The new iPod nano is a tour de force, the Swiss Army Knife of mobile entertainment. I'm sure there's some obscure gadget from Japan that packs more features per cubic millimeter, but I've never heard of it, and chances are neither have you. This one's a major consumer product, just in time for stimulating the economy this holiday season. Speaking as a technophile, I want one of the new nanos for the same reason I want a Dremel with 300 different bits: just because.
I'm also impressed by the new price point on the iPod Touch. Apple frequently overhypes its announcements, but the $199 price point in the US truly is a milestone that should lead to much higher sales. The improvements to iTunes and the App Store look promising as well, and I'm especially intrigued by Apple's effort to make paid apps more prominent. More on that in a future post.
But the thing that surprised me the most about Apple's announcement wasn't the features of the new products, or the absence of a tablet or an iPhone Lite. It was something Steve Jobs said when he talked about the video camera in the nano:
"We've seen video explode in the last few years," he said, showing a picture of a Flip video camera. "Here's one, a very popular one, four gigabytes of memory, $149, and this market has really exploded, and we want to get in on this."
Think about that for a minute. "There's a big new market, and we want in." Not, "we're creating something new" or "we can vastly improve this category." Just, "we want a cut."
It sounds like something Don Corleone would say. Or Steve Ballmer. But it's not what I expected from Apple.
Now, it's logical for Apple to put video cameras into iPods. A friend of mine worked at one of the companies producing cameras-on-a-chip, and he's passionate about the potential for building vision into every consumer product. It's not just an imaging issue; when the device can see the user, you can create all sorts of interesting gesture-based controls that don't require you to ever even touch the device. Instead of point and click, the interface is just...point.
So it's been inevitable that video cameras would eventually be built into things like the nano. For Pure Digital, the makers of the Flip, this ought to be a tough but normal competitive challenge. The first step is to make sure your camera works better than theirs (check). Next, since music players are becoming cameras, you might want to build a camera that can also play music.
But that's where the situation becomes abnormal. Because even though Pure Digital was recently purchased by Cisco, giving it almost limitless financial resources, it's more or less impossible for its products to become equivalent to the iPods as music players. Not because they can't play music, but because they aren't allowed to seamlessly sync with the iTunes music application.
The issue of access to iTunes has already been simmering in the background between Apple and Palm, with Palm engineering the Pre to access the full functionality of iTunes, Apple blocking that access, and Palm breaking back in. To date I've viewed it as kind of an amusing sideshow, and I didn't really care who won. I figured the folks at Palm had plenty of time in the past to build their own music management ecosystem, but they (including me) didn't bother, so there wasn't any particular moral reason why they should have access to Apple's system.
Apple the predator
The situation with Pure Digital is vastly different, in my opinion. Pure Digital pioneered the market for simple video cameras. It identified an opportunity no one else had seen, and built that market from scratch. In a declining economy, it created new jobs and new wealth, and made millions of consumers happy. It's incredibly difficult to get a new hardware startup funded in Silicon Valley, let alone make it successful. For the good of the economy, we ought to be encouraging more companies like Pure Digital to exist.
But there's no way for a small startup like that to also create a whole music ecosystem equivalent to iTunes. Yes, third party products can access iTunes music. But not as seamlessly as Apple's own products, and as we've seen over and over in the mobile market, small differences in usability can make a big difference in sales. So Apple gets a unique advantage in the video camera market not because it makes a better camera, but because it can connect its camera more easily to a proprietary music ecosystem.
In other words, iTunes is no longer just a tool for Apple to defend its iPod sales; it's now a tool to help Apple take over new markets.
In the legal system they call this sort of thing "tying," and it is sometimes illegal. For decades, Apple complained that Microsoft competed unfairly by tying its products together -- Office works best with Windows, Microsoft's file formats are often proprietary so you can't easily create a substitute for their apps, and so on. I was heavily involved in the Apple-Microsoft lawsuits when I worked at Apple in the 1990s, so I know how passionately we believed that Microsoft's tactics were not just unethical, but also harmful to computer users and the overall economy.
So it's very disappointing to see Apple using tactics it once bitterly denounced, and declaring that it's decided to take over a market because "we want to get in." If Apple can use iTunes as a weapon against Pure Digital and Palm, what's to stop it from rolling up every new category of mobile entertainment product? Where's the incentive for other companies to invest?
I saw first-hand the stifling effect that Microsoft and Intel's duopoly control had on personal computer innovation. PC hardware companies learned not to bother with new features, because Microsoft and Intel would insist that anything new they created be made available to every other cloner. And software investments were restrained by the belief that Microsoft would use its leverage to take over any new application category that was developed.
Good fences make good neighbors
There's a danger that Apple's behavior will have the same chilling effect in mobile electronics. So I believe Apple should allow any device to sync with iTunes content, the same as an iPod. But not because it's morally right or even because it's legally required, but because it's the best thing to do for Apple. Here's why:
The two biggest threats to a very successful company are complacency and consistency. Complacency is more common -- a company that's very successful starts to relax and loses the hunger and drive that made it a winner. I think we can safely assume that won't happen to Apple as long as Steve is around. But the second risk, consistency, is more insidious -- behavior that's appropriate and accepted for a spunky startup gets punished when a big company does it.
This is what tripped up Microsoft. The same aggressiveness that served it well against IBM got it a series of lawsuits and intense government scrutiny a decade later. Even though Microsoft eventually won those suits, its execs were distracted for years, and it was forced to dramatically change its behavior. It has never been the same company since. I think Microsoft would have been much better off had it proactively adjusted its own behavior just enough to pre-empt legal action.
That's where Apple is today. It has to realize that it's no longer the underdog. It's the dominant company in mobile entertainment, and the fastest-growing major firm in mobile phones. It's already under a lot of legal scrutiny for the way it manages the iPhone App Store. If it also leverages iTunes to take out small competitors, and especially if it's dumb enough to say things like "we want in," it will guarantee unfriendly attention from government regulators -- a group of people who actually have more power to hurt Apple than do most of its competitors.
The Obama administration in the US is making noises about enforcing competition law more vigorously, and look at how the EU is picking on details in the Oracle-Sun merger, allegedly to protect local companies (link). If they'll do all that to help SAP and Bull, what will they do to protect Nokia?
Apple, you don't need the special connection with iTunes to keep on winning. You've already proven that you're much better at systems design than almost any other company on Earth. The huge iPhone apps base is exclusive to you, and that won't change. By opening up iTunes, you take away an easy excuse for regulators to pick apart your business, a process that would be distracting, expensive, and could result in much more dramatic restrictions on your actions.
Ease up a little on the gas pedal, Steve. It's the best way to keep moving fast.
Is Apple too powerful?
Mobile Device of the Year, 2007
It's very difficult to say what's the best mobile device in a given year, because different people have different needs and desires. The ideal device for me might be repulsive to you, and vice-versa. But most of the computer publications try to make a call anyway. If you read the end-of-year reviews online, you'll probably conclude that the best mobile product of the year was the iPhone. It was cited by the Washington Post, Wired, Business Week, and Tech Republic (which strangely listed it as a business technology product, alongside Salesforce.com and LinkedIn).
Other mobile products getting mentions from major publications included the Nokia n95, iPod Touch, Razr 2, and Blackberry 8800. Amazon's Kindle was the only one that showed up on both best-of and worst-of lists. The best-ofs generally liked the wireless features and screen, while the worst-ofs disliked the closed business model and "eye-poking" industrial design.
I don't agree with any of those choices.
Since people have different needs, I think the best product of the year ought to be the one that best meets needs the needs of a particular group of users. It should be utterly compelling to its own audience. There are several questions to ask:
How efficient is it? Since people use mobile devices on the go, it should do just what the user needs, without any confusion or unneeded features. But there can't be any critical features missing, either.
How well does it trade off size vs. power? Because it's carried on your person, where size and weight are at a premium, it should balance tiny size with reasonable battery life.
How does it look? Because it's effectively a part of your wardrobe, it must look great (or whatever the target customer thinks of as great).
By that standard, I think the best mobile device of 2007 -- in fact, one of the best mobile products of all time -- was the third generation iPod Nano.
Don't get me wrong, iPhone fans. The iPhone is a very interesting and provocative device. There are some beautiful features in the user interface, and I love the turmoil it's causing in the industry. Several years from now we may look back on it and call it the most influential mobile device of its time. But that doesn't mean it's the best product.
To me, the iPhone is more an intriguing statement of direction than a completed product at this point. The lack of 3G is a huge compromise, and Apple obviously didn't think through the third party application thing. If you want a slow mobile browser that also plays music and videos and doubles as a somewhat awkward phone, then the iPhone is great. But for all of the cool highlights in the iPhone, I don't think it's enough to crush the phone industry in its current version. Future versions, maybe. We'll shortlist the iPhone III for product of the year in 2010.
The n95 is also a remarkable product in its own way, and I know it inspires a lot of technolust, especially in Europe. But in my opinion, it's just the latest Swiss Army Knife of the mobile world. Next year there will be another one from Nokia or Samsung or somebody else that has an even higher-resolution camera or maybe an electric toothpick or something, and people will be fawning all over that one. Like a lot of Japanese consumer electronics products, it's not a marvelous product as much as it is a marvelously ingenious bag of features.
By contrast, in third generation Nano is not just the latest model from Apple, it's an elegant culmination of the design work they've been doing for years.
The Nano doesn't look all that great in photographs. It's wider than its predecessor, which produced some criticism when it was announced (Engadget nicknamed it "fatty," which is asinine when you see it in person). In real life, the Nano's shape is compelling. It's much thinner than you'd expect from the pictures -- shockingly thin for something that has a color screen and plays videos. With its heavily rounded corners and brightly colored case, it feels a bit like a high tech chocolate wafer. You're almost tempted to take a bite out of it.
Physically, the Nano is almost all user interface -- the screen and thumbwheel take up the entire front of the device. Until we get flexible screens, the Nano is about as small as you can possibly make a device with its features. This is the endpoint, a form factor that's going to be with us for a while.
The biggest surprise to me about the Nano is the usability of video on it. When it was announced, I thought video was a throwaway feature -- who would ever want to watch video on a screen that small? But the reality is that when you're sitting down, you'll hold a Nano about 18 inches (45 cm) away from your face. At that distance, the screen is about the same apparent size as a 20-inch television (50 cm) at the other side of the living room. It's not like watching a flat panel monster screen, but it's very usable.
I'm not sure yet how much video will be used on the device, or what sorts of video, but that's a general question about mobile video rather than anything specific about the Nano. What I've observed so far is teenage girls using the Nano to watch music videos together, commenting on how cute the drummer is.
And that's just another sign that Apple made a great design for its target audience.
The new Nano doesn't have Bluetooth built into it, or Wi-Fi, or a camera, or a phone, or a hard drive. That probably accounts for why the technophiles online have been so dismissive of it (link). But to me, it's an almost perfect balance of functionality and art. Come back in ten or twenty years and I think you'll find it in design museums, when most of today's mobile devices will be long-forgotten and mildly embarrassing.
What do you think? Do you agree with my choice? If not, what do you think was the best mobile device of 2007?
