What’s really wrong with Apple?

Despite the huge tumble Apple has taken on their share price, the reality is they are doing well on most measures that count, and exceptionally on some. Take for instance the way they have pushed Samsung to second place in the US cell phone market in the last quarter of 2012. Samsung has a vast range of phones including some very cheap entry level models, whereas Apple only has premium models. This is like Mercedes-Benz pushing Toyota or VW into second place.

Here’s a much bigger story of decline.

Dell is buying back its shares and going private, while pretty much scaling back on manufacturing.

Anyone following this story will no doubt have seen numerous reminders of Michael Dell’s advice to Steve Jobs: close Apple and give the money back to the shareholders (repeated in the article I point to above). Apple right now could buy Dell for cash and still have $100-billion left in the bank. For now it seems that Apple had the right business model all along, it was just poorly executed until the Jobs revival.

Next year, we could have a different theory of the universe.

My view: Apple does some things right, other things wrong. They could still have a major stumble if one of the competition gets a major thing Apple is missing right, whereas they are all trying to do better than Apple at the minor things and missing the big picture.

Next year, we could have a different theory of the universe.

Microsoft Surface: a precision-engineered kick stand, I ask you: what major problem does that solve? Microsoft has designed a laptop you can’t use on your lap and is selling it as a better kind of tablet.

Many of the arguments about what Apple is missing revolve around minutiae, like the absence of this or that port, or this or that hardware or software feature deemed so essential that the Apple product will surely fail if one of the competition remedies the defect. One of the competition remedies the defect, and sinks without trace. How often have we been told some Apple product would be a success if only it had a USB port, could use SD flash cards, or could receive FM radio? Products like Zune that supposedly met one or more of these needs litter the trash heap (or, better, the recycling bin).

If any competitor is to get serious traction, they need to focus on finding something major that Apple is missing or getting wrong – and finding a product or niche is not enough. You need also to find a fundamental flaw in their business model that stops them taking on your new idea.

All these other things excite geeks, not people who just want something that works and don’t care about technology.

Of course Apple did get things badly wrong in the past. In the late 1990s, they almost went broke.

The original Mac OS did not have a proper kernel, so it did not implement memory protection or true multitasking, meaning one program could take over the machine if it went awry, destroying data of other programs or requiring a hard reboot to get the machine back under control. In the late 1980s, I told someone from Apple that they already had a solution. At the time, Apple had a version of UNIX, called A/UX, that included a way of running Mac apps in a compatibility layer called Blue Box. I proposed that they give up on their own operating system project that eventually became the disastrous Copland project, and create a new Mac-like interface on top of UNIX, with Blue Box for old apps. No, they said. UNIX was way too heavyweight for ordinary users. At the time, A/UX only ran on the top of the line Mac II (with a wicked fast 16MHz Motorola 68020). I tried to explain that they didn’t need all of UNIX, just the kernel, and the application layer could be a version of the existing Mac application layer, but they insisted it wasn’t possible. Nearly 10 years later, Apple bought NeXT, and the resulting new Mac OS, called Mac OS X, was pretty much what I proposed. You may argue that the entry level Macs of the day didn’t have hardware to support a proper operating system with memory protection, but that’s very short-sighted. By 1991, System 7 was launched with virtual memory support, requiring a hardware memory manager (though still without protection, since that would have required a major rewrite of many applications that relied on accessing a single common memory).

Where Apple went wrong in this whole exercise was taking focus off their key strengths: usability and clean integration between multiple hardware and software components. Design of an operating system kernel is secondary to this focus. Once they reverted to their traditional strengths, they recovered fairly quickly (in the process also addressing another of my criticisms, a complex product range no one could understand).

Apple went badly wrong because they took their eye off the ball, and wasted huge amounts of money on something that no one but a geek or hard-core computer scientist would care about, a highly innovative operating system kernel.

So if anyone is to seriously dent Apple’s dominance of their key markets, what it will take is a clear understanding of the important things Apple does well and the important things they do badly. Identify the latter, and address them, and you’re in with a chance.

What options are there? Here’s a few hints. Apple’s serious weaknesses are not in areas like ports, memory expansion or kickstands. So what are they then?

I do think Apple has some serious weak points, and I’ve been right on these things in the past. So what do I think Apple’s real problem is (or will be if someone sees it and exploits it)?

Sorry, I’m tired of giving my ideas away for free. If you have a serious amount of money to invest, let me know.

Where is Apple Headed?

One end of Apple's range is being ignored and it's not the iPhone.

There's something of a feeding frenzy going on around iPhone 2.0, with claims that inventory has dried up (all models at time of writing show "Currently Unavailable" at the Apple Store, a sure sign that something is up), Apple has imported unusual consignments to the US, various phone providers leaking alleged attributes of the new model, etc.

That there will be an iPhone 2.0 is a given. That it will appear soon looks very likely. But is this all?

If you mosey over to the Apple store, you will notice that the Mac Mini has ceased to make much sense. The fastest model comes with only a 2GHz processor for $799 with 1GB RAM and a 120GB hard drive, while the base iMac has a 2.4GHz Intel Core 2 Duo and a 250GB hard drive and significantly better graphics hardware. Option the Mini up with a 160GB drive, and you have an $849 machine before you've bought a screen, mouse and keyboard. Go cheap on those e.g. via Dell, and you add about $280 to get USB mouse and keyboard, and a 20" screen, total $1129, only $70 less than the base iMac – despite a significant loss of features and speed.

So I predict the Mini is due for an overhaul.

What else?

Apple TV remains a half-baked product. Who heard of a TV without a tuner? You can buy devices like EyeTV for a Mac then export recorded video over to an "Apple TV" to play. But this is silly. You want this part in the box called the "TV" – and you want to be able to watch live TV, not only recordings, from your EyeTV. Why not support a developer interface to Apple TV that would allow devices like EyeTV to be implemented even if Apple isn't interested in the concept? After all, many people have made a big deal of the absence of an FM tuner in iPods, a need that's been filled by third party developers.

In any case, since no one else is talking about this, I propose that Apple do something a bit more creative: merge the Apple TV and Mac Mini into one low-end product that can be configured as a pure black box media device, or used as a more general-purpose computing device with options to add on your own features.

All that it would take is opening up the interface to Apple TV, and converging the feature set of the two devices with some creative build to order options. With a bit of a stretch the feature range could go from a relatively simple low-end box to something close to an iMac without a screen.

The overall lineup then would look something like this:

• iPod lineup – Shuffle, Nano, Classic, Touch: eventually Classic will go when flash is cheap enough; no big change except Touch will get any appearance overhaul to match the new iPhone
  
• iPhone lineup – soon to be clarified but I would be surprised if the variations widened significantly before Apple had a worldwide presence
  
• entertainment Mac lineup – Apple TV with options up to an attractive Mini, comparable to an iMac
  
• iMac – no change since there has been a revamp recently
  
• Macbook – no big change
  
• Mac Pro – no big change
  

So that's my prediction: not only an iPhone overhaul but something at the low end. The iPhone is obvious; the other more a question of fixing some flaws and inconsistencies.

Third-Party Apps on iPhone

It's nice that Apple has conceded the need to allow other developers to build apps for iPhone.

It's also nice that they have conceded that they have delivered a platform full of security holes -- and that they plan on fixing this.

The most obvious security hole is a gaping opening: everything runs as root (system administrator). That had to he a quick and dirty fix -- exactly the sort of thing that leads to long-term trouble. You would have thought that Apple would have learnt the hard lesson of the past: make a system as secure as it's ever likely to need to be from the start, not as secure as you think you can get away with now.

The really huge thing though that this development opens up not only for the iPhone but the iPod Touch (and one presumes future iPods which should be build on the same platform) is turning it into an alternative computing platform. This opens up really interesting possibilities, like a decent voice over IP implementation. Aside from what this may do to whatever deal Apple made with Cisco to avoid confusion over the Linksys iPhone, this would be a very attractive addition for iPhone users roaming in parts of the world where cell phone service is very expensive. The option to control whether you connect through WiFi or the cell network for data traffic would be useful here as well.

If Apple fixes the security problems (which I hope is not too hard an ask, given that the list of existing applications is small, and most are based on apps that run in a more protected environment on other platforms), this is a really big development. Many, many more people should be interested in an iPhone if it can run apps of interest. This puts it much more into the camp of smart phones running a real operating system, like a variant of Linux or Windows.

The iPhone battery lawsuit

Another day, another Apple battery lawsuit.

The whole thing is at http://gizmodo.com/photogallery/iphonelawsuit/ for those interested in the detail.

The substance of the allegations against Apple is:

• an iPhone battery only lasts 300 charges, and this implies a battery must be replaced in less than 2 years
  
• only Apple can replace the battery because it is soldered in, and this imposes not only an unacceptable cost but unfair "enrichment" on Apple's part
  
• sending in the battery results in total data loss
  

First, the battery replacement policy is not great – most cell phone users who need a new battery would at worst expect to wait in a shop while it was replaced. Second, the cost is high.

However, the substance of the allegations doesn't stand up to detailed scrutiny. The "loss of data" is not as serious as it is made to sound. As Apple makes clear, you should back up your data before sending the phone in – not exactly the same thing as total, irrecoverable data loss, as the law suit would have you think.

Also, the number of charges is stated by Apple as follows:

A properly maintained iPhone battery is designed to retain up to 80% of its original capacity at 400 full charge and discharge cycles.

Nowhere does Apple equate a "charge and discharge" cycle to about one day's use as the lawsuit attempts to claim. Let's for example take a day's use as:

• 1 hour of music
  
• 2 hours of video
  
• 2 hours Internet
  
• 1 hour of talking
  
• 18 hours standby
  

Given Apple's claims of 8 hours' talk time, 6 of Internet, 7 of video playback, 24 hours of audio playbackand up to 250 hours of standby time, these numbers represent about 85% of a full charge on a good battery. You might do something like this if you were travelling (watch a moving on a plane, catch up on your email, listen to some music, do some long business calls).

What if you have a day at the office, and only use the phone for a few phone calls, and to listen to some music on public transport to and from home? The usage could look something like this:

• 1 hour of music
  
• no video
  
• no Internet
  
• half an hour of talking
  
• 22.5 hours standby
  

On Apple's numbers this would use less than 20% of a full charge. So with this sort of usage, you could go almost a week between charges.

On these numbers, the phone would still be reasonably usable in a wide range of scenarios if Apple's 80% of capacity after 400 cycles is correct. With moderate usage – mostly phoning with occasional music in daily use; videos only while travelling – a full charge cycle every 4 days seems likely. This would mean the battery would still be reasonably useful after 1600 days – over 4 years.

My own low-end Nokia phone which is a couple of months shy of 4 years old has a battery which is holding about 50% of its original charge.

So unless Apple is lying about the battery specs – which is not claimed in the lawsuit – I can't see that the claim that the battery's life is inadequate by industry standards holds up.

Of course it is possible that Apple did not have all the information I found on their web site the day the phone was launched. However, I do recall discussion of the battery issue pretty early on and, as others have pointed out, the plaintiffs always had the option to return the phone if they didn't like it.

So, in summary – I don't like the battery policy but don't see the basis for the lawsuit. It looks to me like a fishing expedition.

iPhone = iFlop?

Within days of the iPhone's launch, some clown published an article claiming "Apple's iPhone missed a 1 million unit sales target and rivals are rejoicing". I haven't seen this "target" anywhere else and judging from the fact that most AT&T stores and a high fraction of Apple's retail outlets are reporting stock shortages, it is extremely unlikely that Apple missed an internal target.

Then there are the articles that iPhone will not be adopted by business, mainly because it does not fit the "standard" of Microsoft Exchange.

Wake up, people.

Microsoft is not a standards organization, it's a monopoly.

Any organization which ties its infrastructure to a monopoly when there are open standards available (which are technically superior in most respects) has to be run by morons.

Until they lost their dominance, it used to be said that "No one was ever fired for buying IBM". This wasn't always because they had the best technology (they didn't) but because they had a strong commitment to looking after their customers. If you are a huge customer, you may get that from Microsoft. Good luck otherwise.

Another "biggie" is the absence of a "real" (what they mean here is "toy") keyboard. I can't see myself that typing on a tiny keyboard with real keys is going to be a whole lot faster than Apple's touch screen if it works as advertised. As some have pointed out, learning to type reasonably fast on these small keyboards takes time; already some have claimed to be reasonably quick on the touch keyboard. This looks to me like jumping to a conclusion before the facts are in.

I can just imagine these analysts poised over their keyboards for the first reports of functionality to dribble out, so they could finish their headline "iPhone will not be adopted by business because ...".

In any case, why is this such a big deal? What we have is a simplified portable computer with cell phone functionality, WiFi, calendar, web access (with a few features left out), photo viewing and music. The last two clearly indicate a focus on personal use. The market for personal cell phones is huge, as is the market for music players. Putting these two together alone would be pretty big – as several have tried before. The only real question is whether Apple has a compelling enough product to sell. The initial sales are promising – but the real test will be in how sustainable they are.

So, hype and counter-hype aside – it's still early days, and any prediction of how hot iPhone will be long-term is premature. My feeling is that it will be pretty big but there are too many unknowns to be sure: that's what you get with a breakthrough product.

That leads me to the other common thread: is it a breakthrough product?

Just as with the iPod, there are plenty of other options out there that on paper have the same feature list – even add some missing details. (Like toy slide-out keyboards.) Just as with the iPod, the real difference will be how it all hangs together. Apple can fix some of the obvious annoyances (I was really surprised that there is no copy and paste); the competition can't make a solution cobbled together out of mismatched parts suddenly become cleanly integrated. The difference reminds me of a question I ask about cars: how is it that European car makers can build cars that are made all of a piece, whereas US cars are made all of pieces?

A real big difference I haven't seen much positive comment on is the way pricing splits the handset from the phone plan. This is supposedly a negative. At first sight, it doesn't make a whole lot of sense that (aside from non-obvious workarounds) you have to sign up for 2 years of Cingular, yet the handset is sold separately. My guess is that this arrangement is an artifact of Apple's 2-year US exclusivity deal with AT&T, and they would rather maintain this separation for when the deal runs out. To me, this is a positive: it puts real pressure on Cingular to up their act, to keep future iPhone buyers. If they become the major source of complaint, Apple will have no reason to stick with them after 2 years: if iPhone is a huge success, other networks will have little cause to resist adding in the extras Apple needs from them.

So, in summary, talk of iPhone as being a flop is typical FUD from ignorant business columnists. There's no way the initial roll-out can be anything but a huge success. As to the longer term, we don't have the data. My bet is that it will do well, and exceed Apple's 10-million target in the first year easily.