Pocket Watch

Proposed iPhone 5 Design.

That is just plain funny.

Seriously, Apple could use a bit of media training in how to handle a crisis.  The sequence of responses from Apple around their defective antenna design are less than ideal:

First, Steve Jobs sends one of his famous terse email saying “don’t hold it like that”.  You do have to give kudos to a CEO who chooses to respond to any customer emails, but that isn’t the best way to address a verified problem.

Then, Apple says the “formula we use to calculate how many bars of signal strength to display is totally wrong“, not that there is any actual signal attenuation.  Apple gets points for apparent candor in their willingness to ‘fess up.  But, their assertion that it is just an issue with how many bars are shown is inconsistent with the published reports showing that the bandwidth delivered to the phone is affected dramatically by how is it held (see Speed Test image below).

Now, even the staid Consumer Reports is slamming the iPhone 4 over the antenna attenuation issues.  And Apple’s response is to start deleting threads on their tech-support forums referencing the Consumer Reports’ negative review.

Perhaps, this is a time for Apple to recognize their changed role in the world.  As the most valuable tech company in the world, they are held to a higher standard than others.  That may not be fair, but it is reality.

Declining connection bandwidth for iPhone 4 depending on how it is held. Left to right: not being held; held in leather case; held bare-handed.

With Capital Efficiency, Entrepreneurs can focus on building what customers want, rather than what VCs want to fund.

In addition to Democratizing the Startup Process, Capital Efficiency drives another important improvement in the startup model: Entrepreneurs are largely freed from the tyranny of building what the VCs want to fund.

In the traditional startup model, step one is for the entrepreneur to raise venture money.  Pragmatic Entrepreneurs want to know what the VCs want to fund, because it is much easier to sell a VC on an idea/category/business model that they have already decided they like.   This is a significant contributing causal factor for all the reporting and cocktail party chatter around what VCs are interested in/funding now.  This echo chamber effect causes some big problems, systemically reducing the chances of startup success through two mechanisms:

(1)  The world ends up with multiple copycat companies pursuing essentially the same business idea.  These companies engage in infant fratricide, wasting money, time, and market opportunity, in the process.

(2)  In an effort to “anoint a winner”, some VC funds will put much more money into the number two or three player in a space on the hopes that they can leapfrog into the number one spot.  Most of this “extra” money is spent inefficiently at best; poured down the drain at worst.

But, Capital Efficiency changes this.  Since Entrepreneurs don’t need to seek VC money as step one in the process (step one is put product into the market, since it’s so cheap to do), they don’t need to try to read the VC groupthink tea leaves regarding what is hot today.  Instead, they can follow their own market knowledge/intuition to build something the world really wants.  I humbly submit that we’ll all be much better off with this approach.

It makes sense for the next new iPhone to support NFC mobile payments.

I know we haven’t even held the fourth generation iPhone in our hot little hands yet, but I was thinking about what Apple should put in the next new iPhone, and it seemed obvious that adding NFC to enable mobile payments for real world purchases made perfect sense.  Then, when I saw today’s announcement regarding the acquisition of Innovision by Broadcom, that solidified my belief that this must be coming down the pike.

Mobile payments are a wonderful idea — pay for modestly priced items in the real world by just putting your phone up to a reader.  It’s gotten some traction in Japan, but it’s failed to see widespread adoption, because it is so darn hard to get the multiple players in disparate ecosystems to act in concert.  You need:

(1) The handset vendors to put the NFC chips, and supporting software, into a critical mass of phones.

(2) The mobile operators, who generally subsidize the phones, to enable the payment mechanism (or, in an unsubsidized ecosystem, you need a banking partner to enable the payment mechanism).

(3) A critical mass of merchants to install point of sale systems to use the same NFC system as the phones have.

(4) A critical mass of users to actually use the system to pay for things.  Making the use of mobile payments be “easier than cash” is a necessary, but not sufficient condition.

Getting all four of those to move in concert has proven to be an insurmountable barrier to date.  BUT, Apple is in the perfect position to pull it off!  Let’s take the each of the items above in turn.  Apple doesn’t have to convince anyone other than themselves that they should put the NFC chips, and supporting software, into the phones.  Apple already has iTunes as a payment mechanism for the majority of iPhone users.  If anyone can leverage their brand to convince merchants to do something, it has to be Apple.  And, with the rabid Apple enthusiast fan base, they will get a lot of early adopter end users to give the system a try.

Apple is likely the only company on the planet (outside of Japan) that has the ability to pull this off.

I can only think of one reason why Apple might choose NOT to do it.  The only way that Apple can recruit a critical mass of merchants to install the NFC point of sale systems is to go (quasi) public with the effort long before the launch, and Apple hates to go public with anything before a launch.  Of course, given the impressive pre-order rate for the fourth generation iPhone — despite the phone getting leaked a couple of months ago — maybe they should rethink that stance (heck, maybe they should be cutting some affiliate marketing checks to Gizmodo for creating so much demand).

Denying Fragmentation is an issue for Android isn't going to help address that real and growing issue.

Dan Morrill, Open Source & Compatibility Program Manager at Google posted a couple of days ago On Android Compatibility saying, essentially that Fragmentation is a non-issue on Android, and it has been trumped up into being an issue by bloggers/pundits looking to drive traffic.

While I am a big fan of Android, I have to respectfully disagree with Dan.  ”Fragmentation” is a real issue if (1) it takes noticeably more development resources to support the multiple instantiations, and/or (2) end-users have to become hardware platform aware in knowing whether or not a particular piece of software will work on their device.

Re (1).  I don’t know which developers Dan is talking with, but the small (less than 10 developers) companies I talk with complain vociferously about the extra resources it takes to develop, test, and debug for the various Android handsets out there.  Often, it is a problem of simply getting access to the handsets before they go into the market.  Of course, one has to expect some overhead associated with supporting multiple devices, but the current level is legitimately concerning to developers–especially as they look at all the new Android devices coming to market in the foreseeable future.

Re (2).  If you want to know whether or not Fragmentation is an issue from the end-users perspective, just spend some time reading the user reviews of anything other than the top apps.  It has become fairly common practice for end users to list what handset they are using the app on, because it is widely recognized as being a key determinant as to whether or not a particular app will work.   (Dan uses the example of an app using the camera not working on a device without a camera, which is sort of a customer-intelligence-insulting example.)

I’m not saying that the Android team isn’t going to heroic lengths to attempt to avoid Fragmentation, but Denial is generally not a good approach to dealing with a real problem.  Let’s not have a repeat of the Java fragmentation tagline: “Run Once, Debug Everywhere.”

AdMob released their April 2010 Mobile Metrics Report today.  The Android Catching iPhone trend continues, and seems likely to accelerate over the next couple of months, as folks wait for the next gen iPhone.  In the Android-iPhone universe, Android now represents 37% of worldwide AdMob ad requests.  Earlier this month, NPD reported what we were all expecting: Android handsets outsold iPhone in the US in Q1, 2010.

In April, Android represented 37% of AdMob ad requests from Android and iPhone.

Interestingly, Symbian has seen some noticeable increase in ad requests over the last couple of months.  If anyone has some insight into that, please do let me know (or post a comment here).

Yesterday, AT&T Mobility said that they were shocked, shocked! at T-Mobile USA calling HSPA+ “4G”, instead of waiting to affix that name to an LTE protocol network.  OK, fine, it’s their job to complain about stuff like that.  But, what I don’t get is, why kick sand in the face of the 34 million subscriber T-Mobile, while letting 93 million subscriber Verizon make a mockery of AT&T with their Red and Blue 3G coverage maps?

Verizon Picks "Interesting" 3G Definition.

If you look at the definitions for the construction of the maps, Verizon has defined “3G” for AT&T Mobility as HSPA only, despite the fact that the International Telecommunications Union includes EDGE in their definition of “3G”.  The ITU is part of the United Nations, for goodness sake — if they don’t transcend petty capitalist squabbling, I don’t know who does.  And, look at who Verizon takes their definition of 3G from: the vendor who sold them the protocol, Qualcomm, which sounds like the fox guarding the chicken coop to most consumers.

Instead, AT&T attacks Verizon because the map seems to imply AT&T doesn’t have voice coverage in all those white areas on the map?  Why not attack them from a position of strength (“here’s what our 3G map looks like using industry standard definitions”), instead of a position of lameness (“we think consumers are too stupid to know the difference between voice and data”)?

Apple’s market cap is now about $230B up from about $35B five years ago. That is super impressive performance driven by the release of truly great products, for which Apple deserves hearty congratulations. But Apple’s size will necessitate a change in corporate behaviors, as they’ve moved from Underdog to Goliath status. In particular, Apple will need to be careful to avoid the Bully label.

Look at Apple’s $230B market cap compared with those of the companies around it. IBM (Apple’s Goliath in the 80’s): $170B; Microsoft (Apple’s Goliath in the 90’s and 00’s): $270B; Google: $170B; Nokia: $44B; HTC: $10B. Apple’s a big boy now, and they need to be careful about public perception. A couple of recent happenings could turn against them.

At Apple’s request, there is a police investigation that leads them to breaking down the door of the home of the Gizmodo editor who got the fourth generation iPhone prototype, to take his server, computer, and hard drives (SJ Biz Journal article). Wow. That’s some serious Gestapo-like stuff! That can look cool/gutsy when you’re the Underdog, but as the Goliath, it could really turn into an ugly PR nightmare.

Apple sued HTC (23X smaller market cap) over some UI items earlier this year.  Recall that HTC has had forward facing cameras in many of their phones for a long time, and they’ve got new IP from MSFT, so there may be some potential for IP infringement by Apple, or one of their suppliers, with the upcoming forward facing camera iPhone capabilities. HTC could suck a lot of oxygen out of the room at the fourth generation iPhone announcement in June with a well executed PR/Legal strategy painting HTC as the scrappy innovative underdog and Apple as the abusive IP stealing Goliath. If (to be clear, I’ve got no knowledge as to whether this is possible) the HTC CEO is able to say “We think competition is healthy, but competitors should create their own original technology, not steal ours,” (word for word from Apple Sues HTC press release) Apple might be surprised at how many reporters are ready to take up that cause.

It seems like Apple should proceed with care.  If the Bully label is affixed, it will be very difficult to shake off, and very bad for their brand.

AdMob released their March 2010 Mobile Metrics Report today.  The Android Catching iPhone trend continues unabated.  In the Android-iPhone two horse race, Android now represents 35% of AdMob ad requests.  And, for the first time ever, Android ad requests exceeded iPhone’s in the US (54% Android, 46% iPhone).  So far, I haven’t seen any changes driven by the pending Google acquisition of AdMob that would lead me to search for a better leading-edge proxy of actual usage than AdMob ad requests.  The next generation iPhone’s video conferencing capabilities may render this analysis moot, but we’ve got at least two or three more months where updating this graph will be relevant.

Apps as Powerful Word of Mouth Enabler for iPhone User-Evangelists

I witnessed a very common scene in a restaurant the other day: a woman had her iPhone out and was showing off some App to her friend.  It stuck me that this was both a powerful customer acquisition mechanism for Apple, and the creator of powerful incentives for Apple with respect to Apps and App developers.

From Apple’s perspective, the most important role of an App is to induce an existing iPhone user to become an evangelist for the product by showing off the latest greatest coolest funnest App to their friends.  Think of Apps as a customer acquisition enablement tool for Apple.  Given that motive, it is in their interest to have a constant supply of fresh, innovative, interesting eye-candy Apps.  It is NOT in their interest to have a single App stay in the top 25 for weeks on end. It is also NOT in their interest to have some App make its way into the top lists through some other means other than user popularity.  It’s not just that Apple doesn’t care that it is difficult to promote/buy your way in to the top lists, they actively don’t want you to be able to do that.

We need to recognize that the system has been designed by Apple to produce a constant flow of fresh Apps at the top of the list, and build App business models accordingly.

This is consistent with the Apps are to iPhones as Songs are to iPods approach that Apple is taking.

Congrats to Gizmodo on getting their hands on the next generation iPhone, and getting the good folks at Apple to confirm that it was real.  The most interesting part of the fourth generation iPhone is the front facing camera.   That will bring to the US one of the few areas where the US mobile industry lags other geographies in the world: mobile video conferencing!

Unless Apple tries to own mobile video conferencing for themselves, this will be a boon to the good folks at Skype and the Chinese Mobile Video companies, who I’m sure must have iPhone video conferencing apps in the works.  Although the monetization path isn’t immediately obvious for this, since there isn’t really the equivalent of Skype In/Out opportunity for video.

If you’ve had a mobile video conferencing App rejected by Apple, please let me know, because that will be the most certain indication that Apple is planning to own the category.