Sunday 10 November 2013

MacPro, 4K displays, and supply chain co-ordination

Many including me, have regularly hailed the innovative character of Apple.  In previous posts though, I have noted their innovation in areas other than product which normally steals the limelight. These other areas include in retail and in company cultural learning etc.  Tim Cook, now CEO, was previously in charge of supply chain, and it is this in which we see some clever co-ordination if not yet another example of innovation.

The MacPro product line has hit the headlines in the last twelve months for its delayed upgrades, and since the new radically different design was announced, the fact that it will be assembled in the USA rather than the far east.  One specification detail however has caught my eye, the fact that it can drive two 4K (ultra HD) resolution displays as well as an HDMI screen all simultaneously.  It's not the technical spec itself that peaked my interest (a lesson many traditional tech commentators and analysts should remember) but rather an aspect relating to market size and supply chain.  

Consider the market size for the new MacPro.  It's really aimed at supporting the most demanding professionals in music, video and software development roles.  And even some of those who would have previously bought the MacPro line will now be satisfied with the top end iMac models, given their capabilities. So the market size is likely to be less than it ever was.  The screen components are typically one of the most expensive parts of computers, so how could Apple repeat the trick of economy of scale in their supply chain for 4K displays which they exploited so well across other product lines (e.g. flash storage in iPod and iPhones, and wireless chipsets between computers and mobile products etc.)?  The answer may well lie in their rumoured entry into the television market.  4K TVs have so far sold in very few numbers due to many factors including very high price.  

The provision of an ultra HD 4K screen option in any TV offering (and not touted as the main selling point as others have mistakenly done - the Apple TV will headline other more consumer-friendly distinctive selling points) would offer a way to make economies of scale for the 4K display for MacPro and essentially lower the bill of materials (BoM) cost for both product lines by giving Apple much bigger purchasing volume potential for the cash that they hold.  Secondly, the storyline of the need for 4K display panels when negotiating with suppliers, many of whom like LG and Panasonic may well also be competitors the Cupertino firm wishes to beat in the TV marketplace, is at least useful and at most a strategic masterpiece.  Such competitors have no need to be nervous about 4K displays for the MacPro; their interest in a new player in the TV market would be rather different!  

Thursday 25 April 2013

Apple, Analysts & Innovation

Well it has been a while ... very busy with work ... but I couldn't resist a post about Innovation and Apple and Analysts, given the recent stock price performance of the most successful consumer electronics and computer maker of the last two decades, and the reaction to their quarterly financial results this week.

The sales and therefore revenues of Apple in the last quarter were higher than the same quarter in 2012, and higher than the so-called expert analysts expected.  The profits were down compared to the year ago quarter, and this is because the company has deliberately (including forecasting it in previous quarters) reduced its gross margin which has been traditionally exceptionally high amongst any company. The analysts who seized upon the profits report this week are the same analysts who have been critical that Apple have not made a cheaper low-end iPhone to attract more market-share!   They can't have it both ways.

Next, we are told that Wall Street and the analysts are concerned by the hint from CEO Tim Cook that exciting new innovative product classes (not just upgrades to existing top-selling products) may not be released until the Fall this year and into 2014.  This is criticism of the company that revolutionised the personal computer in 1984, revolutionised the music industry in 2001 with the iPod, and again stunned the world with a revolutionary mobile phone in 2007.  They then ignited the tablet computing market, where other big names had previously failed, in 2010.  Revolutionary products do not come around (even from the leading player) annually or quarterly or monthly.

Also innovation requires not only technical advancement, clever design, and vision to identify solutions which advance the status quo, but also an element of timing in the marketplace too, and the Cupertino company have shown that actually they are very good at timing.  I have no doubt that Apple will revolutionise other product categories in the decade from now, but it will be when they decide the time is right, not ignorant observers.  It's a pity that the market traders don't seem to share this confidence in a company with a proven track record.  Meanwhile competitors in Apple's existing markets are not seeing their stock similarly devalued while they play safe and make cheaper, lower quality plastic copies of lightweight razor thin notebooks, smart phones and tablets.

Finally, while on the subject of innovation, lets not forget that Apple don't only have a track record of technology and product innovation, but also business model innovation, which is in some sense much harder.  The iPod not only revolutionised how we listen to music, but the whole business model of the music industry.  The iPhone not only revolutionised the phone, but again the business model behind cellular data services and transparent charges for them along with seamless WiFi switching models  previously defended by the mobile network providers.  Their retail stores have also revolutionised the high street in terms of the profitability per square foot used for product shelving.  Lastly, the app store model for paying software developers who write apps for iOS is another example of how a traditional business model has been re-shaped by Apple.  

I have no doubt that the biggest obstacle to addressing some of their new potential product classes which the analysts all crave, is how to break and redefine business models underpinning the new products themselves.  This requires partners to be convinced outside of Apple, just as had to happen (with record labels, movie studios etc) to make the iTunes Music Store such a runaway success.  When you develop not just revolutionary products, but also revolutionary user experiences, you invariably rely on convincing third parties outside of your own organisation to begin a disruptive journey with you so that the complete user experience from purchase to service to upgrade and transition is consistent.  This takes time.  I only hope that Apple's future partners show more confidence in them based on their track record than analysts do!

Sunday 26 August 2012

The hidden damages to Google

So the news about the damages awarded to Apple against Samsung by the court which has been considering their intellectual property dispute has hit the headlines.  Of course the journalists have to simplify the quite complex arguments and counter-arguments made by each party for the consumption of the masses.  However lets not believe that this is all about using rectangular screens and   touch sensitive control of a phone, which some in the media have portrayed.  You only have to look at the appearance, functionality and user interface design of smartphones (and not just from Samsung) before the iPhone was launched in 2007 and then afterwards.  There is no comparison.  And I do mean compare smartphones ... we are not talking here about simple feature phones or basic cellphones.  Smartphones were being marketed and sold before iPhone, but none of them had the radical differences of the iPhone in appearance, functionality and user interface design (user experience).   I was a professional gadget guru, and even I had to do a double-take when passing the displays in carrier's shop windows at times, to blink and see if they were offering Apple's phone or new competitors in since 2008.  

Lets consider appearance.  Before iPhone it was pretty easy to see the difference at a glance between for example, a Motorola (remember them?) and a Nokia, the latter having a very distinctive shape across a huge range of phones.  The other manufacturers didn't try to make their phones look like Nokia's in appearance.  They innovated their own distinct shapes and designs, placement of buttons, colours etc.  But post-2007, it seemed like everyone's smartphones were beginning to look like iPhone.  One big screen with a similar sized bezel/outline, the same basic shape (ok most were bulkier and thicker but that's only because they couldn't copy that too - few people want a bulky handset), even a single bigger home button in many cases and even buttons and controls placed in similar places around the sides!  Note that most didn't copy the use of materials such as metal and glass, instead replacing these with plastic, which allowed them to undercut on cost/price whilst looking (but not feeling) similar.

Now the functionality.  Before iPhone in 2007, the functions even on "smart" phones were quite limited.  Remember the 'baby internet' using WAP?  No - I never used that crippled attempt at browsing the net either!  Even getting a GPRS data connection was a chore and a worry.  There were very few in-built data plans, so people tended to have to count the cost of their data usage carefully or worry and not use it at all.  And as for seamless connection without user intervention to WiFi when in range - well that wasn't implemented by the existing players because they were afraid to upset their cell-network partners by taking expensive data traffic away from them.  (So actually its not just functionality but business model innovation too).  But after iPhone, it was suddenly much simpler to use data services on a phone - so functionality of the phone was enabled!   But remember, no-one then talked about apps on their phone ... they were another radical step towards the functionality explosion on mobiles.  Yes you could add 'programs' to your phone before mid-2007, but it wasn't easy and the available software was extremely limited.  Apple innovated and made the App store model usable by the masses, (importantly including app developers).

Finally the user interface design or user experience.  Before the iPhone it was all about a fixed plastic miniature keyboard, and awkward little up/down buttons or tiny finger 'joysticks' or a stylus.  (You imagine trying to do a rotate or pinch gesture with a stylus!).  There were inaccurate touch screens using resistive technologies on other devices but not phones.  The capacitive touchscreen on the iPhone changed the experience of smartphones forever.  But even if you discount this innovation, those who copied the touchscreen could have innovated their own behaviour for that touch screen interface.  The rubber banding of the scroll bars when they reach the top or bottom of a selection is one example.  You don't need that behaviour.  It's not essential to a smartphone.  Apple did it first. Others didn't have to copy it.  Notice now I say others ... hence the title of this article.  This is not just about  Samsung (and potentially other hardware manufacturers).  They are only indirectly responsible for the User Interface and how the 'system' works.  They made a choice to go with Android, Google's mobile operating system.  They chose to launch products which rely on Android software.  So who copied the features like rubber banding of on-screen scrollbars (together with an awful lot of other 'behaviour')?  The culprits are somewhat hidden.

The win by Apple in the courts, made simpler against Samsung by both the lawyers and the media, is actually also a more complex case against Google.  The damages awarded (after any appeals etc) are of little consequence in Samsung's case (but send a message to other manufacturers) and Apple will dwarf those amounts by paying Samsung to supply huge numbers of components for current and future mobile products.  Of far more significance to Apple is the damage this inflicts on Google because of Android.  Most of the serious competitors to iPhone use Android software now.  They will be worried.  There are other ways for hardware manufacturers to design the appearance of their phones.  But there are also many more ways that they and the operating systems software players could innovate the design of the functionality and user experience of future mobile devices.  This would benefit everyone.  Let's hope they do.

And of course as technology and innovation moves on, the best ways to do standard things and implement common features emerge.  Those shouldn't be barred from being used on all devices in a particular category across all vendors.  But the answer is to acknowledge who innovated and protected that idea first, and licence the technology from them, not blatantly copy and try to get away with it until you end up in court.  There is an example of this involving the very same players.  Google innovated brilliantly with their online mapping.  Apple, recognising this, licensed Google Maps to use as a very early app on iPhone!  Is it now hardly surprising that in their next mobile operating system release that they will replace Google Maps with their own solution?!  But it isn't copying the idea.  It uses different (vector) graphics technology which has advantages when scaling the map view especially with labels and when an online connection is lost.  This is lawful innovation.

Doing the iPhone was risky, especially for a player who was a completely new entrant in the smartphone market.  Being so radical with appearance, functionality and the user experience was risky.  (I remember the nay-sayers at the time pronouncing how the touch screen keyboard would be too difficult and lots of other criticisms).  It might not have been successful, but it was, and now others strive to emulate it.  Success from risky innovation should be rewarded, not just in the marketplace but by recognition of competitors should they wish to build on it, through licensing or other agreements.  Then perhaps some of the massive amounts used for litigation could be redirected towards further R&D innovation.

Saturday 21 July 2012

EU Digital Futures Project

Been very busy lately, so not many posts here.  One of many things I have been involved in is the EU's Digital Futures project. More regular postings soon though.

Friday 25 May 2012

Design as a Mission

Another Jonathan, Mr Ive, the british design guru at Apple HQ, received a knighthood this week.  Like many people, I heard him interviewed on BBC Radio 4's Today programme.  In answer to one question, Sir Jonathan was talking about the importance of design and the culture of purpose at Apple, essentially saying it was the driver to making money rather than subsidiary to it.  For most organisations, especially tech companies, such a business 'mission' statement would sound implausible.  

However in Apple, it is not just a sentence on a piece of paper.  Nor is it even just about the products they make, although these are the most visible examples of it.   It is actually demonstrated in many more ways.  Their retail stores are another example, where designs are incredible including glass domes, glass staircases and other distinctive architectural features.  Corporate design finesse is also represented by the new campus they are building, and even their huge data centres.  Together with their internal 'university' re-enforcing the corporate culture, their mantra of 'start by designing the best - the customers will buy it - the company will make money' - is not only plausible but highly successful. 

Thursday 26 April 2012

Consumer Cloud storage misses the point!

There is so much about the Cloud in the computing press at the moment ... it's one of the buzz words of the moment. I still prefer to think of it as distributed networked computing resources, but I admit that 'cloud' is simpler to say!  In the consumer marketplace, we are now seeing offerings of Microsoft's SkyDrive, DropBox, Apple's iCloud and most recently Google Drive.  Google grabbed headlines on the BBC Technology news website by offering free storage and a headline of 16Tb; though reading further you find that free allocations are of course limited to 5Gb, with 16Tb coming in at $800!  But all these offerings bar one emphasise storage even in their name alone (with terms like drive and box).

I don't say that emphasising storage in the cloud is missing the point from my computer scientist purist view that distributed resources should include processing as well as storage.  I say it is missing the point because the race to offer the biggest storage capacity in the cloud is to make the same mistake as choosing a PC by the detailed technology specifications.  Sure Apple's iCloud does offer storage but their strategy for offering the service across device types (computer, iPhone, iPad) is not storage but that old chestnut (discussed in my previous post as well), the user experience.  Consumers need a simple view of how distributed resources on the Internet can just work and make their lives easier.  Providing a secure trusted means for media, documents, online personal information and other data to just be available across all their devices is increasingly useful for people.  If iCloud makes the user experience of Apple's products better, then it will have succeeded.  It's not about selling storage.  Just like the point of my previous post about convergence and compromise, user experience drives the position the Cupertino company takes.

Trust is one thing that people are concerned about in the cloud.  Consumers should be aware of potential differences in the rationale for different providers to offer them "free" cloud resources.   The terms and conditions in the small print may well reveal differences in the motives of different players.  If your main business is search and advertising for example, the chance to store and access consumer data will probably offer different value to you than if your main business is selling consumer electronics or software and services!

Wednesday 25 April 2012

Convergence or Compromise?

One of the questions analysts asked Apple's CEO Tim Cook during the financial results call yesterday was for his views on the future for a converged device such as a cleverly designed notebook pc that can also be used as a tablet.  Analysts and many parts of the media just don't seem to understand that it isn't about what it's possible to build (however cleverly).  It is about the user experience.  Time and time again this mistake is made by forecasters and pundits.  Within Apple, it is ingrained corporate understanding.

Yes of course it is possible to make converged PC/tablet devices; indeed some companies are already doing so (defensively as Tim Cook characterised it). And a relative few people will be attracted to such devices and will buy them.  But the mainstream majority will evaluate the converged experience and see so many compromises that it is obviously worse than the experience of either individual device.

It's not just about physical design compromise.  It's also about the way people actually use and interact with devices; that is also very different for the PC and the tablet.  Some people will want and need to work in ways that best fits the notebook PC (however portable, lightweight, high res, etc it may be).  An increasing majority however, who never had a choice before, just want and need to work in ways that best fits a tablet.  And many people who never wanted a PC, find that they do want a tablet and can be extremely productive with it.   And the Apple's tablet, iPad, is finding uses and applications that the notebook PC would never be deployed in (such as electronic versions of flight data for airline pilots).

I was writing papers back in the early 90s when I formed BT's devices research unit in which I then talked about co-operating devices which were excellent at what they individually do, rather than converged kludges which try to be a swiss army knife 'jack of all trades' but are inevitably a master of none.  The reason I gave for my minority view then, although I couldn't have known it was exactly what Tim Cook said yesterday, that it is all about the user experience.

My next article will take another example of how the user experience focus of Apple looks at another popular and topical concept from a different perspective.