Mobile Forward

Apple’s Bold Platform Risk

Steve Cheney, in his interesting and good post entitled “On Apple’s Insurmountable Platform Advantage”:

In 2007, when Steve Ballmer famously declared “There’s no chance that the iPhone is going to get any significant market share. No chance”, Jobs was off creating a chip design team. If you study unit economics of semiconductors, it doesn’t really make sense to design chips and compete with companies like Intel unless you can make it up in volume. Consider the audacity back in 2007 for Apple to believe it could pull this off.

Read the whole piece. It’s great.

John Gruber commented on Cheney’s post, and one thought that struck a cord with me was this:

We should clarify one point from Cheney’s headline — Apple’s lead is formidable, not insurmountable. Nothing in tech is insurmountable.

Why did I notice that bit? Perhaps because of my view on this.

Apple’s ResearchKit Expands Internationally

Arielle Duhaime-Ross, for The Verge:

Apple’s ResearchKit apps aren’t restricted to US users anymore. Starting today, people who live in Hong Kong and the UK will be able to access the MyHeart Counts app, which collects data on physical activity and cardiac risk factors for a heart disease study run by Stanford University.

This is the first ResearchKit app to get an international release. […] But that’s just the beginning; the researchers behind the study want to make MyHeart Counts the largest study of measured physical activity and cardiovascular health to date.

My hunch is that the entities that care the most about ResearchKit aren’t mobile device makers. And, conversely, that mobile device makers don’t care much about this. (By “care”, I mean in terms of talent, tools, goals, investment.) Of course, most device makers depend on Android. So, it’s understandable; their options are limited. (Unless… they invest in experiments that use ResearchKit.) And so Apple moves forward, learning, quietly.

Car Prototyping Moves from Workshop to Digital Simulation

Andy Sharman, for the Financial Times:

Digital prototyping could also help bring down the industry’s glacial development times as carmakers try to keep up with new rivals from Silicon Valley, such as Tesla, Google and, potentially, Apple. Rapid prototyping, used by tech companies, helps them bring products to market much faster than the four years it typically takes a car to get off the ground.

“The Apples and Googles […] have a completely different approach to how to develop a product,” says Daniel Hirsch, a manufacturing expert from PA Consulting.

The phrases “bring down […] glacial development times” and “completely different approach” caught my attention.

A Former CIA Executive’s Advice on How to Make Hard Decisions

Stephanie Vozza, for Fast Company:

Philip Mudd is accustomed to making tough decisions. As the former deputy director of the CIA’s Counterterrorist Center and FBI’s National Security Branch, he has gathered information and made recommendations about some of the world’s biggest threats to national safety. […]

Mudd breaks down his decision-making process into five steps:

1. FIND THE REAL QUESTION
People often focus on the wrong question because they assume questions are self-evident, says Mudd. Focusing on better questions up front yields better answers later.

“Good questions are hard to come up with,” he says. “We typically overinvest our time in analyzing problems by jumping right to the data and the conclusions, while under-investing in thinking about exactly what it is we want to know.”

Good advice.

Small Teams with a Purpose Crush Large Teams with a Process

Great, short article by Dustin at ThinkCollective. Found via @RichRogersHDS on Twitter (the article and the line I used in this post’s title). Besides the great line I used in the title, another sharp insight is:

Stop putting your A players on process teams – a great process will reduce variability and mute the contribution of your A players. Staff your process team with C players – everyone will be happier.

Yes.

A Strong CTO and a Strong VP Engineering: A Winning Formula

Fred Wilson, writing on his blog AVC.com:

A VP Engineering is ideally a great manager and a great team builder. He or she will be an excellent recruiter, a great communicator, and a great issue resolver. The VP Eng’s job is to make everyone in the engineering organization successful and he or she needs to fix the issues that are getting in the way of success.

A CTO is ideally the strongest technologist in the organization. He or she will be an architect, a thinker, a researcher, a tester and a tinkerer. The CTO is often the technical co-founder if there is one (and you know I think there must be one).

When a company has a strong CTO and a strong VP Engineering that trust, respect, and like each other, you have a winning formula. The CTO makes sure the technical approach is correct and the VP Engineering makes sure the team is correct. They are yin and yang.

Uber Acquires Part of Bing’s Mapping Assets, Seeks Deeper Technology Advantage

Alex Wilhelm, reporting for TechCrunch:

Uber will acquire assets from Microsoft Bing, including roughly 100 employees focused on the product’s image collection activities. In short, Uber is absorbing data-collection engineers from Microsoft to bolster its own mapping work. […]

The technology transfer is far more interesting.

Uber’s app is essentially a map with add-ons, so that it would want to pick up engineers — currently the hottest Silicon Valley commodity — isn’t surprising. And that Microsoft might want to shed some talent that isn’t precisely core to its larger platforms and productivity efforts doesn’t shock. […]

The move also underscores Uber’s ambition. A firm doesn’t hire 100 specific-focus engineers in a single move if it doesn’t have large product aspirations. The new Uber kids are the folks who worked to get image data into Bing, meaning that the search engine’s 3D, aerial and street footage is in large part their doing. You can therefore start to presume what Uber has in mind.

When you truly want to perform at a high level in a core function, it’s difficult to keep using off the shelf solutions. Off the shelf solutions (can) help during an initial growth phase, but to protect a lead, or to extend it when others start to dabble in the same market, it often helps to control the technology that drives you forward. If Uber executes well, to create a mapping solution specific to its needs, Uber customers should get faster response time and more accurate routing (saves time). That’s also good for Uber drivers. Drivers, in fact, might find that using other maps (including any from other transportation companies), is harder and adds more friction.

But, to be clear, acquisitions are the easy part. Executing on this potential depends on Uber’s ability to manage and develop new technology.

It will also be interesting to see how Uber competitors respond: symmetrically or asymmetrically.

Google Reveals Health-Tracking Wristband

Caroline Chen and Brian Womack, for Bloomberg:

Google Inc.’s life sciences group has created a health-tracking wristband that could be used in clinical trials and drug tests, giving researchers or physicians minute-by-minute data on how patients are faring.

The experimental device, developed within the company’s Google X research division, can measure pulse, heart rhythm and skin temperature, and also environmental information like light exposure and noise levels. It won’t be marketed as a consumer device, said Andy Conrad, head of the life sciences team at Google.

My take on this is that Google intends to:

1. Start by creating a device that tracks health and environment data *very* accurately (by having to meet clinical trial requirements). Then improve the size, design, power, and other attributes. The next version will be even better for clinical trials. The iteration after that? – suitable for consumers (size, power, etc.).

2. Use insights to improve Android Wear (the OS, or a related reference architecture), even if its aim isn’t to achieve clinical-trial performance on those devices. Very notably, Nest devices could also benefit.

3. In the meantime, Google will learn a lot about biometric and environmental sensors, related data, and related applications for that data.

Nokia’s Approach to the Have-Product-But-Can’t-Scale Dilemma

Georgina Prodhan, for Reuters:

Nokia, once the world’s biggest maker of mobile phones, plans to start designing and licensing handsets again once an agreement with partner Microsoft allows it to in 2016, its chief executive told Germany’s Manager Magazin.

“We will look for suitable partners,” Rajeev Suri said in an interview published on Thursday. “Microsoft makes mobile phones. We would simply design them and then make the brand name available to license.”

So Nokia will design the handsets, and an interested party would pay for the manufacturing and the brand name. Basically, it’s tight risk management by Nokia. Why? – remember the Product Factors / Business System Factors from yesterday (here)? Even if you have a great product, if you don’t have (most of) the Business System Factors — consumer installed base, developer base, brand, distribution channels, marketing budget — you know it’ll be an uphill (nearly impossible) slog.

Here’s the dilemma, as I laid it out yesterday:

If you’re a smaller smartphone maker, and you stumble upon a killer feature […] what do you do? Meaning, you could launch it, get some modest uplift in sales, and then watch your (larger) competitors copy its best elements. And then what? Or you could sit on it. And then what? (Assume licensing is not an option […].

For Nokia, licensing is a decent option. It’s the way to have unique hardware (in performance, or in ability to reach a low-price cost-effectively) and to still profit from the innovation, even if Nokia itself can’t reach consumers. It also allows Nokia to act with a fairly small staff (see question #2 (Talent) in the earlier post I wrote on Nokia’s potential return.) But, it’s not a path to self-determination, even if that’s a hope for one or two steps from now. As I mentioned in yesterday’s post, there’s really no good answer.

It’ll be very interesting to see who Nokia works with. It’ll either be a low-cost competitor, or one that’s made the tough choice to go dual-brand (whether split by region or by tier). It will be equally interesting to see if Nokia adjusts its strategy in the coming years.

Former Nokia CEO Elop Leaving Microsoft

Shira Ovide and Chelsey Dulaney, writing for the WSJ:

The departure of Mr. Elop along with one of his closest deputies, Jo Harlow, is the latest sign Microsoft is hitting the reset button on its struggling smartphone hardware business. The more than $9 billion purchase of Nokia’s handset business—a deal struck by Mr. Nadella’s predecessor Steve Ballmer in late 2013—was supposed to make Microsoft a relevant player in smartphones.

What I don’t understand is what changed between when Satya Nadella took over as Microsoft CEO and now? Meaning, what factors did he consider when he *didn’t* make this decision during the past year. I don’t mean that critically, either. Perhaps Satay Nadella, too, wanted to believe Microsoft smartphones might succeed, and decided to wait a year. Unfortunately, we are at a point in the smartphone and tablet market where a decent product, or even a good product, isn’t enough to succeed.

Basically, there are two sets of factors1 that drive product success:

Product factors: Superior performance, features, ease of use, design, etc. Or superior price.

Business system factors: Having a consumer installed base, a developer base, a brand, distribution channels, and marketing spend.

At this point, Apple and Samsung have scale and high performance in both sets. And no one else comes close. (Notably, Microsoft’s installed base of Windows and Office users, its developers, and its brand don’t matter when it comes to handsets.) Even if you have a good product – say a Moto X or a recent Lumia model – if you don’t have the business system behind it, you won’t succeed. You simply have less access to the market.

I often use an exaggerated example to illustrate this: you could give Samsung any mobile company’s flagship smartphone — Moto X, LG G4 or, in this case, a Microsoft Lumia 830 — and Samsung could push it thru its business system to sell 30M – 50M units. Done. In contrast, those brands struggle to sell a fraction of that many flagships. And if you’re Microsoft, you’re not only trying to sell product, you’re also trying to grow your platform, Windows Mobile.

This has multiple implications but, to keep this post short, let me just introduce one, in the form of a question: If you’re a smaller smartphone maker, and you stumble upon a killer feature (or offer a 3rd platform, like Windows Phone), what do you do? Meaning, you could launch it, get some modest uplift in sales, and then watch your (larger) competitors copy its best elements. And then what? Or you could sit on it. And then what? (Assume licensing is not an option; and it basically wasn’t a viable one for Windows Phone, with Microsoft making hardware.)

You’re almost better off treading water with your product and focusing on building up your business system – your distribution, customer service, marketing, etc. Meaning, keep your powder dry until you have the market reach to benefit from your innovation. …If you can ever reach that point… There’s really no good answer.

Back to licensing (mentioned above): If you *are* making a platform, like Windows Phone, and if you don’t have a good hardware business of your own, then you’re better off increasing the odds that others use it… obviously… For Microsoft, that means 1) Lower the price, to zero and 2) Stop competing with the mobile device makers that you want using your platform. #1 is done. #2 just happened, and it means you don’t need a smartphone hardware business and, hence, a leader for it.

This is one way to frame the situation that Microsoft faced. Add this to the fact that cloud computing is key to Microsoft’s future, and it probably became even harder for Mr. Elop and others to defend the investment that Microsoft would have needed to even have a shot at succeeding with smartphone hardware. Basically, it was too much of a drag or distraction for Microsoft, with a very low odds of success. Let’s see what Microsoft actually does with Windows Phone and Lumia models in the next few months.

______

1. As much as I love R&D, I’m not calling it out specifically here because it’s represented by the product factors, and because I want to focus on aspects that directly touch the buying consumer.

On Twitter’s Lack of Product Development

Good words by Ben Thompson, who runs and writes Stratechery (recommended, subscription required). From his Daily Update last week (emphasis mine):

There are various ways to potentially fix this problem, all of them variations on a dramatic acceleration in product development and experimentation […]. […]

The root of the problem though […] lies in those two new features I just discussed [shared block lists and removing the 140 character limit on direct messages]: it’s great that they exist, but they should have existed years ago. Twitter’s product is barely different from the product that existed in 2009 when Dick Costolo joined the company as COO, or since 2010 when he became CEO. […]

Twitter’s next CEO must have a profound understanding of what makes the service valuable and the product vision to take advantage.

He’s spot on. There’s certainly a level of simplicity that’s helped Twitter. But simplicity is not the same as forward progress. And, in the case of Twitter, simplicity also wasn’t the same as ease of use. Mix those together — product stagnation and product complexity – and you get Twitter’s current situation: an okay service, plateauing user growth, lots of potential, and no roadmap (that we can see) to get there.

Contrast Twitter’s stagnation with Facebook, a company that’s clearly invested in R&D, product experimentation, and product advancement. It’s an amazing contrast.

Play Catch-Up When You’re Ahead

Apple held its Worldwide Developer Conference (WWDC) last week. One theme in the media coverage was that Apple was playing “catch-up”. That’s very true. Here’s an example article from the Verge. It’s correct; in a number of areas, Apple was catching up. I think there is a bigger point, though:

Playing catch-up is okay, as long as you’ve delivered on the big things.

Here is a rough list of Apple’s major accomplishments since 1997. Compare it to any other company’s.

 

iMac iTunes Apple Stores
MacBook Air App Store China Entry
iPod Siri Mac OS
iPhone iMessage iOS
iPad iCloud watchOS
Apple Watch Apple Maps Apple CPU
Apple TV Apple Music Apple Pay
Leading Industrial and Interface Design

These are what mattered for Apple’s success. Apple went until *2015* before playing catch-up on the features announced at WWDC (iPad windowing, low power mode, music streaming, iCloud drive, transit directions, etc.). With minimal pain.

What does this show? It’s wiser to postpone (or be behind in) 100 features than the ten technologies that go into one major product (and often, more). Put differently, it’s better to be in “feature debt” than “product debt” or “platform debt”, when you have the competency to deliver one of the latter.

Those ten technologies and that one major product can end up improving the world, and your company, in incredible ways.

How BlackBerry Crippled BlackBerry

In the WSJ, Jacquie McNish and Sean Silcoff published an overview of their new book, “The Inside Story of How the iPhone Crippled BlackBerry”.

It’s an excruciatingly painful account of BlackBerry executives’ response to the iPhone. Having worked in the mobile industry since 1994 and, most intensely since 2006, these executive reactions are familiar to me.

From my perspective, they reveal several key reasons why BlackBerry, and companies like it, struggled:

1. Lack of In-House Technology Development

  • “How did they do that?” Mr. Lazaridis [Blackberry co-CEO] wondered.
  • “By all rights the product should have failed, but it did not,” said David Yach, [BlackBerry’s] chief technology officer.

When executives at this level are shocked by new technology, or don’t understand it, it means they haven’t been leading their company to scout new technology, and haven’t been doing enough in-house development to push limits.

2. Focus on the Wrong Customer

  • Mr. Balsillie’s first thought was [BlackBerry] was losing AT&T as a customer.

It’s true that an operator is a customer of sorts. But the people using your product are the ultimate customers – i.e., the consumers. While BlackBerry focused on satisfying the operator executive, Apple focused on satisfying the consumer.

3. Narrow Definition of its Market

  • “It wasn’t a threat to [Blackberry’s] core business.”
  • Offering mobile access to broader Internet content, says Mr. Conlee, “was not a space where we parked our business.”

BlackBerry isn’t alone in this. Nearly every mobile company at the time paid lip service to the Internet. But they defined it as the “Mobile Internet” and, critically, none acted to provide a device that consumers could easily use. They thought of their devices, and their market, as narrowly limited to phones, not general computing devices. And when your device isn’t a general computing device, the Internet is an afterthought.

This fundamental framing also limited technology development (#1 above). Most mobile companies, if they developed technologies in-house, limited them to the cellular radio, rather than more general areas: computer interfaces (e.g., touchscreen), computer software platforms, the Internet, or imaging. Nokia was the exception, but it’s too complex to discuss here.

4. Denial, Masked by Mischaracterization of the Disruptor’s Success

  • “I learned that beauty matters […]. [BlackBerry] was caught incredulous that people wanted to buy this thing,” Mr. Yach says.
  • This was no ordinary phone. It was a cult with a devoted and rapidly growing following.
  • “The carriers aren’t letting us put a full browser on our products,” [said co-CEO Mike Lazaridis].

Similarly, from my experience as a mobile analyst during that time, no executive in the industry admitted (for a very long time) that the iPhone was a better device. Seeing leaders in denial, in my experience, weakened their ability to focus their companies on the right things. Which leads to point #5.

By the way, the point about “the carriers aren’t letting us”: The price of entry for a “full browser” was a stellar product. And that was under BlackBerry’s own control.

5. Tactical Responses to Strategic Problems

  • Mr. Lazaridis believed the four pillars of BlackBerry’s success—good battery life, miserly use of carrier’s spectrum, security and the ability to type—still ruled in the new smartphone world and gave his company its competitive advantage.
  • [BlackBerry] would take another stab at a clickable screen with Storm 2.

They brought features to a platform fight. Tellingly, the word “platform” (which means operating system – one of the iPhone’s major strengths) appears one time in the article. [I’m not faulting the authors. I’m saying it’s a reflection of the thinking – and BlackBerry’s thinking — at the time.] And even as features, none of them – except the long standby battery life –matched the iPhone. And, damningly, part of the reason that BlackBerry phones had better battery life was simply that people used them less. They were “phones”…

All this led to the following:

To Mr. Balsillie, [BlackBerry] was in an existential crisis, mired in what he describes as “strategic confusion.” The company’s business had been disrupted on several levels, with no obvious path forward.

Part of the answer — the part that gives you glimpses into the path forward — is #1 above. When you shape your own technology, you can see the future before others do. Is there another part to the answer? Yes — having a great product shaper. And it’s hard to grow, or recruit, a great product shaper if you don’t give them new technology to work with.

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