In Other Words, Kwitch'er Whining

WSJ tech columnist Farhad Manjoo has two words for tech observers who were disappointed about 2013: grow up.

the touchscreen smartphone (and its cousin the tablet) was a singularly novel, industry-shattering device, and we're unlikely to see anything as groundbreaking in a generation.

The smartphone and the tablet *are* the next big things, and we act like spoiled children when we claim that they somehow aren't enough. Most future advances will simply be improvements or expansions on these basic technologies...

When a sports team wins a couple of championships, some of its fans begin to expect that they will win one every year. The fans have forgotten or perhaps never even knew the amount of effort and expertise required just to perform competently, much less win it all. We often see such lack of perspective in critics who were never creators/doers themselves.

In the New Year may we strive to be more appreciative of the good in the world, rather than dwell upon its imperfections. © 2013 Stephen Yuen

Happy With Hamburger

The new, thinner, lighter, faster Apple tablet, the iPad Air, wasn't revolutionary but it was enough to stay ahead of the competition (reminiscent of the old joke that one doesn't have to run faster than the bear, one just has to run faster than the other guy.)

My iPad 2 is looking a little long in the tooth. Though it still works fine, I'll forego my daily latte and save up for the Air. It'll be WiFi only, though, with no data plan. Verizon costs $20 per month for 1 GB of data, which is plenty for e-mail and reading websites, but not for streaming video and advanced gaming applications. The iPad 2 will be taken on the road--if it's lost or stolen I won't feel too bad--while the Air will stay at home.

There's no reason to buy steak when one is happy with hamburger. © 2013 Stephen Yuen

Twin of Doom

Separated by decades: the Fantastic Four villain
Doctor Doom (left) and the Worker of Secrets (above)

When I need a diversion, I've been punching up one of the free games that I downloaded a month ago from Apple. One favorite way of letting off steam is Infinity Blade 2, a sword-fighting game with gorgeous graphics, wondrous weaponry, and fearsome foes. If frantic forefinger- or thumb-swiping helps to ward off senescence, then I'm decades away from having to be put in a home.

I can't say much, though, for the plot of Infinity Blade 2. The game's objective is to free the "Worker of Secrets" from a magical prison. When we see the Worker at the beginning of the game, his appearance should set off alarm bells. He looks like the twin of Doctor Doom, the comic-book villain created 51 years ago by Stan Lee. (Doctor Doom was one of the inspirations for Darth Vader, by the way.) And if his appearance weren't confirmation enough, when the hero-protagonist meets him near the end of the game the Worker speaks with excellent diction in an English accent, the true signs of evil in our age.

Realization comes at the end

Oh, well, no one plays this game because it's a brain-teaser. © 2013 Stephen Yuen

Technology Not Settled

Devices that I use now:

iPhone 5 (2012)

iPad 2 (2011)

MacBook Pro (2009)

Gateway SX - Windows 7 (2008)

Dell Vostro - Windows XP (2007)

My mobile devices are fairly up to date, but the desktop and laptop machines are getting long in the tooth. WSJ tech reviewer Walt Mossberg surveyed the computer landscape and advises:

Alas, I'm sorry to report, it's still pretty confusing and frustrating to buy a new laptop....

For a high-quality, traditional laptop without a touch screen, you can't do much better than a MacBook Air, if you have at least $999 to spend. On the Windows side, stick with touch screens and be prepared to spend nearly as much, or even a bit more. But if you can wait, come back in the fall.

Good advice. I've found that with computer purchases it's always better to wait as long as one can before upgrading. Also, the technology should be well enough settled so that the purchase will not be regretted two years later. I'll hold off opening my wallet. © 2013 Stephen Yuen

Late to the Gold Rush

So much big, early money had been made in mobile-device applications that the industry came to resemble a latter-day gold rush. Sure, it's likely there will be more "killer apps" released in the future, but with low barriers to entry the competition has become extremely fierce.

App development now resembles the entertainment and publishing industries, which have a few enormously wealthy celebrities at the top, a sizable minority in the middle, and the majority at subsistence wages, if that. From a survey of app game developers the NY Times writes:

the app world is an ecology weighted heavily toward a few winners. A quarter of the respondents said they had made less than $200 in lifetime revenue from Apple. A quarter had made more than $30,000, and 4 percent had made over $1 million.

My friend has been working on an iPad app as a supplement to his consulting business. The process is fascinating, but we

lack the technical know-how to build mobile apps on [our] own. The options range from using online app-building tools, to taking crash courses in computer programming and coding languages, hiring a costly professional on contract, or recruiting a full-time developer.

So we've opted to pay for outside help. In the past year all three staffpersons assigned to our project have left (separately) for greener pastures. Partly out of self-preservation and partly out of curiosity we are slogging through technical manuals and code, even trying our hand at simple app-writing.

We're a little late to the party, but the lure of app gold in them thar' hills is irresistible. © 2013 Stephen Yuen

Apple Shareholders Meeting

We arrived for the 9 AM Apple shareholders' meeting at 8:45, but already we were too late to get into the main auditorium. The young guides with Apple badges herded us over to Building 4, where two large videofeeds had been set up. Before entering, we had to check in all iPhones, iPads, Macs, and any other electronic equipment. (It took 20 minutes to retrieve our items after the meeting, so for future reference it's recommended that attendees leave their gear in the car.)

Now that Steve Jobs is gone, there's little point in attending Apple shareholders' meetings. Today there were no product, dividend, strategy, or personnel announcements. The business session went smoothly--the controversy over Proposal 2, regarding shareholder approval of new preferred stock issues--had dissipated because Apple withdrew the proposal. The rest of the Board's recommendations passed overwhelmingly (for more detail see Barron's live blog). CEO Tim Cook fielded questions for half an hour and several times repeated that Apple wants to make the best products, not necessarily the most or the biggest.

Other comments:

1) the breakfast spread was generous and well laid out; shareholders could bring food and drink into the meeting area, unlike in previous years.

2) at the beginning it was announced that the meeting would be over by 10 AM, so it was obvious that there weren't going to be any big revelations today. At least with Steve Jobs there wasn't the feeling that he couldn't wait for the meeting to end; he would field questions until the audience was reasonably satisfied.

3) Concerning Apple's glorious new "spaceship" campus that will be ready in 2016, we are reminded of the words of C. Northcote Parkinson:

"During a period of exciting discovery or progress there is no time to plan the perfect headquarters," he wrote. "The time for that comes later, when all the important work has been done. Perfection, we know, is finality; and finality is death."

© 2013 Stephen Yuen

Business: the Unforgivable Sin

Apple's stock seems to have bottomed, perhaps temporarily, at $525.62 on November 15th. Since then it's risen 11%. Knowledge of the Maps debacle (Apple discontinued Google Maps on September 19th) has not dampened enthusiasm for Apple's products:

In the past 12 weeks, Apple’s mobile operating system has grown to now make up 48.1 percent of the U.S. smartphone market, just ahead of [Google's] Android at 46.7 percent.

Despite the fact that customers have shrugged off the Maps problem, Apple's management hasn't been as forgiving:

Apple Inc. pushed out an executive responsible for its mapping service about two weeks ago, according to people briefed on the matter, as the company tries to recover from the map service's rocky debut.

The vice president, Richard Williamson, had been a senior leader with Apple's iOS mobile software team. During his tenure, he oversaw a variety of services, including at one point Apple's voice-activated assistant Siri.

Mr. Williamson's boss, iPhone software chief Scott Forstall, was pushed out of Apple in October, also on the heels of the maps imbroglio.

Both Scott Forstall and Richard Williamson have been heavily involved in some of Apple's most important successes over the past ten years. Nevertheless, in the top echelons of business, like in sports and entertainment, the key question is "what have you done for me lately?" Both are gone because they committed the one unforgivable sin--no, not failure, but embarrassing their employer. © 2012 Stephen Yuen

Late to the Party

I've been helping a friend of mine test an iPad business app. The process is fascinating: app screens are storyboarded like in film production, and each screen has to be tightly defined in order to minimize programming costs and keep to the schedule. My modest role is to test-drive the app and check some of the calculations. Typically, my setup uses two computers (one Mac and one PC) and an iPad.

I have been working in accounting and related areas for over three decades. This is a lot more fun. To be young again....

Apple, Bitten

Apple's market cap has fallen $118 billion since Google Maps was removed September 19th.

Other companies (GE, Microsoft, Cisco, AIG) have fallen further in market capitalization, but Apple's recent drop is nonetheless remarkable in a non-crisis year. A scant 44 days ago AAPL had been rising on the heels of the iPhone 5 announcement and the rumored iPad mini. Then the new operating system, IOS 6, was released.

The premature removal of Google Maps was one of the greatest blunders in Apple's 36-year history. Apple knew that it was taking a chance but underestimated the negative reaction:

in breaking with Google and giving iPhone users worse maps than before, Apple has gambled on three things. First, that users will like its maps’ embedded content. Second, that it will be able to improve fast. And third, that the allure of the iPhone and the loyalty of Apple’s fans will buy it time. After all, people do not buy smartphones for the maps alone, and queues for the iPhone 5 were every bit as long as for previous incarnations of the revered device. But Apple has more catching-up to do than it expected. In a market where brands can rise and fall fast, it may also have less time than it thought.

The removal of a single app, important as it may be, wasn't the reason that the market values Apple $118 billion less. Now that Steve Jobs is gone, Apple is beginning to look like just another good but not extraordinary company. The revolutionary product in the pipeline may well be a myth.

It's going to be an uphill slog back to $700 per share.

[Disclosure: I am long Apple.] © 2012 Stephen Yuen

Cloud Cover

The Friday night dump is a time-honored tradition for releasing bad or awkward news that one doesn't want to discuss. Once again Apple has shown how it even does obfuscation better than everyone else: send out the press release in the midst of a hurricane that has closed the markets for a couple of days.

The announcement this morning:

Scott Forstall, the man in charge of its iOS mobile software efforts and a major and longtime executive at the tech giant, is leaving next year and will remain an adviser to CEO Tim Cook until then. [snip]

More to come on what happened, but Forstall’s departure is very big news and a drastic move for such an important player in the tech space. He had big fans and also many detractors for his sharp-edged personality, as well as what some described as exhibiting “growing open challenges” to Cook himself. Forstall had previously been called “CEO-in-waiting” in one media account in Fortune.

In addition, numerous sources noted persistent tension between Forstall and several other key execs, especially the powerful design chief [Jony] Ive.

Veiled internal politics at Apple aside, Forstall has been a key part of Apple’s success over the last decade, especially in the development [of the] iPad and the iPhone.

The departure of Scott Forstall, who was in charge of the operating system that runs Apple's most successful products, is "very big news" indeed. Apple could have disclosed the management shake-up at the same time as last Thursday's earnings release, but talking about strategy and people is a lot tougher than talking about numbers, even disappointing ones.

Let's hope Apple's spokespeople have their stories straight when the market re-opens Wednesday.

(Disclosure: I am long Apple.) © 2012 Stephen Yuen

Forecasting is Uncertain, Especially About the Future

The Election
Monday night's debate was the least disputatious of the three debates between President Obama and Governor Romney. The consensus seems to be that the President won the debate but not enough to change the minds of Romney supporters.

For what it's worth, your humble observer thinks that Mr. Obama may still eke out a win, but the likelihood is that Mitt Romney will be the next President, and a good chance that he will win by a significant margin. There is no possibility that President Obama will get even 300 electoral votes (he won 365 in 2008, and 270 are needed to win).

iPad Mini
Tuesday's announcement of the iPad Mini initially triggered disappointment because of its high price relative to the competition:

The iPad Mini tablet, which starts at $329, is a cousin to the original iPad, whose screen is about a third larger. But Apple's smaller tablet is priced well above Amazon.com Inc.'s Kindle Fire HD and Google Inc.'s Nexus 7—two tablets which are similar in size and some specs. Those devices cost $199 or $249 depending on the amount of memory.

Apple also announced upgrades to existing products that were understandably overlooked in the hoopla over the Mini. Macintoshes (Mac-minis, iMacs, and MacBooks) and the regular iPad all have become faster under the hood without a price increase. Our household already has ordered a couple of the new Mac offerings.

As for the iPad Mini, critics would do well to remember how the iPhone 4S took off after an underwhelming reception. It could become the hot new gaming platform or be just the right size for the distaff set--the iPhone screen is too small for many applications, yet the regular iPad is too big to fit in a handbag. Besides, Apple still has room to drop the price later to push sales.

World Series
Please, not another post about the Giants, you say, but after tonight's game how can we not comment? The Giants were heavy underdogs in Game 1 to Detroit and its otherworldly pitcher Justin Verlander.

Three home runs in one World Series game by third baseman Pablo Sandoval---a feat matched by only three other players (Babe Ruth, Reggie Jackson, and Albert Pujols) in history---and a superb performance by supposedly washed-up pitcher Barry Zito added compelling drama to a game that an 8-3 final score would normally belie. Some over-the-top sports reporters are completely reversing their original predictions and calling the Series "over" because the Giants beat the Tigers' ace in one game.

Whoa, the ball takes funny bounces, political sentiments can shift overnight, and tech dross can turn into gold and vice versa. Forecasting is uncertain, especially about the future. © 2012 Stephen Yuen