Apple’s New Ecosystem: the Implications of Apple Pay

Apple Pay





Today, October 20, Apple launched Apple Pay with the release of their iPhone iOS 8.1 version of the device operating system. This new payment system is scheduled to go live with 220,000 merchants today for users with iPhone 6 or 6 Plus. I wrote about these devices here. When the Apple Watch is released in 2015, which I wrote about here, it will support Apple Pay. See the list of merchants at the end of this article. *

While the iPhone and Apple Watches are innovative, I believe the real excitement is in the new ecosystems Apple is creating. Ecosystems are built around devices with software and services. This is one way for customers to enjoy using a number of Apple devices in a more easily integrated environment, encouraging them to buy more Apple products and upgrade to new devices when they come along.

Who is starting with Apple Pay?

The first was the Apple Store itself, where Apple employees were recently trained to help customers use it. The first app I updated after upgrading to iOS 8.1 was the Apple Store app. Soon followed like Panera, OpenTable and Uber. Others are jumping onboard quickly, including McDonald’s. The big questions that consumers will have is: what about security and privacy?

McDonald’s already has thousands of locations with NFC (Near Field Communications) POS terminals (Point of Sales). McDonald’s examined the security mechanisms that Apple Pay is using and were impressed enough following their end-to-end testing that they’re not using any safeguards beyond those provided by Apple and their backing financial payments network.

Other merchants like Best Buy and Walmart have quickly and vocally opted out of this program. Sears, Kmart, BP, H&M, Coach, Belk, as well as Bed, Bath & Beyond have said they will not be participating or have no plans at this time. A number of fast food restaurants are not yet part of the program: Pizza Hut, Chipotle and KFC.

Why Apple Pay can win big

  • Apple controls over 40% of the US smartphone market and has complete control over what goes into its devices, unlike Google which primarily OEMs its Android OS to device manufacturers. Apple can get its payment into the hands of millions of users faster than anyone else.
  • Apple enjoys advantageous relationships with carriers. Verizon, on the other hand, was able to effectively block Google Wallet back in 2011.
  • Other Apple ecosystems have been successful in the past. Over 800 million people have iTunes accounts. iTunes along with the App Store generates $20 billion annually.

It was rumored that the previous two iPhones would have NFC chips for mobile payments and indeed, MasterCard began experimenting with NFC chips on credit cards throughout its PayPass program back in 2003. This did not happen until the iPhone 6. But there is another reason why this is the right time for Apple to launch their

 The Perfect Storm of Wireless Payments

Credit Cards



Banks and financial institutions like Morgan Stanley are behind it in ways we’ve not seen before. Apple is not competing with credit cards, it is leveraging that system:

“By reducing fraud, improving data security, and increasing credit/debit volumes for issuers and networks, while protecting the value of the existing payments value chain, we believe Apple Pay has a high chance of success” -Craig Hettenbach, Morgan Stanley

Visa does not see Apple Pay competing with them, even though they partner with other systems like Softcard and Google Wallet. “Having a partner like Apple really was like catching lightening in a bottle,” said Visa EVP of Technology Rajat Taneja. His company dedicated 750 employees for the last year to perfect the system. Other credit card companies made similar, secret investments starting in the Summer of 2013.

Finextra blogger Dan Eckstein wrote:

“Apple Pay is entirely based on credit cards. That means it is not a new payment method.  It looks more like Apple will become one of the biggest resellers of the credit card industry. They will only facilitate the use of credit cards, and in our industry players like that have a name: payment facilitators.”

  • The largest iPhone launch in history with 10 million in the first weekend and reportedly 20 million pre-ordered for China means a huge number of devices that will be able to use this system immediately.
  • The propitious timing of the EMV (Europay, MasterCard and Visa) mandates set forth by credit card brands requires retailers to switch their existing payment devices for new hardware capable of supporting EMV payments within a year. EMV is the regulatory standard in almost all other countries and is a more secure standard for processing credit card payments that makes use of an embedded chip on the credit card to securely encrypt transactions — I’ve seen this used in France for over a decade. Some 9 million retailers need to swap out their existing hardware for EMV-capable hardware by October 2015 when many will likely upgrade to NFC compatible machines. If don’t upgrade they’ll be required to the cost of fraud liability, which is a burden the card brands are no longer willing to bear.
  • A new kind of security. Apple purports that they don’t capture the identity of the buyer, what he buys, where he buys it, or how much he spends. (Apple does know about your original credit card that you already use with iTunes, along with over 800 million other users.) The system uses Device Account Numbers instead of storing credit card numbers and keeps all payment information in a dedicated chip on the iPhone, called the Secure Element. This is done by employing a tokenized and biometrically verified transaction system — each transaction generates a unique one-time-use cryptogram that the issuer ascertains is associated with the card token. If all checks out, the purchase is approved in less than a second.
  • Apple has widely partnered with the leading credit card companies: AMEX, MasterCard and Visa initially, as well as credit and debit cards from AMEX, Bank of America, CapitalOne, Chase, Citi, and Wells Fargo. Apple will not add an additional charge to the end user, but they will capture from the credit card and bank companies 15 basis points, or 0.15%. This works out to 15 cents per $100 of transactions. My bank has been advertising Apple Pay for over a month at their ATM. The secure process that Apple Pay uses will lower the incidence of credit card fraud that banks are obligated to cover. And the ease of wireless and cardless transactions could mean more transactions. Ka-ching!

How it Works

Using the new Passbook & Apple Pay setting on the iPhone 6, a user can set up the credit card they already use for iTunes, or a new one.

Apple Pay


The credit card shows up in the Passbook application on the iPhone as seen in the example from 9to5mac below.

Apple Pay


Touch IDOnce set up, the iPhone 6 is held within range of the NFC POS “sled” and then the user touches the Touch ID button on the device. No need to pull out of your wallet and expose the credit card, reveal the security code on the back of the credit card, or show photo ID. Users are concerned about where their credit card information is kept, or rather not securely kept. Witness the phenomenal drop in sales during the Christmas shopping season after retailer Target was hacked.

Touch ID SledAt the Apple Store, for example, for security purposes, receipts for items purchased with Apple Pay will no longer show the customer’s contact information or credit card number. Only the last four digits of their iPhone’s unique Apple Pay device ID will be shown. Another change: customers will not be required to provide their name or email address at checkout to receive a receipt, unless they’re buying a service like AppleCare.

Who Could Lose?

  • Google Wallet will feel the impact. It launched in 2011 with partners McDonald’s, Walgreen and Staples among others — but did not get sufficient traction to achieve escape velocity.
  • PayPal has, since the Apple launch in September, announced that they’re splitting from eBay.
  • Square, the startup that used a hardware attachment to the iPhone, then a sled for iPads will feel the pinch.

The Implications

With Apple Pay, Apple has an opportunity to sidestep the internecine fighting between credit card companies, banks, phone companies and phone manufacturers who have strived for years to divert a “piece of the action” their own way from among the hundreds of million payment transactions a year. The new iPhone 6 and upcoming Apple Watch will be the devices that make it happen, but Apple Pay is the revolutionary part of Apple’s recent product launches.

Thanks for coming along.


* The current and list of Apple Pay retail partners is as follows, with recent additions in bold:

Apple Pay support at launch:

  • Aeropostale
  • BJ’s Wholesale Club
  • Champs, Chevron
  • ExtraMile
  • Champs
  • Foot Locker
  • Footaction
  • House of Hoops
  • Kids Foot Locker
  • Ladies Foot Locker
  • Office Depot
  • Urban Outfitters
  • Sports Authority
  • RadioShack
  • SIX:02
  • RUN by Foot Locker
  • Texaco
  • Wegmans
  • Apple
  • Babies”R”Us
  • Bloomingdales
  • Macy’s
  • McDonalds
  • Petco
  • Panera Bread
  • Subway
  • Toys”R”Us
  • Unleashed
  • Whole Foods
  • Nike
  • Walgreens
  • Duanereade
  • Disney Store
  • PetSmart

Support later this year

  • Anthropologie
  • Free People
  • Urban Outfitters
  • Sephora
  • Staples
  • Walt Disney

Apple Watch: a New Category for Apple


On initial impression, some might say this seems like less of a watch and more an iPhone nano. While the iPhone 6 is an evolutionary change and larger than before, as I discussed in my last article here, the Apple Watch for Apple is a new product category with new ecosystems to go with it. I talk about the ecosystems here.

This is the dawn of a new platform for Apple, and though it’s clearly a “1.0” product shipping in early 2015, they got a lot right their first time out. Especially in functionality, this has more raw compute power and storage than any “wearable” I’ve seen. The software and controls are astounding. At two different sizes, 35mm and 44mm, there is a tension between too small that you can’t use the face, and too large to fit on the wrist. The Taptic Engine is another feedback and output system: you feel different kinds of vibrations for notifications, left and right directions, etc.  Apple provides the buyer a choice. Indeed, lots of choices: two different sizes, three different case materials or “collections” each in two different finishes, and a spectrum of different straps. Think of the permutations! Apple will create product segmentation and customization from the beginning.

Apple WatchHorologically, Apple is returning to a market it previously unintentionally de-popularized: the wristwatch. Wristwatches had replaced the older pocket watches especially during the late 19th century for military applications, but the popularity of the Apple iPhone meant people were checking the time from the device in their pocket.

With a return to the wrist, will consumers respond, and is this the “wearable” that they will adopt? Tim Cook said that this is Apple’s most personal device and indeed it is. Unlike an iPhone or iPad, you’ll wear this device on your body. With this many colors and finishes people can obsess over the details. It can become not just a fashion accessory but a piece of intimate information jewelry. Could it become the “digital hub” of information devices a person uses? Sure it will be able to turn on an off various devices, sync with iDevices and Macs. But this will be something that touches our skin. How many people will want that kind of symbiotic relationship with the Internet? People already feel comfortable with an Internet-connected smartphone. The Apple Watch must be more than a sophisticated time piece. The iPod was a non-Internet “always-with-you” device that replaced carrying around a computer to access your entire library of music. The iPhone became that always-with-you device and replaced the iPod. The Apple Watch must consider competing with the iPhone.

Whither Wearables?

Mobile devices carried for connectivity have been around since early cell phones. But computing/communication devices you don’t carry but wear is a horse of a different color.


Google Glass
Google Glass

Google is making a foray into this space with Google Glass, but is not gaining much traction outside the early adopter gadget tribe. Worn on the face, with an asymmetrical appearance and the sneaking suspicion that the “viewee” is being recorded — it seems too overt. It comes between people, it brings up questions of privacy. And initial reaction has included prohibiting them in shower rooms. They are banned in casinos, the White House, Pentagon, and Congressional galleries. Watches are less conspicuous.


A variety of portable and wearable Bluetooth-enabled fitness sensors have become increasingly popular of late. The Jawbone Up and the FitBit are market leaders. Nike had pioneered this space with its iPod Sensor, placed in a Nike shoe in a special space under the footpad, or worn outside a shoe. Apple bundled a Nike app in early iPods and iPhones to display the activity.


Each of these devices are long on data collection, but poor to non-existent on display. They relied on an iPhone or Android phone to display the metrics collected.

Nike has a FuelBand which is a wrist device with a dot-matrix display. Heck, Apple CEO Tim Cooke, and long time Nike board member, used to wear one. It was reported this year that Nike had discontinued the Fuel Band and laid off the staff, preferring to work on FuelBand software rather than hardware, but Nike has stated that they will continue to develop and market the Nike+ FuelBand SE.


Casio Calculator Watch
Casio Calculator Watch

I’ve worn smartwatches for over 30 years, since the Casio Calculator and Data Bank watches. However, it’s a bit of a stretch to call these smartwatches. While they had great functionality, they screamed “nerd alert.” In recent years, smartwatches include those from i’m Watch, MetaWatch, Motorolla, ConnecteDevice, Martian, Microsoft and others running Google Android Wear. Sony, LG, Martian, and especially Samsung lead in this market.

Pebble Steel Watch
Pebble Steel vs original Pebble Watch

But the real standout has been Pebble. Two years ago I was an early supporter of their Kickstarter project which raised over $10M, far beyond their initial ask. I currently wear their second generation device, the Pebble Steel, an advance on their original all-plastic device. I find it useful to see my next calendar appointment, the weather forecast, message and appointment alerts, and check-ins on Foursquare/Swarm. With the latest firmware update and their 3D accelerometer, monitor my step activity and sleep duration. It is more than simply a “monitor” of my iPhone, though its standalone functionality without connecting via Bluetooth to the iPhone is limited.

What are the Implications?

  • Android Wear devices could enjoy an opportunity to move in a less crowded market as there’s a shakeout of other platforms, mentioned below.
  • Pebble, especially the Pebble Steel was priced at $249, just $100 less than an Apple Watch. However, since the Apple launch, Pebble dropped the prices on September 29 to $219 and $99 respectively. Pebble’s entry level plastic version priced at $99 could continue to sell, though it is “black and white” compared to Apple’s color display. Nevertheless, the Pebble has an always-on, multi-day battery and is water resistant.
  • Jawbone Up and FitBit. These devices are useful sensors with limited displays, except when paired with a smartphone and computer. While they won’t be able to go upmarket, they may survive if they work with Apple and Android devices in a complementary way — due to their long battery life, lower price, and smaller form factor. FitBit, however, has announced that they will not support Apple’s HealthKit ecosystem. Current users are already complaining.

What’s My Take?

I think Apple has a huge hit on their hand with Apple Watch. We have been told about the hardware, but little about the software and what it does. I think that’s intentional on Apple’s part: they need to work out some kinks on battery life (1 day?) before they launch. But the software could go in unexpected “category busting” directions.

Initially the Apple Watch will be tethered via Bluetooth to the iPhone for its connection to the Internet and for some co-processing duties. And for more robust display and input. But I don’t think that’s Apple’s end game. I believe Apple intends to make this a standalone device. It will take some time to build an Apple Watch app ecosystem and enhancements to the UI and input capabilities. It comes with 4GB of storage, the same as the original 2007 iPhone. Today’s limiting factor is battery technology: once there are sufficient advances I’m confident it will be cellular-connected. What if you didn’t have to carry your iPhone, or your wallet?

Apple Watch Sensors
Apple Watch Sensors

The big unknown is the health and fitness capabilities. We know there are 4 Sapphire glass lenses that cover visible and infrared LED sensors on the back of the Watch. We know some of the things they monitor, but not all. What if you could let your physician monitor your pulse and exercise activity? Some companies already reward employees with healthcare dividends who allow their FitBit stream to be read by their health provider. But what if the Watch was capable of monitoring blood pressure that might signal an impending heart attack, or blood glucose levels for diabetic alerts? I’ll discuss this more in my next article.

Apple Watch 18K Gold
Apple Watch 18-karat Gold

Though it’s priced at a premium — $349 for the entry-level Sport Collection — I believe this will be a popular gift option. With a price range that starts at half that of a non-subsidized iPhone up to an 18-karat gold  device that I believe will go for thousands of dollars, this will be a fashion statement that says status and prestige. The iPhone is more difficult to award as a gift, as you need to know the cellular plan for the recipient. Initial Apple Watches, like iPads, don’t need to worry about that. iPads are frequently given away as a prize. The Apple Watch will be a premium gift.

Watch designer and SVP of Design at Apple Sir Jony Ive said during the Apple Watch video introduction:

…this is technology that “embraces individuality and inspires desire.”

Lust-worthy fashion statement or a powerful yet proximate tool?

Thanks for coming along.


Apple’s New iPhone 6: Why you care


Apple’s recent product launch in Cupertino was huge:

  1. iPhone 6 and iPhone 6 Plus, about which many leaks had already informed us
  2. Apple Watch, the previously rumored iWatch saw the light of day, though it cannnot be ordered until next year. Read about it in my next article here
  3. Two new ecosystems — which are the truly revolutionary part of the announcement — Apple Pay and HealthKit. I’ll tell you why these will be significant. Read about it in my subsequent article

For a bit of irony…

These are the highest performing iPhones ever released. And as happens with each new iPhone announcement, a couple of days after the announcement pre-orders are available at midnight Cupertino time:

  • Both Apple and the cellular carriers anticipate greater demand than the previous release
  • They prepare their ordering systems for the increased load and staff up
  • During the midnight “ordering storm” their systems melt down faster and worse than previous years

Even Apple’s ordering site was down for almost two and a half hours. The carriers faired no better than in years past: support lines were broken and escalation was delayed or nonexistent. I’m hearing of delivery dates for iPhone 6 Plus that are 2 months out even if you ordered within the first 15 minutes.

To put this in perspective, Apple had record sales with more than 4 million orders in the first 24 hours. The iPhone 5 launch only saw 2 million the first day. In the first weekend, Apple sold 10 million iPhone 6 units sold — a new record — while last year’s iPhone 5C/5S sold 9 million. And this year, China was not counted in the mix as Apple is still waiting on China’s Ministry of Industry and Information Technology to approve the new model for network access. They’ll go on sale in China on October 17. In the run up before pre-orders there are reportedly 4 million reservations for iPhone 6 in China.

How does this compare to launch numbers for the Samsung Galaxy S phones?

Apple vs. Samsung launch

For a bit of fun…

I was interviewed by the local TV station KRDO on all things Apple, Mac, and especially iPhone. This interview was conducted the evening before the iPhone 6 went on sale at stores. I talked about my vintage 512kb Mac from 1985 and the iPhone 6 Plus in detail.

Bill Petro interview

The Announcement

It was a media event, not just because Apple live streamed it and major news outlets covered it, but social media lit up during the 2-hour launch event. Here’s a picture of the Twitterverse as first the iPhones were announced, then the Apple Watch, then Apple Pay. Click here to see the full global Apple Launch timeline on Twitter.

Are these products revolutionary? Historically Apple did not develop the first digital MP3 music player, smartphone, tablet or smartwatch. What Apple routinely does is watch other vendors deliver early and imperfectly, then comes out with significant innovations of high quality that capture the imagination of the buying public. The iPhone 6 is evolutionary, the Apple Watch could add a new level of legitimacy to smartwatches and wearables.

iPhone 6 Launch

The much anticipated and often rumored iPhone 6 and its big brother the iPhone 6 Plus have finally launched. “Bigger than bigger” Apple calls them and they are. At 4.7 and 5.5 diagonal inches respectively these are a far cry from the original 3.5 inch iPhone. How much bigger? Here’s a screenshot comparing the original iPhone pixel resolution, in the bottom left corner, to a screenshot from an iPhone 6 Plus. Note the difference in the number of pixels:

Pixels: iPhone 1 vs. iPhone 6 Plus

This puts the new iPhone 6’s in the same league as the Samsung Galaxy 5S and the Galaxy Note 4. This means better batteries, bigger displays, superior cameras, and better usability. When Steve Jobs first introduced the iPhone over seven years ago, he said it was: a music player, a phone, an internet communicator. These use cases have evolved: I find that I use my iPhone more for its internet communications capability — email, social media, web surfing — than either music player or phone.

Speaking of evolution, here’s a graphic of the changes in shape and size  from the iPhone 2G to today’s iPhone 6 Plus.

iPhone Evolution


Why is this iPhone 6 launch significant?

I expect “legs” on the sale of the new iPhones:

  • Many current iPhone owners upgrade every two years, due to carrier subsidization rules, and wait for the full number upgrade, rather than the ones with a letter after it.
  • Many new customers will jump at the chance to get a larger device — that’s made by Apple
  • Many Android users who chose their device because it had a larger screen, may now be tempted to switch to Apple. Apple has a site explaining how to switch. Even Apple co-founder Steve Wozniak admitted he’s getting rid of his Androids which he’d originally gotten for the larger screen.

Apple CEO Tim Cook claims that this is the “mother of all upgrades” and a recently released slide from an internal Apple presentation that was made public due to Apple’s suit against Samsung shows one reason why: where the growth in smartphone market is occurring: larger screens. In the US market carriers are devoting about a third of their shelf space to selling smartphones measuring 4.7 inches and larger. These devices account for more than a quarter of sales in Q2 of this year, up from only 2% in the same quarter two years ago, according to NPD.

Screen size

Of the two new phones the iPhone 6 Plus will be the big game changer in my opinion. As a true “phablet” (phone+tablet) it has a battery nearly twice the power of the current iPhone 5S, a 3x resolution display that can feature some iPad twin-pane display apps like Mail, Notes and Messages in landscape orientation, an Optical Image Stabelization camera, and of course, the larger display. For people who carry both an iPhone and an iPad this could be a consolidating unit, a compromised iPad nano if you will. While Apple has not released a breakdown of the split for initial sales, I suspect they’ve sold more of the smaller iPhone 6 in the first weekend.

I believe this is due to availability. The Foxconn factory is employing 200,000 workers operating about 100 production lines in China and turning out 140,000 iPhone 6 Plus and 400,000 iPhone 6 daily. The iPhone 6 Plus production line is still ramping up. I’m hearing that inventory for the Plus is severely limited, with production yields currently of only 50-60% for the larger 5.5 inch display, while the smaller 4.7 inch display iPhone 6 is at better than 85%. When inventory becomes available I think we’ll see a surge in iPhone 6 Plus sales. People may buy it for the larger screen, or the greater battery capacity. Whether this will cannibalize sales of iPad mini or other small tablets remains to be seen. But these are “first world” issues.

What are the implications?

  • In other markets like India and China — where some save money by purchasing a large smartphone in place of both a smaller cell phone and tablet or PC — the iPhone 6 Plus could address that need handily. Previously, large screen Android phones were the only solution. Apple could take off in these markets like never before.
  • The final introduction of the Near Field Communication (NFC) chip in the iPhone 6 will open a new world for Apple and mobile payment transactions. The U.S. market alone is estimated by Forrester Research to hit $19 billion by 2017. While the NFC chip has been in other Android phones it never caught on big, for reasons we’ll discuss later in more detail here. For the present, hundreds of millions of people already have a credit card registered with Apple iTunes, and they’ll be able to participate immediately when Apple Pay opens later this month.
  • The iPhone 6 camera has technology used in higher-end DSLR cameras. They can capture 180p high-def clips at 60 fps, do 240 fps slow-mo shots as well as cinematic still and video stabilization. There are already several iPhone film festivals. I no longer take my DSLR camera on vacations. And top tourist spots are already flooded with tourists taking selfies.

But what about the larger screens? Sure, Apple has introduced the Reachability feature, which scrolls the top of the screen down with a double-tap on the Home button. But what about those who have smaller hands?

Thumb ExtenderI’m getting the new add-on…

the Apple thumb-extender procedure.


Thanks for coming along.

VMworld 2014 San Francisco: Final Day


VMworld does something special for the Press and Bloggers, it reserves several tables near the front of the auditorium with power cords and a special WiFi feed. This makes it easy to take lousy low light photos from one’s iPhone. Having written on Day 1 and Day 2 of VMworld, on the last day we learned that attendees had attended 9,300 labs.

And they raised $248,460 through Destination GiveBack.

The last day is usually reserved for innovations, last year’s was about robots and 3D printing. This time: People Plus Machines.

Jane McGonigalJane McGonigal, Super Better Labs, Chief Creative Officer VR Game Designer and Author “Reality is Broken”

She started by sharing:

  • There are 1 billion gamers worldwide who spend 1 hour/day on a connected device.
  • Angry Birds: 300 million minutes a day = 400,000 years of vengeance
  • Call of Duty 170 hours a year/player = 1 month of full-time work every year. 1 in 4 players called in sick on launch day: “Call of Duty Flu”
  • 81% of global workers are not engaged. Gallup 2013
  • The longer you stay in school, the less engaged you become. Elementary 76%, high school 61%, college 40%
  • Kids under 18: 99% of boys vs 94% of girls play games. 92% of two-year olds play games.

She has a PhD and suspects that she’s the only one to have done 13 years of research on this topic. She believes in the future we’ll all play games.

Playing games evokes 10 Positive emotions like: Joy, Relief, Love (oxytocin — hold hands for 6 seconds), Surprise, Pride, Curiosity, Excitement, Awe & Wonder, Contentment, Creativity.

Example: Massively Multiplayer Thumb-Wrestling. With 22,000 attendees connected across aisles we set a new world record for playing this game.

Playing games afford these positive emotions: games make us resilient. Set higher goals for ourselves and don’t give up.

“The opposite of play isn’t work – it’s depression” said a philosopher of gaming You must play the game itself, not just watch to get the hippocampus, thalamus and caudate activated. These are under activated in clinical depression.

Active vs. Passive

Jane wants to see more super-empowered hopeful individuals

  • Self-supression vs. Self-expansion.
  • Not feeling negative impressions vs. pursuing strong emotions.
  • Play to escape vs. Play with purpose.


James PattenJames Patten, Founder and President, Patten Studios. Inventor, visual designer, TED Fellow

Tangible interfaces. Electronically tagged pucks (objects) that talk to the computer. Example: Audio path. Our mind and hands are tuned for using tools. Physical object that represents something in the robot. These pucks can be controlled by the computer as well, as the user moves one the others move via electromagnets. Omni wheels roll well in one direction, but gain traction in another direction. An object can move without turning.

When he proposed his talk to VMworld, VMware asked “How can you touch Data?”


Datapoints appear on an X-Y graph for certain medical information about a group of patients. 31 things are known about each dot (patient). Weight-height, Cholesterol-weight. Robot can be tied to a datapoint. Another robot displays, by moving, drug interaction red dots. FOXP1, weight, and LDL cholesterol relates to a drug interaction.



Sean Gourley, Co-founder Quid. Physicist, collective intelligence researcher, TED Fellow, Rhodes Scholar

When it comes to playing chess, a human is can think 4 moves ahead, the computer can plan at least 8 steps ahead. This led to freestyle chess. 48 teams, no rules. It wasn’t Artificial Intelligence that won, but Augmented Intelligence. This could work Weather Predictions: a 36 hour forecast is more accurate than 72 hour forecast, which has improved over the years. 15Bx increase in computational speed over the last several years. 16% improvement when you add humans to machines only. What is the interface between humans and machines? Expert: Intuition. They know what to do when everything is noisy and chaotic around them. The precuneus is the part of the brain that does pattern matching. Expert chess players light up this part of the brain twice as much as amateur chess players. The caudate nucleus associated with learned response functions showed up in fMRI for best move. It takes about 10,000 hours to train your brain for chess. Or to become an expert in almost anything. Experts have a particular insight into solving problems. But it takes a long time to log 10,000 hours. What if a computer could help you do this?

Computational => Subconscious. Build software to do this.



Sean’s company Quid builds software to augment this part of the brain. Augmented Intelligence allows us to better navigate a complex world. He took all the articles on “Space Industry” from a Google search, and found through the Quid engine that it wasn’t just about NASA. Rather, through their engine they could find clusters of information around other topics. Indeed, Satellites seems to be the most often talked about topic for the “Space Industry” on the Internet. This is a map that a space expert might draw.

It reminds me of psychohistory suggested by Isaac Asimov in his Hugo award winning trilogy “Foundation.” In the story, the mathematician Hari Seldon spent his life developing a branch of mathematics known as psychohistory, a concept of mathematical sociology. Using the laws of mass action, it can predict the future, but only on a large scale. This may be a start to that kind of Augmented Intelligence.



See you next August in San Francisco for VMworld 2015.

Thanks for coming along.

VMworld 2014 San Francisco: Day 2, The Details


Following on the announcements of Day 1, three VMware executives filled in the details.

Ben FathiBen Fathi, VMware Chief Technology Officer

Ben started the morning with Destination Giveback, a charitable effort that involves flying paper airplanes as a part of the donation. No ice involved.

Recapped the previous day’s comment: The Brave Will Thrive. EVO and EVO:RAIL, the OpenStack distribution, the renaming of vCloud Hybrid Services to vCloud Air, the renaming of vCAC and vCOPs to vCloud vRealize.

In contrast to the World of Silos


Ben posited:

The Power of And



Around OpenStack, Ben said the best way to run it is on VMware

Ben then brought up the topic of Containers. Where do Apps run? VMs or Containers? In concert with Google and Docker a new approach: Containers without Compromise:

One platform for Apps, envisioned via Open Container API:

Open Container API

Sanjay PoonenSanjay Poonen, VMware EVP and GM, End-User Computer

Sanjay was the next speaker. He’s always sharp in his delivery and cogent in his messaging.

Sands ResortHe began with the metaphor of the Sands Resort in Singapore. I’ve been there, and it’s stunning. Sanjay pointed out that it took years to build the tower infrastructure, but atop the resort is a fabulous swimming pool. VMware wants to build three towers.

Desktop, Mobile, Content

Desktop Mobile ContentHe talked about his end-user computing vision. Secure virtual workspace for work at the Speed of Life. Music and movies is in the cloud: iTunes and Netflix. From phones to cars all heterogeneous.

Workspace services: social, identity, gateway, catalog.

Desktop: Horizon with unified VDI and App Publishing. Desktop-as-a-Service, Real-time App Delivery, Rich User Experience.

Nvidia Grid + Google + VMware. He showed Horizon on Chromebook with Nvidia graphics.

The newly announced Airwatch acquisition involves device management and app management.


Sanjay showed off what’s going on with SAP Mobile, the company where he was previously head of the Mobile Division.


Raghu RaghuramRaghu Raghuram, VMware EVP, Cloud Infrastructure & Management Business Unit

Raghu talked about NSX claiming 150+ customers, and Cloud Management with vRealize.

He expanded on the announced EVO: RAIL and EVO: RACK

VMware Integrated OpenStack, VMware builds its own distribution of OpenStack. Claims the best way to run OpenStack is on VMware via VMware Integrated OpenStack (vSphere, NSX, Virtual SAN) and OpenStack-Aware Cloud Management (vRealize).

Partnering with Canonical, HP, Mirantis, Suse.

vMotion: latest vSphere has Cross vCenter vMotion: load balancing. Long Distance vMotion can migrate app coast-to-coast. NSX supports this.

Cloud-native apps are built with services or micro-services. Allows for faster iterations. Developers use containers (since 10-15 years) in BSD Jail, Solaris Zones. Docker has made a ubiquitous packaging for this. Containers Without Compromise is VMs and Containers working together. Google kubernetes (helmsmen) works with Docker.

Project Fargo: makes VMs faster, smaller, quicker booting

Simone Brunozzi, VP and CTO Hybrid, talked about Hybridity.
For details on the last General Session of VMworld click here.

Thanks for coming along.

VMworld 2014 San Francisco: Day 1, The Announcements



The largest cloud show of its kind, VMworld 2014 opened with the General Session in Moscone Center in San Francisco. 22,000 attendees from 85 countries are here. The show actually opened 2 days previously, but everyone who is going to be here is at this event. Partner Day and TAM Day were earlier and last night was the welcoming buffet in the Solutions Exchange. I’ll be at the Solutions Exchange later this week demoing in the Cisco booth Platform as a Service and Cloud Management.

No Limits is the theme this year.

Pat GelsingerPat Gelsinger, VMware CEO

started with this quote:

“The limits of the possible can only be defined by going beyond them into the impossible.”

This is one of the Three Laws of Prediction by Sir Arthur C Clarke, famous science fiction author and futurist.

Two years ago Pat stepped onto this stage to take the baton of leadership at VMware. This morning he uses the analogy of a “liquid world” to talk about the change in business:

  • Uber has a market cap of Hertz and Avis combined, with no physical assets.

He talked about Bravery:

  • 23andMe, DNA testing for $99… not the $100,000 that Steve Jobs paid to fight his cancer.
  • Landing on the moon 45 years ago was done with an army of people behind it.
  • VMware’s 17,000 employees who drive business enablement around the world.

Fluid, instant, choice:

  • VMware’s vision is to virtualize compute, network, and storage… with a management layer above it.


  • vCloud Suite 5.8. Version 6.0 is in beta.
  • Virtual Volumes and Virtual SAN 2.0 beta
  • vRealize Suite: new name for automation (including vCAC and vCOPs)

Hyper converged infrastructure solution: VMware EVO, the next evolution of infrastructure. This is another move in VMware’s march to the higher end of the market, and for hardware commoditization:

  • 1st member: EVO RAIL: deployment in 15 minutes, design and price predictability, one support call, designed for 100 VMs. With OEMs: Dell, EMC, Fujitsu, in spur, net one, Supermicro.
  • EVO:RACK (tech preview). At cloud scale, to DC in less than 2 hours, range of certified hardware solutions.

Pat announced that VMware is joining the Open Compute Project today.

  • More choice: VMware integrated OpenStack, now in Beta.
  • The apparent conflict between VMs and containers are addressed “containers without compromise”: Open Container API, and Project Fargo: lighter weight, faster deployment.

Partnership with: Docker, Google, Pivotal, VMware

Last year, VMware announced NSX, the networking equivalent of ESX for servers. Pat called out IT Security — SDDC and NSX offers automated security and enforcement with scale-out fire walling. NSX currently has +150 customers, +40 partners


Bill FathersBill Fathers, VMware EVP and GM, Hybrid Cloud Services Business Unit was the next speaker.


A year ago today VMware launched vCHS, now called vCloud Air.

Then promised: DRaaS, DaaS, PaaS… and ecosystem partners as well.

All accomplished in the last year, and more. But it all boils down to three key benefits:

Agility, Efficiency, Cost Savings

5 years ago in 2009: 2% of workloads were in Public Cloud, 98% on-prem.

2014: 6% of VMs in Public Cloud, 94% on-prem. Acceleration.

4 Phases of Cloud Adoption:

  • Phase 1: Experimental
  • Phase 2: Professional
  • Phase 3: Mass Market
  • Phase 4: Legacy

vCloud Air = Hybrid Cloud Platform helps move workloads between on-premises to Public Cloud, like vCloud Air, across all three continents.

September will mark the beta of vCloud Air with Government to conform to their compliance standards.

3,900 worldwide partners now with applications like:

DevOps Services, DaaS, Object Storage, Mobility Services, Cloud Management. You can find it at:


Carl EschenbachCarl Eschenbach, VMware President & COO was the last speaker.

He showcased 3 customers:

  • Medronics VP of Applications.
  • MIT Information Systems and Technologies
  • Ford Enterprise Technology Research

There were other announcements delivered, you can catch the recording at VMworld NOW

Read my articles on VMworld Day 2 and the Final Day.

Thanks for coming along.

VMworld 2013 San Francisco: Day 4, Makers and Shakers


For the popular Innovator’s Day at the end of the VMworld Conference…


Jay1Jay Silver, Founder and Director Joylabz, and Maker Research Scientist at Intel Labs.

Jay went to Ken Burns’ place in Massachusetts and went on a nature awareness walk. He had a guide, but Jay didn’t see anything new… so he went to downtown Boston and did some urban discovery. Another student licked his finger and stuck it in the air all around the area… and noted wind patterns that led to a vortex at the center.

“If we can see the invisible, can you change it? Can you make the world a construction kit?”

He attached a “squeaky set” sound sensor to a pencil and after spreading the graphite on a paper found you could play music. Ditto with water on a surface, or water pouring from a tap. Or copper stripes on a one’s body that when you hula hoop across it, makes music.

jay2The crowd loved his example of using a MaKey MaKey via USB to a bananas that act as forward and back arrow on a MacBook laptop. Or the same with Play Doh. Or making pianos out of stairs, or even dogs. Or a child with MS whose dad made controllers for him out of gloves. Or a musician who makes drums out of eggplants.

“What happens if you drop an M&M on an escalator and then add a roll of Chap Stick?”


keller1Keller Renaudo, CEO and Co-Founder Romotive

Robots are what science fiction has been teaching us for a hundred years. In movies: C3PO from Star Wars and Johnny 5 from Short Circuit, but can they be made real and accessible?

Others like Asimo by Honda came out, but he had a hard time with stairs.

Robots are science meets the real world. Mobile phones cannot move. What if we could make cheaper robots, that use the software on your mobile phone?  It would be 100 times simpler than previous robots that are only available in big companies or university research labs. It’s here with Romo, which will be sold under $150.

Meet Romo

Romo, uses computer vision and a simple visual programming language — you can program him to turn and bow. Kids who cannot read can program it. Romo is WiFi capable with other iOS devices, and you can see through his eyes, like Skype on wheels. He can flip himself over if he falls. You can change Romo’s firmware from the iPhone. You can update the software on the iPhone. Goal: build a community of hackers who create innovation for Romo.

With no experience in robotics or creating a hardware company, and being poor, they went out to Kick Starter and got orders that went out to 1,300 requests. But they ended up shipping 2,000 units.

Mission is the next step. It’s an interactive story line. The goal is for Romo to compete in an intergalactic space race.

“People tend to overestimate effects of technology in the short term but underestimate the effects of technology in the long term.

“All Robos come in Peace.”



Bre Pettis, CEO, MakerBot

Inventer and open source guru. Made the MakerBot 3D printer. In 2007 a 3D printer cost $100K. So they made a cheaper one.

“Innovation through absurdity”

“It builds up layers of plastic one at a time until you have an object. Even the first one sole out immediately. We drank way too much caffeine and we ate 2 cases of ramen developing it. Don’t do that.

pre2“We’re now on our 4th generation: MakerBot Digitizer Desktop 3D Scanner.  Previous models turned 3D designs into a physical object. The latest model: lasers point, I’m talking “lasers”, at a physical object and turn it into a 3D design. These come off our assembly line every 2 minutes, no screws on the bottom. Finished it 2 weeks ago, announced it 10 days ago. Ship at the end of Sept/early October.

pre3“My friend saw a cool fish head he saw on a lamp post in Paris, and now it’s turned into a plaster replica. We do this in Brooklyn.

“Go visit to see if someone else has already created something you couldn’t make yesterday.

“PLA is a natural plastic made from corn. It’s like “kittens” for architects, they can build anything. Head of NASA:JPL said “You’ve got to come see what we’re doing with MakerBot.” Yeah, I can make some time for that.

“It’s very iterative and you can make multiple prototypes/day rather than one a month.

“Lockheed used it to save 6 months/$1M on the next Hubble telescope.

pre4“A guy in South Africa lost fingers in an accident and decided to remake his fingers. A child in South Africa was born without fingers and could not afford a $10K prosthetic. So MakerBot made it with $500 worth of materials. sells doll furniture… but it was designed by a set designer on Broadway who designs sets with MakerBot.

“I started as an artist, saw every piece of art in Seattle. Shared photos of what he’d done. Worked for Make magazine. I developed the Cult of Done Manifesto. It’s self-contradictory as most manifestos, my “a ha!” moment was that everything is a draft. I conclude my manifesto with “Done is the agent of more.” (Someone said “I’m so glad you don’t work on airplanes.”)

“Beautiful Objects + Sharing + Iteration”

Is this “The Next Industrial Revolution?”

Thanks for coming along,

VMworld 2013 San Francisco: Day 3, the Gadgets


During this week amongst 22,500 geeks it was noticeable how many devices I saw, especially mobile devices. Here’s the quick breakdown…

Cell phones:

  • iPhones by a vast majority, mostly iPhone 5s.
  • Androids as the largest minority, mostly Samsung Galaxy 3 and 4.


  • iPads by a vast majority, with some iPad minis.
  • Androids in the minority, including the smaller Nexus 7 size.


  • MacBooks were a surprisingly significant fraction
  • PCs of all flavors
  • Ultra thin laptops running Android or Windows 8, including the Microsoft Surface, were more prevalent than in the general population


With a tech show that talks so much about mobile, cloud, VDI (Virtual Desktop Infrastructure) and BYOD (Bring Your Own Device) it is not surprising to see so many different devices, especially non-traditional laptops.

Every person here had at least two devices, a laptop and a cell phone, but many had a third, a tablet. Is the future a single converged device, or more likely, being able to access common data, and perhaps a common environment, from multiple devices?

Thanks for coming along,

VMworld 2013 San Francisco: Day 2


In Day 2, the focused moved to details of the big announcements from Day 1, including NSX, vSAN, and a bit on automation.

Carl Eschenbach, President and COO, VMware

Carl started with the observation of “More attendees than expected this year, 22,500 attendees rounded up to 23K, making this the largest IT Infrastructure event of the year”. Wikipedia reports that the 2009 Oracle OpenWorld had 37,000 attendees, but let’s not quibble.

He recapped yesterday’s announcements: vSphere 5.5 & vCloud Suite 5.5, NSX Network Virtualization, and vCloud Hybrid Services, Cloud Foundry on vSphere — through partnership with Pivotal — and Virtual SAN.

3 Imperatives for IT Infrastructure:

Virtualization extends to ALL of IT

  1. IT management gives way to automation
  2. Compatible hybrid cloud will be ubiquitous
  3. Done with the Software-Defined Data Center as the Architectural Foundation.

To show IT as a Service in action…

He demoed vCloud Automation Center (formerly acquired Dynamic Ops technology), showing costs for different cloud options — Private Cloud, Amazon Web Services, and Windows Azure.

…showing self-service, transparent pricing, governance, automation.

Then he demoed vCloud Application Director that showed the provisioning of a multi-tiered application.


Then followed a discussion of NSX network virtualization with its APIs to L2 switches, L3 Routers, Firewalls and Load Balancers. vSphere Web Client showed these workflows.

Switching with NSX moves the switching intelligence into the hypervisor layer. Routing with NSX is similar, and eliminates “hair pinning” of a packet, moving the routing intelligence into the hypervisor layer. VMware claims that studies show that 70% of traffic in a data center happens between VM. Ditto network security and fire walling.

A video was shown of of WestJet, the Canadian airline, discussed how they use NSX for their network virtualization.

Going further vMotion moved a VM from one vLAN to another vLAN with NSX visible in the vSphere Web Client.

Summarizing, Carl pointed out that NSX delivers:

  • Speed and efficiency
  • Same operating model as compute virtualization
  • Extends value of existing network infrastructure

Switching gears to application dependencies of storage, Carl insisted his customers have requirements around: time to market, predictable performance, certain SLAs, and managed costs. VMware Virtual SAN moves Direct Attach Storage (from a host), including Flash storage, to be used in virtualized environments. This allows setting the data storage policy and having it move with the VM.

In summary, VMware Virtual SAN delivers:

  • Simple provisioning at time of VM provisioning
  • Storage that scales with compute
  • Leverage and extend existing direct attached storage

Announcement that this technology is available for public beta at:

Shifting to mobile end users, the demo moved to vCloud Automation Center which goes to VMware View to provision a desktop, including storage tier, gold of course. Horizon Workspace shows provisioning of SaaS apps to an iPad, and logging in to the desktop from the tablet.

Discussed efficient operations and Policy-Based Automation with vCenter Operations Manager. With a popular application running, auto scaling, which was previously provisioned, is automatically remediated.

vCloud Automation Operations Delivers

  • Policy-driven, automated, proactive response
  • Intelligent analytics
  • Visibility into application health for app owner

Administrators can also take hands-on, or guided remediation, to improve storage I/O per second to increase the SLA for storage from one tier to another, silver to gold.

This delivers:

  • Broad ecosystem that improves accuracy
  • Specific recommendations to speed up troubleshooting
  • Policy-driven IT and financial governance

vCenter Log Insight does Big Data analytics to help examine storage scalability. This shows the trade-offs between cost and scale. Carl announces 5 free licenses of vCenter Log Insight by following the Twitter account @VMLogInsight

Finally, Hybrid Cloud was captured in a discussion of seamless extension of the Data Center from the private to the public cloud. Demoed vSphere Web Client in v5.5: vCloud Hybrid Services is now visible there. Public templates are visible, additionally private ones can be continuously synchronized across private and public clouds.

Carl closed the keynote in the same way as Pat did yesterday, by talking about how the audience were champions. “Champions drive change, so go drive change, and defy convention!”

Thanks for coming along,

musings on current and future technologies – by Bill Petro