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

The Secret to Happiness

Is it possible to find happiness through buying stuff? We know that true happiness comes from finding meaning in life, personal relationships, and all that furrowed eyebrow yada-yada, but it sure felt good to a family member when he ordered his new iPhone 5S at 12:05 a.m. this morning.

The 5S will be arriving next week. He's getting the Silver version; the Gold is in short supply, oversubscribed because that color is the only way to distinguish an iPhone 5S from a distance. Flaunting a status symbol is a source of happiness for many people, but not for our family member. He'll wear that Cheshire-cat smile when he pockets his new iPhone, and only a few people will know why.

Re-assessment

Techies yawned, and AAPL plunged after its Sept 10th iPhone 5S announcement.

Apple's September 10th iPhone announcement was underwhelming to commentators who expected the new iPhones (the 5S and 5C) to come up with revolutionary methods to slice bread or trap mice. The second disappointment was the failure to announce a highly anticipated deal with China Mobile, China's largest cellphone network. But it doesn't appear that there will be a third strike.

Analysts who have had time to test the phones, especially the 5S, are beginning to sing their praise. Walt Mossberg, WSJ:

the new iPhone 5S is a delight. Its hardware and software make it the best smartphone on the market.

Anick Jesdanun, AP Technology Writer:

When I got my hands on Apple's new iPhone 5S, one of the first things I tried was a feature that allows you to bypass the passcode using a fingerprint. I had a lot of fun unlocking the phone over and over again. Who knew biometric authentication could be such a blast?

The fingerprint sensor alone is worth the extra $100 you'll pay for the 5S over an iPhone 5C. Both phones will come out Friday. In the week I've had with both, I've also been impressed with the better camera and slow-motion video in the 5S.

Myriam Joire, Engadget:

Is the 5s the best iPhone ever made? Yes, though that shouldn't come as a surprise. Apple took a good product and made it better through hardware upgrades, new features and a completely revamped software.

In the days ahead we'll see if the stock price reflects this re-assessment. As an Apple investor, I hope that it will.

Disturbing

Late last night an emergency-alert siren could be heard throughout the house. It took a few seconds to realize that it wasn't coming from the TV or radio, and then a longer interval for us to determine that the sound was being emitted by our three smartphones. A state-wide amber alert had been issued for a murder and kidnapping that occurred earlier that day in San Diego.

iPhone alerts are in Settings > Notifications

The event introduced us and many other Californians to the newly instituted Wireless Emergency Alerts (WEA) program. There are three categories of "government alerts" fed to smartphones. Amber alerts and emergency alerts, which concern child abductions and natural disasters, respectively, can be turned off, while the channel for "presidential alerts" is always open.

While we do understand that lives are at stake and sympathize with victims' families, the odds of us being able to help are very remote. (And is sending a blast of sound to millions of Californians at 11 p.m. so superior to the old method in getting results?) We'll fulfill our civic obligations the traditional way, by listening to the news and paying attention when we're out and about.

We're open to arguments, but for now we're switching the alerts to off.

[Update - 8/8: neither the suspect nor the kidnap victim have yet been found.]

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

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

Left by the Side of the Road

Hard to miss a turn with Apple's Maps

Apple's new-product releases introduce technologies that become industry standards. Nearly as significant are the technologies that Apple stops supporting along the way. Apple was one of the first to discontinue built-in floppy disk drives, then optical drives, on its computers. Steve Jobs provoked a furor when he explained "why we do not allow [the widely used Adobe] Flash on iPhones, iPods and iPads."

The iPhone 5, set to be released on September 21st, has at least two "left behind" features amidst all the cutting-edge hoopla. The iPhone 5 has a new connector that doesn't work with ancillary equipment built for the iPod, iPad, and old iPhone. Some Apple customers have to spend thousands of dollars upgrading or adapting their equipment.

Google Maps has more detail.

But the most criticism seems to have been reserved for the abandonment of Google Maps in favor of Apple's own Maps application.

The criticism poured in world-wide as users of the new maps found misplaced labels for businesses and landmarks, cities with missing roads and erroneous features like a fractured river in Ann Arbor, Mich. A search for the Golden Gate Bridge yielded a marker roughly four miles away in San Francisco.

Apple has a history of gauging just how much inconvenience its customers are willing to tolerate without jeopardizing sales of its latest offering. I suspect this controversy will blow over as well, especially as Apple Maps is improved in later versions of the operating system.

Note: Google Maps is far from perfect either. Yesterday a colleague had a meeting at NVIDIA headquarters in Santa Clara. He typed in the address, 2701 San Tomas Parkway, Santa Clara, and Google Maps sent him to a location north of Highway 101.

If he had just typed "NVIDIA," Google Maps would have steered him straight. He would have exited south from Hwy 101 and gotten to the meeting on time.

© 2012 Stephen Yuen

Ho-Hum but Humming Right Along

Apple's product announcements attract widespread news coverage, and the iPhone 5 launch on September 12th was its biggest ever.

It has become impossible recently for Apple to keep key details under wraps. Because every move by the company, its largest suppliers, and partners is being scrutinized, tech observers have been able to make educated guesses about features and components of the iPhone 5 long before the official announcement. In fact many were let down, in part because their clever detective work removed the element of surprise.

But I'm not disappointed. The i5 is bigger, faster, and lighter than the 4S, without apparent diminution of battery life. The i5 is not revolutionary in the sense that a car that cruises easily at 200 MPH and gets 30 MPG is only an "evolutionary" improvement over a 100 MPH / 30 MPG vehicle. (IMHO, the "R" designation should be used sparingly anyway---for the first iPhone, iPad, and iPod.) So I'm going to get an iPhone 5.

Apparently, investors weren't disappointed either. Apple's share price declined for days leading up to September 12th--even through the first hour of the announcement--but then picked up when it dawned on everyone that the iPhone 5 would begin shipping on September 21st. The quarter will be better than analysts had previously forecasted because of the earlier-than-expected shipment of millions of new iPhones. Apple hasn't entirely lost its capacity to surprise.

[Update - 9/14: opening orders were so strong at midnight that delivery wait time is now two weeks (from one).]

AAPL hit an all-time high today (admittedly helped by the Fed's announcement of QE3).