Advantage: Apple

Steve Cheney’s post on Apple’s insurmountable platform advantage is making its rounds around the Internet, because it’s good:

One of Steve Jobs’ biggest legacies was his decision to stop relying on 3rd party semiconductor companies and create an internal silicon design team. I would go so far as to argue it’s one of the three most important strategic decisions he ever made.

In 2007, when Steve Ballmer famously declared “There’s no chance that the iPhone is going to get any significant market share. No chance”, Jobs was off creating a chip design team. If you study unit economics of semiconductors, it doesn’t really make sense to design chips and compete with companies like Intel unless you can make it up in volume. Consider the audacity back in 2007 for Apple to believe it could pull this off. How would they ever make back the R&D to build out a team and pay for expensive silicon designs over the long run, never mind design comparative performing chips? Well today we know. Apple makes nearly 100% of the profit in the entire smartphone space.

I don’t think Apple’s advantage is insurmountable like Cheney says, but I don’t think there’s any way in hell companies like Microsoft, Sony, Dell and HTC are going to make a significant dent as competitors.

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Product, Technology

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Ads for Itself

Vlad Savov on Google’s new Nexus phones:

I’ve spent the past couple of days desperately trying to puzzle out the purpose behind Google’s newly announced Nexus 5X and 6P smartphones. Unlike predecessors such as the Nexus One and Nexus 5, these phones don’t have a clear reason for being, and are not in themselves terribly unique. That’s led me (and others) to question Google’s overall aim with the Nexus line of pure Android smartphones, and I think I’ve finally arrived at an answer. The Nexus program is not so much about carrier independence or purity of Android design as it is about presenting Google in an overwhelmingly positive light. In other words, Google, the ultimate ad seller, sells Nexus phones as ads for itself.

Think about how different Apple and Google are. Google knows there’s no chance in hell they’ll ever have a blockbuster hit with their own phones and Apple sells their phones to pull in 92% of all smartphone profits.

I also love this MarketWatch headline (via Daring Fireball):

Google unveils everything Apple launched, only cheaper

Sounds about right.

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Product

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Compete Asymmetrically

Horace Dediu on the potential to disrupt the automotive industry:

Executives at car companies have suddenly had to answer questions about potential entrants into their business. This is a big change. I don’t recall a time when this was necessary for over 30 years. For decades the questions have been about labor relations, health care costs, regulation, recalls and competition from other car makers. To ask questions about facing challengers posing existential questions must seem terribly impertinent.

For this reason, Bob Lutz, in his dismissal of Apple’s entry is not alone. The industry, with a century of history and has seen little disruption in the classic sense. I wrote a long piece on the fundamentals of the industry titled “The Entrant’s Guide to the Automobile Industry” which explained why this industry has been so resistant to disruptive change. At best a massive effort over multiple decades usually leads in a small shift in market share.

However, one should read that post as a thinly veiled threat. Just because disruption seems hard does not mean it isn’t possible. Indeed, the better you understand the industry the more easily you can observe its vulnerability and the more rigid the industry seems the more vulnerable it may be to dramatic change.

The formula for successful entry is the same for all industries: compete asymmetrically. This means introduce products which change the basis of competition and deter competitive responses by making your goals dissimilar from those of the incumbents. This is classic “ju-jitsu” of disruptive competition.

Here’s how it would work.

Apple has succeeded in disrupting:

  • the music industry
  • the (smart)phone industry
  • the PC (and post-PC) industry

And while the Apple Watch is still very young they’re beginning to chip away at the watch industry.

Why would anyone think it’s not possible they eat up the automotive industry too?

Apple’s success in any new industry is far from guaranteed but to count them out seems extremely short-sighted.

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Business

Solving the Same Problems

Vlad Savov on Apple, Google, and Microsoft all solving the same problems:

Consider all the overlaps that have developed in recent times between the strategies of America’s three foremost tech corporations. Apple CarPlay and Android Auto are getting into the connected car business that Microsoft has been in for years, while the latter’s Cortana personal assistant echoes the voice-activated Google Now and Siri software of its competitors. Where Apple has Continuity to keep people working across various devices, Microsoft has Continuum, and Google has the universality of the Chrome browser and its range of web apps. Besides the connected car and the connected you, all three are also connecting the TV — through AirPlay, Chromecast, and the Microsoft Wireless Display Adapter — and developing app and gaming platforms such as the Xbox One, Android consoles, and the new Apple TV.

Savov is right, but what’s the alternative? Not built a product or service your competitor has and risk ceding ground to them now or in the future?

It seems better for the three top dogs to build redundant solutions to the same problems than not build them.

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Technology

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Samsunk

Samsung brings forward its Galaxy Note release to August to gain some ground against rival Apple:

In a break with recent tradition, Samsung Electronics Co. will move up the autumn launch of its oversize smartphone lineup by several weeks to mid-August, according to a person familiar with the matter.

The South Korean company’s move is part of a bid to give its Galaxy Note smartphone-tablet hybrids some breathing room before mid-September, when Apple Inc. typically unveils its refreshed iPhone—a product whose popularity has the potential to monopolize media and consumer attention for weeks.

Pussies.

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Product

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Podcasting Turns 10

Apple introduced podcasting to iTunes 10 years ago this month.

Prior to that, when someone wanted to cast a pod, they didn’t know how to.

My friend Byran and I have been casting pods for a little over a year on a semi-regular basis on Weekly Exhaust. Sometimes talking continuously for an hour isn’t as easy as it seems but I think we’ve gotten a lot better at it. It’s actually kind of fun.

After we finish our Skype call, I take the audio files into Garageband and edit them. For a while I was starting each episode with the sound of the exhaust from a classic car, now it can be anything: an old FM radio clip from the 60s or a piece of dialog from a movie we talk about on that episode.

In way, it brings me back high school, when I used to make mix tapes for myself or a girlfriend. I didn’t just slap songs back to back and call it a day. No, I had figured out how to hook up my VCR into my stereo so I could put snippets of movie dialog between each song (listen to the soundtrack to Pulp Fiction to get an idea of what I’m talking about).

Weekly Exhaust is also the only podcast I know that updates it’s cover art every episode (not that I’ve listened to every single podcast).

Cheers to podcasting.

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Podcast

Post-PC Era, Post-Windows Era

No one could have predicted a move like this by IBM back in the 80s or 90s or 00s:

In a memo to employees, IBM notes that starting today all employees (not just some select developers like in the past) can pick from a MacBook Pro, MacBook Air, or a PC when setting up a new or refreshed workstation. The machines will include new software for security, Wi-Fi, and VPN out of the box so employees just have to connect to the internet to get started, according to the memo. IBM notes that it currently has around 15,000 Macs deployed through its BYOD program, but plans to deploy around 50,000 Macbooks by the end of the year. That, according to the memo, would make IBM the biggest “Mac shop” around, and the company said it’s sharing what it learns through the new deployment with Apple as Apple assists through its device enrollment program.

We’re not just in the post-PC era, but the post-Windows era.

Feels good.

via Daring Fireball

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Technology

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Samsung: Copy? Yes. Transform? No. Combine? No.

There’s a great TED Talk with Kirby Feguson up on Vimeo’s Tumblr. It’s a 10-minute version of his awesome 4-part film series, Everything Is A Remix.

He starts off his presentation explaining how, at the height of his career, Bob Dylan was accused by “a small minority of dissenters” of stealing other peoples’ songs. He then fast-forwards to 2004 to talk about DJ Dangermouse’s The Grey Album, which was a remix of The Beatles The White Album and Jay-Z’s The Black Album.

The three techniques used to create these albums:

Copy. Transform. Combine.

But Ferguson says these techiques are not exclusive to music:

But I think these aren’t just the components of [music] remixing. I think these are the basic elements of all creativity. I think everything is a remix and I think this is a better way to conceive of creativity.

He then goes on to talk about the patent wars between smartphone manufacturers going on today. He calls out the apparent hypocrisy behind Steve Jobs’ intention “to go thermonuclear war” on Android for copying iOS and the iPhone when seen in the context of the original Macintosh being ‘inspired’ by the pinoneering work by Xerox PARC on the graphical user interface (GUI). To his credit, Ferguson talks about the theory of loss aversion–it’s ok when I copy another person’s work, but it’s not ok when someone else copies me (To use Ferguson’s language, Apple didn’t just copy the GUI work done at Xerox PARC, they combined and transformed it into something completely new with the Macintosh, but I’ll leave this for another post). Which leads me to Samsung.

Apple’s beef with Samsung isn’t that it stole Apple’s hardware and software—it’s that they copied Apple’s hardware, software, marketing and retail store design (via The Loop). Samsung has had no intention to remix anything they copied from Apple. Samsung’s intention with all of it’s Android smartphones has been to align as closely as possible with the look and feel of Apple products. Bob Dylan took melodies note-for-note from old folk songs, but you’re never confused. You always know it’s Dylan. This is because Dylan copied, transformed and remixed old media into something new.

Samsung stopped at copying and never bothered to remix anything. This is why many people confuse Samsung phones running Android for iPhones.

Update: Jim Dalrymple talked about this the other day too:

Apple had two blockbuster hit songs and Samsung stole them, note for note. That’s not right.

Microsoft and Palm also came out with smartphones after the iPhone. It’s interesting Jobs and Apple never went ‘thermonuclear’ on them like they did Samsung. I have a feeling this is because both Microsoft and Palm took the time to remix (in various degrees, Microsoft more than Palm) what Apple started with the iPhone. Does webOS look a lot like iOS? Absolutely. It has the DNA of the iPhone in it (Makes sense. The VP of hardware at Apple, Jon Rubinstein, became CEO at Palm/HP during that time). But if you’ve used a Palm Pre, you know it’s a Palm Pre. It has many characteristics unique to it, like cards and the Quick Wave Launcher.

Windows Phone 7 did the same thing, but they went even further. I’m not even sure you could say Microsoft even started with the Copy technique. They turned icons into tiles. They threw away drop shadows and gradients. They transformed the smartphone into something that makes sense to them.

Competition is important. Apple should not be the only company allowed to make multi touch smartphones and tablets, but to copy, almost pixel-for-pixel, what Apple has created is to concede Apple has done everything perfectly with iOS and the iPhone. The thing is, they haven’t. When a company creates a new smartphone they have the opportunity to remix what’s been done and present something fresh and new.

Maybe all Samsung wants is a product approaching ‘iPhone-ness’, but I’d like to think they have a lot of talented designers, developers and engineers who could come up with something good, maybe even great. People with the ability to remix.

Then I always remember we’re talking about a hardware company that doesn’t know how to make software. Who seems to have no interest in learning how to make software. Who licenses their mobile operating system from another company.

Change

“…and this transformation is going to make some people uneasy. People from the PC world, like you and me. It’s going to make us uneasy because the PC has taken us a long ways. It’s brilliant. And we like to talk about the post-PC era but when it really started to happen I think it’s uncomfortable for a lot of people because it’s change and a lot of vested interested are going to change and it’s going to be different.”

—Steve Jobs, D8 Conference

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Technology

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