The Death of Google Wave is interesting.  We’ve written about Wave before, several times, but in particular when SAP put out its “Gravity” demonstration.

The official Google Blog blames the closure of Wave on a lack of user adoption:

But despite these wins, and numerous loyal fans, Wave has not seen the user adoption we would have liked. We don’t plan to continue developing Wave as a standalone product, but we will maintain the site at least through the end of the year and extend the technology for use in other Google projects. The central parts of the code, as well as the protocols that have driven many of Wave’s innovations, like drag-and-drop and character-by-character live typing, are already available as open source, so customers and partners can continue the innovation we began. In addition, we will work on tools so that users can easily “liberate” their content from Wave.

So, there’s a bunch of open source code, it looks like, that partners and customers might leverage.  But most of us, I think, would prefer to just use a finished product.  There are many other unofficial takes, here and here are two examples.  I had a few others linked, but no need – you can find such commentary easily!

When Wave was announced last year, I spent some time discussing with others what it meant for BPM.  Some thought it was a game-changer, some thought it was a non-event.  The thing that became clear to me: collaboration tools like this are going to tend toward being free, or extremely inexpensive.

Starting last fall, the discussion in BPM circles had often turned to “ACM” (A variant on Case Management).  Some in BPM circles would call this unstructured process. Some would call it “chaotic” or unpredictable processes/work.  Keith Swenson and colleagues even penned a book about managing such unpredictable work.  Google Wave was, to this crowd, a great example of where “knowledge work” is headed – into collaboration spaces, not into BPM software.  To me, it was just proof that email and lightweight project management tools were not going away.   If Google Wave accomplished anything, it showed:

1. Separating yourself from email divorces you from a knowledge worker’s daily routine (some might say, process).
2. If it isn’t trivial to involve the right people in a collaboration, then users give up
3. Collaboration is going to be free or nearly free.  Even if it has pretty amazing features.
4. It is really hard to do a “big bang launch” successfully.  It makes me even more impressed that Apple seems to pull this off with such regularity.

So what does it mean for BPM?  Not much.  Wave was never really about structured interaction, it was about ad-hoc interaction.  Although ad-hoc interaction is important to a good BPM strategy, no one (maybe except for SAP) was really leveraging Wave for this.  If they were, they can probably leverage the open source bits to get a jump on the development effort.  For the ACM crowd, its both good news and bad news.

First, the good news:

1. A free competitor to your products, supported by a major software company, has gone away.
2. Hm. I think that’s it.

The bad news:

1. If you were counting on convincing users to leave email to use your product for knowledge work, it is time to change gears.
2. If you were expecting that being good and free was good enough… Maybe it isn’t.  Although Wave was panned in the press, it really was pretty good at what it did, though perhaps it tried to do too much.
3. If you were expecting to charge a lot of money for general-purpose collaboration software… I think those days are over.
4. If Wave was your favorite example of how ACM was really relevant to what people are doing… time to find a new example.

Silver lining:

1. Collaboration software for very specific purposes will live on (aka process modeling, or services like tripIt).
2. Some of Wave’s features will likely get absorbed by Gmail.
3. Some of Wave’s features will likely show up in other products.

I think Keith Swenson summed it up best for the ACM folks on Twitter:

“nooooo. It can’t beeeee. :-( RT @jpmorgenthal: Google waves goodbye to Wave: http://bit.ly/bg3ixC”

Well, fans of Wave and its approach were bound to be disappointed.  I saw quite a few more comments on twitter with a more positive spin on Wave being shut down.  Google found Wave squeezed inbetween email and all the other things we do in life.  It apparently couldn’t live on its own.  I’m not sure the future of ACM, per se, is anything different.  Yes, the ACM proponents will have their analogies, and they sound compelling.  And we could even agree that a large percentage of work is not addressed by BPM today, or by, more specifically, structured process.  But what ACM proponents fail to mention is that even less work is currently addressed by purpose-built ACM software.  It *could* be, but isn’t.  It is still likely to be addressed by email, project management tools, telephone, hallway conversation, and more email.

Note, I’m not arguing against ACM as a description of work, I’m just looking at the software market and not seeing it as an independent market, yet.  Willing to be proven wrong.  And I think there are a couple vendors that have the right strategy or tactics, but we’ll see if they can execute.

Working on a longer collaborative post on ACM and the marketplace.  Watch this space.

I’ve previously written about Apple’s need to step up their level of service, using luxury car service shops as an example.  Apple Insider has a story about Apple rolling out business-friendly, or at least small-business-friendly, services to its retail stores:

Apple is said to have at least one salesperson dedicated to managing accounts with local businesses, and has also recently begun recruiting within its sales staff to create a team that negotiates leasing and pricing terms for business clients. People familiar with the company’s plans said the strategy has proven successful, as some stores have seen their revenue more than double after implementing the program.

Well, it is brilliant to leverage the retail outlets as a differentiator for small-business-owners, who might prefer to just pop into the Apple store for something rather than ship their laptop off to a repair center. However, if that is going to be a differentiator, Apple still needs to address services like in-store repair rather than shipping off your laptop, or else provide reasonable loaner programs.  Providing discounts to small businesses is a smart way to get some buyers off the fence, who might have only been holding back over pricing concerns.

But the real value is value-added services for businesses: that’s what creates lock-in.  And, if possible, leveraging the install base of Apple Stores to differentiate.  Given how crowded these spaces are already, however, it may require rethinking how much square footage is needed in a typical Apple Store to provide the full range of services.

In a previous post, I argued that (contrary to Alain Breillatt’s expert perspective) Apple’s approach to product actually saves money rather than “wastes” money.  What most people would look at as waste, I would look at as costly-wrong-turn-avoided.  If you understand the arguments behind technical debt or process debt, the idea that a bad design (or more than the minimum necessary number of designs) is expensive makes perfect sense.  This argument was an exercise in looking at the R&D process around one future product – the 10:3:1 ratio of product design weed-outs, for example.  In another post, we looked at the big picture R&D spending versus revenue and profit growth – and in this wide angle lens, it is hard to argue with the idea that Apple’s R&D is quite efficient.

Recent events and a few good blog posts bring some additional data and perspective to bear on this.  First, we have the Tyner Blaine post, The High Costs of Building the Wrong Product, which is a fantastic explanation of the concepts discussed between myself and Alain Breillatt.  As Scott Sehlhorst writes for Tyner Blaine:

There’s an analog to the market dynamics of making poor product decisions – executing with poor quality. Many research studies and articles have identified the market impacts of poor quality.  This has become so well accepted that people today cite it like a law of physics (one example here based on this 1988 IEEE research by Barry Boehm and Philip Papaccio) as the “1-10-100 rule.”  The primary conclusion of that research is that ten dollars spent on fixing bugs:

• Costs and saves $10 when you catch (and fix) the bug during implementation.
• Avoids $100 in costs when you catch the bug during QA and send the product back to development (then test again).
• Avoids $1,000 in costs versus waiting until your customers catch the bug in the field, causing the team to remedy the problems, rush out a patch release, and/or go to heroic lengths to manage a PR problem.

This is an opportunity in front of your product team – a 100x payback from investing in quality during the development process.  Of course, be pragmatic about it – if the cost of testing exceeds the cost of bugs, don’t test.

We just recently witnessed the cost of a “bug” in the final version of a very popular product.  Apple has taken it on the chin in PR because of this.  Imagine the launch coverage absent this issue – the press and blog coverage would have found something to complain about, but this issue was almost too easy for them to focus on.

Now, imagine that Apple had developed, say, one of the many bad Android phones.  There are Android phones that review well.  But had Apple wasted the resources to build one of the ones that wasn’t good – that is quite a cost, isn’t it?  To reputation for one.  But there are marketing costs, support costs, potentially recall costs (analysts were estimating north of $1B in recall costs to Apple if it came to that). The Droid X is already getting criticism for its bad User Interface (allegedly, worse than the default Android 2.1 interface – though I don’t claim to be an expert on that).  What is the cost to Moto’s business to develop “a bad product” or, a product with a few really bad bugs?  People often compare Apple to “Android” – but actually each Android handset maker is a separate competitor.  Each one has to invest significant energy into developing their handsets.  As long as Apple has significant volume advantages over any single competitor, they should enjoy economies of scale that the other manufacturers don’t.

TechCrunch has an excellent article detailing Apple’s surprising vertical integration benefit. I say surprising, because in economics we’re generally taught that vertical integration is less efficient than specialization.  Apple seems to buck that trend.  Steve Cheney writes:

Perhaps the best example of this so far is FaceTime, Apple’s take on video-calling. FaceTime makes video-calling on the Android-based Sprint HTC EVO look silly, because the EVO awkwardly requires users to sign up and download a third-party app, then launch it every time they want to talk. Normal people simply won’t do this.

Apple eliminated this friction by innovating at the confluence of hardware and software—hit one button mid-call and the feature just works. It really is amazing (yes, I am channeling Steve Jobs).

Once Apple does release a product, they really know how to market it.  In this FaceTime ad compaign, they do a great job of not marketing technical specs and instead marketing human value.  This is what makes the difference between evangelizing your product and just geeking out.  Not every body likes it – but think back to when the iPod commercials were ubiquitous.  They didn’t market the # of songs so much, nor the quality of the build (though it was high), nor the RAM, nor the CPU speed.  They marketed people dancing in their heads while going about their every day life (the shadows are dancing while the person calmly walks to the subway).  Sell the benefit, sell the humanity.

Back to the TechCrunch article… the author argues that Apple actually benefits from feature bloat in component vendors.  For one, they get to strip out unnecessary features from their designs (which aids battery life, for example).  For another, Apple gets an inside track view of what is coming down the pipeline in these components that their competitors depend upon.  And then Apple has degrees of freedom to decide how to respond.

Good food for thought for anyone running a product business.

We had a brief hiatus while I was out for a few much-needed vacation days.  At my highschool reunion this past weekend, I took note of the phones in evidence – almost every one I saw was a blackberry or an iPhone (noteworthy: everyone who had a blackberry said it was company issued, or they’d have an iPhone).  I didn’t see any Android phones – but maybe I did and just didn’t recognize them as such.  Apparently, however, there are 160,000 getting activated every day (I’m wondering where they are… I still don’t see them yet, but I don’t doubt Google is reporting accurate numbers). I also had a great brunch with my parents and a number of their friends near their home in Florida.  It turns out that of the 9 people there, 7 had iPhones.  Not the demographic I would have expected to adopt iPhones, but last year my parents got each other iPhones for Christmas.

Tomorrow, a significant percentage of BP3 is heading to an Apple Store of their choosing to pick up an iPhone 4.  My friends are a little surprised – although I’m somewhat of an early adopter on technology, I detest standing in line today for what I could buy easily another day with no wait.  I also hate to buy things the moment they come out because if there are any hitches, you don’t know what they are yet.  Finally, I hate to pay the early adopter premium.  But tomorrow I’m breaking these rules for a few reasons… First, I’m standing in line because I didn’t see the home-delivery option when I pre-ordered (maybe I didn’t see it or maybe I ordered too late on Day 1 to see that option?).  I’m buying early because Apple has earned my trust with the iPhone 3G (and 3GS, and iPod Touch… and several MacBook Pros).  Finally, the pricing doesn’t penalize the buyer for early adopter status.  So I’ll be there bright and early in the morning for my iPhone 4 pickup, and I’m looking forward to the Retina Display and other fun new bells and whistles.

Apple’s iPhone 4 continues a trend they clearly established with the iPod line, and are continuing with the iPhone line:  yearly, substantial, incremental improvements in the device and platform.

We’ve previously commented on both the process and the efficiency of Apple’s approach.  I found some of the commentary on the latest release pretty interesting, and likely it is just getting started, as most of us haven’t even held one of these devices yet, the closest we’ve come is that WWDC keynote…

Forrester’s Charles Golvin says “While the iPhone 4 isn’t the leap forward that Apple paints it as, it is an exceptionally beautiful device and is a substantial upgrade that will succeed in maintaining Apple’s mind and market share growth.” I expect we’ll see a lot of commentary that amounts to a big yawn (for example, who cares if it has a gyroscope instead of in addition to an accelerometer).  I think this is largely because of the dribble of leaks mentioned below.

On the other hand, Oppenheimer’s coverage (Yair Reiner):

Despite the “dribble of leaks” before Monday’s keynote, he said, Apple’s latest iPhone “catapults the smartphone category forward along every axis of relevance to consumers: OS sophistication, speed, battery life, display resolution, video connectivity and camera quality. If products like the HTC Incredible demonstrate that Apple’s competitors have significantly improved their game, the iPhone 4 suggests the stronger competition has sparked an almost fierce level of innovation at Apple.”

The dribble of leaks lessened the impact of the release.  But smartphone innovation is in its sweet spot right now, from my perspective.  It reminds me of the pace of change in laptops in the 90′s – every 12 months you could get a new laptop that made your old laptop look obsolete.  Smart phones are in a similar cycle.  I’m not sure it will continue for more than a few years at this pace – but when it does, Apple has previously shown it knows how to diversify its product line while keeping it simple: color, storage, form factor.  It has done this with the iPod lineup.  I haven’t felt a need to upgrade my iPod for years – but for a few years I would have wanted a new one about every other year.

Apple is doing a good job of not just innovating (or catching up) on the device (display, CPU, cameras, etc), but also on the ecosystem.  It is analogous to the same plays it made in the iPod line, though obviously the smart phone market and ecosystem is more complex than the iPod ecosystem. The key thing, however, is that Apple is busy making a steady stream of improvements that make their products a more and more attractive value proposition.  And they’re raking in profits that will enable them to keep investing in R&D on those products that will be hard for competitors to match if they can’t produce similar profits.

Some would point out that other phones (Android in particular) will add more features than the iPhone, especially inbetween the iPhone product cycle releases each year.  However, I’d remind the critics that in the MP3 player market, there was one feature that many of Apple’s competitors had, but which Apple never replicated – and Apple *still* has 70% of the market at a higher price point.  What is it?  FM stereo tuning.  It turns out, the ecosystem is more important than FM.

Business Insider reports on wage increases at Foxconn:

WSJ reports that according to a company announcement, minimum wage workers may see a more than doubling of wages, while others will see at least a 30% hike — previously the company had indicated a 20% wage hike to deal with the problem, so this is already an expansion.

I’m curious if this is going to stick at Foxconn, and if it will affect wages in China generally.  If so, I think it is generally a good thing for China, for the potential growth of the middle class there, etc.  It may raise prices modestly here, but counter-balancing that it may also moderate downward wage pressures here as well.  Or, perhaps it will create pressure to put manufacturing in other locations around the world.  Time will tell.

Jason Snell of Macworld writes:

I don’t think the company needs to stop controlling what apps get in the App Store. All Apple needs to do is add a new feature, buried several menu items down in the Settings app, that mirrors the one found on Android devices: an option that lets you install Apps from “unknown sources.” If a user tried to turn this option on, they’d get a scary warning about how these sources couldn’t be trusted, and that they may lead to instability, crashes, loss of data, you name it. Scary stuff.

Most users will never find that setting. Many who do will be loath to turn it on. But by putting it there, Apple immediately shuts up every single claim that the iPhone isn’t open. (Just as iPhone OS 4’s multitasking feature is debatably not “true multitasking,” no doubt many tech insiders would immediately howl that allowing unapproved apps isn’t truly “open,” but I don’t think regular consumers would notice.)

This is why I am surprised that Apple hasn’t taken this step earlier: By keeping the App Store closed, and by using a rigorous approval process, most iPhone OS users would never, ever consider installing an unapproved third-party app. Even in a world where unapproved apps can get loaded on an iPhone, developers will desperately want to be in the App Store.

(And who knows? Perhaps Apple would even feel free to tighten the screws on App Store approvals even further in such a scenario, to make the contents of the store even more groomed and filtered.)

What a fascinating idea.  I think another approach Apple could take is to have another storefront that only restricts based on API usage and malware type issues – basically, non-editorial stuff. So, the content may be objectionable, it may do awful things for your phone experience, but it isn’t a virus and it doesn’t violate basic TOS.  Its a thought.  Jason’s is easier to implement though, and keeps those apps at arms length.

Much has been made, recently, of Apple’s “Walled Garden” – a term borrowed from AOL’s days of providing a restricted internet experience.

And many authors go on to describe Apple as being “un-web-like” or providing a walled garden – exactly analogous to the old AOL days.

Batelle writes:

Next week, Apple will make any number of announcements at its WWDC. I’m hoping the company will announce that it is tacking away from its walled garden approach with the iPad, but I’m not going to hold my breath. Apple makes gorgeous products, but ultimately, I think any product which rejects the web’s core value of connection will simply disappoint. But more likely than not, it’ll be a year or two before that becomes apparent.

Look, Batelle is far more qualified to write about Apple than I am.  But I think the analogy is backward.  When AOL was providing its walled garden, PC’s were the wild west – you could install any application you wanted on them, and there was very little accountability by the software providers, and very little ability for a consumer to verify authenticity or lack of viruses or spyware.  But the Internet experience via AOL was “curated” or walled garden in nature.  It was often explained as protecting people from the wild west of the Internet.  As Batelle says, ultimately the model failed.

But Batelle claims that this was because of the link.  I would contend it was because of the browser as well.  The browser did “enough” to protect you from the perils of the Internet, eventually (let’s not review all the security issues in early browsers), as the browser was increasingly sand-boxed.  Essentially, the consumer’s risk from browsing the web today is a lot less than it in the early days of browsing, and users have learned to be more careful about what they click on.  In fact, in some ways, services like bit.ly have an opportunity to provide curated links that are somewhat guaranteed to not contain spyware or other harmful material.

So why is the analogy to AOL’s walled garden backward?  Because Apple sells devices, it has the opportunity to provid an ecosystem where the web is wide open, but the applications are curated.  To me, this is much more like a garden with a view.  The applications are verified and safe: and for my productivity applications this is what I need.  And the web is open to use as desired – and since I never know where a link will take me, this is also what I need. And the applications aren’t restricted to only Apple-developed apps – anyone can submit an application into a great distribution channel.

Many, including Batelle, claim this has been tried before and failed… but I’m not convinced it has been tried before (certainly not by AOL). There will be competition from even more harshly controlled ecosystems (feature phones), and from completely open ecosystems (Android).  But the outcome isn’t a foregone conclusion yet, because it is a different game.

(I’ve also heard the argument that one cannot tinker on the iPhone or iPad… but the tinkerers can spend a whopping $99 for Apple’s development tools, and tinker all they want with custom software.  It isn’t free, but it is hardly a king’s ransom.)

Parting thought:  I wonder if Siri, a recent Apple acquisition, will be the foundation of interesting inter-application linking within the iPhone/iPad ecosystem.  Batelle laments the lack of deep linking within applications in the iPhone ecosystem, but an API built around Siri’s approach, or the Mac’s “Services” registry, offers interesting open-ended alternatives, without forcing Apple to give up their curated app store.

This post on the Silicon Alley Insider really impressed me:

Turns out, Apple’s run of incredible products (and growth) has been achieved with a staggeringly low R&D spend. How low? Apple only spent $4.6 billion on R&D over the past four years, while revenues soared from $25 billion to $43 billion.

In contrast, Microsoft spent 700% that amount on R&D during the same period, a whopping $31 billion, while growing at an anemic pace, despite flippant M&A. Likewise Cisco and Intel spent about 400% as much as Apple on R&D – $19 billion and  $23 billion respectively. These are astounding differences above Apple’s research and development spend, especially considering that during this period Apple developed the iPhone and iPad.

In fact it’s rumored that Apple brought the iPhone to market for a mere $150 million, doing so organically without acquisition outside of a touch gesture recognition company named FingerWorks.

That’s pretty incredible.  And it points back to something we’ve posted previously, that while Apple’s design process may look expensive, it is actually more efficient than the alternatives.  Anyone who has spent time in the software business (as I have) knows that a badly designed software feature costs a lot more *after* sale than it does to build.  And well-designed software, which may not only cost next-to-nothing to support, but also may increase sales by creating positive impressions and network effects, doesn’t cost that much more to build.

I read a lot of BPM coverage and commentary.  I also read a lot of software industry news and startup news, and Apple-related commentary, because of my personal interests and because of cross-pollination.  Sometimes a theme will emerge that cuts across these interests and it just jumps off the screen.

Right now, that theme is simplicity. Neil Ward-Dutton touched on it when he mentioned the new focus IBM has on “consumability” in its acquisitions. But lets take a quick diversion to talk about some articles that make the same point.

Television

First, this hilarious post by Mark Cuban: “The Future of TV is… TV” (Now, why didn’t I think of that?!). In a world run amok about streaming video and TV going away, Mark points out:

You know what is AMAZING about VOD  ? It gives you thousands of choices and its already connected to your TV. It just works.

You don’t have to buy another box. You don’t have to figure out how to connect it to your TV. You don’t have to stream from another device over your WIFI netork and get all confused about how to pull video from the internet. It just works.  That’s what you want when you unbox that great big flat screen TV. You want it to work…. like a TV. Easily. Quickly.

That isn’t to say money won’t be made streaming video.  But TV isn’t going away – and people aren’t shelling out for new HDTVs for nothing.  Interestingly, Mark has a followup on this article because of the Google TV news – and his answer for the future of TV is still… TV (however, he sounded like he liked the Google offering as announced).

Twitter

Not long ago, SAI covered Twitter’s announcement of a new product called “Blackbird Pie“, a product for “embeddable tweets”. I guess the idea was that you could quote someone more reliably.  But it is something like a 7 step process – and one of those steps is to go to this twitter url and paste in the URL of a tweet that you want to embed/quote.  Of course, most people use twitter clients, so they’re not looking at a tweet URL to begin with.  What people typically do is just quote someone.  Or if they really want to get clever, take a screenshot of the tweet so that the wording isn’t as likely to be questioned.  Simple.  For a service that prides itself on “simplicity”, it isn’t clear that Twitter still realized how crucial simplicity is to its service when they roll out unnecessarily complicated features like this. Worse yet, according to SAI:

Besides being WAY too complicated, here’s what else is wrong with Blackbird Pie.

• Twitter justified its existence by saying that it would prevent people from being misquoted. Problem is, it’s very easy to manipulate Blackbird Pie code to misquote its source.
• If tweets are supposed to be embeddable, THEY SHOULD ALL HAVE AN EMBED BUTTON JUST LIKE YOUTUBE VIDEOS, EGAD.
• There’s no easy way to customize the code Blackbird Pie pumps out. What if you want the tweet to be 640 pixels wide?
• We tried using the embeddable tweets. Didn’t work. Didn’t work on TechCrunch either (see below).
• Blackbird Pie has already crashed.

That criticism stings because it reminds us of other false starts from Twitter.  The article goes on to skewer the @anywhere feature as well, and the fact that it co-opted the “Retweet” but didn’t implement it the same way… and yet decided to use the same name (adding to the confusion).  Not content to be a simple status and notification service with a lightweight footprint, Twitter is overcomplicating things as it tries to extend its control.

Apple

Meanwhile, in Cupertino, Apple puts out a product that simultaneously elicits rave reviews and dismissals.  It is so easy to focus on what it doesn’t do. Amy of the “Cheerful Software Manifesto” has a wonderful way of putting this, I just had to quote it verbatim:

The iPad, though, unlike the Newton, is going to win, and win on an epic scale.

Nevertheless, the shortsightedness of punditry is evergreen. Instead of praising the iPad, critics express their disappointment, because they expected more. They expected a genre buster. They expected something they’d never seen before, something beyond their imagination. Something revolutionary.

They’re disappointed that the iPad is so… well… unsurprising.

Therein, of course, lies the genius.

THE IPAD IS BARELY A SURPRISE AT ALL
The design, delivery, and timing of the iPad couldn’t be more different than the Newton. The iPad wasn’t a surprise at all. It’s the capstone in a family of devices.

There’s a cozy, pre-existing slot in people’s brains that the iPad fills quite nicely.

“Oh,” they say. “It’s a big iPhone.”

It doesn’t matter if they utter that phrase in distaste. That little sand grain of dismissal becomes the core around which will form a pearl of understanding.

“Trying to deal with email on the iPhone is tough. The screen’s too small.”

“I wish we could both work on this at the same time.”

“I’d like to sketch concepts with touch, but I keep running off the borders.”

Ding ding ding.

(The emphasis was hers)

Her point: rather than change everything, or revolutionize (as the Newton attempted to do), we need to prepare the ground, and build on what went before.  The iPhone has laid the groundwork for the App Store, and the developer community, which in turn prepared us for the advent of the iPad.  Jon Gruber takes this point further with “This is how Apple Rolls“:

Next, consider the iPod. It debuted in the fall of 2001 as a Mac-only, FireWire-only $399 digital audio player with a tiny black-and-white display and 5 GB hard disk. The iTunes Store didn’t exist until April 2003. The Windows version of iTunes didn’t appear until October 2003—two years after the iPod debuted! Two years before it truly supported Windows! Think about that. If Apple released an iPod today that sold only as many units as the iPod sold in 2002, that product would be considered an enormous flop.

Today you can get an iPod nano for $179 that’s a fraction of the original iPod’s size and weight, with double the storage, a color display, video playback, and a built-in video camera. Apple took the iPod from there to here one step at a time. Every year Apple has announced updated iPods in the fall, and every year the media has weighed in with a collective yawn.

There’s never been one iteration of the click-wheel iPod platform that has completely blown away the previous one, and even the original model was derided by many critics as unimpressive.

The same thought process applies to Mac OS X, and (so far) to the iPhone… and likely it will apply to the iPad.  Where each year (or so) a significant improvement will be made to the platform, but perhaps never blowing us away as compared to the previous version.  But comparing versions across 2-3 years, we’ll see improvements across the board.  A big part of this is starting as simple as possible.

There’s a simplicity to the Apple ecosystem and products that really makes it easier to engage with their products as users.

Business Process Management (BPM)

Mike Gammage talks about “Cracking Complexity” – and how BPM creates strategic value:

Institutional complexity stems from strategic choices about organizational and operating systems. It’s a consequence of the number of nodes and interactions within an organization. It’s about geographies, customer segments, business units, products, regulatory jurisdictions and manufacturing locations.

Individual complexity is defined by McKinsey as “how hard it is to get things done”. It’s the complexity that the vast majority of employees face – typically due to poor processes, confusing roles, or unclear accountability.

Apparently most execs focus on institutional complexity, but individual complexity can really impact the bottom line (negatively).  If individuals can get their job done more easily, and more importantly have visibility as to how to get their job done, then you’ve really increased your organization’s efficiency.  As Mike puts it: “There are jaw-dropping hidden costs arising from confusion in roles and accountability across end-to-end processes. And similarly enormous costs of IT failure where IT and the business are not speaking the same language. ”

If BPM is defined correctly, then it’s a C-Level issue. BPM is not about new ways to automate, it’s a far broader canvas. Process excellence goes way beyond just standardising and automating. BPM is about the management, adoption and continual improvement of every process, whether automated or not. And it’s about wrapping in compliance, risks and controls so that it becomes possible to manage the business in 3D.

Framed in this way, BPM is the key to reducing individual complexity – “making it easy to get things done” – whatever the level of institutional complexity.

So, if BPM is about simplifying the individual’s experience of the business – managing for the complexity inherent in any large organization, rather than just trying to oversimplify – then what is, exactly, the role or mission of the BPM software vendor?

Phil Gilbert commented on one of our posts recently:

The shame in all this is that what gets lost in all this scope creep is the original goal, the original promise: BPM technologies should focus on reducing the technical barriers to the definition, creation and maintenance of business information. Instead, we seem to be paying for the Original Sin of BPM which was to focus on BPEL (or BPML before it) as anything to do with any of this. We defined BPM properly, then the industry and some of its early proponents corrupted the delivery.

[...] The beauty of BPM, though, is that it’s about HOW existing technical capabilities can be exposed to a broader audience, an audience more directly connected to the business outcomes than ever before.

Phil goes on with a very good example, versioning… something that literally everyone can do.

“HOW do you version artifacts in a way that’s easy for less technical people to understand?”. Versioning is something everyone can do… so the interesting question isn’t “do you allow versioning” but, rather, HOW do you expose this core capability so that it is accessible to a broader audience and can scale technically.

And the how is important because, as Phil points out, it translates into lower costs and better outcomes.  And honestly, it makes it more likely that you can envision those outcomes in the first place if the how is well thought out – and simple.

It is why installation should be easy, and why we shouldn’t have to hunt for myriad third party libraries and their appropriate hotfixes and fixpacks.  It is why the “checkbox” method of software evaluation doesn’t really cut it (at the very least, use a 1-10 or 1,3,9 scoring methodology so that you can weight things that really *work* versus things that barely get a nod from analysts – but better yet, really understand the depth of the product).

Some argue that BPM is too complex, and therefore shouldn’t be used. For some this is a theoretical argument, but for others they are putting their money where their mouth is and building product that starts with a simple core.  But that is the long road to building out a BPMS.  However, not all vendors are making their BPM offering more complex – as Phil points out above, they’re working hard to make previously complex issues, like versioning, transparent to the user.  It is also why cloud computing will be come increasingly relevant – simplifying (to the user) the task of allocating computing and networking resources to applications.  This is the real magic of software development done right – making previously complicated activities more accessible.

Software companies, and in particular BPM vendors, need to continue to invest in the deep thinking and deep investments to create tools that simplify complicated work; and they need to realize that this is an iterative process – we don’t need the whole thing on a platter 5 years from now – a little progress every year would be great.  Similarly, BPM practitioners need to really think through the processes they build for their participants- providing advanced functionality in a highly consumable package is what BPM is all about.

This hit the news this morning, that Apple acquired Siri.  We had the opportunity to see Siri compete in the startup accelerator competition at SXSW-interactive this year. Even at that time I was thinking how much better something like Siri would be if it was able to take advantage of a “service registry” or API registry within the iPhone App community – much like apps in Mac OSX can take advantage of the service registry there.  So an application could register to provide “table reservations” and Siri could farm out reservation requests to such applications (currently, it does this only with OpenTable). And integration to core applications within the iPhone would greatly improve the service (emails, calendar, etc).

So its a logical fit, and a good outcome for the Siri team.  But more than that, the Business Insider believes it is a shot across the bow at Google- because it may be what Search looks like on mobile devices.  Where it is less about “search” and more about “search as a preface to action”. I think this is a great point, and a fantastic move by Apple.  I can definitely imagine them taking advantage of Siri functionality to make the Apps we already buy more useful on our phones.  And hopefully the Siri application itself will improve (more stable, better voice recognition, etc.).

Business Insider’s original article here.

Alain Breillatt argues that you can’t innovate like Apple for many reasons.  His article is really a fascinating read for what it reveals about Apple’s design and product development process, regardless of what you think of his conclusion.

But as with any piece that makes a bold statement, there are bound to be pieces where the author misses an underlying truth in pursuit of making the point that is the thesis of the article.

The part of the article that caught my attention:

10 to 3 to 1. Take the pixel-perfect approach and pile on top of it the requirement that Apple designers expect to design 10 different mockups of any new feature under consideration. And these are not just crappy mockups; they all represent different, but really good, implementations that are faithful to the product specifications.
Then, by using specified criteria, they narrow these 10 ideas down to three options, which the team spends months further developing…until they finally narrow down to the one final concept that truly represents their best work for production.

This approach is intended to offer enormous latitude for creativity that breaks past restrictions. But it also means they inherently plan to throw away 90% of the work they do. I don’t know many organizations for which this would be an acceptable ratio. Your CFO would probably declare, “All I see is money going down the drain.” This is a major reason why I say you can’t innovate like Apple.

Well, first of all, the math is wrong.  If they brought 10 concepts all the way to final production-ready version, and threw away 9, that would be 90% “thrown away”.  But actually they’re abandoning 7 ideas at an earlier stage, and 2 more at a late stage for production.  So the percentage thrown away is something less than 90%.

Second, what struck me most is that Apple’s design process doesn’t consider these throw-away prototypes as waste – it considers these prototypes as a valuable part of the creative process – and that the TRUE waste is producing less than the best product design.  Or worse, producing multiple products that are inadequate.  Imagine if Apple had released 4 iPhones instead of 1 in the first run.  That would have been the real waste – because each of those products would require significant production costs, engineering costs, support costs, and marketing costs on into the future. So Apple is making a trade-off of design-cost against production-waste, from this point of view…

Next, Alain describes Apple’s strategy as high-risk:

4. Apple focuses on a select group of products. Apple acts like a small boutique and develops beautiful, artistic products in a manner that makes it very difficult to scale up to broad and extensive product lines. Part of this is due to the level of attention to detail provided by their small teams of designers and engineers. To think that a multi-billion dollar company only has 30 major products is astounding, because their neighbors at that level of revenues have thousands of products in hundreds of different SKUs.

As Jobs explains, this is the focus that enables them to bring such an extensive level of attention to excellence. But it is also an inherently risky enterprise, because they are limited in what new product areas they can invest in if one fails.

Again, I see how having a “narrow” product line can look like it increases risk.  But the advantage that Apple gets (and which I’ve pointed out previously), is that Apple can put all of their R&D effort behind a smaller number of products at volume, rather than splintering the focus with a great number of different products.  The greater risk to Apple’s business would be producing a broad array of inferior products.  The risk that Alain is focused on is the risk that Apple produces, for example, only one phone, and if the next version is a “dud” then the risk comes home to roost.  But this risk is over-stated:

1. Apple’s product update lifecycle is typically about 1 year. So if a design is a dud, it usually won’t hurt them in that product category for more than 1 year, and they can learn from that failure for the next version.
2. Apple provides a lot of product updates that aren’t risky – color options, storage/memory upgrades, speed improvements, software updates.
3. Apple only provides “choice” when there is demand volume to justify the extra cost.

Moreover, one could argue that for a given market-share, Apple can benefit from efficient R&D expense (yielding higher margins).  And if Apple is successful in delivering a premium design, then they benefit a second time from premium pricing.

Of course, Alain makes many points in his article that were new insights to me, and more that I completely agree with, so it is a little unfair to just pick on a couple of things that I think his post missed.  It’s a great read and highly recommended.  But, my cautionary note: when thinking about cost, think about the cost of the Apple path, sure. But then, think about the real costs of the other path as well.  Which one is really more expensive?  Riskier?  And what is the expected return for each path (Risk*Reward – Cost)?

Update 5/24/2010: Clearly, Apple’s own R&D and growth trajectory show that its approach is actually more efficient, less expensive.  Alain argues that it is more expensive, but the data shows otherwise.  Take this article from Silicon Alley Insider as an example:

Turns out, Apple’s run of incredible products (and growth) has been achieved with a staggeringly low R&D spend. How low? Apple only spent $4.6 billion on R&D over the past four years, while revenues soared from $25 billion to $43 billion.

Meanwhile, Microsoft spent 700% more, and acquired 45 companies.  And achieved much more modest growth.  It is pretty compelling data.

While Apple’s customer service could use a minor overhaul, the process ninja points out that it is still worlds better than the telcos customer service:

A Tale of Two Processes – Apple vs. Optus:

So I have the choice – dig through 2 years of paperwork and slog back to Optus to deal with the surly girl at the phone shop with no usable iPhones, or I can go to the apple store and they will simply replace it. I choose Apple, and whilst I’m there I may play with all their working products, maybe buy some accessories; using up all that time I would have wasted digging through paperwork…

But wait, isn’t Apple’s customer service top notch?  It is pretty good, especially when compared with other choices in the computer ecosystem.  Surprisingly, however, it doesn’t live up to the customer service I get from luxury car dealers.  When you take Apple out of the context of the computer business and compare to other high-end brands, there are some obvious improvements they could make.  What would I do to improve Apple’s customer service (rather than just complain about it)?

1. Loaner machines for people who have to ship their laptop for repair.  Car dealers do this “gratis” if you buy a luxury car.  Of course, the price of the loaner is baked into your $50 oil change.  Apple could do the same – or they could charge a flat rate ($100?) for a loaner.  $100 for 11 days of up-time isn’t too bad, considering the local Apple authorized repair shop charges $300+ for the same time-frame.  Alternately, offer it for free to people with Apple Care plans, and raise the average price of those plans a small amount to cover the difference.
2. Consider separating education sessions and wait-times from repair/replace wait-times.
3. Surprise and delight. Take a page from Zappos’ book – sometimes when someone comes into the Apple store out of warranty or without an Apple Care policy, go ahead and take care of them without charging, and tell them that that kind of service would be covered with the warranty if they want to have future repairs covered.  It is a great way to build brand loyalty.
4. On-site service.  Take a look at Dell’s servicing model – they’ll come to your office to fix your laptop if you buy the premium service plan.  Apple should consider adding this option to their service offering.

I’m sure other people have ideas about how Apple could improve their customer service – let’s hear ‘em.

A measure of how Apple has changed the game: even die-hard advocates of a browser-first-and-last method for building applications is starting to second-guess their conclusions.  The Apple iPhone/iTouch platform has so many devices out there, that it is hard to resist developing for it first – even if it wasn’t the best-looking target environment to deploy software to.  On top of that, it *is* the best-looking target environment.  Even more troubling for other platforms: Apple has the “cool” factor working for it to.  You can develop for the most populous platform, that shows off your service or application the best, and also get a halo effect of the Apple cool-factor to rub off on you.  When’s the last time you saw USA Today take out a full page ad to advertise their Droid app?  But on Monday they had one advertising their iPhone app (or was it iPad?). And I didn’t even look at it as USA Today being a pretender – it just made sense to me that they’re targeting this platform.

But there’s another factor that analysis like that offered by John Arnold overlooks.  The mobile website experience is significantly degraded by the quality of your 3G or Edge signal.  It makes some web applications nearly unusable, even though they were specifically designed for Android or for the iPhone.

Cameron Moll gives a similar critique of the current state of affairs:

I argued that “smart clients” (lightweight apps installed on a device whose content is primarily fed by and stored in the cloud) would and should remain secondary to providing the same experience in the browser, again for the reasons mentioned above.

Since the release of iPhone and now with the release of iPad, I’ve gradually found myself questioning more and more the assumption I made. Apple has consistently proven that holistically controlling the entire user experience—inclusive of hardware to software and everything in between—has the potential to yield a more pleasant experience overall. Think of Mac OS + Mac, iPhone OS + iPhone, and now iPhone OS + iPad.

He wonders if HTML5 and CSS might still offer viable alternatives to objective-C on the iPhone, but I think without a fully “local” experience with the cached data, it won’t be good enough.  One of the things phone users are starting to value is how their applications behave when they’re offline (in the subway, on a plane, or just in a dead spot).

If I were writing my “mobile experience” for a product today, there’s no question I’d write it first for the iPhone OS.  Odds are it will have the best overall user experience and set the stage for positive reviews and buzz – as well as reaching the largest number of people.  People on phones other than iPhone and Android phones simply don’t use the mobile web – it doesn’t truly work for them.  Android is gaining steam but it is still a distant second, and has a fractured marketplace for me to publish my apps to.  In fact, I’d probably write the iPhone App first, then the mobile web app.  And then evaluate market demand for Android.

But that’s just me.

Really interesting take on the Apple-Google conflict on Daring Fireball (John Gruber’s blog), as well as in the New York Times. It at least seems that the competition and animosity between these two companies runs deeper than perhaps anyone on the outside realized.

It’s really too bad because most of what these two companies do is so complementary, and symbiotic.  One wonders if Google is fighting too many battles on too many fronts- the same kind of question that was often posed to Microsoft when they were competing with so many software companies for so many of its applications.  The interesting thing to me is, I’m not sure that this fight was necessary for Google.  “Smart” phones were inevitably going to give Google the opening in the mobile space that it was looking for… The only real concern I can see is whether these platforms would, in some fashion, be closed to Google’s applications and ad platforms.  It doesn’t seem likely, given how compelling Google’s map and search applications are, and the ubiquity of Google Apps as a platform. And given that smart phones are already cheap ($99 or less), price doesn’t seem to be a huge barrier to entry anymore…

I hope that in spite of the competition in some areas, that these two firms can work together in areas where it makes sense-  I love the map application on my iPhone, but I’m not switching to Android in the foreseeable future – I like the overall Apple iPhone experience.

Fascinating notes were taken at a talk Tim Cook gave earlier today, in which he explicitly laid out the fact that Apple benefited from its narrow product focus, a $40B company whose entire product portfolio could fit on a single table.

So given that focus, why invest in custom silicon?

“We felt that we had the best knowledge of what we wanted the silicon to do,” he said.

By designing its own silicon, he said, Apple can create chips that are best-suited for the company’s products, allowing them to run cooler and more power efficient.

“Apple has, for years, been in the silicon design business,” he said. “When we were on the PowerPC architecture, Apple always personally crafted the northbridge and southbridge chipset, and so it’s not new to us.”

In other words, even when it appears that they are straying from their focus, Apple’s management team has identified an opportunity to use their laser-focus to their advantage, upstream and downstream of the core product the consumer is buying.  (In my way of thinking, silicon is downstream, and retail would be “upstream” of the product itself)

Coincident to this talk, there was new data out showing that the iPhone’s unit shipments *and* market share grew more than any of its rivals in the smart phone space (and honestly, the research firms are being generous when they apply the “smart” label to some of the phones included).

And meanwhile, they’re getting some good news from their major US partner: AT&T.  A recent report from PCWorld shows that AT&T has dramatically improved the reliability and speed of its network.  Not that I can feel these improvements from a particular square block in downtown San Francisco (and the AT&T network gets its lowest scores in San Francisco!), but I’ll take the study at its word that on the whole these improvements are real.

Oh, and, happy birthday, Steve.

Interesting developments in the land of “tablets” and “netbooks”.

It isn’t really my area of primary interest but because I like following Apple’s product direction I follow the news.

First, there’s this article from the day after the keynote, in which Andy Ihnatko goes into great detail with his iPad experience.  I like that he took the time to actually use the device rather than rushing to get a story out and cutting short his time to experience the device.  I’ll note that most of the journalists who stayed and laid hands on it actually had a more positive impression than those that didn’t.  That’s surprising (usually expectations meeting reality is a set up for disappointment).  And it says something about Apple’s attention to detail.

Some of the comments that jumped out from Andy’s review were that it “felt right”.  The “rightness” of products is something Apple has really been excelling at in the last few years.  Another was his commentary on its speed – that it actually feels like you are moving something – not just gesturing and waiting for the phone to move it – a much more complete experience, if you will.

The implications for the iPhone are that Apple may be able to squeeze its A4 (or similar) design into an iPhone and offer this kind of speed in the smaller form factor.  I think there’s limited runway for SPEED to differentiate with phones – and we’ll hit those diminishing returns faster than the 20 years or so it took with PCs -  but right now there’s a lot of room for improvement over my iPhone 3G, and it sounds like Apple has a chance to do that – and still preserve battery life.  That’s impressive.

The truly impressive thing Apple did was leverage the App Store to make the iPad instantly relevant instead of making it a platform in search of applications and utility.  The Kindle and other single-purposes devices suddenly pale in comparison.

Also, regarding the most oft-reported shortcoming (no Flash support):

Months ago, I installed a browser plugin for Safari called “ClickToFlash.” It blocks all Flash content. You’ll see a placeholder image in the webpage and if you want to view the content, give it a click and it’ll load in. I have not noticed any drop in my ability to enjoy the Web. What I have noticed is that my browser is faster and more responsive, and that I can leave a couple of dozen tabs and windows up for weeks without having to force-restart my Mac.

Interestingly, I do this as well, and it doesn’t diminish my experience one bit – in fact it enhances it.  Granted, I do like the option of turning on flash for, say, streaming stock quotes.  But HTML5 can handle that level of animation and is “more standard” than Flash… I think Apple has done the smart thing here by protecting their platform and brand image, and putting pressure on Adobe to step up and make Flash a better product, or get out of the way and make way for HTML 5.

Next, the North Temple blog has an interesting post: On iPads, Grandmas and GameChanging, but I would have called it, so a Grandma, a Technophobe, and a Luddite meet in a bar… The short point here: people he never expected to be interested in a computing device are interested in the iPad.  I had a similar experience when my parents told me they were “buying each other iPhones for Christmas.” And then they asked me if they should get the 3G or 3GS… seriously?  I was tempted to tell them 3G just so they wouldn’t leap frog me technologically.  Then, I find out they’re Netflix subscribers.  When my parents start buying something technical – it is going to be big – because they are NOT early adopters anymore by any stretch.  But they are influencers.  My dad proudly tells of all the guys at the golf club who now have gone out and gotten iPhones to keep up.  And hey, they like the big numbers on the phone.

On a surprising, but I think intelligent response to the advent of the iPad, Acer says it will not release a competing device per se.  I think it is refreshing that Acer is sticking to what it does best.  Honestly, I think this is what RIM should do – make the keyboard experience better and better, rather than try to be a touchscreen phone company.  Acer understands that if they make a tablet it will lack the advantages of Apple’s iPad, but it will have all the same disadvantages.  So they’re punting (for now). Smart move, in my opinion.

Many pundits surmise that Apple won’t have a 2 year lead this time… but I think they will have at least 1 year before a competing system (an Android tablet?) will come along that can leverage apps (android apps?) that even come close to putting it in the same league.  And Apple is also adding pressure by having what looks to be better performance that will be tricky to match in the short-term. The key points from Lin of Acer:

Lin pointed out that designing an iPad-like device would not pose any technical challenges for Acer, but said such a product does not fit into Acer’s business model.

Apple is able to support the iPad through its iTunes ecosystem, while few other makers, including Acer, have comparable experience in operating an online store, Lin noted.

Astute analysis.

Now, StevenF argues that the iPad is a signal of the New World, versus the Old World.  Gen X being smack in the middle of old world computing, and the New World being targeted at those both older and younger than Gen X.  I’m not a big fan of generational themes like Gen X, but he has a point.  If computers in the future will “just work” and reduce the expertise required to use them, they become accessible to more people, and become more important to our society.  I’m constantly trying to get people (rather, the people who ask me IT questions) to switch to Macs because the number of IT-related issues is so much less (as judged by how often they ask me for help).  But an iPhone? I never get questions about how to get some driver installed or printer to work with it… !

I especially enjoyed reading how stevenf railed against the iPhone’s closed system at first -but a month later came back and used it full time.  Because it is just a better phone / smartphone experience, and the open/closed argument doesn’t really matter outside of technophiles like me.  And even I can see that it shouldn’t matter to 99% of the world’s population.  When it is your phone, or your car, you just want it to work. Period. No BSOD. No crashing.  To that end, foursquare can you please fix your app? It crashes more than any other 3 apps I use combined.

So how are things going elsewhere in smartphone land?  Jay Yarrow of the Insider says that the Google Android app store is a joke… You don’t often hear Google described as “sloppy”.  The fact that Android developers feel they can make more money on the Apple App Store is not a good sign for Google/Android. And it is an indication that doing this stuff right is harder than many of us assumed.  From Skyhook Wireless:

In December, wireless firm Skyhook Wireless produced a report about developer frustration with Android. Skyhook interviewed 30 mobile application developers and concluded, “developers are not generating real revenue via Android apps.” As a result “developers are becoming hesitant to invest more time and effort into apps that do not pay off.”

Ouch.

Finally, some would argue that the iPad is a sign of the third revolution…

I’m looking forward to laying hands on the iPad. But more than that, I’m looking forward to iPhone 4.0 – I want to see if it is worth upgrading!

It looks like Nexus One may not be the iPhone killer after all (despite all the Google ads running on TechCrunch these days)…

The first quote:

Flurry is estimating the Nexus One only sold 20,000 handsets in its first week. That means the Droid, with an estimated 250,000 units sold in its opening week, outsold the Nexus One by more than 12 times. The myTouch 3G, with 60,000 units outsold it by 3 times.

Ouch. And people were non-plussed with Droid and myTouch numbers… But it gets worse.

The iPhone 3GS sold 1.6 million units in its opening week, according to Flurry, which means it outsold the Nexus One by a “staggering” 80 times.

So, even if these estimates are off by 2x or even 10x, these aren’t stellar out-of-the-blocks numbers… I think it was too much to expect their first couple of efforts to out-do the iPhone. Story embedded below, courtesy of Business Insider.

I’ve been reading the latest flurry of iPhone / NexusOne articles and blog posts making the rounds, and I just can’t resist commenting.  Walt Mossberg gives both products a thumbs up, and Michael Arrington says the Nexus One is better than the iPhone (um. okay).  But, once again, all too many analysts and pundits are trying to compare what’s happening now to what happened with the Mac and the PC back in the 80′s/90′s… essentially comparing Apple to, well, Apple.  And comparing Google to Microsoft.  There are some valid similarities.

But they’re missing a few key things that make this round different.  In particular, those who want Google to come out on top cite Bill Gurley’s article on the subject. Gurley, first of all, paints Apple as dependent on receiving a share of the subscription revenue of the Telecom partners – but this was, to my knowledge, only true of the exclusive partners – e.g. AT&T.  Second, I believe when Apple renewed its contract with AT&T and revised the pricing to the consumer downward dramatically, that it gave up that subscription revenue in exchange for a lower consumer price.

Gurley goes on to make much of the difference in price point.  But, as Arrington states:

The Nexus One is available “in large quantities” starting today at Google.com/phone. An unlocked GSM version of the phone that will work in most countries is $529.

Google is also offering a subsidized version of the phone – also unlocked – through T-Mobile for $179. The service plan offered by Google is 500 minutes/unlimited SMS/unlimited data for $80/month. T-Mobile’s termination fee is $200, and some users might be tempted to buy the T-Mobile version and terminate immediately, paying just $379 for the unlocked phone. Google says that users terminating too soon will be charged the full price of the phone, however. But even the T-Mobile version of the phone can be used overseas on trips by slipping in a different SIM.

So… how was that cheaper than an iPhone exactly?  Oh. It wasn’t.  You can pick up a 3G iPhone for $99, with 8Gb of memory, rather than the anemic 190MB or so of app memory standard for the Nexus One.  After all, the whole point of these things is to run Apps right?

Gurley pushes the point that cheaper to carriers will matter!  But doesn’t explain how, exactly, that ends up being the case (except, possibly, with respect to Verizon):

The Android strategy results in phones at much lower prices with much more diversity which will hit a broader set of demographics. Apple can and will quintuple its current market share and still have a small portion of the overall cell phone market.

But unless the carriers start paying me to take phones, I’m not sure that the prices don’t get appreciably close to zero and therefore not matter to me or anyone else.  The real cost will end up being in the telecom services.

Mr. Gurley is also overlooking a more obvious analogy to the phone market: the mp3 player market.  And the reason to look at it?  Volume.  Apple is the biggest or one of the biggest buyers of the memory that goes into these devices, in the form factors required.  Apple’s sheer volume of orders allows it to pull off a rare double-whammy against the competition:

1. Buy vast quantities of memory at guaranteed prices, often much lower than competitors can get, and with supply guaranteed or prioritized over other buyers.
2. Actually drive UP the cost of these same components for competitors by buying so much capacity that the spot market is left with too little supply – causing painful price spikes for other buyers (Apple’s competitors).

The memory purchasing advantage is significant.  And Apple gets to consolidate its purchasing power across iPod, iPod Touch, and all three iPhone versions.  Certain economies of scale are not about software cost, and this time around Apple is the one with the economies of scale in hardware – and this advantage is one that even phone manufacturers with much larger marketshare (e.g. Nokia) don’t share – because they don’t buy such massive quantities of flash memory.

Also, like the mp3 market before iPod, the mobile phone business is a big, existing business with high unit volumes.  Many industry analysts assume that Apple cannot win a majority of share in a market because someone (Microsoft or Google) will offer an OS that will take away the mass market by being cheaper.  But what Apple understands is that below a certain price, cheaper just means “less good”, not “better”.  Apple’s profit share of the PC business far outstrips its unit share.  Its profit share of the mobile business even more dramatically outstrips its unit share.

While I think part of Gurley’s analysis is dead on:

Users won’t switch in mass from the iPhone to the Android. It’s the other 3.95 billion cell phone users that are highly likely to consider Android a step up from their current feature phone.

However, his assumption that android customers will be price sensitive and Apple customers price insensitive, seems off-base to me.  Can Apple drop the price from $99 to $10?  Sure it can. Because that is just the subsidized price from the wireless provider.  If Apple asks for less money from the carrier, that can be passed on in the form of a lower up front payment. Gurley states: “Some will argue that the best product will win the market and that Apple will still dominate the smartphone market. The history of the personal computer market is no omen for this thesis. “  Well true enough, but then again the mp3 market is an omen in support of this thesis.  I’m not sure why the mp3 market isn’t relevant to Gurley’s analysis.

Time will tell – and if Google’s Android produces better phones (and ecosystem) than Apple’s iPhone and Appstore ecosystem, then everyone will clearly be better off for it – and if they don’t achieve this high bar, they’ll still have raised the bar for anyone who doesn’t want to buy an iPhone but still wants a smart phone (as Mossberg states, the Blackberry UI is looking more and more antiquated by the day).  I just think the pundits and analysts are underestimating the benefits of scale that Apple currently has – much larger benefits than you would think with only “one phone” on the market…

After writing this, I found a few other posts that are more aligned with my way of thinking.  One, by none other than Henry Blodget which makes the point (quite rightly) that actually Google is not now in the phone business.  This is the HTC Nexus One, on the T-mobile network.  Google actually just set up a storefront.  And wrote Android.  And probably provided technical advice (much as it did for Droid). Its a pretty compelling argument.  However, the new Android-based phones *are* increased competition for the smartphone category (including the iPhone).  I just think it really puts more pressure on the Blackberries and feature-phones than it does on the iPhone.  I also think everyone is underestimating the lock-in value of having an iPhone – if I switch phones I have to buy new apps… different apps maybe… and maybe I’m happy with the App ecosystem I’ve got!

And then Dan Frommer argues that the customers service for the Google Phone won’t be what we’re used to if you buy from their online store, because you’ll have HTC, Tmobile, and Google to deal with, depending on your issue.  Google doesn’t own the customer relationship… Nothing insurmountable, but it may lead to bad press down the road as people run into inevitable service problems.  These problems happen in the Apple/iPhone world too -but Apple is in a better position to fix them and protect the brand.

Finally, Pogue of the NYT hits on a few sour notes, starting with the smaller selection of apps (about 1/10 of what is available on the iPhone – this is such a strange mirror image of the old Windows vs. Mac debate… ):

Worse, even if you find a lot of good ones, you might not have anywhere to install them… the Nexus allots only [190 megabytes of storage space] for downloaded apps.

The Nexus also does not come with any iTunes-style companion software…

There’s no physical ringer on-off switch…

Sadly, the Nexus One also lacks a multi-touch screen like the iPhone’s….

Finally, the Nexus just doesn’t attain the iPhone’s fit and finish.

Note the storage space (my emphasis) – my nearly 2 year old iPhone 3G has 8Gb of storage space for apps… about 40x as much… Of course, as the Insider points out, his take on the business model is even more scathing. Read the Insider article or the NY Times original for more…

Of course, for the “drank the Google Phone” kool-aide crowd there is this piece by Brian Sheehan arguing that Google will own mobile.  It isn’t a bad piece of writing – I just don’t agree that Google and Apple will forgo giving the iPhone most of the same integration advantages.  I do think that Google is enough of a “swing for the fences” company to do audacious things like buying fiber optic cable (oh wait, they’ve already done that)… So maybe they really will get into telecom.  We’ll see.

On the other end of the spectrum, Stewart Alsop crushes the Droid in his review.  It isn’t Nexus One but one could assume that Nexus One would have to be a big software improvement to make Stewart happy…

Andrew Chen asks this question in his blog.  Its a good read from several perspectives, but I’ll just pull out the couple of bits that people developing processes should be thinking over well and good (I like to read the work of thought leaders outside the BPM space to see how their ideas might apply to BPM):

Back to Steve Jobs – what does he really do?
Long story short, my hypothesis is that Steve Jobs is one of the rare CEOs who is very focused on product desirability. In battles with the business and technology goals, desirability will almost always win out.

And what is “product desirability”?  It sounds like understanding the “voice of the customer” to me (but broader than typical six sigma definition of that term).  Having an understanding of what will matter to your customers is a key driver for success for your processes.  The definition of customers is a bit vague :  users, primarily, but also people impacted by the process (often, your end-customers)…

• What makes your process desirable to your customers?
• What makes your process desirable to your internal users?
• Who is responsible for representing desirability of the process?

Andrew goes on to define what he surmises are Steve Jobs’ duties:

So his role isn’t that of a designer, but rather Chief Design Advocate. This means:

• he makes it clear that products should be “insanely great”
• he recruits a top design team, and protects them from competing goals
• he is willing to spend money, adjust technology processes, all for the goal of highly desirable products
• he convinces financial analysts, industry pundits, etc. that product design is very important

As Andrew says – is there any reason that any company can’t be doing this?  Or that you can’t be doing this for your processes?  Making sure the processes are great, that you have recruited a top BPM team that is focused on making the processes valuable to your customers?  Spending money, adjusting technology, to support highly desirable products?  Convince the folks that hold the purse strings that processes and process design are important…

Very few companies do this… It could be the differentiator for yours.  And there’s no reason you can’t do it.