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Comment Apple Not Sharing Any Pie (Score 1) 662

Well, it looks like a lot of what I expected was announced. What's really impressive is how brazenly Apple has dictated terms and cut into other companies' business models.

The terrible notification system in iOS to this point has actually benefited Apple in 2 major ways: it appeased the iPhone wireless carriers by allowing archaic, expensive text messaging to still seem relevant (email alerts didn't appear on the lock screen, but text messages did), and it provided Apple with a future selling point.

Now that they're updating the notification and messaging systems, it's likely that text messaging volume will very, very gradually begin to dwindle for iPhone users. The carriers can't be too happy about this since texting services are their cash cows.

On the web browsing front, integrating Reader into iOS Safari is likely to frustrate a lot of advertisement-subsidized sites. The strength of its implementation will also push publishers into their News Stand platform (the choice will be: "no revenue for you through the web since we'll strip out all your ads or revenue with a commission to Apple through News Stand").

The iTunes Match service is going to trick lots of people into paying for access to music they already have. It'll be interesting to see how Apple authenticates music via Match: will it use some fingerprint analysis from the actual sound stream (à la Shazaam), or will it simply read through tags? Either way, it'll be easy for someone to log into Match once on a system with a huge library to get access to thousands of songs. I wonder if people with huge libraries will sell services to help you "unlock" lots of music on iTunes Match and/or if there will be frequently updated "master" iTunes databases with proper tags and placeholder files posted all over the internet? Apple's basically selling an all-you-can-eat music subscription service (comparable to Napster's) at a low annual rate and making its users jump through hoops or pay more to get access to the whole library. This is going to further kill CD sales and record stores; once Apple moves to Lossless audio, there'll be very little reason for Apple customers to access digital music any other way (perhaps unlimited access to the whole library and lossless quality will be available in a couple of years for a higher subscription price).

Finally, iCloud is going to hurt Dropbox and Google's bottom lines. Google's going to be implementing most of the same functionality once they get Chrome OS off the ground, but Apple's lead is formidable.

Barring any major technical or privacy failures and given the appetites of their fans/customers, it's hard to see Apple failing to pull all of this off. Apple's waving the stampede through their velvet rope and right into their club. Once inside, though, it's going to be awfully hard to get out.

Comment Where Apple Is Going (Score 3, Interesting) 722

Hi, everyone. Reading articles about Apple's Post-PC outlook (such as this one), it's interesting to think about where Apple is headed, as it provides a good context for their recent announcements.

First, it should be clear that Apple wants to extend their walled-garden approach to their entire line of products. This would allow them to provide a consistent user interface and good interoperability (something they'll continue to tout to sell consumers on their Post-PC products). It will also allow Apple to translate success in one area (e.g., strong iPad sales) into other markets (e.g., stronger Mac sales with Lion's interface echoing the iPad's). Finally, it will allow Apple to monetize other services (as they already have with 3rd party application and subscription sales).

At the iPad 2 announcement, Jobs gleefully boasted that Apple has the largest number of registered user accounts with credit cards of any online vendor, and Apple's certainly interested in billing those accounts as much as possible.

One obvious area where Apple could try to pull ahead is in data storage and synchronization. Apple is actually worse at this right now than many other vendors (e.g., using iTunes to get a Word document onto an iPad), as they've avoided implementing simple, consumer-centric solutions (e.g., WiFi syncing to iPhones, iPods, and iPads from Macs/PCs) so they could build the infrastructure necessary to implement an Apple-centric approach. The $1 billion data center they're building in North Carolina is obviously for something bigger than just music streaming.

It's likely that Apple will try to pull more customers into Ping and MobileMe. Whereas Google has to implement roundabout connectors to allow users to synchronize their calendars and office documents, Apple actually controls the OS and APIs used on Macs, iPhones, and iPads. Apple could simply force all applications, including 3rd party applications on the iPad and iPhone, to use Apple's cloud data store by changing the SDKs and development agreements for their iOS devices.

In iOS and in Mac OS 10.7 Lion, a multitasking application is supposed to gracefully "suspend" when a user switches to another application. If the application isn't used for a while, iOS/Lion actually can save its state and reallocate its resources for other applications to use. In Lion, this has even lead Apple to remove the open application indicator lights from the dock. In Apple's new computing paradigm, applications merely have a "state," they're never "closed" or "opened."

Now, imagine Apple extending this paradigm to applications running across devices. An end user could open a document for editing in Pages on her office Mac, then, without doing anything, could leave work, open Pages on her iPad on the train home, continue editing the same document, and so on. If data and application states are synchronized through the cloud, users don't have to worry about file versioning, backup, etc. The possibilities become even greater when multiple applications and file sharing with multiple users are involved.

Apple is in the best position to make this sort of computing paradigm possible, since they already have such large markeshare across multiple devices.

Having wireless carriers' cooperation in providing lots of cheap bandwidth to customers will be critical in enabling their vision. In this regard, Apple has recently moved from being at the mercy of a single carrier (AT&T) to having leverage over two carriers (AT&T and Verizon). The WiFi hotspot feature that Apple has just added to the iPhone 4 is the first salvo signaling this shift. Apple would prefer that its iPhone owners could pay for a single iPhone plan and then share that data plan with their MacBook and iPad when they're away from WiFi, so all their devices can remain connected to the cloud. The WiFi hotspot feature on the iPhone 4 that Apple has just added allows this. Further, Apple wants end users to be able to run high-bandwidth services (such as FaceTime) over their wireless carrier's connection. At the moment, you can't FaceTime over 3G, but you can set up an iPhone 4 as a WiFi hotspot and then connect another iPhone 4 to it over WiFi and use FaceTime through 3G (the absurdity of this scenario illustrates the tension between Apple and the carriers).

Apple will try to play Verizon, AT&T, and other carriers off each other to force the carriers to offer more bandwidth at lower prices going forward. They also may try to simplify their software and hardware development (and increase their leverage over Verizon and AT&T) by having a single universal iPhone that works on both carriers. The existing Verizon iPhone 4 doesn't seem to be Apple's favorite child at the moment (Apple is releasing iOS 4.3 this Friday for all current iOS devices except the Verizon iPhone, and it probably irks Apple that they have to complicate their software development by supporting two versions of the iPhone 4). However, getting Verizon on board and getting all those Verizon customers was worth it to both Apple and Verizon, and Apple has been willing to re-engineer the iPhone 4 to act as Verizon's flagship for a paltry 6 months and sprinkle some WiFi iPads as crumbs to Verizon to feed their 2010 holiday sales.

Things will really take off when Apple can synchronize its iPhone releases (something they'll probably do around June this year when they launch the iPhone 5 on Verizon and AT&T) and when the carriers have higher-bandwidth services (given the slow deployment of 4G services from Verizon and AT&T, Apple may delay 4G phones until 2012, but they could surprise everyone this year, especially with pressure from other 4G devices).

So where does this all leave Apple?

Well, it's likely that Apple will settle into the predictable, annual refresh cycle for the iPad, iPhone, and iPod products they've been moving towards for the past several years. Their schedule allows them to maximize sales of old inventory around the 4th quarter holidays while selling new iPads in the 1st quarter, new iPhones in the 2nd quarter, and new iPods in the 3rd quarter (they clear out their old iPod inventory by bundling old iPods with their Macs during back-to-school promotional sales in the early 3rd quarter - the "quarters" designated here refer to the calendar year, not Apple's official fiscal calendar).

Regarding their Macs, Apple can continue riding Moore's law along with the rest of the industry and can simply keep producing faster machines over the next couple of years. Their recent moves to discontinue the XServe and Lion Server signal that they're really shifting their focus towards their other products and, unless they allow virtualization of OS X on non-Apple hardware or distribute Mac OS X for generic x86 PCs (both of which are unlikely at this point), their interest in the Mac seems to be waning a bit.

Regarding services, growth in that area would be a boon for Apple, as successful deployment and wide adoption of the cloud services outlined above would provide a huge new revenue stream (via tiered subscriptions and/or advertising) that would add to Apple's bottom line.

So, Apple can incrementally update its hardware on a predictable annual cycle and can use the popularity of its hardware and online services to synergistically expand in both areas.

Where does this leave Apple's end users?

Well, the simplicity and integration of Apple's solutions have been favored by consumers recently. It may be, in the short term, that end users prefer having Apple do all the legwork of backing up and synchronizing their applications and data, and this very well may yield more productivity for Apple's users, in aggregate.

In the long-term, however, end users may decide that they are overly reliant on Apple's proprietary solutions. Apple's new iOS 4.3's Home Sharing features are easy to set up, but requiring an Apple ID log in to simply stream music and videos between devices on the same WiFi network is a bit alarming (especially when Apple's Remote App used local authentication to do this). If users feel that they increasingly need to ask Apple's permission to do things with their own data, or they see that there are other popular services that aren't interoperable with Apple's, they may defect.

Finally, while Apple is pitching their new initiatives as Post-PC, they're really just simplifying existing computing paradigms for their end users. The true Post-PC era will arrive when the computer becomes a more active agent: it's one thing if all your devices can show you the paper you wrote; it's another if your devices can actually write papers for you.

That is perhaps the biggest danger for Apple: at some point in the future, the relatively simple problems that Apple is good at solving may not be enough. End users may want to have computers that can answer any question or drive their car. In the short term, though, Apple is far ahead of everyone else in mind and market share. In the short term, simple might just be good enough.

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