★ Stopped Clock

There’s a streak of incredulity in the old inbox regarding this item wherein I agreed with Jim Cramer’s take on Apple, which (the incredulity) stems from the fact that Cramer can be a bit of a buffoon, and/or because as recently as 29 January he was recommending selling Apple, which was at the time selling for like $131 a share and which at this writing is at $169. But, (a) that 29 January piece was about the tech sector as a whole, not Apple in particular, and most of the stocks Cramer warned about in that piece (e.g. Dell, Garmin, Google, Microsoft, Texas Instruments, and VMware) are in fact down or flat since then; and (b) even if Cramer is often or even usually wrong about Apple, it doesn’t mean he isn’t right this time. I didn’t say “Jim Cramer is always right”, just that he’s exactly right on this one particular point: that young people — by which let’s say we mean college-aged and younger — are buying Apple products in both remarkable numbers and with remarkable devotion. Apple’s strength in this market is both wide and deep, and it includes both iPods and Macs. (I suspect students are a big reason why Apple’s laptop sales are growing so much faster than their desktop sales.1) And, investor-strategy-wise, I also think Cramer’s right that this particular point (Apple’s popularity and iconic status in the youth market) is one that most Apple analysts are overlooking or underestimating. It’s a potential gold mine. The younger one is, the more disproportionately one tends to care about what’s cool.2 Apple’s kit is very cool, and their competitors’ kit ranges from “not cool” to “totally lame”. When you’re old and everyone around you is doing or buying something you don’t understand, you think they’re assholes; when you’re young, you do it/buy one, too. They don’t have preconceptions (or misconceptions) about Macs dating from the ’90s or ’80s because anything pre-iPod is prehistoric from their perspective. For the just-released-yesterday Q2 2008, Apple’s Mac sales were up 51% over the same quarter a year ago. But desktops (iMacs, Mac Minis, and Mac Pros) were up “just” 37%, compared to 61% for laptops. (Source.)�↩ Or as the kids themselves are saying, “dyson”.�↩

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★ The iPad

Back in December, here’s how I concluded my piece on what I expected from Apple’s then-still-unannounced tablet: If you’re thinking The Tablet is just a big iPhone, or just Apple’s take on the e-reader, or just a media player, or just anything, I say you’re thinking too small — the equivalent of thinking that the iPhone was going to be just a click wheel iPod that made phone calls. I think The Tablet is nothing short of Apple’s reconception of personal computing. After the iPad was announced, I got two types of emails from readers. The first group saying they were disappointed, because they had been hoping I was right that The Tablet would be Apple’s reconception of personal computing. The second group wrote to tell me how excited they were because I was right that The Tablet would be Apple’s reconception of personal computing. Count me in with the second group. Apple hasn’t thought of everything with iPad, but what they’ve thought about, they’ve thought about very deeply. I got mine Saturday morning, and I’ve been using it since — or at least as often as I could get it away from my son. Here are my thoughts. The Big Picture The whole thing feels fast fast fast. The only thing that feels slow overall, so far, is web page rendering. Not because it’s slower than the iPhone — it’s not, it’s definitely much faster — but because it’s so much slower than my MacBook Pro. It’s easy to forget on modern PC-class hardware just how computationally expensive HTML rendering is. The funny thing is, the iPad, in raw CPU terms, is a far slower machine than a modern Mac. But the iPad is running a lightweight OS and lightweight apps. It’s like a slower runner with a lighter backpack who can win a race against a faster runner wearing a heavier backpack. Thus, many of the things you do are faster, or at least feel faster (which is what matters), on the iPad than the Mac. Like, for example, launching applications. The built-in apps, and many of the third-party apps I’ve been using the most, are ready to use within a moment of launching them. (Games tend not to load instantly, but that’s true on high-power consoles like Xbox and PS3, too.) There’s something fundamentally strange about how fast the iPad feels considering how underpowered it is versus a modern PC or Mac. How can a computer with so much less CPU speed feel faster? What Apple has done is re-think several fundamental aspects. The iPad was designed from the ground up with a different set of priorities. I think Tim Bray summarizes it well: For a 1Ghz device with limited memory, the iPad is unreasonably fast. I suspect this accounts for a whole bunch of the “Wow!” reaction the iPad obviously provokes. Since there’s no free lunch, I think it’s really important that we understand what they sacrificed to get that performance. My bet would be on some combination of windowing and virtual memory. I tend to work on lots of things at once, but in fact I look at things in rapid succession, my eyes can really only focus on one thing at one time. Given sufficiently fast switching, maybe we all ought to be getting less WIMPy. The iPad (and iPhone OS across all devices) does indeed lack virtual memory. The only memory is honest-to-god RAM. RAM is fast, virtual memory is slow. The tradeoff is that without virtual memory, the iPad can do far less at once, but what it does do is never going to require hitting virtual memory. Without a windowing system, drawing is simpler and faster. Apple has made other significantly different tradeoffs as well. Battery life on the iPad is simply stunning. Reviewers across the board are getting real-life results that beat Apple’s promise of 10 hours of battery life. This is a function both of software (which does less and works hard to keep the CPU from drawing power while the iPad is being used) and hardware — iFixit’s teardown shows that, internally, the iPad looks more like a battery with a computer than a computer with a battery. The iPad, so far, never gets warm. Browse a bunch of web sites. Play some video. Play a game. It still feels as cool to the touch as when it’s turned off. It is also dead quiet — no fan, no humming, nada. This is the future of computing. The iPad was designed with an entirely different set of priorities than Macs or PCs. Someone may well produce a worthy iPad rival in the next year, but it’s not going to be something like HP’s Slate that runs Windows 7, an operating system that epitomizes the traditional set of computer design priorities. The iPad is also eminently affordable. $500 for this thing seems hard to believe. I wouldn’t hesitate to recommend it at double the price. But clearly there were tradeoffs involved to hit this price point. Build quality is not one — the thing feels perfect in hand. But it only has 256 MB of RAM — perhaps the single biggest hardware weakness of the device (see the section on Safari below). It is super high-quality, but clearly designed for the mass market. Anyone who thinks Apple only makes high-priced products has completely lost sense of reality. “Affordable luxury” is the sweet spot for mass market success today, and Apple keeps shooting bulls eyes. In fact, the only thing that makes my heart ache regarding the iPad is when I start imagining a hypothetical Pro model — imagine what Apple could put in an iPad that cost as much as a MacBook Pro. (My dream iPad Pro: double the display’s pixel resolution and include a gigabyte or two of RAM.) Affordability presents itself in other ways, too. Nothing is included in the box other than the power adaptor. The dock and case are separate SKUs, and it doesn’t even come with headphones. It’s like buying a Honda, not an Acura — the base model is not “well-equipped”. $500 is affordable but not cheap, and the iPad does not feel cheap in any regard. The build quality is outstanding. The brushed aluminum back makes my plastic iPhone 3GS feel cheap. The iPad takes more cues from the current iMacs than it does from the iPhone. The seam between the glass and the aluminum is nearly perfect. It’s just one piece of aluminum and a piece of glass — there is no superfluous chrome bezel between the glass and the backing as there is on all iPhones and iPod Touches to date. Even without turning it on it looks and feels a step beyond the iPhones and iPod Touches we’ve seen to date. The Killer App One thing that’s making it hard for some people to grasp the purpose of the iPad is that no one has an answer to what precisely it is for. This was not so for the iPhone. The answer to the question of what the original 2007 iPhone was meant for was right there at the bottom of the iPhone home screen, in the “dock”: phone, email, web, music and video. The other apps were icing on the cake. The four apps in the dock were what Apple designed the iPhone to do. The iPad also has a “dock” on the home screen, and the default apps in that dock are clearly important: Safari, Mail, Photos, iPod (which, on the iPad, is only for audio). But some are treating the iPad as, fundamentally, an e-reader. Others as a gaming device. Others as a movie player. None of those things are represented in the iPad’s default dock apps. The truth is that the App Store is the killer app. The iPad is meant for anything that can be represented on a 10-inch color touchscreen. Back in January when we were playing the “What’s Apple going to name the tablet?” game, my favorite, by far, was “Canvas”. I’m not saying here that Canvas would have been a better name than iPad, but the word conveys perfectly what the iPad is. Adam Engst captured this: The iPad becomes the app you’re using. That’s part of the magic. The hardware is so understated - it’s just a screen, really - and because you manipulate objects and interface elements so smoothly and directly on the screen, the fact that you’re using an iPad falls away. You’re using the app, whatever it may be, and while you’re doing so, the iPad is that app. Switch to another app and the iPad becomes that app. If that’s not magic, I don’t know what is. As did Cultured Code’s Jürgen Schweizer: Steve Jobs said about the iPod that “it is all about the music”. With the iPad, Apple has done the same for personal computing as it has done before with the iPod: it made technology go away. But if the device is gone, and the operating system is gone, what is left? The iPad is an empty canvas that invites us to imagine what is possible. It inspires our imagination and it makes us want to create, because never before were we able to create software that was so close to the user. The iPad hardware and OS are profoundly humble — they put all the focus on whatever app it is that is open. Out of Box Experience One thing that is very iPhone-like about iPad is that when you first take it out of the box, it wants to be plugged into your Mac or PC via USB and sync with iTunes. In some ways, that’s understandable. USB syncing is how you load your iPad with music and videos and transfer over stuff like your email accounts, and, if you’re not using MobileMe, your contacts and calendars. But, on the whole, it feels retrograde. It’s creates an impression that the iPad does not stand on its own. It’s a child that still needs a parent. But it’s not a young child. It’s more like a teenager. It’s close. So close that it feels like it ought to be able to stand on its own. Android devices do not have this problem. You can sync an Android device with a desktop computer via USB, for transferring things like music and videos, but you don’t have to. Out of the box, a Nexus One is ready to go. Google’s big advantage here is that they’re using online services as primary data stores. The Google Way is to use Gmail for email and contacts, and Google Calendar for events. You just tell your Android device your Google ID and password, and your email, contacts, and calendars start syncing over the air. Apple has MobileMe, but because it’s a paid service, they can’t (or at least won’t) assume that all iPad owners are going to use it. But then even those of us who do use MobileMe get stuck with a first-run iPad experience that involves a tethered USB connection to a computer. The Apple Way is to assume that your primary data stores for these things are locally stored on your Mac or PC — Address Book, iCal. At the very least, these things ought to be able to sync between iTunes (on your Mac or PC) and your iPad over your Wi-Fi network. Third-party iPhone OS apps like Things do a great job with this — there’s no reason iTunes and the iPhone OS shouldn’t too. Those Heart-Stopping ‘Scratches’ On the iPhone (and iPod Touch; assume from here out that when I say “iPhone” I’m referring to both), app icons on the home screen sit atop a plain black background. On the iPad, they’re spaced further apart, which is why I think Apple has added wallpaper — making the iPad home screen look a lot more like a Mac or Windows desktop. The default wallpaper shows a sunset skyline of a mountain range in front of a like. There’s a meteor shower in the sky. And the streaking meteors look, at a glance, like a series of severe scratches on the display. It’s a curious choice. The Touchscreen Keyboard It’s a lot like the iPhone’s, but, it’s different. Because it’s bigger, there are no pop-up indicators showing which key you hit as you type. They’re not necessary. The feel, overall, is pretty much like typing on a really big iPhone. If you’re in a position where you can set the iPad down on your lap or a table top, it’s not too hard at all to type with all your fingers when the iPad is in landscape (horizontal) orientation. Now, to me, it’s nowhere near as good as even the worst full- or nearly-full-size hardware keyboard I’ve ever used. You can’t just rest all eight of your fingers on the home row keys, and you can’t feel where the key cap edges are. You have to look at the keyboard a fair amount as you type. On a hardware keyboard, I hardly ever look at the keys. But for a touchscreen, it’s good. In portrait (vertical) orientation, I can type on the iPad using just my two thumbs, as I do on my iPhone. I have relatively large hands, though — I don’t think most people can do it. The keyboard in this layout is way too small for me to type with all of my fingers, though. In portrait orientation most people will type using one finger, I expect. Now, the funny thing is, in general, bigger keyboards are easier to type on than smaller ones. That’s why big laptops are easier to type on than compact ones, and, indeed, that’s why the landscape iPad keyboard on the iPad is easier to type on than the portrait one. But at a certain point, the curve flips around and smaller becomes faster. I type much faster on my iPhone using the smaller portrait orientation keyboard than the wider landscape keyboard. In both modes, I use just my two thumbs. With the smaller iPhone keyboard, my thumbs have to travel less from one key to the next. People who aren’t very proficient at the iPhone keyboard, or who have very large thumbs and therefore have trouble precisely tapping the smaller keys, may well prefer the iPhone’s wider landscape keyboard. But for me it’s not even close. I never type in landscape on my iPhone. And in fact (and this is the aforereferenced “funny part”), I type faster on my iPhone than I do on the iPad. That’s especially true for when the iPad is in portrait mode, which puts the keyboard size in a no-man’s land — too small to eight-finger-type, too big to thumb-type. But it’s also true for when the iPad is in landscape mode. I’m hopeful that this is just a factor of experience and muscle memory — I have nearly three years of experience typing on the iPhone, and only two days experience with the iPad. Last Friday I watched Andy Ihnatko eight-finger-type on his iPad — which he’d been using for over a week — and he was typing pretty goddamn fast. One problem I’ve run into is that Apple has subtly changed the layout of the keyboard from the iPhone’s. On the iPhone, the Delete key is on the lower right, above the Return key. On the iPad, it’s in the upper right corner, and the Return key is next to the L key. The iPad adds a right-side Shift key. �� The iPad layout makes perfect sense — both these keys are now where they reside on traditional hardware keyboards. Their weird positions on the iPhone are a compromise forced by the extreme lack of space on the iPhone display. Apple has also added a new key to the iPad keyboard’s numeric/punctuation mode: Undo. It’s a good idea — I have the feeling most iPhone users don’t know about the system-wide shake-to-undo gesture, and even for users who do, the iPad is harder to shake (and, when docked, downright silly to shake). But this new Undo key moves the period and comma keys over to the right by two positions. The iPhone keyboard layout is so firmly ingrained in my mind that these changes are problems for me — I keep hitting the (new to the iPad) right-side Shift key when I mean to hit Delete, and I keep hitting Undo when I mean to type a period. I’ll get used to it soon, I’m sure, but I find it interesting that my iPad typing muscle memory is based on the iPhone keyboard, not regular keyboards. I think this is because, overall, it really does feel like a big iPhone keyboard. Hardware Keyboard Support I don’t have (and did not order) the iPad keyboard dock, but I have been using an Apple Bluetooth keyboard. In fact, I’m using it to type this entire review. It works great. Pairing (via the iPad Settings app) is easy and quick. And it works great. Several essential text-editing shortcuts from the Mac OS work system-wide on the iPad: Command-Z, -X, -C, and -V work for Undo, Cut, Copy, and Paste. Command-A works for Select All. You can use the arrow keys to move the insertion point. Option-Arrow keys work to move the insertion point one word at a time. Command-Left/Right moves the insertion point the beginning/end of the current line; Command-Up/Down moves the insertion point the start/end of the current text field — which, in the case of something like Pages, is the beginning/end of the entire document. Holding down Shift extends the selection range, and works in conjunction with the Option and Command keys as expected. (Certain of Cocoa’s long-standing Emacs-style text editing shortcuts work too: like Control-K (kill) and Control-H (backspace).) Certain of the function keys on the Bluetooth keyboard are useful on the iPad. The brightness keys control the iPad’s display brightness. The volume (and mute) keys work. The playback buttons — play/pause, next, previous — all work to control the iPod app. By default, once you’ve started using a hardware keyboard, the on-screen keyboard no longer appears, which is great, because the full display is now available for displaying content. But if you want to use the on-screen keyboard while a hardware keyboard is active, you can toggle it using the hardware keyboard’s Eject key. The Esc key dismisses the auto-complete suggestion — it’s like tapping the little “x” next to the suggestion under the current word you’re typing. While a keyboard is connected, you can wake up the iPad by hitting any key — completely bypassing the iPad’s slide-to-unlock screen. Very nice. The iPad is fundamentally a touchscreen device. You absolutely do not need a hardware keyboard for it. But if you’re hoping to do any amount of serious writing with it (and, for obvious vocational reasons, I plan to), you’re going to want one. There are a few places in the iPad UI where I really wish the keyboard was useful but it isn’t. For example, Safari location field suggestions. On the Mac, you can use the up and down arrow keys to move through the list of suggestions. On the iPad, you must use touch to select from the list. Since you’re already typing if you’re entering a URL, this is just begging for arrow key support. (Ditto for suggested results from the Google search field in Safari.) The Esc key does not dismiss popovers, but that’s probably OK. It’s only possible to invoke popovers via touch, so it seems OK that you must dismiss them via touch as well. The Tab key can be used to switch between text fields; Shift-Tab goes in reverse order. (When using the hardware keyboard, I do find myself hitting Command-Tab, without thinking about it, when I want to switch to another app; it does nothing on the iPad.) Display The iPad display is, overall, wonderful. Colors are bright and (unlike the Nexus One’s OLED display) accurate. Photos and videos looks great. Touches seem precisely accurate. The glass feels good. Viewing angles are shockingly good. You can lay the iPad flat on a table while you eat or drink and it looks just fine at a decidedly skew angle — far more so than with the iPhone. This IPS stuff is the real deal; here’s to hoping for an IPS display in this year’s new iPhones. The only complaint I have about the display is that the pixel resolution isn’t all that dense. The iPad’s 1024 � 768 display has a resolution of 132 pixels per inch. The iPhone’s 640 � 320 display has a resolution of 163 pixels per inch. The difference isn’t huge, but it’s definitely noticeable. Type looks crisper on the iPhone than the iPad, and type rendering falls far short of even newspaper-caliber resolution, let alone glossy-magazine caliber. (Those of you who doubt that the pixels-per-inch resolution isn’t high enough, just wait until you see the type rendering on this summer’s new iPhones.) Safari The iPad is so good as a web reader, that, if you’re a web junkie, everything else the iPad does is just gravy. It’s good. I’m so used to Safari on the iPhone, though, where the toolbar is at the bottom, that I’m having a hard time getting adjusted to the toolbar at the top. I’m not saying it’s a bad decision on Apple’s part. In fact, the iPad HIG is quite explicit that iPad toolbars should go at the top, not bottom — which makes me think Apple thought about and tested this and has concluded that the top works better for the iPad form factor. It’s just that I use Safari on my iPhone a lot, and I am really used to the button placement. When you create a new page in Safari on iPad, text focus goes to the Google search field by default, rather than the URL location field. That’s a change from both desktop and iPhone Safari. I’m finding this hard to get used to, but I can see how this might be a better design for typical users. It makes the default search engine all the more essential to the web browsing experience, though. Zooming and flicking are essential to the experience, just like on the iPhone. Flicking is how you scroll, no surprise. The zooming, though, may come as a surprise. It wasn’t too long ago when 1024 � 768 was considered a large display for full-size web browsing. But: what matters on the iPad (and iPhone) is not the pixel count of the display, but the physical size. 9.7 inches diagonally is a bit small for non-zoomed web browser. But the action of zooming — whether through double-tapping or pinching — is so smooth, fast, and natural that it feels better, not worse, than old-school desktop web browsing. There’s one severe problem in Safari for iPad, though: memory crapping out. MobileSafari for iPhone has always allowed you to open up to eight pages at a time. It tries to keep them all truly open, in RAM, so that you can quickly switch between them. But when it runs out of memory it starts flushing some of the pages. It doesn’t forget the URL for those pages, and, in recent versions, it saves a static thumbnail image of the rendered page, but when you switch back to those purged pages, MobileSafari must reload the page — thus, you must wait both for the contents of the page to download and for the page to actually render (which — the rendering — often takes longer than the downloading). It’s very noticeable. Switching between unpurged Safari pages is instantaneous. Switching to a purged page takes as long as opening it from scratch. Wolf Rentzsch, linking to this complaint from Peter-Paul Koch, wrote a brief technical overview of why Apple might have designed MobileSafari this way. (Keep in mind that iPhone OS does not use virtual memory; thus RAM is severely constrained.) This purging problem got a lot better with the iPhone 3GS. The original iPhone and iPhone 3G only had 128 MB of RAM. The 3GS has 256. MobileSafari’s ability to keep more pages in memory is probably my single favorite aspect of the 3GS. The iPad also has 256 MB of RAM. But, in my use, iPad’s Safari isn’t able to keep nearly as many pages open as I can on my 3GS. In fact, sometimes it seems I can only have one, and every page I switch to gets completely reloaded. This is more than just annoying — it can lead to data loss if you have unsubmitted form data sitting in an “open” iPad Safari page. I’ve run into this posting items to DF from the iPad — my posting interface is a web page form. When I want to link to the current page, I invoke a bookmarklet which opens a new page with the title and URL fields of the posting form set to the title and URL of the page from which I invoked the bookmarklet. Often, though, I want to switch back to the page I’m linking to copy another URL or a bit of text to quote. Twice so far, when going back to the posting form, it’s been purged and must reload from scratch — in which case I lose anything I’ve already written. I never run into this problem on my iPhone 3GS when switching between just two open Safari pages. The problem is also severe for AJAX web apps, which tend not to be designed with full page refreshes in mind. I hope this can be improved significantly in an iPad software update, but I worry that it’s endemic — that because the iPad screen is so much larger than the iPhone’s, that MobileSafari must allocate significantly more memory per page for the framebuffers. 256 MB of RAM simply may not be enough for MobileSafari to keep more than two or three pages in memory. If so, Apple really needs to consider some sort of caching or serialization scheme rather than completely flushing away purged pages. Pages I wrote the entire 4,828-word first draft of this piece on my iPad using Pages.1 I didn’t use any of the formatting or layout tools — I used it as a text editor rather than a word processor. It’s quite serviceable. What I like best is that it opens very quickly. Switching between, say, Pages and Safari and back to copy-and-paste a URL feels more like switching than quitting, launching, quitting, relaunching. You don’t need to (and can’t) save manually. Whatever you do in a document simply persists automatically. When you go back to the list of documents, they’re presented as big thumbnails — very much like the list of open web pages in Safari. Pages’s toolbar and ruler are only visible when in portrait mode. In landscape mode, all of the chrome disappears. It’s just a full-screen editing view, a la WriteRoom. I’m writing this piece in this full-screen (landscape) mode, with my iPad propped up on a table in Apple’s iPad case. It’s a nice setup, and I can genuinely imagine leaving my MacBook at home for trips in the future, with the addition of few missing iPad apps (like, say, a good SFTP client). But when I say there’s no chrome in the landscape mode, I mean none. Pages has a decent simple little find and replace feature, but it’s only possible to invoke it in portrait mode. (I must have hit Command-F a dozen times so far, to no avail.) There are already complaints piling up that the iWork apps don’t support the complete feature set of their current Mac counterparts — open a file created in a Mac version of Pages/Numbers/Keynote on your iPad and certain document features may be removed. (The iPad apps prompt you with an alert telling you which aspects of the document have been changed or removed.) Another way of looking at it though, is that the iPad iWork apps are to their Mac counterparts what the iPad as a whole is to the Mac — simpler, more focused, but in some ways faster. Pages launches and is ready for input far quicker on my iPad than on my MacBook Pro. Writing this review, I’ve been switching back and forth between Pages and Safari. It doesn’t feel like quitting Pages, launching Safari, copying a URL, quitting Safari, and re-launching Pages. It feels more like switching — it only takes a moment after tapping the Pages icon on the home screen to be back where I was in my open document. (My only complaint is that you lose the insertion point when leaving and coming back to Pages — the document re-opens to where you left off, but you must tap the screen to place the insertion point. When switching several times, that becomes slightly tedious.) This is obviously not even close to a full review of Pages, but I can say without hesitation that it’s easily worth $10. Syncing There is, however, a severe shortcoming inherent to the iWork suite of iPad apps: document syncing between Mac and iPad. It’s a convoluted mess. In short, the only way to edit a document on your iPad that was created on your Mac, or vice versa, is to go through a convoluted multi-step process of exporting, copying, syncing or downloading, and importing. Ted Landau has copiously documented the entire situation in this article at The Mac Observer. Read it and weep. What it boils down to is that there is no syncing really. Real syncing is something like IMAP for email, or the way MobileMe handles calendars and contacts. When I read a bunch of new email messages using my iPad or iPhone, when I next sit down at my Mac, those messages are marked as read in my inbox. I don’t have to do anything on the Mac for that to happen. That’s just how IMAP works. I can add a new calendar event on my Mac, then walk away from my computer, take my iPhone out of my pocket, and the event is there. I can add a note to that event using my iPhone and a few moments later the note will be synced to the event on my Mac. Certain of my favorite iPad and iPhone apps sync like this too. When I read a bunch of RSS items using NetNewsWire on my iPad, they’re marked as read on my Mac. Sitting at my Mac in my office, I can send a long article to Instapaper. I go downstairs, pick up my iPad, sit on the couch, launch the Instapaper iPad app, and a few seconds later, there’s the article I just added to my Instapaper queue. This is the sort of data flow that makes me feel like I’m living in the future — using multiple hardware devices to view, edit, and modify the same data. I don’t worry about where separate copies of my data exist. Conceptually it’s just there in the apps, and the apps do all the hard work of pushing and pulling changes made on other clients. The data flow with these iWork apps isn’t like that at all, and needs to be for them to be truly useful. It doesn’t matter how good the user interface for viewing and editing spreadsheets is in Numbers for iPad if my spreadsheets aren’t there. Here’s an example. I keep the schedule for Daring Fireball RSS sponsorships in a Numbers document. What I’d like to be able to do on my iPad is launch Numbers and access the current version of that spreadsheet. But the only way I could possibly do that today would be if I went through the following steps every single time I made a change to the document on my Mac: Before opening the current version of the file on my Mac, check to make sure there isn’t a more recent version of it on my iPad. Open the file on my Mac and make changes. Save. Dock my iPad to my Mac via USB. Switch to iTunes and go to the Apps tab for my iPad. Add the newly-saved revision of the document to the file sharing list for the iPad’s Numbers app. Sync. Even after going through all of this, when I do want to open this file on my iPad, I have to remember not to open the last revision of it listed in the iPad Numbers app’s “My Documents” list, but instead remember first to import the latest revision from Numbers’s file sharing list to Numbers’ “My Documents”. And, again, it’s effectively up to me to keep track of which machine, Mac or iPad, has the most recent revision of the file. To say the least, this is a recipe for disaster, and even if you don’t make a mistake and inadvertantly make significant changes to an out-of-date version of the document on one of the two machines, you’re stuck with a preposterously, mind-bogglingly convoluted workflow each and every time you make a change to the document. The bottom line, obviously, is that there is no way that anyone is going to use these iPad apps in the way I describe above. As-is they’re only useful to me in two ways. First, I can imagine using Pages on the iPad to compose original new documents — posts for Daring Fireball — while I’m using my iPad. I’ll either finish them there and then copy-and-paste the result into the web-based posting interface for DF, or, I’ll send the draft to my Mac for further editing (which is what I did for the piece you’re reading right now). I can also imagine creating finished Keynote decks on my Mac and then moving them, once, to my iPad, and taking only my iPad with me to the presentation — i.e. using Keynote, Numbers, and Pages on the iPad as viewers for finished documents. (And, conveniently, they’re viewers that can make edits if you notice a mistake or want to make a last-minute change or addition.) But there’s no possible way to use these apps as clients alongside their Mac counterparts on an ongoing basis. The sort of over-the-air syncing I’m imagining for iWork is, admittedly, a difficult problem to solve. But the bad news for Apple is that their top competitor in this space has a solution: Google Documents. With Google Documents, there’s no making copies, importing/exporting, manually invoked syncing, or USB tethering involved if you want to edit a single instance of a spreadsheet from multiple machines. You just make changes on one machine, and when you next look at that document from another machine the changes are there. The workflow for iWork is downright antediluvian. It’s not just pre-Cloud, it’s pre-network. It’s effectively the “Who’s got the latest revision of this file?” workflow of the days when we moved files from one machine to another via floppy disks. What in the world is iWork.com for if not for solving this problem? At least iWork.com lets you avoid having to physically tether the two machines via USB to get a document from the Mac to the iPad (or vice versa), but it’s no better than file sharing through iTunes conceptually. When you send a file to iWork.com (from either Mac or iPad) you’re pushing a copy, a snapshot of the document from that moment. After making subsequent changes, you’ve got to push those changes to iWork.com all over again. And to get them on the other device, you must manually import — making just another copy. What you ought to be able to do is specify iWork.com as the canonical shared storage location for an iWork document. iWork.com doesn’t serve as any such purpose today. iPhone Apps I predicted it’d be crummy to run non-iPad-optimized iPhone apps on the iPad — like Classic apps running on Mac OS X — and I was right. It’s OK for games — they look jaggy, but jaggy games aren’t that uncommon. But regular (non-game) apps just look and feel weird. When you run them pixel-doubled text doesn’t scale dynamically — everything is pixel doubled. It’s a good way of proving that the iPad is not “just a big iPhone”, though. The only iPhone app I find myself using on my iPad is Simplenote, for copying and pasting bits of text to and from my Mac and iPhone. Needless to say, I’d love an iPad-optimized version of Simplenote. iBooks and Kindle The iBooks app is free, but doesn’t ship with the iPad by default — you have to download it from the App Store. Apple hasn’t explained why this is so, but there are several reasons I can think of. For one thing, e-book rights are managed on a country-by-country basis — it seems likely that the iBooks store won’t be available in every country where the iPad will soon be sold. Making it an App Store app will also allow Apple to update the app on its own schedule — built-in system apps only get updates along with the entire system. So in some ways, the iBooks app is on equal footing with other e-book readers available in the App Store, particularly Amazon’s Kindle app. But iBooks does get some special treatment — the first time I launched the App Store app on my iPad, it prompted me with a dialog box asking if I’d like to down the free iBooks app. It’s impossible to miss. The iBooks app also has display brightness controls that are not availble through public APIs. Winnie the Pooh is included as a free sample, and the choice is genius — it’s a beloved story, a good read, and best of all (from Apple’s perspective) it can’t be read properly on the Kindle because the color illustrations are a big part of the experience. No book on the Kindle will ever look this good. The Kindle has its own advantages — its books are generally cheaper, its selection bigger, and e-ink works better in bright sunlight — but Winnie the Pooh epitomizes the iPad’s advantages. iBooks’s page-turning animation is delightful — it doesn’t just track your finger-swipe precisely, but even renders the type faintly in reverse on the other side of the “sheet”. The practical minded can simply tap the right and left edges of the screen to turn pages. Amazon’s iPad-native Kindle app is good, too. Oddly, to my mind, it is superior to their recent Mac app in every way. It looks better, feels better, renders text better, and has more features. I say this is odd because the iPad was announced just two months ago; Mac OS X was announced over a decade ago. I suspect part of the reason the Mac version is so crippled is that they were more worried about keeping Mac users from un-DRMing Kindle content than they were about making the Mac app an actual good-to-use app. The Kindle doesn’t do animated page-turning, but that’s not a big deal. Reading is great. And the Kindle’s ace-in-the-hole, of course, is the far larger selection of e-books in its store — hundreds of thousands versus Apple’s tens of thousands. I bought When the Game Was Ours, a new book by Larry Bird and Magic Johnson. It is not available in the iBooks store. So Kindle’s advantage is library size (and, secondarily, price per title). iBooks’s advantage is the color display. I’d be shocked if every single piece of advertising Apple produces for iBooks doesn’t focus entirely on screenshots of books with color illustrations, photos, and video. I think it’s going to be easier for Apple to improve the iBooks store library than it will be for Amazon to create a Kindle hardware model with a color display. I think Amazon would do well to add color support to Kindle e-books for use on iPads and iPhones. Kindle has a better chance of long-term success as a software platform than a hardware one. Third-Party Apps in General Given that most iPad-native apps in the store right now were developed using only the simulator by developers without access to actual iPads, you might expect apps to be buggy and UIs to be awkward. I’ve found the bugginess to be true, but the UIs are actually good. I think the physical prototypes developers jury-rigged for themselves paid off, design-wise. There’s no question that UIs are going change rapidly in the coming weeks now that developers have the real deal to measure the feel of their apps against, but for the apps I’ve been using the most, they’re pretty damn good already. As for the bugginess, I’m not saying it’s inexcusable or even surprising — the SDK simulator is not a perfect simulation. Several of the bugs I’ve reported are only present when the apps are running on actual iPad hardware. On the whole, though, the quality of iPad apps on day one is better, by far, than I had expected considering that developers had to build them in the dark, as it were. Prices, so far, are significantly higher than for iPhone apps — but still far cheaper than category equivalent Mac apps. For example, NetNewsWire is $10 (and going to $15 in May); Things is $20; and OmniGraffle is $50. No doubt there are going to be wildly popular 99-cent iPad apps, but it’s also shaping up as serious platform for serious tools. Games are a bit more expensive, too, but, to me, reasonably so. The final word count is just short of 7,300, so admittedly I wound up writing quite a good chunk of it in BBEdit on my Mac.�↩
★ Yet Another in the Ongoing Series Wherein I Examine a Piece of Supposedly Serious Apple Analysis From a Major Media Outlet and Dissect Its Inaccuracies, Fabrications, and Exaggerations Point-by-Point, Despite the Fact That No Matter How Egregious the Inaccuracies / Fabrications / Exaggerations, Such Pieces Inevitably Lead to Accusations That I’m Some Sort of Knee-Jerk Shill Who Rails Against Anything ‘Anti-Apple’ Simply for the Sake of Defending Apple, and if I Love Apple So Much Why Don’t I Just Marry Them?

From Adam L. Penenberg’s December cover story for Fast Company, “All Eyes on Apple: Will the gray light of January cool the world’s hottest company?”: Yet this is also a dangerous moment for Apple. In a way the company has never seen, the barbarians are massing at the gates. “Never” is a long time ago, but I’m sure that’s exactly the case and isn’t in the least bit an exaggeration just to frame the entire piece in epic terms. From hardware to software to services, major competitors with serious R&D and marketing budgets are laying siege to the House of Jobs. Calling Apple the “House of Jobs”, or some such, is like using verbs other than “said” when writing dialog. Just use “said”, and just call Apple “Apple”. A good rule of thumb, by the way, is that the more a writer attributes the actions of Apple, an enormous corporation with thousands of talented employees, to Steve Jobs, who is just one man and neither an engineer nor a designer, the more likely the writer is an idiot, a hack, or both. As Apple moves into new markets, it has made powerful new enemies, some working in concert. Nokia, for example, is banding with telecom companies to offer its own touch-screen hardware in an effort to sway subscribers from the iPhone and Apple’s exclusive partner, AT&T. (a) AT&T is only Apple’s iPhone partner in the U.S.; and (b) Nokia has been “banding with telecom companies” forever, because, uh, Nokia’s core business is “banding with telecom companies to sell new phones”, right? MP3 players from the likes of iRiver, Microsoft, SanDisk, and Toshiba are getting slicker all the time, targeting the iPod at a fraction of the cost. iRiver?; Microsoft’s Zune players costs exactly the same as corresponding iPods; SanDisk’s second-place success is not new and doesn’t seem to be hurting the iPod at all, but rather seems to be coming at the expense of all the various “other” player manufacturers; and, as for Toshiba, their top-selling MP3 player clocks in at #97 — ninety-fucking-seven — on Amazon’s current bestseller list. (Even Sony has better-selling players than Toshiba.) Empirical evidence indicates that Apple’s iPod franchise is doing better than ever. iPod sales growth can’t continue unabated — eventually, at this rate, they’ll run out of people who don’t already have one. That seems to me the biggest threat to the iPod — or at least to the iPod’s effect on Apple’s stock value — on the horizon: that Apple will saturate the entire potential market for handheld media players and growth will slow, even if profits remain strong. That’s a problem Apple is willing to accept, I’d say. It’s weeks before Christmas, and all through the house, there’s an iPhone, a touch screen, and no need for a mouse. But Jobs, the “brilliant,” “visionary” “genius” with a knack for creating “insanely great” consumer products, may well be wondering whether next year will be different. Merry Christmas, Steve. Enjoy it while it lasts. Those unattributed quotes lead me to suspect Penenberg is an “untalented” “hack” and that Fast Company’s “copy editing” amounts to little more than right-clicking the green squiggly grammar-checker underlines in Microsoft Word. Seriously, what’s up with the quotes? But none of that will stop a growing number of adversaries from doing all they can to pare Apple down. Nor does it diminish the fact that at $185 a share, its stock is far more vulnerable to a stall or even a fall than it was when it was $50 cheaper. That Apple’s stock price goes through seemingly irrational swings, both up and down, and is outside the control of the company’s executives, and is just how the market works. It’s also a far cry from this article’s premise, which seems to be that Apple’s products are set to suffer in 2008. It’s entirely possible that 2008 could be a better year for Apple’s sales and profits than 2007 and but that its stock price could fall; say, if the growth isn’t as fantastic as some investors anticipated, or if the entire economy goes into recession and investors panic. Jobs declined to speak with us for this story, but on the eve of the iPhone’s debut, he deployed a simple metaphor to chart Apple’s future: “We’ve got two strong legs on our chair today,” he told USA Today. “We have the Mac business, which is a $10 billion business, and music — our iPod and iTunes business — which is $10 billion. We hope the iPhone is the third leg on our chair, and maybe one day, Apple TV will be the fourth leg.” In essence, Jobs was describing a hermetically sealed system, the central premise of Apple’s business model: If a customer buys one Apple device, she’ll buy two, three, even four more — at a premium price — rather than dilute the experience with other brands. This isn’t what Jobs described at all. It doesn’t follow from the plain meaning of the words attributed to Jobs in the quote, and doesn’t make any economic sense. The entire key to the iPod’s success is that Apple has sold them by the boatload to Windows users who don’t own any other Apple products. And, for those customers who do purchase multiple Apple products — say, an iPhone, an Apple TV, and a Mac — it’s probably more because they work well together than “brand dilution”. In an age increasingly defined by interoperability and technical collaboration, Jobs still refuses to license Apple’s operating system. Because there are so many companies making so much money “licensing their operating system”, other than Microsoft. Worked out great for Apple the last time they tried it a decade ago, and it’s worked out great for Palm now, right? (Note also that all these decisions are, again, solely attributed to Jobs’s personal whim, rather than to Apple as a company.) He won’t allow music and videos downloaded from iTunes to be played on other MP3 players. Except for all those iTunes Plus tracks that have no DRM, and which Jobs has stated explicitly, in a widely-publicized open letter, he’d like to see the entire iTunes Store switch to, if the music labels would allow it. He won’t permit music downloaded from competing stores to play on the iPod. Except for all the music from any store that sells DRM-free music, like Amazon’s or eMusic’s. Otherwise what’s being argued here is that Apple should support Microsoft’s DRM platform, formerly known as PlaysForSure, recently renamed to “Certified for Windows Vista”, which Microsoft itself doesn’t support in its own Zune players. There’s a lot of stupid packed into the above 13-word sentence. And in enforcing his exclusive deal with AT&T for the iPhone, he went so far as to disable or “brick” the device of anyone who dared “jailbreak” it for use with another carrier, or who downloaded third-party applications for features Apple hadn’t built in. (a) Again with the “Jobs did it”; (b) only iPhones that were SIM-unlocked wound up bricked by the 1.1.1 update, not iPhones that were “jailbroken” to run third-party apps; and (c) there’s no proof that Apple deliberately bricked unlocked iPhones. Apple has thus far ridden this exclusionary strategy to riches, power, and glory. But what does Steve Jobs know that Albert Einstein didn’t? Einstein posited that a closed system would become stagnant over time. Well, if Einstein predicted Apple’s business is doomed, it must be so, because we can all agree Einstein was one smart dude. (Perhaps Nostradamus foresaw this as well?) As McCourt, the Morgan Keegan analyst, points out, “Each SanDisk generation of MP3 players is getting closer to iPods; the handset manufacturers are arguably making more impressive music-enabled handsets than the iPhone; and try out a new HP laptop with imbedded Altec Lansing speakers — it’s half the price of a MacBook, with a far better audio experience.” Wow, better speakers in an HP notebook? No wonder MacBook sales are tanking. Sell your Apple shares now. Samsung already sells a touch-screen phone. So does Motorola. Chevy already sells a sedan with a V8 engine. So does Ford. Sprint has a touch-screen phone that runs “thousands” of third-party applications And they’re all great. And the king of search [Google] has banded together with Apple foes such as Dell, HP, Microsoft, and Samsung to form the White Space Coalition to push the Federal Communications Commission to open up part of the broadcast spectrum. If successful, Americans would be able to use any Wi-Fi-enabled device to access the Web anytime, anywhere, and at zippy speeds — a direct threat to AT&T and Apple, which have a five-year exclusive contract. Because Apple doesn’t sell any other portable devices than the iPhone. There’s nothing like, say, an iPod that’s just like the iPhone but without the phone, and which would be a perfectly positioned product for some sort of ubiquitous wireless networking that comes from a provider other than the existing phone carriers. Apple is at a moment of choice: If it can stay hot and produce breakout couture hardware indefinitely, it can hold onto its closed model, elite pricing, and huge margins. In many ways, the world would be a prettier place if it did. But in an age of convergence and simplification, customers are ever more insistent that computers, phones, TV, and music systems work together. So (a) customers are “ever more insistent that computers, phones, TV, and music systems work together”, and (b) Apple’s entire product strategy in a nutshell is to produce computers, phones, TV, and music players that work really well together, and the conclusion Penenberg draws from this is that Apple is in trouble. Jiminy. Jobs may have to accept that Apple’s next wave of growth — or energy, as Einstein might have put it — depends on syncing up his products and platforms with those of his competitors. Sure would be swell if iTunes ran on Windows, and if iPods and iPhones could work with PCs, and if Macs could dual-boot into other PC operating systems now that they’re using Intel processors. Again, though, perhaps I’m overlooking something, given that Penenberg’s argument is backed up by a reference to Einstein. Yet there are risks, too, in tearing down this wall. If the company’s success has flowed from the trendy, gleaming exclusivity of its machines, then diluting that quality could erode the very foundation of the franchise. Unless, instead, Apple’s success has flowed from the fact that its products are simply better designed, easier to understand, and provide better experiences — i.e. that Apple products are popular because they’re good, rather than popular because they’re “trendy” — in which case the only serious problem the company faces is that it needs to keep making new products that people want to buy, and their success isn’t really precarious at all. Or, as Albert Einstein actually did put it, “Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”
★ BlackBerry vs. iPhone

1: Wherein Neither ‘RIM’ Nor ‘BlackBerry’ Are Even Mentioned, but Rather the Stage Is Set for Showing Why They Might Be Seriously Screwed Along the lines of can’t-really-be-answered-but-gosh-they’re-fun-to-ponder questions like, say, “Who’d win in a fight, Batman or Spider-Man?” or “Star Destroyer vs. U.S.S. Enterprise?”,1 here’s one regarding the iPhone: What historical Mac is a current iPhone most analogous to, spec-wise? I.e, complete this sentence: “An iPhone is like having a tiny ____ in your pocket?” Now of course the comparison can’t be precise. Different software, different use cases, different purposes. But there’s no denying that an iPhone is a computer. And unless you’re really young, it’s faster — a lot faster — than the computers you owned not so long ago. So, seriously, stop here for a moment and think about it. My first answer, pulled simply from recollection of how fast machines felt to use, was the original iMac. But that machine — announced 10 years ago this week — had a 233 MHz G3 and, by default, a paltry 32 MB of RAM. Apple has never officially released the CPU specs of the iPhone, but Craig Hockenberry poked around with undocumented system APIs which indicated the iPhone’s CPU runs at 400 MHz with a bus speed of 100 MHz, and that there’s 128 MB of RAM. As we all recall from the PowerPC era, MHz is not a precise metric for comparing the performance of CPUs across different architectures; I wouldn’t be surprised in the least to find out that a 400 MHz PowerPC G3 is a faster chip than the 400 MHz ARMwhatever that’s in the iPhone, if only because of the power constraints. But, still, it’s something. So, my answer to the question: the original “Pismo” G3 PowerBook. The numbers match up pretty closely: 400 MHz CPU, 100 MHz bus speed, 64 MB of RAM. (The higher-end Pismo had a 500 MHz CPU and 128 MB of RAM.) Even storage sizes are similar: hard drive options for the Pismo were 6, 12, or 18 GB. Another possible answer: the original blue-and-white Power Mac G3 — again, 400 MHz CPU, 100 MHz bus speed, 64-128 MB of RAM, and 6-12 GB hard drives. Think about that — in just nine years, the specs that then described Apple’s top-of-the-line desktop computer now describe their phone. One thing that makes this comparison hard is that there’s not much software in common. You can’t use most of the real-world tasks commonly used for ballpark benchmarking, like, say, Photoshop image processing or ripping MP3s from AIFFs, because the iPhone doesn’t do them. But there is one processor intensive task we can compare: web page rendering. In the early days of the web, it took a while for even moderately large web pages to render in a browser, even when you were loading them from HTML files right on your hard drive. If you were to plop yourself down in front of one of these vintage 1999-2000 Macs for an afternoon of web browsing, even with a decent Ethernet connection to the Internet you’d find the experience pretty damn slow by current standards. For all the incessant chatter about the demand for and purported certainty of 3G wireless networking in the next generation of iPhone hardware, the truth is that current iPhones are held back, web-surfing-wise, by more than just the speed of EDGE (which admittedly, is indeed pretty slow). Recall this video pitting a 3G Nokia E61i against an iPhone on EDGE — total rendering time was more or less the same, and in a few cases, the iPhone came out ahead. You can see that browsing speed — which is what matters — depends on more than just networking speed simply by comparing how long it takes to render a web page on the iPhone using Wi-Fi: a lot longer than it takes to load the same page in using Safari on a Mac. For example, it takes about two or three seconds for Safari to load the Daring Fireball home page on my new MacBook Pro. Using the same Wi-Fi network, it takes my iPhone about 15 seconds. (Using EDGE, it takes about 60 seconds to completely load, although you can start reading much sooner than that.) Point being that even if 3G wireless networking were as fast as Wi-Fi — which it’s not — browsing on an iPhone would still be pretty slow compared to browsing on a modern desktop or laptop. If you frequently use Wi-Fi on your iPhone, a faster processor in the next-generation hardware would make a bigger difference to the overall experience than faster phone-carrier networking. And so here’s the point I’m driving at. If a 2007 iPhone is loosely equivalent in terms of computing power to a 2000 PowerBook or 1999 Power Mac, that puts the spread at around seven or eight years. Extrapolate forward, and it’s therefore not at all unreasonable to think that a 2014 iPhone will pack the computing power of today’s MacBook Pro. Or, nearer term, that an iPhone introduced two years from now might pack the punch of a 2003 Aluminum PowerBook G4 — quite a difference from the Pismo. Even if your estimate of the iPhone’s equivalent-horsepower Mac is further back in time than mine, there’s no denying that Moore’s Law applies to handhelds, too. Eventually there will be a computer that fits in your pocket that is more powerful than today’s Mac Pros. But the path from here to there is riddled with difficult engineering problems — heat dissipation, battery life, and OS integration chief among them. There is marketing. There most certainly is design. But at the core of this market — by which I mean the market for handheld multitasking web-surfing networked-everywhere “phones” which are really computers — is engineering. Apple is the best handheld computer engineering company in the world today, hands down. They’re also the best handheld computer user experience design company. And they’re not sharing. 2: Why RIM Is Screwed When the iPhone was announced, I saw Apple as staking out ground far afield from the territory RIM occupies with the BlackBerry. Last year, I didn’t see Apple implementing Exchange support in the iPhone OS, and clearly that was, well, completely wrong. The “enterprise” features Apple has announced for the imminent 2.0 release of the iPhone OS — remote wipe, push email, automatic calendar and contact synching — pretty much encompass every single feature that’s been held up as a reason the iPhone wouldn’t sell to enterprise users. It remains to be seen how well these new iPhone features will actually work, but if the answer is “as well as promised”, and if the iPhone’s Mail app is improved in ways targeting people who receive a high number of messages, it’s hard to see a single software advantage in the BlackBerry’s favor. Which leaves hardware, which leaves the keyboard. Two Sundays ago, the New York Times ran a lengthy business-section piece by Brad Stone, titled “BlackBerry’s Quest: Fend Off the iPhone”. Regarding the upcoming BlackBerry 9000, the focus turned to the keyboard: Photographs of the device, leaked to gadget news sites, also indicate that the new BlackBerry will have elegant curves suggestive of the iPhone. It will also have a physical keyboard like previous R.I.M. devices, as opposed to the glass touch screen found on the iPhone. There’s a reason that R.I.M. is averse to the iPhone’s glass pad. “I couldn’t type on it and I still can’t type on it, and a lot of my friends can’t type on it,�? says Mike Lazaridis, R.I.M.’s co-chief executive and technological visionary. “It’s hard to type on a piece of glass.�? Mr. Lazaridis thinks that e-mail-dependent BlackBerry owners demand the reliability and tactile feedback of a keyboard. But, despite his critique of the iPhone, he does not dismiss the possibility that R.I.M. may itself one day sell a touch-screen phone, aimed specifically at consumers without the e-mail demands of BlackBerry’s core users. Translation: “We’ll emphasize the physical keyboard as a differentiating factor as long as it seems to work, at which point we’ll try a touch-screen keyboard too.” The only other angle RIM seems to be hanging its hat on is “security”: RIM is also betting on security, which hinges on the fact that its handsets and e-mail systems are relatively impervious to hackers. Mr. Lazaridis predicts that corporations will not give iPhones to their workers because they have already proved vulnerable to hackers eager to pry iPhones off AT&T’s system and make them work on other wireless networks. “It’s not that simple for an I.T. manager to give up security,�? he said. The idea that iPhone carrier unlocking is a “security problem” is a conflation between what an attacker can do to your phone, against your will and/or unbeknownst to you, versus what a phone’s owner can do to their own phone. It’s not like these “hackers” are attacking happy AT&T-subscribed iPhone owners and switching them over to Sprint against their will. To understand why Apple is making a concerted effort to appeal to BlackBerry users, consider an analogy to the board game Risk. RIM has a large army (read: users), but they’re all massed together in one spot on the map. They care about email, they care about exactly the sort of enterprise features Apple has announced for the iPhone, and they are known to be willing to pay several hundred dollars for a handset. A lucrative target that can be attacked all at once. And the BlackBerry is weakest where the iPhone is strongest: web browsing, music, and video. Compare and contrast with, say, a software platform like Windows Mobile, or a hardware maker like Nokia — their users are spread across a wide variety of phones and platforms. It was far easier to turn the iPhone into something almost every BlackBerry customer might at least consider than it would have been to make a lineup of iPhones that appeal to every Nokia customer. RIM doesn’t really have any lock-in other than user habits. The BlackBerry gimmick is that it works with the email system your company bought from Microsoft. Replace a BlackBerry with an iPhone (2.0) and the messages, contacts, and calendar events that sync over the network will be the same ones on the BlackBerry you just tossed into a desk drawer. In broad terms, BlackBerrys are optimized first for email; the iPhone for the web. What’s more important, an email client or a web browser? For most people, and perhaps even most current BlackBerry users, the answer is clearly the web. Many people in fact read their email entirely through the web. Unless you’re Richard Stallman, you probably don’t read the web through your email client. The iPhone would be a credible, useful device with just two apps: Phone and Safari. But it doesn’t just have those two apps. It has a slew, and they’re all better on the iPhone than the BlackBerry and the difference with regard to anything other than email is only going to get more stark once the iTunes App Store opens its doors. If nothing else, consider games, games, and games. As I wrote when the iPhone’s upcoming enterprise features were announced, the iPhone can do more BlackBerry-ish things than the BlackBerry can do iPhone-ish things. Apple doesn’t wait for someone else to knock one of their hit products off its throne or slowly run it into the ground (cf. the Motorola Razr) — they do it themselves. For six years pundits have been declaring that competitors would “soon” catch up to the iPod, but the iPod has never been a static target — over the same six years Apple has released significant new iPods every year. There are no signs that RIM has the engineering chops on either side of the ball — hardware or software — to compete with where the iPhone is now, let alone where it’s going to be. We know that Apple has an OS that can scale to take advantage of faster (and multi-core) processors, because OS X is doing that already. If a two-years-away 2010 iPhone might be like having a 2003 PowerBook G4 in your pocket, for RIM’s sake a 2010 BlackBerry had better be something more than a BlackBerry with a brighter screen. Correct answers: Batman, Star Destroyer.�↩
★ Microsoft’s Long, Slow Decline

There were two interesting Windows-related news stories last week. First, Joe Wilcox’s story on a report from NPD claiming that 91 percent of $1,000-and-higher retail computer sales now go to Apple. Second, Microsoft’s quarterly financial results, in which revenue fell $1 billion short of projections and declined 17 percent year-over-year. To be clear, Microsoft remains a very profitable company. However, they have never before reported year-over-year declines like this, nor fallen so short of projected earnings. Something is awry. What is particularly alarming about Microsoft’s numbers is that revenue from its Windows PC division suffered an even greater year-over-year revenue decline than the company as a whole: 29 percent. One explanation for that is that Windows 7, a major new update, goes on sale in October, and so it’s expected, somehow, that Windows revenue would decline in the months preceding its release. But Microsoft’s operating system business is not new, and it has never been particularly cyclical. Windows revenue, prior to this just-completed quarter, has only ever gone in one direction: up. Windows is at the core of everything Microsoft does that makes money. They sell Windows, then they sell software that runs on Windows. As Windows goes, so goes Microsoft, and right now Windows is heading south. One argument is that the fault lies with the global economy, not Microsoft itself. (This seems to be the argument Microsoft’s executives are making.) But not every tech company is suffering. Google is doing just fine, and Apple reported record non-holiday-quarter numbers for its just-ended quarter. Apple operates in the same economy Microsoft does, and Mac sales are up. And the numbers from the aforementioned report by NPD are simply astounding. It’s worth noting, though, that NPD’s report is specifically about retail computer purchases; Wilcox’s story doesn’t make that clear. But that they don’t represent all computer purchases doesn’t mean they aren’t astounding figures. Things have not always been like this. NPD conducted the same survey at the beginning of 2008, and at that point Apple’s share of the $1,000+ retail computer market was only 66 percent. Repeat: Apple’s share of this segment has grown from 66 to 91 percent in a year and a half. Apple has always only competed in the middle-to-high range of the computer market. But it was never the case, historically, that Apple sold a majority of middle-to-high-end computers. Even given that NPD’s numbers represent only retail sales, is there any reasonable doubt that Apple’s share of the non-retail market for $1,000+ computers is also growing? Apple’s strong growth in this segment is a sign that the market is turning against Windows. If for no other reason than that Apple has never entered the low-cost computer market, it’s always been the case that the most budget-conscious computer buyers were Windows users. But the converse wasn’t true — not all Windows users were cheapies. Today, though, Microsoft is increasingly left only with customers whose priority is price. A Simple Pointed Question During the late-’90s dot-com boom, it was standard operating procedure at many companies for professional web developers and designers to have two computers on their desks: one Windows, one Mac. One for primary development, one for testing in browsers on the “other” OS. (Virtualization wasn’t yet practical.) But which to choose as the primary platform? Many chose one, many chose the other. But it was an interesting test group, because they were exposed to both platforms. These web developers were not like the people who, in a form of tribalism, claim to despise one or other other platform without having actually used it. Web developers had to know both the Mac and Windows, at least with passing familiarity, and the truth is that many, if not most, preferred Windows. Today that is simply no longer the case. Microsoft has lost all but a sliver of this entire market. People who love computers overwhelming prefer to use a Mac today. Microsoft’s core problem is that they have lost the hearts of computer enthusiasts. Regular people don’t think about their choice of computer platform in detail and with passion like nerds do because, duh, they are not nerds. But nerds are leading indicators. This is true in many markets with broad appeal, not just computers. Microsoft is looking ever more so like the digital equivalent of General Motors. Car enthusiasts lost interest in GM’s cars long before regular people did; the same is happening with Windows. Or consider cameras. Companies like Canon and Nikon make most of their money from consumer-level point-and-shoot cameras. But they are intensely competitive at the high end of the market, too. Enthusiasts are valuable customers not just because they themselves buy expensive products, but because they, as enthusiasts, tend to recommend products in their area of expertise to others. The photo nerd who’s delighted with their $2,500 Canon SLR is likely to recommend a lot of $250 Canon point-and-shoots to friends and family. Vista was a disaster for Microsoft. Windows 7 is, supposedly, the light at the end of the tunnel. But the best consensus about Windows 7 is only that it’s not going to be a complete and total clusterfuck like Vista. That it’s something XP users will actually want to upgrade to. Something that, when it comes pre-installed on a new machine, will not prompt questions about how to downgrade to XP. But no one seems to be arguing that Windows 7 is something that will tempt Mac users to switch, or to tempt even recent Mac converts to switch back. It doesn’t even seem to be in the realm of debate. But if Windows 7 is actually any good, why wouldn’t it tempt at least some segment of Mac users to switch? Windows 95, 98, and XP did. Microsoft seems to have conceded that the enthusiasts who’ve switched to the Mac in recent years are gone for good. Their apparent goal for Windows 7 was merely to make something better than Windows Vista. If Microsoft were a healthy, functional, competitive company willing and able to honestly assess its own shortcomings — like the Microsoft of the ’90s that conquered the entire industry — their goal would have been to make something not just better than Vista, but better than anything else on the market, including Mac OS X. Some Joke The evidence is staring Microsoft’s leadership in the face that they have lost the most lucrative segment of the market, but, judged by their actions and public remarks, they seem to think it’s all a big joke. They should be sweating this but they’re laughing it off. Two weeks ago Microsoft held its annual Worldwide Partners Conference. There was a much-reported bit from the remarks of Kevin Turner, a former Wal-Mart executive who is now Microsoft’s COO. What caught people’s attention were Turner’s comments regarding having gotten a phone call from a lawyer at Apple regarding Microsoft’s “Laptop Hunter” ads. From Microsoft’s transcript: And so we’ve been running these PC value ads. Just giving people saying, hey, what are you looking to spend? “Oh, I’m looking to spend less than $1,000.” Well we’ll give you $1,000. Go in and look and see what you can buy. And they come out and they just show them. Those are completely unscripted commercials. And you know why I know they’re working? Because two weeks ago we got a call from the Apple legal department saying, hey — this is a true story — saying, “Hey, you need to stop running those ads, we lowered our prices.” They took like $100 off or something. It was the greatest single phone call in the history that I’ve ever taken in business. (Applause.) I did cartwheels down the hallway. At first I said, “Is this a joke? Who are you?” Not understanding what an opportunity. And so we’re just going to keep running them and running them and running them. That’s interesting insofar as it proves that Apple has an eye on Microsoft’s ads. But I’ve always imagined that this is pretty much what corporate attorneys do all the time when a competitor runs an ad that claims things which are not true. This is why you don’t often see direct price comparisons in TV commercials — prices change. And, in fact, a week later, Microsoft changed the ads to remove specific mentions of Mac prices. That silly lawyer. But the really interesting part of Turner’s remarks from the conference is what he said immediately preceding the above, when he first broached the topic of Apple: Now let’s talk about Apple. What are you going to do about those Apple ads? That was a year ago. Gosh, when I went home for the holidays, brothers, sisters, cousins — hey, hope you don’t have anything to do with marketing over there at Microsoft. What are you guys going to do about those Apple ads? Stay tuned, stay tuned, stay tuned. Wow. Did we punch right back? The PC Hunter ads, the PC Rookie ads clearly have been winners in the marketplace. Such winners in the marketplace that Apple’s laptop sales went up last quarter, and the rest of the industry’s declined. (Perhaps Microsoft would do better to measure the efficacy of their ads by their effect on sales, rather than by the number of phone calls they prompt from Apple lawyers.) Then comes the real insight into Microsoft’s thinking: I pulled this out of my Sunday newspaper. I have an old habit because I came from retail looking at the Sunday tabs and circulars that are in newspapers. This is straight out of my paper last Sunday. This is a comparison out of a leading electronics retailer that you can get a 13.3-inch Macbook for US$1199 from that retailer. Guess what. That same retailer, you can get the same PC with more RAM, a bigger hard drive, and almost a three-inch bigger screen for US$649. What an incredible opportunity. And so Microsoft’s official stance regarding Apple’s growing domination of the $1,000+ market is that Apple is charging hundreds of extra dollars in pure margin — $500 in the case Turner cited in his prepared remarks. The computers that Microsoft chooses to brag about on stage at a major conference are the $650 17-inch laptops advertised in Best Buy Sunday circulars. There’s no question that retailers sell tens of millions of cheap Windows laptops every year. But no one with a pair of eyes thinks such machines are of comparable quality to Apple MacBooks. Even without turning the machines on, anyone can see the difference in design and build quality. In fact, you don’t even need eyes — just pick them up and see which one squeaks. Apple is selling more MacBooks every quarter. Microsoft thinks it is sitting pretty because Best Buy has a 17-inch Dell for $650. Turner is not alone. Back in April, when the new PC Hunter ad campaign started, David Webster, general manager for brand marketing at Microsoft, said the following in an interview with Newsweek’s Dan Lyons: He says the idea was to turn Apple’s “I’m a Mac” campaign to Microsoft’s advantage. “We associate real people with being PCs, [but then Apple] ends up looking pretty mean-spirited, the way they go after customers,” he says. “It’s clear that’s who they are insulting.” At the same time he can’t resist taking a crack at the preciousness of some Mac users. “Not everyone wants a machine that’s been washed with unicorn tears,” he says. Quoting the above, I wrote: It seems clear that Microsoft’s stance on the Mac’s sales growth is that there’s nothing wrong with Windows or right with the Mac, but rather that there’s something wrong with Mac users. Microsoft is no longer ignoring Apple’s market share gains and successful “Get a Mac” ad campaign. But the crux of these ads from Apple is that Macs are better; Microsoft’s response is a message that everyone already knows — that Windows PCs are cheaper. Their marketing and retail executives publicly espouse the opinion that, now that everyone sees Apple computers as cool, Microsoft has Apple right where they want them. They’re a software company whose primary platform no longer appeals to people who like computers the most. Their executives are either in denial of, or do not perceive, that there has emerged a consensus — not just among nerds but among a growing number of regular just-plain users — that Windows PCs are second-rate. They still dominate in terms of unit-sale market share, yes, but not because people don’t recognize Windows as second-rate, but because they don’t care, in the same way millions of people buy metric tons of second-rate products from Wal-Mart every hour of every day. That’s the business Wal-Mart wants to be in — selling a zillion cheap low-margin items and turning a profit on volume. That’s not the business Microsoft is in. And in mobile software, the fastest-growing segment of the computer industry, Microsoft’s platform is both inferior and unpopular. Their plan to address this is to change its name. I’m not arguing that Microsoft will collapse. They’re too big, too established for that to happen. I simply think that their results this quarter were not an aberration, but rather the first fiscal evidence of a long, slow decline that began several years ago.
★ Regarding the Verizon and ‘iPhone Lite’ Rumors

There’s been much speculation this week regarding reports in BusinessWeek and The Wall Street Journal of talks between Apple and Verizon. To wit: that Apple is considering Verizon for a future iPhone and/or its mythical forthcoming tablet. This is not too complicated. Let’s just play “What’s in it for them?” Verizon — Would they want to sell some sort of iPhone model? Yes, of course. The iPhone has undeniably turned into a big deal. Verizon has nothing to do with it, and it is the single best competitive advantage held by AT&T, Verizon’s biggest rival. None of the iPhone rival devices Verizon has offered so far is any good or very popular (cf. the BlackBerry Storm), and the Palm Pre is exclusive to Sprint. AT&T — The iPhone means more to AT&T than any other phone it carries. Most people decide which carrier to buy a phone from, go there, then pick a phone. With the iPhone, people decide they want to buy one, and then they go to AT&T. Some number of iPhone owners switched to AT&T specifically and only because of the iPhone. In fact, there are some who switched to AT&T to get the iPhone despite the fact that, all things considered, they’d prefer to buy a phone from another carrier — often Verizon, which is widely regarded as having the best overall U.S. network coverage. It is very much in AT&T’s interests to keep the iPhone as an exclusive AT&T device for as long as it can. Apple — The iPhone matters to AT&T, but AT&T doesn’t really matter much to Apple. The U.S. is Apple’s (and the iPhone’s) biggest market, but it’s still just one country in a big world. In the just reported quarter, AT&T reported activating 1.6 million iPhones. But Apple reported selling just under 3.8 million total iPhones — so 58 percent were sold outside the U.S. AT&T isn’t Apple’s iPhone partner. They’re just Apple’s iPhone partner in the U.S. I think the U.S. tech press often overlooks this, hence some of knee-jerk skepticism that Apple would even talk to Verizon. Apple wants profit and they want market share. The trick is balancing the two. Surely Apple makes more money per iPhone with an exclusive deal, but they would sell more total devices if iPhones were available on both AT&T and Verizon. Yes, Verizon’s network is CDMA, not GSM, and so it would require Apple to produce different hardware. But there are some number of Verizon customers who won’t switch to AT&T but who would buy an iPhone from Verizon, and my guess is that that number is high enough for Apple to at least consider producing Verizon-compatible hardware. So, even if Apple would prefer to stick with AT&T exclusively, at least for another year, I’d find it surprising if they didn’t at least talk to Verizon just to hear an offer, and perhaps more importantly, to leak the flirtation to the press so as to keep the pressure on AT&T to offer Apple the best possible terms. But as for whether I think an iPhone on Verizon is actually imminent — as in “coming in the next few months” imminent — I doubt it. During Apple’s quarterly finance call last week, analyst Gene Munster asked why Apple has maintained its exclusive agreement with AT&T. COO Tim Cook said: On AT&T, Gene, we view AT&T as a very good partner. We believe that they’re the best wireless provider in the U.S. and we are very happy to be doing business with them. They have done a very good job with iPhone, they’ve put the full force and weight of their company behind it, it’s a major strategic thrust for them and so we’re very happy with the relationship that we have and do not have a plan to change it. And then Cook again, responding to a follow-up question regarding any “technical hurdles”: Well from a technology point of view as you know, Verizon is on CDMA and we’ve shown from the beginning of the iPhone to focus on one phone for the whole of the world and when you do that, you really go down the GSM route, because CDMA doesn’t really have a life to it after a point in time. Steve Jobs, famously, is known for pooh-poohing ideas or features only to turn around months or years later and declare them to be the best ideas or features ever, now that Apple has embraced them. Apple doesn’t announce big changes until it is ready to announce them, direct questions be damned. And so I wouldn’t count on Apple’s “not having a plan to change” the AT&T exclusivity lasting forever.1 But the CDMA comment does not sound like misdirection from a company planning to unveil CDMA phones this summer. That comment was specific, and it wasn’t something along the lines of we’re not going to do CDMA, but rather more along the lines of CDMA is on its way out industry-wide. That’s just not something Cook would say if Apple were planning to announce a CDMA phone in June — and without a CDMA iPhone, there’s no iPhone for Verizon.2 Ask again when Verizon’s next-generation LTE network is running, though. But that’s just the iPhone. If Apple is preparing to soon announce its supposed tablet / mediapad / whatever, and if said tablet / mediapad / whatever is going to support mobile broadband, it could well use EVDO from Verizon without contradicting anything Cook said about CDMA or the iPhone remaining exclusively on AT&T. (Brief Interpolation Regarding the Proper Perspective Regarding Any Rumored New Devices: Keep in mind that these tablet / mediapad / whatever rumors are growing to the point where if the WWDC keynote comes and goes without any mention of this device, the jackass contingent is going to blame Apple for not releasing it rather than blame the rumor reporters for being wrong. BusinessWeek’s report had the most details about purported new devices, but in terms of timing, only said “One of these devices may be introduced as early as this summer.” Point of this interpolation being that if — and this is a very real if — this really is a device Apple is preparing to release, fever-pitched rumors won’t make it appear any sooner than when Apple deems it ready.) Erring on the Side of Increased Market Share It’s my assumption that Apple’s long-term plan for the iPhone platform is patterned after Apple’s long-term plan for the iPod. Apple’s iPod strategy has been phenomenally successful, and there are many obvious parallels. The biggest difference is that the iPhone has succeeded far faster than the iPod did — Apple didn’t release the Windows version of iTunes until two years after the original iPod was released as a Mac-only peripheral. One of the key points in the history of the iPod was the release of the iPod Mini in January 2004. That’s when Apple expanded the iPod from a single product to a family of products, and the Mini proved to be a smash hit. The formula behind the iPod Mini was simple: Apple made a smaller, cheaper device with more or less the same technical specs as the original iPod from October 2001. Apple went on to repeatedly improve upon the iPod in two ways: on the high end by producing new devices with the same shape and price but with new features (additional storage, color screens, larger screens, video, etc.); on the low end by taking the existing features and making them smaller and cheaper. So here’s how I see Apple applying its iPod strategy to the iPhone. At some point the iPhone will expand to two form factors: A high-end iPhone with the same basic size and price as previous iPhones, but with significant new features. Obvious potential new features would be things like more storage space, more RAM, a faster CPU, an improved (and eventually video-capable) camera, 802.11n Wi-Fi, and superior battery technology. A new, lower-priced, smaller, and more adorable iPhone, with more or less the same technical specs as the original iPhone. Given that those specs include the 320 � 480 display, I wouldn’t expect something tiny, but remember that the original iPod Mini was “just” 35 percent smaller by volume than the then-current full-sized iPod. Shrink the iPhone’s forehead and chin and make it thinner — maybe a lot thinner — is what I’m thinking. Existing iPhone apps would run just fine on the new device, as it’d have similar, if not identical, CPU performance and RAM to previous full-sized iPhones. Such an iPhone sounds much like the “iPhone Lite” that BusinessWeek reported its source saw. The only question is when. Could be this year. Could be next year. But put me on the record for predicting it’ll happen before the end of 2010. The reason why Apple did this with the iPod, and why I’m convinced they’ll do it again with the iPhone, is that when it comes to managing the balance between per-unit profit and overall market share, Apple is determined to err on the side of market share. (Not as much with the Mac, however — the difference being that PCs are now a firmly established market.) Most gadget companies, when they have a smash hit on their hands, try to milk it. A typical company that found itself selling millions of $400 hard-drive-based digital music players would try its best to continue selling the same $400 hard-drive-based digital music players for as long as it could. Apple, despite an overwhelming 70 percent market share, aggressively added features and drove down its own prices, year after year after year. I’ve previously quoted the following passage from Steven Levy’s 2004 Newsweek interview with Steve Jobs, but it’s worth repeating here. The topic was the Mac’s long-stagnant (at the time) market share. If that’s so, then why is the Mac market share, even after Apple’s recent revival, sputtering at a measly 5 percent? Jobs has a theory about that, too. Once a company devises a great product, he says, it has a monopoly in that realm, and concentrates less on innovation than protecting its turf. “The Mac user interface was a 10-year monopoly,” says Jobs. “Who ended up running the company? Sales guys. At the critical juncture in the late ’80s, when they should have gone for market share, they went for profits. They made obscene profits for several years. And their products became mediocre. And then their monopoly ended with Windows 95. They behaved like a monopoly, and it came back to bite them, which always happens.” In the near term, Apple could fuel explosive iPhone unit sale growth just by reducing the entry price. But at some point, looking a handful of years down the line, expanding the iPhone’s U.S. market share is going to require going beyond AT&T. The only question is when. Worth a footnote: Munster never mentioned Verizon by name. He simply asked about maintaining exclusivity with AT&T. Cook brought up Verizon on his own.�↩ The CDMA/GSM schism has blocked Verizon users from even unlocked iPhones. I’ve long wondered how much more prevalent iPhone unlocking would be if Verizon had a GSM network.�↩
★ Apple, Adobe, and Flash

In my “Tablet Musings” piece two weeks ago, I speculated that Apple’s imminent tablet probably won’t support Flash, for all the same reasons the iPhone doesn’t. Reaction to this was polarized — typically either “duh, of course it won’t” or “no way, it has to support Flash”. You can see both reactions represented in the thread on my piece at Hacker News. One group is going to be very surprised come Wednesday. I’ve been writing about this saga for two years. My fascination with the subject is fueled by the fact that it’s so polarizing, and that it encompasses both technical and political issues. On Flash and Mac OS X Application Crashes Two weeks ago I wrote: To my knowledge, Apple controls the entire source code to the iPhone OS. That’s not to say they wrote the whole thing from scratch. Many low-level OS components are open source. But they have the source. If there’s a bug, they can fix it. If something is slow, they can optimize or re-write it. That is not true for Mac OS X, and Flash is a prime example. The single leading source of application crashes on Mac OS X is a component that Apple can’t fix. Several readers asked me for the source for my accusation contained in that last sentence, that Flash is the “leading source of application crashes on Mac OS X”. (And good for them for asking; I’m not sure what I was thinking including that without sourcing it.) Here’s the deal. On stage at the WWDC 2009 keynote address last June, Apple senior vice president of software engineering Bertrand Serlet was explaining the new web content plugin mechanism for Safari in Snow Leopard. Rather than run within Safari’s application process, web content plugins now run in their own process, so if they crash, they (usually) don’t crash Safari itself. You get a broken little rectangle in the page where the plugin was executing, but the browser itself stays running. Apple did this for two reasons. Serlet’s stated reason on stage was “crash resistance”, as mentioned above. As for why such crash resistance was worth implementing, Serlet explained that, based on data from the Crash Reporter application built into Mac OS X — the thing that asks if you’d like to send crash data to Apple after a crash — the most frequent cause of crashes across all of Mac OS X are (or at least were, pre-Snow Leopard) “plugins”. Serlet didn’t name any specific guilty plugins. Just “plugins”. But during the week at WWDC, I confirmed with several sources at Apple who are familiar with the aggregate Crash Reporter data, and they confirmed that “plugins” was a euphemism for “Flash”. In other words, in Apple’s giant pile of aggregate crash reports — from all app crashes on all Macs from all users who click the button to send these reports to Apple — Flash accounts for more of them than anything else. That doesn’t mean Flash somehow causes crashes in any various app. Presumably, most of the time it’s Safari or some other browser playing Flash content. And it’s worth noting that this doesn’t necessarily mean Flash is particularly crash-prone or poorly engineered. Think of it as a formula like this: total crashes = (crashing bugs) × (actual use) Flash’s number and severity of crashing bugs could well be somewhat low and it would still account for a large number of total crashes because it’s actually used all the time — by any Mac user with Flash content playing in a web page. And, if Flash Player for Mac OS X actually is poorly-engineered overly-buggy code, well, that’s even worse. But there’s another reason why Apple created this new external process architecture for web content plugins in Snow Leopard: it was the only way they could ship Safari and the WebKit framework as 64-bit binaries. Flash Player is only available as a 32-bit binary. (This is true for other third-party web content plugins, like Silverlight, but Flash is the only one that ships as part of the system.) 64-bit apps cannot run 32-bit plugins. Apple doesn’t have the source code to Flash, so only Adobe can make Flash Player 64-bit compatible. They haven’t yet. So if Apple wanted Safari to be 64-bit in Snow Leopard (and they did), they needed to run 32-bit plugins like Flash in a separate process. Maybe you don’t believe Apple that web content plugins are the most frequent source of crashes on Mac OS X. Maybe you don’t believe me and my unnamed sources at Apple that it’s Flash in particular that accounts for this. That’s cool, skepticism is good. So then in that case, maybe Bertrand Serlet blamed “plugin crash resistance” for political reasons, just to stick a knife in Adobe’s back, and the only reason Apple went with this external-process architecture was for the 64-bit/32-bit incompatibility. But that just shines a light on the fact that Flash is still a 32-bit binary despite the fact that Apple wants to go 64-bit system-wide. Flash remains 32-bit and there’s nothing Apple can do about it. Instead of being able to make Flash 64-bit themselves, Apple had to engineer an entirely new plugin architecture. This is why Apple wants to control the source code to the entire OS. If they want to go 64-bit with iPhone OS, it’s entirely in Apple’s own control to do so. And what happens if Apple goes to a new CPU architecture? For the components Apple controls the source code to, they can recompile for the new architecture. If the entire system doesn’t recompile cleanly for the new architecture, they can work on it until it does. For a component like Flash, where Adobe controls the source code, Apple instead has to wait. Which situation do you think Apple is happier with? Mac OS X, where they had to create a new web content plugin architecture because Flash crashes frequently and isn’t 64-bit? Or iPhone OS, where they control the source code to every single component, and can do whatever they want, when they want? Point is, even if you think Flash Player for Mac OS X is the greatest piece of software in the world and that a Flash Player for iPhone OS would run just fine, too — there’s no denying that Apple executives have and continue to say anti-Flash things publicly. Apple doesn’t say much about Flash, but what they do say doesn’t sound like the sort of things they’d say if they were looking forward to supporting it more rather than less. The Proprietary Web It’s probably pretty clear to regular DF readers that I don’t care for Flash, and that I’m hoping Apple never includes it in the iPhone OS. Might as well make my biases clear. Why? At the core, because Flash is the only de facto web standard based on a proprietary technology. There are numerous proprietary web content plugins — including Apple’s QuickTime — but Flash is the only one that’s so ubiquitous that it’s a de facto standard. Flash is the way video is delivered over the web, and Adobe completely controls Flash. No other aspect of the web works like this. HTML, CSS, and JavaScript are all open standards, with numerous implementations, including several that are open source. The simplest argument in favor of Flash support on the iPhone (and The Tablet, and everywhere) is that Flash is, by dint of its popularity and ubiquity, part of the web. But the best argument against Flash support is that it is harmful to the web as a whole to have something as important as video be in the hands of a single company, and the only way that’s going to change is if an open alternative becomes a compelling target for web publishers. It’s a chicken-and-egg problem. Publishers use Flash for web video because Flash is installed on such a high percentage of clients; clients support Flash because so many publishers use Flash for web video. Apple, with the iPhone, is solving the chicken and egg problem. For the first time ever, there is a large and growing audience of demographically desirable users who don’t have Flash installed. If you want to show video to iPhone users, you need to use H.264. Apple isn’t trying to replace Flash with its own proprietary thing. They’re replacing it with H.264 and HTML5. This is good for everyone but Adobe. And yes, I know Flash does much more than just play video. But that’s the main thing everyone is talking about when they talk about Flash not working on the iPhone — video. And when you talk about others uses for Flash, you’re talking about serving as a software runtime, and whether you like it or not, Apple has a clearly stated opposition to third-party software runtimes for iPhone OS, and that policy seems to be working out pretty well for them. Here’s an email I got from a DF reader: I was in line waiting for a coffee on Christmas day. In front of me was a kid, about nine or ten, who had an iPhone. He clearly had gotten it that morning. He was pushing frantically at a white box on a web page with the broken plug-in symbol. He was squeezing it, swiping it. He was frustrated and on the verge of getting pissed with his new toy. It seemed like he was trying to hit an online game page, probably one he was used to playing on the family PC. Finally I couldn’t take it anymore. I leaned over and said, “It won’t load Flash. It won’t play your Flash games.” His mom, ignoring him up to that point, was triggered by a stranger talking to her kid. “That’s okay honey,” she said, “we’ll get you a game from the App Store.” His response to this? He started working that device even harder. He didn’t want an App Store game; he wanted his Flash game. And that iPhone suddenly took a huge dive in value to him. Like it not, Apple needs to come to terms with this. If only for the kids. I think this anecdote, and this reader’s takeaway from it, accurately captures the feeling behind much of the “Apple has got to bend on this eventually” sentiment that’s out there. But think about it from Apple’s perspective. How do you think this situation turned out in the long run? Do you think the kid told his mom to return the iPhone for a refund? Or, do you think they went home and started buying games from the App Store? That there was a period of initial frustration due to Flash games not playing doesn’t change the fact that they (a) bought an iPhone and (b) were set to buy games from the App Store. I’m not arguing that Apple’s apparent executive-level antipathy toward Flash is about anything other than Apple’s own interests. (I do think, though, that Apple’s WebKit team is genuinely idealistic about helping the web as a whole.) But while Apple may be acting spitefully, they’re not spiting themselves. The iPhone’s lack of Flash has not hurt it one bit. Perhaps that will change in the future, if Flash someday proves popular on other mobile platforms, but don’t hold your breath. Flash Performance on Mac OS X In addition to the principled concerns outlined above regarding Flash being proprietary, there are also practical issues. One, Flash’s aforementioned crashiness on Mac OS X. Second, crashiness aside, its performance on Mac OS X is not as good as it is on Windows. And for video playback specifically, Flash’s performance pales compared to H.264 played through QuickTime. This is not subjective. My machine is a two-year-old MacBook Pro. It plays full-screen H.264 video through QuickTime without problem. When I play full-screen Flash video, my fan kicks in within a few seconds, every time. I’ve been hard on Flash Player for Mac OS X, but this performance situation is not entirely in Adobe’s hands. On Windows, Flash makes use of hardware decoding for H.264, if available. On Mac OS X, it does not. This is one reason why Flash video playback performs better on Windows than Mac OS X, and also why H.264 playback on Mac OS X is better through QuickTime (which does use hardware decoding). According to Adobe, though, this is because they can’t. Here’s an entry from their Flash Player FAQ: Q. Why is hardware decoding of H.264 only supported on the Windows platform? A. In Flash Player 10.1, H.264 hardware acceleration is not supported under Linux and Mac OS. Linux currently lacks a developed standard API that supports H.264 hardware video decoding, and Mac OS X does not expose access to the required APIs. We will continue to evaluate when to support this feature on Mac and Linux platforms in future releases. Adobe platform evangelist Lee Brimelow recently posted a weblog entry addressing this: But let’s talk more about the Flash Player on the Mac. If it is not 100% on par with the Windows player people assume that it is all our fault. The facts show that this is simply not the case. Let’s take for example the question of hardware acceleration for H.264 video that we released with Flash Player 10.1. Here you can see some published results for how much the situation has improved on Windows. Unfortunately we could not add this acceleration to the Mac player because Apple does not provide a public API to make this happen. You can easily verify that by asking Apple. I’m happy to say that we still made some improvements for the Mac player when it comes to video playback, but we simply could not implement the hardware acceleration. This is but one example of stumbling blocks we face when it comes to Apple. I’m aware of no reason to dispute this. Windows is more hospitable to a third-party runtime like Flash than Mac OS X. I think most would agree that Apple is an opinionated company (to say the least), and they make opinionated products. The runtimes Apple cares about are Cocoa and WebKit. The Apple way to play H.264 is through the QuickTime APIs (and really, as of Snow Leopard the new QuickTime X APIs), not to write your own H.264 playback code that seeks to directly access hardware accelerators. You can argue about why Apple has taken this stance. One could argue that it’s pragmatic — that Apple doesn’t allow third-party software access to things like hardware H.264 acceleration because it seeks to maintain a layer of abstraction between third-party software and the underlying hardware. One could argue that it’s political — that Apple is happy to make Flash look bad performance-wise because Flash is competitive with Apple in several different regards. (E.g. you may wish that Hulu, which is entirely Flash-based, worked on your iPhone and worked better on your Mac. Apple wishes that Hulu’s content was going through the iTunes Store.) I would argue that it’s both — that Apple’s distaste for Flash Player is both a matter of engineering taste (that third-party software should only have access to high-level APIs) and politics. But objectively, regardless of what you personally wish Apple would do with regard to Flash, if Adobe needs Apple to grant them further access to the hardware to make the Mac version of Flash Player better, what are the odds that they’d get that sort of low-level hardware access on the iPhone OS? (Hint: zero.) I’ll leave the last word to Apple COO Tim Cook, who a year ago said, “We believe in the simple, not the complex. We believe that we need to own and control the primary technologies behind the products we make, and participate only in markets where we can make a significant contribution.” Flash is owned and controlled by Adobe.
★ This Apple-HTC Patent Thing

There are two aspects surrounding Apple’s patent litigation against HTC that demand further consideration. First, the severe problems with the U.S. patent system as a whole, particularly with regard to software patents. Second, the strategic implications of Apple’s decision to file suit. Smart writers with first-hand experience with software patents have written much over the past few years on the system itself. Tim Bray, in particular, has written extensively on them, including his own experience obtaining them. I’ll quote here from one of his early pieces on the subject: Are Software Patents a Broken Idea? — I really don’t know. One of my brothers, an Industrial Designer, has his name on a patent for a device for mixing gases that’s used in chromatographs. When he showed me the filing, with the drawings and schematics and so on, I was impressed; these guys had cooked up a new arrangement of valves and geometries that did a practical task in an elegant and new way. It felt much more rigorous than the way we go about inventing new technology in the software space; but maybe that’s just because I’m way too close to the software world and can see all the warts on its underbelly. I’m inclined to think there’s a spectrum of reasonability in software patents. “One-click ordering” seems like a grievous error, simply because if you said those three words to any web-savvy ecommerce-savvy programmer, they’d say “OK” and build it for you and it would work; which doesn’t seem to meet a high enough bar to qualify as an invention. But consider the basic PGP setup by Phil Zimmerman, it’s just immensely clever and elegant. I have the feeling that that really does qualify as an invention in totally the same sense as my brother’s gas-mixing apparatus. Obviously I think the things I filed are closer to PGP than one-click ordering. In a later follow-up, Bray wrote: Does this mean that I’ve concluded that software patents are just fine, thank you, and the current rat’s-nest of litigation is good business practice? No; while I generally agree with Jonathan that the software-patent idea is not inherently broken (and thus disagree with Richard Stallman), the fact is that it’s almost impossible for rational people to have a rational discussion about software patents. The reason is the insanely-dysfunctional behavior of the US Patent and Trademark Office, whose idiotic willingness to grant patents on anything without regard for prior art or the obviousness test has totally poisoned the waters of this discussion. The result, as I’ve argued before, is that the net effect of the software-patent system is to serve as a parasitic tax by lawyers on businesspeople. Where I disagree with Jonathan is on what’s known as “business-method” patents: one-click ordering, per-employee pricing. I’m having trouble seeing the benefit to society in granting patents on something that could never possibly be done secretly. I also think that to get a patent, an invention should include innovation both in conception and implementation. The emphasis in the last sentence quoted above is mine. I’ve quoted extensively here from Bray because, having re-read his patent-related essays, I find myself in nearly complete agreement with him. I’m not opposed to idea of the patent system on general principal (as Stallman, and many others, are). And I think in many fields, the system has and continues to work well. But for software the system, in practice, is undeniably broken. There’s an argument to be made that software is inherently different than other field of invention, different in such a way that patents should not apply — or, should apply for a significantly shorter period of time before expiring. You can’t (or at least shouldn’t) be able to patent mathematics, and there are good arguments that programming is a branch of mathematics. But because software patents are granted, concede at least for the moment that certain kinds of software innovations ought to be patentable. Even with that in mind, clearly the U.S. Patent Office is and has granted patents for things which ought not be patentable. Not just silly frivolous things, but patents that have been granted for concepts alone, rather than specific innovative implementations of said concepts. Ideas in the abstract, rather than implementations of ideas. Paul Graham, who has also been awarded software patents, has written well on the subject, too: We, as hackers, know the USPTO is letting people patent the knives and forks of our world. The problem is, the USPTO are not hackers. They’re probably good at judging new inventions for casting steel or grinding lenses, but they don’t understand software yet. And: There’s nothing special about physical embodiments of control systems that should make them patentable, and the software equivalent not. Unfortunately, patent law is inconsistent on this point. Patent law in most countries says that algorithms aren’t patentable. This rule is left over from a time when “algorithm” meant something like the Sieve of Eratosthenes. In 1800, people could not see as readily as we can that a great many patents on mechanical objects were really patents on the algorithms they embodied. Patent lawyers still have to pretend that’s what they’re doing when they patent algorithms. You must not use the word “algorithm” in the title of a patent application, just as you must not use the word “essays” in the title of a book. If you want to patent an algorithm, you have to frame it as a computer system executing that algorithm. Then it’s mechanical; phew. The default euphemism for algorithm is “system and method.” Try a patent search for that phrase and see how many results you get. These arcane rules lead to patents being described in an obfuscated manner. That they are patenting algorithms but must pretend they’re patenting something else is the definition of a broken system. To me, “user interface” patents are hand-in-hand with “business method patents” as examples of things which, no matter how innovative or original, ought not be patentable. They’re idea patents. Adobe, to take one example, has a patent on tabbed palettes. If you’ve used Adobe apps like Photoshop, InDesign, or Illustrator in the past decade, you know what they are. Design applications have been using floating on-screen palettes all the way back to the original MacPaint in 1984. Unlike dialog boxes, they weren’t modal and “floated” over the document window. Unlike menus, they remained visible. They’re ubiquitous in design apps. One shortcoming, however, was that if you opened too many of them, you cluttered your screen — the more palettes you have open, the less room you have for displaying the document itself. Adobe came up with a great feature: they allowed you to dock multiple palettes together as tabs within a single palette window, and you could drag individual tabs between windows or drag them out into their own window. (Similar, at the palette level, to tabbed web browser windows.) Adobe patented the idea, and when Macromedia implemented a version of it, Adobe sued (and won — a measly $2.8 million). To me, that’s exactly the sort of patent litigation that is aimed at stifling innovation rather than rewarding it. Building on the ideas of others is fundamental to competition. No one company can or should be expected to change the entire U.S. patent system. Like any entrenched system with powerful entities who seek to maintain the status quo, we’re likely stuck with it. And so the way the computer industry has dealt with it is detente. Companies obtain as many patents as they can, written as broadly as they can get away with. And since everyone (where by “everyone” I mean all large tech corporations) has a large patent portfolio, and nearly every idea under the sun has been patented by someone to some degree, most of them are inert. Company A doesn’t sue Company B for infringing upon patents held by A because A’s own products almost certainly infringe upon some patents held by B. This why pure patent troll companies such as Nathan Myhrvold’s Intellectual Ventures are so despised. They’re immune from the threat of counter-suit because they have no products or services. Their only business is extorting patent licensing fees. The analogy to nuclear weapons is overwrought when considered literally, but in terms of strategy it’s quite apt. Paul Graham, on Amazon’s notorious “one-click” patent: Where Amazon went over to the dark side was not in applying for the patent, but in enforcing it. A lot of companies (Microsoft, for example) have been granted large numbers of preposterously over-broad patents, but they keep them mainly for defensive purposes. Like nuclear weapons, the main role of big companies’ patent portfolios is to threaten anyone who attacks them with a counter-suit. Amazon’s suit against Barnes & Noble was thus the equivalent of a nuclear first strike. That suit probably hurt Amazon more than it helped them. Barnes & Noble was a lame site; Amazon would have crushed them anyway. To attack a rival they could have ignored, Amazon put a lasting black mark on their own reputation. Even now I think if you asked hackers to free-associate about Amazon, the one-click patent would turn up in the first ten topics. Which brings us to Apple and HTC. Regardless of the merits of all 20 of the patents Apple accuses HTC of violating, strategy-wise the comparison to Amazon and Barnes and Noble seems apt: Apple has the clearly superior product and is winning handily in the marketplace. Whatever benefit in the market Apple hopes to achieve by this suit to me seems likely to be worth far less than the loss of good will and prestige Apple will suffer if they vigorously pursue this case (let alone if they initiate more such suits). Wil Shipley, in an open letter to Steve Jobs regarding the HTC litigation: You’ve famously taken and built on ideas from your competitors, as have I, as we should, as great artists do. Why is what HTC has done worse? Whether an idea was patented doesn’t change the morality of copying it, it only changes the ability to sue. […] If Apple becomes a company that uses its might to quash competition instead of using its brains, it’s going to find the brainiest people will slowly stop working there. You know this, you watched it happen at Microsoft. Copying ideas is how progress is made. It’s copying implementations that is wrong (and illegal). Admittedly there are gray areas, and reasonable people can disagree about whether some specific instances cross that line. But HTC’s phones are not copies of the iPhone. The Nexus One is without question highly influenced by the iPhone, both in terms of physical form factor and the Android software from Google. But it is also without question not a clone. My favorite theory thus far regarding why Apple is suing HTC is expressed entirely in this tweet from John Siracusa: To me, the Apple patent suit smells like nothing more than a manifestation of Jobs’s own sense of injustice. I.e., Jobs is offended by HTC’s products, not worried about them. I can understand the indignation, or at least imagine that I can. Apple’s press releases tend to be remarkably terse and plainspoken, at least by the standards of modern corporate communication. And when Jobs is quoted in them, the words are carefully chosen and meaningful, worthy of being carefully parsed1 — not at all like the bromides attributed to CEOs from most companies in most PRs. The PR announcing these suits against HTC is no exception: “We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it,” said Steve Jobs, Apple’s CEO. “We think competition is healthy, but competitors should create their own original technology, not steal ours.” That’s not the language of a licensing dispute or the beginning of a polite negotiation. That’s the language of a man aggrieved. During Jobs’s iPhone introduction keynote address in January 2007, before showing what the iPhone looked like, Jobs put up this slide showing four of the then-leading smartphones on the market: the Motorola Q, a BlackBerry, a Palm Treo, and the Nokia E62. Those pre-iPhone smartphones Jobs displayed all shared the same fundamental design: half-screen, half keyboard, and an up/down/left/right navigation controller. Now look at this prototype Android phone Gizmodo spotted in December 2007 — 11 months after the iPhone introduction. Android was conceived of that same old model — the prototype Gizmodo found in December 2007 would have fit perfectly alongside the other four phones in Jobs’s keynote slide. The gaping chasm between that Treo-ish/BlackBerry-ish prototype Android device and the HTC G1 that went on sale a year later (let alone the Nexus One today) was bridged by ideas from the iPhone. The iPhone introduced a new model. A true great leap forward in the state of the art. Not a small screen that shows you things which you manipulate indirectly using buttons and trackballs occupying half the device’s surface area, but instead a touchscreen that occupies almost the entirety of the surface area, showing things you manipulate directly. Android is a far better platform today than it would have been if Apple had never created the iPhone. That, in some sense, is not fair. I think Siracusa is exactly right that Jobs has a particularly acute sensitivity to this sort of unfairness. This litigation, perhaps then, isn’t about particular specific patented components, but rather is about the big idea, the general gist and grand ambition of the iPhone as the basic model for how modern mobile devices should be designed and work. No doubt some of you are nodding your heads and see this as justification for Apple’s suit. But life isn’t fair. Great ideas make the world better. Apple can rightly expect to benefit greatly from the ideas embodied by the iPhone, but they can’t expect to reap all of the benefits from those ideas. That’s the nature of implementing insanely great ideas. The bar has been raised, and, yes, Apple did most of the lifting. That’s how it goes. Paul Graham, yesterday: If this had happened a day earlier I don’t think I would have posted that RFS. Apple is inching ever closer to evil, and I worry that there’s no one within the company who can stand up to Jobs and tell him so. “That RFS” is the request for iPad software startups from Graham’s Y Combinator, and lest you think “evil” is too overwrought a word, Graham clarified later in the same thread: Historically the word “evil” has had a pretty broad meaning. Among tech companies the word has a new and fairly specific sense that follows from Paul Buchheit’s slogan “Don’t be evil.” That’s the sense I was using. It has a pretty low bar. It means, roughly, winning by taking advantage of people instead of by doing good work. I wouldn’t use the word evil this way, but I’m right there with Graham on this sentiment. And I say this not in any sort of hippy-dippy sense of expecting or even hoping for Apple to behave selflessly, holding them to a separate idealistic standard, or expecting them to fight with one arm tied behind their corporate back. And only a fool would argue that a company should never seek redress through litigation. But I believe that it’s good business, in the long run, for a company’s acts of aggression to take place in the market, not in the courts. My concern regarding this litigation against HTC is that it looks like an act of competitive aggression, not defense. I can think of only a few optimistic angles for this suit. One is that perhaps it’s a by-product of the suit Apple is engaged in against (and initiated by) Nokia. Apple’s counter-suit against Nokia involves some of the same patents at play here, and perhaps Apple’s lawyers have concluded that they need to enforce them against someone like HTC in order to use them in their counter-suit against Nokia. Or, perhaps one or more of the truly technical patents Apple has cited against HTC are genuine instances of intellectual property theft, the specific nature of which is unclear from the opaque language of the patent filings, and the rest of the cited patent violations were tacked on as part of a legal strategy along the lines of “If you’re going to punch them, punch them as hard as you can”. I.e. that they’ve filed suit as widely as they can, but have specific narrow violations in mind. What worries me is that idea that Apple, or even just Steve Jobs, believes that phones like the Nexus One have no right to exist, period, and that patent litigation to keep them off the market is in the company’s interests. I say it’s worrisome not because I think it’s evil, or foolish, or unreasonable, but because it is unwise, shortsighted, and unnecessary. For example, consider the timing of this PR Apple released early in the morning on January 5, announcing the three-billionth download from the App Store. Jobs is quoted thus: “The revolutionary App Store offers iPhone and iPod touch users an experience unlike anything else available on other mobile devices, and we see no signs of the competition catching up anytime soon.” January 5 was the day Google held its event to unveil the Nexus One.�↩
★ Microsoft’s Competition for Windows 7

Ignore his upfront needling against straw-man “Mac fanboys”, and Joe Wilcox makes a good point in this piece about what Microsoft’s competition is for Windows 7: Windows 7’s biggest competitor will be Windows XP, which runs on about 80 percent of PCs, according to combined analyst reports. Microsoft’s first challenge will be getting XP users to move up to Windows 7. Mac market share was 7.6 percent in the United States in second quarter, according to IDC. (Gartner and IDC should release Q3 preliminary numbers in the next couple of days.) (Those numbers just came out, and the Mac numbers are up year-over-year.) Mac share is inconsequential to Microsoft compared to Windows XP. My prediction: Windows 7 will slow Mac share gains, which already declined over the last three quarters, according to both Gartner and IDC. We’ll see about that prediction, but I think Wilcox is spot-on that Windows 7’s primary competition is XP. Microsoft really does worry first about raw market share, and XP is the market leader by a long shot. Such comparisons against the Mac are apples-vs.-oranges, though, because Apple isn’t concerned about overall market share. They’re concerned about sales only in the middle-to-high end of the market, and hardware profit share. Apple sells computers, not OS licenses, and their share of the profits in the U.S. computer market is somewhere north of 25 percent. (Maybe way north.) But so even if it’s true that Microsoft isn’t concerned with Apple’s growing market share (which indeed is just a few single percentage points), is there any doubt that PC hardware makers are very much concerned about Apple’s growing profit share? But so here’s a thought: What if the reason why most PCs are still running XP has nothing to do with whether Vista is “good” or “bad”, but rather is the result of indifference on the part of whoever owns these untold millions of XP machines, be they at home or in a corporate IT environment. I.e., that switching to Vista, regardless of Vista’s merits, seemed like too much work and too much new stuff to learn; that the nature of the PC as a universal commodity is such that most of them belong to people who value “old and familiar” more than “new and improved but therefore different”. If that’s the case, Windows 7 may not do any better than Vista. Perhaps Windows 7’s competition isn’t so much XP as it is apathy. Put another way, the idea that Windows 7’s quality will spur upgrades from XP is predicated on the fact that the people holding out on XP make their computing choices based on quality. But if that’s the case, why exactly are they still running Windows XP? Why are they still using Internet Explorer? I think it’s hard to overstate the fact that, with the explosion of the Internet as a universal communication medium, hundreds of millions of PCs have been purchased around the world by people who don’t care about computers or software at all. Maybe that’s way off. Maybe the problem with Vista is really just the general mainstream perception that it was a dud release, and if the idea spreads that Windows 7 is a good release it’ll trigger an avalanche of upgrades from XP. That’s really the best case situation for Microsoft, and I think it’s entirely plausible. The truth is that no one really knows why Vista fared so poorly in the market. It defies a simple explanation. It’s worth noting that Apple isn’t dampening expectations regarding Mac sales in the run up to Windows 7’s debut next week. Quite the opposite: Peter Burrows at BusinessWeek yesterday published an interview with Phil Schiller wherein Schiller makes the case that Apple will benefit from Windows 7: The Cupertino (Calif.) company sees Windows 7 as its best chance in years to win over longtime PC users. Millions of PC owners are expected to head to stores over the next year to replace their aging machines. The surge is expected to be unusually large because Microsoft’s last operating system, Vista, was so poorly reviewed that many people simply stuck with machines running the eight-year-old Windows XP system. In the coming weeks, Apple is expected to hit those computer buyers with advertising aimed at luring them to its Macs. It will likely make the case that Macs are less susceptible to viruses and are best suited to its popular iPods and iPhones. And look for it to poke fun at Microsoft for making XP owners go through an arduous process to upgrade to Windows 7 — one that includes backing up all their files to an external drive, reformatting their PC, and then reinstalling all of their old programs, assuming they still have the CDs. “Any user that reads all those steps is probably going to freak out. If you have to go through all that, why not just buy a Mac?” says Schiller. You might be tempted to argue, Well, of course Phil Schiller would say that, he’s Phil Schiller. That’s true, insofar as that even if Schiller believed that Windows 7 is going to adversely affect Mac sales, it’s not like he’d admit so in an interview. And clearly, in obvious ways, it would be better for Apple if Windows 7 were garnering bad reviews. But the gist of Schiller’s remarks isn’t that he expects the Mac to hold its own, but rather that he expects the Mac to continue to thrive. Why set such an expectation if he didn’t believe it? This gets to the heart of the weird, orthogonal, indirect competition between Windows and Mac OS X. Yes, they compete. Yes, it is both fair and inevitable that Windows 7 will be compared against Snow Leopard in every review. But Microsoft is selling licenses to an OS, the majority of them for low-end PC hardware. Apple is selling computer hardware, none of which is in the low-end market. So it’s entirely possible that Windows 7 will be good for both Microsoft and Apple. The Mac can continue to gain a few percentage points per year in the higher-profit premium range of the market, while at the same time Windows 7 could grab a majority share of the overall market, mainly at the low-cost high-unit-sale end of the market. In fact, that’s pretty much exactly how I expect it to play out.
★ The Phone Company

For a long time — the entire decade of the ’90s and the first few years of this decade — the story of Apple was the story of a company searching for a way to be something other than “the Mac company”. From a financial perspective of revenue and profit, the Mac was Apple, and Apple was the Mac. This was problematic on two fronts. First, it was an “all of their eggs in one basket” scenario. If the Mac had sunk, the company would have gone under. Second, the potential for growth was severely limited by the fantastic success of Windows. The iPod was Apple’s first breakthrough success after the Macintosh. During some quarters in recent years, iPod revenue has run even with or (in holiday quarters) exceeded Mac revenue. The iPod solved both of the problems Apple faced as “the Mac company”: its eggs were now divided between two baskets, and they’d entered a field with room for significant growth. Last year, immediately after its debut, Steve Jobs began describing the iPhone as the third leg of the company. The numbers Apple released yesterday for its fourth quarter of financial year 2008 (July through September) back this up. The main thing you must keep in mind regarding Apple’s reported numbers for the iPhone is that they’re using subscription-based accounting for it. When you buy a Mac or an iPod today, Apple reports the entire sale as revenue for this quarter. When you buy an iPhone today, however, Apple reports the revenue split evenly over eight quarters. Apple’s interpretation of U.S. accounting regulations is that this is only way they can provide free feature upgrades over the course of two years. That’s why iPhone OS 2.0 was a free update for existing iPhone owners, but a paid update for iPod Touch owners. In the long run, Apple doesn’t make any more or less money from this. It’s just a method of accounting for the money they have made. (Indirectly, Apple clearly hopes that it helps sell additional iPhones, on the grounds that people enjoy getting “free” OS upgrades.) But in the short run, Apple’s iPhone revenue and profit are underrepresented in the company’s quarterly results — only one-eighth of the revenue from iPhones sold during the just-completed quarter appear in the quarter’s results. It also makes the iPhone numbers hard to compare against those of the Mac and iPod. So, Apple is now providing two sets of quarterly numbers. First, GAAP results with subscription-based accounting for iPhones and Apple TV. (GAAP stands for Generally Accepted Accounting Principles.) Second, a new set up numbers — non-GAAP results — which, more or less, show what Apple’s quarterly numbers would look like if they weren’t using subscription-based accounting for the iPhone and Apple TV. Here’s what Apple CFO Peter Oppenheimer said during his opening remarks of yesterday’s analyst conference call: As we reported in our press release, iPhone unit sales grew significantly in the September quarter, resulting in a material increase in the amount of iPhone revenue and product costs that had been deferred for recognition in future periods. Specifically, deferred revenue from iPhone and Apple TV sales grew to $5.8 billion at the end of the September quarter, an increase of nearly $3.8 billion from the end of the June quarter. If iPhone revenue was not deferred, iPhone would have represented 39% of Apple’s revenue in the September quarter. This means, I think, that Apple generated more revenue last quarter from iPhone sales than from either Mac or iPod sales. The iPhone, just 15 months old, is perhaps already the strongest of the company’s three legs. And it’s not like iPod or Mac sales are down — compared to the year-ago quarter, Mac sales are up 21 percent in terms of units and 17 percent in terms of revenue, and iPods are up 8 percent in units and 3 percent in revenue. And in terms of the momentum of the iPhone OS as a platform, keep in mind that the iPod Touch is put on the books as an iPod, not an iPhone. (And Apple does not break those “iPod” numbers out into specific models; no one other than Apple’s top executives know exactly how many iPod Touches have been sold.) Steve Jobs rarely appears on Apple’s quarterly analyst calls. I’m pretty you can count on one hand Jobs’s appearances on these calls over the last 10 years. Typically, Jobs has appeared when Apple has bad news to announce. (His appearance yesterday seems to have been about addressing Apple’s plans for weathering the current worldwide economic downturn.) Here’s what Jobs had to say in his prepared remarks regarding Apple’s revenue and profit from the iPhone: As you can see, the non-GAAP financial results are truly stunning. By eliminating subscription accounting, adjusted sales for the quarter were $11.68 billion, 48% higher than the reported revenue of $7.9 billion, while adjusted income was $2.44 billion, 115% higher than the reported net income of $1.14 billion. Adjusted net income that is more than double our reported income — if this isn’t stunning, I don’t know what is, all due to the incredible success of the iPhone 3G. I would like to now highlight two remarkable milestones resulting from iPhone’s outstanding performance last quarter. The first is that Apple beat RIM. In their most recent quarter, Research in Motion, or RIM, reported selling 6.1 million BlackBerry devices. Compared to our most recent quarter sales of 6.9 million iPhones, Apple outsold RIM last quarter and this is a milestone for us. RIM is a good company that makes good products and so it is surprising that after only 15 months in the market, we could outsell them in any quarter. But even more remarkable is this — measured by revenues, Apple has become the world’s third-largest mobile phone supplier. I know this sounds crazy, but it’s true — as measured in revenues, not units, Apple has become the third largest mobile phone supplier. Let’s look at the ranking — Nokia is clearly number one at 12.7 billion; Samsung number two at 5.9 billion; Apple is number three at 4.6 billion; Sony Ericsson, number four at 4.2; LG, number five at 3.4 billion; Motorola, number six at 3.2; and RIM number seven at 2.1. Pretty amazing. So, last quarter: (1) the iPhone was a bigger revenue and profit generator than either the iPod or Mac; (2) Apple sold more iPhones than RIM sold BlackBerrys; and (3) Apple trailed only Nokia and Samsung in worldwide mobile phone handset revenue (and they’re not far behind Samsung). Jobs followed with this caveat: Now, both of these things, beating RIM in units and becoming the third largest mobile supplier in revenues are amazing feats but part of this was the result of expanding into over 50 countries and there’s no guarantee that sustained sales will equal initial sales. And who knows what the future results will be, given the worldwide economic slowdown but we actually outsold RIM last quarter and ranked as the third largest mobile phone supplier in revenues. Not bad for being in the market for only 15 months. He’s right that no one knows what the results will be for the current quarter (which start three weeks ago, and runs through the end of December) — but we can make an educated guess. Because it encompasses the entire holiday season, Apple’s October-December quarter has always been the strongest for iPod sales. A year ago, iPod sales went from 10.2 to 22.1 million from Q4 (Jul.–Sep.) to Q1 (Oct.–Dec.). Two years ago, they went from 8.7 to 21.0 million. Three years ago, 6.5 to 14.0 million. In terms of a multiplier, that works out to 2.17, 2.41, and 2.15, respectively. I.e., Apple consistently sells a little more than twice as many iPods in the holiday quarter than in the preceding quarter. We only have one year of data for the iPhone. Last year, Apple sold 1.1 million iPhones in Q4 2007. It went on to sell 2.3 million iPhones in Q1 2008 — a multiplier of 2.09, very much in line with previous years of holiday-quarter iPod sales. So, it seems quite possible that Apple could sell twice as many iPhones during the current quarter as it did in the just-reported quarter. If they did, that would be 13.8 million iPhones. Even if they fall short of that mark, they seem poised to sell about 20 million iPhones in calendar year 2008 — more than double their oft-stated goal of 10 million. Many analysts doubted that 10 million iPhone goal for the year; Apple might in fact sell 10 million iPhones in a single quarter. Even if sales are flat in the current quarter, it seems almost certain they’ll sell more than 10 million units in the first six months after the iPhone 3G went on sale. As for where this growth positions the iPhone industry-wide, recall Microsoft’s projections for Windows Mobile licenses this year: The warning signs were there. After boldly proclaiming that it would sell “more than” 20 million licenses to its Windows Mobile operating system by the end of its fiscal year on June 30, Microsoft later scaled that prediction back to “nearly” 20 million units. This week, however, the software giant conceded it did not hit its target: The company sold just 18 million units in the fiscal year. So not only is Windows Mobile growth significantly slower than what Microsoft had publicly anticipated, but the iPhone seems set to surpass unit sales of all Windows Mobile phones combined next year. In fact, given that Apple acknowledged during yesterday’s conference call that, including October sales to date, they’ve already surpassed 10 million iPhones sold for calendar year 2008, the iPhone may well already be outselling all Windows Mobile phones combined. The entire iPhone platform is only 15 months old. The cheapest model still costs $199. The room for growth in this market is unlike anything Apple has ever seen. So the question is: Despite continuing strong iPod sales and record-breaking Mac sales, how long until the iPhone is undeniably the primary product and platform made by Apple? My answer: Not long. And I think Apple’s executive team sees it the same way.
★ Macworld Expo Predictions

Predictions and advance commentary for tomorrow’s Macworld keynote, some based on consensus rumors, some based on no more than wishful thinking on the part of yours truly. This is all conjecture and tea-leaf-reading (well, mostly), so, please, no wagering. I keep two questions in mind when evaluating Apple product ideas: Would people run out to stand in line to buy this immediately? If not, is there a long-term strategic reason for Apple to start selling this now? If the answer to both questions is “no”, then Apple isn’t going to do it. The iPhone is a perfect example of a #1; the Apple TV is a #2. New Sub-Notebook MacBook: Yes Apple hasn’t had a small notebook in its lineup since the 12-inch PowerBook G4, which I still see in wide use. If you’re using a portable as a portable, smaller size and lighter weight make a tremendous difference. The demand for a good notebook smaller and lighter than standard MacBooks is strong; I think it’s a sure thing that Apple is set to announce one. (Of course, I said so before last year’s Macworld, too.) I say the consensus rumors are right: super-thin, no built-in optical drive, widescreen 12-inch display. It will use a hard drive, not flash memory, for storage. (Look no further than the iPod Classic to see how hard drives don’t keep a device from being super-thin). Rumors are already running strong that it’ll be called MacBook Air. (I like it, not sure though if Nike would.) Newton-y Tablet Thing: No I am nearly convinced that this product exists, at least as a project in development. My hunch is that AppleInsider has it spot-on: it’s in development, but not yet ready to launch, and, perhaps, never will if Apple can’t get it right. (Recall Steve Jobs’s statement to Walter Mossberg that he’s as proud of some of the products Apple decided not to ship as he is of the ones they did.) Like the iPhone, it runs “OS X” but not Mac OS X, does not run Mac apps, and will not be called a “Mac”. The big problem with a “tablet” computer of any sort is that 15 years of industry history indicate that people do not want to buy tablet computers. But the iPhone, arguably, is a tablet computer — a sub-tablet, if you will. The key mistake with failed efforts like Microsoft’s Tablet PC (and even Apple’s own Newton) was that these devices attempt to do too much. It’s seen as a feature that Tablet PCs run the full version of Windows. But why force software UI’s designed for traditional hardware form factors upon a totally different device? A successful tablet-like device from Apple, I think, would clearly be designed as a secondary computing device — a satellite attached and synched to a Mac or PC (probably, of course, through iTunes). There’s still the “what would I use it for?” factor. It seems to me it would need to be something more than just an iPod Touch with a larger screen — if that’s all it is, then what’s the point of buying one instead of a smaller, poctetable, iPod Touch or iPhone? I simply lack the cleverness to imagine what that hook might be — but I can’t imagine Apple releasing such a product without an obvious “Oh I gotta buy that” hook. Anyway: I do think something like this is in the works, but I don’t think it’s coming out now. I’d love to be wrong. Ubiquitous Wireless Networking for MacBooks: Please After using my iPhone for a few months, it started feeling weird that my PowerBook doesn’t have ubiquitous wireless networking: Wi-Fi when available, and seamless, instant switchover to something else when it isn’t. Just what that “something else” is, I don’t know. EVDO? WiMax? A Bluetooth connection to share an iPhone’s EDGE connection? I don’t care. But I’d pay for it. Ubiquitous networking is certainly the most intriguing thing about Amazon’s Kindle. It just feels crippled that I can’t get a network connection — even a slow one — once I’m outside the range of Wi-Fi. Wireless Time Machine Backups: Yes Time Machine is very cool; the first backup that qualifies as “you don’t have to do anything, it just works”. But currently it only works using a storage device connected via USB or FireWire. Tethered backups are irritating with notebooks — and MacBooks are the fastest-growing segment of Apple’s Mac hardware sales. The problem is that when you want to use your portable away from your desk, it’s a pain to disconnect mounted USB and FireWire drives. You can’t just pulled the plugs — you’ve got to unmount them in the Finder first. And, once you do so, to get Time Machine backups running again, you’ve got to re-tether your storage drive. Leopard developer seeds all supported network backups to USB drives connected to an AirPort base station. The feature was also demoed at WWDC. It was removed (or, better said, disabled) very late in Leopard’s development, supposedly because of a security problem that was discovered, but I expect the feature to return, perhaps in 10.5.2. It’s a terrific idea, perfect for multi-Mac homes and small offices. But so why not sell a device as a dedicated product — a big 500 GB or larger hard drive (or array of them) with built-in AirPort networking. No need to attach it to a separate AirPort base station, no temptation to use the device for anything other than one purpose: backing up via Time Machine. Just plug it into a power outlet, run through a simply configuration tool a la AirPort Utility, and it’s ready. When it first appears on your network, your (Leopard-running) Mac could prompt to ask if you’d like to use it for Time Machine, the same way it prompts when you first plug in a new USB or FireWire drive. iTunes Movie Rentals: Yes This one seems like such a done deal that it barely qualifies as a rumor. It seems obvious: Unlike with music, there’s been a strong market for movie rentals for as long as there’s been a home video market. Most movies aren’t worth watching more than once. Reports (based on leaks from studio executives) indicate rentals will cost $3-5, and will expire after 24 hours. If true, presumably that means they’ll expire 24 hours after you beginning playing them, not 24 hours after downloading. It’d be nice if the terms were a bit more flexible than that. One of the best things about Netflix, and something which makes it far more appealing than traditional brick-and-mortar Blockbuster-style rentals, is that you can watch movies on your own terms. A Netflix-style iTunes movie subscription service that lets you keep a certain number of unlocked movies open at the same time would be killer. Apple TV 2.0: Yes Jobs has called Apple TV a “hobby” for Apple. I think they have high hopes for it, but calling it a hobby is a practical way to buy time for it. What Apple did with the iPod was start as small and simple as they could — one device, in one configuration, only for the Mac, and all it did was play recorded audio — and then build the platform slowly from there. Things like Windows support, color screens, video playback, and expanding to a range of form factors all came incrementally. I think that’s the plan with Apple TV. Start simple and humble, and build from there, year after year. One obvious improvement (albeit contingent upon another rumor) would be to allow us to buy (or rent) movies and TV shows directly from the iTunes Store, right from the Apple TV. If the iPhone can do it, the Apple TV should too. I still think it’d be good business for Apple to sell their own HDTV sets with Apple TV built-in — more money for Apple, one fewer device spewing cables behind the display. DRM-Free iTunes Plus Music From the Other Major Music Labels: No I think Apple would love to have this, but it seems pretty clear that the major labels — other than EMI, of course — are convinced that it’s in their interest to withhold DRM-free music from Apple, in the hopes of helping Amazon gain market share. It actually agree that it’s in the music labels’ interest for Amazon’s music store to succeed. I’m not sure, though, that withholding DRM-free music from Apple is spiting anyone other than iTunes customers. I suspect the vast majority — an overwhelming majority — of iTunes music purchases are made by people who have at best only a vague inkling of what “DRM” is. If there’s any actual logic to it, it’s PR — withholding DRM-free music from Apple makes it easier to paint Apple as a company bent on using iTunes as a competitive cudgel to lock customers in to iPod hardware. Only a hack reporter would buy into that line, given Steve Jobs’s unequivocol “Thoughts on Music” open letter last year. One thing that would dispel any negative stories on the state of the iTunes empire, of course, would be the long-awaited debut of The Beatles catalog, exclusively at iTunes, perhaps with an on-stage visit from Paul McCartney. New iPhone Hardware: No, With a Minor Exception Apple announced the original iPhone a year ago, but they didn’t ship it until six months ago. They’re not going to announce new iPhones six months in advance again. (It was to their advantage last year to cause people to postpone phone purchases until the iPhone appeared; that’s not the case now that the iPhone is on the market.) If anything, I don’t expect new iPhones to appear until next fall, at the yearly iPod/iTunes pre-holiday season special event, leaving the original iPhone on the market for over a year. Why revise hardware for a product that, by all accounts, is selling remarkably well as-is? The only exception I could see would be a 16 GB iPhone that’s otherwise unchanged from the current 8 GB model. iPhone SDK News: No I can see the upcoming iPhone SDK getting a mention from Jobs on stage, a reminder that it’s coming and that’s it’s going to be great, but Macworld isn’t WWDC, and SDKs don’t make for splashy presentations. If I’m wrong, it’ll be because they have a demo queued up from a third-party developer with early access to the SDK. Actual third-party software (written against the actual official SDK) is demoable. Games, perhaps? The apparently-leaked 1.1.3 firmware might make for a good demo, what with the jiggly icons and whatnot. Cinema Displays With Better Resolution, Brighter Screens, and Built-In Cameras: Yes If I keep predicting it, eventually I’ll be right.

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