Sunday, January 14, 2007

The Apple Impact

Tuesday was a dramatic day which has the potential to be of greater direct economic impact than the release of the Macintosh. While the Mac release was of profound emotional impact to many people - its economic impact was tortuous and indirect: Steve's ouster from Apple, the rise of Windows, the slow incremental progress of Windows, and Mac OS X wandering the hinterlands under the alias of NextStep 1.0, 2.0 and 3.0.

The Apple Impact

Three things have just happened; here they are and thoughts on their implications in order of importance.

- Bill Gates is done representing the technology company known as Microsoft.
- The product never-to-be-named iPhone will be an incredibly disruptive economic force.
- The vaunted mobile economic deformity known as the "Walled Garden" just fell.

1. Bill Gates

One of the most tragic outcomes is what will now have been Bill Gates last major speaking event on behalf of Microsoft. I like Bill Gates. I have been fortunate enough to see him at multiple resolutions; room of 20 people, room of 200 people, room of 2000, satellite to 20,000, tv broadcast to millions. He has an equally compelling style, regardless of the resolution. Never as good as Steve Jobs at Moscone resolution - but consistently engaging. Good-bye Bill.

I have got to believe that at least 50 people in Redmond went packing after the Gates' CES speech and the Job's Keynote on Tuesday. The stark contrast couldn't have been greater. Not the contrast between the two men's styles but between what they "hath wrought".

I think a fly on the wall would have heard something to the effect of the following between Gates and Ballmer Tuesday night, "I didn't put you in charge of this company for me to be continually humiliated by its products. Have you ever installed a Macintosh application? Do you realize it takes all of about 2 seconds! Do you realize IE7 breaks more websites than it works with? And 2007 bring an unprecedented level of needless customer disruption with difficult Vista, SQL Server and Exchange Server migrations? And Zune, let's talk about Zune. If there was a massive market in imagined, archival technologies with consumers breathlessly awaiting the release of a product that looks like what an MP3 player WOULD have looked like if they were technologically possible in 1969, then it would be a hit.

I told the audience I was moving on to infectious diseases - and I am - but the one thing I can't cure is what ails this company. Good luck."

2. The iPod that makes voice calls is an incredible disruptive economic force.

First, it may not ever be called the iPhone really. Not because of trademarks, but because it makes the wrong point. I don't want my phone to play MP3's - that is just plain stupid and a waste of time. Now, on the other hand, if my iPod could make phone calls - that would be cool.

(Subordinate prediction - music playing is the new flashing clock in all devices. Whether they need to or not everything over the next decade will end up with an MP3-playing version as degenerate marketing types attempt to cash in on trends they don't understand. Microwaves, washers, refrigerators will all join the fray)

Anyone watch other stock prices besides AAPL during the keynote? RIMM was a fun one - down about $10. (For a contrary viewpoint which I have earmarked for future time-capsule opening comes compliments of Mr. Richard Windsor at Nomura Securities here

Basically this device from Apple marks several beginnings of the end...

RIMM - big hurt
Palm - big hurt
Tivo - small hurt (To be fair this is "iTV" impact and appears to not challenge DVRs yet.)
TomTomGo - big hurt
Zune - sent even further to some zombie netherworld of imagined archival technology
Sony Mylo - dead
Nokia - equally expensive devices look like they were made up on boyscout jamborees in the "Get Smart phone shoe" contest.

Alright, maybe overly-dramatic but the "oh crap" factor at these companies has to be off the scale. Well except for my comments on Zune. And I am confident Nokia will continue to make lots of phones that are free with your new cellular contract.

3. The Walled Garden just fell - and no one is talking about it! (Mr. Jobs please bring down the wall.)

The most dramatic impact is the beginning of the end of the walled garden. Maybe not as quickly as the Berlin Wall since we have to get through FCC approval, outlast the Cingular exclusive, withstand first bugs, and wait for the first wave of volume effects to drop price. But to all the device makers and cellular service operators who somehow think they are value added service providers, content providers, platform providers, API providers, etc.. - TTFN. It is over, over, over. While you weren't looking, Cingular snuck down into the garden and unlocked the door to the passageway under the moat and guess who they let in? AAPL, GOOG and YHOO, which if my math is correct represent about 100 billion million google trillion dollars of market capitalization and 94.5% of the creativity in the world of consumer computing technology! (Actual market cap is $275bn, actual creativity percentage is 92%).

Real web pages on handheld devices. Real access to Google services. Real email access via Yahoo. Now look at the craplets that infest your handheld or phone today. Which do you want?


Will all of this happen overnight? Of course not. See CNET for a list of all the question marks they have ( Will only Apple reap the reward of the Apple Impact? No. But, take note, Apple will not make the Mac user interface mistake again. They have patented their innovations to the bejeezus and will defend them to the fullest. So unlike last time the copycats will be creative as they aim to create, gain and retain market share.

Its been 23 years since 1984, isn't it time for some change?