…but boy, does Yosemite look better on a retina display than a non-retina one. Which leads me to wonder just how long it will be before we have bigger (much bigger) retina displays than those currently available.
My old chum Liam is mightily annoyed at the state of operating systems, which he sees (and I largely agree) as kludgy, inelegant messes. Amongst the missed opportunities: Newton and the original Mac:
“And the ancestor of the Macintosh was Jef Raskin’s “information appliance”, with a single global view of one big document. Some bits local, some remote; some computed, some entered; some dynamic, some static; with the underlying tools modular and extensible. No files, no programs, just commands to calculate this bit, reformat that bit, print that bit there and send this chunk to Alice and Charlie but not Bob who gets that other chunk.
Sounds weird and silly, but it was, as he said, humane; people worked for millennia on sheets of paper before we got all this nonsense of icons, files, folders, apps, saving, copying and pasting. The ultimate discrete computer is a piece of smart paper that understands what you’re trying to do.”
Yes but… Remember the video of the child trying to swipe a magazine? Using paper isn’t genetic: using your fingers is. What’s a natural metaphor to someone mine and Liam’s generation can be alien to someone who has never know anything but touch screens.
If you spend any amount of time reading technology news and opinion sites, you’ll know how high the percentage of bullshit is. It’s huge. Finding the decent stuff takes forever, and you’ll spend your time tripping over errant nonsense.
It takes a lot to excel in the field of writing bad technology stories, but I think Eric Jackson, writing for Forbes.com, may have beaten us all and written the worst article in tech history.
It is, naturally, about Apple. Apple attracts poor writing like nothing else, probably because posting articles about the company attracts page views like nothing else. Jackson spends hundreds of words chastising it for failing to buy companies. Everyone is doing it: Microsoft, Facebook, Google… just everyone. So why isn’t Apple?
It’s clear almost from the get-go Roberts knows remarkably little about how Apple works and what’s made it richer than Croesus. Take this:
It’s also clear that Apple has lots of weak areas that it should be more aggressive in filling in: cloud services (it would nice for iMessage not to go down), web/app services (hello Ping and MobileMe), adding key mobile apps beyond things like iPhoto and iMovie, and maybe even turning its back on the whole walled garden approach with iCloud and iMessage by acquiring a leading cloud company like DropBox and messaging app to open it beyond Apple users.
Sure, Apple could “turn its back on the whole walled garden approach”. But why? So it could lower its margins? So it could have to support more platforms, increasing its costs and complicating its business? Apple sells hardware, with high margins. Now I know this idea utterly offends blinkered pundits who think there’s only one way to make a profit (repeat after me: “MARKET SHARE”) but that’s the way it is. Everything else it does is to support and enhance the hardware.
Better is to come. Jackson isn’t just a Jeremiah: he has actual positive ideas for how Apple can spend some of its cash:
What’s a quick way Apple could deploy $50 billion in cash? Well, they could pay $400/share to take out Tesla (TSLA) and make an audacious huge play for the Internet-connected car, as well as snagging Musk into the fold in one fell swoop.
Leaving aside, for one second, the value of Elon Musk (not everyone thinks he’s a genius) what would Apple gain by this? Suppose AppleTesla becomes the biggest car company in the world, by force of will, hitting the levels of General Motors. That’s 10% of the market. What happens then? Simple: every other car company, which might all have bought Apple technology for their connected cars, uses someone else’s tech because there’s no way they’re benefitting a serious competitor.
Plus you’re now saddled with a high-revenue, low profit business: General Motors made just $18 billion gross profit for the whole of 2013, on revenues of $155bn. Over the same period, Apple generated $64bn gross profit on revenues of $174bn. Apple’s profit margin is 21%; GM’s profit margin is 3%. If Apple wanted to just put $50bn in an ordinary bank savings account, it could make a better annual return than buying a car company.
Fucking. Dumb. Idea. This is why people like Jackson don’t get to be CEO’s of Fortune 500 companies.
“After years of trying to take NeXT public, [Jobs will] get some $175 million in cash and stock for his 45%-plus stake. And other than a part-time consulting role–he'll even have an office at his old haunt–he's free to focus on Pixar Animation Studios and other interests. ''I'll advise Gil [Amelio] as much as I can, until I think they don't want my help or I decide they're not listening,'' he says.”
It really didn't quite work out that way – and I'm glad it didn't.
Let’s take a look at the “conversation”, piece by piece.
“Ken: “Apple really needs to do a Netbook.”
Me: “Yes, now. It’s the biggest growth category in laptops. They’re missing out on a big opportunity to take Windows’ share away.”
Mistake number one: A focus on market share. Even in 2009, it was obvious this wasn’t Apple’s focus . In its lean years, the company had learned that you could survive happily on market share of a single digit, and that what was important was simply profit. If you were profitable, you lived. If you weren’t, it didn’t matter how much share you had.
Ken: “Apple keeps saying it doesn’t want to go near the low-end and make crappy notebooks with low margins. Would tarnish the brand, hurt the bottom line.”
Me: “They’re lying. They know they have to go there.”
Mistake number two: Thinking Apple will make crappy products to grab share. Apple’s made its fair share of duffers over the years, but since the end of the Amelio era they’ve tended to be few and far between – and I can’t think of a single example where the product has been crap because Apple has tried to create something cheap with a low margin. Apple just doesn’t do that anymore. Instead, the company focuses on building the best things it can, and if it can’t make something “good enough” at a specific price point, it just doesn’t enter that part of the market.
The best example of this is the way Apple introduced new variants of the iPod. The original iPod was expensive, by the MP3 player standards of the day, but was also significantly better than anything else on the market. When the company extended the range and hit lower price points, it didn’t do so with something crap: the iPod mini was a better iPod, and cheaper. The iPod nano was much higher quality than its competitors. None of the iPods ever felt like “me too” products. None of them ever felt cheap. And none of them were crappy products with low margins.
Me: “So they slap a little design flair on the thing, put one model out for $599 and another for $699. Sure, the Windows version would cost you $350-$450, but I’d have no problem paying the Apple premium on one of these.”
Mistake Number Three: Thinking design is something you “slap on”. There’s a phrase for this view of design: “putting lipstick on a pig”. It’s not what Apple does – or at least, it’s not what the Apple of 2014 does. It used to be what it did, back in the early 1990’s, and it’s one of the things which almost killed it. The likelihood of Apple starting to just put lipstick on pigs again is about the same as pigs growing wings and flying.
Ken: “A lot of people would pay $599 for an Apple Netbook.”
Me: “No one’s buying the Macbook Air at $1,800.”
Ken: “I wouldn’t say no one.”
Me: “OK, but it’s sort of the Apple TV of laptops. It’s just not that relevant. Most people would prefer buying a more powerful notebook that weighs a little more for a grand.”
Ken: “I agree. I almost bought an Air when it first came out, but I’m glad I didn’t pull the trigger.” [Note: Ken uses a MacBook Pro but he wants a Netbook for nonbusiness travel].
Mistake Number Four: Failing to understand how Apple pioneers product categories. Sometimes, Apple will produce something which is a little expensive, but which effectively reshapes or creates an entire product category. In the case of the MacBook Air, that category was what we now call ultrabooks: something expensive, high-margin, but thin and light.
Me: “Apple always talks about design–and they do have great designers–but what people want now is cheap. As I said, this thing doesn’t have to be a masterpiece. I’d rather see them keep things simple and elegant and keep the cost down to $599.””
Mistake Number Five: Believing mature markets are solely price-sensitive. Where to go with this one? It’s so obviously false that it almost beggars belief. No matter how tough the market, there’s always someone buying a £50,000 Mercedes rather than a functionally-equivalent £20,000 family car. And there’s always someone who will pay $2000 more to get exactly the model they want, even though it’s functionally the same as the cheaper alternative.
The thing which makes Carnoy’s post brilliant is how it manages to encapsulate every way of misunderstanding what Apple is about, while also misinterpreting the signs of the overall market. It’s not that Carnoy was an idiot – I’m sure he wasn’t, and isn’t – it’s simply that everything in his post illustrates how easy it is to get tech punditry wrong when talking about Apple. This is a company which has grown because it defied expectations, bucked trends, and followed its own path. If you want to write about Apple, this is the first thing you should always bear in mind.
One of the most consistent questions asked about Apple at the moment is whether it will ever be a “growth” company again. And, of course, the answer you’ll see is usually “no”.
I disagree. There’s nothing in the present state of Apple and its core businesses which indicates it won’t continue to be a growth company. In fact, it has grown all the way through Tim Cook’s leadership.
What it won’t necessarily be is the kind of hyper-growth company it was during the earlier days of the iPhone. But the kind of opportunity which the iPhone represented are rare, and largely driven by factors outside the direct control of the company. The iPhone was launched into a mature mobile phone market, where there was weak competition and the potential for high margins. Apple’s execution was superb, which enabled them to grow massively and quickly, but it took the existence of a particular set of market conditions to allow this execution to work.
I don’t see any potential product categories which would present the same level of hyper-growth opportunity as smartphones did. TV is huge in revenue, but short on margin, and massively complicated. The regular update cycle is too long to support rapid repeat sales if you look at TVs themselves. You can sell a $100 product like the Apple TV, but it’s effectively a peripheral, a value-add to the iTunes/iOS/Mac ecosystem.
Wearable a feels like a big opportunity to me, but as a value-add for iOS devices rather than a standalone. It’s a way of getting iPhone and iPad owners to pay another $100-250 rather than a $20bn business on its own. And with more and more iPhones sold through the Apple Stores, Apple has a clear path to upselling customers with an incredible health-related wearable.
So where could Apple get iPhone-levels of growth? I just don’t see anywhere. To put the size Apple is at into a little context: if Apple somehow magically owned the entire global online ad market in 2016, it would only add another $163bn of revenue: that’s less than the $170bn revenue the company earned in FY 2013.
It seems, then, Apple is doomed to be merely an enormous, vastly profitable player in the biggest technology markets on the planet until whatever the next big wave is comes alone. And when that wave comes along, it will have to completely miss it or fail to execute as brilliant as it did with the iPhone. At that point, yeah, Apple will be doomed. As doomed as, say, IBM. I’m sure Tim Cook will live with that possibility.
I’ve been saying for some time that Google’s longer-term plans for application development all hinged around Chrome. Native Android apps are silos: although Google has built tools which allow developers to make Android apps searchable (and thus a target for ad sales, and tracking) it’s much harder than with a native HTML web app.
Building an app using native tools is also a dead-end: developers have to work harder to create a web-native equivalent. And web-native equivalents can be easily supported by advertising, supplied by… you guessed it… Google.
Chrome Packaged Apps, on the other hand, are “native” web apps – and the web is Google’s true focus. So it’s no surprise that Google has released an early release which lets you bring Packaged Apps to iOS and Android.
Chome is the development platform, not Android: Android is just the host, just like iOS is.
The first Mac I used was a 512K machine, in the computer science lab at Hatfield Polytechnic in 1986. The halls where I lived were organised into floors of 12 rooms which shared a kitchen, and although the Poly tried its best to mix students of different disciplines, for some reason my floor had six computer science students on it. I was the sole, weird, humanities guy.
One day, one of my floor-mates took me to the computer science lab, and showed me around. There were terminals hooked into the polytechnic’s main computer (yes, the one computer, running UNIX), PCs… “and this is the Mac. It’s pretty advanced – you should try using one. You might like it.”
I did. In fact, I was in love. Compared to the primitive home computers I’d used up till then, this was amazing. Like something from another planet, or at least California.
Three years and one first-class honours degree later, I ended up spending a year commuting from my home in St Albans, round the M25 to Apple UK’s headquarters in Stockley Park, near Heathrow. I spent a year interning with the Information Systems and Technology (IS&T) team, mostly fixing problems by the two most reliable methods available to a Mac tech at the time: reinstalling the system, or, if that failed, replacing the motherboard. I could probably still disassemble a Mac II if I had to, in record time (hint: don’t touch the power supply).
More importantly to me, working for Apple meant I could take advantage of the “Loan to Own” scheme, which let you borrow a Mac and, after a set period of time, buy it at a steep discount. In my case, a year later the Mac Plus (and 20Mb hard drive) I’d been using was mine, just in time for me to go back to Hatfield to work on a PhD. The Mac Plus, with 4Mb of RAM, spent its time with me for the next few years churning through words in MacWrite (and then Word), keeping notes in HyperCard (in a note-taking stack I’d written) and storing endless academic references in EndNote (which I’m happy to find is still going strong.
The experience of working at Apple and owning a Mac changed my life. A few years later, casting around for a job when it became clear I really didn’t want to be an academic (and academia didn’t really want me) I answered an ad in The Guardian media section (in print!) for a labs assistant on MacUser magazine. I’d never wanted to be a journalist, but – thanks to the Mac – I ended up one.
The Mac, in the form of one machine or an another, has been with me now for 25 years. I’ve written millions of words on it, played countless hours of games, got into arguments and met people hundreds of people. It’s taken me – literally – around the world and given me a livelihood. I wouldn’t be the person I am without Steve’s Amazing Machine.
How many stories in the tech press have you read over the past year which posited a theory of Apple being in trouble? Tens – probably hundreds of articles have appeared which put forward the idea that Apple’s needed to move the iPhone downmarket and create a cheaper version to gain market share. Failure to do this means doom.
So let’s take a look at a company which has followed exactly this plan, competing at every level of the smartphone market from cheap devices for the masses through to expensive, high-end phones: Samsung.
Samsung’s earnings are out, and they’re not pretty:
“Earnings will remain stagnant this year as the explosive growth of the past two to three years seems to have ended,” said Lee Sun Tae, a Seoul-based analyst at NH Investment & Securities Co. “Although the lower-end smartphone market will continue to grow, the scale of profit from that segment doesn’t compare to the high-end market so the growth seems limited.”
Samsung’s problem is simple: at the low end it is being squeezed out of existence by low-name and no-name Chinese manufacturers, all happy to stick “good enough” Android on their phones with no costly extra software. Although the company has tried to differentiate its products by value-ended extras and services, for price-conscious consumers these are meaningless or, in some cases, a turn-off.
At the high end, it is being squeezed by Apple, which has proved it can compete in any market.
If you want to make a comparison to the PC market, Samsung is like IBM was: a “quality brand” producing products which aren’t sufficiently different from cheaper commodity players like Dell. In the smartphone market, for Dell read Lenovo or (long term) Xiaomi.
Ina Fried, reporting on a survey of iPhone users which apparently shows the iPhone 5c doing worse than the equivalent model in the range did last year, the iPhone 4S:
The iPhone 5c, meanwhile, represented 27 percent of sales, less than the 32 percent that the iPhone 4s had a year ago when it was the mid-range model. CIRP’s findings are based on a survey of 500 buyers of Apple gear during the survey period.
How accurate a survey is depends on the sample size. And while 500 is a valid sample size considering the overall “population” of around 50m iPhone buyers, it isn’t enough to reduce the margin of error to the kind of point which would justify the claims being made.
With a sample this size, unless they’d taken a lot of precautions, the margin of error would be around +/–4–5%. This means, potentially, the models could have the reversed share: 32% for the 5c (27% + margin of error upwards of 5%) and 27% for the 4S (32% – margin of error down of 5%).
All that you can say based on these numbers is the iPhone 5c is performing about as well as the iPhone 4S did in the same role. However, a conclusion like that isn’t enough for CIRP. According to CIRP analyst Josh Lowitz:
“If the old iPhone 5 had been the mid-priced phone, we expect that it would have sold a higher percentage of iPhones than the 5c did, as previous mid-priced legacy iPhones have,” Lowitz said. “The 5c seems to have been designed to force certain buyers to the 5s.”
I’m not sure how you can “force” buyers into buying something more expensive if they haven’t got the money. Sure, it probably does well at “upselling” customers: those who would never consider buying the top-end phone and so walk into an Apple Store to get the 5c, but then play around with a 5S and get a case of profound gadget-lust. But I can’t imagine that more of those kinds of customers took at a look at last year’s top of the line phone and didn’t feel equally lustful.
A “population” in survey terms is the number of people who fall into the group you’re trying to sample: in this case, the roughly 50m people in the US who bought iPhones that year. The bigger the population, the bigger the sample size you need. ↩