Apple and the innovation dilemma
Just how long can Apple run the table in the post-Jobs era? It was simply a matter of time before those whispers turned into a question asked out loud. George Colony, the CEO of Forrester, a research and advisory firm that has followed the company as closely as anyone, is taking a particularly dim view of Apple’s future. In a blog post that was guaranteed to spark a conversation, Colony says Apple’s days as a market leader are numbered; its “momentum will carry it for 24-48 months” and then, absent a “charismatic leader” in the Jobs mold, it will devolve from “being a great company to being a good company.”
Colony doesn’t get too specific about what this means, but we know. It’s not just about market cap, or stock price or any other shareholder metric. Colony is talking about that combination of imagination and execution pixie dust that has made Apple the most significant high-tech company of the moment, and one of the most important ever.
It’s a pretty big statement, especially since Apple is on fire: $6 billion earned on $40 billion in revenues in the most recent quarter, the iPhone selling as briskly in the rest of the world now as it did in the United States for years, 65 million iPads sold in two years, more cash than it knows what to do with, and at least one analyst speculating that it’ll be a $1,000 stock before long.
It’s also not the toughest bet to make, since high-tech companies, in particular, almost always glow hot for only so long, with rare exceptions – especially after the charismatic founder leaves or is kicked out. We’ve seen it at Sony, Polaroid, Disney and even Apple, Colony argues, when Jobs was kicked out in 1985.
But it’s a sucker’s bet. Here’s the easy counter: There is virtually no chance Apple doesn’t have tricks up its sleeve that were developed in the Jobs era. And it’s those tricks, of course, that got them this far. They have something everyone can see: a management team in CEO Tim Cook and designer Jony Ive, handpicked by Jobs more than a decade ago. Indeed, Cult of Mac editor Leander Kahney says Ive is all the proof you need to know that Colony has it wrong:
Apple’s design chief Sir Jonathan Ive – the man Steve Jobs once called his “spiritual partner” and the genius behind Apple’s iconic aesthetic and design language – is still working at Apple. More importantly, as Jobs bragged to his biographer, Jony Ive has just as much operational power at Apple as Tim Cook himself. Cook is only nominally Ive’s boss: In reality, thanks to Steve, they’re equals.
Even when Apple is losing, it wins
The Department of Justice, as anticipated, filed suit Wednesday against Apple and five of the Big Six publishers over alleged price-fixing. Three of those publishers have entered into a proposed settlement with the DOJ, but Apple is still on the hook.
We won’t know until we know whether Apple will win, lose or settle (and now there are 16 states piling on the charges, too), but in a way it’s a sort of hapless victim. If the DOJ theory is correct, Apple did participate in a sort of conspiracy, but one driven (again, according to the allegations) by publishers that were determined to keep controlling e-book prices. In the beginning of the e-book industry it was the publishers, not Apple, that had the upper hand.
It’s important to remember the climate in which this alleged conspiracy unfolded. Amazon, against publishers’ wishes, was going rogue with $10 e-books. The mammoth online retailer – which got its start in print books but essentially created the e-book business – was widely thought to be making nothing, or next to zero, on its proprietarily encoded e-books, the better to boost demand for the Kindle.
It was classic razor-and-blades: You want to make money on the razor, so you almost give away the blades, except only your razor can hold the free blades. But in e-books it’s an even better deal. Amazon doesn’t make e-books, and they are virtual goods, requiring no inventory and little overhead in the traditional sense.
But the publishing industry was displeased with Amazon’s new $10 regime. While it was beating on Amazon to change its ways, Macmillan – whose titles at the time included the best sellers Wolf Hall and The Gathering Storm – and Apple were negotiating terms for the iPad maker’s new offering: iBooks. Apple, unlike Amazon, was willing to play by Macmillan’s – and thus the publishers’ – rules.
In Apple’s agreeing to terms from publishers that Amazon had resisted for as long as it could, a number of things occurred. It was high-stakes poker, with most of the cards still face down:
- Apple, always fearsome in prospect if not in practice (can you say iAds?), got all the deals it needed to be a credible e-book player with its new platform.
- The publishers got a new, and potentially fearsome, retailing partner that agreed to see things their way.
- That new dynamic had the immediate effect of making Amazon’s market power less fearsome.
Tech’s forbidden touch
“You can look, but you can’t touch” – great advice in most museums, and every strip club. But it makes no sense when it comes to our computers. We are getting very touchy-feely with our smartphones and tablets, and this is how it should be. Even BlackBerry and Amazon’s Kindle, which launched with hardware keyboards to differentiate it from the competition, have abandoned them.
It’s no accident. We touch instinctively. We are born touching everything, and only learn where the boundaries are later in life. Our handheld devices are reconnecting us with the primary technique we used to learn about the world we had just entered. The metaphor extends. Now it’s the mobile computers that we use to learn about the world around us, and we control them with our fingers, by touching a screen. How do you place a price on that?
Many are trying, thanks to software patents. Patents have become a bane to the very essence of innovation. They are arsenals, ostensibly meant to defend but more often used to offend. Yahoo’s lawsuit against Facebook over 10 patents further proves that weaponizing software patents is the last gasp of a dying business.
Which brings me to the news that Twitter is trying to patent one of the most instinctive gestures on the iPhone, what they call User Interface Mechanics. Anyone who has used a Twitter client on their phone knows to refresh the page: You “pull” it down and release. Others use this as well, like Google’s Gmail mobile site.
But as Techcrunch noticed, this functionality isn’t built into every core app on the iPhone (like the Mail app), and the reason is probably because it’s potential lawsuit bait.
It’s not a sure thing that Twitter’s application will be approved, or that Twitter would enforce it. The most important computer interface device – the mouse – was patented by visionary Douglas Engelbart in 1970, and everything worked out all right.
The high costs of the cloud
How great is it that high-definition video is now portable? Thanks to cloud computing, superfast 4G networks and tablets with high-resolution screens, we can watch thousands of movies and TV shows in lush, beautiful clarity wherever we go.
In a way, that is pretty great, as the millions of people who have bought the new iPad with retina display and LTE connections have already seen. But in another way, it’s going to quickly become not so great: As hi-def video – or rather, the data bandwidth to deliver it – becomes a commodity for more people, that commodity will start to become much more expensive. Not just for consumers, but for the companies that will increasingly need more wireless spectrum and wired infrastructure to handle the surge in data demand.
Call it the curse of the cloud. The proliferation of online video services and portable devices to watch them on have added congestion to data networks even as wireless carriers impose fees on its biggest data users. According to Bytemobile, video accounted for half of all mobile data traffic in February, up from 40 percent only a year earlier.
And that was before the arrival of the new iPad, which has four times as many pixels as the iPad 2. More pixels can enhance hi-def video but requires more data. Demand for wireless data will rise even higher once more LTE smartphones – including, most likely, the iPhone 5 expected this year – start streaming video and other high-bandwidth content on them. If carriers are overwhelmed by the demand, as AT&T was with its notoriously unreliable 3G networks, wireless service will grow more spotty over time. But we’ll be paying more for it.
We’re already seeing some of this happening with the LTE iPads. Just ask the guy who used his brand new iPad to watch NCAA games while attending NCAA games, blowing through his 2GB allotment in less than two days. Or the USA Today columnist who says he did the same just by downloading apps. Meanwhile, complaints were surfacing on message boards that AT&T’s LTE networks were dragging in some urban areas as people played with their new iPads.
It won’t be just iPads and the next generation of iPhones taxing wireless networks. Apple is the first to offer an LTE tablet to the masses, but LTE Android tablets will follow, as will more LTE phones powered by Android, which runs on 51 percent of the world’s smartphones. Verizon, AT&T and Sprint have been building out their 4G networks for years, but Verizon recently warned that despite that effort, demand will outstrip LTE capacity as early as next year.
Teardown experts crack open Apple’s new iPad
The electronics hardware experts at iFixit find themselves again in the spotlight as they crack open the latest iPad to see what chips, display and other components make it tick. Teardowns, as they’re called, are closely followed by investors betting on which companies supply components for consumer electronics devices like Apple’s massively iPads and iPhones.
iFixit sent its engineers to Australia, where they managed to buy one of the first new iPads to be sold, and — fueled by cans of Red Bull – proceeded to crack it open with tools ranging from guitar picks (to pry open the cover) to “spudgers” (for poking and prodding at wires).
They’re live-blogging the entire affair, but so many people appear to be watching that iFixit’s webpage is responding very slowly.
UPDATE – Photos from the teardown appear to show a Broadcom chip, which iFixit says is a baseband/WiFi/Bluetooth component. You can also see silicon from Avago, which specializes in semiconductors used to keep different kinds of radio frequency chips from interfering with each other, and another chip from Texas Instruments.
Being chosen for an Apple product may be a double-edged sword for chip companies. On one hand, inclusion in an iPad or iPhone suggests a company’s chips must be top-notch. But on the other hand, with Apple’s reputation for squeezing its suppliers to get the lowest price possible – these companies might not be making a ton of profit.
A new iPad, the same iEthics
Several days after the launch of the new iPad 3, HD, or whatever it’s called, we all know about it’s blazing 4G capabilities, including its ability to be a hotspot, carrier permitting, of course. We know about its Retina display, which makes the painful, insufferable scourge of image pixelization a thing of the past. We know about Infinity Blade. We know that to pack all this in, Apple’s designers had to let out the new iPad’s aluminum waist to accommodate some unfortunate but really quite microscopic weight gain. We know the iPad’s battery life is still amazing, and its price point is altogether unchanged. We know Apple has adopted a cunning new strategy of putting the previous-generation iPad, as it did with the iPhone 4, on a sort of permanent sale, to scoop up the low end of the high-end market. (We wonder if this was Steve Jobs’s last decree or Tim Cook’s first.) We know a lot about the iPad.
But what we don’t know: How many of Foxconn’s nearly 100,000 employees will harm themselves, intentionally or inadvertently — or their families or loved ones — in the manufacture of it? And will the developed world ever acknowledge the dark side of these truly transformative technologies, like the iPad, or will we continue to tell ourselves fables to explain away the havoc our addictions wreak on the developing world? Is a device really magic if to pull a rabbit out of a hat, you have to kill a disappearing dove?
Those of us who have been technology journalists have long been subjected to the cult of Steve Jobs’s Apple, and those of us who are fans of technology are mostly well aware of the stark elegance and extreme usability — even the words seem inadequate — that come with using, let alone experiencing, Apple products. But the rumblings about Apple’s manufacturing processes started years ago, and the recent New York Times series on the ignobility of Foxconn as an employer blew a hole in the side of that particular ship of willful ignorance. Few Apple consumers can claim not to understand the human sacrifice behind their glowing screens — the death, diseases, exhaustion, mental and emotional stress, and superhuman expectations placed upon the workers who bring these magic devices to life. It’s not just in the papers — Mike Daisey’s This American Life podcast exposé on Foxconn and Apple is a mere click away, and most mainstream media have given at least passing coverage to the working conditions reflected in the Gorilla Glass on our devices.
Update, 3/16/2012: Mike Daisey’s account of working conditions at Foxconn for This American Life has been retracted by the radio show. Other reporting linked to here describing similar episodes and working conditions has not been retracted as of this update.
To be sure, Apple isn’t the first company to exploit a developing society’s cheap labor. That’s a tradition that proudly goes back hundreds of years, arguably to the first triangle trades, or perhaps to Roman times. Maybe things have come full circle for China, and this is just another version of Marco Polo and the Silk Road. But there’s something insidious about a near-perfect system where the only factor beyond design is the human one. (Especially when those humans decide to jump off buildings.)
Apple has given more than lip service to the problem, and worker suicides appear to be down. But when will American consumers care how their iPads are built? When will they be told how many human hands had to touch the elegant machine, including the last pair that wiped off all the fingerprints with powerful solvents, and how many yuans were put in those hands at the end of the workweek? With technology taking an ever greater place in our culture and our society, when do we consumers begin to demand ethical technology, the way some of us now demand ethical meat and ethical investing?
The apps that run on these devices — not just iPhones and iPads, but Kindle Fires and Samsung Galaxy Tabs — enable social connection and sharing as never before. Communication across time, distance and borders has become free, or just pennies a minute. But few, if any, apps enable any sort of social organizing around things more important than discounted lunches or happy hours. In fact Groupon founder Andrew Mason famously abandoned his social-change startup to focus on the far more popular idea of building a coupon site. We like — love — the social tooling our devices allow us, as long as they cater to our essential selfishness as consumers.
Perhaps when we see a rise in prices something is afoot.
Apple, the new iPad, and being ‘sanely great’
Sometimes it’s best to start with the obvious. The “new” iPad announced Wednesday will sell like mad when it goes on sale next Friday. So confident is Apple in what it isn’t calling the iPad 3 that it didn’t even bother to give it a special name. It’s just iPad, even though there is a first-generation iPad (a retronym, of course) and an iPad 2. When you’ve achieved one-name status — Bono, Cher, Liberace — you don’t give that up lightly.
The new iPad has a bunch of hardware and design upgrades that do make sense, even though the impetus for incorporating them may or may not have been to play catch-up with some Android tablets that nobody is buying.
It’s nice to see 4G make its first appearance on an Apple device — one wonders why this wasn’t possible on the iPhone 4S that came out not that terribly long ago. This exponentially better network standard isn’t widely available yet, but where it exists. it spoils you quickly.
Better camera, new iSight on the back, HD video, retina display, quad-core graphics acceleration, check, check and double-check.
But it all seems so … predictable. The immensely insightful Sharah Rottman Epps says of the new iPad: “A Gut Renovation Masquerades As Incremental Innovation,” and she’s not someone you disagree with lightly. Yet there’s no magic in this newness. Apple really is only shoring up a sure thing with features first introduced by considerably less successful competitors and Apple itself on other devices.
I was hoping, especially in the first big product rollout of the post-Jobs era, for One Last Thing from the Jobs era. Instead of surprising us with an unpredictable Bobby Fischer-like sequence of moves to win, this update feels like Apple is playing for a draw.
Why not, one might argue. Apple really doesn’t have anything to prove right now. The iPad already has the kind of market share in tablets that Google, which is virtually synonymous with search, has in search.
Hardware inovation is only part of the reason the ipad is so successful. Nothing compares to the ease of use in IOS, and developer community that Apple has nurtured. Balance these things with phenomenal battery life and then you see why they have dominated tablet sales.
Nvidia to Apple: thanks for the backhanded compliment
Nvidia got some free publicity from Apple today. Well, sort of.
On Wednesday, its crosstown peer flashed a slide at the new iPad’s unveiling, briefly claiming that Apple’s A5X processor packed four times the graphics punch of Nvidia’s own next-generation Tegra 3. Nvidia product spokesman Ken Brown’s phone has been ringing off the hook since.
“People noticed. When Apple calls out your processor as the one to beat, it gets attention. We’ve gotten some questions about it,” he said.
“It almost looks like it’s a two-horse race between Apple and Tegra,” he added, deftly framing things in the best possible light for Nvidia.
The A5X chip boasts quad-core graphics and is twice as fast as the IPad 2, Apple claims.
For a company whose core business is not chips, Apple’s processors so far have more than held their own against processors used in other tablets. But precisely how it matches up against Nvidia or othe competing silicon has yet to be empirically and independently tested.
Chip companies are famous for picking and choosing benchmark tests that cast features of their own semiconductors in the most flattering light possible.
It will be interesting to see how NVIDIA’s Tegra 3 (4xPrimary CPU cores, 1xLowPower CPU, 12xGPUs) performs against the apple A5X (2xCPUs, 4xGPUs) when someone does side by side testing of both a variety of benchmarks and applications.
I’m sure Apple could do one benchmark that does not make good use of multiple processors and get better results. How about a benchmark or application that makes good use of all processors (2 or 4)? For example, there are applications designed just for the Tegra processor (Tegra Zone) to make use of all that computing power.
A graphic intensive application such as a game or video/photo processing optimized for the Tegra 3 will likely kick ass over an application optimized for the A5X.
Boohoo for Yahoo
Yahoo is taking on Facebook — but it’s not vying for the hearts and minds of the Internet cool kids. It’s for licensing fees over some patents. This is not how it was supposed to be.
No, I’m not naive. But I am a bit of a romantic. Thing is, I remember when Yahoo was an upstart with two crazy awkward college kids who came up with something that the search giants of the time — Lycos and Alta Vista — could not withstand. Yahoo’s scrappiness was part of a long tradition of Silicon Valley startups that came before (and would come after). Like Bill Hewlett and Dave Packard, the elder statesmen of Silicon Valley who began their iconic company in a now iconic garage, Jerry Yang and David Filo started with nothing but an idea in a dorm room and changed everything. Yahoo’s blazing success in search and (the now-quaint notion of) cataloging the Web begs comparison to two other crazy awkward college kids who started a search engine. That search engine, of course, killed Yahoo. It had an equally kooky name — Google.
Now Yahoo, as part of its effort remake itself after a decade of decline, is said to be wielding a new weapon: a patent trove. The stellar DealBook blog of the New York Times, which first reported this story, couldn’t get anyone to disclose the particulars, but it quotes “people briefed on the matter” as saying Yahoo is threatening lawsuits and is in the midst of negotiations with a pretty big fish. “Yahoo is seeking to force Facebook into licensing 10 to 20 patents over technologies that include advertising, the personalization of Web sites, social networking and messaging,” DealBook reports.
Oh, how the mighty have… matured, to be charitable. Yahoo was crazy disruptive before “disruptive” was even digerati shorthand for “cool.” It was so popular that Reuters — yes, this Reuters — took a sizable stake in the young company. The American executive who made this happen, Andy Nibley, delighted in telling the story of how the very British Reuters board received the news he was investing millions in a company named “Yahoo!”
For years the two companies closely partnered to create wicked revolutionary news services. I know this because I was the lead guy on the Reuters editorial side in those heady days, collaborating with some daring executives and talented engineers at Yahoo’s Mountain View mecca.
Hey, we all grow up. We get married, get car loans, take on a mortgage. We become, as my closest comrade from those days (still a dear friend) never tires of reminding me, “not the demographic they care about.”
Love your title here, Reuters! I just set up a ranting account and website with the name of http://www.boohoosoo.com.
I chose yahoo for this, and am migrating my gamil slowly to yahoo as an alternative.
May Yahoo make wiser decisions about privacy concerns than Google, and remember that people are behind those screen names! Respect! (something learned with maturity.)
http://about.me/boohoosoo.com
Sony’s case of iPad 3 launch envy
Sony, in a bout of bad timing, is hosting an event on March 7 in San Francisco for tech reporters at the same time as Apple’s reported iPad 3 unveiling and the Japanese conglomerate wants to make sure it won’t get ditched.
Sony, which some people consider to be the “Apple of the ’80s”, sent out a helpful e-mail on Tuesday informing invited members of the press of the scheduling conflict without mentioning the world’s most valuable tech company.
Another press event invitation went out today which conflicts with the Sony roundtable on March 7. Please confirm if you are still available to join the Sony event.
The Sony event is a breakfast with Sony Electronics president and chief operating officer Phil Molyneux. He helped spearhead Sony’s tablet launch last year, the “S” and the “P”, which are among the many tablets chasing the iPad.
Sony isn’t the first Japanese company to get overshadowed by an iPad launch. Last year, the iPad 2 was revealed at the same time Nintendo President Satoru Iwata was speaking across the street at the Game Developers Conference.
