Concurrent apps on the iPhone: A threat to iTunes

It should be perfectly possible to run multiple applications on the iPhone in a way that protects battery life:  It could limit to the last 2 or 3, it could allow the user to specify which 1 or 2 is allowed, it could wake a certain apps every minute for 5 seconds, etc.  Allowing just 2 would make a huge difference in usability.

I get the feeling Apple is not allowing it simply because then they would have to allow iPod competitors to run in the background.   So they are just protecting iTunes, giving it another year to get entrenched.

This is a huge competitive advantage: Pandora and Spotify are just some of the excellent music services, but you can’t play a game or catch up on the news while listening!

A watershed moment in Silicon Valley

After their long alliance against Microsoft, Apple and Google parted ways today, and the stage is set for the great fight of the second decade.

The Apple Management Institute

I’m beginning to think Steve Jobs should have been the least of our worries about Apple.

First Jon Rubinstein goes to Palm to develop the Pre.  Now George Blankenship goes to Microsoft to help setup their stores.

Who will be next?

The end of TV as we know it

I believe Apple is about to do for TV what they did for cellphones two years ago.

Most pundits have opined on AppleTV’s shortcomings, overwhelmingly declaring it a dud, even though it’s still sold more than Roku and about the same as Series 3 TIVO.  This is nonsense.

Clearly, after introducing iPhone and ATV together, Apple made a strategic decision to go all out on marketing and developing a best-in-class phone, rather than just a good phone and a good TV box.  They focused their resources rather than fighting a war on two fronts.

Fast forward to next week’s release of iPhone 3.0 which:

• Puts the platform way ahead of the nearest competitor on a feature-by-feature basis.
• Explodes the target market to include many new personal uses (e.g. ad hoc multi-player gaming with bonjour), industrial applications (as a sensor and device control interface), and commercial uses (e.g. handheld payment processor with attached ribbon printer).
• Turns it into a video recording, editing and sharing tool (which BTW is sure to hasten the rise of citizen journalism).

Meanwhile in the last two years Apple has:

• Drastically expanded the base of ObjectiveC / Cocoa developers.
• Perfected a supporting ecosystem: App store, iTunes, push notifications.
• Developed Open CL to squeeze more out of a low-power CPU/GPU combination.
• Added enough movies to iTunes to make the rental service a viable alternative.

And consider how content has changed as well:

• Low-def content has been embraced by a whole generation, not only for low-budget amateur productions but also for clips and highlights of commercial programs.
• Podcasting of video has become viable at current hosting costs and broadband speeds.
• Commercial podcasts are increasing as providers free themselves from licensing restrictions.
• Hybrid models are developing.  For example Current TV delivers via cable, website and podcast.

This confluence of factors creates a perfect opportunity for Apple to kickstart the switch to real IP TV, by which I mean on-demand delivery of content produced by millions of sources (not the same 500 channel all-or-nothing model simply delivered over IP).

I believe this Summer, having placed the iPhone in an overwhelming competitive position, Apple will repurpose its iPhone engineering and marketing resources to the ATV, and shortly thereafter release a major overhaul of the software, including an API.  This will be followed by an App Store, and push notifications.

By the end of the year viewers will be watching Youtubes recommended by friends, the day’s extended family videos (recorded with their iPhones), the news (DailyKosTV, Democracy Now or Pajamas TV), the sports wrap-up podcast from a small state university in Oregon, a BBC drama, and CSI.  All from the couch/bed and without having to click around, hunched over a small computer monitor.

And because it costs Apple nothing to deliver it, each provider is free to use their preferred revenue model: free, ad supported, subscription or paid hosting.

I will be so happy to ditch cable and stop paying $60 to watch a couple of shows a week.

Publishers throw a Hail Mary

Some guys are going to try a micropayment/subscription system for news content.

Looks like a terrible idea just judging from their name (Journalism Online L.L.C), their backgrounds (mainly attorneys and newspaper execs), and the extent of their ‘innovation’:

“The most important thing is it’s simple to use,” Mr. Brill said in an interview. “Much of the barrier to charging online is the transaction friction, as opposed to the actual cost. With this system, you’d have a single password, give your credit card number just once.”

He said that for the unlimited subscriptions, “we’re playing with a figure of $15 a month.”

…which is too bad.  Micropayments could work, but the more botched attempts the harder it is for someone new to try.  Looks like the best chance is still Apple and Amazon and their handhelds/bookreaders.

iPhone 3.0 top features

In addition to usability enhancements such as copy-paste, wide keyboard for all apps, universal search, background SMS send and SMS forward this is an important release because it really expands the possibilities for the platform:

1. In-app purchases: Buy additional levels in a game, another city guide, more talk time, an article, etc.  This might be the re-launch of micropayments.
2. Peripheral control APIs: The iTouch platform can now be the face of home appliances, entertainment devices, industrial equipment and testing tools.
3. Bluetooth networking and discovery with Bonjour: Should allow starting and playing games with one or more friends across the room, and sharing pictures, contact cards and other files.
4. Voice memos over MMS: What if instead of spending one minute typing a text message I just speak it? Recipient can then reply by voice.  Asynchronous as SMS, but efficient as talking.
5. Streaming video: If providers deliver paid live content to the iPhone this could be another pathway to the living room (iPhone supports TV out).
6. Embedded maps: Now watch LBS apps really take off.
7. Push notifications: 3rd party communications apps are now possible.

So simple a 9 year old can do it

You know you’ve changed the way software is created, marketed and sold when a 9 year old can do it:

The creator of Doodle Kids, a finger painting app downloaded 4,000 times in two weeks from the App Store, is more than just a kid at heart. He hasn’t even entered middle school.  Lim Ding Wen, 9, of Singapore, said he was just trying to give his siblings something to do.  “I wrote the program for my younger sisters, who like to draw,” he told the BBC. “But I am happy that people like it.”

Micropayments

Walter Isaacson pleads the case for micropayments to save the newspapers.  Andrew Sullivan dismisses it (it’s too late!).  I do fear a news coverage gap as traditional media shuts down their foreign bureaus, investigative reporting teams, etc.

The article comes short because it acknowledges how many micropayment systems have come and gone but doesn’t propose how a new one could be made successful, except maybe to say that it should be ‘iTunes-easy’.  So let me take up where he left of:

First off, the environment has changed significantly since past players tried and failed, thanks to an unsung hero: Apple.

It is widely recognized that Steve Jobs has revolutionized computers, portable music, wireless and even retail, but one key overlooked aspect is iTunes’ micropayments system, which has quietly got consumers used to paying 99 cents or more for music, software, audiobooks, movies and music lessons.  It also incorporated two key ideas that really show us the way: daily transaction batching and standardized pricing (which the labels vehemently opposed).

With that in mind, here’s what I think would make a micropayment system successful today:

1. Concurrent free and paid availability: Switching to a paid model is a risky proposition for any content provider.  So why switch at all?  Instead let customers choose.  The paid version of an article could be easier to read (full width, no pagination, no or less intrusive ads), have related resources, additional pictures/charts and enhanced/prioritized/separate discussion and other social tools.  A paid video would not play a 20 second commercial in front and could be higher resolution.  User should be able to select paid versions as a general preference, or click through to a paid version individually (after initial payment system signup/authorization).
2. Standard pricing: We are not willing to spend time deciding whether each article is worth 15 or 25 cents before reading it.  But if we only have to do this once per publication it is a better value proposition.
3. Don’t monetize everything: Instead of making everything available for 9 cents, offer paid versions only for major features and stories for 29 cents.
4. Batching:  Costs are very high if there is a transaction for each purchase, or if authorization needs to happen in real time.  Instead, on signup publisher assigns the user a ‘credit limit’ and captures funds only if limit reached, but more typically every week by batch submission.
5. No costly chargebacks: Customer can decline charges via online tool within a month.  Requests are automatically approved without research involved, but each one lowers a customer risk score that is provided to the publishers on signup.
6. Not publisher-specific:  Entering a credit card number to purchase that first $0.20 item is a non-starter.  Consumer should be able to setup a payment account once, and approve its use with a simple form, in under 10 seconds, for each new content provider.
7. Not vendor-specific: Content providers should support multiple micropayment providers that offer a standardized interface.  Customers can use their preferred provider at most publishers.

AppleTV 3.0

Daniel makes his wishlist for AppleTV 3.0  As usual a great article, and I particularly agree including a DVR or DVD player is complete anathema to what they are trying to accomplish, but I do join a few commenters in saying an HDTV would be great:

• It’s a great marketing tool:  An actual TV which plays all this additional content and rents movies is a much more immediate and familiar concept for (largely unsophisticated) consumers.  Apple should offer just one 24″ model which is perfect for the bedroom and easy to demo at their stores.  Once the customer is comfortable with the concept they are more likely to consider getting the freestanding box for their larger/existing TVs.
• Apple’s enormous purchasing power in LCDs allows them to build with a lower bill-of-materials than competitors.  In turn, more LCDs for TVs lowers the cost of LCDs for iMacs.
• Convenience: Switching source on the TV is simple enough, but having to reach for that third remote repeatedly to go from an iTunes TV show to live TV, back to an iTunes movie gets very annoying.
• Stickiness: No chance of user disconnecting it.  Even if customer doesn’t use often, new features and content can be announced when TV switched on.

Also, just to expand on how they really need to add content, and recognizing how difficult it is to work with the studios and their contractual tangles, perhaps they should go for multiple niches.  For example festival-circuit films, film school projects, French cinema, Bollywood.  Most of these either have no existing distribution agreements in the U.S. or would be eager to gain the exposure.  Each niche would have a small but very enthusiastic audience that would also purchase mainstream content and could be very vocal evangelists.  Of course, this only works if Apple’s overhead to setup agreements and prepare content is very low, which I would expect.

Goodbye Blue-Ray?

It is striking that in introducing the new 17″ MacBook Pro not a word was wasted by Apple, media or analysts on its lack of Blu-Ray support.  This is their top of the line creative artist mobile platform mind you.

Steve Jobs is getting pretty close to killing Blue-Ray for good.