Wednesday, July 25, 2007

The (real) numbers

Apple released its quarter numbers today and as opposed to analyst's estimates, these ones are real. Apple sold 270,000 in the quarter but those numbers are not the most impressive. The company suggested it will have sold 1 million iPhones by the end of the current quarter. It took seven quarters for the iPod to reach that number. Revenues were up almost a quarter and earnings almost three quarters. Apple sold almost 10 million iPods in the quarter and almost 2 million Macintoshes (or a 33% increase). The iPod sales were 21% higher year over year. All of those numbers seem to suggest that some of the "analysts" that yesterday were yakking about big declines were more than a bit off the mark.

Tuesday, July 24, 2007

Developments on the iPhone - coming out of the Hyposphere

Today saw a lot of news about the iPhone. Some of it moved a pretty over-heated market. Apple took a percentage reduction in price which might have reflected reality or may have brought prices down to more reasonable levels. Apple has been pretty muted - although they did a good job of getting people to know about the product. But some of the cheerleaders did what you would expect.

First came some harder sales figures. AT&T suggested that there were 146,000 activations in the first two days of the product. That is under some estimates, especially Goldman's numbers - but the AT&T numbers may not reflect total sales because of delays in activations. (Although one would think people would not buy a $600 phone and then dilly dally with the activation. ) By any account AT&T's number is a huge one for the launch of a consumer device but not in the stratosphere that some people suggested sales would be. Pacific Crest’s analyst suggested that the expectations were wildly out of synch with reality. AT&T noted that sales continue to be strong, which was confirmed by a random sample of local stores in my area. Apple said they still expect to sell 10 million phones by the end of 2008. One other analyst from CIBC world markets suggested that their spot checks suggest that demand has slowed in the last ten days. I am not sure how to interpret any of that. The market report of the CIBC estimates indicated that the firm had a possible conflict on the issue. They also suggested that a 3G phone would be out by November. Piper Jaffrey, who has been a cheerleader on this product, said the numbers mean little for the long run success of the project and also touted that Apple today announced a $69 Applecare plan. The real numbers are what they are and analyst’s guesses area also what they are. Better to wait for the hard numbers. The real numbers of 146,000 are pretty phenomenal. I suspect that a couple of things happened. First, there was an initial rush - which was visible. Second, demand continued to be steady for a while but finally sales came more into the realm of a normal product. I expect that as people understand the capabilities of the phone people will continue to be attracted to it.

Second, came some reviews. Eric Barger, on Appleinsider offers a comparison with the newest Blackberry. It is one of the most thoughtful reviews I have seen. He was generally complimentary to the product and expressed real appreciation for visual voice mail and response time on the screen. He also banged the Balckberry on the inflexibility of the contact fields. In an interesting twist, which I think is fundamentally accurate, he raps the Blackberry compared to the iPhone on almost all features. He does note that Edge (the iPhone network) is slow. But the integration of functions in the Safari browser and other features are far superior to the Blackberry. He compares the push email of Blackberry to the iPhone and has nice things to say about each- although for the hardcore email user he rates the Blackberry higher. But he also raises questions. For example, in the iPhone one must download a message to be able to forward it to another person. The synch features for the Blackberry are also compliented. I've found and he agrees, that for heavy use, WIFI is superior for the iPhone both because of the speed and also because all the functions perform more smoothly. But when it comes to the calendar function the iPhone outshines the Blackberry easily. (And I agree). The integration of features in the iPhone is something I appreciate more every day. He was not so complimentary on the earbuds(for example no noise reduction), nor the lack of ability to use a type in on the contact list. He also is annoyed that the current design limits the number of earphone jacks that can be used. He is very complimentary of the Video iPod part of the phone - saying it is easier to use than the regular video iPod (expect those features in generation six). Although he dinged the bluetooth battery consumption (I have not noticed it) he thought the integration of the iPhone bluetooth functions was far superior. One feature I have liked has been the ability to switch between the Motorola unit in my car, my headset, the speakerphone and the handheld device. I am not overly impressed with the speaker phone. And I really like the conferencing feature which is very simple. He also pointed out some obvious comparisons that are likely to change soon - for example you can download ring tones to the Blackberry. Not yet on the iPhone.

The Blackberry does not have a camera and the iPhone is ok but not close to perfect. I have always thought the camera on a phone is a bit of an unnecessary add on. The iPhone is ok in good light but I would prefer to use something like a real camera. Compacts today are small and easy to pack in a briefcase.

He concludes that there are eleven feature sets which should be looked at which include - cut and paste(I was surprised not to find that since it was an Apple essential in all OSs going back to the original OS) , a landscape keyboard (which you can use in some programs but not all), a better file system, mass email deletion, mass email deletion, a way to use the phone as an internet connector for your laptop, MMS support (not something I care much about), ability to use WAV and MP3 in email, and a couple of other features. But Barger calls himself an iPhone convert. I suspect that many of these ideas will come out in software updates in the coming months.

Bob Levitus, of the Houston Chronicle was a lot briefer, he made the following comment “When the review unit goes back to Apple, I’m buying one.” That about sums it up. As noted, with three weeks of use I am still a very happy camper. For the last few days I have been using it in Mexico. The phone coverage seems to be better than my Razr in the same places.

Hooray for Adam Schiff and Michael Castle

In a burst of good sense yesterday the House passed a bill by Adam Schiff (D-Ca) and Michael Castle (R-Del) to prohibit Members of Congress from employing spouses in their campaigns. In my local area John Doolittle was a prime example of why the practice was so terrible and why it should have been banned long ago. He employed his wife Julie in a kickback scheme (Doolittle uses other terms but that what the practice looks like to any normal person) which offered 15% of campaign donations to her "consulting" firm for campaign work. That was not illegal but it certainly stretched the bounds of credible ethics.

The practice was not limited to Doolittle. In California Rep. Zoe Lofgren (D-Ca) also used the arrangement by employing her husband's firm and collecting $280,000 for the firm over the last several years. There are all sorts of justifications for this sleeze, none of them good. Lofgren said her hubby had other clients and this was only part of the work the firm did. The practice was used in a couple of variations by many members of congress on both sides of the aisle. One wonders why Congress is held in such low esteem.

Schiff summed it up with a statement yesterday "You're essentially telling a donor, 'Part of what you give to my campaign, you give to me.' That's inherently a conflict." Truer words were never spoken. Let's hope the Senate adopts the same measure.

Sunday, July 22, 2007

A common soul

This afternoon I went to Mexico for some meetings in the central part of the country (Aguascalientes, Guanajuato, Zacatecas). I sat next to a woman who was only going to Mexico City. She helps museums present themselves to the world. She is a New Zealander who married an Australian. She said that the minute she first came to Mexico she somehow felt at home. Funny, I felt the same way also.

The work she is doing is interesting including working with an economics museum in Mexico. She explained that museums have several problems. First, they take all comers - so the range of expertise/understanding is quite varied. That presents a challenge to interest the well prepared and the not-so-well prepared. At the same time museums face the same set of issues that other institutions face in regard to expertise. No longer is it possible to assume that because you are a museum or a curator that you will know the field - just like professors or doctors or other professionals the assumptions about expertise are changing. Finally, they have the problem of catching the moment for museum goers. How do you catch their attention - offer them somethng interesting and yet not overwhelm them? I thought it was an interesting perspective.

Saturday, July 21, 2007

Saying Goodbye to Verizon

For about the last year I have used a Verizon card for access to data when I could not get wireless. I maintain a Tmobile hot spots account because that seems to be very handy. But I have decided to drop the Verizon service.  That came about because of a couple of factors.  First,  I found I did not use it as much as I thought I would - open wireless (802.11) is much more available than it was a year ago.  Second, I bought an iPhone. FInally, compared to Tmobile's Hot Spots it is pretty pricey.

Understanding speed involves three measures - the speed at which a file is uploaded, the speed for a download and the time it and latency (the time between when you do something and when you actually see it happening). The latter is done in miliseconds. But even with that close measure you can see the difference with much higher latencies (or at least you have the perception that it is happening).

To give Verizon its due there were a couple of things I liked about the network. It was ubiquitous. I do not think I found very many places in the US where it was not available. There were some perceptions of differing times do get things done depending on the strength of the signal (Latency) but it mostly lived up to its advertising.

The rap against the iPhone is the Edge network.  So before I signed off I wanted to do a comparison of speed.

Here is what I found: 

For my office network the speed is pretty good - consistently at 1100 KBPS download and about 650 upload with a latency of 37-50 ms.  For my home network, which is Comcast, the down is just over 700 and the up just over 400 with a latency of 95. For Verizon the download is about 900-990 but the upload slows to between 110 and 120.  And the latency is a whopping 320-350 MS.

The speeds on EDGE are in the 175 range both ways with some latency - although I have not found a measure on my iPhone which can do that. So what I found is that for the kinds of things you are going to use the iPhone for, the speed is acceptable but especiallt for uploads not all that bad. As I have used the phone so far it has been for email - where you download only part of the message and send things in short bursts. Some very limited web surfing - which is admittedly not fast. And maps - which is just fine.

When the iPhone was pre-release there was a lot of techie talk that AT&T and bumped the network a bit. I suspect that is true - but the next generation will probably be a lot better. I am not sure how much more speed can be wrested out of the existing system.

Thursday, July 19, 2007

The Forgotten Man - Post 2

There are two other things that I thought were excellent about Amity Shlaes book on the depression.

First, she spends a lot of time explaining how the FDR people aggressively used legal tactics to move their political philosophies forward.  But at the same time she also details how completely silly their tax philosophies were.  The FDR people assumed the economy was a lever that they could manipulate (as did Hoover) - the difference being that their perception of what was permissible was quite different.  Lord Acton's phrase about power comes to mind.  The legal efforts to get Samuel Insul and Andrew Mellon and the Schechter family are three examples and well detailed in the book.
Second, at the end of the book she goes through in pretty good detail what happened to many of the major characters in the book.   That was a good way to finish off the narrative but it also tied together some important issues.

Although Shlaes does not make the connection but I did between the FDR people and the current Administration.  Both seemed to care more about their agenda than the constitutional limits that should define the system.  That was Sumner's point in his essay that gave the title to the book - and would that more elected officials understand the moral hazards of operating outside reasonable limits.

Wednesday, July 18, 2007

The Forgotten Man

Amity Shlaes' book (The Forgotten Man) is a wonderful piece of work.  Schlaes explores the responses of both Herbert Hoover and FDR  to the depression.  What struck me most about the book (Shlaes is even handed in her criticism of both presidents.) was the similarity of response between the presidents.  Both started with a fair dose of hubris about the capabilities of policy makers to successfully change behavior.   Hoover started with a history of being a successful engineer and looked at the world as a series of problems which could be solved.  Want to understand how to feed people after WWI - it is an engineering problem.   Want to find out how to build business in the country as Secretary of Commerce - again an engineering problem.  Want to help with power and water problems - another engineering problem.  FDR came with advice from his "brain trust" both inside and outside of the administration (she mentions Keynes as a relatively constant commentator to FDR).

The discussions about FDR's brain trust center on a couple of important people including Rex Tugwell, Henry Morgenthau, Robert Jackson and FDR himself.    Shlaes begins her discussion with a short history of a group that went to visit the Soviet Union early in its history - these were young academics - Tugwell, and Stuart Chase (who was later a liberal journalist) who journeyed to Russia and actually met Stalin. These guys were fooled by what was going on in Russia.  Schlaes also discusses the roles of Harold Ickes and Felix Frankfurter and has an absolutely wonderful discussion of the conflict which caused FDR to try to pack the Supreme Court.

She describes, in pretty good detail,  the work and failures of the National Recovery Administraion.  She does this by describing a decision against a small kosher chicken merchant who fought against the absurd controls in the NIRA (the National Industrial Recovery Act).  The Administration tried to persecute (not prosecute) this small business and make them an example.  But this family decided to fight, and they won.

Shlaes also presents, in rather glorious detail, the flexibility that FDR had in pressing his case.  Indeed he did not seem to be guided much by ideology - although a lot of his staff came with a high degree of confidence that they could change behaviors.  They knew they were right and they were not going to allow some pesky data to turn them around.  FDR was able to take an essay that had been prominent with his generation of undergraduates (William Graham Sumner's Essay) and turn the principles in the essay on their head.  Sumner's point was to discuss the person who pays for services designed to help others - FDR called the forgotten man the person who lost out in the depression and needed help.

Shlaes asks the question why FDR is given the credit for solving the problems of the depression when the data suggests that all of his efforts did little or nothing to reduce double digit unemployment for most of the thirties.  She also describes in great detail the huge abuses of power that people like Robert Jackson (who worked for Morgenthau then went on to be AG and a Supreme Court Justice and part of the Nuremberg trials after WWII) and Ickes took to pursue enemies of the Roosevelt administration.  There is a continuing discussion of  Andrew Mellon,who is also discussed in some detail in the book for his role as Treasury secretary, the Roosevelt's efforts to make him a scapegoat for the wealthy and his magnificent gift of the National Gallery.

What Shlaes does not expressly do is the intellectual history of the era that brought people like all those mentioned above had in common.  There is clearly a link between the excitement that Frederick Jackson Turner (mentioned in the book) and Frederick Winslow Taylor (also mentioned) created for people as diverse as FDR, Hoover and Chase.  Shlaes' book is worth the read just to get a good picture of both the data from the era and the people who made the history.  

Perhaps the most interesting picture for me was her constant description of Wendell Willkie.  Willkie started out as a energy exec and a democrat.   She also gives you an idea about the development of electric power in the country.  From the first efforts by Samuel Insul toward Willkie's holding company to the determined efforts to create public power in the TVA and the Bonneville Power system. 

If you are interested in this era in history or even in the precursors of the debates we are still living through today - this is a great read.

Monday, July 16, 2007

A polite response to an intemperate column

Mike Elgen of Computerworld is tiwtterpated about loss of communications on airplanes or so it seems.  In a column today he said the following:
"We spend billions more (after the money we spend on transportation) on taxes, year after year to fund the Federal Aviation Administration and the Federal Communications Commission.  We pay your salaries and pensions to ensure our flight safety (FAA) and to maximize the quality of electronic communications (FCC).   All of you are failing us. It's time to step up and do your jobs. During our in-flight time, you airlines hold us as information prisoners and incommunicado for all in-flight time and much more of the time spent in airlines on the ground.  It's the sole remaining place (besides jury duty) where millions of busy people are unnecessarily forced to sever all communications ties." (Emphasis added)

After this rather intemperate start Mr. Elgen makes some pretty reasonable suggestions.  He comments that there are pretty simple technologies which would allow cellphones and wi-fi to be universally available on airlines.  But then goes on to conclude that we should ban cellphones during flight.  Right now cellphones can be used when the wheels hit the ground on flights.  I fly a lot and would be driven bozo by being contained in the small space of a cabin and listening to inane conversations for my flight.   I once flew with Jesse Jackson on a flight from LA to Sacramento. I think Jackson wanted to impress the rest of us in First Class that he was something, so he spent the entire flight on the Verizon installed phone. His side of the conversation was spent mostly on gossip, at least as far as I could tell.   All that showed me was that he cared remarkably little for the charitable donations that he lives off of.

As to the wi-fi - my expectation is that it is likely to come and soon.   I have noticed in recent months that the airlines I fly have now begun to install powerlinks so that you can use your laptop for the whole flight.  You need a cable, but that is fine.  

The first concern on airlines should be safety.  Too often we are caught up in the hustle and bustle of our ability to communicate immediately.  We should start with a deep breath.  Understand that less than a decade ago all the crackberries and cellphones were not there is such profusion and the globe continued to turn.  But then I should admit that I am one of the first on the plane to turn on my cellphone when I have the chance after landing.

Sunday, July 15, 2007

Two surveys on the market for iPhones

Last week two surveys were released on iPhones which were quite interesting.  

#1 - According to American Technology Research a quarter of the purchasers of the iPhone switched from another cellular carrier.  

#2 - Lightspeed Research (which has an online panel) did a survey conducted on July 5. (39,000 people on the panel) They found the following;
* People in the West were almost twice as likely to purchase an iPhone with people from New England and Mid-Atlantic regions the second level purchasers.  That seems to confirm the data I posted in the simple survey of availability soon after the launch. (Which simply reviewed the Apple site for RED-DOTS - that store was out of product.)  But according to Lightspeed only about 6% of people who wanted a phone were disappointed.  That seems to show a pretty good initial distribution channel.
* Just over a third of the respondents claimed to have purchased more than one iPhone.  Remember that Apple initially limited purchases to one per customer.
* Product recognition was amazing - 90% of the respondents (you would expect this partially because of the Lightspeed panel - which is made up of more web-saavy people than the average person on the street).
* Apple's demographic on this product is younger - almost two thirds of the initial buyers were 25-44 (45% 25-34 and 20% 35-44) while only 9% were over 44.  Of those planning to purchase an iPhone the same numbers seem to apply - 40% 18-24, 36% 25-34, 33% 35-44.

Friday, July 13, 2007

Lloyd Turner's Back

Last night the Rivercats started the second half of the season.   It was a good game.  The Cats went out early with a 5 run fourth inning. They added one in the seventh.  But then in the seventh and eighth the Portland Beavers added three each so that we went to the ninth tied.
The team has had a lot of mobility this season.  There have been 128 roster moves.  Last night two of those were important to the game.  Ron Flores, who is back from a couple of months with the As had a pretty rough outing in the seventh inning.  Flores, who holds the record for the team of the most appearances for the franchise, got his ERA beaten up a bit.  The pitching staff had a total of 17 strikeouts over the game.  Those three runs moved Ron's ERA up to 2.38.
But the real fun in the game came in the bottom of the ninth.  Daric Barton got up in the ninth and hit a double.  They then brought in Lloyd Turner to run for Barton. Turner has bounced between Stockton and Sacramento this season.   He has brought his hitting up a bit during the season to .203.   But what he has lacked in hitting, he makes up for in base speed.   Jeremy Brown, whose base speed is not legendary, came up to bat and hit a long single.  That was enough for Turner to race around home and we won the game.  It made for an exciting finish.

Thursday, July 12, 2007

An informal survey on iPhone sales

I was in two AT&T stores today in the Sacramento area and one in the Bay Area in the last couple of days.  I asked each how sales were going on the phones.  All three said about the same thing.  They are selling about 10-12 phones a day and that has been pretty consistent.   There seems to be a lot of walk in traffic.  All three stores had a lot of foot traffic and one sales associate said they had talked about doing a separate person for iPhone accessories (that suggests some volume in those products).  I have no idea about how those three stores compare to the full set of AT&T stores.

My second comparison was with the two Apple stores I have recently been in.  The AT&T stores are a lot less consumer friendly.  The Apple stores seem to be able to handle the volume of business but in the AT&T stores it seemed to take a bit of time for customers to get through the line.

Scene Completion - a WOW from Carnegie Mellon

Researchers at Carnegie Mellon University demonstrated a new technology in a paper ( which allows a digital photograph to be altered to either add or subtract elements.  What is interesting about the new idea is not the ability to edit (they describe it as "reconstructing" the photo - a very skilled user of Photoshop or some other programs like Graphic Converter can do that now - but the linkage to a group of photos. In this case they used Flickr as their database to find the photo which could be used to correct the image.  I suspect this will take a while to get to the market but the possibilities are quite interesting.   The example above was used to take out an annoying element in a photo which has an unwanted rooftop (lousy composition) and substitute a more scenic element.   All photographers get caught either a lot or a little in missing elements when they are composing a picture.  This technology would allow an after the fact do over.   The paper also shows some other examples where, Zeliglike, the technology can also be used for adding new elements to a photo - in that case they added a group of people to the Abbey Road Album's pictures.

The paper will be presented in San Diego in August, but if you are interested in digital photography you can read it before the conference.

Wednesday, July 11, 2007

Lady Bird Johnson

The former first lady died this afternoon at the age of 94.  I recently read the Beschloss book on the Johnson tapes.  Much of the book confirmed my thoughts about the people around LBJ.  That is, all but Lady Bird.    The most striking case in the book was with the Walter Jenkins case.   Jenkins was caught in a pretty striking sexual indiscretion and LBJ wanted to cut him loose, but according to the tapes, Mrs. Johnson reminded her husband of Jenkin's loyalty and long history with LBJ. In the tapes you hear a very resolute Lady Bird telling LBJ that he could not do what naturally comes to many politicians.   I suspect that was not the only instance of her courage but I was impressed deeply with that one.

What Passes for Wisdom in Washington

Of these two pictures which one do you trust more? (Note the one on the right is a Member of Congress) Representative Edward Markey (D-Mass) today commented at a hearing that he does not like the deal on the iPhone which restricts its' use to one network, AT&T.  Mr. Markey, who should get the gem of the week said "You're stuck with your iPhone and you can't take it anywhere."  
I have two responses to his comments.  First, if you extended his logic to, for example, the auto industry he should logically lambast Chevrolet because you can't get a Jaguar logo on their cars.  You can't even get a Ford engine in their models.  (I realize that with globalization some wags might suggest you cannot get a Jaguar engine in a Jaguar - but that is another story.)  Cellular customers have a wide range of choices.   Apple developed the iPhone with features and if you want those features you use the network they chose.   At some point, if markets really do work, the key feature which is only available on an iPhone at this point, will be produced by some other carrier or cellphone maker.  That is the way markets work.   Markey was really looking at those annoying cancellation fees - but when is there an example that a regulation reduced consumer costs?
The second response is more basic - "You're stuck with the Congress and you can't take it anywhere."  Would that we had as much choice in our elected officials as we did in our cellphones.  Certainly the cancellation fees with cellphones are a lot cheaper than with politicians.

Sunday, July 08, 2007

The two sides of the issue on the California Budget

In a column for the Sacramento Bee this morning, the Executive Director of the California Budget Project, a foundation funded "non-partisan" organization made the following comment - "This year's (budget) dance results from the divergent approaches to dealing with what budget wonks call our structural deficit - that chronic mismatch between the money the state takes in and the money it spends on the public services Californians have come to want and expect."   The Executive Director then asks "Why, even in relatively good times, California's budget problems persist and what must we do to fix them permanently?"

But note to the Executive Director - a budget includes both revenues and expenditures.  The substance of this op-ed is how horrible the California tax system is.  Indeed, the California tax system needs to be improved.   We rely too much on capital source income - so that in times of economic vibrancy we get loads of dough from capital gains and options realizations.  But in times like when the NASDAQ took a dump - the money does not roll in.   So the Director suggests that we need to get our "fiscal house" in order.  But only on one half of the budget.

Unfortunately for those in the state who are really interested in thinking about the public fisc - the director of this organization seems only to look at the revenue side of the ledger - we should raise corporate taxes, reduce the fraction that we need to pass a budget, and close out the tax "loopholes."  There is no thought about the relative costs of changes in the tax code.  One thing any student of taxes learns early is that changes in the tax code have dynamic effects - and sometimes it is a good idea to think about those before they are enacted.

The director has no thoughts about whether we could find some savings in the expenditure side of the budget.  As the Governor pointed out last year, revenues grow pretty rapidly - almost as you might expect in a vibrant economy like California's but expenditures, based in part on a number of requirements that should be looked at with the same kind of care that the tax side seems to merit.

One would hope that any serious thought about how to solve our perennial budget problem would think about the full range of alternatives.  But for the California Budget Project answers come from one side of the ledger.

Thursday, July 05, 2007

Two views of iPhone margins

Techdirt did a post today which suggests that the tear downs of the iPhone by Portelligent and one other company are probably a bit off the mark. Business week and a couple of other sources suggested that the margins on the phone, based on parts costs, were in the range of 55%. Both of the companies purchased an iPhone and then broke it down to look at the components and then costed out the individual pieces. But as Techdirt commented those estimates may wildly out of kilter. They correctly point out that a good part of the cost of the phone at this point involves the development cost of the phone (all of the bells and whistles of the phone did not just magically appear when the components were assembled).

The second issue on margins came in an NYT article on the people who bought an iPhone thinking they would be able to arb the device for a healthy profit. With dancing profits in their heads several buyers got two phones or had a friend stand in line and then thought they would be able to sell the thing for a hefty markup. Some buyers of the Nintendo WII were able to secure the game box and then offer it on E-Bay or Craig's list for a healthy profit. The Times pointed out that Apple has done a pretty good job so far of managing supply (although it also points out that the AT&T stores have a pretty consistent shortage of product). The Times compared this product more to a Harry Potter book (great to be the first one on the block with a copy) than a WII. That conclusion depends on whether the supply chain gets bumpy in the coming weeks.

The proto-iPhonearbers have the added burden of carrying cost, which the WII arber does not have. When you sign up for the phone you also have to sign up for a service plan which might run $60 a month or more. A few months of holding that could cut seriously into your potential profits.

When the Newton was pulled from the market I was amazed at how quickly Apple pulled the device out of the supply channel. I had a friend in Mexico who lost his Newton two days before the public announcement of Apple's withdrawal and called me to see if I could find a replacement. I began a web search and could not find a new one on any of the normal electronic sources.

Wednesday, July 04, 2007

More thoughts on the iPhone and its markets

Tyler Cowen at Marginal Revolution did a post this morning which casually mentioned that among the things he could do is type on this iPhone (He claims he cannot drive stick and some other things which I found curious).

One of the responses, from a Sociologist from Arizona named Kieran Healy made the following comment - "Based on that first comment, I will be interested to see how many MR readers will find the iPhone awakens their inner Galbraithian, Marxian or Veblenian economist, discount the judgment of hundreds of thousands of consumers, and insist that advertisers have duped all those buyers into overpaying for a product that allegedly has perfectly good market substitutes; that the masses just have the wrong set of preferences when it comes to assessing phones because necessary feature x is missing; or that people only want this new product because it will impress their friends. Perhaps EP approaches will offer a way to save face, because I'm pretty sure having shiny objects on one's person was adaptive in the EEA." (By the way his post on the iPhone is pretty good and also pretty funny - his comment on the Sprint counter campaign was spot on.)

I responded that most of the "experts" on the iPhone had been proven wrong. Many suggested that the iPhone, for whatever non-feature, would fail. It obviously did not. But in another post on Marginal Revolution someone said the initial success is based on a prime sub-group inclined to accept it. That got me to thinking who that sub-group actually would be. There are two possible that come to mind immediately. The first would be the Apple diehards. In the Amelio and Spindler era they were called Macintosh Evangelistas. I was an original Evangelista. Just as there are diehard Windows supporters there are also diehards for Apple - indeed there are even a small group who try constantly to berate Apple supporters. The second most likely group would be the techno-junkies who want to stay at the bleeding edge of technology. Both groups would create an initial uptick of people who would buy the product - pretty much without thinking much about the preliminary reviews. Galbraith claimed in The Affluent Society that business somehow manipulated demand but like most of what he wrote it was about 180ยบ off. I think the most accurate quote on Galbraith's economics came from George Stigler who said (on a picture for Milton Friedman) "All great economists are tall. There are two exceptions: John Kenneth Galbraith and Milton Friedman." (Galbraith stood almost 7 feet.)

But I would argue that there is also something else going on. If you look at the development of the market for iPods - the initial buyers were probably from the two groups mentioned above. All of a sudden, however, people began to see new ways to use the device. That happened with the original Macintosh (with WSYWIG word processing and with Desktop publishing). In the iPod cycle people began to think about linking blogs and broadcasting so we created Pod (and Vod) casts. My suspicion is that as the market for iPhones begins to elaborate that those kinds of new uses will also emerge. The linkage of full fledged browsing with maps and a personal contact list and calendar creates a pretty wild set of possibilities.

The most interesting thing to watch in the coming months is whether the kinds of new uses that have evolved with the iPod and the original Mac will also develop with the iPhone. For now, the cool factor is still there. I get asked at least once a day to show it off. But as happened with the iPod, if the thing begins to develop we may see some very interesting developments.

Tuesday, July 03, 2007

Global Warming and You

An Ipsos poll for the BBC on Global Warming shows some remarkable good sense. I think the results look to be accurate.

More than half of the respondents "have many doubts about exactly how serious it really is and believe it has been over-hyped." They question whether some of the motivations for the alarm offered by scientists is motivated by self interest or money. The poll found that several other things were more important to the respondents including terrorism, graffiti, crime and dog mess.

In my mind all of that shows remarkable good sense.

Baseball and Church

The last three nights of Rivercats baseball have been interesting ones. Our new catcher has hit a couple of homers for his debut. Kaz Tadano had a marvelous outing last night. Andrew Brown has looked good in two closing appearances.

But as I was at the stadium last night I was struck with some of the things that make every baseball game almost like a church service. The processional is like the national anthem. During the season there are some very good performances of the anthem and some less than good. Last night the woman who sang was very good. Also before the game we get the order of service - where players are introduced in their batting order. Another pre-ritual is the first pitch. In this stadium there are always a couple. Then there is the invitation - at the Rivercats, after the introductions and the anthem. A young kid, in this instance, invites us "Let's play ball" (Those three words we all want to hear.)

Then the game gets underway. There are all sorts of things that happen in every game. At some points the congregation is asked to be very involved, at others not so much. Many of these involvements do not always come in the same order. Inevitably the people in blue will flub something and the congregation is asked to join in - almost like the responses in the lessons. Some games, like some services, there are more opportunities to participate. But then comes the Seventh Inning - anticipation greets the away team for that inning because all the congregation knows what is coming. In the middle of the inning, almost like communion, everyone gets involved - a group helps to lead the crowd through - but everyone knows the words and almost everyone participates.

At the end of the game, people begin to peel off. But if you stay for the dismissal, the home fans of the congregation will get up to participate in the last out. All of those things give comfort to the regulars and even to those who come to the stadium from another place. Baseball, like church, is a group exercise. While you can watch it on TV or even listen to it, it is better when you can join your fellow parishioners right there in the church.

Monday, July 02, 2007

More on iPhone sales

According to Apple Insider the iPhone over the weekend beat the previous record sales for an Apple product by huge margins. Analyst Shaw Wu of American Technology Research estimated that Apple sold 250,000 units in two days (about half of what Piper Jaffrey estimated) - even with this lower estimate that compares to 59,000 units per day for the initial run of the Nano versus 125,000 for the iPhone. The Nano sold 1 million units in 17 days. Wu estimates that Apple will sell 2 million iPhones for 2007 and 7 million in 2008. That is more than double his original estimate for 2007.

The Apple Insider poll on iPhone purchases amounted to 85% for the larger model which is slightly under the PJ estimate but still pretty close for an unscientific poll. As of this evening there were about 10 California Apple stores with product and a lot more red dots were showing up around the country (meaning no sales tomorrow).

Goldman Sachs suggested that Apple sold as many as 700,000 units over the weekend.

There is also a developing body of iPhone Aplets or small programs which can be found at iLounge included so far is an ap that will search for the cheapest gas in an area. My guess is that the variety will proliferate quickly over the next couple of weeks.

Best line on the iPhone

On June 30 Lev Grossman of TIME had the best line so far on the iPhone.

"Somewhere in the unwritten amendments to the U.S. Constitution it is stipulated that every gadget reviewer is entitled to his or her personal iPhone quibble" - he then goes on to review those "concerns" and he concludes after reviewing this or that feature that was not included -

"Cold fusion would be great too, but you know what? Nobody cares. Steve Jobs has said, repeatedly, that this is the best iPod that Apple has ever made, and it is. It's also the best phone that anybody has ever made."

Things I would like to see in firmware updates

This third post is about the things that I would have liked to see on the initial iPhone but could be useful in updates. From my perspective they are minor.

Before I get into my top 2 plus one that seems to be common for others - there is a good post which compares the Nokia N95 which some people have suggested is the competition. That post on Scobelizer says the following - "The iPhone is superior in almost every way to the Nokia N95. The battery life is better. The contact management is better. The Web browser is better. The photo taking experience is better. The screen is better. The wireless management is better." The writer claims the only thing that keeps him on the N95 is a higher level of pixels on the Nokia device. He puts a comparison photo on the post to show the difference - looks to me like the iPhone photo could be easily color corrected in any photo program.

#1 - Print capability - this is a digital device, and thus most of what you will use it for is digital things but it would be useful to be able to print out some things. Currently, anything you create which you want to print (notes for example) gets emailed and then printed on your regular computer.

#2 - iRooster and other tune utilities - My favorite piece of software in the last couple of years was a small product called iRooster. iRooster I initially bought it because of the ad - turn your $3000 laptop into a $5 alarm clock. (Actually it is a $10 alarm clock because the software is $9.95.) What it does is allow you to use your tunes as an alarm clock - your laptop will wake up and play the song. The software is intuitive and bulletproof - with a couple of more features than just the alarm clock. Right now the iPhone only allows the iPod to be used as a music player. I would have liked (and expect relatively soon to see) an ability to apply different ring tones, especially sound files (my RAZR uses the Guiness characters to say - "your phone is ringing" - I expect that will be a simple fix.

#3 - Email for some users - I use a lot of web based mail and so am fine with the way the mail program works but some corporate users cannot access their home systems unless they are bounced in some way.

That is a pretty short list for a new device. I am sure there are things that will come up as I use it. But based on discussions with the developer community I expect that in six months many of the issues I have not thought of will be handled.

#4 - Other comments - Some have suggested that a removable battery and memory upgrade would be useful. I have commented on the battery issue earlier (I think it is a non-issue) but the upgrade depends on what one will use the device for - I think I will not drop my laptop - so memory here means simply that issues like being able to load my 80 gig iPod on to my phone is not an issue. But some quibblers might argue differently.

Sunday, July 01, 2007

An interesting pattern on iPhone sales

When I checked the iPhone availability tonight I found that only two locations in California (both in SF) had product for tomorrow. And the red dots (those stores that are sold out at this point) were predominantly on the West Coast or in tech centers although if you want an iPhone tomorrow Colorado and Oregon look like good places to find one.

There are also stories about people having a problem in activating their phone. (As noted in an earlier post it took me about 20 minutes to activate and to synch). I changed a phone number (switched a number from an existing AT&T phone) and that was no problem and I thought the AT&T screens to walk you through it were very helpful. I will be interested to see the sales figures in the first full week. According to the contractor who did the activations, Synchronoss, they were pleased with the process and results. Even with a very small percentage of problems in this process unhappy customers can be created and CNET has made an effort to compile those. It does not hurt that one of their correspondents, Declan McCullagh, took 39 hours to activate. One other writer griped that without activation the product was not usable. There is some logic to that, since a good part of the utility comes from the synchronization, but it could produce some mighty grumpy customers.

Piper Jaffray estimated, according to CNET, that there were about 500,000 sales of the phone from 6 PM Friday through close of business Sunday. Based at least on their estimates total sales for that first weekend far exceeded expectations. PJ had suggested that 200,000 phones might be sold. 84% of the Apple stores still had product - although as mentioned above that is not true uniformly. Finally, PJ also suggests that at least in New York, Minneapolis and San Francisco 95% of the buyers purchased the larger model (8 gigs). From my discussions with my AT&T store on Saturday and the Apple Store on Sunday, that figure may not have held up in Sacramento but a majority of buyers wanted the larger model. The LA Times said this morning that most of the 1800 AT&T stores sold out by the end of the weekend.

One other comment - Apple offered two workshops in their Arden Fair store today - it was very helpful - about a hundred tips in about 45 minutes. The person who walked us through the "advanced" course was very good and had a lot of good ideas. The session seemed also to bring around a couple of customers. The bar with the iPhone seemed to have a lot of traffic around it.

It's real - a preliminary review of the iPhone

I bought an iPhone yesterday and despite all the hype, it's real. On Friday I looked at the line at my AT&T store and decided to go to the baseball game. Saturday morning I was able to get into the same store and get out in about 20 minutes. In the time I was at that store there were four other iPhones sold but I think Apple got in a good supply. I got the 8 gig - at $25 a gig for the larger phone it seemed a natural.

First to the criticisms. In my mind a lot of the criticisms are not on point. Speed of the network - this is not a heavy web surfing device it is designed just like a Blackberry to do light surfing (for example I looked up Chad Harville's record on Baseball Cube last night at the game). Its primary web functions are mail and maps and for both of these functions the speed is OK. It matches the speed of the Verizon network which I used until yesterday for data - and I suspect over time that will speed up. Although I still believe this is not a heavy web device. No Video in the Camera - Again, I plan to use this device for a Smartphone. If I want photos I will use a camera. Lacks a Keyboard - As the day progressed I found I got better at using it. I am not going to write a paper on this and will probably use if for short messages and for that it is fine. Ring Tones - The inability to use your own ring tones is true (although Apple supplies a lot) but I suspect it will be corrected by some software writer soon. I also hope iRooster gets ported to the iPhone - that alarm clock with an attitude would be a great addition. Battery - One NYT Commentator ripped the new phone for lack of a replaceable battery. I have used Ipods since they came out. None has ever experienced a battery problem. The battery life seems to be as advertised so I am not sure what the rip was here.

The obvious plusses - Intuitive Functions - The instruction manual is very short. The sign up with AT&T is simple. Synching is very easy. Switching functions is simple. The map function is a treasure that I am sure to use a lot. Accelerometer - This works as advertised and I think it will be used a lot. The Screen - you have to see it - pictures are excellent, videos are crisp - well done.

I have one other comment - about the network. I have been a Cingular customer since I left Tmobile. I have used their network all over the country and despite Verizon's claims I have found it to be consistently strong almost anywhere I go. I have also used Verizon including their data network. AT&T seems to have done a lot to make the process of signing up (the fee adds $20 a month for unlimited web functions and 200 SMS messages. That seems like a good deal - comparable to the $20 for T-mobile's access for customers to hotspots but with more functionality. The integration with iTunes was a good match - it allowed me to download my calendars and contacts, photos and music, in about 10 minutes (for the first time).

Tips - I found, at least for me, that the Horizontal view is much better for typing and for web browsing. And because of the efficiency of the ability to change modes, that is a snap.

All in all this is a very good new product.

3 nights - 3 results

On Thursday night the Rivercats set a new record - their game against the Fresno Grizzlies lasted 16 innings and unfortunately they lost. I was coming back from the East Coast and spent from 7 AM (EDT) until 9 (PDT) (remember to add the three hours) getting across the country. So when I got into the car I thought I would listen to the end of the game - indeed I did but it took a couple of hours more for that to happen. The Cats were fully in control going into the ninth only to give up a bunch of runs and tie it up to go into extra innings. They had a couple of chances to score through the next 7 innings and simply did not come through.

On Friday, we got to go back to the ballpark. We started out well against the Grizzlies then in the fifth it fell apart. Another record. The Grizzlies scored 11 runs in one inning. It looked for a while like the three stooges were playing for the Cats. I debated about whether I wanted to go get an iPhone (at the AT&T store in the Downtown Mall) but stayed until the ninth.

On Saturday, the Cats debuted a new pitcher named Michael Madsen. Lord knows we need some pitching. A good part of the changes in roster (112 at this point) has been to move pitchers up or down. Remember Ron Flores is still up. Madsen pitched a good solid first outing. What was impressive was almost eight innings, six Ks and only four hits in his time on the mound. Jermaine Van Buren, the first reliever was not as impressive but then the Cats brought in Andrew Brown who was able to close the Sidewinders down. Also impressive was Landon Powell, the new catcher, who homered in his second at bat - if he keeps this up it will be impressive! (that was his second homer). Barton finally broke his hitting streak but that was an impressive run, nonetheless.

It is odd that we had such problems with the Grizzlies - they are usually a reliable safety net - but in this series we had trouble with them in two of the three games. More importantly over this season they have the advantage. We stand at .542 with on up on Fresno and no longer the strongest record in the league. Our last 10 we were 4-6 so we will need to get back on track. But with the number of roster moves it is hard to imagine how a team can jell.