Untethering Apple Watch

Over the years Apple has cultivated a very powerful Halo Effect. The the Halo Effect works because you can get customers to experience one of your products, they enjoy your product, and they want to buy more of your products. Apple’s most famous halo products were the iPod and the iPhone. Unfortunately, I don’t think the Apple Watch1 has the same ability to be a halo product (yet). 2 And here’s why.

In order for a product to be a halo product you have to be able to buy it first. Famously, Steve Jobs was convinced to put iTunes on the Mac and PC. This made the iPod available to basically anyone. The iPod exploded because everyone could access a computer that worked with an iPod.

The iPhone is a halo product for Apple because it could be your first Apple product. Interestingly, over time it became apparent that something was holding the iPhone back. Something was preventing it from being an even better first Apple experience: tethering. You had to tether the iPhone to backup your device, sync, get software updates, or do any number of other activities. By construction this prevents anyone that does not own a computer from owning an iPhone. Apple recognized this and adapted. iCloud, for all of its problems, makes the iPhone the perfect halo product.3

The Apple Watch cannot be a halo product. The way it works is by being paired with an Apple device, so the watch becomes an accessory only. This will make rapid widespread adoption difficult. Understanding that the market of current iPhone owners is huge, Apple is limiting their market to their existing users.

I suspect the need to tether an Apple Watch will be temporary. As technology advances and becomes smaller and less power hungry, I hope to see Apple modify the Apple Watch through time so it can become a stand-alone device and the next great Apple halo product.4

  1. or Watch if you please

  2. To be clear, I am not saying the Apple Watch will be a failure. I think it will likely be very successful.

  3. I am not forgetting the iPad, but it follows the same conceptual arc as the iPhone.

  4. For more thoughts about the Apple Watch as a stand-alone device go here and here.

Scaling the new anti-inversion rules

bloomberg.com: Treasury Unveils Anti-Inversion Rules Against Tax Deals

The U.S. Treasury Department announced steps that will make it harder for U.S. companies to move their addresses outside the country to reduce their taxes, clamping down on the practice known as inversions.

I’m sure there will be a lot of virtual ink spilled over this story, but I can’t help but focus on this line from near the end of the article.

The congressional Joint Committee on Taxation has estimated that legislation to curb inversions would raise about $20 billion over the next decade.

According to our friends over at Wolfram|Alpha in 2013 the GDP of the US was $17.08 trillion and government expenditures were $3.746 trillion. So, the government spends about $118,785 per second… Raising $20 billion won’t even cover 2 days of government expenditures. In reality the impact is much smaller than that because the $20 billion will be raised over the next decade.

Educating a CEO

I read a very interesting article about CloudFlare’s new keyless SSL security system and this caught my eye.

Arstechnica.com: In-depth: How CloudFlare promises SSL security—without the key

The development of Keyless SSL began about two years ago, on the heels of a series of massive denial of service attacks against major financial institutions alleged to have been launched from Iran. “We got a series of fairly frantic calls from those banks saying they needed help with this problem,” Prince said. “We met with JP Morgan Chase, Goldman Sachs… pretty much everyone in that community. They described to us a challenge that put them between a rock and a hard place. They had spent billions on hardware in data center to control access to their network. But it didn’t matter—no matter how intelligent the boxes they bought were, they were falling over because the attacks were so large. There was no way spending more money on premium equipment could solve it.”

At the same time, the banks weren’t able to use existing content delivery networks and other cloud technology to protect themselves either because of the regulatory environment. “They said, ‘We can’t trust our SSL keys with a third party, because if they lose one of those keys, it’s an event we have to report to the Federal Reserve,’” Prince said. “Somebody has to explain to (JP Morgan Chase CEO) Jamie Dimon what an SSL key is, and then he has to call the Fed. It’s a [chief information security officer]’s worst nightmare.”

Organizations like banks depend so heavily on technology. How long will it be before the average CEO at the average company starts to have an in-depth knowledge of how common technologies like SSL work? I imagine we eventually will see a trend in non-technology firms where the path to become a CEO travels not just through CFO and COO, but through CIO and CTO as well.

Becoming Coca-Cola

I have watched every Apple product announcement and keynote address since 2006. Most of the time I am watching simply as a technology enthusiast waiting to see what’s next; however, overtime you get used to the normal rhythm of these events. Something was different about the event announcing the Watch and new iPhones. To understand how it was different let’s look at the anatomy of a new product launches.

The Pattern
1. Identify a market that is currently poorly served
2. Explain why current offerings are not good enough
3. Announce the new product
4. Explain why the product needs to exist 1
5. Compare and contrast the new product with existing poor offerings

Steve Jobs directly addressed Apple’s competitors and he made a case for Apple’s entry into a new market. Jobs announced Apple’s music player with slides like these:


Again, Jobs directly addressed Apple’s competitors and he made a case for Apple’s entry into a new market. Here Jobs even goes as far as mentioning specific models of competing smartphones.


The iPad was no different.

Tim Cook took a very different approach with the Watch. Throughout the announcement there would be no slide acknowledging the terrible state of the smart watch market, no matrix of the current inferior offerings, and no slide demonstrating just how terrible their competitors’ interface is.2 Apple did mention traditional watch makers. But, the tone showed much more respect for the mechanical wonders fine watches can be.

The evolution in Apple’s product launches shows they recognize that they are no longer an underdog. Apple is the big dog. Just as Coca-Cola never mentions Pepsi, Apple did not mention Samsung. Pepsi screams “we are better than Coke!” Samsung screams “we are better than Apple!” This may be an effective strategy for the number two vendor to follow but it can not be consistently deployed by the market leader.

I imagine, just as the Mac vs. PC commercials had to go away, so too will most direct mentions of their other competitors.

  1. The Watch announcement was surprisingly missing a solid answer here. I can think of a few reasons why it might need to exist but that should really be Apple’s job.

  2. I secretly wished they would put a slide up with one of these.

Waiting in a line

In the past I have been part of the crazies that line up on opening day to get the new iPhone. I did it for the iPhone 4. I did it for the iPhone 5. And, I even did it for the iPad 2. But this time it was going to be different. I decided that I would just get online and order one there hoping I would be able to get the phone delivered on day one.

There are a couple of things that I really enjoy about waiting in line for a new Apple product. There is an incredible amount of energy in the air as people anticipate their new purchase. I mean, you get to hang out with a few hundred other technology nerds. How could this ever be a bad thing? I have had great luck becoming friends, although temporary, with my neighbors in line. We have shared stories about how we use our iPhones, talk about the new features that excite us, and just shoot the breeze about other random things.

For me, buying an iPhone after waiting inline has been as important a part of the iPhone experience as using many of the iPhone’s actual features. When I decided to buy my new online I was a little sad that I would be missing this experience.

As it turns out there is a pretty good substitute for standing in a line for hours in the early morning: Twitter. The iPhone launched online at 3:00 AM Eastern time, but Twitter was flowing freely with people sharing their experiences trying to buy the iPhone. And just like in a normal line there was a lot of angst. Most launch day cell phone carriers and Apple could not handle the massive volume of people trying to buy an iPhone. And just like in a real line where you have no idea how many units the store will actually have, we waited anxiously to actually see the screen refresh allowing us to buy a phone.

So in Jimmy Fallon style, thank you Twitterverse for being just as crazy as I am when trying to order a phone at 3 in the morning.

The iPhone 6 and one-handed mode

Daring Fireball: Laugh It Up, Fuzzball

Brian X. Chen:

To deal with concerns that a bigger phone will make typing with one hand difficult (the current iPhone has a four-inch screen), some changes to the design of the iPhones’ user interface will allow people to type or use apps with just one hand; there will be a one-handed mode that can be switched on and off, two employees said.

I know what you’re thinking. You’re thinking, Oh, that can’t be. Samsung tried that and it was ridiculous. Haha, the New York Times got punked.

The thing is, I’m not laughing. You wanted Apple to make a 5.5-inch iPhone? This is what you get.

I think we have already been shown Apple’s one-handed mode. The below screen shots are from iOS 8. Both images show interface elements that require just one hand AND you do not need to lift your finger to get from one button to another; you simply slide your finger across the screen.

I think this feature is especially important when using larger phones with just one hand. Lifting your thumb off of the screen requires you to secure the device with your remaining four fingers; this is much harder with larger devices. But, being able to simply slide your thumb across the phone allows the user to maintain steadier control of a large device.

I seriously doubt Apple’s one-handed mode/features will just shrink the displayed area down like we saw with Samsung. I am willing to bet Apple will be moving more toward radial menus and moving the location of important buttons to the bottom half of the screen.




Hush Hush in the Hamptons

NYTimes: A House Built to Baffle

This was Labor Day weekend in the Hamptons. Lines poured out the door of the town’s coffee shop. Traffic was snarled for miles. The scene achieved Times Square-level chaos, only with trees and fresh-baked pies. And yet inside the Masi residence, it was silent.

The couple had even thrown open the sliding-glass wall that runs the length of the room, transforming the yard into a grassy extension of the living space. The only sound was birds chirping.

Although the style of this house won’t please everyone, I think anyone who loves sound engineering could appreciate it. 1

  1. I probably would never buy one but I am a sucker for modern/contemporary houses

Tesla’s poker face

Yourhoustonnews.com: Texas among those playing factory poker with dealer Tesla Motors

Tesla signaled this would be no ordinary competition last fall, when it gathered economic development officials from seven Western states and unveiled its vision for a “gigafactory.” (“Giga” refers to the large amount of power that batteries produced at the plant will store.)

This spring, CEO Elon Musk announced Tesla would take the extremely unusual step of spending millions to prepare sites in two states — or perhaps even three — before the finalist was chosen. Then, over the summer, Musk said the winning state would pitch in about 10 percent of the cost, effectively signaling a minimum bid of $500 million.

“We don’t usually see companies setting a floor at which states will be considered,” said Leigh McIlvaine of the research group Good Jobs First, which tracks large subsidy packages by states.

It is very interesting that Tesla has so much control over these negotiations. I am reminded somewhat of the prisoner’s dilemma. Each state is at an informational disadvantage; they know nothing about the bids by the other states. I imagine Tesla has set up the negotiations this way because they believe they will get a better deal for keeping the bidders in the dark just as the police get a more favorable outcome in the prisoner’s dilemma.

The competition for the gigafactory began at an October meeting at Tesla’s auto assembly plant in the San Francisco Bay Area city of Fremont — a rare approach to opening a site selection process. Tesla executives laid out what a winning bid must have: “Green” energy such as solar or wind at a low cost, an affordable and well-trained labor force, good transportation links to Tesla’s Fremont assembly plant. And a robust package of incentives.

Tesla is putting its (or the government’s) money where its mouth is. Tesla claims their goal is to end our dependence on fossil fuels. It is only natural that Tesla should be expected to follow its own pledge. Requiring clean energy as part of the bid is also a way to encourage states to improve their infrastructure that might otherwise have never been improved.

NFC, the iPhone, and iWatch’s killer feature

It would appear near field communications (NFC) are coming to the iPhone. NFC has been around for a while in other devices but has never really taken off in the mainstream. But now that it might be included in the most popular smartphone, we might ask how does NFC work and what does it do?

Techradar: What is NFC and why is it in your phone?

At its core, all NFC is doing is identifying us, and our bank account, to a computer. The technology is simple. It’s a short-range, low power wireless link evolved from radio-frequency identification (RFID) tech that can transfer small amounts of data between two devices held a few centimeters from each other.

The main reason NFC gets included in phones is to replace your wallet and its various cards. Instead of pulling out a credit card or store member card, you pull out your phone. NFC has never been something that interests me for two main reasons. I quit carrying a Costanza Wallet a long time ago. My current wallet is closer to a large money clip than a traditional wallet. So, being able to pay from my phone will not help me there.

I also do not see any difference between quickly pulling a credit card out of my pocket versus pulling my phone out of my pocket to pay at check out time. Sometimes it is easier to pull out my wallet than it is to pull out my phone. How much of a difference does it really make to wave a phone within centimeters of the register versus just swiping the card?

This is where the iWatch becomes very interesting. Check out what John Gruber had to say.

Daring Fireball: Paczkowksi: ‘Apple Plans to Announce Wearable in September

Follow-up joke: It would be cool, and would make a lot of sense, if the new wearable thing had the same magic payment apparatus.

If this is true then it changes my view a little bit. A watch is always out on your wrist; this location can actually improve the payment experience. You can expect whatever system Apple employs to be compatible with new chip and PIN credit card systems which obviates the need to sign.

There are a few implementation problems that I am interested to see addressed before I could switch all of my payments over to my phone. These include:

  • Paying at restaurants – how long will it be until restaurants have machines that can come to your table? You certainly aren’t going to let the server take your phone to some remote place in the restaurant to process a payment.
  • Paying with different cards – I view my financial setup as being pretty simple; I carry just three cards (one credit card and two debit cards). What is the mechanism behind paying with these different cards using my phone? Will the NFC payment system be tied to the credit card on my iTunes account? This does not sound like a good solution because I do not want to always pay with that card. If the iPhone will let you store multiple forms of payment then how will you choose between them? This type of complexity, unless it can be handled intuitively and quickly, will prevent people from using this payment method.
  • Paying for things online – this might seem out of place when writing about a payment method that lets you wave your phone, but I think this is important to consider. I occasionally buy things from online retailers that do not have my card information, so I have to enter it. This is no big deal when I can just pull out my card. I realize Safari already has a way to auto-complete credit card information. Does the new system operate separately from the current Safari system? This would be unfortunate. Anytime your credit card information changed you would have just one more place to remember to update. Apple would be wise to unify their payment systems so you are using just one account for in person purchases or online purchases.

  • No matter how they have done it, September 9th is going to be a fun day.