It was a week of beginnings and endings.
The iPhone launched on T-Mobile on Friday to lines nearly everywhere, although they quickly dissipated. There seems little reason to doubt the iPhone will soon be more that 50% of T-Mobile smartphone sales, just like the other major carriers. More pointedly, it seems increasingly clear that limited carrier distribution of the iPhone was the most significant factor in Android’s past success in the U.S; the rest of the world, where an iPhone 5 costs $600, not $200, remains a different story.
The Facebook First also began sales on AT&T, albeit without lines. I went to check it out and will have a brief report early next week. Facebook Home also launched on Android Play to middling reviews; do users know what they’re getting into? Both angles actually makes one more bullish on Apple: one of their most important competitive advantages is retail and the direct connection they enjoy with regular consumers.
On the other side of the spectrum, IDC announced that PC Sales had plummeted by 14%, double the 7% predicted. It seems there are three significant reasons why:
- PC’s have long since become good enough from a performance perspective. There is no compelling reason to upgrade
- The iPad does many of the jobs PC’s were previously hired to do more effectively, eating into time spent on PCs and PC-buying budgets
- Windows 8 may disincentivize traditional PC users from upgrading, while not yet offering a compelling alternative to iPad use cases
I didn’t write more about this report, largely because it feels like it’s been coming for a long time. Two key pieces:
- From January 2010: The iPad: It’s for Everyone Else
The reason this matters is that the vast majority of users are primarily content consumers. These are the people buying netbooks as their primary computers, or simply avoiding computers as much as possible. They simply want to go on Facebook, check their email, watch YouTube, and at most, upload pictures. Apple’s value proposition to these customers is: The iPad is a superior content consumption experience with sufficient creation capabilities to meet your needs.
- From three weeks ago: The iPad and the Disaggregation of Computing
It is not so much a computer as it is an appliance, significantly better at some use cases – reading, drawing, playing games – and significantly worse at others – writing, organizing, editing. In this way it began the disaggregation of personal computing. Instead of using one device for all of our computing needs, we used two. True, you can use the iPad as your only computing device, but most don’t; they simply keep their old laptop a little bit longer than they would have otherwise, and use both.
Here on stratechery I wrote three articles and five linked-list items; this felt much more balanced and sustainable than last week’s madness. Moreover, I’m pushing to make the linked-list items clearly pertinent to the themes I’m focused on here at stratechery, and more substantive than simply pull quotes. They’re arguably articles in their own right, just of a different style. I trust you find them useful.
As always, I greatly appreciate your spreading the word about stratechery and following @stratechery.
I’m skeptical about Facebook’s mobile prospects generally (see here and here), and Facebook Home specifically. For one, I question the addressable market for the First. In this article, though, I question the product itself:
The reason why smartphones rule the world is because they do more jobs for more people in more places than anything in the history of mankind. Facebook Home makes jobs harder to do, in effect demoting them to the folders on my third screen.
This is a high-level strategy piece that uses Maslow’s Hierarchy of Needs to analyze the basis of competition in mobile.
The iPhone and, say, the Galaxy S 4 both have “good enough” hardware, “good enough” software, and a “good enough” app selection (and the end-game for “good enough” is commoditization and razor-thin profit margins). The next means of differentiation and competition is in services. It’s a competition that will be waged not only by the operating system vendors and device manufacturers, but also by pure service plays such as Facebook (on the big side), and outfits like AppGratis (on the small side).
As I noted above, it seems increasingly clear that users prefer the iPhone, all things being equal. But as Apple increasingly saturates markets where price is equal, thanks to carrier subsidies, it may be time to consider more SKU’s.
Still, the idea that Ford became overly focused on production as opposed to customer needs is a worrying one; if this fall brings nothing more than a 5S, with the same form factor as the 5, well, that will be great for production costs, but not so great for customers who prefer a larger phone, or a cheaper one (and remember, Cook is a production guy, not a product one).
As an aside, I now understand why sites write anti-Apple articles. This was by no means anti-Apple, yet it achieved traction for being presented as such. The truth is I think the iPhone is a superior experience and that Android’s market share dominance is largely driven by carrier availability in countries with subsidization models, and by price in pre-pay markets. But my goal here is to not simply react to the world as it is today, but to think about the world as it may be years from now. Apple is certainly contemplating their 3~5 year road map; this article should be read in a similar vein.
- The Death of HTC in Seven Bullet Points, Revisited link — The HTC One is getting amazing reviews, even as their financial performance tanks. Unfortunately, I think it’s the latter that is more pertinent to their long-term survival.
- Samsung’s Press Page link — The S 4 is only one of a plethora of new Samsung devices. Further evidence they are pursuing a much different smartphone strategy than is Apple.
- Huawei, MediaTek and the Lower Right link — Huawei is facing similar challenges to HTC in building a sustainable brand. Meanwhile, MediaTek is increasingly dominating the cheap Android market.
- LINE Enters E-book Business with LINE Manga link — One of LINE’s advantages vis a vis Facebook is that it’s platform was designed from the beginning with App Store’s in mind.
- The Samsung Mega link — In the long run, phablets are a much greater threat to iPads than are Android tablets.
News & Analysis:
- Official: WeChat Will “Definitely” Have to Pay Fees in China link — WeChat insists they won’t charge users. This could actually entrench WeChat in China, if telecom payment becomes a barrier to entry for OTT messaging generally.
- Interview with the CEO of LINE USA: Challenging WhatsApp Aggressively in Its Core Markets link — Interesting detail on LINE’s Spain success, including the fact they advertised on TV, and that their success has spilled over into Mexico and even the U.S.
- The Coming Information Totalitarianism in China link — China is seeking to tie your online identity for your everyday one, with the ultimate goal of chilling dissent completely.
- Kowtow Now link — The reality of doing business in China.
- Salesforce and Rackspace shine the spotlight on mobile app development link — Salesforce and Rackspace both announced new tools and SDK’s to help build mobile apps for both businesses and one-off
- For the Future of Chinese Startups, Tencent’s WeChat Must Not Subsidize the Telcos link — This argues that small guys won’t have a chance if Tencent agrees to the telco’s demands. Speaking cyncially though (and probably realistically), why is this Tencent’s problem?
- Switching to Android full-time – an experiment link — The iPhone’s superiority when it comes to accessibility doesn’t directly impact most of us, but is indicative of the care and attention to detail that does.
- Touch Hate link — I completely agree with this: touch on traditional computers should be viewed as additive (and a welcome addition at that), not as a substitute for more precise input.
- Thinking of Tablets Only as a New Form Factor Misses the Point link — This is key to understanding the iPad’s success: it’s not just about adding touch, but also about removing complexity. It’s a particularly pertinent observation when considering Windows 8.
- The Revenge of Steve Jobs link — One of the better pieces in response to the IDC report. What I really appreciate is that this article captures why Apple lost Round 1: buyers were businesses. It’s the same reason they’re winning Round 2.
- Why Redfin, Zillow, and Trulia Haven’t Killed Off Real Estate Brokers link
- Does BuzzFeed Know the Secret? link
- Ron Johnson: A Great Plan With a Fatal Flaw link
- News is Bad for You – And Giving Up Reading It Will Make You Happier link
- The Relativity of Wrong link
- “Facebook has a sponsored post on my newsfeed for Facebook Home. The post has 4,500 comments – and I can’t find a positive one.” @SammyWalrusIV
- “Primary flaw in the e-reader revolution: reading in the bath.” @joshtpm
- “Management at many of the big OEMs were very motivated to make costs back asap on investing in these new designs, hence stupid pricing” @anandshimpi
- “In 1943, Thomas Watson the chairman of IBM proclaimed: ‘I think there is a world market for maybe five computers.’ What if he is right?” @BenBajarin
- “And how long before Lee Kun-hee gives a blank check to Ron Johnson to buy Best Buy and turn it into 1,200 Samsung showrooms?” @counternotions
- “Recall the command line to GUI transition? Extreme whining about taking your hand off the keyboard to use the mouse. Sound familiar?” @halberenson
- “Expect Facebook to give distribution/promo to Android apps in exchange for apps using proprietary APIs in FB Home by the end of 2012.” @anildash
- “The thing that disrupts Facebook on mobile isn’t apps. It’s the phone number. Phone numbers aren’t fragmented at all.” @benedictevans
- “Consistently amusing to watch computer engineers persuade themselves they understand all other disciplines better than their practitioners” @benedictevans
- “My biggest blogging challenge is the assumption that everyone has read everything I’ve read and knows everything I know.” @siracusa