I don’t know if there’s a better representation of the health of a consumer business than this kind of chart found in the Asymco blog:

In the chart above, it shows that Apple derives more profit per unit than any other vendor (by far), and that RIM (another integrated platform) still derives the second-most profit per unit.  It also shows the profit per vendor by looking at the area of each rectangle.  Again, Apple and RIM look to be #1 and #2.

Similar charts for the PC business would also be interesting.  And the Auto business.  Conventional wisdom says you have to have volume (scale) to be successful – and therefore a high-margin product in a low-margin industry won’t succeed (because it won’t achieve scale).  But there are examples that show it is possible.  And in some markets (cell phones), even a single digit market share is a very large user base (platform).

Marco Arment is the creator of Instapaper, a great reading app for webpages, blogs, etc. that you want to cache for reading later on your iPhone, iPad, or browser of choice.

He recently announced an “extended vacation” for his free app:

Maintaining a second configuration of the app incurs direct, significant costs in development and support. Furthermore, the Instapaper web service that powers the app costs a good amount of money and time to operate every month. So Free users have a direct cost to me.

On the website, this cost is defrayed by ads from The Deck, but people using the iOS app might never visit the website. So Instapaper Free has an ad from The Deck in its list screen. It’s unintrusive, its advertisers are respectable, and it pays well. It’s the best ad unit I could ask for.

But it still makes far less than paid-app sales — the increase in app sales with Free’s absence exceeds this many times over. The math to explain this is simple: most Free users won’t give me anywhere near $3.50 worth of ad impressions.

Essentially, conversion rates from free to paid were low.  But without the free option, many would pay that relatively harmless cost of $4.99 – because the app has that much value to a significant number of people (including me).

I love the way he sums this up:

If you’re a developer, you’re probably talking yourself out of making a move like this because you think Instapaper is a special case.

Every app is a special case.

Maybe you think I can only do this because Instapaper is already popular. But it built its popularity while charging “a lot” for an iPhone app from the start.

Maybe you think I can only do this because my blog is moderately popular among geeks like me. If so, I assure you that my blog’s audience is smaller than you think, and is extremely insignificant relative to the size of the iOS app market.

Maybe you think there aren’t enough people willing to pay $5 for an app with no free version. I used to think that, too. But I was wrong.

The short version: don’t assume free is the only way.  People will pay for quality, and getting paid allows you to invest in quality… and the virtuous cycle ensues.

If you’re in a business other than writing apps for smartphones… you might be convincing yourself right now that you’re case is different, your market is different.  But you have only to look as far as Ning to see that sometimes charging for your service, site, or product is exactly what you need to do to focus the business and make money.

Marco Arment’s Instapaper could come under the Apple’s guns in the next version of Safari, which purportedly will offer a “Reading List” feature.

Marco (rightly) concludes there isn’t much to worry about.  First, what is an instapaper competitor?

• Saving articles to read later — timeshifting — like a DVR for the web.
• Synchronizing the reading list between computers and mobile devices.
• Presenting the articles in a stripped-down text format on those mobile devices for optimal reading on their screens.

If another product doesn’t implement all three, it’s not really an Instapaper competitor.

His take is that the first version is likely to implement bullet 1, and maybe bullet 3.  Perhaps the next version will be an Instapaper competitor.  As he says, Safari already has too much going on in its UI, and Apple tends to be conservative about making changes to it.  But what if Apple *does* build this Instapaper competitor?

Marco has spent time building his defenses:

• Supporting other browsers (on other platforms).  Safari features really won’t play in audiences that prefer to use Firefox or IE or Chrome (especially on non-Mac systems).
• Integration with other apps – this is analogous to putting down roots in the space that other apps can take advantage of, but which feed back into keeping Instapaper alive and relevant.

He also understands that he doesn’t need to win the market to make a fortune (he estimates 1% would be a fortune).

When you’re in this situation, you’re really rooting for more visibility.  A small market-capture or increase in publicity and attention can have a big effect on your revenues and fortunes.  It sounds a lot like the BPM world, actually.  A rising tide…

His next point is about Starbucks – the number of coffee shops has increased dramatically since Starbucks came along – and although they place their stores aggressively near other coffee shops – the *good* coffee shops actually do even better.  The less-good shops tend to go out of business or change their business model.

Marco’s words:

My biggest challenge isn’t winning over converts from my competitors: it’s explaining what Instapaper does and convincing people that they actually need it. Once they “get it”, they love it, but explaining its value in one quick, easy-to-understand, general-audience sentence is more difficult than you might imagine.

If Apple gets a bunch of Safari users — the browser that works best with Instapaper — to get into a “read later” workflow and see the value in such features, those users are prime potential Instapaper customers. And it gives me an easier way to explain it to them: “It’s like Safari’s Reading List, but better, in these ways.”

This is exactly the problem the BPM vendors have had-  it wasn’t beating the competitors so much as it was explaining what BPM can do for you and convincing people that they need this BPM thing.  This is not a zero sum game when the market is a long way from being saturated. And in that respect, the BPM market and the “Instapaper” market are very similar.

And this explains a lot about why BP3 works well with partners that outsiders would probably look at as competitors.  Philosophically, we believe we’re growing the pie rather than competing over how big each slice is.

Horace Dediu’s Asymco blog yet again strikes a chord with me, as he fairly well trashes the classic “iPad is DOA” quotes from last year.  Of course, even more amusing are the follow on wave of death watch quotes from this year.  As new iPad user, I have to say the experience is better than I expected and I now understand why you would have this device that isn’t quite your phone and isn’t quite your laptop.  But at a macro level, the iPad is a huge business already, so it just seems odd to see how many people still think it is a fad:

I thought that would be that. As the success of the product would become self-evident, predictions of imminent demise would trail off. The pain of share loss would prompt a wave of challenger copycats. Imitation would be the the best form of flattery.

But no.

Critics were not silenced. One year, 15 million units, and $9.2 billion later I went back to the source of the quotes and found the following.

Great summary.

The easiest way to launch a $1B product – in year 1 – is to first have a $9B product trending toward $23B, and then sell a must-have accessory alongside it:

I’m estimating that at least 60% of iPad buyers will get one. Based on an estimate of 36 million iPads sold in 2011 and an average price of $48 (70% polyurethane and 30% leather mix), the total revenue for Smart Covers will top $1 billion this year.

I further estimate that with a very modest gross margin of 75% (average cost to produce of $12), the Smart Cover could contribute $777 million to Apple’s gross margins.

Until other innovative covers come to market (and they will), Apple is going to sell these to more than 60% of iPad buyers.  My anecdotal evidence at the pop-up store in Austin during SXSW was that everyone buying one for themselves bought a cover.  Only people buying them for others skipped it (and they were obviously not buying the iPads for friends or they would have splurged for the snappy cover).

Great post from Marco Arment about a week ago, regarding the new Samsung products that are supposed to compete with the iPod Touch.  Just the beginning is telling:

Apple should be scared of the upcoming competition:

Samsung presented some of the first significant competition to the iPod touch…

I’d call it “potential competition” — it’s not competition if it doesn’t exist yet. And when it does, it’s not really a competitor if it doesn’t sell very well. It’d be difficult to say, for instance, that the Zune was ever really providing “significant competition” to the iPod.

in years…

…ever.

Both run Android 2.2 and will be upgradable to 2.3 in the future.

2.3 has been out for a few months already, and we know how good the Android device manufacturers are at getting updates issued after a device’s sale.

I thought the new target was 3.0.  The android ecosystem is just not up to the challenge yet.  And the manufacturers are having trouble matching Apple just on hardware innovation, forget the software for a moment.

Now, keep in mind, I’m not a fan of the iPod Touch.  I’d rather have an iPhone or an iPad.  But I’d sure rather have a Touch than one of these Samsung devices.

Day 1 is over.  For me.  For many people at SXSW interactive, 11:30pm is just midway through the evening. But Day zero was interesting too.  We attended a tech happy hour on Thursday night.  Surprisingly, I ran into an ex-IBM consultant who is starting a BPM practice at an IBM partner.  Small world!  You don’t often run into people you don’t know, who are doing BPM, I’ve found.  Especially unusual at a non-BPM related event…

Day 1 started frenetically.  Wake up early, teacher’s conference for our daughter, coffee, get the office and get contracts, paperwork, bills, emails, and a dozen other things done as soon as possible … to make sure I could get down to the first SXSW session at 2pm.

(Update: Photo Gallery by Austin360)

Things started off right.  I found parking in the convention center garage, no crazy antics required.  $9 for all-day parking.  Cost of business.  As I exited, I realized I was only one block away from Hashable‘s sponsored free taco stand.  Coincidentally, my wife‘s company, Red Velvet Events, is helping them out with a few planning/logistics items during SXSW, and we had the good fortune of having met a few folks at Hashable at a happy hour earlier in the week.  Trusting that they wouldn’t have a crummy taco truck, I walked over.  GREAAAT taco.  And Jane Kim (VP Business Development, Hashable), and Elliot Loh were there. Elliot and I went to school together at Stanford and both worked at the same company out of school.  It was a nice reunion to run into him.  The three of us wandered over to the convention hall and then split up to three different sessions.  That worked pretty well because Elliot tweets the goings-on in his sessions like a mad man so I could follow his session, and at the same time follow my own.

First session:  Conference Startups.  The format was a “core conversation” where the room and chair arrangement is concentric and intimate to foster spontaneous, but still centralized, conversation.  The moderators were great, and the conversation moved smoothly from one topic to another, almost as if the audience was in on the script. I was interested in this session, despite other strong sessions in this slot, because we have previously hosted the bpmCamp unconference and have intentions to do it again in the near future.  With that in mind, I hoped to get some new ideas from the conversations.

A shotgun sampling of advice I heard:

• Get a clear yes or no from sponsors.  If you don’t get one, you haven’t asked clearly enough for what you want.  “You haven’t really asked if you don’t get a no”
• Find the experts, and then find out who you could bring to your conference that would blow their minds.
• Market the conference.  Presumption is that it takes 7 times before someone acts on hearing about a conference.
• (At this point, I noticed this session was standing room only … unreal )
• Mizzou School of Journalism was represented – looking for ways to foster more participation in the community in Columbia, Missouri.
• Discussion of Ignite and TedX – you can lend your brand to other regions, cities, and venues… you don’t have to own every one of them.
• People like great speakers, and conversations – but they don’t often like panels.  People want to be engaged in the conference, not just talked to.
• Food and coffee are more important than you think.  No really. They’re more important than you think.
• Some discussion of tools – lanyrd, eventBrite, etc.

Ultimately, people still want a live connection, face-to-face.

Session 2:  Time for comic relief.  I headed back to a VERY crowded Austin Convention Center (they set up a book signing right across from an info center booth, right in front of the entrance to one of the main Ballrooms.  Suffice to say, TRAFFIC JAM and poor positioning of obstacles go hand-in-hand.  Made it to Battle Decks.  Got a coveted seat at the end of the row (making it easy to bail on the session if it sucked).  It was a huge room, big projection screen of slides.  The presenters don’t know the slides in advance.  They just have to adlib their presentation based on what comes up.  This comedy is not for the politically correct or faint of heart.  The very first word out of the emcee’s mouth might have been an F-bomb.  The presenters were judged on coherence, comedy, and sexual innuendo.  Enough said.  Sadly, the slides were funnier than the presenters.  I gave up after 2.5 presenters weren’t making me laugh enough.

Decided to check out the pop-up Apple store – and get coffee at one of the dozens of coffee stands on the way out of the convention center (pro tip: no line, because everyone was still in session).  Checked in on foursquare, and won tickets to the Big Boi concert on Monday night.  If you don’t know who that is, then you’re probably in my demographic and so now I have to figure out if we’re going to go or not!

Ok.  Stopped at 4th and Trinity to meet Elliot for the walk to the Apple store.  Ran into fellow entrepreneur Aruni.  Also, ran into two guys dressed as super heros to promote their website.  Yes, we’re at SXSW.  Elliot pings me: he’s at 6th and Trinity. All right. We meet at the Apple store. Pretty amazing mini-story. They lease the place on Monday.  An empty store front at 6th and Congress – a very important intersection in Austin.  Wednesday morning the black drapes go up and the construction begins.  Friday at 5pm, the drapes come down and an apple store nearly as nice as any I have seen opens up – wood floors, wood tables, ipad2′s EVERYWHERE.  But also a healthy supply of demo machines and phones.

Ok.  The line was around the block, around two corners.  We walked back to the Convention Center to listen to Clay Shirky talk about the various online events surrounding the events in Egypt, and other countries in the Middle East.  He really went in depth about the history of the movement to oust Mubarak.  There was more to it than a spontaneous rally a few weeks ago.  Years of groundswell support led up to that moment.  It hit especially close to home because one of our very good business partners is based in Cairo, Egypt, as well as one of my close friends from school (who lives there with his family).  Incredibly informative talk, and the Q&A session brought China and other countries into the conversation in really interesting ways.

During the session, I realized that none other than Clay Richardson of Forrester is here, tweeting about the talk.  Or rather, he realized I was sitting in the room making snarky comments on twitter.  We met up in person for the first time.  A second BPM connection at SXSW.  Two more than I made when I came last year.  We had a great mini-meetup and then split up to find our various dinner commitments.  Met a fellow entrepreneur, Tony Chen, for dinner at a good sushi restaurant downtown.

After dinner, we thought, “hey, surely the line at the Apple Store has died down by now!” and walked back over there (quite a few blocks).  Sure enough. The line looked reasonable.  Ten minutes later, chatting amiably with Apple store staffers, we were buying iPads.  The staff were brought in from all over Texas – Texas all-stars.  It showed too – all the good things about Apple retail employees were even more apparent with these folks. Happy Happy Happy.  Helpful. Interested in what business I was in and how we use iPads (um, figuring that one out!)  Painless process.  Unlike phone activation.

Hint: Apple, stop activating phones on opening day. The lines would move SO much faster and you could actually blow out your opening day sales numbers.

We then walked down the street back to the parking garage like rock stars, constantly being asked if we had just bought an iPad2 at the pop-up Apple store.  (One wonders what else we would be carrying in Apple bags and Apple boxes of that size.  Still, it was a nice conversation starter).  On the way back to the garage, we passed a cross-dressing band (playing good music…), and a group of people changing costume (not sure from what or into what – they were in a slight state of undress) – ooops!  And then passed a fleet of pedi-cabs offering to give us rides to wherever.  Tony headed out to some of the night time party activities, I headed home to rest up, and write this blog post!

(Well, I might have had an interest in setting up my new iPad2 as well… )

The state of mobile process apps is pretty… underwhelming.  After reading David’s post about process apps, I wasn’t any more enthused:

As the table below shows, the type of BPM App best represented in the App Stores I visited could be described as a ‘BPM Participation App’, that is, an App that acts as a client to a remote BPM server allowing the user to start and track cases, and complete work items from an Inbox. Note that the table is simply the result of myself as a ‘mystery shopper’ visiting these stores (which included an Australian filter in some cases) – there may be other BPM vendors with an iPad story (for example), but they just weren’t in evidence in the store on the week that I looked.

My take on iPhone and iPad and Android BPM apps to-date:  unimaginative.  They don’t re-invent or re-imagine the experience one would want to take advantage of mobility, location, or touchscreens.  They’re just barely-adapted to the new form factor by shrinking the amount of information at your disposal.   If the various BPM vendors exposed better APIs for building apps, and made their support for those APIs more clear and committed, we’d consider writing our own iPhone apps for users (there are a few exceptions, such as Activiti’s interfaces).  For now, we’re in wait-and-see mode.

Most people reading the title probably think Apple already has good customer service.  But I’ll let you in on a secret (sarcasm alert):  those Apple Stores are packed with people and the customer service operation needs some help to scale to the new market position finds itself in.  And as Apple’s market share and unit volume in its business grows, the rough edges of customer service will become more apparent without some retooling.

Reports are that Apple will launch “Joint Venture” – Apple just launched “Joint Venture“- a new service targeted at small businesses that leverage Apple products.  There are already service options that are well-publicised: One-to-one and Applecare; and there are service options available to business partners that are not well publicized (or perhaps they consisted of piloting certain business services over the last year before rolling them out nationwide).

The last time I went into an Apple store to return a laptop (we had misordered, it wasn’t Apple’s fault), they offered to sign us up for a business account – and since then they’ve offered somewhat better service around both ordering hardware and picking up orders at the store or getting help at the store.  But there hasn’t been a fee for this service, that I’m aware of.

From Apple Insider:

Joint Venture will also provide customers with personal setup data transfer, limited group training sessions (up to 3 sessions per year, for up to 8 people at a time) and access to a website to schedule phone support appointments with Apple Genius technicians, according to one person familiar with the matter. Apple will reportedly continue to offer its AppleCare and One to One plans alongside Joint Venture.

This is good: helping customers transition to Macs, and training users who aren’t comfortable.  In our business we’re about 50% Mac and 50% Windows-based.  The Windows users primarily just want to stick to what they’re comfortable with when they sign up for a new job.  I can relate to that – don’t let a switch in Operating Systems impact your productivity.  A better set of transitioning services would be A Good Thing for such users – allowing us to push a few more in that direction.

Further details:

Customers enrolled in the plan will receive priority service at the Genius Bar and gain access to an exclusive Apple Genius-manned technical support number at the corporate office. Similar to Apple’s ProCare service plan, customers will be first in line for repairs.During repairs that take longer than 24 hours to complete, customers may be eligible to borrow 15-inch MacBook Pros with iWork and Microsoft Office preinstalled.

I like the phone-support option – faster than driving to the nearest Apple Store.  I think the thing that Dell provides that really one-ups Apple is the on-site technical assistance – literally sending someone to your office to fix your laptop while you wait.  And it is actually affordable for a distributed business like bp3.

But the most critical service Apple needs to provide is one that I’ve been asking for, for more than two years:  loaner machines.  I have always thought that if they rolled out a loaner program, they’d get businesses (and consumers!) wanting to sign up for this left-and-right.  At least, they will once they need a loaner machine (I picture a lot of “wait til I really need it” sign-ups for consumers, but businesses will think ahead).  I found a local authorized Mac repair shop (Austin MacWorks) that rented a nearly identical machine to me for a week – all I had to do was swap the hard drive from one machine to the other, and I was ready to go.  They then sent my machine off for an 11-day video card repair.  It worked great – but it was expensive.  I think the repair shop was missing an opportunity to build a loaner business that complements its repair business.  Certainly Apple was missing a real opportunity.  I’m happy to say that now they are offering a real loaner program with Joint Venture.  This is “A Good Thing”.

After all – when you take your BMW in for service, do they tell you to call a cab, or do they give you a loaner car?  You bet they do.

(And this is a service that virtually all luxury brands offer, and most non-luxury dealerships now offer some form of loaner program in the United States at least).

Dave Brakoniecki’s post on Nokia, Apple, and the Commodity Trap takes issue with Henry Chesbrough’s argument that Nokia had fallen into a commodity trap – essentially that it was not thinking about its business as a service business.

But Dave argues that actually, the problem is that Nokia’s market has been commoditized at the low end by contract manufacturers around the world, and at the high end, by Apple and Android, which commoditized the app business:

While it was asleep, contract manufacturers made the fabrication of complex and high-quality products a commodity business.  As Chesbrough correctly notes this trend has eroded Nokia’s competitive advantage and their position in the market.  [...]

Ironically, at the other end of the market, Apple and Android have also commoditized the market, just a different market.

Yes, they are selling premium hardware but the handset market has always been heavily subsidized by telecom providers in exchange for long-term contracts.  [...]  First, Apple and then Android essentially commoditized application development in a way Nokia never managed.  Apple and Android have made the mobile data services market explode.

By including a usable browser and making app installation plug-and-play, suddenly anyone could build a data service.  There really isn’t that much the iPhone does that you couldn’t achieve on the Nokia N95 but the amount of effort and development pain involved simply made it pointless.  The pain outweighed the utility until Apple made it easier.

Put another way – Apple has commoditized its complements – application development, for example – more effectively than Nokia has.  And if you can commoditize your complements, then commoditizing is a good thing.

The tempest in a teapot last week in the twitter-verse was all about how Twitter cut UberTwitter clients off from its API, which looked like a platform-vs-app battle between Twitter and UberMedia (Bill Gross’ company).

But as Mark Suster says in the linked article, when Twitter cut off UberTwitter clients – it wasn’t really hurting UberTwitter as much as it was hurting its own users.  Users with literally millions of followers use UberTwitter.  But many of the followers do not.  So by cutting off these clients, Twitter was implicitly (explicitly?) cutting the social connections from the glitterati to the following.  To me, Twitter ends up looking like the bad guy in these scuffles, even when it might seem that they’re right.

What does this have to do with Apple? It banned Flash preemptively  from iOS devices- putting up with the beating it took in the press – so that it wouldn’t look like even more of a bad guy later by severing users from Flash apps that it deemed either unstable or security risks (or simply, not “Apple” enough).

Because when your users depend on a particular UI candy that you don’t control, and there are enough of them, the purveyors of that UI start to get leverage on your platform – if you do things to disable that UI, or punish the vendors of the UI, you are also punishing your own users.

Of course, UberMedia could have had an alternate plumbing set up to keep users’ messages flowing during this outage – outside of Twitter.  But Adobe is in a tougher spot because developing a tablet or phone just to prove you can run Flash on it is a much more expensive end-around.  They’re still waiting on their hardware and software partners to come out with the killer combination that proves Adobe Flash will run just as well on mobile devices as HTML5 / iOS.

I can’t say I’m happy that I can’t run Flash on my phone.  But I’m not sad either.  Not as sad as I’d be if my favorite, Twitter client, say, ran on Flash and then was abruptly disabled because Apple decided to enforce rules against Flash.  (Oh wait, that’s exactly what Apple appears to be doing with its new subscription rules… )

In a recent update on Evernote’s experience on the Mac App Store:

A strike against lowest common denominator

If Evernote’s desktop clients were written in Adobe AIR, I’d be worried right now. The immediate popularity of the Mac App Store, and the iPhone App Store before it, reinforces my belief that in a world of infinite software choice, people gravitate towards the products with the best overall user experience. It’s very hard for something developed in a cross-platform, lowest-common-denominator technology to provide as nice an experience as a similar native app.

As the CEO of a software company, I wish this weren’t true. I’d love to build one version of our App that could work everywhere. Instead, we develop separate native versions for Windows, Mac, Desktop Web, iOS, Android, BlackBerry, HP WebOS and (coming soon) Windows Phone 7. We do it because the results are better and, frankly, that’s all-important. We could probably save 70% of our development budget by switching to a single, cross-platform client, but we would probably lose 80% of our users. And we’d be shut out of most app stores and go back to worrying about distribution.

Does this mean that web apps are doomed? Not at all, but the most successful web apps will be the ones that emphasize unique benefits—sharing, communications, integrations—that are better implemented on the web than in native code. This is the main design goal for the next version of the Evernote web client, by the way.

This is a really eloquent explanation of why techies pursue cross-platform, and why he’s decided to, instead, focus on native applications.  As a user of iOS applications on the iPhone, as well as web applications, the difference between the two is stark. I’d like my Google apps much better if they weren’t just sad HTML5 apps.

BPM vendors, please take note: a great user experience matters more than pandering to the technical experts.  Well, the technical experts are likely to appreciate a good experience as well, but they might complain a bit about loss of configuration options.

First, this announcement from Verizon.  The 90million+ customers of Verizon now have access to the best smart phone on the market. Previously, there were a lot of pundits saying that Verizon wouldn’t “cave” to Apple’s terms.  According to Verizon, it wasn’t even hard for them to “cave” on those terms – they knew what they were getting into and the financial numbers make sense so it wasn’t really an issue.  (Well, maybe it was an issue 2 years ago, but I guess it wasn’t now!)

Second, there’s this update from IDC on the state of the PC market.  Apple has now captures 8.7% of the market according to IDC, up 15.2% from Q4 last year. It has all the momentum, in an environment where the PC market in the US declined more than 5%.

Third, Gartner confirms the general trend in their report: 9.7% market share in Q4 with a 23.7% growth rate year-over-year.  An interesting tidbit in the Apple Insider article is that the iPad is noticeably absent from any of the analysis or figures:

Under its published charts, Gartner notes that its “data includes desk-based PCs, mobile PCs, including mini-notebooks but not media tablet such as the iPad.” Apple sells more iPads than all of its Macintosh computers combined, so including iPad tablets within PC sales would dramatically boost the company’s market share at the expense of generic PC makers, much like the balloon of netbook sales from Acer and Asus skewed the PC market in 2008 and 2009.

Neither Gartner nor IDC have explained why they gerrymander their PC sales data to exclude the iPad, even as they count limited functionality netbooks, scramble to invent non-iPad explanations for contracting growth in the PC market outside of Apple’s own sales, and describe Apple’s tablet as part of a distinct “media tablet” market that simply does not exist.

Gartner previously invented arbitrary definitions of “smartphone” that excluded devices from some makers (notably Palm) in order to flatter sales of Windows Mobile, formerly included PC servers (but not competing servers using non-Intel chips) in its PC sales reports to flatter Microsoft, and more recently has invented tens of millions of devices it says are probably using Android in order to dramatically skew its modern reports on the smartphone industry and fulfill its own predictions on mobile platforms.

I find the blind spot kind of interesting.  I guess it lets everyone pretend that the iPad *isn’t* eating their lunch for another year or so… but the gig is going to be up soon. Investing in the Experience seems to be the right way to go.

UPDATE:  I should have caught this excellent article from Marco Arment (of Instapaper fame).  He makes the point that although Android has a ton of volume, it hasn’t really been in proper competition in the US with iPhone:

Whenever I’ve overheard conversations about smartphones in real life, by “normal people” (not geeks like us), it has always been clear that the true battle happening in the U.S. phone market wasn’t iPhone versus Android, but iPhone versus Verizon.

The decision that people were discussing wasn’t “Do I get an iPhone or an Android whatever?”

It was always “Do I get an iPhone or do I stay on Verizon?”

I get the feeling that very few people except anti-Apple geeks really care about Android itself. The buying decision for most seemed to be, “I’m on Verizon and don’t want to switch, so which of the phones in the Verizon store looks best? They say this one is just as good as an iPhone. I guess I’ll get that.”

I get this same feeling as well.  Looking forward to seeing if I’m right.

In Part I, we explored the notion of open and closed, and what those words mean to customers and experts.  The basic argument: customers care about the “experience”.  Experts care about the nuts and bolts – and how fine-grained their control is. We used as a foil, Apple’s iPhone versus Google’s Android mobile OS.

Since that first post, there has been a little bit of evidence that the focus on “experience” pays off:

• Apple’s AppleTV topped Amazon’s Wish List in November. And iPads ranked #2 and #3.  Eight of the top 20 items listed were Apple devices.
• iPhone’s 4% market-share in phones yields 50% of the profit.  That’s simply incredible.
• And the halo effect appears to be in full effect, as interest in Apple Laptops is way up. The Changewave survey showed a surge from 25% to 36% in one month… What changed? The new MacBook Air is what changed.
• We’re about to see Verizon pick up the iPhone on Tuesday.  At first glance it looks like they’ve agreed to most or all of Apple’s terms.

Steve Jobs made a pretty compelling argument on the last earnings call in favor of the Apple approach : integrated focus on experience – “When selling to users who want their devices to just work, we believe Integrated will triumph Fragmented every time.” – this is a really good lesson for BPM vendors.

But why? Why is Apple a good example for BPM vendors to consider?

For a few reasons:

1. BPM sits at the top of a big pyramid of IT assets.  Any one of these IT assets could really undermine the experience of interacting with business processes that are affected.
2. BPM itself is an amalgamation of several different technologies, notations, standards, etc.
3. Integration is still the long pole in the tent
4. The Business is the customer.  They actually value simplicity and “it just works” over complexity and flexibility for the IT folks.  It turns out that flexibility for the business usually requires simplicity and a focus on the quality of the experience.

This is why it is so important for companies like IBM to push forward with Blueworks – in order to find the secret sauce of collaboration, process authoring, and process automation.  And equally, why it is so important for IBM to rationalize its product vision behind an offering that sells well to their business customers as well as their IT customers.   And it is also why it is important for Activiti to pursue initiatives like Kickstart.

But going deeper – it is why we need BPMS vendors to really focus on the fit and finish of the products they bring to market.  The workarounds, the kludges, the accommodations for bugs across many different versions of a product have profound costs:

• Slowing the rate of adoption in the industry – by impeding the rate of learning of new BPM experts who have to learn all the warts of each system, and each version of each system.
• Adding a layer of non-value-added code to accommodate product shortcomings.  If we were to apply value-stream analysis to code: value-adding code versus non-value-adding code, workarounds and kludges would certainly fit into the latter camp.  But usually these work-arounds are actually more expensive to maintain over time than the value-adding code, on a per-line basis.  Worse: they add no value except to make up for vendor shortcomings.
• They slow time-to-value for BPM projects by introducing friction that works against the productivity of process authors.

With the competition as plentiful as it now is in BPM, and in enterprise software generally, catering to the user experience is going to start to trump catering to the experts.  It isn’t that the experts won’t still have their place and role and value – they will.  But the real value they bring won’t be knowing about various product warts, it will be be about how to effect real business process improvement realized in software.

Perhaps another example would be useful.  Take a look at Gosling’s blog on Desktop Linux – “The Dream is Dead” – regarding why Linux has been such a huge success on the server side, but not on the consumer / desktop side.  Ultimately, Linux is an Expert’s dream operating system.  But it is a nightmare user experience for a novice user.  As a server product, Experts *are* the customers, and Linux has done quite well.  But in the desktop arena there was no business model to support a good user interface – and lack of a good user interface is actually what made desktop linux untenable.

We’re advocating for a better Experience.  As Experts, we like the power of today’s BPM environments.  But when we’re users -as with phones -  we really appreciate the Experience.    We imagine the consumers of BPM software feel the same way.  Back to Sachin’s post:

And they don’t measure products by what they do, but by how well they do them. You won’t find a matrix where Apple compares their product to a competitor by feature. They measure products by the experience.

In reading about RIM, I’m always amazed at how complex their statements are about their products.  It is almost the opposite of how Apple talks about their products.

Business Week’s quote of Balsillie:

“There’s tremendous turbulence in the ecosystem, of course, in mobility. And that’s sort of an obvious thing, but also there is tremendous architectural contention at play. And I’m going to really frame our mobile architectural distinction. We’ve taken two fundamentally different approaches in their causalness. It’s a causal difference, not just nuance. It’s not just a causal direction that I’m going to really articulate here — and feel free to go as deep as you want — it’s really as fundamental as causalness.”

Wow.  Sometimes complex language hides simple truths – usually truths we don’t want to face.

I hope RIM gets their product lineup act together. I was a happy RIM user for years (well, not so happy with voice quality of the phones, but the texting/email was great).  But I feel like Apple (and Android) have completely thrown them off their game.  They’re no longer pursuing their own best path, they’re reacting.  I’d recommend they focus on their own vision of mobile computing – and simplify.  Simplify the message, simplify the product line, simplify the hardware, and simplify the software. Make it easier for consumers to articulate why they use a blackberry instead of an iPhone.

There’s an ongoing debate between “open” and “closed”.  Chris Dixon has written what I consider the most thoughtful blog on the subject, as it relates to phones and desktop PCs, which I referenced here.

This argument seems to come up any time Apple’s iPhone comes up because it is often referred to as a “walled garden”. Of course, this is nothing new for Apple.  They were long criticized for keeping the hardware in-house rather than licensing their software to multiple hardware vendors, a la Microsoft.  This is certainly one definition of “open” – giving a channel of manufacturers the ability to leverage your OS and build hardware around it.  Another definition of “open” is releasing your source code for your operating system, a la Android, as Andy Rubin points out on twitter.  But for Joe Hewitt of Facebook, neither iOS nor Android are open:

How does Android get away with the “open” claim when the source isn’t public until major releases, and no one outside Google can check in?

Compare the Android “open source” model to Firefox or Linux if you want to see how disingenuous that “open” claim is

Until Android is read/write open, it’s no different than iOS to me. Open source means sharing control with the community, not show and tell.

Clearly, from an OS-developer point of view, neither Android nor iOS (nor Windows, nor Mac OSX) meets the bar. (There’s a more complete writeup from Hewitt here)

From a Telecom Carrier point of view, Android meets the “open” claim: a carrier is free to jam pre-load it with proprietary software (good or bad).  The handset manufacturers consider it open because they, too, can customize to their needs.  Though, as Hewitt points out, they’re at significant disadvantage because they only have source code at major release points and have no way of getting their improvements back into the main branch of code so that it will survive into the next major release.

As an application developer, both Android and iOS are open at development time.  For a small expenditure ($100 or less) I can equip my laptop with the software I need to develop my own Android or iOS application.  I can even load the application on my phone to test it. I just can’t hack the OS on iOS.  But if I’m writing applications, I don’t particularly *want* to hack the OS because I want my OS to look like everyone else’s (my customers’) OS.  Open “source” for the OS is something that developers (the Experts) want.

Interestingly, I never heard people complain that RIM’s Blackberrys were “closed”.  I suspect this is because the volume of developers for Blackberry was much lower and not in the mainstream (ie, Silicon Valley), and because the approval process for apps was dictated by each carrier in each geography, not by RIM.  So the complaints weren’t targeted at RIM, but at carriers.  Apple’s platform was clearly more open than RIMs in that the carriers couldn’t block your apps anymore.  Apple had an approval process, but this process did not have a “negotiate payments” step in it – it was all about your application, not about holding you over the barrel for financial terms.

Apple (and Steve Jobs in particular) argue that the real debate is not open vs. closed, but “integrated versus fragmented”:

We see tremendous value in having Apple rather than our users’ be the systems integrator. We think this is a huge strength of our approach compared to Google’s. When selling to users who want their devices to just work, we believe Integrated will triumph Fragmented every time. And we also think our developers can be more innovative if they can target a singular platform rather than a hundred variants. They can put their time into innovative new features rather than testing on hundreds of different handsets.

So we are very committed to the integrated approach, no matter how many times Google tries to characterize it as closed. And we are confident that it will triumph over Google’s fragmented approach, no matter how many times Google tries to characterize it as open.

I like Steve’s re-framing of the discussion, the poles in the debate.  But since I’m not marketing for Apple, I think the real debate is between the Experience and the Expert.  Balsillie of RIM complains that “We think many customers are getting tired of being told what to think by Apple.”  But Apple and Jobs aren’t telling customers what to think, or developers.  They’re explaining how Apple thinks – Apple has to defend against this notion of “closed” because the point (for Apple), isn’t to address the Expert-  it is to address the Experience.

Apple is oriented around creating a user Experience that “just works”.  They don’t always succeed, but that is what they’re after (if I had a nickel for every time someone at Apple, or NeXT before that, said “and it just works” I’d be a very rich man).  Meanwhile, the Experts are worried.  The Expert wants to be able to see the source code, compile it themselves, contribute to the project.  The Expert wants to decompile and find the internal APIs and write apps that leverage those unpublished APIs.  The Expert wants to be able to install unverified code and run it (perhaps his or her own code, developed on their own laptop).

I think many Experts are concerned that Apple is dumbing things down.  But certainly no more than Mac OSX did – for the experts.  For the Expert, I can still write my own apps and install them on my own phone.  If I want to sell them, there is a walled-garden channel for doing that – but “buying” is something non-Experts do, and Apple has built a streamlined Buying process within their iOS ecosystem.  Experts don’t like it, but non-Experts love it.  (No viruses? I like it).

There’s also an argument that “open” proponents make, that open wins out over closed over time.  But the real question is what is the target market?  Open source projects have often won over experts, but there are fewer examples where “Open” has won in consumer markets where the average consumer just wants their products to work.  Linux has made huge inroads in corporations as a trusted server operating system, and open source operating system cores makes up the core of many other product offerings (including Mac OS X).  But Linux desktops have never made much progress (don’t believe me? read Gosling’s article “Desktop Linux: the Dream is Dead“).   It is both an economic problem (free), and a user experience problem (too complicated for the average consumer).

Even in the corporate world, some industry titans are evaluating an integrated approach – in order to create a better experience for the customer.  The thinking goes that they can offer better integrated products – better tested, simpler integration, and simpler maintenance.  Of course, to make that strategy work, Ellison’s Oracle has to offer an integrated stack in which each component of the stack keeps pace with the industry’s cutting edge.  With the ecosystem of suppliers that feed the computer industry, this is easier to do today than in the 1980′s, when the vertical components would (mostly) be manufactured in-house.

The focus on experience is something that many people understand… but that many more do not.  I highly recommend reading Sachin Agarwal’s blog post about Posterous, recounting an argument with someone who thought Posterous was doomed due to smaller share, and fewer features, than some of its rivals:

I asked this person directly: do you have an iPhone? Nope. Do you use a Mac or a PC? PC. There you go. You don’t get it. Until you use an iPhone, a Mac, drive a BMW or Audi, you don’t even realize how great the experience can be or how much it can drive the success of a product.

[...]  My entire life, I fought for Apple. I tried to get my friends to use Macs. But they didn’t. It’s not because they thought their PC was better than my Mac. It’s because they didn’t know something better could exist.

[...]  And they don’t measure products by what they do, but by how well they do them. You won’t find a matrix where Apple compares their product to a competitor by feature. They measure products by the experience.

We’ll return to this topic again… focusing on BPM.

There’s a real interesting battle for mobile phone supremacy or “smartphone” supremacy right now. As the NYT notes,

In the six months ending August 10, Android phones accounted for 32 percent of the smartphones sold, Nielsen said. By comparison, iPhones accounted for 25 percent of devices sold and BlackBerry handsets for 26 percent. A month earlier, the three types of devices were in a virtual dead heat.

(I believe these numbers are US-only).  Clearly, from a marketshare point of view, Apple needs to get out of its exclusivity with AT&T to improve its US numbers.

However, it is worth noting that Google’s share of smartphones is… pretty much zero.  They don’t sell phones.  But some other folks DO sell phones that run Android:

• HTC
• Motorola
• Samsung
• LG
• etc.

One would think, as they’re selling so many of these Android phones, they must be killing it in profit, just like Apple, right?

Not so fast.

Check out this article from Horace Dediu which reveals the velocity of profit and market-share changes in 3 simple charts:

The change in 3 years is astonishing

The dramatic nature of the change is all the more apparent looking at his last chart, which really shows the velocity of change:

Profit Share Growth is telling

So, if Android handset manufacturers are killing it in volume, surely they’re making a hansome profit as well, right?

Wrong.  Over the last 3 years, none of them has profit share growth north of 10%, and it looks to me like HTC is only barely above 0%, and Motorola might be about 1%.  The others are negative.

Meanwhile, Apple’s profits from the iPhone are soaring… and Nokia’s profits are plummeting.  So how is Apple getting all the profit when it has such small market share, and isn’t even the leader in market share growth?

First the obvious items:

1. Apple’s iPhones are still considered the creme de la creme and therefore fetch a higher price from service providers like AT&T.
2. Apple is selling every phone they can make – in a sense right now they are build-to-order – which means, no inventory going stale on store shelves.  That usually enhances profit considerably, though it also often means they lose out on some marketshare.

The less obvious items:

Apple benefits from laser focus – having essentially one model every year means that all the engineering focus can be on one model.  All the sales focus. All the support focus.  Yes, they still sell the 3GS, but this pattern of selling last year’s model at a lower price is a pretty simple model to sustain and support.

By leveraging common components and commodities across several device categories, Apple gets “scale” in certain components they might not otherwise:

• The A4 chip (iPhone4, iPad, and AppleTV)
• Flash Memory (NAND) – they are the biggest buyer by far, buying 20-25% of the world’s supply!  This gives them a huge pricing and availability advantage in the market.
• Touch screen R&D
• Touch screen components – Apple is already the largest purchaser of capacitive touchscreen glass screens.
• Leveraging iOS across multiple devices… and iOS itself leverages much of OSX.

By developing a few key differentiators and then leveraging them to the hilt across their product line, Apple is moving up-market at the same time that Apple is growing share.  But from Apple’s perspective, quality is much more important than quantity.

A reasonable difference, however, between Apple eating Nokia’s lunch, and Apple eating “Android’s” lunch (if we can pretend for a moment that Android phones are one thing rather than dozens of companies), is that Android *does* represent a viable competing platform, whereas Nokia’s fractured smartphone strategy did not.

However, as long as Apple’s platform is seen as the premier platform, with a halo effect for those who write apps for it, Apple will continue to see the best apps first.  And the platform will continue to be not only viable, but defensible. To that end, we’re already seeing Apple leverage the platform (appstore/iOS) across more devices than just phones.  And they’re making these moves faster than the competition, and in a more rationalized way.  I think in this market, you want to be the phone provider that is making money, rather than the one that is taking market share, if you have to make a choice.

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.