Quick Thoughts: Periscope and Meerkat

I’ve been meaning to write something about Meerkat for a while, but haven’t got around to it. Now that competing product Periscope has launched, I feel like it’s finally time. A brief primer for those to whom these names mean nothing: Meerkat launched several weeks ago, and is a barebones personal video broadcasting app for iOS, and Periscope is a very similar but more polished app which Twitter acquired a while back and launched yesterday.

Watch me talk about this stuff

I did a quick interview with Reuters TV yesterday on the topic of these two apps, and you can see that here.

Also yesterday, by way of testing Periscope, I did a quick Periscope session where I talked about the two, which I subsequently uploaded to YouTube:

Meerkat’s faster start helped rather than hurt Periscope

Given that people knew about Periscope even before it launched, there has always been discussion about how the two would compete and whether Meerkat would have such a lead by the time it launched that Periscope would be dead in the water. I was always skeptical about that – being first doesn’t always (not even mostly) lead to winning in these battles. and first-day results from Periscope seemed to bear that out. Dan Frommer of Quartz posted this chart this morning:

This shows the number of Meerkat and Periscope-related tweets over the last few weeks. As you can see, it took Meerkat most of that time to reach the 30k per day mark, but Periscope almost hit that number in its first day. What I’ve wondered about, and what now seems to be happening, is that Meerkat actually did Twitter and Periscope a huge favor by teaching people about the concept and letting them experiment with it, such that by the time Periscope came along people immediately understood the value proposition.

I prefer Periscope so far

On top of that, as I alluded to in my first paragraph and in the video above, I find Periscope to be much more polished and easier to use than Meerkat. Meerkat seems very much like a cheap Android app, somewhat ugly in its interface and hard to navigate around. Periscope seems much more better thought out, nicely designed and professional, much more at home on iOS (the only platform both apps are on, for now). And of course then there’s the fact that Meerkat got cut off from Twitter’s social graph shortly after launch, which will make it harder for Meerkat to sign up new users, because the process of finding followers will be much harder. For power Twitter users, custom curation of following and follower lists has always been important, but for mainstream users easy setup is key, and Meerkat has likely lost some of that.

Periscope isn’t perfect – the fact that I had to post the video of my session from my camera roll to YouTube rather than being able to share it directly from the app is something I hope they’ll fix in time. Both apps force you to use a portrait orientation, which is fine for selfie-style videos but poorly suited to either group shots or shooting a scene (and, as this BBC citizen journalist expert mentioned, poor for incorporating into professional news broadcasts too). But I like the fact that it keeps sessions in the app for viewing after they’ve ended, unlike Meerkat, although finding those needs to get easier.

It’s still early days here, but I think Periscope has a fantastic chance to dominate, given its polish, its ownership, and the fact that Meerkat laid the groundwork for it. Meerkat isn’t necessarily doomed, but there’s little in my mind to recommend it over Periscope, and I think the latter will pretty quickly become dominant.

Why did these products break through now?

The other question worth thinking about is why these two apps suddenly appeared at this time, and what’s made them so successful when other previous efforts have failed. I think it comes down to two main things, and a third factor which has helped too:

  • Mobile-first products – these products don’t really exist in any meaningful sense on the web or desktop – they’re mobile-first, and only enable streaming from iPhones. Meerkat allows sessions to be viewed from the web, while Periscope doesn’t, but they’re clearly designed for both broadcasting and viewing on the device you have with you all the time. This also allows them to tap into notifications, which are huge for real-time services.
  • Twitter as megaphone – speaking of real-time, Twitter has become the real-time platform, with many people keeping it open and watching the tweets roll in more or less as they happen. It’s already been the real-time platform for covering current events, but that has largely meant text and the occasional picture. Video adds a whole new dimension to this real-time element, and Twitter becomes the megaphone through which these broadcasts from apps get shared with the world. Tapping into existing Twitter audiences and leveraging the retweet as a way to seamlessly rebroadcast popular streams is a huge part of why these services are successful. It’s also the biggest reason Twitter’s acquisition of Periscope makes sense – it adds another vital dimension to Twitter’s “media” strategy.
  • Tech reporters getting on board – this was arguably less a catalyst than an accelerant, but quite a few tech reporters quickly jumped on board with Meerkat, tried it out, broadcast themselves and got the product through its awkward “here’s me eating my lunch” phase that all sharing platforms seem to have to go through. Though that phase was repeated as Periscope launched as regular people tried it out, that early reporter experimentation meant we quickly learned what worked and what didn’t, and this early experimentation by those with significant followings helped the product to get far more attention than it would have got through more of a grassroots adoption by regular people.

Breaking into the mainstream is the next challenge

The challenge will be transitioning from this early success among those who have significant followings on Twitter to regular people. Are ordinary people whose Twitter audiences consist mostly of people they know in real life going to use either of these two services? Or will their broadcasts only be meaningful when they happen to find themselves in the right place at the right time, as with yesterday’s building collapse and fire in Manhattan? I suspect that over time we’ll see some new Meerkat and Periscope celebrities emerge, just as we’ve seen Instagram and Vine give rise to new personalities with significant followings seemingly out of nowhere. But I think that, most of the users will be viewing, not streaming, and that actually fits great with Twitter’s new direction.

Facebook’s payments trojan horse

Facebook’s announcement of person-to-person payments through Facebook Messenger last week has a lot of people scratching their heads. The most puzzling part? It’s not charging for these payments, even though there’s a cost to Facebook, which means it’ll lose money on every transaction. So why would Facebook do this, and what implications does it have for payments and other services at Facebook?

Take a step back for a minute and look at Apple. For years, signing up for an iTunes account was almost impossible unless you were willing to provide credit card details for potential music purchases. As such, Apple collected credit card information for hundreds of millions of users, which enabled the later introduction of purchases of other forms of content such as TV shows, books and movies, and much later enabled the easy introduction of Apple Pay. Having a payment method on file makes creating new paid-for services much easier and more seamless, but getting the credit card information for the first time is the big hurdle. Just look at Google – it’s struggled for years to get users to pay for apps and content. There are certainly other reasons for this, but one of the key reasons is the fact that users don’t provide credit card information when they sign up for either a Google account or an Android device. In markets where Google has added carrier billing as a payment option, app purchases rise significantly, according to one of the companies I’ve spoken to which provides the underlying technology.

So, back to Facebook. Other than its fairly limited previous payments play with partners such as Zynga, Facebook has never really given users a reason to add payment information to their accounts. And that’s been fine, because Facebook’s main business model has been advertising, with payments and other fees dwindling as a source of revenue. But as Facebook attempts for a second time to create a platform for developers and businesses, payment information will be a critical element of many of the potential implementations. The biggest barrier? Most of Facebook’s users don’t have payment information on file. How, then, to incentivize these users to add their credit card details? I suspect fee-free person-to-person payments may well be the trojan horse Facebook is using to catalyze users into adding their payment details to their accounts. Give users a compelling reason to add their details, and then you’ve got them for other purposes too. Now all it requires is getting their permission to use the same credit card for other transactions.

So, what transactions could we be talking about here? Well, last year Facebook trialled some basic commerce solutions, such as a Buy button, and at last year’s F8 conference it announced Autofill with Facebook, in partnership with several other payment providers. But at today’s F8 event we got a much better sense of what it has planned. The Buy button together with Facebook’s Messenger platform announcement highlight various ways in which Facebook could benefit from having users’ credit card details on file. If that platform is to make money, in fact, it’s almost certain that it’ll need some way to allow users to make payments for various products and services, of which Facebook would naturally take a cut. But even beyond the platform announcement, Facebook is planning to bring more video and news content into Facebook natively, and having ways for users to pay for such content on a subscription basis would also be attractive, just as Apple allows its users to do today. In fact, almost all of the ways in which Facebook could diversify away from advertising require it to have ways for users to pay for things through Facebook, and that requires getting their payment details.

All of this brings us back to Google, which we touched on briefly earlier. Google clearly plans to get into the payments business itself with Android Pay over the coming months, and it would obviously love to increase users’ spend on apps and content as well over time. But Google has struggled throughout its history to get users to pay for things, especially since it’s taught them so effectively that its most useful services will be free, supported by advertising. What will Google’s vehicle be for getting users to add their payment details to their profiles? It could arguably take a leaf out of Facebook’s book here – find a way to incentivize users to add their credit cards to their accounts through a service that’s compelling in its own right. Once that’s done, all kinds of new opportunities will open up.

Quick thoughts: Defragmenting media on Facebook

Facebook seems to be working on two fronts to bring content from third party sites natively into the Facebook experience. This began with video, where Facebook has been quietly bringing both major traditional brands and smaller content creators into the core Facebook experience. But there are now reports that Facebook plans to do the same with news articles from major publications like the New York Times, Buzzfeed, and National Geographic.

I’ve talked previously about the video efforts, and in that piece I said this:

Facebook has become a massive destination for video, but almost all the video is actually hosted on other platforms. That obviously has cost advantages for Facebook, but it means that it doesn’t own the content, and therefore can’t monetize it effectively. It also means that engagement around videos on Facebook is fragmented, with popular YouTube videos attracting millions of comments scattered across hundreds of thousands of different user shares of the same video.

There are lots of aspects to all this, and Facebook is no doubt talking up the performance and monetization benefits of publications hosting their content directly on Facebook. But I think one of the other key benefits is the ability to overcome this fragmentation, and that applies just as much to news as it does to video. So let me expand on that a bit. The problem as things work today is that there’s no single version of either a video or an article on Facebook, just the original on the third party site. Meanwhile, there could be thousands of individual shares of that video or article on Facebook, with no connection between them. On the third party site there might be an indication of the number of third party shares, but the site has no easy way to digest what’s happening on each of those shares, and Facebook users have no visibility into how many shares, comments or other metrics the article or video is capturing in total across Facebook. Sometimes Facebook takes an article shared my multiple friends and bundles it into a single card with a single link, but there are still two entirely separate discussions happening among two separate groups of friends.

What Facebook could do if these things were being shared natively through Facebook is start to aggregate all this activity much more effectively, both for the content owners and for users, with commenting, stats tracking and so on happening much more effectively. And of course Facebook could share much more data about the users sharing the content with the content owners, so that they’d get a much better picture of who’s viewing the content. One of the key challenges with Facebook (in contrast to Twitter) is that sharing is inherently private, which provides almost zero visibility for content owners. With native sharing on Facebook, that could change, though of course it raises some interesting privacy implications. If you’re commenting on my video or article on Facebook, does that mean I now get to see your comments, even if they’re only shared with your friends and not public?  And in a world where many news sites have either switched off comments or left them on but failed to curate them effectively, could Facebook help to provide a better class of discussion?

There are so many aspects to all this, including some significant risks for the brands involved. But it seems to me that they would at least in part be making the following tradeoff: ceding control over hosting and branding the content itself in favor of better visibility and tracking of the engagement with that content. For some of them, at least, I’m guessing that’s a tradeoff worth making.

Apple Watch and the Platonic ideal

Malcolm Gladwell and Spaghetti Sauce

I’ve been thinking recently about the sheer range of Apple Watch options, and the departure this represents from Apple’s past product strategy of a single SKU at launch for a new product. As I did so, I was reminded of several TED talks I’ve watched over the years on the subject of choices, and I went back and re-watched some of them. One in particular that seems very relevant to this topic is Malcolm Gladwell’s 2004 talk, Choice, happiness and spaghetti sauce. I’ve embedded it below in case you want to watch the whole thing – there’s also a transcript on the TED site in case you’d prefer to read the thing. I’m a Gladwell fan, generally speaking, but I know not everyone is. However, this talk is a good example of his ability to tell a good story around an ostensibly uninteresting topic, and in the process draw out some key messages.

This talk, if you haven’t seen it before, focuses on the work of a man named Howard Moskowitz, a psychophysicist (don’t know what that is? Neither does Gladwell). Moskowitz’s chief contribution to the world, as Gladwell sees it, was the invention of a concept called horizontal segmentation as applied to the food industry. The key idea here can be summed up by saying that he brought variety to product lines that had hitherto only featured a single product. The mistake, Moskowitz and Gladwell argue, that the food industry had made was to assume that there was a “Platonic dish” – a sort of ideal version of every food product that would be universally accepted as the best possible version of that thing. In reality, of course, people have different tastes, and one person’s ideal is another person’s nightmare, so you need several versions of your product to appeal to different segments. Hence the mention of spaghetti sauce in the title of the talk: Moskowitz was the one who convinced the owners of the Prego brand to diversify their offering, and specifically to introduce an extra chunky version, which became a huge success.

36 flavors of Ragu, 38 flavors of Apple Watch?

So how does all this relate to the Apple Watch? Well, what struck me as I thought about all this is that Apple has very much taken the Platonic ideal approach to its most important device, the iPhone. For seven years, there was only a single new model each year, which you might argue represented Apple’s conception of the ideal phone at that point in time. Next year, that ideal would have moved on a little, but there was still only one. A year and a half ago, Apple introduced the iPhone 5C as an alternative, but really this was just a revamped version of the previous year’s phone, and this past year Apple introduced a different spin, with two roughly equally capable phones in different sizes. Though it’s diversified a tiny bit, it’s largely stuck with the Platonic ideal approach to phones.

But now we come to watches, and the Apple Watch. One way of looking at this is that Apple has not just one Platonic ideal of a watch, but many different versions. In fact, there are 38 versions listed on Apple’s Watch gallery page, which coincidentally is quite similar to the 36 versions of Ragu Gladwell cites in his talk.  This reflects the fact that, when you move from a purely technology product to a an accessory or piece of jewelry, personal taste becomes much more important. As such, the horizontal segmentation approach comes into play, and you suddenly get an explosion of options to meet people’s different tastes and preferences (as well as body size and income).

However, I think the right way to look at all this is that there’s still just one Platonic ideal when it comes to the Watch – in terms of its functionality. The $17,000 Edition contains exactly the same technology as the $349 Sport, and it’s really just the outward appearance that’s different. In that sense, the Watch is a lot more like the iPhone than it is like the MacBook line, where there is a real difference in functionality/capability between the new MacBook, say, and the various flavors of MacBook Air and Pro. Of course, with the iPhone there are also color variations and so on to suit personal tastes, but the basic form factor remains unchanged, so no-one talks about three different “versions” of the iPhone in the same way that they’re talking about 38 versions of the Watch.

Everyone else treats devices like food

Despite the fact that Apple has largely stuck with the Platonic ideal approach for its devices, others have a different strategy. Samsung might well be the Ragu of the devices world, with many different variants designed to appeal to various market segments. Or perhaps a better analogy is the spaghetti rather than the sauce, being thrown against the wall to see whether it sticks. Apple’s approach is focused, but also limiting – I’ve often said that Apple is characterized by the limits it puts around its own addressable market. However, there are significant downsides to the opposite approach too, and not just in terms of the financial cost of a lack of scale around a single product. Another TED talk on choice comes from Sheena Iyengar, and it talks about the difficulty of making choices when presented with a myriad of options:

Interestingly, part of her talk focuses on strategies for making a plethora of choices less overwhelming, among which are categorization and concretization: i.e. divide a large number of options into broad categories, and make the category names (and therefore the differences between them) meaningful. Take a look at Apple’s 38 options and you quickly see that they’ve done both: three broad categories, with names that mean something: Watch as the broad middle category, Sport as a low-end option that could be worn while exercising, and Edition using a common descriptor associated with luxury goods. So even where Apple does offer lots of choice, it’s clear that it understands the psychological impact and has optimized for minimizing the negative impact while helping consumers to choose what’s right for them.

The challenges ahead for Apple’s TV service

The Wall Street Journal is reporting that Apple is finally beginning to get somewhere with its TV service, and has several key content providers on board. Techpinions readers won’t be surprised by any of this, because I’ve been talking up this strategy for some time now, starting a year ago in March 2014 and most recently this past week following the HBO Now announcement. At this point, the outcome I pointed to in that first piece seems more likely than ever, but it’s still not certain that it’ll be a success. As such, I wanted to talk about some of the details of the power struggle that remains ahead for Apple (and for other would-be providers of new pay-TV services) which I haven’t said much about previously.

From lots of little games of chicken to one huge one

What’s ahead is really a huge game of chicken, with the players being Apple (and other would-be new pay TV providers), the major existing pay-TV providers (and especially the major cable operators), and the content owners, both broadcasters and cable networks. There’s already a power struggle between the content owners and the pay TV providers over the fees the latter pay the former, due to two major evolutions:

  • the shift from must-carry to retransmission consent models for local broadcasters, which means they’re now insisting that would-be carriers pay them for carriage
  • the steady increase in affiliate fees for both some individual channels and for ever-expanding packages of channels from some of the major content owners, driven in particular by the rising cost of sports rights and additional sports channels, but also by the increasing investment in original content.

We’ve seen one carriage dispute after another in recent years, with several short-term blackouts, some smaller cable operators dropping Viacom or other content providers entirely from their lineups, and most recently Verizon dropping the Weather Channel, which had hitherto been the most widely-available cable channel in the US. These carriage disputes represent smaller games of chicken, with both sides calling the other’s bluff, and waging public battles for the minds of end users. In most cases, the pay TV providers have ended up caving to some extent and ponying up the required money to keep channels on air, but it’s no longer a sure thing. The relationship between these two sets of players has become increasingly tense, but with these traditional pay TV providers the only channel to market for cable networks in particular, and realistically the main route to market for broadcast channels too, there’s been little alternative but to reach terms and move forward. But many of the content owners would love a real alternative to the traditional hegemony of major cable and satellite providers. The two major telecoms companies, AT&T and Verizon, have provided some competition, but operate very much on the same basis as the old guard.

Incentives to deal, but also penalties for stepping out

All this gives the content owners huge incentives to find alternative routes to market, both as insurance against future carriage disputes and as leverage over the pay TV providers. Few of the content owners, though, have the broad, recognizable brands that would enable them to go it alone in any meaningful way, though CBS is one of a few to be testing the waters. What they would much prefer is to partner with a player which itself has leverage and a huge potential market for TV services, and that’s where Apple comes in. To be sure, Apple today is a tiny player in the overall video market, which generates about a hundred billion dollars in the US each year, the vast majority of it going through the cable providers. But what Apple has is eyeballs, credit cards, and platforms, all of which could be applied to such a service. Apple’s leverage is entirely in its potential as a provider.

The problem, though, is that any such move by the content owners would be seen for what it is – a gambit to break down the power of the traditional pay TV providers. And as such, those providers would retaliate. They have power over these content owners in several forms, with the harshest being refusing to carry channels, but the more moderate (and more realistic) being withholding marketing dollars from promoting those channels and the packages that contain them. Until such a time as any new partnership delivers equivalent benefits (which seems far off at best) they simply can’t afford to sacrifice their existing relationships.

Apple tried one way, but now for plan B

All this creates a dilemma, and a need for a strategy which balances these competing demands. The content providers need to forge partnerships which allow them to build leverage over the pay TV providers without alienating them. For this reason, and because Apple understands the inherent challenges of going up against the pay TV providers, Apple’s plan A was to work with the pay TV providers, rather than against them. It reportedly worked with Time Warner Cable before the Comcast deal was announced, and then switched to Comcast itself, but apparently without success. Comcast is unwilling to yield two things: the customer relationship, and the lucrative set top box fees that go with controlling the delivery of the TV service. Apple would have displaced both of those in a deal with Comcast, which meant it could never happen. Comcast apparently made this clear, and so Apple went to plan B.

If Apple is successful, of course, Comcast will lose both the things it refused to sacrifice in a much worse way than it would have done had it dealt with Apple instead of shutting the talks down. At this point, its greatest leverage is its NBC Universal holdings, with NBC apparently the major holdout broadcaster, but that’s far from a deal killer for the service Apple is creating. Disney is arguably the most important content partner, with its ownership of ESPN, but with the other major broadcasters on board too along with several others, and the recent HBO deal, Apple suddenly has a pretty compelling proposition on the way. The big question now is how the larger game of chicken plays out. So much of the success of Apple’s service will depend on the exact pricing and structure, and the completeness of its content offering. And that’s where the game of chicken comes back in. If the content owners provide overly attractive terms to Apple, they undercut their relationship with the pay TV providers. If the terms aren’t that attractive, Apple’s service won’t be priced competitively.

The challenges ahead

Some of the content owners – Viacom among them – are likely to be more desperate than others, and will sign up with Apple at decent rates. Others have already shown their willingness to break ranks with the pay TV operators through their deals with DISH’s Sling TV. But others will want to tread a more careful path, and that’s the other challenge Apple faces: being truly disruptive to the current model when it can’t undercut on price, and may well end up building a comparable bundle without the a la carte options some consumers (think they) want.

One other interesting piece of leverage Apple has with the content providers is its ability to track usage across its various devices, and across live/linear, DVR, and VoD, something advertisers are particularly keen on and which traditional pay TV providers have struggled to deliver. At some point, all of this reaches a tipping point where Apple’s TV service (and those like it, from Sony and potentially others) gains enough momentum and customer and content provider support that all the content providers can swing their support fully behind it. At this point, Comcast’s refusal to play ball with NBC content will become increasingly untenable, and I would bet Apple would make it very clear (either directly or through the media) that Comcast is to blame for NBC content being absent. The big question is how long it takes to reach this tipping point, and whether Apple can get enough support in the meantime to make things worthwhile.

Of course, for some consumers, simply being rid of the cable operator would be benefit enough, but of course Apple won’t be providing the broadband service over which these services will be delivered. The cable company will still play a role in many cases as the broadband provider, and with the loss of valuable TV revenue it’ll be tempted to compensate by raising broadband prices. If cable operators then also offer comparable over-the-top TV services as a retention strategy, the appeal and impact of Apple’s TV service may be further blunted. Apple’s differentiation will be greatest in the areas it specializes in – creating great user experiences across devices. Apple can apply some of what it’s acquired through Beats to develop recommendation features, and surely has plenty else up its sleeve. The effectiveness of this differentiation is ultimately what will drive Apple’s success or failure as a truly disruptive TV offering.

Updated Android Auto and CarPlay support

This week, Apple updated its website with regard to auto makers’ support for CarPlay, and I’ve taken the time to update my charts and tables on support for both CarPlay and Android Auto (my previous post was here, and has much more analysis than this post, which mostly updates details).

Here’s the new master list:

CarPlay and Android Auto March 2015

The big changes are mostly on the CarPlay side, with Renault and the Volkswagen group (including VW, Skoda and SEAT) coming on board. Android added Opel in the interim, but I couldn’t see any others. This backs up Tim Cook’s assertion from the Spring Forward event this past Monday that all the major groups are now onboard. Interestingly, the main brands missing are still some of the high-end luxury sub-brands and specialty makers, including Tesla (which was the subject of questions and remarks from Tim Cook at the shareholder event this week). Apple Insider points out that the major Chinese manufacturers are also missing.

Here’s the summary by group, which hasn’t changed much.Car groups March 2015Finally, we still don’t know exactly which models and cars will have CarPlay in the near future – Tim Cook mentioned 40 models by end of 2015, but that’s not a ton in the grand scheme of things. I’m going to be heading to the New York Auto Show later this month, and keeping a close eye out for signs that CarPlay and Android Auto are showing up in more cars – both were conspicuously absent at CES.

Thoughts on Apple’s Spring Forward event

I had the opportunity to attend Apple’s Spring Forward event yesterday, and wanted to give my quick take on both the event and the brief hands-on I had with both the Apple Watch and the new MacBook. I’ve already written about Apple’s ResearchKit announcement over on Techpinions (for Insiders), and put out a brief comment for reporters yesterday too.

A surprising order

Apple often starts its keynotes with a minor update on retail and other statistics, and this one was no different in that respect. However, it then normally focuses on the main event, followed by one or more additional items – the legendary “one more thing” Steven Jobs was so fond of. What was so interesting to me here was that the Apple Watch was the focus of all the pre-event speculation, and yet it was held for last, almost an hour into the event, and was given only just over 30 minutes of its own. Much of that first hour was taken up with several other announcements: ResearchKit, the new MacBook, the Apple TV price drop and the HBO Now exclusive. I think the reason for this order was likely that Apple had already covered the basics of the Apple Watch in September, with little new information to be announced yesterday other than price and availability.


See my Techpinions piece for a deeper dive into what I think ResearchKit means and represents for Apple, but in some ways this was the announcement I was most excited about. It suggests various things about Apple and its potential, not least its ability to marshall its considerable resources and its installed base not just in the service of selling more product, but also in the service of doing good in the world. I see this is as a first move beyond the hobbyist self-tracking that’s usually associated with health and fitness trackers and into something that’s truly meaningful in the field of medicine.

New MacBook

The new MacBook is interesting for three key reasons: the naming and positioning, the switch to USB-C, and the technological advances involved. Taking the last first, this is clearly an example of the way in which Apple can, when it wants to, move to extend its lead in key product categories through the use of focused, meaningful innovation. Just as the MacBook Air was a huge leap forward, and has arguably maintained a lead over the competition for several years, this new device is likely to set Apple’s computers apart for the foreseeable future. It’s both a great step forward in portability and a bet on the future – a wireless future which seems more and more possible all the time, and which is being held back at this point mostly by the poor performance of wireless charging. I’ve no doubt that at some point Apple will embrace that too, but for now it’s betting instead on making battery life so long that charging is an occasional rather than a constant concern on these devices.

The switch to USB-C, and the removal of almost all other ports, is the biggest visible representation of this bet on the future, and like the removal of CD/DVD drives and Ethernet ports, will cause some consternation and complaining about the need for various adapters and such. In a scenario where someone wants to power their deice while carrying on a Skype call using an external mic and display, a MacBook user will need to plug three different items into that one port, something Apple has clearly envisaged with its various adapters. But Apple has also been laying the groundwork for this move with a variety of wireless technologies including AirPlay and AirDrop, and various standardized technologies such as Bluetooth and WiFi obviously play a role too.

Naming and positioning was the last interesting aspect, in that this device obviously looked a lot like a MacBook Air from the moment it appeared on screen, but was never referred to as such and indeed fills the MacBook slot rather than the MacBook Air slot. My sense is that the MacBook Air filled a temporary role in Apple’s product portfolio, necessary as long as the technologies involved commanded a significant premium over the base level, but soon to disappear as the key attributes (thinness, lightness, massive battery life) make their way into the MacBook line. Over time, Apple is likely to go back to the 2×2 matrix Jobs trumpeted when he returned to Apple – pro and consumer laptops, in two flavors rather than three.

I had an opportunity to use the MacBook for a few minutes at the event, and it’s truly impressive in terms of the thinness and lightness combined with the amazing screen. The absence of a fan is a plus in some ways, but it’ll be worth watching the reviews for the tradeoffs in terms of performance. Others have pointed out that the specs and performance may be more on a par with Macs from several years ago than any of recent vintage, but I’m curious to see how real-world performance is. Talk of taptic feedback in the keynote had me concerned – I’ve never been a fan of haptics in devices – but the instantiation in the MacBook trackpad feels nothing like any haptic technology I’ve ever experienced before. It’s basically used to provide a second-layer clicking feeling for the “force click” even as the new trackpad doesn’t actually travel. It’s another one of those things that has to be experienced in person to be understood, but it’s very effective, along with the new on-screen functionality associated with that force click. The keyboard keys are different enough that they were tricky to use at first, with quite a few typos, at least partly because the keys are wider than in the past. But I’m guessing it’s the kind of thing you’d quickly get used to.

Apple TV and HBO

The Apple TV and HBO Now announcements are interesting partly for what was announced on Monday but at least partly also because of what they signal about the future. HBO Now has some potential, and as I’ve said elsewhere I think a big part of the success will depend on how effectively HBO can get people who currently use someone else’s HBO password for HBO Go to switch to paying $15 per month for their own service. At least part of that will be about making the first real efforts to discourage sharing of passwords, and I’m curious to see how they accomplish that. The price cut on the Apple TV is clearly a concession to the much-lower price of the various streaming sticks such as Chromecast – the new price is now 2x the Chromecast price, whereas it was previously around 3x the price.

But the more interesting thing is what trends these two moves presage. A shift to a cheaper Apple TV suggests either that a new device might be coming or that Apple’s focus going forward might be less about making money on the hardware an more about seeding a base of devices that can in future subscribe to a TV service from Apple (or perhaps a range of services from various providers). I’ve written on Techpinions about what I think it would take for Apple to really turn the Apple TV into something other than a hobby, and it’s really about providing a fully-fledged subscription TV service on the device (and of course on other Apple devices). Apple is no doubt taking a cut of the HBO Now revenues, and is handling billing and so on for the service. App Store revenue sharing would suggest at 30% cut, but I’ve no idea if that’s accurate. I do think this makes it more likely that we see some sort of TV service from Apple, or more deals like the HBO one that allow Apple to act as the aggregator of a loosely-bundled pay TV replacement, and I’ll probably write more about this.

Apple Watch

Lastly, then, we come to what was to have been the main focus of the event according to all the preview coverage, but what ended up being just the last act of a multi-act performance. The key new details were the pricing and availability details. These confirmed to me several things: the Watch Edition is important in terms of positioning and in terms of Apple’s foray into true luxury (and beyond simply affordable luxury, its past focus). But ultimately, it’ll be a marginal story, available only in few places and in small numbers, and sold at a price to make it affordable for very few people. It’s an interesting story, but essentially all the action will happen between $349 and $1100, in the two other categories. Interestingly, that might well make for an ASP very much in line with the iPhone and iPad, somewhere between $500 and $700 per unit.

I had a chance to wear the Watch (the stainless steel version) and play with it some at the event, and the first thing you notice is how much functionality is there. In my five-minute demo we barely scratched the surface of what the Watch does, and I think that’s illustrative of the challenge and the opportunity for the Watch. The use cases for different people will be at least as diverse as they are for the iPad, with third-party apps making up much of the value proposition. Apple talked about three broad things the Apple Watch does: timekeeping, intimate communication, and health and fitness tracking. And there will be some number of people for whom each of these is perhaps the main focus. But there will be many more who will end up using the Watch for a combination of things that doesn’t fit neatly into any of these three categories, but rather combines both pre-installed and third-party apps in a way that creates a mosaic of useful experiences. That makes it challenging to market, but as I’ve said before I think the early adopters who buy the Watch right off the bat will be a big part of how the device reaches the next wave of people, as they discover its usefulness and communicate it to others.

Edit: I’ve been asked by a Twitter follower to add a little more on my experience with the device. It fit well on my wrist, was comfortable and felt very much like the analog watch I normally wear. It instantly felt better than pretty much any of the other smartwatches I’ve worn, at least in part because of the quality and fit of the band. The materials looked great on the one I tried and the others. The screen was responsive and easy to use. The best way to think about the buttons is that pushing the digital crown is like pushing the home button on an iOS device – it always takes you back to the main screen. The other button, meanwhile, is the communication button, which is an interesting departure for Apple – a dedicated button on a personal device for a specific set of functions. There’s lots of swiping involved too, whether to get to Glances, to swipe between Glances, to navigate on the main apps screen, to select emoji and so on and so forth. Then the digital crown is also used for scrolling and zooming, in some cases with the digital crown offering vertical scrolling and swiping on the screen controlling horizontal scrolling. I’m not going to go into any more detail just because I think it’s worth waiting for a thorough review.

I’ll no doubt write more about all of this going forward, and I’ll have at least one other piece on Techpinions later this week (Thursday is my regular day for my public column), but would love to hear your thoughts in the comments, as always.

Quick Thoughts: Apple and advertising

I wrote a piece almost a year ago on Techpinions on the subject of Apple and its advertising products. Today, Jay Yarow posted a piece on a similar subject, but reached a different conclusion, at least in the headline. My piece was actually about the inherent conflict at Apple surrounding ads, and I think Jay’s piece largely has the same theme. I wanted to post a quick update here following some discussion on Twitter on this topic earlier in the day.

Jay’s key point is this:

For 0.3% of Apple’s revenue, Apple’s ad business cuts against what Tim Cook calls one of his company’s “core values.” That makes no sense. Apple should shut down iAd.

I’ve actually made a similar point about Microsoft here, and advertising is actually a bigger revenue stream for Microsoft than it is for Apple, so why don’t I agree with Jay’s conclusion?

The biggest single reason is the role that advertising plays in the TV market, a market that Apple seems very interested in and one it is likely to enter at some point. The chart below shows the contribution of ads as a percentage of revenue for three categories of US TV-related businesses based on a sampling of companies that report this split:Ads as percent of revenue TVAs you can see, for each of these sets of companies, ads are over 50% of revenues, and although there’s been a slight drop at the TV stations due to the rise of retransmission fees, it’s still an enormous portion of overall revenue. Now, there are, of course, two prominent video businesses in the US which don’t make any money from ads: HBO and Netflix. But both of them rely heavily on catalog content, mostly movies, with a handful of original series at any given point in time. Neither is a comprehensive replacement for a pay TV service, and both are used largely as complements to, not replacements for, the traditional cable TV bundle. If Apple is serious about getting into video subscription services, it has to offer live, linear programming, and that means ads will be a big part of the business model.

The challenge for Apple is how to embrace this model without compromising its principled stand on advertising. Given the increased focus on targeted advertising, that’s going to get more complicated, but the answer may lie in allowing brands to bring their own consumer data and match it with Apple users, in the way Apple is apparently planning to do with iAd. That way, the targeting is all done by the third party, with Apple only offering to match a user ID with a profile from the third party. This takes all the unpleasant profiling and targeting out of Apple’s hands, while still making its platform useful and attractive to advertisers. That’s a subtle distinction, but it may be a critical one if Apple is serious about TV.

Quick Thoughts: Apple Watch and notifications

My thanks to Gregg Keizer of Computerworld, for sparking these ideas in a conversation we had earlier today ahead of Monday’s event.

I wrote a piece for Techpinions earlier in the week about the concept of intimacy as it relates to Apple Watch. In that piece, I wrote:

What I think intimacy in computing really means is going a level deeper on the personal side, and perhaps also stripping away some of the non-personal elements of the smartphone. The Apple Watch, then, becomes the truly personal device our smartphones have never quite been. Notifications come in noiselessly, communication with our Apple Watch-wearing significant other can be both more private and more individualized, the tasks we do on the Apple Watch can be limited just to those that are meaningful to us, leaving others for the smartphone, and so on.

I highlighted one phrase in bold there, because I think it’s critical both to the success of the Apple Watch specifically and to smartwatches in general. One of the criticisms of some of the other watches out there is that notifications are something of an all-or-nothing phenomenon: either you get utterly bombarded with notifications or you get none, but it’s been tough to get granular control. With the Apple Watch, this problem has the potential to get worse: with both traditional notifications and apps running on the Watch itself, there’s potential for even more of this. So it becomes all the more important that Apple get this right on the Watch. The ability to manage notifications and other activity on the Watch so that you only get notified for the things you really care about is a key value proposition. There have been a couple of pieces today about how the Apple Watch will handle notifications, but neither of them is clear enough to answer conclusively the question of how well the Watch deals with this issue.

I think there’s an analogy here to the early smartphones, which acted as task-specific extensions of our PCs. PCs were general purpose devices, on which we did essentially all our work. Early smartphones, and especially those made by BlackBerry, majored on email above all else, and allowed us to perform triage on this central form of communication on a dedicated device, leaving the rest for when we got back to our desks. I see the Watch performing a similar role in relation to smartphones, which have now become in some ways general purpose devices in a similar way to early PCs. If the Watch is to succeed, it will do so by allowing us to focus on those tasks that are most important to us, stripping away the rest of the stuff we’ll leave for our smartphones. And for many of us it will do this for our personal lives in much the way early smartphones did it for our work lives.

Google’s MVNO ambitions

This is a post I had intended to write a few weeks back, when the Google MVNO rumors first started circulating, but never got around to. With Sundar Pichai’s remarks at Mobile World Congress this week rekindling the topic, I thought I’d finally set down by thoughts on this story. I haven’t been completely silent on this topic – I’ve tweeted about it quite a bit, talked to a few reporters, and discussed it on the Techpinions podcast (skip to 21:35). But I wanted to pull my thoughts together here in a coherent fashion. I’m pasting a transcript of my remarks on the podcast at the bottom of this post, because it sums this up pretty neatly, but I’ll expand a bit on the detail here.

The two rules of MVNOs

If you don’t know much about MVNOs, I’ll give you a quick primer. The first thing to know is that an MVNO is a mobile virtual network operator, which means these companies don’t own their own networks, but instead buy “airtime” (minutes, data etc) on a wholesale basis from those who do. In some markets such wholesale arrangements are mandated and regulated, but in others (including the US), both the arrangements themselves and the pricing are left to individual operators.

All this gives rise to what I like to think of as the two rules of MVNOs:

  • You can never be truly disruptive to the company whose network you’re using, because it always has the power to shut your business down
  • Wireless carriers will never support you as an MVNO unless they believe you can reach a niche or segment they can’t reach as effectively directly, rather than competing directly with them.

Partly as a result of these rules, despite the success of MVNOs in certain other markets, they’ve largely failed in the US, with many going out of business or being acquired by their host network operators. The one exception is Tracfone, which uses several major operators’ networks and targets largely low-end prepaid subscribers most of the carriers don’t want to own directly.

What this means for Google

All of which brings us to Google’s reported ambitions in the MVNO space, which are allegedly based on some sort of cooperation with T-Mobile and Sprint. In addition to the two rules above, the third thing worth bearing in mind here is most carriers’ view of Google. Google is one of the two companies that already has the most leverage over the carriers today, along with Apple. While Apple has arguably been more disruptive to most carriers with its refusal to pre-install carrier software, its direct retail and customer service relationships with many customers, its FaceTime and iMessage offerings which compete with carrier voice and text messaging and so on, Google has already demonstrated that it’s perfectly willing to disrupt carriers’ businesses too. Google Fiber, Hangouts, Google Voice, Google Wallet, Android Pay, Google Maps and other products either have already disrupted or have the potential to disrupt services offered by carriers. With both Apple and Google, carriers are already looking for ways to reduce their dependence on them and to temper their influence and power with end users.

Taking the two MVNO rules and these opinions about Google together, then, we can easily see that whatever Google wanted to do in mobile, the carriers wouldn’t support it unless it:

  • Would be complementary to their businesses
  • Would be relatively small in scale
  • Would not compete directly in any meaningful way with their existing offerings
  • Would not compete directly on price.

Three possible business models

Given all this, ideas about full-blown wireless services from Google make little sense. What makes much more sense is something that’s narrowly defined, targeted and relatively small in the grand scheme of things. Three possibilities I’ve floated are:

  • Wireless connectivity for Nexus devices, the only wireless devices Google sells directly to consumers through the Play store, such that this connectivity would be built in with the purchase, and the customer would only ever deal with Google. This would overcome some of Google’s challenges with getting carriers to carry Nexus devices directly, and fits with the new direction Google is taking with Nexus devices, moving away from the developer focus and towards a broader consumer appeal
  • Wireless connectivity for non-phone devices, such as a successor to the Chromebook Pixel, Android tablets (perhaps Nexus ones only, in keeping with the previous bullet), etc. This could potentially also include Android Wear devices with their own cellular connectivity.
  • Wireless connectivity for smart home, connected car or other non-device applications. With Google’s Nest business, Android Auto, self-driving cars and so on, Google has several non-device businesses which could benefit from direct cellular connectivity as they expand and evolve.

None of these would be hugely disruptive or competitive with carriers’ existing businesses, either because they’re too small or mostly additive to their existing activities. As such, I think each of these is entirely possible as a future for Google’s MVNO. And of course all this fits with what Sundar Pichai said at MWC this week (I’m quoting TechCrunch here in the absence of a formal transcript):

The core of Android and everything we do is to take an ecosystem approach and [a network would have] the same attributes. We have always tried to push the boundary with the innovations in hardware and software,” he said. “We want to experiment along those lines. We don’t intend to be a network operator at scale. We are actually working with carrier partners. Will announce something in the coming months.

This very much appears to confirm the idea that it’s going to be working with devices and software it owns and controls, rather than a more open approach. It also confirms that it’s not a large-scale initiative but rather a focused one. I’m curious to see exactly what it ends up being (it could easily end up being all three of the things I described and more) but hopefully we’ll stop seeing the sort of thing we’ve been reading about Google upending the wireless industry.

Here’s that podcast transcript:

The fundamental challenge of being an MVNO is that you’re buying airtime from the very companies you’re competing with, who dictate the prices and will always structure it and sell it to you in such a way that you can’t eat their lunch… They only do it where they feel the potential MVNO can fill a gap they otherwise can’t fill directly. So in other words they’re expanding the addressable market and not competing with them directly. And this is the biggest question I’ve had about Google: what could they do, that Sprint and/or T-Mobile would be willing to support, that would not go head to head and compete directly against them? That makes me think it’s somehow a niche that they’re going after, and there are a couple of possible options around that: one is that it’s for Nexus devices, so that when they sell Nexus devices through the Google Play store it comes with bundled connectivity with some interesting structure, features and services associated with it… The other is that the Chromebook Pixel was sold with Verizon connectivity, so that’s another angle, that some of their non-phone devices that are data-only devices that would have some combination of WiFi footprint that they could take advantage of plus LTE as needed for them to fall back onto… I just cannot see Google becoming a broad-based mobile operator in the US. It just doesn’t make sense, and it doesn’t make sense that Sprint and T-Mobile would support that either.