Technically True

Winning In Apple's World

2011-10-17T21:24:00.000-07:00

Apple has dealt a one-two blow to both the communications and computing industries in the past 4-years, one which has radically upset the established order, and has rendered its competitors totally befuddled.

The incumbent tech brands have all felt compelled to scramble and "respond" to Apple's market successes. This has resulted in, first, a wave of touch phones to counter the iPhone threat, and next, a wave of tablets to counter the iPad threat.

Obviously, this approach is flawed at a basic level, as the only possible best result to be gained would be to seize the number two position in the new product categories that Apple has defined. One does not win by copying one's enemy.

The fatal flaw being played out again and again in board rooms and CEO suites across the industry is to perceive the game Apple is playing as a zero sum proposition; i.e, for you to win, Apple must lose. In other words, all of these companies are wrongly adopting Apple's new definitions of the game and are attempting to attack Apple directly within those very rules.

We consider this approach to be stupidity.

Accepting The Inevitable

Winning in today's market requires accepting and understanding the changes that have been wrought by Apple's successes, embracing those changes, and building a new strategy that is solidly based on where those changes are taking the industry.

Winning today is in the answer to this question: How does the new technology landscape being crafted by Apple's influence change the structure of the world around us? How does it make yesterday's approaches obsolete? How does it open new approaches and new opportunities?

You see, winning in the new world that is being defined by Apple is not a zero sum proposition. You do not need to attack Apple. You can win without Apple losing.

You win by accepting the new situation and cleverly aiming your strategy into the new world being created around you and your customers.

Winning In Apple's World

Apple's world has a sea of intelligent mobile terminals flowing around the globe in people's pockets and hands, each of which has WiFi, a modern browser, and a touchscreen UI. Because the rest of the industry has already accepted Apple's new definition for mobile devices, it is also building products to these specifications: WiFi, browser, touch. The resulting competitive environment has already begun to drive down component and product pricing, soon to a point where this product type (mobile, WiFi, browser, touch) will be affordable to the vast middle of the global market.

This product type will soon be sufficiently ubiquitous to assume that anyone who matters economically will have one on their person at any time.

You do not need to compete in this product category, as doing so will be profitless. You need to look at the way this new world will work, how this new situation impacts the infrastructure above the devices and the users below the devices.

Looking At This New World

Individuals will soon have these devices en masse. The cost and performance of these devices will make them extremely desirable to businesses and other commercial and institutional users. These commercial entities will need to connect to the devices their customers are carrying. All of which raises the profound questions we all should consider:

How does everyone having these devices and all commercial and institutional entities wanting these devices impact other elements of the technology landscape? What new uses are enabled? What new bottlenecks are created? What old approaches become insufficient? What new approaches open up?

And the mother of all questions: How can you win by enabling this new situation, not by competing with it — by not competing with Apple?

This is the question we have answered with DotGT.

It is the question every company in the computing or communications industries needs to be answering — but that, apparently, nobody is even asking — except for us.

Technology Is For People

2011-10-06T13:57:00.000-07:00

I am enormously sad today.

There hasn't been a moment of my work career that was not influenced by Steve Jobs; and, he is gone. One of the things he left behind is a profound appreciation I feel for how technology products hold the potential to dramatically impact the lives of the everyday people who use them. And, regardless of the effort Steve expended or the success of the company he built, this message is as lost today in the bowels of this industry and from the hearts of its leaders as it has always been.

Steve applied this lens — the viewing of technology as enabling the improvement of people's lives — to the consumer space. I have spent ten-years applying that perspective to the business space.

Today's business computing systems are iterative evolvements from the days when the technologies involved were severely limited. The result is a confounding mess that perplexes and irritates day to day users, requires the regular intervention of paid professional fixers to accomplish even mundane changes or additions, and, erects a maze of barriers between users and getting things done, and between developers and users.

It is an unholy, inexcusable mess. And, it presents the biggest unrealized business opportunity of our generation.

It is also the problem I have been working to fix for a decade. It is the problem elegantly, profoundly solved by DotGT.

We can do this — get the holy grail of all tech projects to market — within a year, building on the work we've already done.

We can quite literally change the world.

Thank you, Steve, for the inspiration.

The Power Of Platforms

2010-10-27T09:53:00.000-07:00

I am presently involved full-time in implementing a quite extensive, long-range business plan I've been developing for many years. It's been eight years since I decided to invest into one of my own business ventures. Everything since then has been done for clients. This project is so compelling that I have no choice but to stop everything else and just do this. After all, how often does a guy like me have the chance to become one of the leaders in the global technology world?

Think "Platforms"

The foundational idea under my efforts is that the way to build a hugely successful global company is to establish and own a widely adopted platform, not by relentlessly iterating individual services or products. Microsoft and Intel just had a near 30-year run doing it. Apple's done it once for nearly 30-years (Mac), and is now setting the pieces in place to do it again for the next 30-years (iOS). Underwriters Laboratories has done it for 100-years. Define a platform. Get adoption. Watch as the world builds out its businesses and entire industries that foundationally include reliance on or usage of your product or service. As more commerce spins around your platform you have more insulation from competition, less pressure on pricing and margins, the increasing benefits of scale, and growing affirmation of the value and worth of your offering. Platforms rock... and can be sustained for decades.

The problem is that when markets emerge and are established, competitive platforms rapidly appear, fight for attention and adoption, and the landscape in the new market pretty quickly settles into a small number of platforms with enough mass and traction to be profitable. Once the hierarchy of platforms becomes well established in a market, everything I said above applies: Nobody is going to upset that order for decades. How many companies attempted to bust Microsoft's OS licensing model and were crushed? How many companies tried to usurp Apple's iPod's leadership in music players, only to fail? How many safety standards organizations have come and gone over the past century in efforts to displace UL?

Trying to displace an established platform in an existing market is a dead man's play for a new business. Better to go do something else... anything else. And, while doing something else, keenly watch the world around you for the signs that a new market is emerging, and put yourself in the right place to establish one of the platforms for that new market. Do that, and you, too, can have near-monopoly success and profits for a few decades.

We Are At A Pivot Point

I've watched for many years as the computer market has slowly turned, and the cell phone market has gently drifted, and the two of them moved onto tracks that put them on a head-on collision course. Today, the most forward edges of the two industries are making contact in what will rapidly grow into one of the most massively destructive, disruptive crashes in all business history. Over the next three to five years, the entire order of things in both industries will be shattered. Leaders will fall. New entrants will appear and prosper. Whole categories of products and services will disappear and new ones will rise in their place. And then, clearly starting within 3-years, all of it will settle down and begin revolving around a small number of core platforms, and everyone will be structurally locked out again for a few decades.

We are in that wonderful early period of chaos in what is currently, nervously referred to as "mobile computing" when old platforms are failing, and new ones are being readied for battle. We are at the cusp of a one-time opportunity to boldly step forward and declare that we, our offering, is the future of this new market, and then seize one of those precious top platform positions.

That's the way reality works, the way platforms work, and the way the next crazy, critical two or three years will work in "mobile computing." A handful of platforms will emerge and gain traction, and lock into a decades long fight. And, from there, anyone else coming along late to this party will be relegated to competing for last place.

The stakes? Some substantial portion of a $100 billion to $500 billion annual sales global marketplace.

Owning A Slice Of The Future

The expression goes that, "The best way to predict the future is to invent it."

There is an approach to defining a platform for this new market that is strikingly different from the earliest competitive approaches now being seen. It is more forward thinking and embraces a more future-oriented set of techniques than the others. It is more consumer friendly. It is more developer friendly. It is cheaper to build, but works better. It is 90% built, today. It can be put into the market in less than a year, and scaled from there. It is called DotGT, and I and my team are relentlessly working to get it to market.
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The Twisted Path To VC Funding

2010-10-24T23:27:00.000-07:00

I am in Silicon Valley to raise $5 million to found a company that will change the face of computing and communications forever.

People who know me would offer varying opinions about my personality, skills, my sanity. I've led a helluva life. And, at 52, I carry every lesson I've ever learned. None of those relate to what's involved in raising investment capital. They mostly relate to how to build great products that sell really well, and avoiding the pifalls common to that process.

Until recently I thought I was pretty good at understanding complex systems. After all, how many other people on the planet understand how microprocessors, networking, wired and wireless communications, operating systems, application software, and user interface and industrial design all interactively intertwine to define great products?

I have never encountered anything as complex and bewildering as the mind of a venture capitalist.

My simplistic view of VC guys has always been that they lived to find those rare deals that would safely generate massive percentage returns on their investments

I was wrong.

It appears that actual VC guys live to find simple deals that they can easily understand, and that fit neatly into their personal preconceptions about how things work. Those are the dimensions of their box.

Perhaps in time I could ferret out the reasons VC guys are like this. However, as the guy creating the deal, my motivation is to craft the best company possible, and that requires that I focus on understanding all of the elements affecting my business plan -- not on what may have twisted the thinking of a VC guy.

Over the past decade I've met and worked with and developed strategy with some of the smartest people in technology. Together, a few of us have incrementally evolved a reality based plan to meet the needs of the global market for the coming generation of small computing products. We have de-risked the venture to the point of humor. Every element large and small is based on off the shelf components, easily integrated. The result is much greater than the sum of those parts.

So, here we are, 200+ man-years into the project, within a year of hitting the market and shattering two different global industries. I am dropping off letters each day at the front desk of VC firms asking for appointments to talk about our project. And nobody is replying.

Shame. We can create order out of the chaotic mess that is presently both the computing and communications sectors. And, from that realignment would come profits. Lots of them.

And, some uniquely clever VC guy who is more in love with profits than his own preconceptions could hit the mother of all home runs.

I am in Silicon Valley to raise $5 million to found a company that will change the face of computing and communications forever.
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Welcome To The ARM Generation

2009-02-17T10:30:00.001-08:00

This morning I read an article about TI's newest ARM core-based OMAP processor family. You should read it, too.

What a wonderful time to be developing low-power devices, eh? Between TI, Freescale, and Marvell, ARM is going to have a heyday these next few years... Linux will have a new day in the sun... as more devices gain true standards compliant browsing, web developers will more and more find new revenue producing opportunities... proprietary (closed) IPTV schemes will fall away, and HTTP-based media offerings of all sorts will reign (think Hulu...)... and, a huge new open-source and commercial pool of lightweight ARM-aimed software will rapidly grow, and grow, and grow...

Analog Devices will miss the wave, because their Blackfin won't run the emerging new software standard based around ARM...

PowerPC will miss the boat for the same reason...

WindowsMobile will wither, as will Symbian...

Apple will surf the bleeding edge of the new ARM hardware wave... We'll see the first home-based products from Apple using ARM within a year, eventually followed by MacBooks, then by their primary desktop systems... all ARM-based, designed by their PA Semi division, using ARM's hottest new cores.

Intel loses Apple... AMD further marginalizes... Dell, HP further marginalize... ASUS and Acer bloom (to the degree they are clever enough to walk away from their Windows base and move to ARM)...

All amazing and very fun stuff. :-)

If you have any extra cash, buy ARM stock, hold it for 5-years, then sell.

Note that there is a gaping opening for a low-power, small form factor HTTP server architecture in the above reality. "Much" web hosting, especially of interactive/active sites will be blossoming in this new era and will benefit from the new space-saving and power-saving features of the new ARM platforms.

There are whole categories of possible new small computing products that open up given the power of ARM combined with flash memory and multitouch interfaces. Yes, the next few years are going to be a blast for the ARM crowd.

Me?... I'll be developing ARM-based products. Maybe for myself, instead of for clients.

Jack Campbell
Strategic Product Development
Hendersonville, Tennessee, USA -- Ningbo, Zhejiang Province, China
jack@aboutjack.com
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Five Blunders That Inhibit Growth And Profits

2007-02-08T14:25:00.000-08:00

As I pursue my day to day job of creating hit consumer technology products, and then pitching those products to potential clients, I see many behaviors repeated by company leaders. And, it is not just within the small group of company owners and executives with whom I have direct dealings. Some reactions and choices -- really bad ones -- are ubiquitous across the technology industry. I thought a short report on some of the top bad leadership blunders would be helpful.

1. Ignore reality -- we'll do it our way.
The best example of this idea in practice is the more than five years of observation we have of every music player and online music store company on the planet completely ignoring the data available from observing the success of Apple's music offerings, and, insisting to do it "their way," instead. Anybody with an I.Q. above dirt can see that Apple's sustained market dominance is based on customers wanting a simple to use, easy to operate pairing of a free desktop jukebox application and store interface with an equally easy to use portable music player. The integrated approach of the iPod + iTunes software + iTunes store has hit a home run each season, going into its sixth year now. How long before some clever company leader sees the obviousness here, and makes the investment to compete... based on accepting these customer preferences, instead of on attempting to modify customer preferences?

Lesson: Pay attention when a competitor has a hit product. It is a hit for a reason. Embrace those reasons. Make your customers as happy as their customers. You'll win. (If perhaps two or three companies had thought this way in 2001 - 2002, the iPod would today have a 20% market share, not 80%.)

2. Build many average products, instead of one great one.
What's the best television made? The one by Panasonic? Sony? LG? Well, the reality is that these companies combine to have hundreds of "televisions" on the market. Is there a hit product in the mix anywhere within these three big brands? Nope. Not one. Is there a significant difference between a TV model from either brand at any given price point? Not really. The sorry reality here is that none of these three brands focuses resources on creating a true hit product for consumers. They are aimed at hitting every price point and feature combination possible. It's a shame, too. Sony used to make some hit products. I miss them. So do a lot of people.

Lesson: Look at the customers buying products in your market space. Look at what makes them smile, what makes them frown. Invest resources into building fewer products that create more smiles. These are called "hit products." Embrace the concept.

3. Ignore brand management reality.
This one is evident in virtually every consumer electronics company. And, crazily, great brand management is more a science than some black art, and is among the best documented elements of marketing. Pointless brand extensions, dumb efforts to "unify" the brand through making all products look the same, forcing the parent brand onto inappropriate niche products instead of just launching a new brand, launching new brands onto core products where the parent brand has long-standing market power, all of these ghastly errors are basic points taught in every college marketing textbook. Do company leaders not read college level marketing materials? Not to continually beat up on Sony, but that's a great example of how making repetitive brand management errors can neuter even one of the world's most well-known brands.

Lesson: Treat your brand as your company's number one most valuable asset. Nurture it. Protect it. In the end, it's all you really have.

4. Ignore opportunities for growth.
It amazes me how many company leaders actively avoid chances to create real growth in their companies. Instead of moving into new markets, embracing new technologies, adopting newly emerging strategies, these guys cling to the "thing that got us here." Great. What you did to make money in the 90's probably looks pretty stale to your channel and retail customers these days. Is "clinging" really what you should be doing? This is the thinking that put Polaroid into bankruptcy. Instead of embracing the idea that its Polaroid brand stood for "all things imaging," the management clung to the instant print platform that "got us here." Great move, guys. Whew. I humbly suggest that those guys missed the chance to become the number one brand in consumer digital cameras.

Lesson: Find the broader meaning of your brand and embrace any new step that strengthens that broader market message.

5. Reject ideas that are not in your business plan.
Folks, the consumer technology industry is a constantly shifting landscape. Any company leader who thinks he can write "a plan" for the year and then stick to it, and remain competitive, is nuts. Your business plan is only as good as your current product cycle. If something smarter comes along, from whatever source, embrace it.

Lesson: Work your buns off to make what you already have going as profitable as possible. But keep your eyes open for new approaches and new vectors that can take you to places you were not previously considering.
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Dumb Product Of The Day: Bluetooth Earphones

2007-01-10T09:58:00.000-08:00

Welcome to the first of a new feature here at Technically True.

Sometimes I am simply amazed at how engineering driven manufacturers try to push new product ideas into the market -- just because they are technologically possible. When will every company decide to hire at least one guy who actually has some marketing sense and an eye for customer preferences to screen anything planned for production?

Well, until companies hire product gurus to screen out the duds, Technically True will from time to time select a Dumbest Product of the Day. Here is our first!

Bluetooth Earphones

Okay, geekoids of the world, here is reality: Big, gawky devices shoved in your ears are not sexy. It should have been obvious to the electronics companies of the world that most people were already snickering and giggling at others who were wearing wired earphones for their cell phones, and that only a sliver of the public actually used these devices. But, when the technology became possible to make even larger, uglier wireless devices to stuff into ones ears, they all have scrambled to proudly launch them into a questionably existent market space.

Alpha Nerds of the world rejoice. You can now have wireless hideously oversized doodads stuffed in your ears, while everyone else laughs at you! For either music or telephony, you can be the butt of humor anywhere you go!

Someday, when battery technology takes its next leap, and substantial materials engineering improvements arrive to make wireless earbuds completely, inconspicuously tiny, more people may actually use them. But, until that day -- and that much-smaller option -- arrives, we'll continue to use 'Bluetooth Earphones' as one of our prime examples of how some tech companies are blind to market realities, and so in love with the raw gadget potential of their work that they foist insanely bad ideas off as trendy new 'must have' gizmos.

Wake up guys: Today's Bluetooth earbuds are just plain dumb.
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Would SOME Electronics Business PLEASE Actually Read The Web?

2006-12-28T11:59:00.000-08:00

Okay, folks... I've had it. and I am officially losing my mind right now. Why on earth do electronics businesses ignore readily available data about what customer desperately want to purchase, and willy-nilly do their own thing, instead? Why do they not simply do the same thing we all do, and just check the Internet from time to time to see what prevailing opinion is being offered here? Are major company CEO's brain-dead? Have they never heard the term, "search engine?"

Customer Voices Are Hearable Now. Duh.

Hello Sony, Nokia, Samsung, Kenwood, Alpine, Bose, Apple, the RIAA, all the other EU and American brands, and a thousand skilled China and Far East manufacturers: The Internet is here. "Market Research" now takes only maybe two or three-hours of serious Googling to do, on even the most complex product/service proposition. Your customers are online, repeatedly telling you -- loudly -- what they wish the hell you would build or offer or sell. Why don't you listen?

What The Online Voices Are Saying

Dear Technology Businesses: We are universally opposed to being trapped into proprietary revenue generating schemes on content and features. We love simple little devices and services that do one thing extraordinarily well. We like well designed, and well thought-through products and services. We love little doodads and geegaws that truly make our lives easier. We like small, light, and thin. But, we like a sense of weight, and solid engineering, too. We hate being forced to pay new money to update an old product to do new things... or worse, to do the same things we have become accustomed to doing. We hate being viewed as pawns in some manufacturer's greater profit creation aspirations. We love being seen as the most important element in your universe. We like being listened to, and, you can listen to us by spending 3-minutes on Google.

Why don't you?

Why do we have big-ass bulky cell phones with a zillion freakin' menus and features that get in the way of the four features we actually use 99% of the time? Why do we have song files, CDs and DVDs that cannot be legally saved, stored, or used on our choice of devices? Why do we have to endure the high-prices and high-feature burdens of a "high end" cell phone, in order to get a good looking, thin and light handset? Why can't you just build us a simple little handset that is also thin and light? Why is hooking up an HDTV system more complex than configuring a network server? Why must we pay extra to move files from our phone to our PC, when the two products are sitting right next to each other on our freakin' desk?

And, don't even get me rolling on PCs and software and the multitude of interface and usability problems I have to put up with on that front.

Attention Tech Business Leaders

The days of the Focus Group are long dead. You do not need to go grab a hundred people at random at the local shopping mall and herd them into a room to 'test reactions.' You have millions of living, breathing, very motivated buyers right here on the web, all wanting you to listen to what we have to say to you.

Why the hell don't you listen to us?

The iPhone: Welcome To Cellular 2.0

2006-12-18T01:19:00.000-08:00

Apple is about to enter the cellular handset market, but not with a product -- with an entirely new type of communications platform.

And -- it will not be announced this Monday. Why? Because Apple's mobile phone strategy is based on overhauling the entire legacy concept of 'phone' now being applied by all other makers and carriers. This strategy revolves around not viewing a 'phone' as a standalone piece of hardware, but as the centerpiece of a mobile communications lifestyle. And, it requires other bits and pieces to be put into play to make this grander vision a reality.

Such a multi-element platform launch cannot be done by a press release. It will require an Apple Event.

Not Your Father's Cell Phone

Apple has studiously and cautiously sat back and observed the unfolding of the cellular telephone market, and the behavior of cell phone users, smartly choosing to not enter the game until it can do so with a winning hand. Despite being loaded with advanced technology capabilities, today's mobile phone landscape is still very much still running on top of the same Cellular 1.0 topology originally launched in the mid-1980's. Handsets are still all-inclusive devices intended to be isolated islands of technology. Apple has a different vision.

Welcome To Cellular 2.0

Even if we have forgotten, Apple still very much recalls its Digital Hub strategy, and makes this concept the underlying mission driving nearly all of its new product creations. The point for most new non-CPU product Apple develops is to substantially improve the usability of that device by having it operate as a peripheral to a Mac or PC running Apple software or connected to .Mac. The iPod has iTunes. The iSight has iChat. The Mighty Mouse has its unique driver software. The experience Apple thus provides users eclipses the prevailing experience offered by existing products. Some of this experience is Mac-only. Some is available on the Windows platform.

In Apple's vision of Cellular 2.0, the phone handset is a roving peripheral to the computer the user has sitting at their home or office. Apple has intelligently parsed users' various communications activities, and has better enabled each by assigning the component actions to the best qualified device. Some actions are done on the computer, some on the handset. With its grip firmly wrapped around software technologies such as Bonjour, iChat, iSync, and .Mac, Apple is uniquely positioned to slice apart the mobile phone experience, and restitch it into something massively more friendly and usable than today's approach. And, by migrating just a portion of this underlying technology to the Windows world, Apple (again... remember the iTunes experience) gets to painlessly demonstrate its vision of user friendly operation to the sea of Win PC users, and add yet another lure to its bait box of Mac platform promotion tools.

Handset + Software + Service = Bliss

In Apple's Cellular 2.0 vision, the handset is not so smart. Like the iPod it logically emulates, the mobile handset is mostly a repository for data synced from the user's computer. Address book info, media files, calendar data, all are created and manipulated on the computer, and simply refreshed into the handset as needed. This approach allows a tiny device to become enormously useful. And, it neatly smashes a hole between today's ideas of 'just a handset' and 'a smart-phone.' In Apple's vision, the 'just a handset' delivers nearly all of the usability of today's smartest smart-phone, but without most of the data input and processor overhead. Apple still very much believes a computer should be a computer, and a peripheral should be a peripheral. Its cellular handset will vividly demonstrate this philosophy in action.

Apple's cellular handset will sync wired or wirelessly with each of the component software pieces running on a Mac or Win system. The data so transferred to the handset will then be easily usable via the handset's highly graphical multiouch UI. And, upon next docking, any address book data added on-the-go by the user will seamlessly be added into the computer's records. All of this behind-the-scenes activity will be easily monitored and managed through a simple syncing functionality put into iTunes that provides easy usability among all of the contributing software pieces, and with .Mac. And yes, the new application will run on both Macs and Windows systems, intelligently supporting whatever underlying software or service components are available to that specific user's system.

Shattering An Industry's Practices

Even with millions of joyous customers snatching Apple handsets from store shelves, the greater market impact will be behind the scenes, on the cellular telephone industry itself. By marketing the handset as a computer peripheral, and focusing sales benefits on the various computer-resident software and services components, not on the handset itself, Apple will be introducing a radically new marketing scheme. No existing manufacturer or carrier can easily match up against this holistic approach to mobile telephony, as they simply do not have the software products nor data infrastructure in place to respond. This is Apple's Cellular 2.0 vision: Make the key usability and selling points all live on the computer or the Internet, not on the handset, and focus marketing on those pieces, not on the handset.

By diminishing the role of the handset itself, and focusing customer attention on the computer-enabled benefits, Apple will leave the entire cellphone manufacturing industry in a panic to begin trying to catch up. And, by marketing the handset as a device that requires no specific carrier support other than a connection, Apple leaves the carriers in a huge quandary -- how do they respond to suddenly having all of their value-add services reduced to irrelevancy?

The User Is The Winner

Apple's entry will shift the earth underneath the cellular industry. Its user experience focused approach to cleaning up the current mess of incompatible, incomprehensible phone functionality, and too-complex do-everything handsets will announce a whole new way to think of 'mobile phones' to the world. And, its focus on computer-side functionality rather than handset functionality will make its handset the easiest to use, simplest to approach product on the market. In the process, users worldwide gain clarity, comfort, and increased functionality in the mobile phone experience. Over time, as they have done with all of their new products, they will expand the concept into a true platform play that supports added functionality, likely from third-party application software, accessories, and third-party service tie-ins, such as Google, YouTube, and others. I wouldn't doubt that the new mobile platform begins to approach the functionality of the current Mac platform itself within a few years. But, that's another post.

The cellular industry is about to be jarringly snatched one giant step forward. It will be fun to watch as everybody else goes crazy trying to scramble and catch up.

The iTunes Store's Horrible Sales Secret

2006-12-07T17:54:00.000-08:00

I have been surprised over the past few years as many data points have been publicized making it obvious that the current state of DRM-protected music download stores is not in sync with the marketplace's desires. My surprise comes from how quiet the world's media is in discussing this reality, and in how easily the music player makers and the recording industry ignore the reality facing them. You see, most people simply do not buy these copy protected legal downloads.

DRM Doesn’t Matter

According to data collected by Jupiter Research, Gartner, and others, the emphasis today's MP3 player manufacturers are placing on DRM scheme compatibility is ill-founded. It seems that very few of today's customers actually ever use an online music store, and they own very few DRM encoded music tracks. Most people rip CDs, or swap files using P2P services.

What About iPod Users?

According to Jupiter Research, about 83% of iPod users do not buy songs from the iTunes store regularly, and are likely to own fewer than 20 tracks wrapped in Apple's Fairplay DRM scheme. It seems that the other 17% of iPod users buy all of the songs being sold by the iTunes Store.

When considering users of Windows based MP3 players, the situation is even more extreme. A recent Gartner study reveals that over 70% of these people have never bought a song from a DRM wrapped online source. And, over 90% fall into the "tried it once or twice and didn't like it" category. The bottom line here is that fewer than 5% of Win based MP3 player owners regularly purchase songs from an online music store.

Summarizing The DRM Scene

Basically, all of the tracks being sold by iTunes and the myriad of Windows based online services are being bought by 20% of iPod owners and 5% of Win based player owners. The important corollary is that today's DRM wrapped music stores are being roundly ignored by 80% of iPod users and 95% of Win based player users.

New Light On This Old Problem

Now, SoundScan is noting that online music sales have basically flattened over the past year, stuck in the 100 to 140 million tracks per quarter range, and showing no sign of striking any steep upward trajectory. Simple math says that, on average, this means that about each MP3 player owner (all makes and models) is buying one download track every three months. Folks, that is not a very impressive sales pace. And, it surely does not describe the sort of "Future Of The Music World" scenario that Apple (and others) would want everyone to believe is coming. Instead, those sorts of numbers clearly describe a failed system.

The Present System Is Broken

Today's DRM-wrapped music download stores, both click-to-buy and subscription varieties are abject market failures. And, all of the vested purveyors are staying mum on the topic, quietly allowing the myth to perpetuate that the approach is actually a fast-growing success story. It ain't true, people.

People are clearly rejecting the concept of paying for digital music files that are layered in swaths of restrictive DRM. Other than a tiny hard-core slice of upper-income buyers, the vast majority of MP3 player owners simply avoid these online stores, including Apple's vaunted iTunes store. And, from the latest market intel, it's evident that even these affluent buyers are slowing down their purchasing.

What Is The Fix?

While DRM-wrapped online song sales are failing as a business model, the traffic in both paid and unpaid non-DRM song files continues to flourish. Yahoo continues its successful experiment in selling non-DRM MP3 music, an effort I mentioned here a few weeks ago. Michael Robertson's MP3Tunes.com site is showing steady sales growth. And, of course, the P2P networks continue to buzz with downloading activity.

While Apple nor the rest of the industry want to publicly discuss their sales numbers and trends, or admit the failed business model now being promoted, the reality is there for anyone who wants to look: The present approach to using DRM to lock out consumers from Fair Use rights is not working. It is a failed system.

One heroic major company needs to stand up, admit this reality, and offer the buying public a major song download option with 1 million plus standard MP3 tracks... including hot, current tracks from major artists, and major catalog selections. A line of edgy new players that completely shunned all DRM formats would also help make the point. Such a store, and such a line of players would show blow-out sales numbers.

The bottom line is this: The vast majority of buyers do not like DRM, do not buy DRM music, and have no interest in players that support DRM music. Somebody with a brain at a major company should note these facts and weave a new business model to replace the obviously failed one now being applied by others.

Apple's Horizontal Alternative

2006-12-03T07:31:00.000-08:00

Apple's OS X could have been a real breakthrough in modernizing the graphical user interface. But, instead, it is merely the best of the current crop. It could so easily have been much more.

Apple's unique Aqua interface has drawn steady fire for the amount of processor resources it consumes, "just being pretty." As the sort of guy who appreciates "pretty," and usually keeps relatively current with my hardware, the lost system resources issue hasn't really impacted my work; my system's more than adequately snappy in OS X, with Aqua shining in all its candied glory. However, I do have a parallel complaint to lodge.

My complaint runs along these lines: (A) Apple chose to improve the visual user interface in OS X, (B) the decision was made allowing the improvements to use up a great deal more system power than had previously been used, so (C), they developed the ever-elegant Aqua.

My complaint revolves around the third component, (C) choosing elegance over functionality. Let me explain.

Break the 20-Year Old Tradition

Let's talk about the GUI, itself. With Apple's move to OS X, the company had a rare opportunity to truly improve the user interface. If extra processor cycles were going to be dedicated to the interface, then Apple could have chosen to use those precious cycles to support a true improvement, rather than a beautification effort. They could have taken today's 2D vertical desktop metaphor and gone to a 3D horizontal metaphor. And, if they had, the world would now be totally focused on the new system, Microsoft would truly be quaking in their boots, and Macland would be overflowing with joy.

Real Desks Are Horizontal

Imagine having the ability to easily add tag-embedded XML-like keywords to all of your files, or to allow the machine itself to make intelligently guessed tags, and to then do free-form searches and retrievals using an über-Sherlock type search utility.

The element of the "flat" GUI of today that truly irritates me, including the pretty Aqua, is that it forces a set of ordered mechanisms on me for creating, storing, keeping track of, and retrieving projects and documents. Going horizontal would instantly ease each of these processes.

I like the idea of having one infinitely sized flat work surface, where I can simply tell the computer what I want, and what I want to do. It then reaches out toward the horizon and pulls in front of me the relevant documents and tools... as well as neatly pushes away from me whatever irrelevant detritus may be covering that required work space at the moment.

The issue with today's desktop metaphor, to my mind, is its verticality. The computer displays a "desktop" as a vertical wall, ascending upward in front of our eyes. The last time I checked, a real desk top occupied a horizontal plane, not vertical.

Organized Like A Real Desk

A convincing 3D representation of a horizontal plane, stretching outward in front of me would be a much more familiar place to work. Should folders and files be thereon represented as containers, piles, and stacks of varying size, then I could easily reach out into that 3D space with my curser, and grab and drag whatever I want back to the workspace in front of me. Those piles and containers could be tagged to correlate with projects, people, activities, timeframes, and other identifying and linking information. This would enable the computer to create on the fly dialogue boxes, asking if any of a shown list of other linked material would be of interest to me, and what to do with that material.

The idea of a horizontal desktop has simply been awaiting the time when the machines were fast and sturdy enough to handle the added processing load. If the Quartz Extreme power had been invested into this revolutionary step, rather than into merely shoring up Aqua's sometimes sluggish performance, Apple would have hit a grand slam.

It's griped me to no end that the smart guys of Silicon Valley came up with the initial desktop metaphor, but then have never developed it to its next logical evolution. The processor power is there today to now support horizontalizing our vertical "desktops."

I wish Apple would do it.

Manufacturers: Excite People To Buy

2006-11-22T11:46:00.000-08:00

I have a toaster on my kitchen counter that I bought at a local discount store. It cost about the same as the many other mid-price toasters that were on display. It toasts bread the same way. It's the same size. So, why did I buy this toaster, and not one of its dozen competitors? Somebody took the time to make this toaster not just a toaster, but an exciting piece of contemporary art. It's not just a toaster, it's an absolutely gorgeous toaster. The appearance of the product excited me enough at the store to stop me in my tracks as I scanned the many toaster options. Once I saw the price compared to the many dull, lifeless models on the shelves, I stopped shopping and I bought this one.

If you could completely learn and absorb the lesson told in this story, you could be selling many times the number of products you now sell, and, you could be enjoying lower effort in your marketing, and even higher margins.

The lesson is to not just build products, even great products. You should be building products that actually excite customers to buy them.

Right Brain. Left Brain.

Supposedly, people are either predisposed to spontaneity, or to analysis in the way they approach decisions. Traditional marketing and product design apply this idea by theorizing that there are two distinct potential buyer groups. And, a result of this idea is that designers build either low functionality, simple "pretty" products, or, they build high functionality, complex "utilitarian" products, with the second type being priced higher than the first. But, what if one product could exist neatly at the intersection of both groups?

If a product is both functional and gorgeously styled, and priced competitively, it can be an exciting option for anyone, either the right or left brain set. The creative types seize on the design, and then use the competitive functionality as their needed rationale for making the purchase. And, the analytical types obsess on the functionality, and then use the attractive styling as the excuse to justify the purchase. In either case, it's the overall value proposition of combining terrific styling with competitive functionality that makes the product so exciting to nearly any potential customer.

When In Doubt, Simplify.

If you are having a problem determining just what makes the appearance of a product exciting, you can always use a simple trick applied many clever manufacturers: simplify. Of course, this is not often an easy trick to pull off well. Sometimes, simplifying a product without crippling its functionality is one of the hardest challenges in industrial design. But, if the toaster lesson has any widespread application, this challenge of seeking simplicity in your designs should be worth the effort.

The Back Story Behind other Red

2006-11-05T00:58:00.000-08:00

This past week a surprising new charity operation hit the web press. Called "other Red," it appears to be a near-clone of the famously successful (product) RED fundraising system run by the Global Fund and promoted by U2's Bono. In this case, appearances are accurate: The other Red program is indeed a clone of that larger, more powerful program. And, here is how that happened.

Big Problems And Big Solutions

As anyone tracking my activities knows, I live in Kenya, and do marketing consulting work for companies in the USA and Europe. I moved here after having visited Kenya repeatedly for many years. I have been drawn here because I respect the people of this area, and I see the huge challenges they face in their lives. I think that a few skilled Western entrepreneurs committing time and resources here could make a huge difference in the economy. And, I decided that I would be one of those guys who made that commitment. I moved. And, I am trying to apply Western business practices toward helping the community here.

That said, the problems faced by the African people are many and are deep. One major problem is the enormous number of homeless children, created by losing parents to HIV/AIDS, other diseases, other catastrophes. Over a million kids in Kenya alone are without parents. And, there is no one major unified program here strong and capable enough to approach this problem. There are thousands of tiny little programs, none of them coordinating funding or operations. In my mind, a huge problem requires a huge solution. And, my experience tells me to get from "small" to "huge" can best be done by finding a smaller solution and scaling upward from there. So, I went looking for a well-run, well-managed orphan care program here. And, I found one.

Helping Little Guys Get Big

My search led me to Geoffrey and Rachel Malagho, Jacob Matunga, and the many volunteers, and the children they have been helping in Ukunda, Kenya. Unlike most such operations, these guys ran a tight ship management-wise. And, they actually had plans in hand -- well detailed plans -- for scaling up their program to accommodate many thousands of orphaned kids. They saw the enormity of the problem, and they were not afraid to plan solutions. My kind of guys. All they needed was a little help with a promotional system for growing a reliable funding stream. No problem. That's what I do for a living: promotion.

Working with Geoffrey, Jacob and their accounting and management advisors here, we developed a step by step plan for launching a 2,000 capacity all-inclusive orphan care center, one that can be replicated anywhere in Africa. We registered the name of the organization and registered the Ukunda Kids trademark. And, we got busy promoting corporate partnerships as our funding method. Along the way, we contacted the Global Fund's (product) RED program about finding ways to work together with them to fund our work here. After all, I closely advise a number of electronics companies. So, it should not be difficult for me to get a few of them to add some red products into the (product) RED program.

Global Fund Not Interested

Because I respect the hell out of Bono and the Global Fund program, and I know the immense amount of humanitarian goodness they create around the world, including here in Kenya, I want to explicitly say that I have nothing but complete respect for them. Period. That does not mean I agree with all details of their operations.

In investigating possibilities involving the (product) RED program, we quickly realized that two key factors were amiss with that program. First, funds cannot be earmarked by a participating manufacturer to a particular region or specific cause. Second, Global Fund will not accept local or regional brands; they only want "the world's iconic brands." We wanted to add a growing number of RED products from our smallish manufacturing friends, and earmark the funds specifically into East African Global Fund projects. As I said, we learned that was not part of their agenda. So... no Global Fund partnership.

When Others Fail, Do It Yourself

We talked over the situation as a team, including the various intellectual property and morality issues involved, and, we decided to create our own red products program. Thus, other Red was born. I and some marketing friends in the USA and Europe would donate our time and web resources. The local management team would work with the growing kids program and the local volunteers. The manufacturers would wire the 10% contribution directly to the orphanage each month. All would be well.

The Launch And The Aftermath

Because like any public business figure, I have my own little herd of online haters and nasty comment posters, I was hoping to stay out of the limelight on this project and just let all of the light shine directly on the guys at the orphanage. They're the ones doing the work. I'm just in the background helping. But, alas, immediately after launching the program, the first two products, and the new web sites, my little gang of web bashers started sniffing around trying to find "clues." And, they pretty quickly began seeing the similarities in the web sites, the similar domain registrations and hosting accounts, etc. And, they began screaming suggestions that the program was some sort of scam. Sigh... welcome to trying to do something positive on the good old World Wide Web, where anybody with a keyboard can say anything about anybody.

This Is The Real Deal

It pisses me off to have people attacking this brand new little program, not because I care one bit about what's said about me, personally. But, I do care about the kids and the people here in Kenya who are making plans and working hard to apply the hoped-for funds from this program to doing some great humanitarian work here. I care a lot. These are good people. And, these are really good kids.

We've posted the legal registrations and banking documents online on the Ukunda Kids site. We're working quickly to post more photos and data about the kids and the staff and volunteers here, showing who they are and what they are doing. We are posting the individual participation agreements for each manufacturer. At every step we will publish all records pertaining to our financial operations and the work we do. There will be no secrets. We're real, and we want the world to know it beyond any doubt.

My Personal Thoughts On This Situation

Folks, there are 5 million -- F I V E M I L L I O N -- orphaned children in Africa. When driving through Kenya, they are on the roadsides, under rusty metal sheets, in grass lean-tos, digging through trash to find a scrap of food... it is absolutely gut-wrenching to see and know of this situation. I'm a jaded old businessman, but it makes me cry to see these kids in this position. I cannot be here, see this, know this thing, and not use my skills to help. It's not in me to just ignore such a problem, when I know I can help.

And, in closing, I am asking anyone who reads this, even the people who have personal grudges against me, or had a Bluetooth mouse screw up a couple of years ago, or, who just don't like red color gadgets, to put aside those petty issues in this unique circumstance, and help us make this effort actually work.

Or, as my mother taught me, "If you have nothing good to say, say nothing at all." And, as always, big thanks to everyone who has helped us get this far and who is supporting our efforts to help these kids.

iTunes Will Flourish In A Non-DRM Market

2006-09-19T11:41:00.000-07:00

I just read an article extolling the virtues of Yahoo's encouragement of the major record labels to offer non-DRM, pure-MP3 music downloads. It seems they got a deal a while back to sell a non-DRM Jessica Simpson song. And, now, they've gotten a deal with Warner to offer a non-DRM album (Jesse McCartney's Right Where You Want Me. Good for Yahoo, and, smart of Warner. My problem came when I read the writer's ideas about how a mass move to non-DRM music downloads would spell "the end of Apple's monopoly" on legal music downloads. Right.

Apple Sells Convenience And Selection

The wide spread FUD that iTunes has some sort of hypnotically induced irrational hold over its customers just drives me crazy. I wish the whole world could take a basic business class, and develop the sensibility to simply see that Apple has succeeded with iTunes because they have done a great job relieving customers of hassle, and offering them easy to use selection and functionality. No voodoo dolls or magic potions involved. Apple has just consistently done a great of pleasing its customers.

Should the record companies wake up one day soon, have a fit of rationality, and realize that a completely DRM-free MP3 based download marketplace would auger the beginning of a new era in legal download growth, Apple would gleefully shift its library away from the Fairplay restriction it now implements at the behest of these same record labels. And, with the present file movement and usage restrictions then gone, iTunes would continue to lead the marketplace.

iTunes does not get new customers by "locking them in" to some "proprietary" file usage scheme, as so many anti-Apple writers pen each day. In the absence of DRM, iTunes will still be the most convenient, easiest to use, and most popular download store. That's my opinion. What's yours?

Apple iPhone: Online Comments Are Wrong

2006-09-09T22:58:00.000-07:00

As the background buzz leading to what many hope will be an Apple launch of a cell phone gets ever louder, and the blog and news story comments get ever shriller, I thought I would take a few moments to post a few comments of my own. My comments are as much about the comments as about the phone, itself.

The Wrong Voices

At web sites from iLounge, to MacCentral, to Spymac and the rest, every time some mention is made of an impending cell phone coming from Apple, the commenters come out in herds. It is clear that there is much interest in such a product... at least among the late-night online forum junkies of the world. And, the most prolific and insistent of these voices seem to beat the drum of 'more features, more capabilities' in expressing their vision of just what an Apple branded cell phone will be. Hmmm... my hunch is that Apple is not listening, and has a much different vision for this phone product. In fact, a little look at recent history just might draw upon these forum-junkie comments as data from which we can extrapolate what the coming phone might actually be like.

The Voices Always Point The Wrong Way

Let's face it, the people posting comments around the web are not Apple's core market. These guys and gals are technology addicts of the worst sort, for the most part. Certainly the loudest of the bunch are so hung up on leading-edge this, and state of the art that, that they have lost all perspective of Apple's actual business model. And, these folks are nowhere near the type of people Apple actually wants to buy its products. Most consumers are not technology geeks. Most consumers are actually put off by all the very features and capabilities and gadgetry that these online pundits adore.

When the buzz was that an entry level Mac was finally coming, these same people started the 'more features, more capabilities' chant. When the iPod first launched, the same people hammered the 'it won't sell' and the 'more features, more capabilities' nails. All along through the Jobs-era Apple, these same people have percussively reiterated their ideas of how things should be. And, Apple has held true to its own vision, and has ignored these comments, and has simply done what they do well: an entirely different approach based on simplicity, nice styling, and feature set reduction. I expect the potential cell phone product to be no different.

The People Who Sleep At Night Buy Phones

Apple's target consumer market is not the late-night forum addicts of the world, it is the more normal people who actually sleep regular hours, and live regular lives. Apple's consumer product demographic is Joe and Jane Everyman. And, these days, it is pretty clear that Jane and Joe are pretty put out with confusing, overly complex cell phones. I know. I am Joe, when it comes to cell phones.

Mr. Everyman wants a phone that is good looking, has an easy to use and easy to see UI, works well for making and receiving calls, and has basic address book, recent call, and caller ID functions. That's it. No more, no less. Since this is an Apple product, having it seamlessly sync its address book info to your nearby Mac is a certain feature. And, having it offer the full iPod music experience is a certainty. But, there is where it all stops, folks. Steve Jobs has rarely been happier than when he was on stage bragging to the world about how few buttons are on Apple's remote control for Front Row. This same man will implement the same philosophy on a new phone, style it nicely, and offer it as the solution to Joe and Jane Everyman's frustrations. I expect an Apple phone to have no buttons at all, only an elegant multitouch capacitive touchscreen, and lots of big, easy to punch icons.

And, to the shock of the online pundits and late-night commenters... Joe and Jane will happily buy the 'too simple' phone, in droves.

Cell Phones Will Not Displace iPods

2006-05-29T22:25:00.000-07:00

Okay, I've had all I can take. I think reading one more sentence of illogical tripe supporting the notion that cell phones will soon begin eroding the iPod's death grip on the portable music player market, and my brain will explode. Now hear this: It ain't happenin'.

The Experience Sucks

I happily own one of the super-thin little SLVR candybar phones, and even have 90 or so tunes loaded on the device from my iTunes library. I have wanted this device to work as my primary music player. It does not. It can't. It is a royal pain in the butt to use that way, compared to simply tossing a "real" iPod in my pocket. So, after months of determined effort to adopt the SLVR, I now am back to carrying both devices.

The reason for my rejection of the SLVR's music player abilities is simple: I actually use my phone... a LOT. If I never needed to actually conduct a telephone conversation using the product, it would be a capable, albeit exquisitely pricey, music player. No problem. But, that is not the case. I need to easily answer and place calls on the SLVR throughout the course of my days and evenings. That's where the whole cellphone music thing breaks completely apart.

While listening to music with the SLVR, first, I am forced to either (A) use the bargain basement earbuds shipped with the product that are terminated in a mini-USB plug, or (B) use the mini-USB plug adapter that is provided, and use my own higher quality earbuds. Believe it or not, I actually have a hard time making certain that I always happen to have that little adapter in my pocket at all times. I also hate the ugly thing hanging off the side of my phone. And, using the adapter with regular earbuds makes the easy call-answer ability that can be had with the OEM buds unavailable... no microphone on the adapter. So, given a choice between using the horrifically bad OEM earbuds, with a microphone in the cord, or, using a no-mike set of better sounding earbuds, but not being able to answer calls without removing them, I choose a third option: carry my iPod.

An Unfixable Flaw

Sadly for the hugely fantasy-driven predictors of the cell phone's ascendency to music player leadership, the problem of "how to answer calls" cannot be fixed suitably. Ever. Listening to music and talking on a telephone are mutually exclusive activities, insofar as using earbuds. So, the issue will always be there of having to deal with switching back and forth between talking or listening.

For a small group of user who spent much time listening to mobile music and texting, but little time actually talking on a phone, a feature to switch the earbuds from one use to the other would work. Should Apple ever build a phone I expect this functionality to be included -- along with a whole slate of functions for everybody else.

There are other interface and file management issues that I have with my few month experiment with my SLVR. But, why complain? It is the basic flaw I discuss here that is the impassable hurdle that will keep cellphones from ever toppling standalone music players from their sales perch. For the foreseeable future, the iPod product line is in no danger of being slapped into irrelevance by music phones.

The Reason For Apple's Resurgence

2006-05-20T21:07:00.000-07:00

Over the past couple of years a growing stream of business and technology media have been extolling the many successes Apple Computer has been achieving in the marketplace. And, while many of these pundits have hit on most of the great moves executed by Apple's management, I have not seen one piece published anywhere that has drilled down to expose the one, simple fundamental reason that Apple is blossoming.

The reason? The overall cost of computers as a percentage of the consumers' earnings has steadily plummeted down to a point where the actual difference in price for a Windows versus and Apple system has become irrelevant. Click on the below chart to see a larger version you can actually read. Then, come back here and let's talk a bit about what those numbers mean... not just in the Apple vs. Microsoft war, but to the manufacturers of all manner of consumer electronics products.

PC & Apple Prices vs. Family Income
Click Image For Larger View
This chart shows historical price points that loosely represent the total price a consumer would have had to pay in the years shown to get a fairly basic PC or Apple computer system... entry level desktop or notebook, and display/printer. Don't fuss with me about the precision of the numbers, please. Recall I used the word "loose." And, from here forward, I will state all prices and income values as CPI/inflation adjusted to 2005 values, in US dollars.

In 1980, a PC system cost about 25% of a family's yearly income, and an Apple system about 35%... explaining why the first wave of PC adoption circa 1980's was principally in the business market. The increased worker efficiencies gained by using the PC was something that could be quantified and justified as a business purchase, but pre-internet home users were rare. So, with Apple's machines aimed squarely at home users and the PC machines aimed straight at businesses, it is obvious why Apple began bleeding market share throughout the 1980's.

By 1990, prices for entry level PC or Mac systems dipped below 10% of the typical family income, and home user adoption began to take off. But, Macs were still more expensive than PCs, and most consumers then buying their first home computer were doing so from having used the machines at their jobs, so they were more inclined to buy a Windows based machine for home use, too.

Since 2000, prices for either Windows or Mac based computer systems have plummeted, both in absolute terms, and in relationship to family income. In fact, the relative cost-to-income percentage dropped by greater than a factor of ten since the early 1980's. This decade has ushered in a new era where PCs of any sort are a truly minor expense to the vast swath of buyers.

PCs And Macs Are Both Negligible Expenses Now

PCs are nearing a point where complete systems can be bought for 1% of annual income, or even less. And, this makes the price of these products less relevant than ever in the buying decision. Consumers and businesses alike are now looking more closely at the attributes of the computers they choose... at attributes other than price.

Because prices for computers in general are so easily affordable to consumers and businesses, buyers are pausing and are more likely to buy the one that looks the coolest, has the extra features, or has the hipper brand image. And, they are already showing their preference for good-looking, easy-to-use, status-branded products. After all, if the "step up" system is only an extra 0.2% of your yearly pay, why not buy the sexier product?

Apple has fought for its livelihood historically by making sexier products than the Windows world has offered. In fact, in both software and hardware, Apple's primary business advantage is its intense focus on industrial design and user experience... two areas historicaly neglected by Windows PC makers. So, Apple is winning a swarm of new customers. But, all of that is really just background for my next point.

All Consumer Electronics Are Cheap Now

It's not just computers that have been steadily declining in price as a function of disposable income. All consumer electronics products have become so easily affordable that price is rapidly becoming a non-factor in the buying decision. And, it is the companies across this market space that are focusing on non-price attributes that are seeing huge growth. Motorola's march back to market leadership in the cellphone arena is just one good example. Their sexy phones are similarly priced to the many non-sexy options, and all cellphones are so easily affordable now, that choosing the sexy option is a no-brainer for a fast growing block of mainstream buyers.

CE Manufacturers Need To Wake Up

As price diminishes even further as a buying factor, it is the companies that fully embrace user experience and industrial design that will emerge as new market leaders in the coming decade. Music, video, and communication products are all priced for the masses, and will continue to be priced even lower as mass market technology production becomes even cheaper. Investing a wee bit more effort on making a product look great and work easily will steadily differentiate the winners from the losers in this new era of non-price based buying.

Apple has always emphasized user experience and product design. Motorola may be learning to do the same thing. Other companies are shifting their attention to these non-price factors: Even Dell has announced a corporate mission to offer better looking machines. For fans of gorgeously designed electronics gear that just works without any hassle, the next several years will be a playground of slick and sexy new toys. And, the ranking of market leaders in all of these consumer electronics sectors is going become a scrambled mess. Traditional sales leaders will falter, newly emerging combatants will rise. And, along the way, the average consumer is going to have a steadily growing array of hot, sexy products to tempt their wallets.

The reason for Apple's resurgence is the same reason that can drive any other consumer electronics maker straight to the top of their category... if they are just smart enough to deemphasize price and put more effort into people-pleasing, beautifully designed and packaged gear.

I can hardly wait to look back from ten years hence and to see who got smart and made the most of this fundamental shift in market and product priorities. What a thrill it will be to watch the concept of "industrial design" become the major marketing theme rather than "price."

The Mac OS X Virus Contest, A Year LaterAn Open Challenge To The Technology Media

2006-05-08T21:02:00.000-07:00

My name is Jack Campbell, until September, CEO of a manufacturing company producing Apple Computer related products.

Just over one-year ago, my company, DVForge, announced a $25,000 prize for the first virus developer who could infect two Powermac G5 computers located in our office, both with plain-Jane installations of OS X, by propagating that new virus over the internet. In the onslaught of correspondence that quickly then began streaming into our office we found enough wisdom to convince us to cancel that contest, due almost completely to potential risks to legal liabilities. But, the flare was shot into the sky, and the challenge received a huge degree of worldwide press attention, in both Apple press and mainstream press outlets. Presumedly, any virus coders who had not previously eyed the Apple platform would have seen some of this press exposure, and would have been enticed by the challenge, regardless of the retraction of the cash prize.

Well, more than a year has passed. And, surprisingly (or not, to some of us), there is still not one self-replicating virus in the wild that attacks the Mac OS X operating system. That's right, folks... not one. Not the first. Ever. Never. Zero.

Against this reality -- zero actual propagating OS X viruses in the wild -- there has been a groundswell of press attention offered recently to the notion that, somehow, Mac OS X is "nearly" as vulnerable to such afflictions as is Windows XP. In fact, this idea has become the darling for seemingly every writing hack in the industry to use as a stepping off point for whatever brand of yellow journalism they wish to pen.

When I announced the OS X Virus Contest, OS X had been on the market for four years, with still not one single in the wild virus. Now, it has been more than five years. And, guess what?... still not one in the wild virus!

We structured the contest last year to isolate the threat of an in the wild, self-replicating, self-propogating virus as that is the one true worldwide threat to any computer operating system. This can be seen from at least two hugely publicized attacks by just these creatures against the Windows OS in just the past two-years. Worldwide panic and devastation to millions of computers was the result in both instances. These were not "malware" or "trojan" attacks... and despite the yellow journalist's efforts to blur the distinction between these various security threats, the fact remains that it is the self-propagating virus, that launches from computer to computer without conscious involvement by the user, that poses the highest risk of devastating damage. So, that is where we focused.

Today, in honor of the many people who so vocally supported our virus contest last year, I am publicly challenging the many tech industry writers who have so loudly heralded "the growing OS X security risk" over the past few days to step up and show me one thing: just one in the wild virus that infects Mac OS X.

Show me that one item, and I will shut up.

Oh No! I'm Addicted To iTunes Video!

2005-10-22T10:23:00.000-07:00

On Video Wednesday, when Steve Jobs launched the new iTunes video download store section, I went to take a look. What I found were the much-hyped 'Lost' and 'Desperate Housewives' episodes the whole world was already jabbering about. But... surprise! There were the first two episodes of an all-new series I had intended to begin watching... but, I had gotten busy it seems, and had completely overlooked the series launch. Yessir... I was tickled to hand over my $1.99 per show to grab the two episodes of 'Nightstalker' that I had missed.

Well, the next Thursday night I was out and about, away from home as the air time for 'Nightstalker' approached. For a moment I considered hotrodding it through traffic to the house, to try and catch the show. Then, I realized I didn't have to bother. I could just download it from the iTunes site the next day! And, that's what I did. I watched that Nightstalker episode while eating at Krystal on Friday afternoon. Hmmm... sounds like the seed of a possibly huge behavioral change, eh?

This Thursday night, I was at home, in front of my 30-inch Cinema Display, with my ElGato eyeTV 200 set firmly to ABC. Not only did I watch Nightstalker in real-time, I also recorded the show into a Quicktime file. Job done... right?

Yesterday and today I've had this nagging voice in my head telling me that I had a nice start on a commercial-free collection of Nightstalker episodes, that one was now 'missing.' So, guess what? I have now gone back to iTunes, like a junky needing a fix, and have paid $1.99 to download Thursday night's show... the one I had actually already watched, as well as recorded.

Am I the only one out here acting this way? If I am not, then Apple has a much, much more powerful business model started here than a lot of people have realized.

It's Not iPod Video. It's iTunes Video.

2005-10-18T16:53:00.000-07:00

Since last Wednesday's video-centric announcements from Apple, the mainstream press has been printing itself silly with commentary. It's interesting to me to note just how few of these professional writers seem to completely understand the actual implications of Apple's group of announced products and services.

For instance, have you noticed that nearly all of the writers have felt some obvious urge to make their opinion known about 'people watching video on an iPod?' Very interesting... as these people are uniformly missing the bigger idea here: Apple intends for us to watch videos, not on our iPods, but on or through our Macintosh computer. Sure, people 'can' synch all those little video clips onto their precious iPods. But, that's not the main point in Apple's agenda.

Video On Demand, Apple Style

As more content becomes available in the 320x240 resolution H.264 iTunes video format... everything from cult TV shows, concert reels, and, yes, porn... more and more folks will begin to have larger and larger libraries of readily available content, sitting right there on their Mac, for instant access. That's got to drive some behavioral changes in at least a few folks. And, it's going to become a wee bit addictive for others.

Frankly, I'm not prescient enough to predict exactly where this thread of new reality will eventually lead. But, I do know this: So far, I have bought 4 TV shows from iTunes, and have converted several of my preexisting video files to the iTunes format. And now, in less than a week, I am already programmed to carry around the predisposition to consider iTunes for a variety of 'video' related uses. 7-days ago, iTunes meant 'music.'

I was talking with a lady today in Spain. She's been buying Desperate Housewives episodes from iTunes.

And that, folks, is called 'change.'

Why Apple Has Added Video To iPods

2005-10-12T14:22:00.000-07:00

During Wednesday's press unveiling of the new video-capable iPods, Steve Jobs said something pretty fascinating: “Because millions of people around the world will buy this new iPod to play music, it will quickly become the most popular portable video player in history.”

In that one sentence is the key to what is about to be a huge business model shift at Apple. Until now, Apple has carried the iTunes store as an essentially break-even proposition intended to help promote the sale of iPods. We are about to enter an era where that shifts. Apple is about to start making money from iTunes, by reversing the formula with video sales.

Note that Apple did not introduce a higher-price 'video version' of the iPod, positioned above the music models. They launched a new line of music models that just happen to also play video. The efffect will be just as Jobs explained. Everybody who now buys an iPod will have video capability, whether they use it, want it, or even realize it is there, or not. Millions of video capable iPods will now begin insinuating themselves into the lives of customers around the world.

Instead of waiting until all of the back room deals could be made to launch a full-blown commercial movie/video download area in iTunes, and then hoping that critical mass of material would begin enticing people to buy compatible iPods, Apple has gone the other way. They are going to create a critical mass of video-ready iPods in the market, and then steadily add more and more paying video content to the iTunes store.

What will happen is that Jobs will soon be able to meet with a movie company executive, sit down to talk, and start the conversation with, "Well... our 8.3 million video iPod owners would sure like to be buying your movies..." Or, 11.5 million... or, any number of millions. That is the real reason Apple has gone ahead and brought video capabilities to 'normal' iPods.

Doing this has just paved the way to get much quicker and broader licensing in place for additional video content for the iTunes store. And that, folks, is very, very clever of Apple.

The Perfect In-Car iPod Music System

2005-10-09T22:19:00.000-07:00

After three years of trying every iPod connection product on the market, experimenting with developing my own products, and, pondering just what would make for the absolute best way to listen to my iPod in my car, I've had a revelation of sorts. You see, I realized it is not "my iPod" want to listen to in my car; it's my favorite music from my iTunes library... iPod, or not.

The latest car I bought has a high-end Bose sound system option, with an in-dash CD player. Earlier tonight, I burned a CD-ROM of an iTunes playlist I made with my highest rated 200 songs (in MP3 format), took it out to my driveway, stuck it in that CD player, and... wow! It turns out the thing has a scrolling playlist display, shows complete ID3 tag information for the songs, and, it sounds amazing. It was such a striking experience that I fired up the engine and went out to just drive around and enjoy my new-found toy for almost an hour.

So, that's the perfect iPod in-car sound system: no iPod at all. Just buy a car with an MP3 capable CD player, burn a few hundred tunes to CD, and play them back from the disc. If that's not enough tunes, then burn a few discs and put 'em in your center console. No adapters, no FM hiss, no dangling cables.

Perfect!

Samsung-Apple Deal Deeper Than Recognized?

2005-10-07T18:42:00.000-07:00

While I stopped publishing my Apple rumor site, MacWhispers, almost two-years ago, my daily business activities keep me in constant contact with a wide range of Taiwan and China based manufacturers. Basically, I hear things. And, what I have been hearing more and more the past couple of weeks leads me to think that Apple's recent scaling up of involvement with Samsung is a lot bigger deal than simply contracting for good NAND flash memory pricing.

Apple Embraces Flash Memory

My friends in the orient (I will refrain from calling them 'sources') have been filling my ear with all sorts of info about strange disruptions in the flash memory market, all openly attributed to 'upcoming products from Apple.' Samsung has just shown a prototype of a tiny flash memory storage notebook computer. The wire is all atwitter with murmers about new Powerbooks and video devices and wireless devices coming from Apple. Tie the ideas together with Apple's sudden access to high-end flash memory at over 40% below market pricing, and... well, you can see some very interesting possibilities.

Flash Memory Is Very, Very Small

Flash memory has two major characteristics that differ from disk based storage. Flash is smaller; and, it uses much less power. When viewed against two simple questions, this quickly shines light on what Apple is about to bring to market. Those questions are: What device types now made by Apple could be radically improved by reducing size and power consumption? And... What completely new types of devices might make commercial sense, if they could be smaller and lower power than possible with hard drives? A number of answers come to mind, with the ones here best matching up with the loose talk I've been picking up from my China buddies.

Video iPod? "Think Different"

While the world argues about whether Apple is about to launch a video capable iPod, I will make the risky prediction that it's not whether Apple will launch such a device, but when they will launch a video capable iPod. With the Samsung deal in place, Apple can drop a couple of miniaturized video models into the $400 to $600 space, using 16GB or 32GB of flash memory, rather than a hard drive. Combined with some clever file compression and streaming details (based around the H.264 standard), such pencil-thin iPods could deal with dozens of music video type clips, several SD-quality movies, or, even a couple of HD-quality movies. Imagine a 2.5" x 4" full-screen video player, the thickness of the iPod nano.

The Powerbook nano?

When Apple gave us the 12-inch Powerbook, a steady stream of voices began a chant for an even smaller Powerbook, one handy enough to carry with little more effort than a day planner. The Samsung deal, and the availability of 8GB (and, rumored 16GB) NAND flash chips are still too small and pricey to replace HDD storage in notebooks. However, continuing declines in pricing and increases in capacity to hit a crossover point within 5-years that will give Apple the chance to hit that glorious techno-marvel sweet spot that they love to hit with any all-new product. Imagine a small, fully-functional Powerbook the same thickness as an iPod nano, with an 11" to 13" widescreen display, and 64GB to 128GB of flash, instead of a hard drive. Toss out the normal hard disk drive, and this form factor suddenly becomes very buildable. In not too many years it will be possible at under $1,000. That's when Apple will leverage their then massive flash memory channel strength and do it.

Airport Extreme Extreme

Streaming video from a player device to other playback devices in a home is not a real-time process. Some delay is acceptable, just as the 2 to 3-second delay in streaming music over Airport is accepted. But, video streams are much fatter than music streams... even SD video. And, decoding a video stream is a massive chore compared to decoding music. Current Airport Extreme models lack the horsepower for the job. The solution? AE models with better processors, and with (you guessed it) onboard flash memory buffer storage, and multimedia decoding/transmission functions.

The Mythical Apple Mobile Phone

My final conjecture here is that the deep commitment Apple is making to its flash memory supply signals broad internal development within Apple aimed at -- yes -- flash memory based mobile devices. In a big way. In fact, in a way bigger than likely forward growth of only the iPod platform would support. This leads to the question, "What other mobile device could sell in large enough numbers to drive Apple's commitment to lock up its mobile memory device supply? The only practical answer is "phone." When? Who knows? ... when Apple can get it right, that's when, no sooner. But if there's ever been an indicator that Apple really actually is developing a mobile phone, it is these moves in its flash memory channel.

Flash Devices. Fact Or Fiction?

Are flash-based video iPods, Powerbooks, and home media streaming devices actually about to be announced by Apple? Only Steve jobs and his cronies know for certain. But, if I've tallied the realities and the whispers correctly, my prediction is that at least two of these will be shown in the not too distant future. If so, I'll be at the head of the line, credit card in hand, to buy one of the new iPod video players...and, someday, a flash-based MacBook, and an Apple mobile phone.

Big Flash Future

One thing is clear from the channel indicators: Apple is making a huge, huge internal commitment to mobile devices. If I am right, I wouldn't doubt Apple soon becomes the world's number one buyer of flash memory.

And, wouldn't that be a kick in the pants?

The Mighty Mouse: Bill Palmer Has It Right

2005-08-03T17:28:00.000-07:00

Today, Bill Palmer published a wonderful editorial reaction to Apple's launch of its Mighty Mouse product, one with which I wholeheartedly agree.

You see, I'm a 2-button mouse builder who actually agrees with everything Bill stated in today's article. I actually use Apple 1-button mice on all of my personal Macs, despite having the number one selling USB and Bluetooth multi-button mice in my own product line. Why?

1. I actually am not too lazy to occasionally lift my left arm and press the "Control" key on my keyboard. in fact, it's a minor joy to do so from time to time, to avoid developing a tennis player-like asymmetry between the musculature of my arms. I mean, even my left arm deserves a tiny bit of activity from time to time, doesn't it?

2. I'm sloppy. Yep... there's an admission for you. I am an unprecise, vague, bad-aim kind of guy when it comes to fine finger dexterity... a real klutz. With a 1-button mouse, 100% of its top real estate is sitting there forgivingly to let me use the grossest, completely misaimed hand gestures to render a click. Only when I completely miss the mouse is there a problem.

3. I never, ever have to be even subtly aware that my mouse is "there." The mouse merely becomes an extension of my hand. No distracting higher thought process is needed to operate my Mac with a 1-button mouse. Need something clicked?... just repeat the same autonomic motion I've executed a billion times over the past 21-years. Tap. Job done... sort of like breathing. Same thing for when those rare moments arise where I need for my left index finger to tap the Control key. Tap. Job done.

4. I don't "game" on my Mac. However, I have a wonderful PSP and a Playstation 2, with excellent handheld controllers for the latter. I guess I don't buy into the idea that I should try to force my Mac into being a gaming machine, then complain and whine about why it is never as good at the task as a dedicated gaming console. I also don't want to live through the majority of times I use my Mac as a desktop computer, suffering the use of a hideously complicated "mouse" just to accommodate those rare moments when I might choose to use the Mac as a surrogate gaming console. If that were the case, I think I might be bright enough to (A) use my 1-button mouse for computing, and (B) invest into buying an appropriately complex mouse to use just for gaming. However, most "gamers" have seemed to overlook that amazingly simple solution.

I appreciate the challenge Bill makes in his article to what is often promoted as conventional mousing wisdom. The Apple User Interface is about a "less is more" approach. And, the geek-boys of the world always seem to be screaming more, more, more. I especially appreciate his observation about mouse makers giving equal prominence to both left and right buttons. His idea runs along the lines of a couple of prototype designs we have been working on here that actually eschew that convention, albeit not as cleverly as Apple's Mighty Mouse has done. If Apple's new product finds some substantial sales success, we may just bring one of these additional mouse designs to market, as well.

Thanks Bill (as usual) for standing for the more practical, if less "hip" interpretation of the Apple experience, and publishing the truth about matters. I hope your home address is well hidden, to keep your front lawn from being repeatedly rolled by vans full of florid-faced geeks.

The Blue Ocean Paradox

2005-07-31T23:32:00.000-07:00

There is a wonderful book, "The Blue Ocean Strategy," now on the business best seller lists that encourages businesses to look beyond simple extensions of today's products and services, and to find their own unique products that appeal to a vast wave of new customers. It's a great book, and is one I highly recommend. And, like so many great business books, it's premised on a readily observable, widely accepted reality. We all know at face value that its message is true.

Everybody knows that the most amazing business success stories invariably involve a guy, an idea, a new way of doing things, and, an appreciative new market that flocks to buy the resulting product or service. The most-told stories of blazing growth and profits involve unknown entrepreneurs, unanticipated products, and uncharted new markets.

The VC Response To Innovation

Have you ever approached a venture capital company as an unknown entrepreneur, with an unanticipated product, aimed into an uncharted market space? If so, you know that the result can be pretty ugly. No matter how obviously your new approach strikes to the heart of a vast new sea of buyer demand, the VC guy simply points to his investment criteria, calmly explains how your oddball plan doesn't fit the mold, and then sends you along your way.

The truth is that VC companies don't want to invest into truly earth-shattering new markets and products. So, despite the known truth of the Blue Ocean Strategy, the result when trying to fund such an out-of-the-box venture is that the guys who should be most motivated to seek out businesses with the potential to carve entire new markets into existence actually turn these projects away on a regular basis. This is the Blue Ocean Paradox.

The most financially lucrative new ventures are the least attractive to venture capital companies. A little "different" is good; but, being too different is the kiss of death.

Where The VC Approach Breaks Down

Skimming the "requirements" listed on a variety of venture capital company web sites quickly points to a few common threads in their expectations. And, perversely, it is these common threads that are at the heart of why VC companies almost always pass up the most promising and profitable new ventures. Here is a look at a few of those points.

Experienced Management Team

It's amazing how nearly every VC company wants to only back an experienced management team, and will only consider projects submitted from such teams. The paradox here is that throughout history the best companies have emerged from some of the most inexperienced people on the planet. In his series of books exploring the course of innovation in modern business, Clayton M. Christensen notes that the only way to truly maximize the early success of a innovative business is to put it into the hands of managers who are not steeped in prior methods and existing habits. In other words, the only way that truly innovative business ventures can reach their highest early growth potential is when piloted by inexperienced managers... ones who are not bound by historical precedent or corporate dogma.

It's a good thing that Steve Jobs and Steve Wozniak found a private backer for their little business venture (in Mike Markkula). Their inexperience at running a computer manufacturing company would surely have seen them driven out of the offices of every VC firm in California.

Category Defining Business

VC companies make it plain that they are only really interested in companies with the potential to lead their market segment. The fallacy in soliciting only category defining companies is that the idea presupposes the existence of a quantifiable "category," in the first place. How does a VC firm react to a proposition based on opening an entirely new market? What's the response when zero financial metrics exist for such a project, because the market into which it is aimed simply has never previously existed? Even though the first company to mine such an opportunity would have an enormous opportunity to truly define the new category, VC guys run for the hills when such a project comes their way.

Venture capital guys really do not want category defining companies in their portfolios. They want companies that can compete strongly in existing categories.

Acceptable Types Of Businesses

All VC companies precisely state what type of businesses are acceptable investments, and which are not. The premise here is that the people working in the VC firm must provide sufficient in-house expertise to properly evaluate a business venture, and, that this expertise can only come from prior experience. At face value that makes good sense. But, in reality it creates quite the hurdle to any new venture that is also an entirely new type of business. "Normal" is a requirement to get VC funding, despite the fact that the most lucrative business ventures are also the ones that take the most abnormal approaches to providing entirely new value to customers.

Some Ventures Are Doomed From The Start

Today's reality in new companies seeking venture capital is that it is not good to be too clever, too inexperienced, too creative, or too different. If you are, you are doomed from the start in gaining institutional venture capital funding. No matter how strong your premise nor how well crafted your approach, if your business plan sits too far out of the box you will have to find another funding route.

The result of the Blue Ocean Paradox is that the brightest new ventures face unneeded delays and risk oblivion from capital shortages, and venture capital companies lose out on the highest rates of return on their capital funds, because the traditional approach taken in the VC community is structured to exclude the best business prospects.

From this writer's view, it seems like the time is ripe for a truly innovative venture capital approach to emerge. The rewards to both the brightest entrepreneurs and the innovating VC firm will be remarkable. Until that happens, such bright new ventures will remain privately funded ventures, nursed into existence by sheer entrepreneurial determination, credit cards, second mortgages, and angel investors.