if connected

With the launch of the 2011 iPhone models, Apple will also launch iCloud, a new online services play that replaces MobileMe. This is a part of the iOS5 software that will be available for free to existing iOS devices and will ship as standard on new iPhones, iPads and iPod Touch’s.

This is a core part of Apple’s near term strategy to drive greater device sales — iPhone, iPad, iPod Touch and Mac — as Apple builds a post-PC world. Over the long haul iCloud will also help Apple’s content and services revenues but that won’t be its most important initial impact.

Apple still makes the vast bulk of its revenues from hardware sales despite having by far the most successful app store, music download store and various other services initiatives. Example: In the first three years after the launch of the Apple App Store Apple generated $1.1bn in revenue from iOS apps (1). But this figure is dwarfed by their iOS device revenues of over $100bn in the same period (2). Apple has great margins on those hardware revenues too.

Because of that hardware model, Apple has enormous incentives to create new product features to drive device sales, even if that means offering those new features or services for free. Apple can be disruptive with “free” offerings too. The “contagion of free” business models are not just the preserve of Google and Valley-based VC-funded startups.

This is the cloud the way it should be: automatic and effortless. iCloud is seamlessly integrated into your apps, so you can access your content on all your devices. And it’s free with iOS 5. — Apple marketing, October, 2011

Those devices sales give Apple a massive incentive to package its cloud services for free. In so doing, Apple undermines those that have cloud-based services as their core business. This includes Google. Although Google charges for few cloud services — the main exception being Google Apps for businesses — it still generates direct advertising revenues across all of its cloud services such as Gmail. So, if people choose to use Apple’s services instead of Google it still hurts Google’s bottom line.

iCloud supports Apple’s desire to sell more devices by helping two overlapping groups of consumers:

Read the rest of this entry »

Way back when, every mobile gadget aimed to fill in little gaps in people’s day: dead times like waiting for a bus, walking to a train, or perhaps when out at lunch.

I’m struck by how the dead time opportunity no longer exists. Every morning I take the tube to work. Ten years ago people read newspapers, or books, or just stood and avoided eye contact. The latter may be just a London thing. Now, everyone is fiddling with their phone, tapping emails on a Blackberry, listening to music on mp3 players, or playing games on Nintendos. I even saw someone with a Sony Ebook reader on the way home last night. Result: There is no dead time left to fill. People already have multiple fun or work options that help them to avoid boredom.

So, 2009′s new mobile phones, other devices or mobile software have to displace an existing digital activity. In fact, they have to compete with multiple digital options as well as books, newspapers and the ubiquitous freesheets. This is hard. For Londoners, it’s never been easier to avoid eye contact underground.

We’re in the run up to MWC, when the great of the mobile industry will make their major 2009 product launches. To succeed, these products have to be: attractive to persuade people to buy them; be easy to take along all the time (so are light, small and have a long battery life); and deliver a compelling enough experience that people reach for that device or launch that application/game/music/movie/website/social network on a regular basis.

The death of dead time means that to succeed, companies have to father the birth of excellence.

At Macworld Apple announced that the whole iTunes shop content would be available DRM-free soon and most, 80 percent, would have no DRM copy protection immediately.

So, throughout this week I’ve been wondering whether to pay the fee to go DRM-free on the protected music tracks and albums that I own. Most of them were the result of being given iTunes store vouchers, or are free single of the week downloads. There’s perhaps two albums that I bought otherwise that I care about.

But, Apple only allows an all or nothing upgrade. It’s not possible to pick individual tracks or albums to upgrade. As each album costs 2UKP and each track 20pence to set free, this means I have to pay to upgrade music that I don’t like.

Even stranger is that while virtually all the DRM-locked music that I own is now for sale without DRM, much of it isn’t appearing in the list of what I can upgrade when I click ‘upgrade my library’ in iTunes. Yesterday, two albums and six songs were offered to me as ‘upgradeable’. Today, an additional album has been added. Of the 203 tracks that I have that are copy protected, iTunes is only offering me the upgrade on 50. None of the past free single of the weeks are included (will they ever be??!!!) and many of my albums aren’t either, including ones that I have verified are for sale DRM-free now.

Even with its last gasp, DRM is still making life painful. Its cold dead fingers are locked firmly on music I own and I’m still struggling to pry my music free.

The sooner DRM is gone and forgotten the better.

Film and TV industry? Are you listening?

Back from two weeks on leave from the office. I had a pile of books I wanted to read, websites to build, blog posts to write. But family and friends filled the time almost completely. This is not a particular bad thing, but!

I’ve spent much of today musing about the trade-offs we make to save us time. I’m hosting this blog on wordpress.com rather than self-hosting. Why? I’m choosing to focus on writing rather than keeping the server patched and up to date. I’m ceding some control over look/feel for example, in return for time saving. Blog software and other content management tools do the same, why self-host WordPress rather than building the site from scratch in PHP, Rails or Drupal or whatever? It’s quicker.

Elsewhere, I’ve been using Mac OS more and more. Why? Because I spend less time patching it with software updates, fixing things that break, and it starts up, shuts down, and goes in and out of sleep fast. The downside is that there’s less software available for it and much less legal hardware I can run it on. Sure I could grab a MSI netbook and put OS X on it, but to my mind that defeats the point. If I want to spend time tinkering I may as well run Linux on my main machine.

This applies right across many areas. Why do people buy music on iTunes? It’s not cheap compared to retailed CDs now. The music is lower quality and most has DRM that restricts what devices can play it back. However, iTunes is quick and easy to use. It’s faster than visiting a shop or waiting for a CD to arrive from Amazon. People trade off sound quality and freedom for speed and save time.

Why do people write so much about other trade-offs — money/quality/size/weight/battery/features — but not time?

What’s interesting about the iPod Touch is less what features Apple has included as which Apple chose to leave out. The iPod Touch appears to be built on the same hardware and software platform as the iPhone. Most of the Touch’s features appear identical in usage.

But the Touch is, of course, different. (Apple still thinks that way – sorry!). From my tests with the Touch, the main omissions are:

1. Email software (although webmail should work in the Safari browser).
2. Contacts editing. Yes, the iPod has a very iPhone-like contacts application, but users can’t edit entries. But both Contacts and Calendar items do still sync down from iTunes…
3. Maps.

So why isn’t the iPod Touch the same as the iPhone, just sans phone?

This is classic portfolio management. Apple is positioning the iPod Touch initially as an entertainment device. Apple wants to minimise the potential for the Touch to conflict with the iPhone. By omitting these productivity functions Apple will succeed in the short term, but Apple still leaves the way open to add features back in to the first generation iPod Touch through software/firmware updates.

Apple’s iTunes delivers one of the slickest firmware update processes for a device that I have seen: such updates gives Apple tremendous tactical feature capability, either to respond to competitve threats, or to switch on new revenue opportunities in their existing device user base.

Expect to see greater use made of Safari and WiFi in the future. Both outside the home, and inside. Also, note how Apple is slowly introducing content delivery on a direct-to-device basis, rather than via a PC/Mac. First Apple launched Youtube access on Apple TV, and now the WiFi iTunes store offers music purchasing from the Touch itself (and iPhone). Expect more features along similar lines in the months ahead.

And, as a closing thought, the iPod Touch would make a great remote control for the digital home, wouldn’t it?

There’s much discussion about mobile music phones and how they relate to the iPod. While I haven’t had a complete road to Damascus moment since I last wrote about the subject, two years have passed and mobile music is much more credible now. Apple is clearly making plans for how to tackle mobile, how to enter the area, or how to compete with mobile music phones…. but what should Apple be planning, specifically?

I think the many fevered observers — here, here, and most especially here — have missed the target.
Apple has four main options, but only the first three have been seriously debated by Apple watchers:

1. Continue licensing software to established handset vendors similar to the Motorola relationship. Apple cedes some control, much upside margin, and weakens its superb end-to-end experience through working with such partners. The upside is that it enables Apple to enter a challenging value chain that is quite different to today’s iPod market.

2. Create its own iPod mobile phone handset and sell via mobile operators. Apple has a deserved reputation for creating well-designed devices, that are compelling, and revive stalled markets in which previous companies have delivered so-so devices. The mobile operator subsidy would make Apple’s phone extremely attractive on price. But Apple’s challenge is that, unlike Nokia, Sony-Ericsson, Samsung and the rest, it lacks strong operator relationships to secure a good distribution deal. Additionally, the operators may insist on changes which compromise Apple’s brand and the overall consumer experience, as well as cutting into Apple’s margins.

3. Apple could chose to bypass current operators by launching one or more MVNOs. This strikes me as unlikely and a weak global strategy. MVNOs take time and effort to set up. Apple would have to work country by country that would cripple its global aspirations. Operators that face an Apple MVNO would be even more reluctant to stock and subsidise Apple’s iPod phone than if Apple pursued just #2. Also, commentators speculating about MVNOs miss the big point: an MVNO is a virtual operator, Apple would still be reliant on an existing mobile operator for wholesale capacity. An MVNO would have little benefit for Apple, in my opinion.

4. Apple could sell its iPod mobile phone in retail: Consumers would just slot in an existing SIM and have a working combination device. This approach ignores the current mobile value chain (#2 above). Yet consumers have repeatedly proved that they are prepared to spend hundreds of Euros on iPods in retail, but they are reluctant to pay a similar amount for a mobile phone plus contract and subsidy. What’s the downside? Not much: Apple would find it hard to sell over-the-air music downloads without an operator partner, but that is a nascent market, with little immediate profit potential. Apple could continue to to sell music via PCs and make its traditional retail margins. This approach doesn’t even need an expensive 3G radio – which would help Apple keep handset cost, size and weight down and make the handset competitive with (relatively) bloated 3G handsets sold by operators.

Apple will most likely pursue a multi-track approach as it enters the mobile market. I’m sure retail sales of Apple’s iPod mobile phone should, and will, be one part of that strategy, perhaps even the main one.

This is old, but worth revisiting given the Zune launch.
On the positive side for Zune, unlike this video, the Zune box is clean and neat by comparison. Read more on Zune.
Microsoft designs the iPod package:

( link to video.)