Category Archives: iPhone

Apple’s New Ecosystem: the Implications of Apple Pay

Apple Pay

 

 

 

APPLE’S NEW ECOSYSTEM: THE IMPLICATIONS OF 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.

BillPetro.com

 

* 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

Apple WatchAPPLE 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.

Glass

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.

Sensors

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.

FitBit
FitBit

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.

Watches

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.

BillPetro.com

 

Apple’s New iPhone 6: Why you care

iPhone

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.

BillPetro.com

iPhone 3G: 2 months on, post-hype

iPHONE 3.0: 2 MONTHS ON, POST-HYPE

I recently bought my son a new iPhone 3G, a month after they first went on sale, and buying it then was a bit less painful than buying it the first day. The first day was like attending the premier of Batman: The Dark Knight. And as the Dark Knight has made $500M as of this writing, Apple is still selling a lot of iPhones.

So, what is the experience of the iPhone 3G, now 8 weeks later, after the initial thrill of excitement, post-hype, after the reality distortion sphere has dissipated?

Here is the good, the bad, and the ugly

The Good

This launch has been very good for Apple in terms of revenue and market share growth. “iPhone 3G had a stunning opening weekend,” said Steve Jobs, Apple’s chief executive, in a statement.

  • iPhone sales statistics:

1M first weekend

3M in the first month

8M iPhones? At this time, Apple had manufactured at least 5,649,000 iPhone 3Gs. Added to the 2.4 million first-generation iPhones the company reported it had sold in the first six months of 2008, that means that Apple has manufactured more than 8 million iPhones this year. In 2007, Apple sold 3.71 million iPhones.

Overall, the experience of buying an iPhone 3G, while in high demand initially, was pleasant and made easier by Apple’s convenient iPhone availability widget.

  • AppStore:

There were 60 million downloads in the first 30 days, admittedly mostly for free apps, but with about $30 million in revenue, and a runway of 3 million more new iPhones out there to run them on.

The iPhone is a small part of Apple’s business — only 5% of its overall sales in the latest quarter. Macintosh computers and iPods typically generate 75% of Apple’s revenue. But iPhones are hugely profitable. By some estimates, Apple stands to make between $100 and $400 on each new iPhone sold, depending on the model (8 or 16GB) and wireless carrier.

Although Apple has less than 1 percent of the overall cell phone market, it has 19.2 percent share in U.S. smart phones, which pack more functions. That put it ahead of Palm, which had 13.4 percent, but far behind RIM’s 44.5 percent, according to research firm IDC. And the less than successful launch of Apple’s MobileMe “cloud” offering has made predictions of the demise of RIM’s BlackBerry seem rather premature.

iPhone 3G imageThe Bad

  • iPhone 2.0 software

While there are many new features in the long awaited 2.0 firmware update, available on the first generation iPhone as well, there seem to be a number of steps backward as well. Some of the iPhone core applications are less stable, with the Mobile Safari crashing regularly when it didn’t do that with the 1.0 software. There are still some persistent and vexing features missing: copy and paste within and across applications or global search — it’s available only in Phone/Contacts.

Additionally, core applications have shown sluggish performance, slow typing, as well as clunky scrolling and Safari rotation. The 2.0.2 version update of software has addressed some problems, but not all.

  • 1.0 Apps

While there are many fine 3rd party applications available in the AppStore, they are by definition 1.0 versions. Because there is no Apple-supported universal beta or try-and-by program in the AppStore, these apps don’t have the testing that most usual applications enjoy. Some are quite immature. Many of them are unstable and crash regularly. And when they do, they can lock up the entire iPhone. Steve Jobs said he’s look into it.

  • Where are the AppStore “killer apps?”

Applications that one would expect, that are common on other platforms like Palm’s Treo or Windows Mobile phones are still missing in action on the iPhone. Here are the two most obvious:

Office documents: while you can view Microsoft Office and Mac iWork documents, you can neither edit nor create them on the iPhone.

Turn-by-turn navigation: the GPS feature on the iPhone 3G is very nice — though a battery killer — and on the iPhone’s native Google Maps is wonderful to behold. But Google Maps directions are not known for their accuracy. And while it works in a pinch, it is not the same as turn-by-turn navigation. While a number of popular vendors have mentioned intentions or successful porting to the iPhone, there have been no release announcements or available products at this time.

  • Suggested Apps

Here are a couple of potential Apps that I know would be immensely popular:

Typing shortcuts: the iPhone keyboard does not allow one to type as fast as on a physical keyboard like the “thumb boards” on the Treo, BlackBerry, or other smartphones. And while it does have an auto-correction feature called “keyboard dictionary”, I’d like to see the availability of an app that does either predictive typing (T9) or “macro” shortcuts — think “.sig” for your signature.

Speed navigation: moving around the iPhones apps mean a trip through the “Home” button before moving to the next app. And drilling through menus even within an application can take a lot of time. Changing email accounts takes 4 “clicks”, toggling BlueTooth or 3G on/off also takes 4, email account modifications take more. Either a gesturing system or an imaginative use of the “hard buttons” would be greatly welcomed.

The Ugly

Here are a couple of things that detracted from the huge media event of 8 weeks ago, both of which persist.

  • MobileMe

This long awaited enhancement to the dusty .Mac service got off to a rocky start the first day, lifted off, crashed, was rumored to be fixed, but alas, no. Apple has as much as admitted it wasn’t ready, and no longer promotes it as it was originally stated “Exchange for the rest of us.”

Steve Jobs said in an Apple internal memo in August:

It was a mistake to launch MobileMe at the same time as iPhone 3G, iPhone 2.0 software and the App Store. We all had more than enough to do, and MobileMe could have been delayed without consequence.

This appeared to be a back-end infrastructure problem, at least on the first day during what has been called the iPocalypse. Why Apple did not take advantage of VMware Fusion technology to avoid the server meltdown earlier, is hard to understand. But MobileMe still isn’t performing as expected. iPhone updates “to the cloud” is occasionally near instantaneous, if you have “Push” turned on in Settings — another real battery killer — but synchronization with iCal/Address Book is at best 15 minutes out.

To that end, Apple has twice offered extensions to users’ annual contract, first one month, the second time two months.

  • Battery Life

My personal biggest complaint is the battery life. While Steve Job’s launch said the battery in the 3G is superior to the 1st generation, that has not been my experience, nor that of most of the people I know and correspond with. While it may be the case that the battery is better than the 1st Gen when both devices are in standby mode, the new iPhone 3G has capabilities that the 1st doesn’t, and one or more of those may be the culprit. Here are some examples:

GPS radio: I’ve seen this feature run a device dry, even when plugged into a car lighter charger. I now usually leave “Location Services” off.

3G radio: AT&T’s coverage maps is, shall we say, wildly optimistic. I live in the coverage area, but only get one 1 bar. Not all locations in the country get coverage, I usually leave this off.

“Push” email: Microsoft Exchange, and even MobileMe support pushing email to the iPhone, but this can run down the battery faster. I only push Exchange.

3rd party apps: some of these are location-aware — which turns on the GPS to find your location — others apps connect to Web servers. I suspect some buggy versions are a battery culprit.

Bottom line: is it a keeper? Sure. I trust that upcoming firmware upgrades address some of these issues, more stable apps are less sloppy in their use of memory and battery, and that some killer apps do come over the horizon.

Thanks for coming along.

BillPetro.com

iPhone 3G Launch: a Tale of Two Cities and Two Vendors

iPHONE 3G LAUNCH: A TALE OF TWO CITIES AND TWO VENDORS

Remember the old Far Side cartoon that shows a couple thinking about each other — with the commentary “Same planet, two different worlds”? That was the sense of the first day the iPhone 3G went on sale in the US.

It seemed that the two partners — AT&T, the exclusive carrier in the US, and Apple, the creator of the new device — had no idea of what the other was doing. AT&T referred customers to Apple, and vice-versa. Most of the AT&T stores sold out of stock early the first day, Apple had stock well into the evening. This is the story of the AT&T Store in Colorado Springs and the Apple Store in Denver, Colorado.

Folks started showing up at the AT&T store in Colorado Springs around noon the day before the new iPhone 3G went on sale. Calls to the store the day ahead said they were prepared, following their experience selling the iPhone 1.0 a year earlier. However, they sold out an hour and a half after opening. Police appeared when the natives became restless after they heard that they couldn’t get a “rain check” for additional phones that would come later, but could happily order and pay for a device they’d get in 7 to 10 days. When asked, the store manager said that the Police were there for her protection. She said this out loud?

The more popular 16GB device sold out early, to a person who had been standing in line since 4:45 am that morning. A number of folks where there to get their 1st generation iPhone “unbricked” as they’d installed the pre-release version of iPhone 2.0 software the day before and their device was now unusable. Alas, no joy for them as the manager didn’t know what a “brick” was.

Some of the iPhone Phans headed north to Denver, to the main Apple store in Colorado. Their experience was very different indeed. While the line was quite long, the Apple employees made the wait fun. Indeed, while waiting and participating in the “gallows humor” associated with such a long line, the following table of comparisons between the two stores was developed:

AT&T, Colorado Springs

Apple Store, Denver

Inventory

Sold out by 9:30 AM

In stock until late at night

1st in line

12:30 PM day before

5:30 AM morning of

Number in line at 8 AM

125

275

Security

At store opening

Through the Mall

“How many in stock?”

“We don’t know”

“We have enough”

Last person to get 16GB

In line at 4:45 AM

All day

Snacks

0

Water, candy, chips, nuts

Answers

None

Lots

Can you fix my “brick“?

“What’s a brick?”

“Sure”

Workers on hand

10

100

Doors between customers

Locked

Cheers

Activations per minute

0.5

1

The Apple employees came by from time to time with a cart filled with soda, water, candy, chips, and nuts. Medical application of chocolate can be a strong palliative and it appeared with abundance. The Apple Store is located in the Cherry Hill Mall in Denver, the most high-end mall in the state and a busy mall on any day. Other provender could be obtained by foraging, including pizza and Mrs. Fields cookies.

The mood in the rather long line was high — this was a media event. Nothing like it has occurrence except a movie debut or a new music album release… or a new video game release could compare. But this was just a phone — or was it? Comments like this got mock stern looks from the Apple employees working the lines an comments like “You, out of line!” Regular nervous requests to these employees of whether they’d have the coveted 16GB model were met with “We have enough.”

As people got to the front of the line, some having waited for 7 hours, they’d be escorted into the Apple Store. These entrances were accompanied by cheers from those in line behind them knowing that their turn was coming up next. Ben was the Apple employee extraordinaire who performed this duty with good humor and grace. Inside the store there were a number of stations where numerous orange t-shirted Apple employees quickly and efficiently processed and fulfilled the order. They would ask a series of questions to understand any special circumstances. If you had a special AT&T contract though, they’d have to forward you over to the “specialists” at the Genius Bar. If, for example, you had a special company discount on your AT&T contract they could not apply the new iPhone 3G to that contract. However, they were MOST careful to make sure people left the store with a new iPhone — much more motivated than an AT&T employee — and made numerous calls to insure that. A suggestion to a customer that they could buy it more efficiently with the discount applied if they went to the AT&T store elicited a “been there, done that, they’re sold out” (see above) did not daunt them, and they found a way to address the special need. This was customer service par excellance.

Is it the iPocalypse?

The first day of the iPhone launch has been called the iPocalypse as device activation often failed, especially earlier in the day. This was caused by a “perfect storm” of several factors, all on the same day.

  • To minimize jailbreaking 3G iPhones — unlocking devices to run on other carriers, a common occurrence on an estimated 20% of the 1st generation iPhones — AT&T and Apple required that all new 3G iPhones be activated in the store before departure. And this practice was to be carried out worldwide, as the new device was being sold in countries other than the US. This put a considerable strain on Apple’s iTunes servers, which did the activation.
  • The new iTunes and iPhone 2.0 software (discussed in my previous article) were released on this day for download from Apple’s servers.
  • The Apple AppStore debuted on the same day, putting an enormous strain on Apple’s servers as people downloaded many new iPhone apps.
  • MobileMe, the new incarnation of the .Mac service, debuted on the same day putting an incredible strain on Apple’s servers.

Are you seeing the trend here?

I’ll discuss this more in my next article: the iPhone 3G experience, post-hype, some 8 weeks later.

Thanks for coming along,

BillPetro.com

iPhone 2.0 premiers

Christmas came a day early for iPhone Phans. They were expecting the iPhone 2.0 firmware update on July 11, but it became available for download (if you knew where) along with the new MobileMe software (ditto) and early adopters were updating their iTunes software to version 7.7 and examining the new AppStore (discussed below), which is already online.

I’m not talking about the new iPhone 3G device, which debuts tomorrow, rather the iPhone 2.0 firmware update — which will also run on the 3G by the way. iPhone 2.0 runs on today’s iPhone version 1.0 device.

AppStore

More than 550 applications are available at opening, 130 of them are free. The iPhone Phaithful began downloading these applications this morning.

  • Prices: $0 – $69.99
  • Free: about 25% pf apps
  • $0.99 – $9.99: about 70% of apps
  • Over $9.99: about 6% of apps

The selection of applications at the AppStore range from the sublime to the silly.

Epocrates Rx

For the sublime, Epocrates Rx is highly valued by physicians and is indespensible in their moving from the Palm, Windows Mobile, or BlackBerry platforms — to the iPhone.

On the silly side, PhoneSaber is a little application that allows you to display a lightsabre, in your choice of color — upon your iPhone screen — and when you move and rotate your iPhone, it makes the renown Star Wars lightsabre sound. But it’s cool.

Loopt on the other hand, is one of the first of many location-based social media applications. There are over half a dozen presently on the AppStore, including MySpace, Facebook, and Twitterific (for Twitter) but this one ties in friends and location in new and innovative ways — as was shown at the Steve Jobs announcement at the recent Apple WWDC.

Remote, which has become popular in the first day, is an application that allows you to control iTunes remotely via WiFi. The iPhone is becoming a universal remote, software utility belt, and information treasury.

Applications drive volume in attracting both developers and consumers to a new platform. Windows Mobile has many applications available for smartphones, the Palm platform has thousands of applications. For Apple to jump in to this market with over 500 applications on the first day is remarkable. Many have complained that it took Apple a year to open up the platform. Those who couldn’t wait would “jailbreak” their iPhone to install 3rd party apps. But now there is a remarkably easy and attractive way to select, download, and install free or inexpensive software applications for this device. In addition to syncing from iTunes, applications can be downloaded and installed over-the-air from the AppStore application on the iPhone.

Installation

Installing the iPhone 2.0 firmware update is quite straightforward. After downloading it through iTunes — which you’ll first want to update to version 7.7 — you install the firmware update to the iPhone. You have a choice of “wiping” the iPhone clean, or installing it and retaining all your settings. I elected the former, as I wanted a pristine device. However, if you want to keep your settings, note that by using this approach you may lose your Notebook data on the iPhone and all your email account settings, along with other settings and home page bookmarks.

In this scenario, I elected to restore my Calendar and Contacts – essentially overwriting the iPhone with iCal and Address Book information.

More details in my next post.

Bill Petro
www.billpetro.com

iPhone in the Clouds with Diamonds

iPhone and Cloud Computing

iPhone represents a phenomenal growth in user-generated data, as Joe Tucci alluded to in his EMC World 2008 keynote, when he said that by 2010:

  • 70% will come from individual creation
  • 85% will become the responsibility of organizations: YouTube, Flickr, Twitter, Google

We know that since the advent of the iPhone just over a year ago, Google has experienced a HUGE jump in mobile access to its site, primarily via this device with it’s image-rich Safari Mobile web browser. As Google mobile product manager Matt Waddell said back in March,

“We have very much hit a watershed moment in terms of mobile Internet usage. We are seeing that mobile Internet use is in fact accelerating… as many as 50 times more Web searches” vs. standard, so-called feature phones.

According to data released by M:Metrics, roughly 85% of iPhone users access the mobile Internet and almost 60% perform mobile web search. These numbers are dramatic and outstrip usage on other smart phones as well.

While the iPhone 2.0 firmware upgrade release will increase the appetite for end-user device consumption, including over-the-air downloads, the iPhone 3G will double or triple the data download speed over the first generation iPhone. Greater speed will likely mean greater consumption.

Cellphone tower triangulation has been a feature on the old iPhone as well as other mobile devices, but the new GPS capabilities of the iPhone 3G will mean even greater online data consumption.

mobileme.png

The implications on data consumption, and on cloud computing with MobileMe can be significant. Apple used the term “cloud computing” at their announcement at the WWDC in San Francisco. The idea is that any item you change in your Calendar, Contacts, or Email will be near-instantly be changed in the cloud and be updated on your Macintosh (if you have one) or on a web-based tool on your Windows PC.

The service will be MobileMe, the rebranding of Apple’s .Mac service. It will be beefed up in space to 20GB of space and will cost $99/year. For those who already have .Mac, they’ll be automatically upgraded. This secure online server holds the information and pushes the updates to the other locations in seconds. On the Mac it will work with the native applications: iCal, Address Book, and Mail. On the PC it will work with Windows XP or Vista. On the handheld, it will work with the iPhone or iPod Touch. As Apple calls it, “Exchange for the rest of us.

The PC web-based applications will be available from MobileMe at me.com. There will be mail, contacts, calendar, photo gallery, and iDisk, the online file storage. This is not the first time we’ve seen cloud computing, but it’s the first time we’ve heard Apple discussing it in a product launch. Cloud computing is the popular name for a number of different trends and technologies that involve online computing, data manipulation and storage.

One of the more popular consumer applications of cloud computing is Mozy Backup, which I’ve mentioned before. For about $5 a month, a user can backup an unlimited amount of PC or Mac data “into the cloud” over the Internet. The initial full backup can take some time, but thereafter, it backups just incremental changes at a block level. For those who want “off site” backup, this is ideal… and at much capacity than .Mac/MobileMe offers.

I’ve been asked about the implications of cloud computing.

Question:

Isn’t my data on someone else’s server?

Answer:

Yes, just like your email is at your ISP before you download it (via POP) and as it always is if you use IMAP email.

The trade-off here is the sense of insecurity in having your private data somewhere else (though Mozy encrypts it) compared to the flexibility of being able to access it anywhere that you can connect over the Internet. I gave up POP email years ago for the convenience of being able to collect it on the road, at work, at home, or from a hand held device, using server-side spam filtering and sorting. Another concern is:

Question:

If I can’t get online, won’t I be without  access to my information?

Answer:

Yes, unless it’s synced locally to your hand held (like an iPhone), or unless you have an offline copy. Technologies like Google Gears are making browser based information more persistent when disconnected.

Who knows what the future holds for other more powerful technologies.

Thanks for coming along.

BillPetro.com

iPhone 3G: the Second Coming

iPhone 3G: the Second Coming

Last week, after an eagerly waited and much speculated upon announcement from Steve Jobs at the World Wide Developer Conference, we finally got the story on the 2.0 version of the iPhone, known as iPhone 3G. While it’s really iPhone 2.0, we get the appearance of a 3.0 product with the new name. The event was a combination of Woodstock love fest, fan boy rally, and reality distortion field generation par excellence. But Steve Jobs announced what most people were expecting, and then some.

In the past, when people have asked me what I have thought about the first generation iPhone, I told them “Excellent as a media device: music, movies, YouTube, email/web browsing are all seamless.” But the flip side was this: as a data device is was sorely lacking. Specifically:

  • No 3rd party applications could be (safely) installed
  • No data, including Office files, could be transferred to the iPhone for editing
  • The PIM (Personal Information Management) tools were immature: Address Book had no searching, Calendar had no colors for sub-calendars, Mail was weak

These will change with the iPhone 3G and the updated iPhone 2.0 software expected on July 11. Here are the highlights:

  • Apple’s App Store will permit and distribute 3rd party applications for the phone, in some cases over-the-air
  • Integration of Microsoft Office and Apple iWorks documents. (Though we don’t know yet about “editability”)
  • PIM upgrades: Address Book will allow searching (though not any “cut & paste” yet?), Calendar will support different  sub-calendars with different colors, Mail will allow push technology from Exchange via ActiveSync.

Game Changers

There are several things both explicit and implicit in the announcement that could change the way people use mobile devices like smart phones. While 3G and GPS are not a new item in cell phones, the combination of a number of elements in the iPhone ecosystem could change the game.

  • Location Based Services: while there are other phones with both 3G and GPS, the iPhone holds out the promise of an easy-to-use, high resolution mobile device that can support services that rely on knowing where you are. One was demoed at the announcement, Loopt is a social networking tool that would tell you where your friends are and vice-versa. Adaptive GPS (A-GPS) will take advantage of the closest satellite as well as WiFi and cellphone tower triangulation to identify a users location. Will this serve as the communicator locator from Star Trek: The Next Generation, or introduce a privacy concern?
  • 3rd party applications: The Macintosh has some of the most innovative developers, several apps previewed at the announcement could have a profound impact on productivity, enterprise connectivity and gaming. 250,000 iPhone software development kits have been downloaded and an analysts at Piper Jaffray believes it could be the start of a billion dollar ecosystem. The previously existing Web-based-only applications are trivially easy to “install” (use), but can be slow to start up and don’t work without a connection to the Web.
  • Enterprise connectivity: Access to the corporate Exchange server, previously only available for  the BlackBerry with the BlackBerry Enterprise Server, could have an impact on how corporate users access their email, calendar and contacts. Could they turn their BlackBerry back in?
  • Wide availability: Presently, the iPhone is only (legitimately) available in 6 countries. Of course, unlocked versions have appeared everywhere, not tied to the official carrier of the country. When I was in Hong Kong last December, I saw iPhones available many places for sale, despite the fact there is no carrier there. By July 11 this year, it will be available in 22 countries, and 70 are expected by some time next year. Notably missing on the map are China and Russia, but confirmed contracts with carriers there seem to have simply missed the announcement date, work continues apace.
  • Cloud computing: Apple plans their own over-the-air updating system, “Exchange for the rest of us” as it were. The rebranded .Mac, aka MobileMe will allow near real time synchronization of email, calendar and contacts between the iPhone, Macintosh, and web-based PCs. More on this in a subsequent article.

TCO vs. ROI?

Although the new iPhone 3G will have a lower initial purchase price of $199 vs. the previous $399 for the 8GB device, the Total Cost of Ownership is measured by the initial cost plus the ongoing monthly service fees over the 2 year commitment to the carrier. Announced by AT&T on the same day as the iPhone 3G, but not as part of the Apple announcement, was the new pricing service for the device. The monthly data plan and SMS plans will cost more, making the device more expensive to own over 2 years by as much as $160. But perhaps the more valuable analysis would be the Return On Investment. The incremental value of being able to pull data down faster over a 3G connection, or the added value of GPS functionality… all add up over a 2 year period and may be compelling enough for a new purchase, or upgrade.

Thanks for coming along.

BillPetro.com