This Is What Happens To Gold Standards

This is what happens to gold standards when a new, annual revision is announced and sold.

Apple PR:

Apple® today announced pre-orders of its iPhone® 5 topped two million in just 24 hours, more than double the previous record of one million held by iPhone 4S.

AT&T PR:

AT&T* set a sales record with iPhone 5 over the weekend, making it the fastest-selling iPhone the company has ever offered.  Customers ordered more iPhones from AT&T than any previous model both on its first day of preorders and over the weekend.

The iPhone As The New Standard

apple_iphone_5_precision_cameraIt’s iPhone 5 launch week, and as can be expected, there will be nonstop news about the new wonder-phone and all that it can do, can’t do, and how it compares to the competition.  Here’s the thing though, the only people who really care about that, by and large, are journalists, tech pundits, and competitors like Samsung and Google.

Why? Because the iPhone is now the standard. It is the baseline. The norm. The default option. That is both amazing and boring at the same time.

Ever since the iPhone 5 announcement last week, countless journalists have come out saying how boring and how disappointing the iPhone 5 announcement was?  But does anyone really care about that?  Fact is, the iPhone 5’s industrial design was leaked months ago, and this itself takes a bit of air out of the announcement.  But that doesn’t make it any less new.  The iPhone is also nothing but a paperweight without iOS.

In 2007, Apple shocked and stunned the world with the iPhone.  The announcement in January at Macworld, followed by the launch in June signaled a major shift in the industry.  Apple had made its move beyond MP3 players and into a new major industry: not smartphones, not even phones, but mini personal computers disguised as phones. While the first edition was groundbreaking, it still lacked an immense amount of features. These features would need several years of revisions and refinement as the technology slowly matured.  While it can be argued that some launches and introductions were larger than others (ex. iPhone 3G, iPhone 4), the fact is that each revision was merely an evolution of the preceding version.  While many people loved their iPhone 4, the 4S contained significant improvement in the camera and performance department that it was a significant upgrade, even though it looked the same from the outside.

While the iPhone iterates and grows, it increasingly becomes that “one thing” that everyone has with them.  Due to their industry exclusive feature of free, annual OS updates, users feel more than comfortable keeping a handset for 2+ years.  I purchased my 3GS in 2009, over 3 years ago from today, yet two days from now it will receive the brand new iOS 6.  That’s an intangible that Samsung and Motorola and Nokia simply can’t compete against.  You see more old iPhones running around than any other brand of smartphone.  This isn’t just perception.

So what has this brought us to?  We now find ourselves with the sixth generation of iPhone being largely feature complete, now with LTE and a larger retina display while still delivering great battery life.  Could it be better?  Sure! Apple could have included NFC and joined an already immature, increasingly crowded and confusing market, but to what end?  That’s not Apple’s style.  They didn’t include copy-and-paste until it was just right.  They didn’t included multi-tasking until it was great and didn’t kill battery life. But by and large, the iPhone has grown so mature that the industry of mini personal computers has itself grown boring.  And in boring markets, you usually have a standard; a default choice. Consider the iPhone 5 the gold standard. It may be boring, but it’s pretty as hell and most people can’t wait to get their mitts on it.

Android’s fragmentation: whose problem is it?

The topic of fragmentation within the Android ecosystem continually pops up from time to time. For evangelists of opposing platforms (and I probably count as one of those people), they like to bring up the issue as a point of showing how inconsistent the platform is and how it drags down the user experience.

Let’s assume for the sake of this article that Android, as a platform, is very fragmented. But we’re not going to assume that fragmentation is inherently bad for all people. It may in fact be very good for some, so let’s just leave that issue to the side for now.

A blog post making its way around the internets today comes from Michael DeGusta at theunderstament. I’m including his chart below for reference.

Android & iPhone Update History by Michael DeGusta

What Michael contests is that it comes down to an issue of support and that Apple is crushing it in this area and thus also driving customer loyalty (is that a shock to anyone that Apple would be driving loyalty?):

It appears to be a widely held viewpoint that there’s no incentive for smartphone manufacturers to update the OS: because manufacturers don’t make any money after the hardware sale, they want you to buy another phone as soon as possible. If that’s really the case, the phone manufacturers are spectacularly dumb: ignoring the 2 year contract cycle & abandoning your users isn’t going to engender much loyalty when they do buy a new phone.

…In other words, Apple’s way of getting you to buy a new phone is to make you really happy with your current one, whereas apparently Android phone makers think they can get you to buy a new phone by making you really unhappy with your current one.

It’s a fair argument, but I don’t know that it’s altogether there. People talk about the Android platform as this singular unified thing, when I actually believe that it is quite the opposite. The Android ecosystem is actually fragmented by design. Google created it and is licensing it for that expressed purpose that it can simply be chopped up 15 ways from Sunday in any manner you like. What we often fail to remember is that you and me, as consumers, are not Android’s (and by proxy Google’s) customers. We are merely another part of Android’s complex ecosystem of cash generation, but we don’t generate the cash from buying our phones or using our minutes, rather we generate Android’s cash by searching and utilizing Google’s wide array of free, ad-supported services.

The beauty of Android’s ecosystem is in it’s flexibility: it can be just about anything to any manufacturer, but if you want to create an iPhone like experience, a manufacturer would have to create the entire experience on their own. Amazon and Barnes & Noble are prime examples of companies trying to do that now with their locked down Nook Color and Kindle Fire.

But now let’s return to the previous idea of whether fragmentation is distinctly a good or bad thing and who it impacts. For Google, even though they act like they care, I’m not sure why they would. Android is clearly the highest selling mobile platform with no imminent threat of that changing anytime soon. They seem most concerned about what pundits say, but it’s hard to say whether they actually care about changing the culture or not when the results speak for themselves. Now let’s look at Android’s partners, the manufacturers (Samsung, LG, Motorola, HTC, etc.) and carriers (Verizon, at&t, T-Mobile, Sprint, etc.). Each manufacturer is producing multiple phones for multiple carriers. The phones vary widely (again, another benefit of the platform) in both features and price, yet also now we’re finding in operating system version as well. I’m guessing the profit margins for the manufacturers differ widely as well and with so much internal Android competition happening, new phones being introduced and launched virtually each month, there is a palpable pressure for a high frequency of releases.

From a manufacturer’s point of view, when all of your effort is on more devices, more carriers and placating each carrier with their own customization (if they don’t placate the carrier, someone else most likely will, which makes Android differentiation tricky), why would these companies care about long-term support? What’s in it for them? Customer switching costs would be quite low since there is a variety of Android handsets on each carrier from multiple manufacturers. How do these companies differentiate themselves?

The answer is they can’t. They’ve effectively turned the majority of the ecosystem into a commodity for the average consumer. I would bet yesterday’s donuts that the best selling Android handsets right now are not big name high priced ones, but they’re the “free on contract” devices that always seem like the best deal at the time (even though we know it’s not in the long run of the cost of the service). These devices are commodities, quickly to be replaced with the latest hotness coming next week. It was bound to happen once the market matured enough and the effect will only accelerate going forward.

So the question is, does this really matter to consumers that the manufacturers won’t support their device a year after it’s launched? While those of us who already get great support say yes, my guess is that the majority of average consumers simply don’t care. That’s the effect of a commoditized market.

Moving At The Speed Of Change

The other night I was cycling around lovely Lake Nokomis when I nearly got into what could have been nasty accident simply because someone wasn’t paying attention.  At Nokomis, they have separate paved trails around the likes, one for walkers and runners and another for people riding bicycles, the whole point being that the traffic for each is such that separate paths are necessary for proper safety.  It’s a great idea, you just have to get people to follow it.  Such was not the case the other night when I was cycling down the bike path and a family of six was walking towards me.   As I approached them, a couple young girls in the family were distracted by a loud airliner flying low overhead and didn’t see me coming at them at almost 20 mph.  Even though I was riding on the very edge of the path, I still passed within a foot of the young girls who were simply walking along, oblivious to their surroundings, on the bike path.

It’s easy to get distracted and not see what’s coming.  I’d be lying if I said I don’t have lapses myself.  Everyday we witness those (our ourselves) who simply aren’t paying attention to their surroundings and ultimately it doesn’t matter whether you’re going 2 mph or 200 because you could end up in a big crash either way.  The short version is to simply call it “change”.   No matter what we do, change is occurring all around us.  Sometimes it may be very slow, virtually imperceptible to the human mind over a lifetime, such as evolution.  Or it could happen very, very quickly.   In business this is no different: the change itself is inevitable, but our reaction or plan for change is what can often mean the critical difference between success and failure.

One of the hottest industries of the past few years is the mobile phone industry, specifically with regards to smartphones and their emergence as a large segment in the mobile device industry.  While smartphones weren’t invented in 2007, the introduction of the iPhone in January, 2007 had more to do with shaping the smartphone landscape today than almost anything else.  Back in early 2007, smartphones were very different than they are today.  The most popular models ran Palm OS, Windows Mobile 5, Blackberry OS and Symbian.  Blackberry had been around for a while, but they were really coming into their own with their new camera sensors built-in to the Blackberry along with a calendar and contact support and web browser.  The Blackberry always had fast and secure email, but now it was a full-fledged smartphone.  Due to the super secure, lightening fast, don’t-have-to-think-about-it email built in to the Blackberry, it was quickly becoming a favorite in the business market and to a much lesser extent, the consumer market.  This would be a time of tremendous growth for Research In Motion, yet also the moment when they most needed to innovate and realize change.

The writing was on the wall.  Whether you bought an iPhone or not, you couldn’t deny its appeal:  sleek and simple design, easy to navigate, big touch screen, geared for average users.  This was something new, something not seen before from any other company.  Even at the exorbitant price of $499 (or even $599 for the 8GB model!) and despite the fact it was a 2G phone (many phones were packing faster 3G radios at that time, albeit at the cost of shortened battery life), it was still an instant success.  Apple had brought a massive wave of change to the industry before they sold a single unit and regardless of whether they actually succeeded themselves.  Their message of beautiful simplicity, an approachable user interface and consumer centric design was powerful.  The only thing standing in their way was the actual execution of the idea and getting the price down from their original stratospheric levels.

We could go on and on about the minutiae of what happened in the years to follow the iPhone’s original announcement, but suffice to say, here in 2011 the landscape is radically different than it was in 2007.  Before the second half of 2007 Apple hadn’t sold a single handset.  Now in 2011 Apple is the most profitable mobile phone company in the world, the iPhone is the most popular smartphone in the world, smartphones are officially mainstream consumer devices and we’re witnessing the repercussions of the companies who failed to pay attention and realize the rapid change that Apple ushered in.

After bringing us some of the first popular smartphones with the Treo back in 2002 (building on the success of the Palm Pilots and Handspring Visors before that), Palm quickly realized that neither Palm OS nor Windows Mobile could compete as a new, modern smartphone OS.  But modern smartphone operating systems don’t exactly grow on trees.  With a new infusion of capital and led by their visionary Jon Rubinstein (one of the co-creators of the original iPod at Apple), they created webOS and the Palm Pre.  However due to their late start, the Pre debuted a full two years after the original iPhone.  The exclusivity to Sprint wireless also hindered their adoption (debuting a device exclusively on the third largest carrier in the US probably wasn’t the best strategy), and in 2010 Palm was bought by HP.  WebOS was commonly thought of as a truly capable modern mobile operating system that truly had the chops to go head-to-head with Apple’s iOS, but what Palm really lacked was great hardware.  So teaming up with the world’s leading PC manufacturer should be a win-win, right?  Sadly, that didn’t happen.  After HP promised to double down on webOS, they squandered many opportunities and released a half-baked tablet called the TouchPad that seemed to have great potential but didn’t offer enough compelling reasons for consumers.  Now on August 18th, 2011 HP has announced their intentions to jettison their personal devices and sell-off or spin-off their PC business.  Could this be the end of Palm, the Pre, the TouchPad and webOS?

Due to having a strong market share amongst OEMs, Microsoft was in a strong position as they licensed Windows Mobile to industry heavyweights such as Samsung and Motorola.  To Apple, Windows Mobile exemplified everything that was wrong with smartphones before the iPhone: very technical, lots of menus and submenus, stylus input, geared exclusively towards business and very unapproachable to the average consumer.  Microsoft’s CEO Steve Ballmer didn’t seem to think the iPhone as much of a threat, yet as their market share took a rapid decline over the next few years, Ballmer finally realized that Windows Mobile 6 was not only not what consumers wanted, but it wasn’t what business users wanted either.  Microsoft went back to the drawing board and finally created a truly modern smartphone OS in Windows Phone 7 (taking some cues from OS design elements from their Zune music player.  Like Palm, it took Microsoft some time to get Windows Phone 7 phones to market (even for Microsoft, modern mobile operating systems don’t grow on trees either!).  Through their licensees they finally launched in late 2010 but have yet to reach significant adoption or consumer acceptance in less than a year.  Shareholders continue to be worried about the direction and leadership at Microsoft.

Nokia was also in a position of strength in 2007 as the worlds leading mobile phone manufacturer.  They leveraged their Symbian OS for their smartphones and while they were extremely dominant around the world, Symbian-based smartphones never quite took off in the US.  While Nokia put tremendous resources to the Symbian ecosystem, the OS itself was never quite powerful enough to compete with the modern smartphone operating systems of today.  It was essentially an advance feature-phone operating system that Nokia kept refining and adding more features.  Unfortunately, just like lipstick on pig, you can’t deny what’s really underneath all that glitter and Nokia’s advanced hardware design couldn’t make up for the shortcomings of Symbian.  With Nokia and Symbian market share plummeting (along with their profits), Nokia replaced their CEO with former Microsoft Business Division President, Stephen Elop in September, 2010.  Elop, with his famous “burning platform” memo, promptly turned the direction of the ship around, declared Symbian dead, and formed a groundbreaking partnership with Microsoft to become a featured hardware partner (though not an exclusive partner) for Windows Phone 7 devices.  Because of Nokia’s traditional strength in hardware and weakness in software, this partnership could ultimately bear much fruit, but as of yet, no Nokia-Microsoft devices have been released and Nokia’s market share continues to drop in the meantime.

Google became an unexpected player in the mobile business when they acquired the small Android Inc. in 2005.  While the new smartphone operating system was originally patterned after the Blackberry and Windows Mobile OS, it changed dramatically and altered course shortly after the iPhone was unveiled in 2007.  They quickly realized that the traditional smartphone user interface was not the template to pattern a new operating system after.  Through extensive financial support of Google, Android has grown and evolved to become the dominant smartphone OS today, largely due to their lighter restrictions, open-source nature (allowing great customization by carriers and manufacturers), and because they’re essentially giving the operating system away for free.  While Android Inc. operates as a subsidiary of Google and their smartphone operating system has seen incredible adoption, the fact remains whether Android Inc. is actually profitable as a business.  While some estimates have Android bringing Google $6-$10 per user, per year in search revenue, how certain can you be that they would not realize this revenue from competing platforms without incurring all of the development costs that go along with a modern operating system that you’re giving away for free?  Combine that with Android’s recent litigation over patents and use of Java, and it remains to be seen if Android, in its current form and business plan, is a wise investment for Google.  Google makes money off of search.  Does Android really bring more people to search than they would if they were using an alternate non-Android device?

With all that has changed in the industry, it’s amazing to see how little Research In Motion has changed.   From 2002:

Blackberry 5810
released 2002

To now in 2011:

Blackberry 9930
released 2011

Now in nine years of research, development, and technological advances, how far has RIM really come?  Besides adding a color touch screen and a better browser, how different are these phones really?  While RIM also works on keyboard-less versions of their smartphones (Storm, etc.), their sales have paled in comparison to the traditional Blackberry layout of full keyboard, short widescreen display.  Does this really look like the phone of the future to you by a company that prides itself on innovation?

The point is that change is not only inevitable, it’s constant.  Some companies create and drive change, some react quickly to it, and yet others play catch-up only after they’re absolutely sure it’s a safe bet.  But if you’re not willing to change with the times, to pay attention to your surroundings and be agile enough to see what’s coming ahead, then you must also be prepared to get off the bike path and into the slow lane for walkers.

Wayne Gretzky once said, “A good hockey player plays where the puck is.  A great hockey player plays where the puck is going to be.”  Is your company playing to where the puck is going to be?

When is 4G not 4G?? It’s all marketing….

So Motorola is coming out with their highly touted new Android phone the Atrix 4G on AT&T’s 4G network (well, it’s sort of a 4G network ever since the rules for what is and isn’t 4G were relaxed a bit, but we’ll give AT&T and T-Mobile the benefit of the doubt and agree that their new HSPA+ network is “4G” for all intents and purposes).  Motorola has a lot going for it as they can really design some fantastic hardware, and according to the guys at Engadget, this phone packs some serious heat.

But right now there’s all this buzz around phones with “4G” this and “4G” that.  Advertisers and marketers for the wireless companies are pushing the “4G” label around as much as they can and the unfortunate thing is that it’s actually working.  Uninformed consumers actually assume that they’re somehow better off with a 4G-capable phone right now than with one that isn’t (for the real scoop on 2G, 3G, 4G and everything in between, check out Engadget’s fantastic primer on the subject).

Well, as Denny used to say, the proof is gonna be in the puddin’.  According to Engadget on the Atrix 4G:

AT&T and Motorola are billing the Atrix as a 4G device. Hell, it’s got the term in its name! We wish that we could report back that we saw 4G-like speeds on the phone, but it’s actually quite the contrary.


In comparison to other handsets we’ve tested on the network in the same spots, the Atrix 4G actually got lower speed rankings on both downstream and upstream tests. In general, we saw an average download speed of around 1.5 Mbps, while uploads were even worse at just about 0.15 Mbps. We did see download speeds spike occasionally into 2.2 Mbps territory, but that wasn’t the norm. During the testing, the phone had four or five bars, and was clearly displaying the HSPA+ icon.


The odd thing is that if you compare the device against the iPhone 4 on AT&T’s network — tested in exactly the same locations — you see much different results. On the iPhone, data speeds were consistently in the 2 or 3 Mbps range for downloads, and hovering around 1 Mbps for uploads.

At this point it’s hard to say if it’s the phone or the network.  Could be one, the other, or both.  But the point is, don’t believe the label and understand that 4G is under developed right now that it’s just too early to get excited about which phones are 4G and which ones aren’t.  Give it about a year and then we should really be seeing 4G phones and devices really start to surpass their 3G counterparts.

The Verizon Guy Comes Back for a Big One

Seriously, where has this guy been all these years?

I have no personal allegiance to any carrier and given the iPhone’s sordid history in terms of call reliability, I found the commercial pretty darn funny.  Though now that the reviews are in on the new Verizon-flavored iPhone 4, it’s pretty much unanimous that it makes phone calls much better than on at&t’s network.  If you’re a diehard Verizon customer and have been waiting four long years for the iPhone, I can certainly understand jumping in ASAP.  But if it were me, I’d try to hold out just a few more months for what will certainly be a new iPhone 5 coming in June or July.  Don’t you just love competition?