The iPhone Phenomenon!

Same day 10 years ago a blockbuster phenomenon called iPhone happened and the phones are never the same. When Steve Jobs introduced iPhone at Macworld, he sucked the attention of the whole world and made everyone second guess whether they can believe what was being showed. That's how iPhone made the phones on sale till then look - Dumb! 

Great things shouldn’t be talked about as less because we are habituated to them. Let’s all time travel 10 years ago and look at the phone market. The phones were ugly, fat, featureless and the software was laggy, poorly made and not given enough thought. When you see a beautifully designed phone, you might not explain why you love it so much but you intuitively know that the people designed this product should be smart. iPhone is just that.

Microsoft had been this big giant that showed the world what licensing the software is and how that simple plan shifts the power centres from hardware manufacturers to software makers. It in the process it also showcased to the world what Network effects are and how you can reap benefits out of it. Windows was so huge that it made Microsoft to become myopic and complacent. 

Computer is one form factor that can easily copied by a large number of commodity hardware manufacturers who can then undercut the original innovators on price using cheaper components and leveraging economies of scale. With iPod, Apple leveraged tight integration to deliver a product with some unique features that were harder to copy, mainly including connectivity with iTunes. Apple had the effective integration of software, hardware, distribution and services that made hard for commodity hardware manufacturers to replicate. This was the eureka moment for Apple that gave it enough confidence to jump into the phone business. 

So in a way this busted the Windows myth of “Licensing is the way to go.”

Despite being slow and limited by modern standards, the iPhone launched in 2007 had far more processing power and RAM than existing smartphones. Apple also covered the hardware limitations through the use of some clever tricks one of them being capturing the image data even before an user clicking the shutter button resulting in the appearance of photo capture faster than the hardware was actually capable of doing. 

With iPhone Apple is in a unique advantage no other smartphone maker is in terms of economies of scale they have achieved, the premium loyal user base they garner and the ability in the quality of products they can make. 

Microsoft thought of licensing Windows for a while to mobiles but gave up on that very quickly realising tight integration as the key. Then they bought Nokia for the hardware and tried the integration route but Android is doing really well and the market didn’t give an opening for a 3rd player. 2 players are good enough said the market and the app developers. Microsoft realised this and they are now cheerleaders for iOS Appstore to distribute their apps and services.

Now lets look at Google and Android. For Android optimists, everything looks great because 9 out of 10 mobiles sold and being sold are Androids and the market share is great. If we put that statistic aside, there are real troubles Google is facing through Android. Unlike Windows which went the licensing way, Google wasn’t really earning from giving away its Android software. Caught in Microsoft’s integration conundrum, Google next copied Microsoft’s Zune strategy of competing against its own licenses by launching its own Nexus-branded phones. When that didn’t work, it copied Microsoft again by buying up a major license. Even Google’s acquisition of Motorola turned out to be the as bad as failed Microsoft’s acquisition of Nokia.

Apple made the work of designing new hardware look easy. It wasn’t!

As Google and Microsoft spent billions of dollars to replicate Apple in creating one tightly integrated phone that worked well, Apple quietly invested great amounts of money in chip building and in technologies like touch id and some proprietary technologies. 

To sum up, Microsoft is almost out of Phone business. Samsung is the only maker that sells more phones than Apple does but the average selling price is around $200 many hundreds less than Apple’s $650. As Google is trying the proprietary way through Pixel at the premium end, it makes far less money than Apple as it doesn’t have economies of scale like Apple which sells iPhones 100 times more than Pixel currently. 

After 10 years of defending iPhones from competitive threats, Apple is in the enviable position of ever increasing margins, great proprietary technologies and sharply limited direct competition. Google despite waging an all out war on iPhone is struggling to find reasons to maintain Android as a platform as Android continues to suffer from serious security issues and software update lethargy. 

With 10th year Anniversary iPhone 8 gaining lot of expectations from the industry, we can only guess how big it is going to be!

Happy birthday iPhone!

The Macbook Pro Crisis

By now I got used to the fact that people on Internet will try to prove themselves how much smarter they are than Apple by criticizing every single product Apple introduces only to see Apple make truckloads of money every single quarter on the same products these “smart” people second guessed and dismissed. Though negativity and gasps of people on whatever Apple introduces is quite common and a part of narrative of many bloggers in the current day, the reactions to newly introduced Macbook Pro models surprised me. While there were genuine concerns over the decisions Apple made into making the new Macbook pros, some rants were well, rants so as to say. Let us address them one by one.

16 GB RAM

Let’s address the elephant in the room. This is the feature people were disappointed the most. ‘Throw battery concerns out of the way and make a laptop that has 32GB RAM in it and do all the work arounds a 32GB RAM laptop should have. Make it an half inch thicker and throw in some fans so that at the end of the day I’ll have my 32 GB RAM Macbook’ is what many have been saying. Let’s say Apple obliged and made that variant of that laptop. Just imagine how people would have trolled that? Let’s think about niches and market sizes. If only about 10% of users are likely to have memory issues at 16 GB and that only for specific tasks like 4K video editing and they would face that issue 20% of the time, how many would have bitten the bullet and say, I want a computer with 32 GB RAM anyway? 40% maybe? What are we down to? 4 out of 100? Well a rational person wouldn’t make a laptop to that kind of low odds niche!

Partly it is intel that has to be blamed here for the reason that its Skylake line currently has no support for low powered RAM. So Apple stuck to 16 GB RAM over battery concerns. Canonlake that might be released next year might support LPDDR4 RAMs. (LP being low powered)

Let’s talk Dongles

Apple removed SD Card slot, USB A type ports, Thunderbolt and Magsafe ports for 4 multifunctional USB type C ports. If one could take a step back and think of the ports they use most of the times, we probably would never have used a port in its life time. I, for example never used the thunderbolt port and SD card slot. All I used were the power and USB ports. So I still pay for half the ports I don’t use. So the issue here is should everyone pay for the ports 10% people use? or should I get an option to customise them? The nice thing is that the multifunctional ports (All the 4 ports can  take power, act as thunderbolt, USB, HDMI or firewire. So its upto you to decide where you plug in the power and where you connect your display) on the Macbook Pro give you the options to have the capabilities you need, not the capabilities Apple thinks someone might need. So its upto you to decide where you plug what. About the adaptors, spending $19 for an adapter for occasional use to complement $1499 Macbook is not that big a deal. Aren’t we spending that much anyway for the accessories when we get a new iPhone? Time for some perspective!

But there will be some people who still aren’t convinced by the argument above and say “Why couldn’t Apple include support for both the ports?” That’s the whole concept. Apple want us to transition to the future as fast as they can. In an alternative parallel world where Apple would have included both USB C and USB A ports, would you be willing to consider USB C port as the interface when you contemplate on purchasing a new hard drive knowing the fact that USB A is still there? (And is inferior?) You wouldn’t because cost and compatibility are always in your mind. 

A lot of this boils down to this concept: We demand Apple innovate, but we insist they don’t change anything.

Side Note: The same thing happened with Adobe Flash in 2010. Apple could have easily included support for Adobe’s flash player in iOS and would have avoided huge controversy and backlash from users and developers. The fact that they encouraged vastly superior HTML 5 and importantly didn’t support flash bought some monumental changes in the industry. Its not the argument: “As HTML 5 is superior we all should transition our content to HTML 5 for better experience” that wins around website owners. Its the argument “Now that iOS doesn’t support flash, we will loose lucrative market if we don’t transition our content to HTML 5 and stop using Adobe Flash” that wins. See the difference? 

This is the same thing Apple had done, has been trying and will continue to do.

Why Headphone Jack?

Now there were some people that poked and made fun on “courage” statement and pointed out why they didn’t remove headphone jack from Macbook Pro too? Phill Schiller had an amazing answer - “The 3.5mm jack is more than just about headphones for the laptops, which makes it different to the iPhone 7 situation. If it was just to plug in headphones, the port wouldn’t be necessary. However, the 3.5mm jack remains in the product as pros have studio monitors, amps and other pro audio gear that do not have wireless solutions."

This explains to me why decisions made by Apple might look outrageous in the short run but make perfect sense in hindsight. It happened with floppy, CD drive, Flash and will happen with Headphone Jack and all the legacy connectors it removed this time.

End of the Dear Headphone Jack?

Look at the port closely. This is the standard for audio from time immemorial. This is the port that Sony and htc tried to kill unsuccessfully. Apple purportedly today is trying to kill it again. If any company has the scale, support and the market power to make a case against this 3.5 mm port, it is Apple. But it’s one of the few places in technology where the ecosystem connects into something much larger than Apple or computers or the tech industry. Its an ecosystem of how we listen to music in general. 

Apple in the past made decisions that seemed crazy but the tradeoffs made gave people enough reasons to forgive the company. When Apple ditched 3 1/2 inch floppy, CD ROM was being widely accepted and the storage, read and write speeds made people forget the floppy fast. When Apple removed Ethernet ports, the convenience and standards allowed people to adjust to WiFi without a complaint. By the time CD ROM slot is removed from MacBook Air, people already started transitioning to USB based drives and in some cases Thunderbolt based storage options. 

Now in the mentioned 3 instances, removal of a legacy port/option is traded off with a great alternative that user perceived as good enough and in some cases backed Apple with their wallets. But Headphone jack is a completely different story. 

This is a port that lots of devices are connect to. There are tons of accessibility devices that plug into the headphone jack. It is great that Apple is reported to be providing the adapter bundled with iPhone but the interface would be a lot messier. 

If we start talking about DRM issue that’s even more complex. Once this analog port is removed in favour of digital Lightning connector, a lot more issues are going to arise. Digitalising the signals has this knock on effects that essentially accrue control to some other entity than being open standard. For example a manufacturer of earphones essentially has to get permission from Apple to make the connector as Apple has the licensing programming for Lightning connector. In addition to this you might have to go and get the permission from some 3rd party DRM vendor to send Spotify through it or Netflix audio through it. This argument might sound insane and pessimistic but this is the history of digital signal change. So Apple should either have an open standard for audio part of lightning connector or at least should promise the manufacturers of equipment that the standards are not going to change in the future. 

The other headache with having standard of your own is that if someone forgets to pack earphones on a trip, he/she can still find decent quality earphones at an affordable price. But that no longer will be the case. You should have packed the connector or the lightning compatible earphones or else you would be spending a lot to buy compatible earphones. Over time, lightning might become the standard and might be available everywhere at affordable prices but again that’s a long journey. So the biggest tradeoff here is the universalness of the jack.

I think the message from the Apple is going to be to go wireless. Bluetooth sucks when it comes to audio quality. There is a saying in the industry that bluetooth should have a slogan: “Bluetooth: It’s gonna be better next year.” So Apple might come up with their own wireless technology that can provide superior sound quality in comparison with bluetooth. And this again is going to rise issues with proprietary vs open standard debate. Now that if Apple has its own wireless technology the side effects of this will be that it might render many wireless bluetooth earphones useless and there can be a warning that says “Device not supported” analogous to the warning “Charger not supported” you get when you connect to lightning connector that didn’t acquire license from Apple. So if it’s going to be wireless Apple has to go open standard - might be Bluetooth 5!

So the only way Apple could pull this off is when the quality is so much better that one couldn’t believe how they spent half their lives listening to inferior quality audio. That’s a high order bit.

The amount of obvious risk Apple is going take by removing headphone jack vs the amount of currently available benefit is way lopsided. I don’t want to be someone to be remembered in the history on the same lines of bloggers who called iPad dumb and iPhone un-exciting. My take on this is – let’s wait and see, I don’t know where it is going to take us. Knowing Apple they might pull up a compelling use case tonight that the removal of the port is completely justified.

One more thing:

The explanation to why they are doing it is that the next year is the 10th anniversary of iPhone and it is rumoured that the plans for next year’s iPhone are grand even by Apple’s standards. The next year’s iPhone is purported to have an edge to edge display which cannot accommodate a headphone jack. They could have removed the headphone jack next year but they might not want people to perceive headphone jack as a tradeoff they need to forego for the beautiful display for the next year's Phone and they are transitioning us there! But as always only time will tell. 

Whatsapp's New Privacy Policy - Things You Need to Know!

Whatsapp started to display a change in its privacy statements a week back and is prompting users to decide for themselves whether they want to share their phone numbers with Facebook or not. Whatsapp after 4 long years for the first time changed its privacy statement. While the previous privacy statement was 2000 words long, the new one is about 7000 words long which in itself states that a lot has changed.

First let us understand what Whatsapp has access to and what it does not. Due to the roll out of new end-to-end encryption in April this year, Whatsapp no longer has access to our images and personal texts but what it has access to is the information about our phone numbers and details of our operating systems. 

Now what is this new privacy policy? According to the new privacy policy Whatsapp can share your profile information with Facebook. Facebook then tries to link your Whatsapp's profile  information with your Facebook account. Facebook says that it is not trying to display your phone number under your profile but they just want to use profile information to show better friend suggestions and help them fight spam accounts. They are also stating that this helps them display relevant ads to users. These are obviously loaded PR words!

Now if you give access to your profile infomation to Facebook, Facebook tries to show you as a friend suggestion to people who have you as a contact in their mobiles. They can also start to display more relevant ads to you. These use cases are okay but what if Facebook decides to do more in the future? Whatsapp says that it is selling your profile information only to Facebook and not to anyone else. That’s fine but what if Facebook wants to leverage that data in the future and sell that to somebody else? The analogy that I can think of is like Whatsapp saying “Hey we are selling guns to a trusted organisation. Its fine!” Now what if that trusted (really?) organisation decides to sell that guns to robbers and psychos? 

Its only logical to think that Facebook should get something from Whatsapp for that they have spent $22 Billion (yes by the time the deal was closed it jumped $3 Billion in value) to acquire it. Now that Facebook had decided to drop subscription model for Whatsapp which used to be a $1 per year this January, the only way Facebook can monetise this platform is to collect some data out of it. 

The voice of this article is a little harsh on Facebook and may look like a rant. But the reason is that, it would have been great for Facebook to take a high moral ground and say users can opt out of sharing their data whenever they want. The caveat here is that you can’t opt out of sharing your data after 30 days of accepting this proposal. 

So before Facebook gives more clarity on the limitations with which they use our data, We suggest you all to uncheck the option of sharing data with Facebook and then accept the new privacy policy. If you have already accepted, you can go to settings and opt out of it within 30 days. To opt out, head to settings -> Account -> Uncheck Share my account info. Breathe! 

Tim Cook and his first 5 Years at Apple!

Tim Cook today completes 5 years of his tenure as the CEO of the most valuable company in the world. When he was handed over the post of the CEO by the board on suggestion of Steve Jobs, Tim Cook believed that Steve Jobs would remain as a chairman of Apple for a long time with Tim Cook being the CEO as Steve Jobs several times bounced back from ill health in the past after a medical leave. But Steve passed away on 5th October less than 2 months after he resigned as the CEO.

According to Tim Cook here are two of various important advices he received from Steve Jobs:

1)”Never enter into product areas where Apple is not the creator of core technology.” If we think of Apple and it’s products, most of the time they are not the ones that come first but they make the best with integration of hardware, software and services. To do this they need to be in the centre of the product and control the primary technology. Music players existed before iPod and phones existed before iPhone but once Apple entered, they were able to change the Music and Phone businesses completely.

2)”Never ask yourself - ‘What Steve would have done.’ Just do what’s right.” There was a reason why Steve said this to Tim. When Steve was the board member at Disney, after the death of Walt Disney, the execs would always discuss – “What Disney would have done?” and this question always used to fill void in the room and the thinking that went into making decisions once this question was asked became cluttered and unauthentic. According to Tim Cook, this one single advice cleared a huge weight off his chest and helped him think better.

Tim Cook is criticised several times for not being able to make Apple enter into new product areas. This statement is invalid because innovations happen when the technology is ready and the consumers have a problem that this technology could answer. Even when Steve Jobs was at helm it took 6 years to launch iPhone after the iPod was launched. 

While Apple’s incremental gadgets are doing quite well – iPhones, iPads and Macbooks – Apple watch, only new category of device that was launched under Tim’s leadership is yet to prove its potential as a device consumers can’t live without. 

All the technology perspectives aside, Tim Cook brought some elements into Apple that his  charismatic predecessor couldn’t (or didn't care). One of them is transparency and being more open towards critical issues. When the factories at China are facing a problem with lot of workers committing suicides, Tim visited China and made sure that there are some changes in the process that made the workplace more comfortable and less punishing. And the efforts of Apple on environment are legendary! Apple by 2017 will run on 100% renewable energy and its efforts on recycling are setting benchmarks in the industry! And Tim Cook even presented himself in front of the attorney on Tax evasion claims and debated passionately on the need for changes in taxation policies. 

Tim is a very private person, yet he openly declared himself as gay, and the reason that he stated was – “If foregoing my privacy in this one issue can help people come out of the depression, make them think that being gay is not wrong and make them believe that they too can achieve great heights, I’d happily help!” This statement sums up what he is and what he stands for.

Everything didn't go his way though. There were some instances when he was under immense pressure. There was Apple Maps issue where it was very un-Apple to introduce a product before it was ready and Tim Cook candidly admitted the failure. The biggest crisis he faced (if we could point out at one) is when FBI asked Apple to unlock iPhone of a terrorist. (San Bernardino incident) The way Apple reacted to this got lot of admiration from the industry and triggered a debate on an important topic – Privacy and Security. Wozniak (Co-founder of Apple) said "I very much admire Tim Cook for standing up for the privacy of individuals because my whole life, Apple has meant to me a question of who is more important, the human or the technology." Who is more important human or the technology?

With iPhone growth slowing down and critics’ rant at Apple for not being able to come up with a disruptive innovation, I would say, Tim Cook shouldn’t be judged on his last 5 years but on his next 5 years because innovation takes time to produce and his hints at Apple Car and VR look exciting!

Yahoo, Google and the Industry.

To include Yahoo and Google under one bracket is one risky title to start with considering Verizon’s recent buyout of Yahoo and Google’s passes at Apple to be the most valuable company. There’s a reason to it. Read on to find out why!

“Yahoo won the search engine wars and was poised for greater things,” said a Fortune article in 2000. Yahoo was valued $2.8 billion then and when Microsoft tried to acquire it in 2008, they allegedly offered $50 billion. Fast forward to 2016, Verizon buys yahoo for $4.8 billion. So what has changed in between? Press is full of various theories and takeaways many of which focused on Yahoo’s failure to buy Facebook and Google, or sell to Microsoft. But if I can think of one thing to attribute for Yahoo’s failure it is being on wrong side of major trends. 

If people remember, Yahoo was one of the untouchable companies in 90s and it was the leader till mid 2000s to the point that Yahoo’s CEO got a 10 minute stage time for the historic iPhone launch in 2007 and Steve Jobs projected Yahoo as a force to reckon with. And then 10 years later, Marissa Mayer who was poised to be the only saving grace and had the potential to turnaround the falling corporation failed to revive and finally sold it to Verizon. 

Now let’s look at Google. As of now, Google’s numbers look great! It is beating expectations quarter by quarter and Industry observers are walking away impressed after every earnings call. Google banked on digital advertising big time and are doing great! Google’s brainchild PPC (pay per click) – where advertisers are charged when advertising works – has become industry standards of how people look at the success of an ad. Even revenue streams of various companies are designed around PPC. 

But the trend is changing faster than expected. Google’s focus is still on browsers, website and search which interrupt the user’s attention. These are now being replaced by advertising designed to engage them. Facebook, is on the right side of all these trends. As a result of Google’s focus on serving ads by interrupting user experience has impacted the rise in ad blockers. About 41% of internet users use an ad blocker according to a survey. As a result publishers are against these low-performing ads that clog the pages with takeovers, wrappers and pop-ups that weigh on load times and ruin the user experience. 

Smart publishers have realised that instead of putting user experience at risk, a better way to serve ads is to engage them with sponsored content. The success of sponsored content depends on publishers delivering value and relevance to the readers. Publishers have realised that sponsored content is more effective vehicle for driving deep engagement and influence!

Facebook is built exactly for this. From pages to sponsored posts, Facebook has concentrated its monetization strategy on feed based units than interruptive ads and is more poised than Google for success on this road. Google’s answer for this has been AMP (Accelerated Mobile Pages) which again are search based rather than discovery. 

Conclusion

In Conclusion, unlike Yahoo, Google has been good at identifying trends and getting ahead of the competition. Their brilliant leadership made some strategic decisions to acquire products like Android, Google, AdMob, etc to stay ahead of the competition and it is fair to say that this expertise is bought than being home-grown. 

But the business of digital content is more of curated than computerised. Google doesn’t have this culture in both structure and technology that is poised to take over this trend of curation because Google is always about left-brain comfort zone and computerising the activities than human curation. What Google needs now is a less Google-y approach to problem solving!

Differential Privacy - What the heck is it?

Artificial Intelligence has developed leaps and bounds in recent years. Automation has taken over the world and is doing many things unimagined 10 years ago. Creating auto calendar events, showing your parking location, tracking your packages are just the beginnings of what AI can do.

Tesla when unveiling Model S, introduced a feature where the car on having access to the owner’s calendar, can come out of the garage, switch on the air conditioning and send you a notification that its time to start based on the traffic conditions to the destination. AI is touching everyone’s lives. But at what cost is the question everybody have to ask.

For any artificial intelligence system to get better 2 things are of prime importance. One is having gobs of data and the other is access to high processing power. Cloud takes care of the latter but what about the data? One way or the other, companies should access users’ data to better the AI system on a constant basis. For AI to perform reliably, knowing users’ habits is of utmost importance.

Now comes the different approaches various companies have towards AI. Google, facebook, Amazon and Microsoft openly collect lots of user data for betterment of their AI systems - Google Now, Echo, Cortana, etc.. Apple has a different approach when it comes to collection of users’ data. They are very vocal about protecting users’ privacy. Apple doesn’t collect data as much as its competitors does and for that reason they are atleast 2 steps behind of what competition does. 

Google debuted auto calendar event creation feature by reading your mails 2 years ago. Apple introduced it last year and they have found an approach where the event creation happens locally on the phone unlike Google’s approach where this happens in the cloud. Google photos have great features such as scene recognition, face detection, etc and as expected Apple is late to the game and they have this feature available only now because they are trying to do that locally on the phone. 

This approach by Apple to do everything on the phone has some limitations. Phones do not have as much processing power as the cloud has and the apps might function slow and sluggish as a result of it. The other limitation is that as all the algorithms that detect scene and faces in a photo should reside locally on the device unlike Google’s approach wherein they reside on the cloud, the size of the app in iOS would be significantly higher than that of Android’s.

Apple might do that anyway on the phone now but when it comes to predictions and slang words rise, they have to collect data from the users. The answer for this question is “Differential Privacy” as unveiled by apple at WWDC this year. The tech­nol­ogy works by adding in­cor­rect in­for­ma­tion to the data Apple col­lects. This is done in such a way that Apple’s al­go­rithms can ex­tract use­ful in­sights while mak­ing it very dif­fi­cult for any­one to link ac­cu­rate data back to an in­di­vid­ual user.

Apple’s short-term am­bi­tions for the tech­nol­ogy are lim­ited. The com­pany will use it to keep user data anonymous while an­a­lys­ing how cus­tomers are us­ing emo­jis or new slang ex­pres­sions on the phone, or which search queries should pop up “deep links” to apps rather than web­pages. In the long term, however, differential privacy could help Apple keep up with competitors such as Google that collect user data more aggressively and use it to improve offers such as image and voice recognition programs. 

Its privacy stance that left Apple in something of a bind. The company promises not to touch its user’s data and criticises other tech companies for collecting personal information that is used to target advertising. But that policy has hindered Apple’s ability to develop and improve services for users. In essence, differential privacy is an effort to tap insights about what a group of users is doing without examining any individuals. 

In a race to Artificial intelligence and a moral obligation to protect users’ privacy, the concept of “Differential Privacy” is going to play a key role for Apple.