Thoughts on the iPad

A few weeks ago, I made some predictions on what might be announced with the Apple tablet device. I tried to include a mix of new technologies, new usage models, and new business opportunities for both Apple and consumers. To a decent extent, I was in the ballpark on most of my predictions, with some of them still being possibilities at a later date.

Like many people, I read the comments from journalists and "experts" after the launch party. I made a mental checklist of items that appeared to be "missing", and features that appeared to be unique. The technologist in me was driving my evaluation. But then I went and watched the keynote by Steve Jobs. As he sat in the chair, surfing the web, it dawned on me that this would actually be the "Internet & media consumption" model of the future. While it was obviously staged, the experience of watching Jobs lose himself while he experienced the world offered a glimpse of the future. The experience appears to be a preview (or 1st generation) of the experience where the activity and the computing device begin to blur, and the computer no longer gets in the way. Marc Cuban seems to agree.

It doesn't do everything that previous devices do, but it does appear to do certain things uniquely well. The definition of a disruptive technology. It will get significantly better over time, just as the iPhone did between the 2G and 3GS models.

Sitting on my couch, typing this blog on my MacBook laptop, I wish I was using an iPad instead. My legs are too warm from the laptop, and the power cord keeps getting in my way. Yes in deed, it's time for a new device and a new paradigm.

Weekly Links (Week of Jan.25, 2010)

This week's links are somewhat Internet-centric, but I've also tried to mix in some interesting ones on leadership, sustainability, quant/statistics and Internet marketing/measurement.

Role Models - (Fred Wilson, A VC Blog, Jan.2010) - I had a conversation with my wife (@GracelyGirl) the other day, as we're starting to see interests from our daughters in various topics. My point to her was if they are interested in things we don't have expertise in (science, art, etc.), we should find someone that can give them guidance and insight. Giving people a role model early in life is so important, especially someone in a nearby age-group, as it helps them understand that their passions and goals are obtainable.

Will the Internet F* with Wall Street? - (Chris Dixon Blog, Jan.2010) - I haven't written about this theme in a little while, so here goes. This article does a nice job of highlighting the difference between doing things differently with technology, and technology being the differentiator to truly disrupt an industry. The article highlights a company called Square (@square), created by the founder of Twitter, which is focused on creating a new way for SMBs and individuals to conduct monetary transactions. Square doesn't disrupt the previous financial industry, but it's thinking like this that could open the doors to new interaction models for the economy.

Will Amazon be the New Wal-Mart? - (GigaOm - Jan.2010) - while companies like WalMart and Best buy have been highlighted for their sustainability initiatives, maybe the company to begin focusing on is Amazon. With Amazon's revenues growing faster than their competitors, should they be driving the next stages of consumer/retail sustainability? Do they have any inherent advantage in this space because they are fundamentally virtual, as opposed to the huge physical footprints of Amazon and Best Buy?

How to Measure the Internet? - For anyone that is getting involved in a business that may drive revenue from online advertising, or will gain share because of online visibility, here are some interesting reads to get a deeper understanding about how the Internet is measure by external agencies. It also highlights how the measurement of the Internet has moved from a sampling-based model to a more direct measurement model.

• Comstore announces new measurement policies for website
  
• Problems with Comstore's measurement methodology
• The details behind the recent fight over Comstore's changes in measurement policies

How to Measure ROI - (Fred Wilson, A VC Blog, Jan.2010) - A quick Entrepreneurial refresher course for anyone starting a business and having to negotiate with investors (Angel, VC, etc.)

Re-examining the Value Chain - Apple Table (The Logical Idea - Jan.2010) - A nice look at how the recently announced Apple iPad show not be evaluated on it's technology, but on it's potential ability to change buying habits of readers of eBooks (or other reading-centric content). A strategic analysis of how it may help or hinder the publishing industry. (note: Some of my pre-announcement and post-announcement thoughts on the iPad)

Some Guesses on the Apple Tablet

This really has nothing to do with our MBA program, but everyone in our class knows that I was an Apple fanboy and spend a reasonable amount of time exploring how their latest strategy was changing various markets (music, communication, mobile computing, application distribution, etc.).

In talking to a colleague at work today, we made some predictions on what might get announced if an Apple tablet does hit the market early this year (rumors of announcements at the end of January). I thought it would be interesting to list some of these for comparison at a later time.

1. I have a hard time believing that Apple would create a purpose built device (like a Kindle). I suspect they are trying to find the sweetspot between an iPhone and a MacBook. Mac OS / Phone OS has too much R&D to not reuse as much as possible. So a form-factor that is similar to a netbook (8-10"), but multi-purpose.
2. The device will be more like an iPhone than a netbook in form factor. No need for keyboards, flip tops, hinges, etc. Everything will be wireless (Bluetooth, WiFi and 3G, similar to the Kindle).
   
3. It will have two modes. The first (mobility) will be like a big iPhone, where you can sit it on your lap and type directly on the screen. All movement will be via gestures, or voice-recognition or the touchscreen. The second mode will include a docking station, which sits the device at a 45* or 60* angle for viewing, and the virtual keyboard and mouse-pad will be projected onto a flat surface (desk, table, floor, coffee-shop, etc.). All the multi-touch gestures will work on the virtual mouse-pad.
4. By default it will come with an incredible eReader application (iRead). Beyond the Kindle-like features of great display and easy download, it will make reading a social activity by allowing people to easily discuss sections of a reading with communities of friends and like-minded people. Highlight a passage and see if other people have commented on it, asked questions about it, referenced it in other forums (Twitter, Facebook, etc.)
5. It will allow you to easily do all the things you can do with paper-based reading material today: Highlight passages, added notes and doodles (via text, voice-recognition, finger-gestures), earmark pages, etc.
6. The future of education could be significantly changed by the social aspects of iRead, as the discussion of topics could be happening at almost anytime, with the full class or a subset. Teachers could introduce dynamic quizes &/or checkpoints into the readings to validate comprehension, discouraging a student from proceeding if they haven't grasped a basic concept before moving to an advanced topics.
   
7. Through iTunes, it will introduce a self-publishing service for authors. Instead of having to use a publisher and pay for their overhead, it will offer a service to allow people to create professional quality content and distribute it through major channels. People already know how to do self-promotion today (blogs, Twitter, Facebook Fan pages, YouTube, etc.), but they may not have access to editors, graphic artists, speakers for audiobooks, etc. By offering an ala carte menu of services to authors, Apple could radically change the value chain for the publishing landscape, cutting out layers between the author and reader.
8. By leveraging their existing customer knowledge from iTunes, and now location-based information (mobile device), combined with their recent acquisition of Quattro Wireless, Apple could potentially offer Apple tablet specific content to readers from sources like The New Yorker, The Economist, or other outlets committed to great journalism, not just chasing eyeballs. Revenue splits between Apple and the journalists could fund this.
9. The tablet will have unique peer-2-peer networking capabilities to share gaming experiences with 6-8 other tablets within close proximity. New games will get written that provide shared experiences.
   
10. One of the complaints about the iPhone is the lack of peer-2-peer video, similar to iChat or Skype. The Apple tablet will resolve this, as well as being a great form factor to watch TV/Videos on the train or bus.

Since everyone feels the need to give the new device a name, I'll throw my hat in the ring. Let's go with iBook, combining the concept of a netbook size with the incredible new reading experience and social aspects for consuming content.

Weekly Links (Week of Jan.4, 2010)

During our program, I used to annoy my classmates by constantly sending emails pointing to various links, stories and other content that related to the topics being discussed in class. In hopefully a less annoying manner, I plan to bring that content to this blog on a weekly basis.

One of the things Ram Baliga told us was that analytics would become one of the cornerstone technologies that MBA's should master in the 21st century. Here is a good write-up on the proliferation of data that is now available for analysis and how it will shape the future of business.

With Chet Miller we evaluated various employee evaluation models, including GE's A-B-C player model. This link explores NetFlix model of trying to hire, retain and compensate almost all "A" players and whether or not that is a good thing.

Following up from our case discussion about NetFlix and their eventual migration to a streaming model. Many elements at play here: short-term vs. long-term profits; customer input vs. decisions that lead to eventual business model changes; decisions that could lead to loses due to digital piracy or alternative models solving a customer demand.

This article explore the Nexus One phone from Google, in the context of how it will impact Google's overall strategy. VC Brian Gurley does an excellent job of looking at the broader impact of this device, but more importantly the strategic impact of the new business model. The Nexus One was an area of highlight in the final Global Strategy paper that I wrote with Ric Freeman and Wendy Perry.

Here's another Nexus One link that follows-up some of the cases we analyzed, including strategic challenges for HTC, Taiwan Semi-Conductor and Google. At least within the technology world, the spread of coopetition and partner/rival scenarios will continue to expand as the value chain is twisted in all sorts of new ways.

Stan Mandel taught us the underlying structures for funding and operating and entrepreneurial venture, but more so he focus on the mindset needed to be a successful entrepreneur. VC/Entrepreneur Mark Suster explorers his views of the characteristics of successful entrepreneurs.

Disruption vs. Shareholder Maximization - Part II

[With our Global Strategy course this semester, I'm going to highlight a bunch of interesting business models and strategies]

"What's very dangerous, is not to evolve.", Jeff Bezos. In a recent interview with Fast Company, Bezos once again talks about how Amazon is using aspects of their core business to disrupt an existing business model (publishing). This time their Kindle eReader is threatening to reinvent the publishing business.

But Amazon is an online store, a reseller of other company's stuff. Why is it trying to compete in the consumer electronics business with a device? Without a massive quantity sold, how can they possibly achieve the same level of margins that the online business does?

Once again, letting NPV's dictate the business can be dangerous to a company's long-term health. Kindle is an enabler. It enables Amazon to make buying books (from Amazon) easier than ever before. It enables Amazon to potentially disrupt the publishing value-chain. It enables Amazon to accelerate the pace at which costs associated with supply-chain for physical reading materials are reduced or eliminated. And it ultimately enables the on-going evolution of Amazon's strategy to be a critical player in the digital economy.

The Kindle may or may not ultimately be the dominant eReading device. It may fail to pass any litmus tests for success (long-term positive NPV; etc.) but the paradigm it has enabled will position Amazon to be a significant influencer in the digital life of consumers for the next decade. That's a position than shareholders of many other companies would highly desire.

Connect the Dots - Relating to what you're learning

In a previous post, I wrote about how an article about the accounting model at Apple helped me connect some learnings from FinAcct (deferred revenues) with something I'm interested in both personally and profession, since I work in the technology sector.  Amazing concept...personal interest in the subject, useful learning area...1+1 = 3!!  

One of the things I'm really enjoying about this semester is that every class seems to be very focused on including assignments that make you apply the current topic to an aspect of your current or former business.  Not only does it make you think about how it's relevant to your world, but it also forces you to go meet people outside your current functional area.  It's a networking exercise, which I believe is where at least 50% of the value of your MBA comes from. 

(btw - that value is a complete SWAG, so don't ask me to do an analysis of it....bad MBA student!!...not using objective numbers to justify a decision or conclusion)

But what happens when the course work covers an area where your company really doesn't focus on anymore?  This is somewhat of an exaggeration, but let me give an example.  In our OpsMgmt course, much of the focus is on manufacturing processes, the creation of physical goods.  We also cover service-centric businesses, but the majority is product-centric businesses.  I work for a high-tech company that sells products, but we don't "build" any of them anymore, at least not the finished good to our customers.  We write software, and then put it on commodity computing hardware, which is built and distributed by 3rd-party partners. Our product managers do handle aspects of this, such as forecasting, but it just becomes a number in a spreadsheet,  So as much as OpsMgmt is critical to business survival, it's a tougher connection point for me because it's not something I actively think about.  

So the $64,000 question becomes, what's the best way to connect with a new topic when the path for connecting is either very bumpy or non-existent?  

Connect the Dots - Apple's use of deferred accounting for iPhone

How about that....it's Day 2 of the Obama administration and there is already change in my world!!  That's right, I'm actually going to write about accounting in a positive light. I'm not exactly sure why accounting frustrates me more than something like strategy, but I suspect that it's because accounting seems to flip-flop between defined rules and interpretive rules. Or maybe it's just because all the examples in the accounting books are about industries I don't know very well, hence I don't commit myself to it as much.

To my pleasant surprise this morning, I found this article on iPhone deferred accounting.  Being somewhat of an Apple fanboy, I started reading it with interest and all of a sudden I start seeing all these accounting terms from this semester and last semester.   And they made sense.  And I kept reading, and reading, and reading.

After finishing the article, a couple thoughts came to mind:

1. Some of the accounting concepts are starting to soak into my head.  I understood the viewpoint of the author, as well as actively thinking about the flipside from an investor vs. business manager vs. regulator perspective.  I know it seems small, but it was really a lightbulb moment for me.
2. I've been around Silicon Valley companies for 15yrs now, so I'm fully aware of the hype-machines that they can create.  But I also live in today's economic situation and understand the problems that occur when exuberance and excess are practiced above all else.  So I found myself taking the viewpoint that while Apple's decision could be short-changing stock investors in the short-term, it seems like a much more responsible long-term decision to represent the true value of the company.  It matches revenues from the phone sale (device) with revenues from the service it provides (monthly fee from AT&T). And in today's economic situation, that sort of responsibility seems like a breath of fresh air.

One of the things I'm learning from this MBA program is there are times when you need to disconnect yourself from the underlying business and simply focus on the numbers, because otherwise you allow subjectivity (or boredom, in my case) to creep into your analysis.  In this case, I got lucky that the subject and the concept held my interest.  But it also showed me that I need to keep paying attention in accounting...

 

The Pace of Change

Following up on the recent Discussion of the Week, I found myself reading a recent BusinessWeek article on the World's Most Influential Companies. I thought it was worth highlighting this article, as it provides an alternative perspective on the pace of business change, which I previously highlighted. Sometimes really big numbers are good to get people's attention, and sometimes it's useful to bring a more focused lens.

Let's take a quick look at the list, and compare it with the 1990s and even the early part of this decade.

1. Apple - Two things are amazing here - First, we don't call them Apple Computer anymore, because while that is still the core of their business, the influence they have created are in Lifestyles, Telecommunications, Music, and Video. Second, they've overtaken Microsoft. Actually, both Apple and Google (also on the list) have ovetaken Microsoft. 10 years ago, Microsoft was fighting a worldwide anti-trust suit because of their might and size. 10 years later, they are quickly becoming a non-player on the Internet and are seeing their marketshare for computing reduced.
2. Google - The article makes a great comment, "Ten years ago, all Google had was Larry, Sergey and an idea." There it is again, 10 years. That's all it has taken for Google to not only capture 70% market share in Internet search and advertising, become a verb, and crush Yahoo and AOL, but also prove that by freeing information to the masses, people are able to create new economies.
3. Unilever - I don't know as much about Unilever as some of the other companies on the list, but the explanation given for their global success - reaching out to and building emerging communities, giving away knowledge to communities, rapidly adjusting their product at the edge to experiment with new business models - all of these align with the 21st century way of thinking about Edge Economics, Long Tail Economies and building value through Tribes.  This should be an interesting battle to watch between Unilevel and P&G in the consumer space, as P&G has also been extremely active in "Proudly Found Elsewhere" innovation model.
   
4. JP Morgan - While JPM has been around for years, it was their (relative) prudence and foresight that allowed then to come through the crisis head and shoulders ahead of Citi, Lehman (R.I.P.), Merrill, BoA, Wachovia and many others. One interesting aspect for MBA'ers to realize is that Jamie Dimon (CEO) was fired by Citi because he wasn't able to implement the ideas has has since implemented at JPM. It's important to build a network of people that look at the world in different ways, and be willing to understand them (although not always agree), because you never know when you'll be able to tap into that network.
5. NewsCorp - Not AOL, not TimeWarner, not NBC. None of these companies had the foresight to see that two critical elements were needed in a digital entertainment world - First, you have to build a platform. Silos don't allow integration, sharing and flexibility to adapt to new markets and technology. Second, you have to embrace and adapt to the Internet and digital media. NewsCorp has done this better than almost anyone (although ABC/Disney/ESPN isn't far behind...plus they have tight ties to Apple/Pixar because of Steve Jobs).
6. Toyota - Even though all the signs were on the wall, few people truly believed that Toyota could overtake GM as the #1 auto company. Not only are they far and away #1, but nobody really talks about Honda or the Europeans (BMW, Renault, Mercedes-Benz) anymore, other than as a niche. What's amazing to me is that they will let you tour their factories and teach you their model, but we haven't seen any of their executives leave to run one of the other companies.
   
7. Huawei - Never heard of them? You're not alone. Outside of the telecommunications industry (and China), Huawei is a well kept secret. But they are quickly eating into 900lb gorilla Cisco Systems in the race to build the next-generation of connected networks.

10 years!  Just 10 years....  

That's all it's taken for this list to go from Microsoft, Cisco, Citi, Big3 Autos, and TimeWarner to Apple, Google, Huawei, JPMorgan and Toyota.  

A lot of this change had to do with companies that truly embraced the new technology, but it's also highlighted by companies that took a very different view of their markets and changed the rules.  

It's a potentially scary place to be if you're looking for long-term success with models from the 20th century.  But on the flipside, it's an extremely exciting place to be if you're willing to look outside the box (maybe a long way outside) and challenge some conventional thinking, rapidly adopt technology, and explore some of the concepts that will be demanded by the global economy in the 21st century.