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What if Apple launched a TV?

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First off, a hat tip to the Apple Finance Board, which if you don’t know already, is home to the best Apple analysts, people whose forecasts routinely beat Wall Street “professional” analysts. A thread on that forum inspired me to think about this topic over the past few days.

The original topic, simply put, is what’s next for Apple? What’s the next product category for Apple that can generate >$10bn revenue a year (like the iPad will easily do this year)? Many people would suggest TVs as a potential category. The living room is at the heart of the digital convergence, and many vendors from different product categories are vying for control of the “smart living room” – TV manufacturers (Sony’s Google TV, Vizio’s Internet TV etc.), cable operators (their set top boxes), game console makers, Internet streaming device vendors (Roku, Boxee, Apple TV), and the niche HTPC makers etc.

Google made big waves last year with Google TV, however their high-profile efforts quickly hit a wall. Of all the current offerings, I think Microsoft is best positioned with its Xbox 360 + Kinect. The Xbox360 already supports many of the features that Google TV boosts, such as Netflix, Facebook and Twitter (the latter two not necessarily that useful, but Netflix is a killer app), and furthermore it has an entrenched install base. The value-add of another box, which offers some overlapping features, is not strong; and from a user experience perspective, adds more complexity for the consumer – another device to hook up to the TV, more cables to sort out etc.

Under such competitive dynamics, it is arguable that to make a big play in the living room, the TV itself is the most strategically valuable product to launch. The TV is the center piece of the living room and the only piece that cannot be displaced (VHS recorders came and left, DVD players came and will leave soon etc.). It is usually the first remote you reach for and the first device you turn on (although in the US it has been hijacked by the cable set top box). The TV offers a strategic point of control on the whole living room – to access your console, your DVD player or your cable, you need the TV remote. Launching a successful smart TV gains you control of the entire living room, and make all other devices your servant.

Strategy-talk aside, what should the features / benefits be for this “real” Apple TV?

  • At the minimum, it should be an iOS-powered device and supports apps. This gives the product great extensibility in terms of function, and killer apps such as Netflix / Youtube should be available (or even preloaded) at launch.
  • In terms of hardware,
    • Built in DVD / Bluray drive, opening on the side (just like the iMac)
    • If feasible, built in cable tuner so consumers can throw away their set top boxes – this is both about strategic control and simplifying the user experience (getting rid of the cable remote)
    • Large storage to record programs / store apps, photos etc.
    • Wi-fi connectivity
    • lots of USB / HDMI slots for connectivity to other devices
    • Optional components could be card readers etc. (similar to iMacs)
    • And obviously a large shiny LCD…
  • In terms of UI,
    • It should support great customization in terms of managing screen real estate. Users should be able to have multiple apps and channels open in a wide range of display setups
    • It can have some simple remote, but users should be able to control it via whatever iOS or Mac device (similar to how you can control you comcast cable using the iPad)
  • In terms of fancy / advanced features,
    • TV streaming to other iOS / Mac devices – iOS / Mac devices can open a “TV” app and use the device just like a regular TV screen
    • Interaction among iOS/Mac devices – you can send whatever app you’re displaying on your iPad onto the TV, and vice versa. This leads to interesting use cases like taking whatever channel / show you’re watching on the TV onto your iPad, and carrying your iPad into the kitchen or other rooms and keep watching
  • Gaming, which may be where the real value add is (disrupt the console business)
    • TV also functions as a capable iOS gaming device (have to evaluate the costs associated)
    • Again, interesting interaction use cases with other iOS devices – use your iPhone / iPod Touch / iPad as the controller; when playing multiplayer games, say Scrabble, the TV serves as the common display while each player sees player specific info (in this case, their letters) on their smaller iOS screen

Obviously I have not evaluated feasibility (would it be prohibitively expensive? How much software development is needed?), but I’d say the above features are not too far-fetched. The really big question, or missing piece, is if and how this TV disrupts the current content value chain (that’s where Google TV stumbled). Figuring out the content piece is the key to unlocking value; the product I listed here is not disruptive in this regard.

I would love to hear any thoughts and feedback.

Starcraft 2 and the e-sports eco-system, part 3

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In the third post of this series, I want to discuss how Starcraft 2 is interrelated with web social media.

The original Starcraft was born pre Google, blogs, and of course Youtube and Facebook. Starcraft 2 was developed through the years of the web 2.0 scene. This led to both in-game designs that incorporate web 2.0 (Facebook integration with user accounts), and more broadly, community developments that heavily utilize social media innovations.

Not all the community building is done by Blizzard. There is the obligatory Facebook fan page and Twitter account, but I wouldn’t say Blizzard has done an outstanding job at either (50k followers on Twitter is nothing to boast about, I’d say). What’s really interesting is the self-motivated and extremely enthusiastic gamers who are creating vibrant media content on top of the game.

For example, a number of “shoutcasters” have emerged as celebrities within the community (shoutcasting refers to live commentary on spectator video games, similar to sports announcers). One of the most famous such shoutcasters, Sean “Day[9]” Plott, even hosts a “Day[9] Daily” show, where he does hour-long shows announcing games and teaching strategies. Another shoutcaster, “HuskyStarcraft”, has quietly amassed over 100MM views on his Youtube account and has over 300k Youtube subscribers. He’s even branched off from pure shoutcasting to do the following parody music video, which has 3.5MM views:

Further more, gamers have strongly embraced streaming technology to livecast community competitions, or even just self-casting (where a player – usually a very good one – casts himself playing Starcraft 2). At any given point in time, video games are generally some of the top-viewed content on Justin.tv, ustream.tv and livestream.com. For Starcraft 2 fans, Teamliquid.net (the website of a professional Starcraft team) offers a convenient one-stop shop to see what streams are live at any time. Teamliquid also hosts a wiki site where players can view and document advanced gaming strategies. There have also emerged dedicated gaming streaming sites (own3d.tv), and dedicated Starcraft 2 casting sites (such as ragequit.tv, glhf.tv).

What I find interesting is that for sites such as Justin.tv and ustream.tv, which are usually popularized by pirated content (illegal rebroadcasts of live TV), gaming streams offer an attractive type of fully legal content. (Well, at least until the game studios start banning such gaming streams, which at least currently they are not doing as it’s free promotion for the games.) More importantly, such community media will strongly reinforce the popularity of the game, and help maintain its relevance. If Starcraft could last close to 14 years now and still be played around the world (a dinosaur of a game by video game industry standards), then Starcraft 2 could certainly hope for the same type of longevity with such community building.

Starcraft 2 and the e-sports eco-system, part 2

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In the first post in this series, I gave a very high level summary of professional gaming. In part 2, I will cover in some more detail the Starcraft 2 pro-gaming scene.

The Game

Starcraft 2 officially launched at the end of July this year, but really, gamers have been beta playing starting February of this year. Going further back, development was officially announced in 07, but had been in stealth mode since 2003 – making it a game 7 years in the making. That’s actually quite dangerous territory in video game development, since technology follows Moore’s Law – you may easily end up in vaporware territory like Duke Nukem Forever, the granddaddy of vaporware jokes. But Blizzard is probably in a league of its own, and has always been known for pushing back release dates. And if they think the game is going to flop, they just cancel it, which is why they have a perfect track record of hits.

Anyhow, the most interesting thing about Starcraft 2, from a content perspective, is in terms of the learning curve. For any Starcraft: Brood War veteran, the sequel is immediately approachable. I would say roughly speaking about 50% of the game is the same as before, in terms of buildings, units and spells, and even the hotkeys have not changed that much. So a Starcraft veteran can start playing instantly and feel very comfortable. But that’s deceptive, because the other 50% of the game which is new completely throws off the competitive play. Few battle-tested Brood War tactics still work in the sequel, and a lot more thinking has gone into the dynamics among units – which units counter which, which work well together. It feels familiar but it really is a new game – very well designed learning curve.

In terms of sales, Blizzard announced 3 million copies sold in the first month, which is a cool ~$200MM in terms of retail value. However, Starcraft 2 is not going to be beating video game sales (except for its own RTS category), since its tied to the PC platform (PC+Mac), whereas the mega box office hits (like Call of Duty Modern Warfare) are really cross platform on the Xbox 360 and PS3 consoles. Back in the day, RTS games have been ported to consoles, but they never really work out well in user experience – perhaps you really do need a mouse sometimes. It will be interesting to see how the new generation of input devices (Kinect etc.) inspires game development – can we see an RTS using a Minority Report type of input any day soon?

The Korean Pro Scene, and Blizzard vs. KeSPA

As said before, the biggest pro gaming scene is to be found in Korea, especially for RTS games. Interestingly, Blizzard used Starcraft 2 as an opportunity to regain control of the Starcraft “platform”. What had happened previously was that KeSPA (the Korean eSPorts Association) had been a driving force in pushing the commercialization of Starcraft in Korea, e.g. establishing the pro-leagues and handing out the TV distribution rights. Meanwhile Blizzard seemed to had taken a passive stance (it didn’t co-invest, but it didn’t charge licensing fees / royalties – it allowed KeSPA to use the game for commercial purposes, including TV broadcasting).

The growth of the sport in Korea probably surprised / delighted Blizzard, except for one thing – they weren’t getting any direct revenue from it. KeSPA had established such a strong control, to the point that pro-gamers needed licenses from KeSPA to compete in KeSPA competitions, and these licenses included some very restrictive terms (e.g.what types of commercial activities and matches the players could participate in, see this recent controversy over an exhibition match in Germany) – essentially, KeSPA was monopolizing the talent and therefore the entire market.

Blizzard saw Starcraft 2 as a chance to negotiate with KeSPA over royalties / licensing. Apparently the talks fell apart, and Starcraft 2 at one point got a “mature – 18+” rating in Korea by authorities (which people speculate as a retaliation move from KeSPA). Blizzard eventually struck a deal with GomTV, which seems to have had clashes with KeSPA before (the enemy of my enemy is my friend). One big implication, though, is that the best Brood War players will probably stick with KeSPA for a while, since that’s where the real money still is – although we have seen legendary players such as “Boxer” and “Nada” join the Starcraft 2 scene.

GomTV launched Season 1 of the GSL (Global SC2 League) in late August, and Season 2 is currently in full swing. Each season has a series of pre-season qualifiers, while the main season is a straight 64-player tournament. The total prize money for the 3 seasons planned this year is about $500,000. As expected, the tournament is dominated by Koreans, with non-Korean players collectively referred to as “Foreigners” – in Season 2, I think a total of 3 “Foreigners” qualified for the main tournament.

The Pro-Scene Outside of Korea

There are many semi-pro competitions organized via Battle.net globally, and players compete in the comfort of their own homes. The pro-scene has and probably always will be about big offline events (however Blizzard hampered that with the decision to remove LAN gaming from the game, which means even “offline” events are now actually battle.net gaming). In the US, the MLG (Major League Gaming) promotes a range of games (e.g. Halo3, Tekken 6) and has incorporated Starcraft 2 as of their Raleigh event in late August. In the recent MLG DC event, the top Starcraft 2 player walked away with $2,500, which indeed is exponentially lower than prize money of the Korean scene (and anyone can register, for $60, so not really a strong pro-scene). In Europe, ESL (Electronic Sports League) has incorporated Starcraft 2 into the Intel Extreme Masters competition.

To be continued…

In the next post, I’ll (finally) talk about the community and the social media related to Starcraft 2. Stay tuned!

Starcraft 2 and the e-sports eco-system, part I

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I have been playing a lot of Starcraft 2 recently. A LOT. So not really a surprise I haven’t blogged at all the past 2 months (the game launched end of July). But I thought I should put on my MBA hat (on top of the nerdy gamer hat), and analyze a bit the gaming eco-system, especially since a lot of it is related to social media.

I plan to cover this in a series of posts. This first post will give a quick overview of “esports“.

Overview

Gamers have played competitively since the inception video games (the wiki article linked above gives a historical perspective). Commercialization began in the late 90s, thanks to the popularity of First-Person-Shooters (FPS) such as Quake (which I think gave birth to a lot of the gamer vocabulary today – such as pwnage). But where commercialized gaming really took off, as most people probably knows, is South Korea. The common catalysts quoted are that Korea had great broadband infrastructure, and during the Asian Crisis of 97-98 many people took on Starcraft as a way to kill time (though this second one sounds more unlikely). Anyhow – Starcraft, the Real-Time-Strategy (RTS) from Blizzard, really took off in Korea, and starting from around 2000, Korea has had professional Starcraft gaming, involving professional teams, full-time players, television broadcasting, and around the year tournaments.

Globally, various organizations have attempted to create major global tournaments (the Olympics or World Cup of gaming). Two competitions that I believe have had good longevity are the World Cyber Games (WCG) and the Electronic Sports World Cup (ESWC). Total prize money for WCG has steadily risen to around $500,000 from $200,000 a decade ago, split over 10 or so games. This is by no means a huge jackpot (for majority of pro-gamers it’s not a sustainable career), but the growth has driven up the popularity of e-sports.

Major Game Genres

Judging by the prize money involved (check out the above links for WCG / ESWC, for prize money per type of game), FPS and RTS are by far the dominant genres, though there are a few up-and-comers such as MMORPG (World of Warcraft) and DotA (a custom map on Warcraft III, which really doesn’t fall under any major genre). Other popular genres including guitar hero, fighting, racing and sports simulation (football etc.).

Interestingly, by and large most of the competitive genres are solo play (one-on-one). While most games, such as Starcraft, support team-based play, the major competitive format has been solo gaming. This has given rise to a series of individual stars over the years, most of which only enjoying celebrity status within the community, but a few who have actually made legitimate money and fame (again, mostly Koreans – look up the Wiki entries on “Nada” Lee Yun-Yeol and “Boxer” Lim Yo-Hwan, probably the two most famous professional Starcraft players ever).

In contrast, the only major team-based genre is FPS, and especially the hit game Counter-Strike. Counter-Strike popularized the 5v5 format, which has been adopted into DotA. Of course, many FPS games are competed in solo, such as Quake.

Major Countries

In terms of where most pro-players are, this is heavily biased by game genre. Korea by and large “owns” RTS, especially Starcraft and now Starcraft 2. The Korean pro-leagues offer the highest prize money (the recent first Starcraft 2 pro-league, GSL Season 1, featured a ~$90,000 cash top prize) and attracts the best players globally, however most of the top players are Korean.

Warcraft III, another popular RTS, is slightly more diversified, with good European and Chinese players alongside the usual Korean suspects. My personal opinion is this is due to Starcraft’s overwhelming popularity in Korea, which has kept many great players away from Warcraft III.

In FPS, the scene is very different, heavily dominated by North American and European teams and players.

Business model of professional teams

Again probably pioneered by the Koreans, the professional team setup involves a manager (who also acts as the agent for his players) and anything from a handful to dozens of players. Players earn salary and are often provided accommodation and food; any prize money won is split between the player and team (I’m not sure of typical ratios).

Teams get income from competition winnings and sponsorships / advertising. Typical sponsors are major IT manufacturers (Intel, Samsung etc.) as well as specialized gaming equipment makers (e.g. Razer, which offers professional gaming grade mice / keyboards). Teams may be based out of a Internet cafe (which sponsors the team), which offers an environment to train in.

Growth Issues

There are several major issues with e-sports / pro-gaming that have hindered commercialization efforts. First of all, outside of Korea, where Starcraft is a national past-time, core gaming remains a subculture in society, mainly followed by adolescent males – the demographics base makes a big media play (such as a dedicated gaming channel on cable) very difficult. Furthermore, this base of core gamers are further segmented by the types of games and the specific games they play (again in contrast to Korea, where most of the commercialization revolves around Blizzard RTS games, such as Starcraft, Warcraft III, and now Starcraft 2). This limits the total advertising dollars and overall market size.

Secondly, the inherent short product life-cycle of video games goes against the needs to build stable spectator sports. New games, even sequels such as Starcraft 2, need to innovate on the gaming mechanics to sell; this however makes following the games harder (imagine if football or any other sport had major changes to its rules and therefore strategies every 2-3 years).

Thirdly, the steep learning curve for a spectator who has not played the games also blocks market growth. Most of these core games are incredibly complex, for example any RTS would feature 30 or more different types of units, each with unique attributes and mechanics. Also, the mechanics of certain games makes spectating boring at times (in Counter-Strike, there is usually pro-longed periods of stalemate with short bursts of intense action).

The complexities of the Android eco-system, and its implications

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Google’s Android OS for mobile handsets is arguably Apple’s strongest competitor in the marketplace. The most recent numbers from Google are 160k activations daily, which implies a run-rate much bigger than iPhone’s recent quarter of 8.4 MM units.

There is no doubt that Android has been a success, especially in terms of offering consumers more choices. US consumers now have a perhaps overwhelming number of smartphones to choose from, across the major carriers. This is certainly a great development.

What I want to focus on in this post, however, is looking at Android from the eco-system players’ perspective – Google, the handset manufacturers, the carriers, and the app developers. My position is that while Android is full of promise as a platform, some fundamental dynamics of the eco-system will make it very challenging to navigate, especially in terms of financial gains – at the end of the day, these players are in it to profit.

I would like to start by going through each player’s objectives from participating in the Android eco-system. Starting with Google, its objectives are:

  • Gain a permanent foothold in mobile, ensuring Google’s future when the web becomes increasingly mobile-driven
  • strategically, prevent dependence on Apple in mobile, limit its bargaining power
  • Increase traffic to Google properties, most notably search, which will in turn grow Google’s ad revenue
  • Offer users a consistent Google user experience across mobile devices
  • “Lock” users into Gmail, Google Maps, Youtube etc. (think Microsoft shipping IE with Windows)
  • Develop a mobile go-to-market channel for future Google products

In essence, it’s all about Android being the hook which will retain the user in using Google products.

What about the handset manufacturers’ objectives?

  • Develop handsets that rival the iPhone’s value proposition, capture market share in the booming smartphone segment
  • Differentiate from competitors
  • Reduce OS R&D costs

And the carriers:

  • Retain some degree of control in the device, unlike Apple’s terms with AT&T
  • Prevent becoming “dumb pipes, up-sell users on carrier VAS (value-added services) such as mobile video, ring-tones, gaming etc.
  • Reduce Apple’s bargaining power
  • Differentiate from other carriers

There is one thing all players agree on – counter the iPhone; but beyond that, there are some immediate points of tension. As smartphones seem to converge on the single big touch-screen form factor, hardware manufacturers will find it increasingly difficult to differentiate in shape and design. In that sense, HTC / Motorola / Samsung would very much want to tweak the UI or customize the OS, but that would quickly run into conflict with Google’s wish to offer users a consistent experience; and practically speaking, UI may really be too much a core part of the OS for the manufacturers to customize. Hence, manufacturers face the dreaded prospect of following the footsteps of PC manufacturers – low differentiation leads to low profits.

At the same time, carriers and Google’s interests aren’t that well-aligned, either. Google recently shuttered its Nexus One online store, which was hailed to disrupt the status quo of handset distribution by offering a contract free model instead of the typical carrier-subsidized model. Obviously this did not please its carrier partners. On the flip side, carriers perennial fear of becoming “dumb pipes” drove them to loading up Android phones with hard-to-remove bloatware, which consumers generally dislike and probably is making Google cringe – and just serves as more ammo for Apple’s value proposition of a refined experience.

My point here is that the logical implication of these interlocking conflicts is compromise. Google aggressively wants Android to become the de facto mobile OS – so much so that not only is the OS free to manufacturers, Google is also reportedly sharing search revenue with carriers / manufacturers. (Pretty amazing that you can think of this as almost the opposite of Apple’s original iPhone terms, where Apple got a share of AT&T’s revenue.) Manufacturers will get away with deals such as putting a Baidu search box on the phone, which would obviously go against Google’s interests. Carriers will get to keep their finger in the OS.

Sometimes these compromises result in degraded user experience, such as bloatware. Most often, they call into question the financial returns on Android. It would be a very difficult task to model how much incremental revenue Google will generate by owning Android, as opposed to not owning an OS and just receiving mobile search traffic from all devices. Manufacturers will get to ride the smartphone boom for a while, but then will again be hard-pressed for innovation – again, the PC manufacturers come into mind. The biggest winner from all this seems to be the carriers – especially Verizon – they finally have options other than Apple, and they can keep their old business model.

Twitter, Facebook and Google: the competition under convergence

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Last Wednesday I attended the first Twitter developer conference (Chirp), at the Palace of Fine Arts in San Francisco. While Chirp is very much being shadowed by today’s Facebook f8 conference (both companies seem to see each other as major competitors), it was still a coming-out party of sorts, a declaration that Twitter is now big enough to host a conference with 1,000 developers.

My biggest takeaway from Chirp was how ambitious the Twitter team is. For a company that has long been under critics’ fire for not having a business model, the core of its strategy remains surprisingly attached to “getting the product right” first. The company’s priorities, according to CEO Ev Williams, is “0. Infrastructure; 1. Friction-free; 2. Relevance; 3. Revenue.” Revenue was decidedly last on the list.

Infrastructure is easy to understand – Twitter has been hurt by scaling pains so many times that it makes sense that the company is focused on coping with the growth first and foremost. Friction-free is about making the service easier to use, especially in the context of retaining new users, which was Ev’s rationale for the Tweetie acquisition. Friction-free is also the thinking behind the @anywhere initiative – so that users can use Twitter anywhere on the web, and not be interrupted by having to open another web-page etc. Relevance is partly about search, and partly about new features such as location and annotations.

And this is where things start to get interesting. For a long time, Twitter itself did not have an inbuilt search function; a number of 3rd party developers offered competing Twitter search products. The leader of these products, Summize, was eventually acquired by Twitter; but as Ev described it at Chirp, it was more like a merge of equals (size of team etc.). While the Twitter team didn’t talk a lot about search, I felt the key to the service’s relevance, and future business model, would be search – how do you organize this world of information (to paraphrase Google’s mission) stored in the billions of tweets, so that value can be extracted?

This is by no means an easy task. The distinctiveness about Twitter is its timeliness – you can literally find out what’s going in the world right now. However, this also makes search, or any other type of data organization, technically complex. Annotations and other types of meta-data helps reduce the complexity, as well as efforts to understand the users’ intent – are you looking for info on a specific location or event – but it will still be a daunting problem. (Google and Bing has had access to Twitter’s data-stream for a while now, but whether it’s for lack of trying or the complexity of the issue, their current use of Twitter data in their search results seem largely inconsequential.)

Still, if the Twitter team can crack this nut, then they may have on their hands a truly blockbuster product. The beauty of Twitter is how many different usages people have come up with for it – as a communications tool, it is simply an enabler of numerous services. If they can make their information much more organized through search, then the value of the communication tool is enhanced, as well as the services built on top of it. The recent story of how Twitter can be used to predict box office success is just one example of the potential value.

(This post was written over several days so the thought-flow is somewhat broken.)

When I was interviewing for my summer internship, I got asked the question “if you had funding to build a new search engine, what would you do?” My response was you can either tackle the existing search problem through a drastically different algorithm, or focus on specific verticals (e.g. travel) or new markets (mobile, location). If we change the phrase “search engine” to “method of organizing information”, then certainly both Twitter and Facebook are taking on a differentiated approach from Google. While the three companies may at face value be in very discrete markets, they are on a unavoidable collision course in terms of competition. While Google is all about indexing the static web, Facebook and Twitter are built on the social web, and they may well grow to become the Google killer that many have been searching for.

This is not as far-stretched as you may think. Think about the last time you performed a search. Did you ask any friends first? Was it only when they said “I don’t know” that you replied, “don’t worry about it. I’ll just Google it.”? Google search is powerful and hugely useful, but only to the extent of how useful the static pages it indexes are. When you do a search on a specific question, you often have to tinker it a few times. Click on a few different search results. Read through them. Often the pages won’t have the answer to the exact question you have, but enough info to give you pieces of the puzzle so you can piece it together. This is still much, much more efficient compared to doing research at the library, but the power of the social web is that you are not confined to static pages and information – the odds are that there is some person out there who knows exactly the answer to your question, and the power of the social web is that it enables you to ask that person directly. Quite a few of the people I follow on Twitter use it as a magical search engine – you pose a question on Twitter and your followers answer it.

Of course, this is just one specific scenario where social web services such as Twitter and Facebook have the upper hand against Google (and for the many, many instances where you need static information Google is still the better option – e.g. what is the year that the US was founded); but it does highlight Google’s key vulnerability – its lack of presence in social. Be it Orkut, Wave or Buzz, Google has repeatedly shown its inability to come up with a competitive social networking product. Maybe Google simply doesn’t have the social genes in its DNA – which is fine, as for the foreseeable future they will still make a killing in Adwords/Adsense. But the danger for Google is that search gets demoted from a primary instinct into a secondary instinct, the same way that Kayak / Mobissimo / Bing Travel and other vertical search engines have made Google irrelevant in travel search. It will still be a huge market, but only a less efficient/user-friendly alternative. And it’s clear from Facebook this week and Twitter last week that these companies have huge ambitions too in organizing the world’s information – hence the competition will be inevitable.

One last note – while Facebook has seemed to garner much more attention and praise with its announcements, Twitter’s efforts, especially in mobile shouldn’t be disregarded. The news today that Twitter has acquired SMS service Cloudhopper may sound insignificant to those of us who are used to iPhone apps and 3G networks, but in the grand scheme of things SMS is still such a viable and active method of information delivery. It will be interesting to see how Twitter uses SMS to its advantage.

Holding off from buying iPad 1.0; eager to buy iPad 2.0?

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I think I qualify as an Apple fan. I bought an iPod in 2004, back when it was still black and white displays. I also have bought two different generations of iPod nanos, an 2nd gen iPod shuffle, a 1st gen iPod Touch, and I finally made my first MacBook purchase last year. I’ve also bought an iPhone 3G and now use a 3GS. I have an iMac at home back in Beijing; my dad is thinking of buying an Apple server for his office (though I strongly discouraged him about it).

When the iPad was first announced, I quickly made the decision that I wanted one, and I justified my decision by telling myself that it would be an laptop replacement for school. I’m pretty big on paperless, and prefer reading cases on my laptop instead of printing them out; so the dream product for me (for this purpose) would be a tablet with a stylus to take notes. The iPad doesn’t support a stylus, but from the original announcement, and the fact that there’s plenty of iPhone apps that support PDF viewing, I thought I could justify splurging $500 on the iPad. (And yes, I decided fairly early on I only wanted the $499 version. I don’t need 3G access and from my previous usage statistics I don’t need big storage.)

However, when the iPad reviews came out last Friday and the product shipped last Saturday, I realized that this 1st gen device does not pass as a laptop replacement, even for the relatively lightweight usage of school (email, PDF, and some basic Office apps). Then again, I’m thinking of using the device in the sense of a traditional computing paradigm, whereas from the onset Apple was looking at the device as an iPhone-esque paradigm, a closed system and a tightly controlled user experience.

The tradeoffs are numerous and huge in implications. Jobs and Apple criticized netbooks for being a device of compromise which doesn’t really excel at doing anything; they claimed that the iPad is “magical” and “revolutionary” in that it sets out to accomplish what netbooks were originally intended to do – convenient access to basic computing tasks (email, web, video) – without sacrificing the user experience. What was sacrificed was an open file system; multi-tasking; flash; multiple channels to access and purchase software. To state the obvious, the iPad copies iPhone’s user environment, rather than that of the MacBook.

This makes the iPad, as it is, primarily an entertainment device. There is nothing wrong per se with this positioning; Jobs’ hyperbole that the product is “revolutionary” still has some merit, in the sense that the device is beautifully intuitive to people with little prior experience with computers. The iPad to computing is akin to the Flip to video recording, or compact cameras to photography. It’s an entry level device (albeit a luxurious one) designed for the mass consumer.

Interestingly, this design philosophy has sparked a philosophical debate among heavyweight bloggers: Doctorow from Boing Boing fears that the iPad era means an era of stifled grassroots innovation and creativity (users are “infantilized” – kids can only play with it, but are restricted from exploring it and programming it – unless you hack it first), while Gruber argues that there will still be creative kids. I’m more inclined towards supporting Gruber’s position. The proportion of users who are interested in programming may decline, but that’s more due to computing becoming accessible to all rather than there being fewer aspiring programmers. I would even argue that the App Store, closed and arbitrary as it is, has leveled the playing ground a lot more for new programmers (ease of distribution and access to users), and therefore there should be more aspiring programmers than ever before.

That being said, the geek in me craves for a more open product than the iPad. I want the flexibility of having access to the file system, of having more than just the App Store to go to find software, and I need multitasking. I need to be able to type up a word document while also doing some web search. Apple has a pretty good history of improving its products – just look at the 1st gen iPhone and see how much it has improved (no 3G, no App Store – in hind-sight can you imagine people actually bought it?) – and give it ten months and I might be seriously tempted to get a 2nd gen iPad.

Will Flash ever work on mobile?

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There’s been a couple of interesting posts on implementing Flash on mobile devices in the last few days. First, An Adobe Flash developer on why the iPad can’t use flash looks at the issue from a UI perspective – namely how some of the UI design elements we take for granted on desktops / laptops, such as mouse hover-over, are not native to the touch paradigm, so that even if Flash can run on the iPad / iPhone, a lot of Flash usages still would not function properly. Instead, either the mobile OSes come up with ways to emulate a mouse interface (or introduce a lot more complicated input methods), or existing Flash apps have to be redesigned with the mobile audience in mind. The first route goes against the touch paradigm, while the second route means a lot of work for developers (so it can almost be argued they might as well forego Flash altogether).

The second post shows a fairly slick youtube video of Flash on Android, through a Farmville demo:

http://www.youtube.com/watch?v=r9whFavOb2U&feature=player_embedded

If you look closely enough, you can see that 1) there is an issue with mouse hover-overs; 2) for a intensely interactive Flash app, there is “money left on the table” in the sense that it is not customized for touch and the controls feel clumsy (or maybe it’s just the demo person…).

Which leads me to the provocative title of this post. The whole demand for Flash on the iPhone and other mobile platforms is based on how it gives consumers the “real web.” However, if you think about the main uses of Flash, which is 1) video 2) games 3) ads, I would say that consumers don’t care about whether ads can be displayed, and as the above example illustrates, games (and other forms of highly interactive Flash usages) probably need to be redesigned anyway (which calls for custom apps). Which leaves video – and this is where the competitive landscape plays an interesting role. The biggest video site, Youtube, is owned by Google, and Google is definitely going for HTML5 + H.264 and moving away from Flash. (Tangent: Google is also getting some criticism for not truly supporting the open web, as H.264 is a licensed technology.)

So the bottom line is, while Flash has dominance on the web now, it definitely faces the danger of becoming completely irrelevant in the mobile space. This may not be a terrible thing – moving to a unified standard such as HTML5 and away from proprietary codecs – except of course for Adobe.

Haas MBA Google Trek and initial impressions of the Droid

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Last Friday, a group of 50 Haas MBA students visited the Googleplex. During the 3-hour afternoon visit, we had an enjoyable tour of the campus, and engaged a panel of Googlers (many of them Haas alums!) from various products and functions in a lively round of discussions. A big shout-out for my classmate and former Googler Lauren Gellman for organizing this spectacular trip!

Haas MBA Google Trek 2010

Besides having a great time talking with the Googlers, I was also lucky enough to win one of the 5 Droids handed out in a surprise lottery (you can see the winners showing off their gear in the photo). The phone, targeted for developers, comes with a one-month free trial from Verizon, as well as a nice discount for a 1 year or 2 year contract.

This is the first Android handset I have used, having been a loyal iPhone user since January 2009. There are things I immediately like about the phone, and it really is almost a completely different experience from the iPhone. I know there are plenty of Droid reviews out there (since this device has been out for a quarter now), but here are some of my first impressions:

  • Great support for Google products – really, no surprises here. The turn-by-turn navigation, a coveted app by many, could well be one of the killer apps for this device. (I am curious how well that works on the road, especially in areas with patchy reception – this was a key differentiation point Nokia was trying to emphasize for its Ovi Maps, where the maps are stored locally and require less data transmission – and therefore less dependence on reception – on the go.) And of course the Google Voice app is great, but it does make you wonder how Verizon feels about it.
  • Background apps – Pandora while surfing? No problem. However, it’s not apparent what apps are running in the background, which could both be a drain on your battery and also a potential nuisance – I realized I was always on Google Chat, even though that wasn’t my intention.
  • Poor support for business users. This is not a phone ready for corporate America. It supports Microsoft Exchange, but apparently the “corporate email” app doesn’t support search. That’s right. No inbox searching. That alone is enough for me to hold on to my iPhone. (I could, in theory, forward all my emails to Gmail, but I’m sure there are plenty of users like me out there who prefer to keep their work-email and gmail separate)
  • Very slow charging on USB? I have a habit of carrying only the USB cord, and not the adapter, for my iPhone. For some reason, the Droid charges at a very slow pace via USB – something like 15% an hour, which is not satisfactory.
  • The physical keyboard is redundant. Yes. I’ve gotten used to typing on virtual keyboards. Having to actually push down feels painful, and there is no auto-correct. In this regard I’d probably like the Nexus One a lot better.
  • App market. Good number of apps already, most of the web2.0 services are present, but much less presence of old-school stuff – e.g. WSJ, FT, NYTimes etc.

Reading through the points above, it’s interesting to note how many of them are talking about consumers’ habits. For example the point about the keyboard – if I came from the blackberry world I probably would love the physical keyboard (remember all those people who hated the virtual keyboard on the iPhone when it first launched?), but I’ve grown accustomed to virtual keyboards. Same for the email search – my work-around would solve the problem, but it is asking me to change my behavior, so I have a strong distaste for it.

One final point – I want to comment on how fundamentally different the Droid is from the iPhone. I felt it was a phone for geeks and engineers. The UI was less polished, but there was much more that the user could customize (menus, widgets etc…) You need to spend time to play around with it. The iPhone, on the other hand, is a device ready for mass adoption. It’s frustrating for geeks who want to do all kinds of things (but can’t), but perfect for everyday users who can just use it intuitively. Very different philosophies, and therefore potentially a sharp divergence in consumer segments going forward.

The Strategic Implications of Chrome OS

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Excuse me for the grand title, but I’ve been writing too many marketing papers recently…

Google held a press release for Chrome OS today. All the major tech blog properties are covering it. Just check out the first page on techmeme and you’ll get a good rundown of all the discussions going on.

What I’d like to talk about is how Chrome OS might impact the computing market. Google has taken a page from Apple’s playbook by deciding that Chrome OS will be available only pre-shipped with certain devices (netbooks, at this point), as opposed to being an OS that you can get and install on whatever machine you have.

This is actually a big deal. By doing so, Google is moving away from the traditional PC hardware / software paradigm and moving towards a model more typically found in other consumer electronics – the future Chrome OS devices will be more similar to your TV or other home appliances than to your laptop or desktop, in that its feature-set is pre-defined and not customizable (unless you are a hacker). It will be a simple, straight-forward user experience – when you boot it up, all it shows will be the Chrome browser window.

Commentators are divided over the OS, but the differences really are due to very different vantage points. The infoworld article boldly titled “why Chrome OS will fail – big time” focuses on how Chrome OS is not a substitute for Windows or Mac, and thus claims it fails. Robert Scoble on the other hand focuses on how Chrome OS is really about low cost supplemental access to the web, and a competition over web standards and tools – HTML5 vs. proprietary frameworks like Flash or Silverlight.

My concern with Chrome OS is really about the bigger picture of netbooks – having never bought one myself (though quite tempted at one point when the EeePC first came out), I am still not a big believer. Netbooks are a niche category on a rapidly converging field, squeezed between ever-more powerful smartphones one the one end and laptops on the other. In one sense there’s a definite value proposition for it – a $100-200 device that you can just boot up and google a recipe while you’re cooking, or just do some casual browsing while you’re on the couch does have some marginal benefit, but the emphasis here is really on “marginal”.

For Chrome OS and netbooks to succeed, Google is really betting on a couple of big industry trends. One is that HTML5 adoption will be smooth and major web properties will convert to it, instead of running on proprietary platforms such as Adobe Flash or Microsoft Silverlight. Of course in this aspect Google does have some control, since it owns Youtube, so at least it can ensure that the biggest video site on the web will be compatible.

The second big trend is the wide-spread availability of wi-fi, since the device is Internet only. Google and its hardware partners can opt for 3G capabilities, but that’s a harder sell because of the additional telecom fees. In one sense, wi-fi is pretty widely available, but it’s far from ubiquitous, and while the device will still sell, people will talk about it less if they don’t use it on the go that conveniently. To a certain extent, this point is more of a technical issue, but Google and friends will have to come up with some solutions to make the device more usable.

In sum, Chrome OS is perhaps just the beginning of the future – a future where every device is a thin client to access the web and everything is stored in the cloud. It may be too early for its own good. Only time will tell.