption of the Necessity of DOS. The previous segment examining Windows Mobile pointed out how the PC industry as a whole assumed that Microsoft's desktop Windows monopoly would easily take over dominance in the MP3 player market, pushing Apple into a niche position. This was expected because DOS had pushed Apple's early computers into a reduced role starting in 1981, and Microsoft had repeated this again in 1991 when the DOS world migrated to Windows, effectively pruning Apple's Macintosh into a Bonsai platform. The inability of one company to dominate any product category has been frequently repeated by PC industry pundits as a given, despite the fact that history is full of examples of this happening. Sony dominated personal music players for two decades under the Walkman brand even while equally large competitors tried to push it from this position; Nintendo has similarly owned handheld gaming despite ill-fated efforts to grab a piece of its pie by products running a generic platform such as Microsoft's WinCE (Gizmondo), Linux (GP32), and Symbian (N-Gage). In fact, outside of the Windows/DOS PC, there are actually few examples of a generic platform taking over an industry. Nearly every other consumer-facing product uses proprietary platforms: car makers, stereo equipment, appliances and so on typically all use designs custom to their maker. The paradox of the Windows PC market has been that Microsoft's broadly licensed software supposedly saves hardware makers from investing in software development while ensuring compatibility, when in reality it adds significant costs to PC makers while limiting their ability to differentiate themselves. That explains why PC makers have been perpetually merging together and going out of business while Microosft has rolled in money over the last two decades. Parallel efforts to copy Microsoft in broadly licensing an operating system have regularly failed: IBM's OS/2, Apple's Mac OS, Palm's PDA OS, even Microsoft's own efforts to duplicate Windows dominance in other markets, from copy machines to PDAs to smartphones to SPOT watches to music players. The closest copy may be Symbian, but its customers are partners, not simply consumers of a generic third party's operating system as Windows licensees are. That indicates it is not necessary to duplicate the dominance exercised by Microsoft over the PC industry in the smartphone market. Google's Android and Symbian exist more as technology sharing pacts among manufacturers, but both aspire to take Microsoft's DOS role among smartphones. However, the idea that Apple's iPhone must be dethroned by a modern-day DOS, whether Windows Mobile, Android, or Symbian, is not just debatable, but does not sync with the reality of more recent events. Apple's recent history of the iPod further refutes the idea that a software analog to Microsoft is needed. The iPod Emergence: Apple & Pixo vs IBM & Microsoft. Apple's iPod in 2001 made no effort to clone the DOS business model; it actually did the opposite. When Apple entered the market, there were a number of existing MP3 devices using custom software, hardware designs, and DRM codecs. The iPod used off the shelf components to deliver a custom MP3 player using third party software, but Apple also added its own technologies: easy to use sync with iTunes, a fast Firewire interface that made uploading music far faster than the prevailing USB 1.0, and an attractive industrial design. With the iPod, Apple played the role of IBM in 1981, using Pixo's embedded operating system to enter the market quickly, just as IBM had used DOS. The difference was that Apple didn't direct any market attention toward Pixo and added a lot of value on top of that core embedded OS. A modern day Compaq couldn't simply clone the hardware and license Pixo to run on it in order to compete against the iPod, because the iPod was much more than just generic hardware running Pixo software. As the iPod developed, Pixo's role diminished and was eventually displaced. Just like IBM, Apple jumped into a new market just as demand was beginning to explode. Apple made MP3 players far more attractive to a general audience by delivering greater playback capacity than most entry level devices offered, along with an ease of use that encouraged buyers to jump in at the higher end of the market. That left Apple with not only the lion's share of the market, but also by far the most profitable segments of the market. Two decades prior, IBM badly fumbled its play with the early PC and ended up irrelevant in the PC world by the late 80s, sideswiped by Microsoft's DOS and the cloners who were licensing it in parallel, notably Compaq and later HP and Dell. Steve Jobs had witnessed that happen, and was determined to not let it happen again to Apple. Rather than being manipulated by a software middleware vendor as IBM had, Apple worked to incrementally develop the iPod market itself. After consuming the hard drive-based player market, Apple took on the Flash RAM-based market with a tiny hard drive system used in the iPod Mini, and followed up with Flash-based devices of its own in the Nano and Shuffle. This allowed Apple to progressively serve an increasingly wider market, incrementally growing upon an established foundation. With the iPod, Apple became, in effect, an IBM with its own internal Microsoft. Microsoft's Failure Despite Features. In contrast, Microsoft entered the music player market by promoting music player hardware reference designs around WinCE. However, it was unable to ship a finished design until the iPod had become firmly established around 2005. Later branded as PlaysForSure, the devices were sold by various hardware makers and all purported to support the same DRM and the same music subscription services while also offering a broader array of hardware that presented video before the iPod did, supported wireless before the iPod, and so on. Despite these unique features, all of those PFS designs still failed. Microsoft blamed the failure of PFS upon its music store and hardware partners and decided to take Apple on itself in 2006. It relaunched a Toshiba PFS player as its own device under the Zune brand, adding WiFi music sharing features and a larger display than the current Pods had. It failed dramatically as well. Did Microsoft's attempts to float a new DOS among music players fail because of Apple's success, or due to Microsoft's own problems? The failure of the Zune, which followed the iPod model rather than the DOS model, seems to suggest that Microsoft itself was to blame. Consider too that Microsoft's Windows Mobile phones, which use the same underlying operating system as its failed PlaysForSure music players and the Zune, had similarly flopped even before Apple could release a charismatic phone equivalent to the iPod. Of course, when the iPhone was released, it hit Windows Mobile hardest. The iPhone made Windows Mobile Smartphones look ridiculous and underpowered, and made Windows Mobile Pocket PC phones look clumsy and awkward, despite the fact that they both supported a variety of features the iPhone didn't, including the ability to edit documents, capture video, send MMS, and so on. Simply adding on features did not enable Microsoft to compete against Apple. The only conclusion that can be drawn from all this is that competing against Apple requires more than just having a feature arsenal. Microsoft's failures in themselves do not necessarily mean that Google's Android will fail in its attempts to float its own smartphone platform. Why Microsoft’s Zune is Still Failing Microsoft’s Zune, Vista, and Windows Mobile 7 Strategy vs the iPhone Will Google Succeed where Microsoft Failed? Microsoft's demonstrated inability to successfully enter consumer markets for MP3 players and smartphones has given observers little faith that the company will somehow turn things around in late 2009 when its next generation of devices are expected to be released. However, prior to that the first fruits of Google's efforts to build its own smartphone operating environment will arrive. Will Google's Android take over Microsoft's crown as the “DOS vendor” among smartphones? Supporters of Google's Android project point to some parallels between Android for smartphones and Windows on the PC: Android will allow hardware makers to differentiate in ways that can offer features Apple can't (or doesn't want to); it should allow software developers to offer features Apple does not allow on the iPhone; it embraces open, hobbyist experimentation in ways that Apple currently isn't; and it opens the potential for content providers that Apple is not interested in allowing. Openness is Android's key competitive feature. Will all this openness allow Google to unseat the iPhone to become the primary platform developers want to participate in, and subsequently soak up the market for third party hardware makers that Windows Mobile serves? While Google currently has no market share due to the fact that no Android phones have yet shipped, it does have broad vocal support from a variety of the same kinds of hardware manufacturers that supported DOS and Windows and helped to make those platforms successful in the desktop PC market. HTC and Android. The first Android phone is expected to be the HTC Dream; Taiwan's HTC (High Tech Computer) also manufactures Palm's Treo Pro phone as well as many of the most visible Windows Mobile devices. In addition to models produced under its own name, HTC also sells Windows Mobile devices under the Dopod brand, as well as no-name phones branded by providers, such as AT&T, Orange, Sprint, T-Mobile, Verizon Wireless, Vodafone, and others. HTC will also be building the XPERIA X1 Windows Mobile phone for Sony Ericsson. HTC was quick to throw its support behind Android despite its long term alliance with Windows Mobile. Why would it so enthusiastically support an unproven platform from a company that has no experience in consumer hardware platforms? One can only assume that HTC is not happy with the current state of Windows Mobile, and desperately wants another “DOS” to succeed where Microsoft's has so spectacularly failed. As an Original Design Manufacturer for Palm, HTC watched as Palm adopted Windows Mobile in place of the Palm OS and subsequently fell even deeper into crisis. Palm's only successful phone since has been its Palm OS-based Centro. HTC undoubtedly sees Android as its ticket to becoming the next Dell, but without a similar dependance upon Microsoft. Android for mobile phones is essentially playing the role of Linux for PCs, except that it has the backing of a major company behind it. Can Android Take on the iPhone with Openness as its Feature? As great as this sounds, it's important to consider that Linux on the desktop has made no significant progress in eating into Windows dominance after a decade of trying. Being open, free, flexible, and decentralized hasn't been enough of an advantage to get consumers to migrate from Windows to Linux in any fraction of significance. Similarly, in the music business, Linux-based MP3 players have had no impact on the iPod, despite offering more features, flexibility, support for additional codecs, and so on. In the mobile phone area, Linux enjoys a sizable portion of the smartphone market, but this is almost entirely due to phones sold by Motorola in China, where the advantages of Linux' openness are void. Motorola's Linux phones offer nothing to users in terms of openness or flexibility, and are really no different in terms of features than other appliance 'feature phones' based upon closed operating systems. And again, a key problem with assaulting Apple in a feature war is that neither the iPod nor the iPhone became popular by being “highly featured.” They both delivered perhaps 80% of the functionality found in all other devices in the market. Rather than trying to match every feature and cater to every niche as Microsoft had with Windows Mobile, Apple's devices did a few things very well at launch, and incrementally developed into full featured devices that still lack some of the more unique features of their competitors. Further, in terms of openness, the demographic that embraces Linux' characteristic freedoms is not the same as the demographic that buys smartphones in quantity and then pays for data service. This is a critical fact to consider because a big part of the iPhone's success stems from the fact that it is being pushed by mobile providers who want to capture the cream of the market willing to pay a premium for data services. The Frankenphone. Combining the fractured aesthetic of HTC's Windows Mobile phone hardware with Android's software, based upon Linux' perpetually unfinished DIY openness and Google's Java-like development platform, will not result in a product similar to the iPhone. Instead, it will look a lot like phones that have already failed in the market. Apple's advantage comes from slick hardware designs with a close attention to detail, combined with software that purposely does less so that it can do what it does better. Even Apple's own conservative attempts to broaden its software capabilities with iPhone 2.0 have resulted in instability problems that can be blamed upon both Apple's early releases of its phone operating system and software from inexperienced third party developers new to the platform. Would the current frustrations with iPhone 2.0 be somehow mitigated by additional openness that also embraced all kinds of variables from different hardware makers with less quality control than Apple, a loose committee of additional cooks working to serve up operating system features targeted at every possible conceived need, and a wider third party software group with fewer constraints on illegal behaviors? The Failure of Open. While it is politically unpopular to criticize the well meaning efforts of open source contributors, the failure of Linux on the desktop, the failure of the vaporware Indrema game console, and the failure of the OpenMoko project to deliver a workable phone within a year of its deadline all underline the serious problems open development faces in the world of consumer oriented devices. Open has simply failed to deliver on its promises in the world of consumer hardware. OpenMoko was supposed to release its first mobile phone to consumers for $250 several months in advance of the iPhone. When the iPhone shipped, the group then announced new plans to get its phone out by the end of 2007. Instead, this spring the group announced new plans to move to an entirely different development platform, and ship its phone mid year for $400 with limited functionality and incomplete software outside of basic GSM phone features. Linux's notable successes, from Motorola's Linux phones to the Tivo DVR to Linksys Routers, have often come without any associated openness or freedom, and were instead delivered simply to provide their manufacturer with a free kernel to build upon. This indicates that while Linux may find its way into an increasing number of smartphones, it will likely not be accompanied by the glorious freedom of an open development environment Google has said it would offer with Android. Apple iPhone vs the FIC Neo1973 OpenMoko Linux Smartphone Can Google Succeed Where Open Has Previously Failed? Despite “openness” being Android's strongest competitive feature compared to Apple's iPhone, Google recently revealed that its wide-open development model is intentionally gravitating towards a closed association of top tier partners due to practical considerations. In July, Google accidentally sent out a notice that revealed that it had been seeding private SDK updates to only a subset of its contributors, angering those who believed that Android would be as open as Linux on the desktop or the OpenMoko project. Further, Google has restricted initial development to higher level APIs just as Apple did, further indicating that Google itself realizes that being wildly open to impress a minority of hobbyists will not result in the commercial success of its new platform. That serves to neuter Android's primary advantage over the iPhone. Without delivering on the premise of being wide open, Android is really just a less mature set of Java libraries used to create a specialized binary that runs on a Linux foundation. Unlike Apple's iPhone, Android phones won't have a slick user interface developed by professional artists, nor the iPhone's legacy of mature software development frameworks crafted over the last thirty years, nor the iPhone's tightly integrated hardware with award winning industrial design, nor its marketing power tied into the iPod and Apple's retail stores. Android won't be an open iPhone, it will only be a Windows Mobile phone with a better kernel that runs specialized Java software instead of Win32 or .NET code. Don't expect consumers to be impressed by that. The Biggest Missing Feature. There is one remaining factor that strangles to death any last remaining hope that Android might assassinate the iPhone and assume the crown of the “DOS of smartphones.” That is: Android delivers zero price advantage to consumers. In 1981 and 1991, consumers who wanted Apple computers faced the sticker shock of a somewhat arrogant price tag. Apple sold its computers, as it still does, at the higher end of the market, but there was simply far more range in prices available. In 1981, that meant the Apple II was $2600 and the new Apple III was $3500, even before you added a monitor. On the low end, Commodore sold its far less powerful, but “still a computer” Vic-20 for $300, while IBM entered the market with the IBM PC at $3000. Over the next few years, Apple focused on delivering additional sophistication at the same price, releasing the $10,000 Lisa and then the $2,500 Macintosh. IBM continued selling PCs in the same $3,000 to $10,000 range, but other DOS PC vendors began selling machines at prices that ranged as low as $1500. That left Apple with a roughly $1000 price premium over low end PCs. The products weren't really comparable, but consumers only saw the huge price difference. In 1991, Apple was still selling moderate to high-end Macintoshes for $3,800 to $10,000; the crippled Mac LC was $2500, and obsolete-at-birth Mac Classic ranged from $999 to $1500. Windows allowed PC makers to ship a functional $1500 PC and claim a rough approximation to Apple's $2500 entry level system, maintaining that apparent $1000 price premium. Today, pundits are lucky to find a Dell or HP system that is even a couple hundred dollars less than a comparable Mac. However, in the smartphone business, the iPhone 3G is now the same price, if not less, than generic competing phones on the market. Even more significant is the fact that the price of the phone hardware is nearly nothing compared to the cost of the service plan. This fact simply eases any price premium that could cause buyers to flock to a smartphone running a generic operating system over buying the iPhone 3G, regardless of whether it runs Windows Mobile or Android. 1990-1995: Planting Software Seeds Android Partners Have Already Failed. That same pricing principle similarly prevented buyers from considering many of the alternatives to the iPod. While Apple's original iPod models were more expensive than many of the first MP3 players on the market, they were price competitive with models offering similar features. By 2004, it was Apple who was undercutting MP3 competitors on price. Microsoft offered zero price advantage when it began selling the Zune, a major factor in its failure, but Microsoft simply couldn't out-price the iPod; it was already losing money offering the Zune at the same price as the iPod. Apple now has tremendous market power in buying RAM and other components that will prevent any competitors from being able to offer a huge discount over the iPhone's $199 price tag. Even if competitors were to give their phones away, they would only offer a $200 discount to users who would then still need to pay the same mobile fees to use the phone. Android's other partners, including Samsung and LG, have already failed to capture any significant market share in the music player market. Are they going to maintain their position as smartphone makers now that they face similar competition from Apple, its iPod ecosystem, its iTunes Music and Apps Store, Apple's retail store experience, and other factors that are pushing the iPhone? If they can, it is not obvious how partnering with Android will help. Other Problems for Android. Android was announced in early November 2007 and was followed with an early preview SDK within a couple weeks, a month ahead of Apple's initial announcement of the iPhone 2.0 SDK. However, between March and July 2008, Apple delivered nine progressive releases of its SDK, opened its App Store, and sold 60 million apps, raising $30 million to support iPhone software development in just the first month. It has since released three more SDK updates to developers related to iPhone 2.1, which is expected next month. Android just published its first open SDK beta update earlier this week, warning developers that “applications developed with it may not quite be compatible with devices running the final Android 1.0.” Additionally, Android still has no phones available. By the time the HTC Dream is expected to launch, Apple will have an installed base of around ten million iPhone (and iPod touch) users supporting software development through iTunes. The business model for selling Android apps is no better than that for selling jailbreak iPhone apps: there is no iTunes Apps Store to promote them, so users will have to track them down on their own. Android developers also have no real freedom that jailbreak iPhone developers lack. The only difference is that there are ten million iPhones to sell jailbreak apps to, and currently zero Android phones. If selling a jailbreak iPhone app sounds like more trouble than its worth, imagine trying to sell Android apps to a non-existant audience. Now add the official iPhone App Store into the mix, where publicity, promotion and profits are booming. What platform is going to have the most applications? How many users will flock to a smartphone platform with no apps? The wisdom of releasing a desirable phone and achieving a significant installed base before releasing an SDK makes a lot more sense in retrospect. Additionally, while Apple has a decade of experience in shipping regular updates to Mac OS X and its Xcode developer tools, Google has only shipped a random assortment of web-oriented SDKs (a number of which have been abandoned) as a tangent to its core business of selling advertisements. When the Android SDK 1.0 is finished later this year, developers will not only lack an installed base to sell their apps to, but will also have no high profile market for selling their apps in, and subsequently no financial incentive to develop applications that add value to the Android platform, just like Linux on the PC desktop. Around the same time, possibly within the next month, Apple will be shipping its second major OS release: iPhone 2.1. Apple will also be upgrading its entire user base to the new software so that developers will have a cohesive platform to target. This mirrors the efforts Apple has taken to upgrade its Mac OS X users to the same reference release. Mobile developers will be seeing money pouring in via iTunes while crickets chirp in the Android section of various mobile online stores. Apple’s iPhone Vs. Other Mobile Hardware Makers: 5 Revenue Engines Same Same, But Different: DOS Model Problems. Android developers will also have a series of other problems to manage. Like Windows Mobile, Android is intended to support everything, from BlackBerry-style keypad phones with a small touchscreen to the simple Windows Mobile Smartphone form factor lacking a touch screen to iPhone-like full size touch screens. Also like Windows Mobile, Android phone makers will have the option to leave off Bluetooth, WiFi, GPS location services, graphics hardware acceleration, and so on. Each Android phone will also have unique camera hardware, support for different video and audio codecs, and varied support for other differentiating proprietary services demanded by mobile operators. This will force developers to to make complex decisions regarding the lowest common denominator they choose to support. So while the iPhone will have a cohesive feature set, a managed software environment, and a functional market, Android will be a loose federation of hardware makers selling the same random features found on Windows Mobile today, with a chaotic development environment that lacks any central market for users or developers. And it will be run as an experiment by a company with no experience in consumer hardware or platform development. The Missing Tap. One specific example of the “DOS model problem” is that Android currently does not support multitouch. It's not touched on in the API, and Google quietly tap dances around its omission. Why no multitouch? Because multitouch screens are expensive, and most OHA hardware members are more interested in making a profit in a competitive phone market rather than impressing consumers as Apple did with the iPhone. Most existing smartphones, even those trying to directly rival the iPhone, use a stylus driven, pressure sensitive tap screen or a simpler, cheaper touch technology that lacks support for sensing multitouch. The iPhone's screen can actually sense up to five fingers at once, but the primary feature multitouch offers on the iPhone is the two fingered tapping and the pinching effects everyone associates with it. Android could certainly support multitouch if there were a demand for it, but that's the point: Google knows that its hardware partners are cheap and unlikely to put out hardware that actually competes with the iPhone. Instead of using expensive technologies that deliver clever yet largely invisible functionality, OHA members, just like PC makers, are far more likely to add flashy, impractical gadgety fluff that's cheap to tack on, such as slide out keyboards, neon tubes, and scratch and sniff stickers. That's how you impress gullible nerds on the cheap. Google itself is blowing smoke and erecting mirrors to distract from the reality that it being a “DOS vendor” means supporting bargain basement hardware from penny pinching duplicators. Android has been demonstrating some “wow” features such as a Street Maps app that pans around based on an internal compass in the demonstration phone. The problem is that that kind of thing only makes for a fun demo. Nobody needs to twirl around their phone in the air to see a view of the other side of the street, but everyone who has used an iPhone will wonder why they can't pinch to zoom out. Even worse, most Android phones aren't going to have a compass built into them, so Google is demonstrating features most Android users won't be able to use. That Sounds Like Microsoft… Google's design decisions are beginning to look a lot like Windows Vista; rather than actually working to make laptops boot faster, Microsoft came up with the idea of adding a small screen to the back of Vista laptops so users could check their email without having to wake the system up. But this was a stupid idea for a number of reasons, the most obvious being that most users just want a laptop that boots up quickly. Few laptops got the mini screen, but every user who tries Vista on their laptop will wonder why it doesn't boot up as fast as Mac OS X Leopard. In the same way, Google is advertising features for Android that most users won't ever see in their actual phones while ignoring things people will expect based on their exposure to the iPhone. Android is simply selecting the wrong features. Android will offer the advantages of supporting MMS, recording video, and the list of other features Windows Mobile already supplies. Those features didn't stop Apple from firing past Microsoft in the smartphone arena however, just as the Zune's highly touted WiFi and screen didn't phase iPod buyers. Incidentally, just months after the Zune, Apple had not only demonstrated a larger display but a higher definition multitouch screen, and not only WiFi, but functional WiFi that could be used to browse the web or check email. This suggests that Apple, with its faster release schedule, won't stay behind any of the leading features potentially offered by Android for very long. Android partners, however, will find it as difficult to catch up with Apple's unique features, just as Microsoft has been stymied to keep up with Mac OS X, the iPod, and the iPhone. The underlying reason: both Google and Microosft are tasked with maintaing support for a huge variety of hardware options demanded by all their partners. Apple has the unique circumstances to do only what it needs to do itself. Android in Windows Mobile's Shoes. Like Windows Mobile, Android faces a difficult market. In the US, it competes against the popular BlackBerry in corporate markets and the iPhone among consumers. Worldwide, it competes against entrenched market leader Nokia. The difference is that Google, unlike Microsoft, has no in. Windows Mobile was adopted by Windows-bound IT shops despite its weaknesses. Nobody has any preexisting reason to try an Android phone apart from hobbyists and open software enthusiasts, a demographic that has done little to move Linux on the PC desktop. Google also lacks Microsoft's installed base; it's starting from zero. The smartphone industry initially doubted Apple's chances of making much progress with the iPhone, despite the company having the Mac platform, the iPod, retail stores, platform development experience, marketing savvy, industrial design prowess, and so on. Google doesn't have any of those things. Mobile Providers vs Android. Apple also started with an exclusive partnership with AT&T, a three legged race that demanded effort from both. Google is hoping that hardware makers handle the hardware details and that mobile providers will be excited to sell its Android phones. While hardware makers such as HTC clearly appreciate having found a free alternative to Windows Mobile, it's not obvious why providers would be excited about Android, as it promises an openness that most mobile providers strongly oppose. AT&T took a big risk in getting behind the iPhone, as the phone encouraged users to use email rather than fee-based SMS and MMS, it supported WiFi for data access, and it bypassed AT&T's MEdia Net services to plug into iTunes instead. Verizon refused to parter with Apple and grant it those kinds of concessions. Is AT&T going to take a similar risk to partner with a phone that is not exclusive to it, and is Verizon now going to open its arms to support phones that do not exclusively support BREW, VCast and its other proprietary services? While Android may well eat into Microsoft's Windows Mobile business by stealing away its hardware makers, it seems unlikely that Android will ever serve as more than free alternative to Windows Mobile in a market where Windows Mobile is increasingly irrelevant. Android may have the dubious distinction of swallowing Microsoft's mobile business the same way Microsoft ate up the Palm OS, but even if it accomplishes that goal, Google will likely find itself unsustainably hungry immediately afterward. It will also find itself swimming in a shark tank of hungry rivals, including Nokia's Symbian, RIM's BlackBerry, and Apple's iPhone. Symbian is the final generic platform vying for the opportunity to play DOS in the smartphone market. The next article will examine Nokia's chances in its bid to match Microsoft's PC dominance in the mobile market while setting out in a new venture to copy Android's open software model. Did you like this article? Let me know. Comment here, in the Forum, or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast (oh wait, I have to fix that first). It's also cool to submit my articles to Digg, Reddit, or Slashdot where more people will see them. Consider making a small donation supporting this site. Thanks!
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What's Next from Apple: New iPods Sept 22, iPhone OS 2.1, iTunes 8.0
Daniel Eran Dilger Kevin Rose has been trying his hand at making broad sweeping generalizations about the next generation of iPods, but sorry, no digg. Most of his predictions are not even original, and those that are are so vague that they're really just worthless. Here's what you can really expect. Rose likes to suggest what's next from Apple, but his guesses only approach reality when they're based on leaks that occur days prior to an announcement. His flat out guesswork tends to be yet far further removed from reality, indicating that he has no special inside track on things at Apple, nor much of an imagination tempered by realistic appraisal. A month before the iPhone was unveiled, Rose predicted it would be available from CDMA providers, have a pull out keyboard, and sport two batteries, one for music and one for the phone. Of course, splitting a battery in half is not really a brilliant solution to prevent music playback from running down your phone, but the simple fact that Rose didn't know about the exclusive deal with Cingular (come on, it was Apple's only mobile partner to date) and the unlikelihood of Apple tacking on an HTC-esque keyboard makes his guesswork easy to dismiss. I had imagineered the iPhone as a web browsing iPod (“based on Nokia’s mobile contributions to Safari”) with SMS messaging features, contacts, calendar, and a camera… six months earlier. And CDMA? I recommended Apple “leave Verizon alone and partner with Cingular, TMobile, and MetroPCS using GSM technology.” The difference between my ideas and those from Rose, apart from mine being six months earlier, is that I presented mine as only reasonable ideas with some rationale behind them; Rose insisted he had special knowledge from reliable sources. Generation 6 iPods An iPhone Worth Talking About The Real iPod touch Deets. Now he's predicting new iPods. The iPod touch is supposed to get “fairly large price drops to distance itself from the $199 iPhone.” Sorry, wrong. The iPhone is only $199 in the minds of consumers. It gets a subsidy from AT&T, which is why you can't just buy one for $199 and walk out the door without signing a phone contract. The iPhone's $2,000 service contract offers plenty of distance between it and the iPod touch. The iPod touch is not possibly going to get cheaper than the iPhone for a couple reasons. First, obviously, it costs nearly as much to make. The lack of a subsidy pretty much balances out its lack of mobile radio components. Second, Apple isn't desperately trying to sell the iPod touch. It exists as a product to sell to users who can't or won't buy an iPhone because they're tied to Verizon or don't want a phone. Rose worries that the iPhone is “cannibalizing sales of the iPod,” but there's nothing more Apple would like to do than to feed every iPod user an iPhone. Sure the bonehead analysts will have another field day complaining about how there's only minor growth among iPod sales while they ignore iPhone numbers, but these guys aren't easy to reach with basic facts. Apple has been giving away the $300 iPod touch to students buying a laptop; that looks like an effort to broaden the iPhone platform. Apple wants college kids playing iPhone games and interested in creating their own iPhone software. Left to their own devices, most kids would buy the old hard drive iPod Classic because they think they need to walk around with their entire torrent library of stolen music. (Get off my lawn!) In any case, we all knew the iPod refresh was coming. I'm pretty sure they're coming on September 22. I'm also pretty sure that the 8GB iPod touch is going away, making the 16GB model the new $199 version. That outrageous price drop, facilitated by today's cheaper Flash RAM, would kill the remaining market for the hard drive-based iPod Classic, converting Apple's entire lineup to Flash RAM. Additionally, it would migrate even more iPod buyers into the installed base of iPhone App Store users and hasten the cannibalization food chain that leads toward the iPhone. The 16GB iPod touch will be sold next to the existing 32GB model, which was just released earlier this year. For that reason, I don't see a larger capacity model being introduced now. I don't see tremendous demand for carrying 64GB of music from people who are also ready to pay for 64GB of Flash. Nano 4: Zune 2007? Rose says the Nano will get a redesign that makes it look like last year's Flash RAM Zune; iLounge already predicted this a month ago, although Rose embellished his version with the idea that “the actual plastic on the outside will be curved,” presumably like a TV from the 80s. How nostalgic! I miss having a wildly distorted tube picture, almost as much as a scratchable plastic iPod screen. Oh the good ol' days. Will Apple expend significant resources to make the Nano 4 into a widescreen tall/long player and define a new 4GB hardware model to fit into a niche that is only $50 less than the new 16GB $199 iPod touch? How much room for differentiation is there under $200? Seems more likely that Apple will instead only release a cheaper version of the existing 4GB Nano that's closer to $99, leaving room for a $149 8GB Nano in between. That will pull Shuffle buyers up into splurging on a full video Nano. If you want to watch video sideways, you can get an iPod touch for $199. What kind of widescreen cinematic experience can you get with a long/tall Nano/Zune? When I reviewed the Flash Zune, one of the complaints was that half (but only half) of the controls reconfigure when you hold it sideways. Plus, existing iPod Games wouldn't work in the widescreen orientation; both the display and the controls would be messed up. On top of that, regular video playback would be forced to play back wide, and/or look bad because its stretched. Microsoft has no qualms with playing video in an odd aspect radio, but the iPod is made by Apple, which has some aesthetic boundaries that constrain its behavior. Winter 2007 Buyer’s Guide: Microsoft Zune 8 vs iPod Nano iPhone 2.1 Rose says Apple will also release “iPod touch 2.1 software, iPhone to get update very soon after.” We already all knew the iPhone 2.1 update was coming, and that it's going to be significant, and that it is due for release around the same time as the new iPods. Whether the new iPod touch will ship with it in advance of the iPhone would depend on whether iPhone-only features in the release hold it up, but Rose doesn't suggest any special knowledge or rationale behind this claim. iPhone 2.1 is supposed to usher in new GPS features and the push Notification system, but the real demand for downloading it will be that it fixes a major problem that currently causes third party iPhone apps to crash on launch and randomly when running. Apple needs to get this out quick before it blows the reputation of iPhone software stability in the minds of users. That's reason to believe that iPhone 2.1 might ship even before the new iPods, rather than the other way around. Because software developed using the iPhone 2.1 SDK won't run on iPhone 2.0.x, expect everyone to need to update their software to download a new generation of 2.1-only apps. This will be free for iPhone users, but might incur a nominal fee for iPod touch users due to accounting rules. Myths of Snow Leopard 3: Mac Sidelined for iPhone Ten Big New Features in Mac OS X Snow Leopard iTunes 8.0 Rose says iTunes 8.0 “it's a big update with new features,” but doesn't say what they are. He also says it will be “a real point upgrade” deserving the 8.0 name. However, there is little rhyme or reason to Apple's iTunes version numbering, and no real correlation between the amount features introduced and the version number increment. iTunes 2.0 added iPod support after ten months of iTunes 1.0, but iTunes 3.0 only added minor features the next year. It was replaced by iTunes 4.0 a year later, which added the Music Store and AAC support. Two years later, iTunes 5 introduced some cosmetic changes and was immediately replaced with iTunes 6.0 only a month later, without any major new features. Another year later, iTunes 7.0 arrived with a new look, video game support, and Coverflow. It has since seen loads of new features, from support for Apple TV to the iPhone to new iPods and new movie rentals, all of which were only numbered as minor updates. We've had iTunes 7.x for two years now, so iTunes 8.0 is not really ballsy prediction at this point. Of course, Apple is just as likely to skip ahead and release iTunes X. And if iTunes X isn't ready, we can might even get iTunes 7.8 and 7.9 over the next couple years. Oh my sides. With the likelihood of entirely new iPod touch or Nano models being quite low (after all, the Zune isn't going to get a refresh until late next year, and Apple isn't facing any tough competition at the moment), Apple's iPod announcement might end up more about a new iTunes than the iPod. Rose doesn't make any iTunes 8.0 feature predictions, instead jumping ahead to suggest that Apple is working to make sure Mac OS X 10.5.6 will provide support for Sony's BluRay, the competition to iTunes that nobody cares about. Hmm. Steve Jobs has so little regard for optical discs that he basically shunned iDVD last year when showing off iLife 08, but now he's going to resurrect BluRay and excite customers by including it on the company's laptops, where any resolution advantage it offers over DVD would be nearly invisible? Oh ho ho my sides. iTunes Unlimited? The rumor mill is talking about subscription music in the next iTunes. Steve Jobs has opposed subscription music since iTunes got started. He worked for years to convince the labels to let go of the dream of billing users to essentially listen to the radio. Subscription music has always revolved around outrageous DRM that requires the (historically Microsoft PlaysForSure) player to sync up and check in every month or lose its music. I've written up lots of reasons why subscription music was an awful idea that wouldn't fly. I doubt Apple will actually float it as rumored (“iTunes Unlimited” for $129 sounds awful). However, enough has changed in the last two years to reconsider how subscription music could be delivered. For starters, the iPhone and iPod touch are now wireless, so they can both stream and verify exploding media DRM. Apple's iTunes, modern iPods, Apple TV, and the iPhone also now already handle exploding DRM for movie rentals, which blew over last year without any complaint, although it doesn't look like iTunes' movie rentals have had a massive impact on the world due to their relatively high price point. Offering movie rentals appeared to be a requisite concession leading up to convincing the movie studios to agree to movie sales in iTunes. Apple could sell access to subscription music directly from the iPhone and iPod touch that worked similar to movie rentals, and the labels might even allow users to freely copy rental tracks between computers linked to the same iTunes account. Such an arrangement hasn't found mainstream popularity elsewhere, but nobody else had been able to sell music prior to iTunes either. While the rumors suggest there could be a discount for MobileMe users, it would be a lot smarter to make it part of MobileMe instead. That would limit subscribers to Apple's loyal base, easing in the system rather than exposing a brand new subscription service to ten million handheld users and 150 million iTunes users and all but promising another meltdown. At least by making it part of MobileMe, Apple could add lots of subscribers and upgrade existing subscribers to a $99 “unlimited music” additional fee. Keep in mind that all this is highly speculative. I doubt “unlimited iTunes” will fly, as the idea was not leaked but rather simply invented. How Apple Could Deliver Workable iTunes Rentals The Online Music and Movie Rental Myth Rise of the iTunes Killers Myth As Long As We're Speculating… If Apple does convert its entire iPod line to Flash players, it would make sense to incorporate a new audio codec setting that maximized the amount of songs you could copy into an 8GB player. For years, Apple's major selling point on the iPod what that it offered massive hard drive storage capacity. Now it's migrating to Flash, which is more expensive but considerably more shock resistant and suitable for a handheld computer device like the iPod touch. Working to cram more music into tighter spaces would allow Apple to make the iPod touch and iPhone more competitive against a hard drive player. AAC is already optimized for low-bitrate playback. Apple also needs to add remote functionality for controlling Apple TV to iTunes, just as you can already do via the free iPhone app. And how about direct streaming of content between iTunes, Apple TV, and the iPhone, such as for movie rentals. Currently, to get a rented movie from an iPhone to Apple TV you have to do two syncs involving a middleman iTunes PC. iTunes also needs to expand on the options for syncing media to the iPod and iPhone. In addition to syncing specific playlists, it should be able to automatically sync over a smart “Party Shuffle” mix of music that fills a specific proportion of the device, such as 50% music, 10% podcasts, and then the specific movies, TV, and audio books the user selects. Then shuffle out the listened to tracks and add new music every time it's synced. Allow users to hide songs from iTunes just as you can hide photos from your iPhoto album to simplify the view without deleting anything. Add Time Machine support so you can go back to see earlier play counts and browse your media library as it appeared in the past. Add integrated support for viewing PDFs and other QuickView document types, so you could use iTunes as a metadata-rich document browser with search and playlist features. Or give Preview an iTunes metadata document database interface. More Music Deals. Add other corporate sponsors to the Starbucks deal, so you can discover their playing music and buy tunes over their WiFi link. And isn't it about time Apple and AT&T got together and hammered out that plan to open iPhones to AT&T's hotspots? I'd debit a 99 cent WiFi access fee from my iTunes account if it were necessary. What's the point of setting up $8 per hour WiFi services for the zero people who use them? And on that tangent, how about rolling out my Ubiquitous WiFi idea for allowing other mobile users to borrow your AirPort's WiFi signal? I'd also like to see Apple get AT&T to allow users to place calls over their WiFi link as a concession for not having a functional 3G network in place yet. I also think AT&T should sell or rent AirPort base stations to its millions of broadband users, with all of them open to WiFi sharing so that iPhone users could place a freaking call and access the web at faster than EDGE speeds between now and whenever AT&T actually gets 3G rolled out. Apple also really needs to deliver some sort of central media server, possibly tacked onto Apple TV. Just add a USB hard drive and have it serve up the contents as a Bonjour-discoverable iTunes library to your local network. This would allows users to dump all the media off their laptop. And then allow WiFi sync to optionally copy fresh media to the iPhone from the central media server library. There's plenty that could be tacked onto iTunes, but the biggest new thing in the iPod announcement actually might be something entirely different than last year's iPods for cheaper and a new rev to iTunes. I'll spill that in the next article. Ten Big Predictions for Apple in 2008 Did you like this article? Let me know. Comment here, in the Forum, or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast (oh wait, I have to fix that first). It's also cool to submit my articles to Digg, Reddit, or Slashdot where more people will see them. Consider making a small donation supporting this site. Thanks!
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Six Reasons Why Apple May Never Open the iPhone
Daniel Eran DilgerThe history of the Office Wars provides interesting context for Apple’s software strategy with the iPhone today. While third party software development offers all kinds of tantalizing potential for the new mobile, there are a half dozen reasons why Apple may not ever deliver the iPhone fully open to third party development, following the model of gaming consoles.Office Wars 1 - Claris and the Origins of Apple’s iWork Office Wars 2 - Microsoft’s Outrageous Office ProfitsOffice Wars 3 - How Microsoft Got Its Office MonopolySoftware Lessons For the iPhone: 1997 - 2007.When Steve Jobs gained the opportunity to retake control of Apple in 1997, he immediately set out to build and assemble a software business for the Mac platform. Apple restarted serious development of QuickTime, much to the chagrin of Microsoft, which had targeted its sights on quickly destroying it to make way for monopolistic expansion of its Windows Media. [Microsoft's Plot to Kill QuickTime][How Microsoft Pushed QuickTime's Final Cut][Why Apple Failed][How CPR Saved Apple][Why Apple Bounced Back]In addition to repurposing NEXTSTEP as Mac OS X and buying and building a series of professional and consumer software suites, the new Apple also developed the iPod platform. The iPod used intuitive software to differentiate Apple’s hardware, launching the computer maker into a new market for sophisticated, data-driven consumer devices. Microsoft’s own efforts in consumer electronics have flopped miserably with the failures of its Handheld PC, Pocket PC, UMPC, Windows Mobile, Media2Go, Mira, SPOT, and Personal Media Center initiatives, among many others.[Apple’s NeXT Server Offensive on Microsoft][The Spectacular Failure of WinCE and Windows Mobile][Windows XP Media Center Edition vs Apple TV]Microsoft Outgunned in Software by a Hardware Maker.Microsoft was late to realize the software threat posed by the new Apple. Five major revisions and over thirty free updates to Mac OS X have ran circles around Microsoft’s capacity to deliver one desktop operating system software update and a couple service packs since 2001.[Leopard, Vista and the iPhone OS X Architecture]Apple also introduced three generations of iWork as an expanding productivity suite during the four year hibernation period Microsoft left since its last version of Office for Mac. Apple delivered support for Microsoft’s own proprietary OOXML file format on the Mac even before Microsoft itself could. At $79, iWork will eviscerate sales of the $400 Office for Mac, which has until now been a cash cow lazily ruminating for years between releases.This year, Apple also targeted and destroyed Microsoft’s fledgeling efforts to repurpose WinCE as a smartphone platform, seemingly overnight. That has given Apple a significant new platform in the iPhone, soon to be joined by the new iPod Touch. [What’s New in iWork 08][Apple's Secret iPhone Application Business Model][Curious Stuff About the New iPods]Six Reasons the iPhone Will Stay Closed.Will Apple give third party developers the keys to its new vehicle and allow them to drive off with the value it has created? It hasn’t yet, and there are a number of reasons to think that Apple won’t. Note that I am not expressing an opinion that the iPhone should be left closed, but rather simply presenting why I think it is unlikely Apple will ever open it up in the same way the Mac is open to any and all development.First, the company has lined up a suitable outlet for third party expansion via the standards based web platform available within Safari. That’s not enough to do everything developers want to do--it has serious constraints for creating games, for example--but it offers a good enough alternative to serve more than 80% of most developers’ needs. [Mobile Disruption: Apple's iPhone and Third Party Software] [iPhone Gremlins: Crashing, Security, and Network Collapse!] Second, the company has developed and begun production testing of online software sales through iTunes, currently limited to 5G iPod games. This mechanism appears too sophisticated to simply be designed for a half dozen $5 games. Apple is quite obviously going to distribute other software through iTunes for the iPhone. If it were going to be open, there would be no need for such a secure software distribution system. [Apple's New Dual Processor Game Console] [Hacking iPod Games: How Apple's DRM Works] Third, historical perspective suggests that once a solid platform has been established, a vendor can sell software as fast as it can deliver it without even trying very hard. Apple’s Claris, Microsoft’s Windows, and the game consoles from Sony and Nintendo all provide examples of this. The iPod’s success suggests Apple can establish a viable mobile platform without the need for software partners. It can handle software transactions as fast as it can sell iTunes songs. That’s big. [Office Wars 1 - Claris and the Origins of Apple’s iWork] [Office Wars 2 - Microsoft’s Outrageous Office Profits] [Office Wars 3 - How Microsoft Got Its Office Monopoly] [Nintendo Wii vs Microsoft Xbox 360, Sony PlayStation 3] Fourth, depending upon large third party developers has caused Apple--and Steve Jobs--some severe headaches. Microsoft's late 80s betrayal of the Macintosh led to Apple’s enslavement to Office, and induced CEO John Sculley to sign away broad intellectual property rights to Microsoft, which Microsoft then immediately used as a weapon against Apple. In the mid 90s, Microsoft led Adobe, Macromedia and other large companies to abandon the Mac platform. In the late 90s, those same companies refused to support Apple’s new Rhapsody plans following the company’s acquisition of NeXT, forcing Apple to spend half a decade retooling the Mac OS, primarily so those developers could sell their existing apps to Mac users without much effort, even while they were earning fantastic software profits and delivering minimal innovation. In other words, Apple’s technology game plan was delayed for a half decade so that Microsoft could sell its $400 copies of Office and Adobe could sell suites of its $500 and up creative applications, all while Apple did all the work in adapting its $99 operating system to run their Classic Mac OS code with minimal effort. Prior to returning to Apple, Jobs experienced his own betrayal and abandonment at the hands of partners--including IBM, HP, Digital, Data General, and Sun--related to NeXT and OpenStep. In all of these cases, the third parties were simply acting in their own best interests. With the iPhone, Apple will act in its own best interests. It will carve out a phenomenally powerful software platform for itself. [Why OS X is on the iPhone, but not the PC: The History of NeXT] [Office Wars 3 - How Microsoft Got Its Office Monopoly] [Cocoa and the Death of Yellow Box and Rhapsody] Fifth, open Application Programming Interfaces involve complex management and maintenance. This is not a problem unique to Apple; it exists for Microsoft and every other company that offers an API for developers to build upon. An API is an interfacing boundary between the software supplied by a vendor and the software supplied by third parties. Ideally, an API allows third parties to do everything they need very cleanly. That allows the vendor to make changes on their side of the API curtain without causing any compatibility problems for software on the other side. In reality, nearly every change and update has significant impacts for third party developers. The more complex and low level of an API being exposed, the more difficult it is to manage significant changes without introducing problems for third party partners. Apple has worked to develop objective APIs that are stable and resilient to internal changes, but if developers are unsatisfied with the level of performance or portability provided, they will work around the API boundary, almost guaranteeing that any significant changes made on Apple’s side will break their applications in the future. Microsoft has often accommodated such “bad programming? by expanding APIs and creating new ones, and lugging around a legacy of old APIs to retain broad compatibility with existing applications. The result is that it is very difficult for Microsoft to actually innovate, or to offer OS level enhancements that upgrade existing applications. This is particularly a problem for Windows Vista, which is hamstrung between the problem of providing entirely new hardware driver APIs on one hand while also maintaining a boatload of crufty legacy APIs on the other. It is absolutely the worst of both worlds. [Five Windows Flaws] [Leopard vs Vista 5: Development Challenges] Sixth, as is the case with software APIs, closed hardware platforms offer a vendor open flexibility for future expansion, portability, and upgrades. With the Xbox, Microsoft didn’t provide a wide open set of APIs for developers, only a subset for building very similar types of games. This closed API allowed Microsoft to move the console from Intel to PowerPC hardware in the Xbox 360 without extreme problems, something the company was unable to maintain earlier when it tried to deliver Windows NT for various hardware platforms in the late 90s. Apple has already benefitted from the flexibility of a closed hardware platform on the iPod. Had Apple allowed developers to write applications for the iPod, it would have to string along support for those old applications across every new generation of the iPod. Having to do that would complicate Apple’s own efforts to deliver new iPods. Additionally, customers would be upset with Apple’s iPod if the apps they downloaded crashed, installed spyware, or caused performance problems. While a rogue Mac app isn’t likely to drain a laptop battery down dead, power management is far more critical on handheld mobile devices like the 11 mm thick iPhone. Given that many consumers are already flummoxed by the reality that batteries wear out after a few years, imagine their rage at finding out that Apple allowed them to install a some worthless Tamagotchi pet that destroyed their battery early. Similar problems plague Palm OS and Windows Mobile devices. In particular, Microsoft’s attempts to provide a “one size fits all? solution and broadly license it to hardware developers results in API constraints that limit supported screen size resolutions, break compatibility with existing versions of applications, and severely limit the power management performance of those devices and their ability to deliver acceptable battery life. If there were any meaningful installed base of Windows Mobile phones, it would also be plagued with spyware and viruses, just as Windows is on the desktop. [Inside the iPhone: UI, Stability, and Software] [Device Problems In Search of a Solution] [David Sessions Tries to Milk iPhone Battery Panic in Slate]A Safe API Boundary for Third Party Development.The simple solution to all these issues is to not offer a custom, wide open API at all, and instead leave third party developers to build applications that make use of open web standards. Nothing new to learn, no barriers to adoption, no proprietary development tools to maintain, no pleading with developers to support a new platform that remains unproven in the marketplace, and no third party crisis to manage when the hardware and software are significantly upgraded.No API, no problem! Hackers can discover how to install tools and handy mini-apps, but Apple’s next software update or hardware revision won't have to figure out how to maintain compatibility with those hacks. That allows the hackers to hack without holding things back. Meanwhile, Apple can reserve the right to offer highly integrated applications of its own that take full advantage of the underlying system without revealing or sharing its intellectual property secrets with third parties that may choose to use those secrets against it--just as Microsoft did to Apple with Windows in the late 80s, or as Sony did to Nintendo with the original PlayStation just a few years afterward.[Mobile Disruption: Apple's iPhone and Third Party Software]Closed Development Involving Third Parties is Not Open.Incidentally, this is the same closed model that resulted in great success for Microsoft and Sony after they betrayed and then supplanted their former partners. Microsoft set up the illusion of an open, developer-friendly platform with Windows, but then used its home field advantage to plot out the assassinations of any and all of the potential rivals it didn’t want to compete against: WordPerfect, Lotus, Ashton-Tate, Borland, Netscape, Sun, and today’s targets such as Google and Symantec.The unsurprising result was that Windows users ended up using Microsoft’s Word, Excel, Access, Fox Pro, language tools, web browser, media software, desktop search, anti-virus, spyware management, etc ad nauseam. With Windows users completely enslaved to Microsoft’s own applications, it was easy to erect significant barriers to prevent the emergence of any new competitive applications from rivals. Clearly, Windows is only an “open platform? in areas where it suits Microsoft. Further, Microsoft’s idea of who a “competitor? is can change. For example, Windows desktop search wasn’t a rival feature for Microsoft to kill until it decided it wanted Google’s business.[Office Wars 3 - How Microsoft Got Its Office Monopoly]Windows Enthusiasts’ Slavery to a Vicious Master. Whether Microsoft’s closed Windows platform is a bad thing is a matter of debate; Windows Enthusiasts celebrate their enslavement. It is my opinion that Microsoft’s closed Windows platform isn’t bad simply because it is closed, but rather because Microsoft’s insatiable greed is holding back innovation that would otherwise flourish. One example is Microsoft’s Internet Explorer browser, which rapidly advanced until Microsoft destroyed Netscape. After that, it went into maintenance mode hibernation and didn’t budge until Firefox began to threaten Microsoft’s position years later. That’s anti-consumer; Microsoft won’t do anything for its enslaved users until a would-be savior threatens to set them free. Microsoft isn’t bad because it is closed; it is bad because it is disgustingly greedy. Windows Enthusiasts need to stop deluding themselves into thinking that they live in a free world of an open platform. They are slaves, and their master is not only vicious, but also incompetent and has no taste. [Safari on Windows? Apple and the Origins of the Web][Apple in the Web Browser Wars: Netscape vs Internet Explorer][The Web Browser Renaissance: Firefox and Safari]Closed Without Pretense.At the same time, it is possible to voluntarily join a closed platform and benefit from its advantages. Nintendo carved out a closed video gaming empire that required third party developers to pay it licensing fees in order to develop any games to sell for its system. Nintendo’s closed business model worked better than Atari’s with the 2600, which had earlier allowed third party games developers to glut the market with bad games, resulting in the video game crash of 1983. Consumers were left thinking that home video games were done to death and would never recover.Sega, Sony, and Microsoft’s Xbox group have all similarly managed closed gaming platforms to deliver high quality expectations, even subsidizing game consoles to establish user interest. The only differences for Apple’s closed iPhone may be that:Apple’s iPhone hardware sells at a sustainable profit without a desperate subsidy, removing risk and allowing for regular feature upgrades. Apple is likely to use software downloads as a way to integrate the iPhone into Mac hardware sales and its online services, rather than simply trying to make a killing selling $50 to $75 game software titles as the console makers do.[Mac OS X vs Linux: Third Party Software and Security]Software as a Great Differentiator.By offering free or low cost software in the model of $5 iPod games, Apple will be able to use its closed platform to deliver software designed to:attract more iPhone and iPod Touch hardware buyers.earn iPhone mobile service revenue fees.earn commissions from WiFi iTunes sales and related deals. direct new iPhone users to iTunes and Apple TV.draw attention to the Mac, which will offer iPhone integrated features Windows does not. Microsoft does some of the same things with Windows Mobile, which ties into the company’s Windows Server products--including Exchange Server--and is also deeply integrated with the desktop sync services of Windows and its Office applications. The problem for Microsoft is that it does not sell phones or make money on service revenues as Apple does. Microsoft charges expensive client access and software licensing fees, but still can’t make a sustainable profit on its Windows Mobile business. It’s also stuck with lame vendors such as HTC, which make poorly integrated hardware that is embarrassing to use. Microsoft could make its own phone, but like the Zune it would alienate its existing hardware partners; further, the Zune disaster indicated that hardware sales isn’t a core competency of the company anyway. [Phone Wars: iPhone vs TyTN, Treo, Pearl, E62, P990, Q][iPhone Sales vs Zune, Palm, RIM, Symbian, Windows Mobile]Selling Hardware with Software vs Selling Software Licenses.Using software to sell hardware fits in with Apple’s past and present use of free or low cost software to differentiate the Mac. In the distant past, that included HyperCard and QuickTime; today it includes the shareware-priced but highly regarded iLife and iWork apps. The full version of Mac OS X costs $129, while Microsoft’s Ultimate Windows Vista is an absurd $400, the same price as an iPhone!Apple’s strategy of using low cost, high quality software to differentiate its hardware plays well against the fact that consumers simply don’t want to pay for software, while they think nothing of paying big money for desirable hardware. Nobody would pay much for an iPod “OS? or a software music player, but millions of people have paid hundreds of dollars for an iPod.That principle has worked in Microsoft’s favor in the past, as it hides the cost of Windows by invisibly bundling it into PC sales. However, its recent fantasy that consumers will widely upgrade their PCs to more expensive versions of Vista indicates Microsoft is highly delusional. Pro-Microsoft wags can chart out their predictions of “impressive Vista adoption? based entirely upon OEM bundled copies, but consumers don’t want it, and no significant number of people are going to pay big money to upgrade to the $400 Vista Ultimatum. [Windows 95 and Vista: Why 2007 Won't Be Like 1995]The Commodity Future of PC Software.What will happen instead is an increasing commoditization of the consumer PC and its software, driven towards standards by an industry that demands interoperability. Microsoft couldn’t hold back the web with its proprietary MSN a decade ago, and companies that once pushed Windows are now behind Linux, including Novell and IBM. PC OEMs are also rethinking their unilateral relationship with Microsoft as they struggle to survive in the shadow of Microsoft’s vast profits. Rather than paying $400 for a PC with a $50 OEM copy of Windows running IE and Outlook, nagging you to verify your software as Genuine and to upgrade to the $400 version of Vista and to hand your credit card number to the dancing paperclip recommending a subscription to Windows Live OneCare terrorism protection, the $250 PC of the near future will come with a standards based web browser and email client. It will be called an iPhone, and it won’t run Microsoft Office.What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast! Submit to Reddit or Slashdot, or consider making a small donation supporting this site. Thanks!
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Forbes' Fake Steve Jobs Is Also Fake On Apple
Daniel Eran DilgerDaniel Lyons is the author of the Fake Steve Jobs blog and a columnist at Forbes. After developing a reputation for attacking bloggers, open source, and any alternatives to Microsoft, Lyons has shed his skin to escape from one scandal while at the same time squirming into position to choke the truth out of his next victim: Apple.Reader Marc Elson sent in a link to Lyons' “Snowed by SCO,? an article Lyons wrote to both apologize for and marginalize his years of articles in Forbes that misrepresented the issues in the SCO Groups' attack on Linux. He blamed his reporting on bad information he'd been fed by SCO. It's easy to backtrack now that SCO is toast; in fact it's rather impossible not to. However, neither Lyons nor Forbes can erase the years of false information and misleading spin they published, which not only idealized SCO but also lambasted any individuals critical of the company. He described anyone supporting Linux as religious folk "convinced of their own righteousness."While fighting for SCO, Lyons also attacked “bloggers? in a front page article in Forbes that screamed, “they destroy brands and wreck lives. Is there any way to fight back?? as if everyone who writes on the Internet operates as a class that can be summarily judged and dismissed at once. [Snowed By SCO - Forbes]Daniel In the Lyons Den Again.Lyons' lack of hesitation in throwing out poorly conceived attacks is getting him into trouble again. He seems to be working frantically to spin together a bizarre new tale of how Apple is going to simultaneously be torn apart by the can-do-no-wrong Microsoft while also turning into a shadow of the evil monopolist itself, threatening us with its fearsome dominance.Lyons resurrected the identical, wholly illogical conundrum of a paradox posited last year by Windows Enthusiasts, principally Paul Thurrott, who spoke in fear of a threatening monopoly position achieved by Apple's iTunes while--puzzlingly--also describing Apple's music business as a pitiful failure that could never withstand the market dominance of Microsoft. Is it part of a new Forbes campaign? Lyons' new work echos other regular articles from Forbes writers, all attacking Apple and reality in the same breath:Presenting Apple TV a supposed flop, despite its profitably outselling the TiVo this year without incurring the tens of millions in losses TiVo has suffered in the last quarter and in every one of the last several years. Promoting MusicNet Digital's failed Microsoft partnership in selling music against iTunes and describing the Zune as something other than a spectacular failure. Even the most giddy Zune fan sites are appalled by Microsoft's lack of support in providing updates and fixes for the Zune's major failures. How is Forbes framing it as some kind of sleeper hit?[The iTunes Monopoly/Failure Myth][Scott Woolley Attacks Apple TV in Forbes, Gets the Facts Wrong][Forbes Prints Insanely Self Serving Attack on iTunes by MediaNet CEO Alan McGlade]When Cost Is No Object: Microsoft Media Center.Reader Robert de Bie forwarded a link to Lyons' breathless accolades over Microsoft's Media Center software, which opened with the line, “Guess who's got the slickest software for handling TV, movies and music? Not Apple.?Lyons compared using a Mac and Apple TV with a PC running Vista Ultimate with Media Center features and an Xbox 360 to relay content to a TV. He raved that the Microsoft solution “can do things with digital media that even Apple can't match.? That's true, as Media Center is principally a DVR, a software version of the TiVo; Apple doesn't sell anything the works like a TiVo to record TV. However, Lyons only noted in passing that “Microsoft charges $400 for Vista Ultimate--$300 too much,? failing to add up that a Mac comes with free Front Row features. Apple TV hardware costs $300; it supplies ultra fast 802.11n wireless and, at a minimum, a 40 GB hard drive.In contrast, an Xbox 360 with a 20 GB hard drive costs $350, and another $100 for slower 802.11b/g wireless. So as a wireless media extender, the Xbox 360 costs $450 (50% more), but gives you half the disk capacity and slower networking.Additionally, the required Media Center software that costs another $400 in Vista Ultimate doesn't magically provide you with a TV tuner, so you still have to buy one.In other words, all the money you throw at Microsoft only gives you software that is otherwise free. Without having to pay for all that software licensing, you can go buy whatever TiVo-like TV tuner for the Mac fits your needs, and solve the problem for hundreds of dollars less.Of course, what Apple wants you to do is go without a TV tuner and an expensive cable subscription and simply buy the TV and movies you want to watch from iTunes. Of course, that's not necessary to use Apple TV; you can also rip your own DVDs or even use it to manage your home movies and free podcasts, something Media Center isn't really designed to do because there's no money in it. Don’t forget that there are more fees involved with Xbox Live services, and that TV downloads are more expensive. You’ll also need to pre-purchase Microsoft’s points, converting your cash into Microsoft Live currency that’s subject to change. And once you buy Xbox Live TV shows, don’t expect them to play on your Zune or Windows Mobile phone the way iTunes content plays on Apple’s iPods and iPhone.Of course, when Microsoft sends writers all this equipment to try out for free, then it’s easy to gush over how great it all works and report, "No crashes, no reboots, no blue screen of death. Stunning," as Lyons did. Had he actually been forced to pay the $840 premium to actually use Microsoft’s system, perhaps he’d sing another tune.While Lyons is certainly entitled to his opinion, he should at least present the facts correctly. Outlining any Microsoft product without a consideration of its true cost is always a mistake, because the true cost is almost always hidden. Lyons also wrote “Microsoft's system supports high-definition video; Apple TV does not,? a line that isn't true. Content from iTunes isn't yet available in HD, but the Apple TV does support HD video from other sources and comes equipped with support HDMI, which only the newest Xbox consoles have. Considering that Microsoft has barely sold any new Xbox 360 units this year, fewer than 20% of installed Xbox users even have HDMI outputs. [Windows XP Media Center Edition vs Apple TV][Forrester Research: Epic Terror of iTunes and Apple TV]Big Brother Says: Apple is the New Microsoft.Since publishing that “Media By Microsoft? article a couple weeks ago, Lyons has ramped up his attack on Apple into a web of false information that approaches his SCO shilling. He even exploits his popular Fake Steve Jobs blog for dramatic effect.Lyons starts his newspeak reporting, ironically enough, in an article titled “Big Brother,? with a comical juxtaposition of Apple's 1984 Macintosh ad and a modern screenshot of Jobs presenting the new 3G iPod Nano against a huge video screen of his own image. Lyons had earlier published the images on his Fake Steve Jobs blog after a reader had submitted them.This is funny stuff, because in both images, there's a greying white man with glasses on a huge TV screen talking. But in 1984, the man is talking about universal ideology to a numb audience, while in the modern scene, Jobs was talking about changing the market for mobile video with a 6.5mm device, and the crowds were enthusiastically applauding.There was one other amusing similarly however: shortly before eating the hammer thrown by the Macintosh girl in orange hotpants, the 1984 Big Brother screen says, “Our enemies shall talk themselves to death and we will bury them with their own confusion. We shall prevail!?In 2007, Jobs has said some similar things about Microsoft, but the Macintosh hammer is actually being thrown at Vista. So while it’s not exactly the same thing, it is a funny coincidence. Along those lines, Lyons provided some examples of how, as an enemy of Apple, he can talk himself to death and be buried in his own confusion.[Big Brother - Forbes]Here's What You Believe.So far, we've just covered the photos on the article. Once Lyons started writing, it was like SCO all over again. He says early iPhone buyers “were threatening to take to the streets again--only this time with pitchforks and torches. They were furious because Apple Chief Steve Jobs slashed the phone's price to $400 from $600, making early adopters look like suckers.?If Lyons really wants to make up garbage and rewrite history, he should confine himself to Wikipedia where he can't do any damage. The people complaining about getting what they paid for were a whiney minority amplified by a desperate press trying to find something wrong with the most successful electronics product launch in history.Anyone who thinks buyers who paid $600 for the iPhone to get the hottest new device available--and who ended up with a phone that cost less overall than even the $99 Motorola Q, and further got a $100 refund credit--are “suckers? needs to reevaluate what being a sucker might mean. Perhaps paying Microsoft $850 for the equivalent of a $300 Apple TV with less storage and a slower network, and then still needing to buy a TV tuner is a better example of being a “sucker.?The only difference is that Lyons didn't get a free iPhone from Apple, but did get a bunch of Microsoft Media Center stuff to try out without having to pay for any of it as the rest of us would have to do, were we inclined to let Microsoft control our TVs.[Ten Fake Apple Scandals: 1 - Phony Rage About iPhone Price and Profits]The SCO Shill Lines Up Behind Microsoft, AT&T, and the RIAA.It might not be a surprise that a writer who identified SCO as safe to cheerlead for because of its seemingly legitimate corporate position would similarly jump at the opportunity to weep crocodile tears for some of the other most reviled companies doing business on the planet. Lyons is apparently not very smart about picking corporate favorites.“It looks like an anti-Apple backlash has begun,? Lyons wrote, noting that NBC Universal pulled out of iTunes to partner with Microsoft's Windows Media DRM-based Amazon UnBoxed store. He didn't mention that NBC also partnered with Fox in setting up a joint Microsoft store, and then went solo on its own website trying to offer ad-encrusted, Microsoft DRM-ed, exploding content. No doubt all of those efforts are going to work out well for NBC.Lyons also said “Vivendi's Universal Music Group also reportedly won't renew its contract with Apple,? without clarifying that only refers to its long term contract; Universal music hasn't budged from iTunes. He also cites unhappy noises from Hollywood about Apple's desire to lower prices to make content more desirable to consumers, who can already obtain movies and TV programming free over the air or via unauthorized downloads.Omitted from Lyon's one-sided overview of the iTunes Store is CBS executives' comments that they are very happy with its deals with Apple, and that both CBS and Fox are offering free season premieres through iTunes.And what about Viacom billionaire Sumner Redstone, who was recently cited by BU reporter Jessica Ullian as saying that “iTunes has 'resurrected the music industry' by creating a legal, affordable, instantly gratifying purchasing system for fans. The challenge now is for the film industry to catch up, he said, and for competing companies to work together to establish new standards and practices.?[CBS and Fox offer free TV through iTunes US - iPod/iTunes - Macworld UK][How iTunes Saved the Music Industry - BU Today]Pity the Poor AT&T.Lyons wrote that “Jobs isn't known for treating partners well,? noting that the iPhone doesn't sell AT&T's worthless media services or overpriced ringtones. That's really an example of Jobs treating the customer well, and the Fake Steve Jobs should know that. Why repeat the “Apple can’t partner myth?? AT&T is making a major turnaround, funded by record numbers of headlines fawning over the iPhone. Apple has propelled Cingular from a middle of the road brand into its new AT&T name, which the company purposely rolled out in conjunction with the iPhone to benefit from the excitement surrounding it. Should we be aghast that Apple declined AT&T's own overpriced MEdia Net TV clips and ringtones? Is AT&T even worried about it?The service provider reported that the iPhone has outsold any phone it has ever introduced. Does that make Apple a bad partner? Would it be better if Apple really was the New Microsoft, extending its support and then yanking it back in a PlaysForSure/Zune style move? Does Lyons really have the extra credibility to burn in making such ridiculous comments? [How AT&T Picked Up the iPhone: A Brief History of Mobiles]More of the New Microsoft Meme.After noting some of Apple's recent successes, Lyons wrote, “the flip side of Apple's success is that Apple has started to seem scary.? Scary, uncertain, and doubtful! “No longer is Apple the plucky underdog out to save the world,? Lyons fears. Oh really? Has evil been vanquished? Is there not still the inky black bile of Windows Media DRM dripping from every alternative store in the universe? Does not Microsoft still have the remains of that $50 billion it took in last year from its monopolies--real monopolies, not the imagined fantasy kind pinned on iTunes by the media? You know, the monopoly in PC desktop operating systems held by Windows, the monopoly in servers, and the monopoly in desktop Office software? The monopolies that earn Microsoft overall profit margins as high as 81% on products that are over a half decade old? From that perspective, Apple could really turn evil over the next twenty years and still not compare to the wrongs we've suffered from Microsoft. Even so, Apple really isn't doing wrong by its consumers. If the best Lyons can do is to suggest that some RIAA labels and Hollywood executives are miffed by Apple's push for low prices, he'd better scramble to find something more problematic than that. I like low prices in content. I don't long for access to AT&T's expensive ringtones.iPhone Price Problems.Apple's iPhone was a better deal at $600 than Microsoft's Windows Mobile Motorola Q at $99, because Apple twisted AT&T's arm to provide lower priced service, making the iPhone around $200 cheaper across two years of use. Apple then dropped the iPhone's price by another $200, making it now almost $400 cheaper than the nearly free phones on the market.Is this wrong? Did Apple harm those of us who recognized value in the iPhone back in June? Did Apple defraud a million people who bought the iPhone at a good price when it lowered the price afterward? [Apple's iPhone Price Cut Unleashes Complaints]Apple TV Only A Flop For Forbes' Frauds.Lyons repeats in passing--without any factual backup--that the Apple TV is a flop. Oh really? Is that because it profitably sold a quarter of a million units with little advertising? Incidentally, that's nearly double the number of new customers TiVo signed up, as reader Timothy Bandy pointed out. He noted that “TiVo-owned subscriptions totaled 1.71 million, up 136,000 on an annual basis compared to the year ago-period.?If Apple sold 250,000 units of the Apple TV, “it's already doubled the amount of new customers Tivo made last year,? Bandy wrote, “or to put it another way, they already have 1/7th of Tivos' customer base without hardly trying. And as you pointed out, I doubt they've lost several million bucks in the process.?TiVo lost $19 million in the last quarter, and $50 million last year. Apple sells the Apple TV at a profit, although not much of one. That's because the company is working to sell content that works on the Mac, and Apple TV only serves as a contributing part of that strategy. Apple is working to expand the market for fair priced Internet downloads, in opposition to high-DRM, high-priced alternatives.Microsoft has lost billions in its consumer electronics products, including the Xbox 360 that Windows Enthusiasts like to compare against the Apple TV. Microsoft also stomped on efforts by Linux users to recycle the old Xbox as a media playback system. Where's the outrage? Where's the “suckers? blubbering? Where's the reporting that “Microsoft regularly betrays its partners?? It's certainly not in the pages of Forbes. [Brent Schlender's Apple TV: Fortune Dud or Fortune FUD?]It's all Downhill From Here.Lyons then complained that iPhone sales must be fading because Apple dropped the price, neglecting to account for the fact that Apple met its million unit sales goal three weeks early. “The next version of OS X, called Leopard, has suffered delays,? Lyons wrote, again failing to compare its 6 month delay to the six year delay of Vista. I guess Apple isn't the New Microsoft after all.Lyons begged for forgiveness after beating on Linux users for years and glorifying a bunch of greedy SCO investors trying to exploit intellectual property rights the company didn't even own. In describing his partnership with Rob Enderle, I downplayed his SCO role after he pleaded for evenhanded coverage of his past, noting that he did publish some correct information after the writing was on the wall for SCO.However, for his shameless attempts to present the same kind of one-sided, half-truth, negative-spin that praises the worst corporations on Earth while reviling the only company that seems to share any interests and values in common with its customers, Lyons has lost the bits of credibility he begged to retain. Shame on him, and Zoon on Daniel Lyons' head. [Daniel Lyons: Fake Steve Jobs and the SCO Shill Who Hated Linux]Thanks to John Schmidt for the “Big Brother? link.What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast! Submit to Reddit or Slashdot, or consider making a small donation supporting this site. Thanks!
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Why Dan Frommer and Scott Moritz Are Wrong on iPhone Sales
Daniel Eran DilgerSilicon Alley Insider's Dan Frommer says Apple's announcement of reaching its million mark goal in iPhone sales three weeks early is actually bad news for Apple and is convolutedly "below plan." He also says the announcement only props up the speculative conjecture by Scott Moritz of the Street that Apple's iPhones sales are somehow woefully below expectations. They're wrong, here's why.The PremiseFrommer wrote that Apple isn't selling iPhones as fast as planned and is set to only sell around half of its 2008 goal.His premise revolves around the idea that if Apple were selling iPhones at "a constant rate," a million phones in 74 days would be five million per year. However, because it sold over a quarter of those in the opening day and a half at the end of June, Frommer calculates that sales of the remainder in the 72 days since the first of July mean that Apple is only hitting a "3.6 million annual run rate."By the end of 2008, that would only result in 5.8 million units instead of the ten million goal Apple. [Silicon Alley Insider: Apple's iPhone: 1 Million Is Below Plan]Strike One: The Run Rate Myth.The most obvious problem with that idea is the fact that devices don't sell at a constant “run rate." Apple's iPhone sales took off at launch much faster than the original iPod due to the fact that a swell of early adopters were ready to buy it after being convinced over six months of anticipation. At the same time, many potential buyers held off on plans to buy the iPhone until they could read reviews and get a real sense of how it worked. Many were also locked into contracts with Verizon or Sprint. With only six months of advanced notice, it will still be a few more months before the majority of buyers who want an iPhone even get the chance to buy one without having to pay outrageous fees to cancel their existing mobile contract. iPhone sales are also now taking on the network effect of the iPod, as early adopters show their friends. All these factors have difficult to estimate impacts upon sales that make trying to figure a static “run rate? a very simplistic and pointless exercise.However, there is another factor that simply blows the entire idea of a static “run rate? out of the water. Last November, I predicted that sales of the Zune would bomb that winter because Microsoft had failed to critically examine Apple's historical sales patterns. Sure enough, the Zune was thrown against the rocks by Apple's riptide. Frommer's idea ignores that same reality by imagining that iPhone sales will schlep along at a linear pace. Had Frommer tried to calculate an "annual run rate" for the iPod based on a portion of third quarter sales at any point over the last half decade, he would never have been close to accurate. That’s because Apple’s iPod sales roughly triple every winter quarter.In 2002, it sold nearly as many iPods in its winter quarter as it did the first three quarters combined: 219,000In 2003, it actually sold more iPods in its winter quarter than in the first three combined: 733,000In 2004, it again sold more iPods in its winter quarter than in the first three: 4,580,000In 2005, it sold more than 4 million units every quarter, but still sold nearly three times as many in the winter: 14,480,000.In 2006, it sold more than 8 million units every quarter, and then sold over 21 million in the winter quarter.In 2007, it has maintained quarterly sales between 10.5 and 9.8 million per quarter.[Strike 3: Why Zune will Bomb this Winter]Strike Two: The Have it Both Ways Myth.One particularly annoying bit of analysts' talk about Apple's expectations is that they can't seem to decide if Apple's projections are bad because they are conservative lowballs, or if they are bad for being overly enthusiastic figures the company won't be able to reach. They often try to describe them as both, loading contempt on both sides of the scale. This makes them look very foolish. Do they think we have no memory, or are they just changing their stories back and forth in sheer desperation?Frommer tried to argue both sides at once in the same article. Recall that Apple only ever gave two iPhone sales goals: one million by the end of the first quarter of sales, and ten million by the end of 2008. In his piece, Frommer suggests Apple will only be able to sell 5.8 million iPhones by the end of 2008, based on that fallacious "run rate." That would be just over half of Apple's ten million goal. However, he then says that Apple's immediate short term goal was an unimpressive low ball, no doubt because Apple reached it three weeks early.Apple's stated goals must be a greatly frustrating logical conundrum for Frommer, because even at a “run rate" of one million in a quarter, Apple could only ever hope to sell six million iPhones by the end of 2008, another five quarters later. No wonder he's faced with trying to say that the immediate goal was too low and the longer term one is too high! Frommer needs to stop trying to pound round facts into square holes just so they can be stacked up like bricks the way he would like them to be.Strike Three: The Market Bearing Price Myth.While Frommer and Moritz are enamored with the idea that iPhone prices could only be cut if sales were in crisis, a variety of obvious market realities don't support that simpleton idea. Between now and the end of 2008, Apple has just two holiday seasons. If it wants to dramatically exploit its historical potential for selling roughly three times as many gadgets during the winter season, it makes sense to trade off unit pricing for volume sales, even if it could perhaps sell fewer at a higher price and make more short term profits doing so.Such a strategy isn't unique. Microsoft and Sony currently lose money on their new game consoles in desperate bids to establish their gaming and HD video playing platforms. Even so, this year they both cut prices again to accelerate volume demand. Nintendo purposely aimed low to capture volume sales using a more attractive price point. Given high demand for the Wii and extremely constrained availability, Nintendo "should" seemingly raise its console price and profiteer. It hasn't. While prices are clearly linked to demand, it is a common fallacy to think that the "right price" is always the highest the market will bear. Jobs' 99 cent pricing in the iTunes store is clearly not the top price consumers will pay for downloads. Music labels are fuming that other licensees such as Verizon will collect $2.50 or more for portions of a song sold as a ringtone. Jobs wants media prices low to induce volume sales and attract buyers to the legitimate market for music and movie downloads. Labels and studios want "market pricing," in part so they can jack up the price of popular music to exploit consumers, and in part so they can exploit artists by threatening to release their work at lower tiered prices and signal to the market that their careers are over.[Universal vs Apple in the iTunes Store Contracts][Nintendo Wii vs Microsoft Xbox 360 and Sony PS3]This All Happened Before.Dial back the clock twenty years, and you'll discover that Steve Jobs also fought with Apple CEO John Sculley over the price of the original Macintosh. The desire to use an expensive but pioneering amount of RAM and a futuristic new processor had inflated the price of the Mac, but the design team was still able to deliver it at a fairly attractive price point of $1,995. Scully determined that the Mac would still sell at $2495, delivering high profits to fund splashy advertising. Nothing on the market was really similar to the Mac apart from Apple's $9,995 Lisa. VisiOn for the PC similarly cost nearly $10,000 and did far less. Sculley thought that the market would bear anything Apple might charge. Andy Hertzfeld recalled on Folklore.org that in October 1983, "Steve Jobs strode into the software area one evening, looking angry. 'You're not going to like this,' he told us, 'but Sculley is insisting that we charge $2495 for the Mac instead of $1995, and use the extra money for a bigger marketing budget. He figures that the early adopters will buy it no matter what the price. He also wants more of a cushion to protect Apple II sales. But don't worry, I'm not going to let him get away with it!'"Jobs fought Sculley over the price increase, but Sculley prevailed. Sure enough, Macs did sell well out of the gate to early adopters at the higher price, but sales then began to stall. While Jobs couldn't cut the price for the original Mac to induce wider adoption in the mid 80s, he could choose to cut the price of the iPhone early and use interest in the iPod Touch to ramp users toward the iPhone. That price cut will dramatically boost sales this winter, just as iPod price cuts and feature refreshes do every year.Apple will earn less profit on individual hardware sales of the iPhone, and may even earn slightly less money overall this quarter than it might have selling the iPhone at $599. However, a $399 iPhone will dramatically boost the company's sustainable subscriber revenues and devastatingly cut into stationary rivals like Palm and the Windows Mobile licensees, giving them little opportunity retool and strike back with copycat products. [Price Fight - Folklore.org][Office Wars 3 - How Microsoft Got Its Office Monopoly]Strike Four: The Myth of Unlimited Availability.Another problem with idea that iPhone sales were in crisis--and that a price cut is a conspiracy to hide the truth--is that Apple sold out of iPhones in many of its retail stores throughout the first three weeks on sale.Carl Howe of Blackfriar's Communications tracked iPhone availability every day through July, and then animated the results in a movie that depicts just how constrained iPhone inventories in Apple's retail stores were. So not only did Apple meet its 94 day goal 20 days early, but it did so despite having no or few iPhones to sell in many of its stores during the first 21 days. Price isn't just related to demand, but also to supply.That also demonstrates the fallacy of Scott Moritz' assertion that Apple secretly planned to sell a million iPhones in a day and a half, and was sorely disappointed after failing to do so. How could Apple have planned on selling a million units in one day when it didn't even have a million units on the shelves of its stores during the first month? Remember, Moritz wasn't saying Apple had a delivery problem in getting enough units to stores as Nintendo is experiencing with its constrained supplies of the Wii. Instead, he tried to suggest that interest in the iPhone was far below Apple's estimates, and buyers were leaving it on the shelf like Windows Vista. The result, he claimed, was that "rivals were rejoicing."The only real rejoicing by rivals was that Moritz was volunteering to repeat the talking points handed to him by Verizon shill Roger Entner of IAG Research. Just hours before Apple announced it had sold a million units, Moritz tried to get some traction out of the idea that Apple had dropped the price in desperation to find another half million or so customers over the next three weeks. Apple isn't the typical tech company being run by visionless bean counters. It it were, it would have continued selling $600 iPhones at least through the end of September and then announced that it had sold its million. Apple had to push out new iPods in early September and fit the iPhone into the price range because next month it will be rolling out Leopard and a series of new software updates. Apple feeds the press in small, consistent, and regular feedings so reporters know what to write. If Apple were a big stupid company such as, say HP, it would parade out a mix of dozens of consumer and business products all together in one big event, and nobody would ever hear about any of it. HP did.[Why a million iPhones in 74 days is better than you think- Blackfriars][HP's marketing this week: fashionable but ineffective - Blackfriars][Unraveling Anti-Apple Panic: the iPhone Launch Success] [More on Scott Moritz and the Jim Cramer Misinformation Engine]Strike Five: It's Too Late to Deny the iPhone.The most comical part of Frommers’ analysis is that he’s trying to stuff a cat back into a bag and explain that there was never really any cat, long after everyone in the room heard the purr and pet the thing. Sorry, but the windows of opportunity to doubt the iPhone have long since closed.Real Windows Enthusiasts were aware of the need to deny the iPhone well before its release. They all chimed in with reasons why the iPhone wouldn't work, wouldn't offer what consumers want, and wouldn't sell well, all hoping that their non-stop misinformation campaigns would act as a self-fulfilling prophesy. They failed miserably.John Dvorak began his smear campaign immediately, appearing on CNBC to say that the iPhone was "trending against what people are really liking in phones nowadays, which are those little keypads.? He explained, “The BlackJack, the Samsung, the BlackBerry obviously pushes this kind of thing. The Palm, all of these. I guess some of these stocks went down on the Apple announcement, thinking that Apple could do no wrong. But I think Apple can do wrong, and I think this is it." Reader Jim Barrow sent in a link to a MarketWatch article from March, where Dvorak scribed a rambling diatribe entitled "Apple should pull the plug on the iPhone." He offered no factual basis for worrying that the iPhone might not work out apart from the offhanded comment that "there is no likelihood that Apple can be successful in a business this competitive," words which echoed Dvorak's 1984 observation that "the Macintosh uses an experimental pointing device called a 'mouse.' There is no evidence that people want to use these things."In April, Dvorak inflamed his 'pull the plug' rhetoric further in a TWiT podcast, where he reported to an audience of hundreds of thousands that the iPhone only delivered "40 minutes of talk time" and "the interface fouls up constantly.? Dvorak said that his inside information on the iPhone came from a "guy at Cingular who’s testing the product," adding, "he’s telling me confidentially and I shouldn’t be telling anybody."[John Dvorak: How Wrong Can One Guy Be?][Readers Write: Don't Write About John Dvorak Anymore]It'll Be the Death of You.Dvorak was joined by Rob Enderle, who called the iPhone “damned? and “not a very good phone? at every opportunity in the months before its launch, despite not really knowing anything about it, or even ever offering any rational criticism. Instead, Enderle appealed to fantasy fears of sexual assault, murder, and the violent death of children, all of which he suggested might somehow be related to the iPhone. Unaware that a password protected iPhone--or even a unauthorized unit without a configured service plan--can still be used to make emergency phone calls, Enderle wrote about, "an emergency situation where, say, a woman was being raped and couldn’t call for help because she didn’t remember her iPhone password." As I understand, with a Windows Mobile phone, even if the unit crashed while trying to place the call, at least the victim could use it like a brick as a blunt weapon. Enderle also feared that being unable to take out the battery would somehow making recharging it impossible, resulting an a scenario where one might end up on “the wrong side of town? with a dead iPhone and be murdered because of it. Being on the wrong side of town was apparently the source of most murders prior to the arrival of the cell phone, which somehow made it safe to be in bad neighborhoods. For those who unfazed by the prospect of one's own own grizzly death in relation to the iPhone, Enderle appealed to his readers to please think of the children, particularly the potential for their brutal decapitation in an iPhone-related collision. "If you are buying this phone for a child or another member of your family," Enderle warned, "please emphasize that entering data on this phone while driving is dangerous." In contrast, operating the slide out keyboards of an HTC brick phone, or using both hands to thumb type on a BlackBerry may or may not save your children as they drive off an embankment, but at least you'll know they didn't die at the hands of Apple's "damned" iPhone.[SCO, Linux, and Microsoft in the History of OS: 1970s][Mac OS X vs Linux: Third Party Software and Security]Pure Concentrated Evil with a Multitouch Screen.Brian Lam of Gizmodo published an impassioned plea to boycott the iPhone shortly before its launch, due to the fact that Cingular had purchased the AT&T name, a brand Gizmodo's writer correlated with "monopoly tactics" in the late 70s. Gizmodo hasn't ever called for the boycotting of Verizon Wireless, which is well known for its anti-consumer tactics and which shares just as much blood with the old AT&T as its Baby Bell sibling Cingular, nor has it ever urged the boycott Microsoft products due to "monopoly tactics." Gizmodo also failed to boycott any other GSM phones that are tied to AT&T.Gizmodo's Lam and Enderle then teamed up with Slate's David Sessions in an article purporting to expose Apple's rated battery life for the iPhone. Sessions complained about the attention the iPhone was getting, and tried to dismiss Apple's announcement of a two fold increase in battery life over what was originally advertised. Unbelievably, Sessions and friends could only explain away the iPhone's jump in talk time by crediting its glass screen, saying that "glass transmits light more efficiently than plastic." That and some witchcraft.However, all of these individuals sharply reduced their squirt rate of false information after the iPhone's successful launch. In day and a half, Apple sold 270,000 iPhones compared to the 500,000 Palm OS Treos, 1.03 million RIM BlackBerrys, and 1.51 million Windows Mobile phones that were sold worldwide in the first 90 days of 2007.Apple has since nearly matched highflying RIM in sales during July, despite being limited to a single carrier and only offered for sale in the US. At this point, denying the iPhone is like saying the Earth is flat. It might be fun to do at a Renaissance Faire, but pretending to seriously doubt reality is not a good career move unless you work for the Street--or perhaps Rupert Murdoch, as Dvorak does.[Secret iPhone Details Lost in a Sea of Hype and Hate][iPhone Sales vs Zune, Palm, RIM, Symbian, Windows Mobile]And Now: a Warning.Let it be known that anyone who publishes further misinformation or blows out similar inanity will risk being instantly awarded a Zoon on the spot. No complicated voting, no tedious application process. New Zoon nominees will be rubber stamped with the same effortless fast tracking as the ECMA declaring Microsoft technology as an international standard.In fact, I’m going to totally Zoon Dan Frommer and Scott Moritz right now, as well as John Dvorak, Rob Enderle, Brian Lam, David Sessions, and even Roger Entner. And John Sculley. And while I’m handing out an intellectual property construct that costs me nothing to distribute, I will also award Steve Jobs with a Zoon for the whole two month “just kidding? iPhone pricing situation, although I might take half of it back if I get a $100 coupon that doesn’t force me to spend $500 to actually use it. So let that be a warning to you out there on the Tubes thinking about how to linkbait an article at the expense of the progress of technology. I have a rapid firing gun full of Zoons and I’m not shy about cranking them out. Be sure to post any nominees.What do you think? I really like to hear from readers. 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