Doing Words

Don’t get stuck selling shovels

// June 24th, 2011 // 0 Comments // Hardware, Mobile, Products

There’s an old saying (who knows, it may even pre-date the internet) and it goes, ‘in a gold rush, it’s better to be selling shovels than trying to find gold’. Well, that only holds true if (a) you can control the market price of shovels; and (b) nobody knows where the gold is.

Once the gold deposits are mapped, or if cheaper shovel-makers start eating into your margins, you better pivot quick and become the best gold miner in the business, or the best refinery, or the best goldsmith in town. If the gold market changes from being about discovering gold to locking up, distributing and selling it, the act of shovelling becomes a much smaller slice of a much bigger pie, and your shareholders will punish you for not adapting to the changing market.

This story isn’t about gold mining, it’s not even about shovels. But as with most of my writing, I need analogies to set the scene. This post is actually about the smartphone market, and it’s partly a response to a post by Jojo over on 37Signals, where Jojo asserts that the new Nokia N9 handset may still be successful, even though the app offering for the N9 looks sparse. This post started out as a comment at the end of Jojo’s post, then got way too long for anybody to read at the end of many pages of other comments, so here it is in full.

Here’s the thing: the N9 will find customers and will be profitable, but will it be a big enough success to do what Nokia shareholders *really* want from the company? To take back #1 place? No. And the answer lies in the way Nokia just keeps selling shovels. Or, if you prefer, keeps making TV sets…

Oh dear me. Billions of dollars, thousands of well-paid employees, and this is what you see when you first go to Nokia.com?

The handset market is changing

Being a handset maker is becoming a smaller slice of a much bigger pie, in the same way that making TV sets is now a small slice of a pie mostly made up of content production, distribution/licensing, and advertising.

By sticking to handsets and partnering with Microsoft for mobile operating systems, what Nokia has done is to commit to making TV sets, handing the content production to Microsoft (the networks, remember, are already owned by carriers).

That would be fine, if making the hardware was still a premium margin business, or if the market for content was still unproven. But a seething mass of Asian manufacturers making Android handsets are cutting all the margin out of making smartphones, and the market for content is very much proven. VERY much proven.

For Apple, meanwhile, is the fastest-growing content production, distribution, licensing and sales business that the media industry has ever known.

Shareholders expect Nokia to make the same leap and the reason it’s taking a hammering is that it’s failing to do so. In fact, it’s been failing to do so for a very long time.

Build a better marketplace

Enough of TVs and shovels, they’ve served their purpose. Nokia can be a successful and profitable handset manufacturer, but it is now clear that it won’t be the biggest brand in the mobile space unless it has the biggest content marketplace. Mobile content is now largely about music, TV, movies and, more than anything, mobile apps. How’s Nokia doing?

Not good. Nokia’s first opportunity to build an app marketplace was actually with the N-Gage platform, which it launched in 2003. Apple didn’t launch the first iPhone until mid-way thru 2007. Here we are in 2011 and Nokia’s had several attempts at building a thriving content marketplace, yet has been overtaken by every other competitor of note, most especially by Apple.

Nobody likes inertia, especially a shareholder

Nokia’s had an eternity in ‘market time’ to see the change coming, from a hardware market to a content market. It’s even had the luxury of being first to market with a content store. Yet with each strategic decision it makes, and with each product releases, it just confirms that making hardware is written so deep into its corporate DNA that there’s no room in there to become anything else.

That’s OK, it doesn’t necessarily mean that Nokia’s doomed, it just means that the market will adjust its valuation of Nokia, and we see that happening right now, with shareholders pricing in the adjustment, realising that Nokia’s probably only ever going to do one thing well, and that’s make shovels.

“It’s like GPS for people who can’t drive” – Bedroomphilosopher.com

// June 8th, 2010 // 0 Comments // Advertising

I can count on two hands the number of times I’ve liked an advertisement so much I’ve embedded it in a blog post. And since I practically lost my thumb in that regrettable Masterchef-worship incident, that leaves only 9.5 things I can count on two hands.

So take it from me: this ad from Melbourne public transport agency Metlink, artist Justin Heazlewood and  agency Currie Communications is very good if you get all the local in-jokes and still very good even if you don’t. It works on many levels — as a spoof of his own previously-released music video, as a piss-take at pretentious iPhone owners, as a critique of idle young arts students, and really, at the idea that iPhone software for finding a train timetable could be anything world-changing. Much courage from Metlink and the agency and much creativity from Heazlewood!

I don’t want more iPhone apps, I want better iPhone apps

// November 18th, 2009 // 0 Comments // software, strategy

Fred Wilson writes in The Power of Instant Approval that Apple is risking its lead in the smartphone app market by forcing app developers to wait on approval from Apple before publishing their apps on iTunes Store. It’s a growing industry concern — does Apple risk being overtaken by competitors? I think Apple understands the consumer relationship better than any competitor in the smartphone market and that’s why in this case, the cathedral can win over the bazaar.

The greater risk is that the industry may turn away from Apple if groupthink decides that Apple’s strategy is flawed. We’ve seen it before.

Could Google's Android Market really overtake Apple's iTunes Store?

(more…)

How the iPhone changed my life

// July 1st, 2009 // 0 Comments // As featured in..., Me, Other news

As I said in the presentation, when I say “changed my life” I’m not talking about any single seismic change, but a significant change in my life brought about by dozens of small, incremental, important improvements in my day.

Here’s a few examples of what I mean:

Presentation: how the iPhone changed my life

// June 24th, 2009 // 0 Comments // Communication, Presentation, Social Media

I’ll be presenting this short talk at an Optus event, hAPPlication, in Sydney, all about launching the iPhone GS and iPhone 3.0 to Optus customers and press. It’s 2:48am now and the event is happening this evening (oh my! I must go get some sleep now) but here’s the presentation…

And here’s the video!…

Mouth off: fun for kids whose parents have an iPhone

// March 19th, 2009 // 0 Comments // Uncategorized

In these busy times, most parents of young children spend at least some of the time wishing they could give their kid something that would keep them amused in those interstitial periods waiting to be seen at the doctor’s surgery, waiting for a train or in the car. Problem is, there’s guilt attached to the purchase of a Nintendo DS.

So I think there’s a soon-to-boom market for “interstitial parent-saving iphone apps” (though I have to think of a better name for the category.) In fact, in conjunction with an author, an illustrator and the talented team from Mogeneration I’m working on an iPhone app in this category. It’ll be in beta soon, stay tuned.

In the meantime, here’s another great example: Mouth Off from Us Two. It uses the microphone in the iPhone to animate one of a library of silly mouths. Hold the iPhone up to the lower half of your face, say anything that comes to mind, and anyone watching you will see the cartoon mouth move roughly in sync with what you’re saying.

Because you can’t use the app and see the effect at the same time, this takes two kids to play, but I’m betting it keeps them amused for 5-10 minutes, so for $1.19 that’s a bargain for any hassled parent.

Another interesting app I’m playing with at the moment is dB which uses the iPhone microphone to measure current and historical sound levels wherever you are. That sounds very dry and boring but like many iPhone apps, dB adds some great user interface design and social glue to make this a very interesting app. For instance, it saves the geolocation of the sound levels you’ve recorded and it will let you share that sound level with friends via Twitter or email and will let you include a photo like this:

iTunes 8.1 update fulfills my desire for “social music”

// March 17th, 2009 // 0 Comments // Uncategorized

“With iTunes DJ, iPhone users that have Apple’s Remote application installed can request songs to be played. Users can also vote to control when songs are played. The DJ feature even has its own preferences, so you can send a welcome message to users and control whether voting is turned on or off. You can also require users to type in a password to access iTunes DJ’s features.” – Macworld

Thank you Macworld, that is so cool! Why didn’t that feature get more press coverage? Since the first Bluetooth connectivity was announced for the iPod I’ve been dreaming of a way to have a room full of people collaboratively controlling the music playlist.

Back then I was thinking about a Bluetooth or FM transmitter dongle that would assign you a unique ID within range of the DJ’s master dongle attached to his Macbook and running a controller app. The DJ could choose to accept a song playing back from any one of the unique IDs within range or queue up a playlist from the songs being suggested by the audience.

But that would be hard. This ought to be much simpler; just setup an AppleTV, or a Macbook with a direct out to a stereo, or via an Airport Express, and the party be started.

…oh, people would need an iPhone or an iPod Touch, naturally, but really, who doesn’t need one anyway?

The voting system could add some spice to the interaction. I can see Twitter being used as a backchannel (as it inevitably is) on people’s musical taste (or lack thereof.)

I must take some time out this week to set something up at the new Pollenizer office — this could be great fun at our welcome drinks.

Nice work, Apple!

[UPDATE:] With Apple’s announcement of broader support for Bluetooth, third-party hardware and apps, Steven Levy of WIRED magazine had a very interesting question about serving iTunes songs from one iPhone/iPod to another over Bluetooth. The Apple guys fielding questions didn’t say ‘yes’ but they didn’t entirely say no either… could my dreams of a giant, collaborative music party be closer than I imagined? Stay tuned!

iPhone apps that help me mock Blackberry users

// November 17th, 2008 // 0 Comments // Mobile, Reviews, software

Me at WebJam, fiddling with my iPhone when I should be paying attention

So far I haven’t written much about iPhone apps, considering they’ve changed my life, and all. They help me get more productive, stay organised, record thoughts, check directions, split bills, mock Blackberry users and fill in the many interstitial moments of nothingness in my day that I should really spend focusing on remaining in the present, observing my ahamkara… rather than fiddling with my iPhone. Ah well.  

Today all that changes (iPhone apps continue to change my life, but today I write about some of them.)

I’m promped to get recommending because Kate over at The Zeitgeists has a good short list of iPhone apps she finds helpful and fun, but like many Web 2.0 dreamers, she has an aversion to paying for things, even good things. So while she’s got some good apps on her list, she’s really missing some of the cream of the crop.

So, after the click, here’s some iPhone app recommendations from me: (more…)

HTC’s Android handset: the little droid that can’t

// November 10th, 2008 // 0 Comments // strategy

As fun to get to know as an early Linux install, for all the same reasons.

I’ve got no mobile clients at the moment but I’m a mobile geek so I’ve been watching with great interest to see what the market makes of the first handset to ship with Google’s Android mobile OS. I’m not surprised that it’s gotten a rave review by people who like to overclock their PC and a ho-hum review from people who just want something as easy to use as the iPhone but not from Apple. I’m surprised that Google and its partners really believe they can create an open architecture for mobile handsets that can compete with the seamless nature of the iPhone. I don’t think it can.

Everything that makes the iPhone such a revolutionary user experience depends on Apple’s ‘cathedral — its absolute control over hardware, operating system and applications. Even third-party applications are developed using Apple’s tools and marketed and delivered in a market tightly controlled by Apple.

Everything reviewers find disappointing about HTC’s first Android handset boils down to the difficulty in making a ‘bazaar’ product work – not controlling every aspect of the product and its software makes it harder design things that work smoothly.

Will the cathedral or the bazaar approach win out in the mobile handset market? Apple’s incredible success in the music player market suggests the cathedral is the model to adopt whenever you’re shipping high volumes of units to consumers who aren’t geeks – they just want something that works.

Google and its handset partners will probably garner a large and sustainable market of customers who like to take pride in their ability to configure, tweak and debug their Android handset, but that will always be a vastly smaller market than the number of people who just want to be delighted by how easy their phone is to use.

Android handsets will get better and better, but the capabilities will drift further apart over time, so that Android handsets will get better at specialist field applications – the sorts of things tablet PCs often do now — while the iPhone gets better at entertainment content and services.

People sometimes forget that Apple now owns a controlling stake in one of the biggest Hollywood studios, has very powerful relationships with what remains of the music industry, has a great set-top box (AppleTV), a robust delivery platform (iTunes) and is rapidly funding (presumably eventually to acquire) iPhone application developers.

Android may put price pressure on Apple, but we’ve seen with iPods how ready Apple is to crush competitors when it comes to price.

Could Google outmarket Apple? The word-of-mouth hype that created the Google behemoth was mostly an accident — byproduct of a bunch of people working really hard and keeping their heads down while the market watched with fascination. Google’s got no clue when it comes to marketing – how else to explain why they left their mobile platform with its original codename when they launched it? Is “Android” accessible? Cute? Sexy? Fun? Yeah, maybe if you like fiddling with code, but otherwise, probably not.

iPhone App-onomics and prospecting for gold

// September 4th, 2008 // 0 Comments // software, Startup, strategy

Thirty minutes after installing 2.01 on my iPhone 2G I had purchased and downloaded 21 new iPhone apps. The whole experience – from finding to buying to downloading and installing – was so quick and easy that my credit card barely warmed up as the money drained away. I had to force myself to stop before I blew it. It was clear there was going to be quite a market for iPhone apps.

Later, I was talking to some friends who had a mind to start an iPhone App development business – would I like to be a part of it? Well, yes! Though the volatility of any new market can be a challenging place to start a business.

Weren’t they worried about planning for their business before the economics of iPhone apps was really clear? Beyond the obvious risk of not yet knowing how long it takes to build apps, how do you know what to charge and what your revenues are going to be? What the hot categories will be? How best to market your apps?

Their response was the right one: we don’t know, but the opportunities are as big as the risks – if we happen across a successful formula we could have a great business. I think that’s a great attitude and I hope to tell you more about this new Aussie iPhone App developer when the time is right.

Meantime, the volatility of a virgin App economy (“apponomy”?) trying to establish itself is becoming clear. Average prices for apps started way up, and now developers are concerned that prices for some apps have been cut in half, others have gone from paid to free. I think Marco Arment, the lead developer at Tumblr and developer of the iPhone App Instapaper, has it right when he predicts that app pricing should turn out to be fairly inelastic – that it shouldn’t matter whether you’re charging $2 or $10, the challenge is in getting someone to pay at all.

The problem with inelastic pricing is that it comes with significant momentum, both up and down. If consumers come to an Appstore and the average price for apps is $0.00, that makes it very difficult to charge even $2.00. If Apple had a problem with apponomics and decided to institute, say, a compulsory $2.00 charge for apps, that would set the expectation that apps are not free, and consumers would then be more likely to pay $5-$10 because of the perception that “apps are not free.”

The challenge for Marco and other developers trying to make a living doing this is: for most app developers, this is not a living, it is not even a main focus of work. Never mind the hobbyist developers doing it for fun, it’s the big businesses using Appstore as a marketing vehicle for their main desktop software that can really hurt your business. They don’t need iPhone customers, but they do need their desktop customers to have access to their software on their iPhone – those are two different things. A big software company that doesn’t really care about iPhone app revenues can really hurt your business if they’re in the same space.

Marco also talks about whether or not to make the iPhone version of Instapaper his main business and not developing any subsequent apps. His first app has been very successful: is he best to build on that success by developing more apps, or by improving the app he’s already built? Many would say to keep one foot in each camp, but Marco calls it right when he makes his decision: you double the complexity of your business and how it is affected by the volatility in the apponomy if you keep a foot in each camp.

The apponomy will settle down as it grows, though Apple may need to assist it in doing so – using the same email marketing it uses to promote music that will be popular on iTunes Store, featuring app developers on Apple.com and by supporting good developers with pricing breaks, free training and access to advice from the App platform development team. Whatever actions Apple takes, it needs to be fast, but subtle. Lots of small, incremental changes please – if they wear their hobnail boots as Apple sometimes does, it will only start the apponomy oscillating more wildly.

Meanwhile, this is a gold rush. Is there really gold in them thar hills, or is it just iron pyrite? There’s only so much you can learn from the greenhorns running out of the supply store with shovels and wheelbarrows. Sooner or later you have to buy your own shovel and go see for yourself… Marco, where’s the store?…