Mountain Lion and the Future of Apple

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Johnathan Gruber has a big post today about Apple’s announcement of Mountain Lion, the next version of OS X.

My reaction to the news: “finally.”  I’ve been waiting for OS X to fully embrace iCloud since last year, when I thought it would happen with the initial release of Lion, but it looks like it will finally happen this summer, when Mountain Lion is released.

Gruber’s post is worth reading. He gives his impressions of a pre-release copy of Mountain Lion he’s been using for the past week, and also ruminates on how Apple orchestrated the announcement. They used a new technique; VP Phill Shiller did one-on-one presentations to a dozen or so tech writers a week before the official announcement.

Among other things, Gruber considers what this announcement says about the current state of the relationship between OS X and iOS

[recounts a few years ago when Apple delayed an OS X release to devote resources to iOS]

 

Putting both iOS and OS X on an annual release schedule is a sign that Apple is confident it no longer needs to make such tradeoffs in engineering resources. There’s an aspect of Apple’s “now” — changes it needs to make, ways the company needs to adapt — that simply relate to just how damn big, and how successful, the company has become. They are in uncharted territory, success-wise. They are cognizant that they’re no longer the upstart, and are changing accordingly.

It seems important to Apple that the Mac not be perceived as an afterthought compared to the iPad, and, perhaps more importantly, that Apple not be perceived as itself considering or treating the Mac as an afterthought.

I don’t think this goes far enough.  What stands out for me is not just that OS X is (back) on an annual release cycle, its that the cycle is in close sync with iOS’s annual release cycle; both are released in the summer, rather than at, say, a six month offset. Why?

I think the reason is obvious, OS X and iOS are part of the same product. The promise I saw in iCloud, iOS 5 and Lion last summer was the arrival of a pervasive computing environment that spanned devices. Moving between a Mac, and iPhone and an iPad was close to becoming seamless. A Keynote presentation you started on your Mac would automatically be sitting in your pocket on your iPhone, waiting for a quick review while waiting in line for lunch. Without a second thought, you could open your iPad on the bus-ride home and finish up the last few slides. And that is just the beginning.

iPod Touch and the Kindle Fire

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When Amazon first announced the Kindle Fire, many people heralded it as the first tablet with a chance in the market against Apple’s iPad by virtue of the fact that it was less than half the price, and more portable, with a 7″ screen.

Those predictions were recently validated, with Amazon selling an estimated 5.5M in the first quarter of release. Not bad, but we learned today that Apple sold 15.43 Million iPads, a 111% increase over the same period last year. It is an interesting contrast, but I wondered how the Kindle Fire’s sales compared to those of the iPod Touch.

My reasoning in comparing the two is that the Kindle Fire competes more directly with the Touch than the iPad. The iPad has a 10″ screen. When the first 7″ Android tablets hit the market, Steve Jobs said that Apple had considered smaller tablets, but found that the iPad was the smallest device they could make that allowed a significantly broader range of interactions than the iPhone. You can type on an iPad, as well as create documents, spreadsheets, and presentations. The Kindle Fire, on the other hand, is a lot like a big iPod Touch. The bigger screen is better for reading and browsing the web, and perhaps a little better for viewing movies. On the other hand, the iPod Touch is significantly more portable; it fits in a pocket, the Fire, in a purse.

I wondered how Kindle Fire sales compared to iPod Touch sales. Apple reported that iPod sales were down 21% to 15.4 million, but over 10 million of those were iPod touches. With a little digging, I found that Apple sold about that many iPod Touches during the same period a year prior. So, even without an update, the iPod touch is selling about twice as well as the similarly priced Kindle fire. Of course, the Fire seems to be on an upswing, while the Touch is just holding steady.

Will Hollywood Look to Apple to Lead them out of the Amazon?

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After last week’s tremendous public outcry over the SOPA and PIPA bills forced the TV and movie industry and their hired hands in Washington DC to retreat, Paul Graham announced that he was interested in funding startups that might have what it takes to “kill hollywood.”

Graham is a successful software developer and entrepreneur who started YCombinator to take advantage of the mismatch between the traditional venture capital business model and the realities of post-dotcom boom Internet startups. He concluded that SOPA and PIPA were symptoms of a large but dying industry that could do “a lot of damage to civil liberties and the world economy on [its] way down.” Hastening their demise would be both a broad public good, and a good business.

Graham stated the problem broadly, asking entrepreneurs to think about what people are going to do for fun in 20 years, instead of what they do now. Graham sees the potential for continued growth in games, and other types of sites, but also sees alternatives to the ways movies and shows are currently produced and distrubuted.

A few days later, on Hacker News, YCombinator’s social news community, someone posted a link to Amazon Studios. Amazon Studios is at least a few months old, but if I’d heard about it before, I’d forgotten it. Amazon Studios says :

We believe 21st-century technology creates ways to make and share movies and scripts more easily than ever.

  • Get noticed. Your work will be shared with a global community of filmmakers and fans, who can offer revisions and advice.
  • Get your movie made. The goal of Amazon Studios is to work with Hollywood to turn the best projects into major feature films.

They run monthly contests with cash prizes for writers and film-makers.

Amazon Studios positions itself as a partner to Hollywood, but in thinking about it, I realized that Amazon already has Hollywood pretty much surrounded. Over the last 20-30 years, the overall importance of revenue from first-run TV, and movie box office has declined as a growing number of broadcast and cable TV channels created demand for TV show reruns, and revenues from movie rentals and DVD sales grew. Lately though, DVD sales have been declining, and BlueRay sales haven’t compensated, because more and more people are turning to digital distribution and streaming through Netflx, iTunes, and Amazon.

In other words, the makers of TV shows and movies have long depended on Amazon for a significant amount of their revenue, first from DVD sales, and now, increasingly from digital downloads. The Kindle Fire was aimed squarely at enhancing Amazon’s position in this market. It’s also worth considering that Amazon uses free digital downloads as an incentive to get people to subscribe to Amazon Prime.

On the other side, we have Amazon Studios, gets Amazon involved in the creation of new movies. They may be working with Hollywood, but part of their appeal is clearly to creative people who were, in one way or another, shut out of Hollywood.

This is similar to how Amazon approached the eBook market. They did deals with publishers to get the rights to distribute books on the Kindle. To secure those deals, they surely used their position as a major sales channel for traditional books. Once the Kindle was off to a good start, they started enabling independent authors and small publishers to sell their own eBooks through Amazon. Now they are starting to do deals directly with authors, taking over the role of publishers for both vetting and editing books, and underwriting their creation with cash advances.

So, how long before Amazon starts funding some of the movies themselves?  It might take longer, because movies are more complicated to make than books. Also, theatrical release is still an important part of the movie business; box office receipts are an important revenue, and it helps generate the awareness needed to drive the sale of the digital downloads.  Its also worth keeping in mind, that Amazon owns IMDB, which helps moviemakers find the collaborators they need to get movies made, and helps consumers find out about movies worth watching.

All of this puts Amazon in a strong position vs Hollywood, but its even stronger if you step back and consider how important the book industry is to the movie industry. One of the most valuable film franchises in the last few decades has been the Harry Potter films, which, if it isn’t obvious, owes its success to the Harry Potter books. The same is true for many other films. The movie industry reduces its risk by drawing on successful books.  Doing so gives them added confidence in the underlying story, and provides them with a built in audience, and built in cultural relevance. Unfortunately for Hollywood, Amazon seems likely to gain a favorable position for the film-rights for more and more books.

This is good for Amazon, but also, I think, for Apple. Apple doesn’t encircle Hollywood in quite the same way Amazon does, but iTunes is an important distribution channel for movies and TV shows. Another thing Apple has is cash, lots of it. Movies are often financed, in part, by distribution rights. Wariness over Amazon’s position is going to drive the movie studios towards Apple (just as of fear of Apple’s power drove the record labels towards Amazon), Apple’s ability to help fund new movies and shows, in exchange for favorable distribution rights, seems like it will draw them even closer to Apple.

We shall see soon enough, I guess…

The Pettiness of Apple’s iBook Author License Agreement

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Today Apple held an education-focused event where they announced a major upgrade to iBooks and iTunes U, the launch of a textbook initiative and a free OS X-only tool for creating rich, interactive iBooks called iBook Author. Apple has received both praise, and criticism for their efforts, but one criticism stands out.

Dan Weinman called attention to a clause in the iBooks EULA which prohibits creators from selling anything they generate with iBooks Author anywhere but Apple’s iBookstore (they can give the books away wherever they’d like).  This has made a lot of people upset, and brought some people to Apple’s defense.  Apple’s defenders argue that it is perfectly reasonable that their Apple’s free software not be used to make a competitor money.

That may be true, but it is hard to see this as anything but a small and petty move on Apple’s part.

My perspective is this: without this restriction in place, how likely is it that someone would use iBook Author to produce an ebook for commercial sale and NOT offer it through iBookstore, considering:

  1. Apple makes the best device for viewing such publications
  2. Apple sells more of them than everyone who makes anything remotely similar, combined
  3. Apple offers the best ecommerce options for selling them?

Further, and for the same reasons, how likely is it that the sales through that alternate channel would be anything but a drop in the bucket compared to what flowed through iBookstore?

If, at some future date, Apple no longer makes the best device for viewing such content and/or, has serious competition for market share of iPad-class devices, and/or doesn’t have the best commerce system, then creators will have plenty of incentive to recreate their publications in order to get around this restriction anyway.

In the end, I think the ill-feelings this restriction creates is more costly than any additional value it might help Apple capture.

Chris Dodd Hates Competition

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“Don’t steal!

Politicians hate competition”

I was reminded of this corny old joke when I heard that former Republican Senator, Chris Dodd, was critical of the way some technology companies were involved in a broad-based effort to defeat some odious anti-piracy legislation.

Dodd, who vowed not to become a lobbyist, before becoming the head of the Motion Picture Association of America (one of the pre-imminent entertainment industry lobbying groups), said, in an official statement:

[…] some technology business interests are resorting to stunts that punish their users or turn them into their corporate pawns […]

In other words:  “Corporate pawn, that’s my job!” It seems clear to me that Dodd’s concern is that it is going to be much harder for a guy like him to sell himself if, as he views it, people are just giving it away for free.

I have a different, more optimistic take, which is that it is going to be far harder for organized, entrenched, minority interests to have their way when individuals and organizations can quickly assemble large collations to represent their own, shared, interests.

For Innovation & Freedom, Against SOPA and PIPA

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This website, like so many others today, has “gone black” to one degree or another to protest the Stop Online Piracy Act (SOPA) and Protect Intellectual Property Act (PIPA) bills being considered by congress.

These bills have been bought and paid for by the lobbying wing of the entertainment industry. They are ostensibly about combating people who are profiting from the piracy of copyrighted material, like music, movies, and TV shows. There are many, myself included, who think these bills will do little to achieve that goal, but they are certain to hurt of Internet security, innovation, and free speech.

Congressional supporters of the bills and the Whitehouse have started to recognize the power of public opinion against these bills, and may make concessions on their most odious aspects, but we need to keep pressing back, hard, because the supporters of these bills will keep pressing forward.

Bills like this threaten innovation and the diversity of opinions and viewpoints the Internet enables. Irregardless of their specific provisions, they create an environment that make it harder for small, independent players, like this blog, to exist. Doing so reduces competition faced, more established, players.  It also reduces the challenges to established political parties.

I feel incredibly lucky to have grown up in the era of the personal computer, the Internet, and the limitless possibilities they afford. So much has changed in the past two decades, and I see room for decades more innovation and improvement in every aspect of our lives, but only if we can stop SOPA, PIPA, and similar attacks.

The Electronic Frontier Foundation has provided tools for reaching your representatives.

For more perspectives: