Expect "Offense" and "One More Thing" at the iPhone Launch Event Tomorrow

The iPhone 5C pricing will say a lot about whether Apple is playing offense or defense. If Apple is playing offense they will position the 5C as a premium mid-range device priced at $450+. This will make the 5C affordable to a decent chunk of the middle class in emerging markets yet keep it out of reach of the majority of emerging market population. As a result, this approach will allow Apple to maintain the premium brand positioning even as it introduces a cheaper phone. Combined with new deals with China Mobile and NTT DoCoMo this presents a huge growth opportunity for Apple for FY2014. They could then lower the price of the “C” series in the future by which time the iPhone would be in the same boat as the iPod has been for the last few years. This offensive strategy is what I would bet on.

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Apple's Ecosystem Helps Deliver a Winning Customer Experience

Last week Paul Stamatiou wrote a post: Android is Better. That inspired me to share my perspective on how Apple provides the best customer experience for my needs. This is not to say that Apple has the best products for everyone. For your needs it could be Android. For someone else it could be Blackberry or Windows.

 

Apple's Ecosystem

Breadth and Depth of Ecosystem

One of the most important advantages that Apple has today is an unparalleled ecosystem. If you use a Mac, iPad, iPhone, and Apple TV you will have the most frictionless experience keeping your devices, services, and data up to date. Just set up iCloud! Today, nobody offers such an experience. I am sure that Google will be able to offer a similar ecosystem in the future. But in that future Apple will also be able to extend the depth and breadth of it’s ecosystem.

This ecosystem is even more important when you think of the average consumer. Unlike the geeks (including myself) when these consumers buy an iPhone they have a higher tendency to use Apple's stock apps and services - Calendar, Reminders, Notes, iTunes, etc. If they buy an iPad next these services (and data) are magically available on the iPad just by entering the iCloud credentials. Later on if they buy a MacBook all of this is available there too. Only Apple can provide such a deep and wide experience today. As these customers buy more Apple devices their experience becomes exponentially better.

Services that Customers Love

An argument that comes up frequently is regarding Apple's weakness in services. It is true that Apple is not as strong in services as Google. But when you look at all the services you use today, there is a long tail of services that is not from any single company. No matter which platform you choose you will use at least a few services that belong to neither of these companies. So when it comes to services the right question is: Which platform provides the best experience for all the services that you use? Today it seems like it is the App Store. Everyone from a small startup to Google and Microsoft wants to make sure their apps are available in the App Store. Think of any hugely innovative/disruptive/popular apps that have been released in the recent past - Mailbox, Tempo, Quip to name a few, they have all come on iOS first. In fact 8 months after launch Mailbox, and Tempo still don't have an Android app. Then there are apps that are available on both iOS and Android but the experience on Android is not close to the experience on iOS. A recent survey from Canalys highlights this:

Quite simply, building high-quality app experiences for Android tablets has not been among many developers’ top priorities to date.

This could change in the future. As Benedict Evans recently wrote:

If total Android engagement moves decisively above iOS, the fact that iOS will remain big will be beside the point – it will move from first to first-equal and then perhaps second place on the roadmap. And given the sales trajectories, that could start to happen in 2014. If you have 5-6x the users and a quarter of the engagement, you're still a more attractive market. 

Although he suggests that a cheaper iPhone could reverse this trend:

A new, cheaper, high-volume iPhone would have the potential to mitigate or even reverse this trend. Clearly, like current low-end Android, it would sell to a demographic with a lower average engagement and purchase rate and so the average iOS rates would drop. However, it would mean that iOS’s reach would expand significantly at the expense of Android. How would a $200 or $300 iPhone sell? Easily double digit millions, possible up to 50m units a quarter. 

There is also historical precedent that a smaller iOS market share may still get the developer attention that Apple gets today. As Rene Ritchie writes (via John Gruber): 

The Mac, though its market share was never large, especially when compared to the well over 90% marketshare of Microsoft Windows-based PCs, had always attracted an incredibly talented, incredibly dedicated group of developers who cared deeply about things like design and user experience. OS X enjoyed not only the traditional Mac OS community, but the NeXT one as well. That talent share always felt disproportionate to the market share. Massively. And a lot of those developers, and new developers influenced by them, not only wanted iPhones and iPads, but wanted to create software for them.

World Class Customer Service

When you use so many products, and services you are bound to have a problem at some point of time. The Genius Bar at the Apple Store is unrivaled in helping customers. I have never had a bad experience in my 7 years of using multiple Apple products. I have also heard countless stories from friends who have had similar positive experiences. And there is absolutely no competition in this area. Those that have the infrastructure to provide in store service (Verizon, AT&T, Best Buy) don’t place much emphasis on customer service. Those who understand the importance of delivering a great customer Service (Google) don’t have the infrastructure today.

Total Cost of Ownership

Apple products are priced very reasonably considering their lifespan and resale value.  Let’s consider the iPhone as an example. You buy a new iPhone for $220 with a 2 year contract. Right before the launch of the next iPhone you can sell that iPhone for $400 - $450 on Craigslist. From that money you pay $250 for the contract breakage fee, and spend $200 on a new iPhone. Your total cost of ownership comes out to be iPhone is $20/year. I have done this 3 times now so I am not pulling these numbers out of thin air. I have also sold (via Craigslist) a 1 year old MacBook Pro at a 10% discount, a 4 year old MacBook at a 50% discount, and 1 year old iPads at 25% discount. 

Apple’s advantage lies in providing an end-to-end experience that delights its customers. While competitors are doing well at some pieces of the ecosystem no one is able to offer an end-to-end experience. As competitors race to build a strong ecosystem Apple could retain its advantage by increasing the breadth and depth of its ecosystem, staying the best platform for services that customers love, and continuing to provide world class customer service.

The Hyperloop: A Solar Powered Elevated Transit System

Elon Musk released a detailed document on how the hyperloop would work: a solar-powered elevated transit system that could take passengers you from San Francisco to Los Angeles at high subsonic speeds in 30 minutes. The Hyperloop would transport people via aluminum pods enclosed inside of steel tubes.

The Hyperloop (or something similar) is, in my opinion, the right solution for the specific case of high traffic city pairs that are less than about 1500 km or 900 miles apart. For a sub several hundred mile journey, having a supersonic plane is rather pointless, as you would spend almost all your time slowly ascending and descending and very little time at cruise speed.
At one extreme of the potential solutions is some enlarged version of the old pneumatic tubes used to send mail and packages within and between buildings. Another extreme is the approach, advocated by Rand and ET3, of drawing a hard or near hard vacuum in the tube and then using an electromagnetic suspension. However, a low pressure (vs. almost no pressure) system set to a level where standard commercial pumps could easily overcome an air leak and the transport pods could handle variable air density would be inherently robust. 
Both for trip comfort and safety, it would be best to travel at high subsonic speeds for a 350 mile journey. The approach that I believe would overcome the Kantrowitz limit is to mount an electric compressor fan on the nose of the pod that actively transfers high pressure air from the front to the rear of the vessel. It would also simultaneously solve another problem, which is how to create a low friction suspension system when traveling at over 700 mph. Air bearings, which use the same basic principle as an air hockey table, have been demonstrated to work at speeds of Mach 1.1 with very low friction.
That then begs the next question of whether a battery can store enough energy to power a fan for the length of the journey with room to spare. This is where the external linear electric motor comes in, which is simply a round induction motor (like the one in the Tesla Model S) rolled flat. This would accelerate the pod to high subsonic velocity and provide a periodic reboost roughly every 70 miles. The linear electric motor is needed for as little as ~1% of the tube length, so is not particularly costly.
By placing solar panels on top of the tube, the Hyperloop can generate far in excess of the energy needed to operate. This takes into account storing enough energy in battery packs to operate at night and for periods of extended cloudy weather. The energy could also be stored in the form of compressed air that then runs an electric fan in reverse to generate energy, as demonstrated by LightSail.

Source: http://www.teslamotors.com/sites/default/files/blog_images/hyperloop-alpha.pdf

Quip and Grid: Two Amazing Productivity Apps For Touch Devices, And Collaboration.

Last week saw the launch of two new productivity applications - Quip, and Grid. While there are plenty of productivity apps available for the iPhone and iPad but what is so neat about these apps is that they are not web or desktop apps that have been adapted for touch devices but they are specifically designed for touch devices.

This is a big deal since the trade-offs for a touch device both from a feature and user experience perspective are very different from that of a non-touch computer. For example, how do you provide features that allow all the power and flexibility of a word processor without giving up a third of the touch screen to toolbars? Both Qup, and Grid apps have attempted to solve this problem and for a v1 app they have done a splendid job. I am writing this blog post using Quip on my iPad and so far the only inconvenience I have run into is not being able to “Undo” any changes.

Another neat aspect of these two applications is that collaboration is not an after thought. Real time document editing, messaging, and audit trail are all part of the Quip app itself. The left panel replaces the need for a separate email/IM conversation, and audit trail by providing all those as part of the Quip app. Again for a v1 app collaboration is on the right track. Grid has some work to do when it comes to rich collaboration but I am sure that will follow.

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Amazon and Apple: More Similar Than Different

There has been a lot of chatter on the web regarding how similar or different Amazon and Apple are.  I had touched upon the similarities/differences between these two companies in a blog post early last year. But Horace Dediu of Asymco has nailed this in his blog post today:

At an even deeper level, Apple and Amazon are much more alike than they are different. They are both hired for similar jobs (convenience, ease of use and a controlled, predictable environment for average users interacting with technology). They both focus on delighting customers and controlling all the variables which come into contact with that delight. They both have long-term views and are driven by vision rather than competition.

Can not emphasize how true this is. They are both focused on delivering the best possible customer experience, and maximizing the value that the customer receives from their products and services.

Tile: Find Your Stuff Anywhere, Anytime.

A functional, beautifully designed, and affordable fob that attaches to any thing you may fear losing. It connects to your iOS devices via Bluetooth 4.0 so you can locate your item via location/sound.

The coolest part is that if you lose something (say a bike) which has a tile attached to it then the "tile" community will help you find it. All the "tile" apps will be on the lookout for your bike, and if they come in the range of your bike then they will automatically send you a message with the location details.

It is available for iOS only. I just ordered mine. 

Product and Design Philosophy

It is cliched to cite Apple when talking about Product or Design. But, these 2 videos from Apple do an awesome job at conveying a product and design philosophy that I believe is common to other companies as well. Companies that care about providing an amazing customer experience like - think Google, Amazon, Starbucks, Nordstrom, Virgin America, Square, American Express, Whole Foods, Nest, Costco, and many more.

There are 4 points that the videos emphasize on:

  1. Customer experience is front and center - Is the user going to be delighted?
  2. What problems are we solving, for whom, and how?
  3. Solve few problems but solve them really well.
  4. Pride in what we make.

Definitely worth spending 150 seconds to watch the videos.