Grumpy old men, the "Inmates" and margins

iPad, iPhone and the future of computing

Apple-Google-Progress.pngAs the iPad descends upon us, it is fair to ask, “Is this the beginning of the end, or the end of the beginning?” Depending upon whom you ask, the conclusions widely vary.

For example, RealNetworks’ Rob Glaser forcefully argues that Apple’s vertically integrated model “Must be stopped.” He cautions: “If that’s the way the industry plays out — and there are a couple of vertical stovepipes that are closed — A: we will have a much slower pace of innovation than we’ve ever had and B: there will be a tremendous loss in terms of value creation versus it being more horizontal.”

Meanwhile, science fiction writer, blogger and tech activist, Cory Doctorow, recently made waves when he asserted in Why I won’t buy an iPad (and think you shouldn’t, either) that, “If you can’t open it, you don’t own it. Screws not glue.” He concluded:

The real issue isn’t the capabilities of the piece of plastic you unwrap today, but the technical and social infrastructure that accompanies it. If you want to live in the creative universe where anyone with a cool idea can make it and give it to you to run on your hardware, the iPad isn’t for you. If you want to live in the fair world where you get to keep (or give away) the stuff you buy, the iPad isn’t for you. If you want to write code for a platform where the only thing that determines whether you’re going to succeed with it is whether your audience loves it, the iPad isn’t for you.

And don’t even get me started on the legions who dismiss Apple’s end-to-end approach with an “Apple’s Evil” slap, or more stridently, paint the story as “destined” to play out as things did in the PC Wars, with arrogant Apple racing to an early lead, only to get its head handed to it in the end.

I won’t spend a lot of time bringing to the fore the masses that see the Apple model in more favorable terms, as the numbers speak for themselves across just about any metric that matters:

  • 85 million iPhones/iPod Touches/iPads sold
  • 185,000 applications built
  • 100,000 developer ecosystem
  • 4 billion application downloads
  • 15 billion iTunes media sold
  • JD Power Award for Customer Satisfaction
  • Ungodly operating margins/cash flow

So how to reconcile the animus with the market’s clear directional momentum? Read on …

Progress and grumpy old men

The late Herb Caen, the legendary columnist of the San Francisco Chronicle, once wrote a piece about the worsening state of San Francisco and, in particular, one of its main arteries, Market Street.

iPad CoverageIn it, he lamented about how this thoroughfare was always under construction, how the city’s charms and enduring traditions were getting swept aside by outsiders, and how the place was becoming less and less hospitable to locals and long-timers, forcing Caen to wonder if, perhaps, San Francisco’s best days were behind it.

Ah, but Caen was setting us up for an unexpected upper-cut, as at the tail end of the piece, he reveals (I am paraphrasing), “Would it surprise you to know that I wrote this piece way back in 1954?”

Caen’s point was that then, as now, every generation sees their generation as the Real Generation and the Right Approach, when in truth, progress just moves forward.

Hence, the locals of San Francisco, circa 1954, saw a city losing sight of its traditions and therefore, its magic. In truth, the city was just moving forward with the times.

Thus, it was unsurprising that 30 years later, today’s locals would reach the exact same conclusions about the “good old days” being their particular generational approach.

I would argue that Glaser, Doctorow and a number of others (Daring Fireball’s John Gruber covers some of the other disenchanted in an excellent piece, The Kids Are All Right) are simply guilty of confusing their truth with The Truth, a not so subtle way of saying, “My Way or the Highway.”

A note aside, while I have heard plenty of grumpy old men lamenting about the continuing rise of the Apple approach and its dark implications, I have yet to hear a single female prognosticator confuse such attributes with real-world unfavorable outcomes. Perhaps, it’s because women don’t long for the “good old days” of Stone Age tools, techno-babble, impersonal computing and the like.

Me personally, my first computer was a TRS-80, so I understand the nostalgia of being able to tinker down to schematics and assembly code, and just the same, prefer the ability to apply my muscles judiciously to higher level problems versus lower level ones.

Hence, what I give up in terms of absolute flexibility, I gain in not having to worry about hardware abstractions, infinite form-factors, middleware, glue code, software distribution, marketplace and monetization.

To me, that is a more than acceptable trade-off, inasmuch as you would be hard-pressed to argue that the model is less democratic or even less web friendly (while Apple is clearly trying to create the best native experience possible, they have unquestionably also created the best mobile web experience and are key proponents of HTML5 and pioneered WebKit adoption).

Nonetheless, the yin and yang of openness vs. integrated raises a fundamental question that underscores the battle being fought in the simmering industry battle between Apple and Google.

Do we really need more inmates?

Inmates.jpgThere are two bookends that gave me a grammar and narrative for thinking about software (and hardware) development and design. The first is “The Mythical Man-Month” by Fred Brooks, and the second is “The Inmates are Running the Asylum” by Alan Cooper.

In “Inmates,” Cooper makes the argument that too often the development process is driven by techies building the types of products that they would like to use, as opposed to really understanding the aspirations and outcome goals of their target user, let alone who that target user even is.

Worse, they often compensate for this blind spot by building products that address all use cases, including edge cases, and build a design interaction model that is a composite of that blob of functionality.

The end-result are products that are confusing, needlessly complex and that address all theoretical problems from a check box perspective, but few real problems from a specific outcome perspective.

Keep this in mind next time you are comparing the Apple product that seems to be “missing” certain features relative to the cheaper alternative on the other shelf. Nothing is free when it comes to product design decisions.

Margins, and who keeps which piece of what dollar

It’s worth revisiting Rob Glaser’s earlier comment about “stopping Apple,” as it underscores the real reason many want to stop Apple.

Train_coupling.jpgBack in the days of the PC, the rise of Microsoft and Intel led to a horizontally organized industry. Microsoft and Intel kept the highest margin dollars for themselves, and could expand into adjacent segments as they saw fit. They also left a number of chunks of the hardware, software and infrastructure stack to third parties.

This type of loose-coupling worked because the PC was essentially a homogeneous platform, and the expectations of user experience were such that daily system crashes, recurrent performance lags and numbingly-complex “enterprise” software was considered the rule, and not the exception.

Now, of course, the two industry standard-bearers of the Post-PC Era, Apple and Google, respectively, have addressed the challenges of old very differently. Google, by embracing simpler, loosely coupled (read: horizontally-focused) cloud-facing solutions, and Apple, by embracing vertically-integrated, complete product solutions that marry hardware, software, service, developer and marketplace.

But make no bones about it; the real tempest here is who keeps the high margin dollars.

In the case of Google, they are happy to allow any and all to plug into their search and advertising gravy train, so long as they can disrupt any and all incumbent segments ripe to be broken up by their model.

In the case of Apple, they see user experience and control of same as central to their value proposition and “govern” accordingly.

Whether you see one as more open, closed, virtuous or evil depends upon your personal preference about user experience and choice, not to mention your particular economic self-interest.

But that is a post for another time.

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  • John Blossom

    Good post. I think that the inherent tension between Apple’s iPad and the cloud-based approach from Google is not too different from previous technology evolutions. Mobile computing is still a new frontier of technologies in many ways, with inputs, outputs and interfaces still in rapid development. Apple, like Compuserve and similar premium services in the early days of the Internet, offered simplified approaches to information service that accelerated adoption. But as Web standards made both vertical and horizontal integration easier on more open platforms, the Compuserve-like services abated.

    Similarly, Apple’s early consumer-friendly offerings like the original Macintosh made graphic interface computing palatable at a time when PCs were way too geekish and IT-oriented for the average person. But once the Wintel alliance began to iron out the big consumer issues, Windows took off. Apple will always have a place in the evolution of user-friendly approaches to technology, but their insistence on tight control inevitably creates broader demand for more flexible services. People like “perfect” things, but they tend to buy more things that are less than perfect but that solve 80 percent of their problems brilliantly. So, in general, more open approaches like the Web will win no matter what.

  • JohnB42

    “85 million iPhones/iPod Touches/iPads sold”

    These aren’t really very big numbers in the context of Apple vs PC (which is still the game we are on about here whatever semantics you want to wrap it up into).

    It is stunningly arrogant to suggest that these numbers mean you do not have to put forward some logical thought to support the Apple world you seek.

    My main problem here is simply one of choice. If Apple win and become dominant I will have to use their kit and subscribe to their vertical ‘integrated’ world.

    If the other players (plural) win I have choice, and lots of it, loads of competing hardware maufacturers, programmers and users.

    One is a good place to be the other is not.

    You can’t even begin to compehend how obnoxious the statement …

    “are simply guilty of confusing their truth with The Truth”

    ….is. You are simpy assuming, and quoting numbers that don’t give you the authority to, that your truth is THE Truth (this is known as hypocracy by the way). As is Apple. I don’t like being forced into corners. You don’t seem to have even the most basic understanding that such behaviour is unwelcome and unpleasant.

    Grumpy ? Hell, yes. With good reason too.

  • Alex Tolley

    “In the case of Apple, they see user experience and control of same as central to their value proposition and “govern” accordingly.”

    Using that logic, the iP[one,od,ad] should not allow access to web pages, as their UIs and user experience are outside of Apple’s control.

    Tim O’Reilly has repeatedly said, and I agree with him, that companies should create more ecosystem value than they consume. Apple is doing the exact opposite with their channel business model. IMO, they will kill their own goose…again.

  • Sriyansa

    Apple’s vision for their products and their balance sheet drives their product decisions. While I do agree that i-suite of products is a frustratingly closed system and that it will reduce choice, as a free market believer I think this is a problem for markets to solve.

    Ultimately if using an open system (choose your best flavor) customers end up getting greater value for the price paid they will use it. Everyone does not plonk down $500 – $1000 because they are an Apple fanboy/fangirl. To assume that Apple somehow dominates our consciousness to the extent that people do not understand the implications of their purchases is not the most rational of things.

    All said and done, iPhone still has the best integrated mobile phone + computing experience of all products out there and I would like to believe that this is why they sell, and not because there are no alternatives

  • Dave Pentecost

    The people bemoaning the loss of alternatives forget the stranglehold that Microsoft had on the industry.

    In the dark days of the ’90s, Apple managed to continue offering an alternative. They survived that time. Why would they not want to guard against the threat that Google now presents? Do you prefer a world where ALL services are Google-based and you just have a choice of which device (Apple or no, general purpose or not) you use to access this “freedom”?

  • Mark Sigal

    @John, thanks for the thoughtful comments. I think the point in the story that will be particularly interesting to watch, is if/when Google Android reaches a point analogous to your reference, “But once the Wintel alliance began to iron out the big consumer issues, Windows took off,” as Google has a ways to go, IMHO.

    The difference then versus now is that Apple left lots of pricing overhang and Microsoft won the hearts and minds of developers, neither of which case is true with the mobile market (Apple is priced and segmented right, and has focused from day one on winning hearts and minds of developers).

    But then, as now, Apple is keeping the device making to themselves (versus cultivating handset OEMs), and of course, their legendary control mindset is if anything more acute so it will be truly interesting to see how your thesis plays out.

    Cheers,

    Mark

  • Mark Sigal

    @JohnB42, I am not really clear which aspect of my argument you actually disagree with, other than not considering the data meaningful enough, which I am not sure what your basis for dismissing it is (other than that it doesn’t support your conclusion).

    More to the point, Apple can be a market leader, and compelling alternatives can still exist. In fact, I hope that it plays that way, as competition is good.

    Not sure why this needs to be an all-or-none conclusion on your part, but appreciate the hard pushback, just the same.

    Mark

  • Mark

    “A note aside, while I have heard plenty of grumpy old men lamenting about the continuing rise of the Apple approach and its dark implications, I have yet to hear a single female prognosticator confuse such attributes with real-world unfavorable outcomes.”

    Here’s Valerie Aurora on a similar closed ecosystem (Facebook):
    http://valhenson.livejournal.com/44781.html

    “[S]crew you Facebook people, I like Real Internet.”

  • Debra Seifert

    Reading your article, I was having a flash-back. We got this fabulous new device. Mysterious, quirky, broken lots of the time. Lots of fiddling. It was called a Television Set. It drove my dad nuts. We lugged it into repair all the time. But we persisted, not because we all wanted to waste time fixing it, but because the value it gave us was so high: Here were The Beatles on TV! And we didn’t even have concert tickets!

    Flash forward. Every day for 5 years I have turned on my TV and nothing has happened to it. It will probably work forever without me ever touching it. I don’t want to work on my TV, my computer, or my toaster. I am a consumer. Get it?

    Grandma is texting her grandson at college on her cell phone. Why? Because it is so simple, she can finally understand it. She’s loving it.

    The technos will keep the uproar going. That is their right. The rest of just want things to work.

  • Mark Sigal

    @Alex, if I subscribed to all or none logic, I would agree with your take, but in practice, Apple supports the best mobile web experience and focuses on differentiating via their native app experience.

    If they were trying to somehow hobble the mobile web, I would agree with you, but that’s just not the case (WebKit, HTML 5 are the most obvious examples).

    As to taking more out of the ecosystem than they give, that assumes that 100K developers see the emergence of iPhone/iPod Touch and iPad as a net negative, which is highly debate-able, given the data re the goodness of integrated platform, 100% distribution and built-in monetization, all things that pre iPhone made the mobile realm a technology and innovation backwater.

    Mark

  • qka

    The other sign of the iPhone & Co. snowballing success that I believe is underreported is the number of apps being developed as add-ons to services provided by non-IT companies – insurance & diet plans are among those I’ve seen advertised in the past 24 hours. They ARE NOT developing for Android or any other mobile platform.

  • David Prinzing

    I like your contrast of Apple and Google, “the two industry standard-bearers of the Post-PC Era”. I see them building and defending two different digital business ecosystems:

    1. Apple is busy building and defending an ecosystem for selling discrete units of “content” (apps, books, music, videos, games, etc.). Old content producers like this model, except for the fact that they may lose a direct relationship with the customer. Apple’s marketing strategy is based on an outstanding user experience; sell the device that people want and make it really easy to buy stuff on it. The focus on outstanding user experience/design requires a certain amount of control and leads them to favor dedicated rich-client apps and superior protocols, even if they’re proprietary.

    2. Google is busy building and defending an open ecosystem where everything is free that can be, supported by advertising that is actually helpful to the customer, because they’ve so clearly identified the customer’s intent/interest. The focus on a free, open ecosystem leads them to favor rich internet/web apps. “Open” is important because (a) it helps the entire ecosystem to grow and benefit; and (b) if it’s open, Google can access it to understand customer intent and sell appropriate advertising.

  • Steve R.

    I think the Mac actually provides an interesting contrast here.

    One of the great things in my mind about Mac OS X is that it brilliantly combines the a beautiful user experience that generally “just works” with a powerful, flexible AND OPEN base. It’s a computer that my non-techie wife can use without fear and loathing, and one that I can do work with the way I want to, not the way that Apple thinks I should.

    If something on my Mac doesn’t work the way I need it to, I can –with effort, but I can — do something about it. If something on my iPhone doesn’t work, well, I’m stuck with it.

    Yeah, I’m one of the grumpy old men, but I like my Mac not just because it works but because I can make it work the way I want to.

  • Alex Tolley

    @Mark

    Regarding ecosystems. Whether the developers can eke out a living is not really the point. Apple is controlling the only sales space, most developers are making next to nothing, every developer has to buy the SDK and Apple’s AppStore approval process is a well documented risky proposition. Apple has an iron grip on 3rd partyd development. I find that hard to characterize as growing your ecosystem. Digital sharecropping seems more appropriate in this case.

    As regards user experience. I didn’t mean to imply that they were hobbling web apps (apart from lack of Flash support). What I was trying to say that Apple uses sleight of hand excuses to defend their position. That have done this before regarding what is permissible on the iPhone under the pretext of carrier security. Yet the same argument could not apply to the unconnected iPod Touch, but the restrictions were the same. Maybe you can argue that this is a case of lowest common denominator standards for the AppStore, but Apple never tried to claim that AFAIK.

    I don’t doubt that the iPad can be sold as an appliance, rather than as a computer. iPhones and a host of other limited use information appliances exist to testify to that model working.
    What I do not care for is the sloppy equating of the device as a replacement/alternative for a laptop/netbook. In some roles this will work, but for people who are used to having control over their computing devices including what software can be put on it and how much control over that they have, the iPad will not cut it.

    A few years of sales should indicate which model of computing platform works best. If the closed iPad approach wins out and started to dominate the market, I do think that innovation and development will be hobbled.

  • bowerbird

    mark, your posts always get a lot of comments.

    i’m not sure if that’s because you pick hot-button topics,
    of if it’s because you throw up a rorschach post that lets
    everyone react to it in their own personal way, or if it’s
    both of those things (and maybe a whole lot more), but
    i find it kind of interesting…

    meanwhile, i’m not sure what your point is, or what the
    point of all your commenters is, so i’ll just bow out now.

    -bowerbird

  • Mark Sigal

    @Debra, great comment. Candidly, one of the more surreal discussions I had recently was with my 70 something dad, who is suddenly hot and bothered to get an iPad, despite being the quintessential non techie. Why? This was the first device that spoke to a set of outcomes he understood. Lightweight, long battery life, great web and email experience and strong media capabilities, plus a couple of apps that he was familiar with via apple marketing. Now, if apple was REALLY motivated to capture this user, they would allow you to set up and maintain without the perpetual tether to an iTunes powered Mac or pc. Soon enough, I suspect/hope.

    Cheers,

    Mark

  • Mark Sigal

    @Steve R., your point underscores the fact that this needn’t be an all or none type of deal. That said, I probably relegate myself to a total utilitarian dweeb when I say that with my iPad I don’t miss the fan on my MacBook Pro going on continuously, owing to Flash in the browser, TweetDeck’s AIR based client (which I love, but is a resource hog), and the various latencies that muck up the overall experience in a personal computer. I have missed my keyboard more than once, but that’s a different topic all together. :-)

    @Alex, I wouldn’t call it digital sharecropping at all, any more than Google has created a sharecropper ecosystem around the web. However, a core element that Apple should be judged by developers over the long haul is whether they make money, and whether some subset grows into big companies, as was enabled by Microsoft in the PC Area. That I agree with you 100%, and in fact, blogged on the topic in a post called ‘Should Apple Give a Rat’s Ass that Developers Aren’t Getting Rich off of the iPhone Platform?’ (http://bit.ly/1KlUJx). As to whether these devices capture the low end of the market or totally replace notebook computers remembers to be seen. Long way to go based on my one week of experience with the device to date — but a great start. Thanks for detailed thoughts/framing.

    @bowerbird, I prefer to think of what I do as intellectual salt lick, and we all like salt, right? I will take your not getting what the topic is about pretty similar to your read on most of my posts; namely, worthy of a “nothing to see, folks” comment. But at least you give it a read, so no worries there. :-)

  • bowerbird

    mark-

    i wasn’t being critical when i said you write “rorschach” posts.

    i write rorschach comments quite often, because
    i’m interested to see how people interpret them…

    but whereas my comments typically make my position clear
    — and leave the interpretation part about something else –
    i’m not sure that your posts make your position very clear…

    meaning you really can’t say “i told you so” down the line…

    i’m also not clear what i think it matters.

    sure, lots of people have _opinions_ on the open/closed thing.
    but does any of it really matter? these businesses are gonna do
    whatever they want, without any regard for how we feel about it.

    and their actions will play out, and maybe we’ll get some kinda
    “resolution”, or maybe we won’t, but very little of the outcome
    will depend on our opinions, because we’re not solid enough
    or unequivocal enough or one-sided enough to tip any scales.

    so it strikes me as equivalent to talking about the weather –
    sure, people do it, but it doesn’t make any _difference_…

    > I will take your not getting what the topic is about
    > pretty similar to your read on most of my posts;
    > namely, worthy of a “nothing to see, folks” comment.

    well, i wouldn’t put it that way. i did read it. _and_ comment.

    but it’s very interesting that you _interpreted_ it that way… ;+)

    -bowerbird

  • Mark Sigal

    Hey Bowerbird,

    I totally did not take your feedback negatively. Dismissive sure, but not negative. :-)

    As to whether this stuff is like the weather or truly matters, I have a different take. Many of the people that read and are influenced by these threads are influencers, early adopters and developers themselves so they are both canaries in the coal mine and shapers of the outcome. You and I can wax poetic about whether it will rain tomorrow but it has zero impacts on the weather.

    If the sentiment were (across the blogosphere, including the comment threads) that Apple was Evil or that Google was an Economic Vampire that sentiment would probably be indicative of early adopters, influencers and/or developers tilting a given direction. To me, that is very different than talking about the weather, especially since a lot of this stuff is like building a straw man – build, pick, pick, tear-down, rebuild, hopefully get to some new level of understanding.

    Final thought is I try to write to different types of posts – thesis posts, where I argue about a given construct and specific outcomes (e.g., Rebooting the Book via iPad: http://bit.ly/zOoEu); and narrative pieces that attempt to provide framing for a crisp, hopefully somewhat pragmatic, discussion. The latter is decidedly rorschach, and I’d certainly rather have a reasoned discussion on all sides of the argument vs. just reinforce my own biases, as it leads to a richer composite on a given topic.

    Cheers,

    Mark

  • bowerbird

    mark-

    except nobody reading these posts is being influenced. at all.
    nobody, on either side, is changing their minds. nor will they.
    and we certainly aren’t getting any “new level of understanding”.

    i’d also disagree, strongly, that anyone here is having any effect.
    the companies involved do decisions based on the bottom-line,
    not on public opinion polls. and even if they did make decisions
    based on public opinion polls, apple has shown that they’re now
    more interested in the opinion of the _public_ than of techies…

    -bowerbird

  • Mark Sigal

    Respect your right to disagree, and definitely concur on Apple’s focus from an audience and user experience perspective, although would add that Apple probably wouldn’t spend so much energy staging events targeted at media and techies if they didn’t consider these folks key constituents in realizing their message.

  • bowerbird

    and i respect your ability to draw a crowd. :+)

    those events are targeted at media to get out to the public.

    and they aren’t targeted at techies in general, but rather at
    the apple faithful, who are one of the two sides here who
    are not listening to the other side or changing their minds.

    and as for that other side, they are not persuaded at all
    by the high-energy events that apple stages, but rather
    have great fun ridiculing the fan-boy nature of the things.

    at least, that’s what i see, from my perspective here in the
    middle, mostly, albeit way closer to the apple-fan-boy side,
    mostly because i want my machinery to just work, thank you.

    everyone else might have mileage that might vary, of course.

    and i’m glad you give everyone here a chance to vent, mark.

    because, you know, that’s the problem, we don’t vent enough.

    -bowerbird

    p.s. and i apologize for turning this thread into a meta-thread.