Doing Words

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?…

AT&T: if I have to learn your interface, you’ve failed

// March 27th, 2008 // 0 Comments // Other news

Why do so many people in tech management find 3D interface so strangely addictive, when it’s clinically proven to be idiot-forming? Techcrunch reports that AT&T has been developing a new web 3D browser, Pogo, based on Mozilla. I’m amongst the readers who reacted with a strong WTF? at the news, though it brings up some important points about interface design, following trends, and remembering history.

I remember my history. Right about when I joined Yahoo! the company cut a deal with Caligari, a maker of 3D software and browser plugins. The two companies collaborated on a 3D visualisation of the main web directory categories of Yahoo! (News, Finance, Sports, etc.) I can’t find a video of the interface in action (challenge: can you find one?) but each section of the web directory was represented by a giant icon on a huge green field of grass.

From memory, Yahoo! 3D was something a lot of senior yahoos were interested in as something fun to play with – it really wasn’t something the company was expecting to monetize or present as the primary interface for Yahoo! then or in the future. This was in the days of 28.8kbps modem bandwidth, 13" CRTs and Navigator 3.0/IE 3.0. Flying across the football field from one category to another would take about a minute, with frame rates at about 5fps, and you were quite likely to miss the category you were aiming for with the frame rate and lag time.

Yahoo! 3D taught me that desktop web browser interfaces were already  quite mature, and that on the desktop, the old "click on a link with a mouse" routine was widely-understood, easily adopted by new users, and fast to use.

Since then, browser interface design has tried and rejected a few new  ideas, and  the only one I can point to that has really been taken up widely is tabs in the browser, as well as in the web page itself.

Twelve years later, 3D visualization of data and relationships is a powerful tool, but 3D navigation remains a solution without a problem. Why is this so? I can’t point you to research on this, but my trusty gut instinct says:

1. 3D interfaces need 3D input devices and displays. It’s too hard to learn to grasp, manipulate and move objects using 2D input devices and displays. It takes too many brain cells to do the interpolation, even for those with strong stomachs and keen to try new  things.
2. Despite Javascript, AJAX, Flash and all that whizzy coding stuff, websites and web apps are still built using metaphors dredged deep out of print publishing. You can stack a bunch of web pages together and drag them about, sure, but each of those web pages has only two dimensions. I can only interact with the content on a web page when viewing it from "the front". Stacking and dragging are useful for organising large numbers of web pages and bookmarks, sure. But who organises large amounts of web content? A tiny percentage of the internet audience. And that dragging is inevitably going to be easier using folders and tabs until Apple ships me a 3D input device and display with my next Mac.

The other classic mistake I see in these videos of Pogo in action is mimicry without purpose, in this case, mimicking Apple’s Cover Flow interface. I betcha nobody at AT&T knows what percentage of Apple’s OS X customers actually choose to use Cover Flow (versus not knowing how to turn it off) but I am sure Apple knows and isn’t telling.

Cover Flow is chrome: something that’s meant to sweeten the sale or upgrade of the operating system, iTunes and iPods, not to be a primary interface mode.

Knowing your new BMW M5 has a gazillion suspension and transmission settings helps you justify your purpose, and six months later, if BMW surveys M5 customers and finds <5% actually mess with the settings? Who cares? We’ve still sold a lot of M5s.

How do I know Cover Flow is just chrome when I don’t have any data? I asked my friends. The responses are all quite similar: even the musicgeekiest friend I have can identify only 30% of his  iTunes library by album art alone. Subtract the albums he originally owned on CD, then subtract the albums he’d owned for years before buying an iPod, then subtract the album covers that actually have the band name and album name on the cover? He’s down to <5%.

Don’t believe me? Test yourself, I’d love to read about your results.

Meanwhile, who’d regularly use an interface that forced you to stop and think about 95% of the choices available to you?

While website homepages aren’t as obscure as album covers, they certainly aren’t designed to be recognisable – much less legible – at Cover Flow-sized dimensions. And any new content on them worth clicking on won’t be readable unless the Pogo user is viewing at something far greater than 1280x1024px.

AT&T’s Pogo mistakes the chrome for the fundamentals, and then tacks it onto its own product without any understanding of its true purpose, like a Chinese manufacturer designing cars that come out looking like a BMW that got left too long in the microwave with a LandCruiser.

Some of the videos of Pogo in action are well worth watching, and I’m in favour of AT&T and other large companies with too much money/time doing research of all kinds, even if its only into doomed interface design.

But while you watch, don’t let the siren song of 3D interface whizzyness lure you away. Don’t start picturing yourself in a ‘Minority Report’ future with productivity levels 10x today’s. Expect the personal jetpack to ship first!

Can the snake swallow the elephant?

// February 2nd, 2008 // 0 Comments // strategy

Microsoft swallowing Yahoo! is either going to be fast and ugly, or slow and ineffective. And I’m being positive! Scott is even less hopeful.Good friend Goonker said it best. Referring to Steve Ballmer’s quote that he feels “putting these things (Microsoft and Yahoo!) together with a great integration should be quite an accelerant to progress.” Goonker says, “accelerant as in: flame out quickly?”I appreciate that Microsoft recognises it needs to take drastic action if it’s to get back into the game, interweb-wise.Today’s offer is a big premium on the market price on the previous day’s close and is sure to be higher than any price Microsoft may have taken to the table with Yahoo! in the past.According to Comscore, Google has 77% of the search market globally, with Yahoo! only 16% and MSN a piffling 3.7%. So an acquisition might garner Microsoft a total of less than 20% assuming no overlap. I don’t know the revenue share but I’m guessing it’s in-line with that. Ballmer suggests it could save the two companies $1B a year, but I’d bet it would be costing $100m a year over five years to smash the two vastly different companies together.Microsoft’s web technologies are as unrelated to Yahoo!’s as the Dark and Light sides of the Force. Before you even begin your Comp. Sci. degree you’ve already made a decision to join one camp or the other. There’s no love lost between the two sides, and very few developers jump from one camp to the other mid-career.Perl, PHP and Ruby developers carry PowerBooks with startup stickers on them, ride a bicycle and wear a tee and jeans. They are too skinny. They are more likely to have an iPod earbud in their ear than a phone. Microsoft developers wear chinos and a business shirt or collared tee, carry a black generic laptop identical to their coworkers. They are a little overweight, but only because they have a good wife at home who loves to cook. They have a full schedule of meetings and tasks always with them in their Exchange-connected phone, which they carry in a leather holster on their belt, with a blinking-blue Bluetooth headset always jammed in their ear. They think the Zune is “kinda cool” but like a quiet working environment (Frank, I love you anyway man).So the only way to borg Yahoo!s products and get them running an all-Microsoft backend would be across the vacant desks of the various Yahoo! development teams, vacant because you’d either fired them or they’d beaten you to it and taken a job elsewhere. The number of senior developers with prior experience migrating global-grade FreeBSD/Apache/Perl platforms to .NET would be approaching zero. I can’t see Flickr running on .NET, ever.Yet Microsoft can hardly continue recommending its web development products to the market while running its own consumer internet business on competing products.Working for a Bay Area startup at the moment, and it’s a tough market to be hiring developers, so a flood of ex-Yahoo! developers into the market would be good news for us and the other Bay Area startups. Most of Yahoo!’s huge developerbase is here in Sunnyvale and that big silo of developers will just fall over and empty out. That should bring hiring costs and avg.-time-to-hire way down.Good point from good friend Luke: if the deal goes through it tightens the market for startups hoping to be acquired, leaving only Microhoo and Google as the big startup-buyers in town. Could we see Cisco step forward as a new force in consumer web acquisitions? Or HP, Intel or Apple? Each owns some consumer-facing web platforms already, each has a hardware business that could benefit from consumer lock-in via a compelling web product.If I still held Yahoo! shares, I’d take the money. If I still held Microsoft shares, I wouldn’t be happy about a deal happening.Because, the way I see it, Microsoft absorbing Yahoo! is either going to be fast and ugly, or slow and ineffective.