What Apple Knows That Facebook Doesn’t

What Apple Knows That Facebook Doesn’t.

Business week has an interesting article on the economics of platforms. Interesting, but flawed. They compare two platforms (Facebook, and Apple’s mobile platform). The argument goes roughly as follows: Apple is using it’s platform to create a new market by being open and Facebook is using traditional methods of using the market as a control point. Apple is creating an open market and Facebook is making an open market more closed. The author even goes as far as to associate the keywords good and evil here.

The article is flawed because in fact Apple is not creating an open market. They have been removing applications that don’t fit their business model (e.g. anything VOIP related) and are still keeping people from writing about the APIs because NDA has not been lifted yet. Apple is acting as a dictator here. That it is a mostly benevolent one doesn’t matter. It doesn’t sound very open to me in any case. Or very new.

Sure, their platform is pretty nice and their online shop pretty usable. That’s definitely disruptive to the mobile industry, which is not used to good quality platforms and well designed use-cases such as online shops for applications. However, there’s a pretty big market for mobile applications and most people writing for the iphone don’t do so exclusively and instead target multiple mobile platforms. You can download several VOIP applications for S60 or mobile windows and other platforms, as well as numerous games, productivity apps, etc. Then there is J2ME of course with a few billion phones in the market right now. You might say it is crappy but it has a huge reach. Incidentally, Apple also blocks components from their shop that would enable people to run J2ME applications since an open source Java platform has in fact been ported long before Apple even ‘opened’ up their platform. That’s right, a good old case of reverse engineering. Apple’s platform is quite unique in the sense that people were developing for it long before Apple decided to hand out developer kits.

Facebook indeed is also not very open but they were first to a market that they created, which is pretty big by now. As a viral way of spreading new services to users it is pretty much unrivaled so far. It is Google that has created a competition for more openness with their Open Social platform, which is in many ways similar but has open specifications and may be implemented freely by other social networks. Both Google and Facebook have a very similar centralized identity model that is designed to lock users into their mutual platforms (Google Friends Connect & Facebook Connect). Google is maybe being somewhat more smart about it but they are after the same things here: making sure trafic flows through their services so that they can sell ads.

So, Facebook’s model is advertisement driven and Apple’s business is operator driven. Apple makes most of their money from deals with operators who subsidize iphones and give Apple a share of the subscription revenue. That’s brilliant business and Apple protects it by removing any application from their shop that has conflicting interests with this revenue stream.

However, the key point of the article that the platform serves as a market creation tool is interesting. Apple managed to create an impressive amount of revenue (relative to their tiny market share of the overall mobile market) and Facebook has managed to create a huge market for Facebook applications. Both are being challenged by competitors who have no choice to be more open.

Interestingly, Google is competing on both fronts and can be seen as the primary threat to both Apple and Facebook’s platforms. Google could end up opening up the mobile market for real because it is not protecting any financial interests there but instead are trying to spawn a mobile internet market. Android is designed from the ground up to do just that. It needs to be good enough for developers, users and operators and Google has worked hard to balance interests enough so as to not alienate any of these.

All three are fighting for the favours of developers. Developers, developers, developers! (throws chair across the room & jumps like a monkey). That too is not new although Microsoft seems to have forgotten about them lately.

Modular windows

There is a nice article on Ars discussing Microsoft’s business practices regarding windows and how they appear to be not quite working lately. It used to be that your PC came with windows whereas nowadays you have to select from a around five different versions and Microsoft is rumored to go to an even more modular and subscription based model. The general idea is to be able to squeeze out as much revenue out of the market as possible. On paper it sounds good (for MS that is).

Rather than buying an overpriced OS with everything and the kitchen sink you buy what you need. There’s a huge differences between what businesses and some individuals are willing to spend and the typical home user that just wants a browser + skype + the sims. Typically the latter group ends up buying the cheapo version and the former group ends up buying the everything and the kitchen sink version. The problem is that there is unmonetized value in the latter in the sense that some owners of the  cheapo versions might be interested in getting access to some of those features in the expensive version but not in all of them.

Now to the obvious problem with the discussed solution. By selling cheapo versions with most of the value removed and factored out into separate chunks you have to pay for, you dilute the overall value of the OS. So instead of buying an OS that can do X, Y, and Z out of the box you are buying an OS that can’t do X, Y, and Z out of the box. Marketing an OS that can’t do stuff is a lot harder than trying to sell stuff that can do things.  Worse they are opening the market to third parties that might do something similar to X, Y, and Z for a better price, or in some cases for free (beer & speech). Or even worse to companies selling an alternative OS with X, Y, and Z.

That in a nutshell is what is discussed in the Ars article and why Apple Mac OS X marketshare is approaching double digit percentages. I’ve been giving it some serious thought lately and I’m also noticing the spike in Safari users in my web site statistics.

Anyway, the reason for this write up is that the article overlooks an important argument here that I believe is relevant for more markets than just operating systems. In general, the tie between OS and features such as photo galleries, online backups, or TV UIs is artificial. Microsoft only adds features like this to make the overall OS more valuable. That is, they are looking to improve the value of the OS, not the photo gallery. However, ongoing and inevitable commoditization of software actually shifts value to new features. Especially when bundled with online subscriptions, things like online photo galleries can be quite good business. For example, Flickr has many paying subscribers.

Naturally MS is interested in markets like this (which is why they are interested in Yahoo). However, the tie-in to the OS constrains the market. Why would you not want to sell these services to Apple users? Why would you not want to sell this service to Sony Playstation owners? Why would you want to want to artificially limit who can access your service just to boost sales of your OS? As long as you were trying to artificially (and apparently for MS illegally) boost value of your core OS, bundling was a valid strategy. However, as soon as your value shifts, that becomes a brake on market growth. The OS market has commoditized to the point where you can get things like Ubuntu for free, which for the low end market is about as good as what you get with the cheapo version of Vista (see my various reviews of Ubuntu for why I’m not ready to claim better yet).

So the difference between MS and Google who is eating their lunch in the services arena is that the latter is not handicapped by 20 years of Windows legacy and can freely innovate and grow marketshare without having to worry about maintaining a revenue stream from legacy software. Google doesn’t have to sell OS licenses and so they give away software on all platforms to draw more users to their services which is where they make their money.

Naturally, Google has a lot of software engineers that are working round the clock to create more value for them. Where possible Google actively collaborates with the open source community because they know that while they won’t make any money from commodities like browsers, file systems and other important software components, they do depend on those things working as good as possible and keep evolving in the right direction. Few people appreciate this but this and not ads is why Google sponsors Firefox. It’s a brilliant strategy and it is forcing their main competitor to keep investing in internet explorer rather than being able to shift resources to directly competing with Google. 50 million $ is pocket money if it is making your main competitor crap their pants and waste resources on keeping up with you in a market where you are not even trying to make money.

You might have noticed that I have carefully avoided discussing Google and Microsoft’s mobile service strategies and also noticed that yours truly is working for Nokia. Well, my readers ought to be smart enough to figure out what I’m trying to say here aren’t you :-)?

San Francisco

I flew to San Francisco yesterday to do some sight seeing, visit my colleagues in NRC Palo Alto, and attend CCNC in Las Vegas next week. The flight was pretty long. I took the 6:15 flight to Amsterdam from Helsinki (i.e. I got up 3:30 am) and was supposed to leave to SF at 11:10. Unfortunately some idiot left some drugs (cocaine??) on the plane which resulted in a 1.5 hour delay to search the plane for more. The flight itself was pretty uneventful. The plane was a Boeing 777-200 which I liked a whole lot better than the 747’s I’ve flown so far on trans atlantic flights. The food was pretty decent (considering quality of usual in flight meals). Additionally, the in flight entertainment system was much better than what I’ve seen before. I saw several nice movies during the flight: Rush Hour 3, Mr Bean’s Holiday, Star Dust and Wallace & Gromit: Curse Of The Were-Rabbit. The system had a pretty decent selection of a few dozen movies with quite a few recent ones. Plenty to see on the way back.

Additionally, I met an old friend from Groningen where I lived a few years ago on the plane (six seats behind me!). She is living in San Franciso now with her husband and I’m having dinner at their place tonight. Small world.

My jet lag was nicely compensated by not sleeping for 26 hours. So I had no problems falling asleep at 21:00 and waking up well rested at 7:30. The hotel is pretty cool. It’s the Pickwick, 1 block from Powel Street station on Market Street. This morning I was planning to take the cable train from there (somebody gave me a ticket before I left). Unfortunately they had some mechanical trouble so I had to walk. I walked all the way to Fisherman’s Wharf and got some great views of San Francisco on the way. It seems to me the cable tram is for sissies anyway.

The only disappointment seems to be the weather. This morning it was pretty cloudy and around noon it started raining. On my way back I visited the Apple store to drool at over the cool stuff they have there. I played a bit with the ipod touch and was pretty impressed with it. Particularly the browser is very cool and I was very impressed with how it scrolls and zooms in and out of pages.

If it had a bit more flash memory I would probably buy one. 60+ GB would be about right for me (right now max is 16). My current ipod photo has 60 GB and that seems to be plenty for me.

Right now I’m relaxing a bit in my hotel room, sipping a coke and enjoying the free (!) wifi. Of course I am taking lots of pictures (despite the weather). I’ve gimped up one, the rest will follow when I’m back home and can use photoshop (the Gimp is comparatively useless/unusable):

Alcatrez

I might post a few more over the next few days.

Browsers

Normally when I play with a new browser (like a few weeks ago when I tried out Flock 1.0) I usually post at least something. In the past week I played with no less than three new browsers.

I started out by installing opera mini 4.0 on my N95. Earlier versions of this program were already quite nice and I used it a lot on my E70 before I switched to the N95. This new version adds some impressive features again. Overall quite nice but I’ll probably use the S60 browser on my N95 most of the time regardless.

The second browser I played with was Apple’s Safari 3.0.4 beta. Unlike earlier betas, this one is actually quite usable and stable. I think the UI stinks and feels really awkward on windows but aside from that it is a fine browser. My main issue with it after a few hours of browsing was that I started missing my firefox extensions and some of its behavior. Additionally the fonts it uses are different from what I’m used to and I’m not sure I like the way it renders them. It uses its own antialiasing which gives a weird smudgy look to the fonts. But to be honest, I think I could get used to using Safari full time. A nice bonus feature is that it integrates Bonjour support. This is really useful because as you may have deduced from some recent publications on my publications site, I’m working with mdns based service discovery mechanisms at work. So I installed this at work and my aptly named foobar.local N800 portal website showed up in the windows Safari browser. Cool!

Speaking of Firefox, I just switched over to 3.0 Beta1 released last night. I’ve been using it all evening and it seems a quite nice upgrade. Most of the feature work is not that important to me but the performance work is really noticeable. I’ve caught myself several times already thinking “hey this used to be slow/laggy”. It’s mostly subtle differences of course and not having most of my extensions (due to lack of 3.0 port) is great for performance probably. But still, works great and seems really stable so far.

To compensate for the loss of extensions I was able to enable the most essential ones using the nightly tester tools. This allows you to override the version check. Since in many cases, a version bumb was all that was needed, many extensions work fine. So far I have just enabled del.icio.us support. What would be really nice is a new version of that that integrates with the new places system in Firefox. Until that happens, I’m posting to del.icio.us using the old extension.

A bit of a disappointment is that none of the exciting stuff regarding ms cardspace, openid and microformats that was more or less promised a few months ago, has made it into this release. There’s no openid support, microformat features are not integrated and I have not found any UI for MS Cardspace either. It could be that this is due in later betas. There is probably still a few months until the final release.

Feature wise, most of the changes are minor tweaks and most of those were not in Alpa 7 that I tried when it was released in October?. The biggest change is the new places functionality which is nice except (as mentioned) that I use del.icio.us instead of bookmarks so this not something I will use a lot. The rest of the changes are quite nice but not that essential changes to stuff like the downloads windows, various settings screens and the url bar. For the rest it is good old Firefox, and what’s wrong with that? Next betas will introduce an updated theme. I was less than enthusiastic last time they changed it and still am rather indifferent to the 2.0 theme, so lets see what comes out.

Anyhow, unless something major crops up, I’m keeping this as my main browser.

Bought my first online album

Convenience finally won me over. I made my first online music purchase with iTunes plus, the DRM free music shop of Apple. Initially, when they launched this shop, they chose to offer music at a higher price than the DRM music. A few weeks ago, they reduced prices to what they were charging for their other music. Additionally, they made deals with several more music companies so the DRM free selection is now getting quite interesting.

The album I just purchased is Blue Finger, by Black Francis, aka. Frank Black. The price is somewhat high but I wanted to have this album nevertheless and it is only available online so far. People who know my music taste probably know this guy is well represented in my collection with just about any album he ever produced under any alias. Most of these albums I actually have on good old CD. However, in recent years his music has gotten less interesting. What I heard so far from Blue Finger he seems to have changed style again. The sound is more raw and much more pleasing to my untrained ear.

“Tight black rubber” is track 5 on this album and one of the better songs on it with a catchy but simplistic bass line.

Anyway, about the experience of using iTunes. It was quite confusing I’m afraid.

First of all, I had to accept terms of usage. OK no problem except that they were in Finnish. I am actually in Finland but like most people on the planet don’t actually speak Finnish. Beautiful language but my knowledge of it is limited to moi (hello, how are you today, fine weather isn’t it) and Kiiiiiiitos (thank you very much, I’m much obliged) and moi moi (goodbye, cu later). Finns are people of little words but they generally mean well. So I just agreed to a document that I cannot possibly have read or understood. But it is not like I would have payed much attention to it had it been written in English or Dutch. Thankfully the ok button was in English.

Secondly, it asked me several times whether I wanted to buy the album before and after agreeing to the terms. Lets see how often they bill me :-).

Finally, the whole iTunes plus thing, which means no DRM, was the bit that won me over. Unfortunately iTunes was a little vague on what I was actually purchasing. It initially listed itunes plus next to the album, which appeared to be the only option (good), so I clicked buy and iTunes informed me that this album was also available in iTunes plus. WTF do you mean ‘also’ anyway I assumed (again) everything was probably ok and once more confirmed that I actually wanted to buy the freaking album.

Seems to have worked since it is downloading now. The first track is actually 256 kbit AAC format and plays fine outside of iTunes so I assume I got the right album without the DRM crap and at the €9.99 price all albums cost instead of the much higher fee they charged until recently for DRM free music. All in all this is worth repeating. I have several more obscure albums on my wishlist that I would be willing to purchase under these terms.

Songbird

As you may know, I currently use iTunes. And despite it’s quirks which include difficult to migrate library and the occasional instability it’s a very nice application overall and I’ve been reasonably happy with it for more than a year now (ever since I bought my ipod).

Well, there’s a great new music player called songbird. It’s been under development for little more than a year now. The development team includes some former winamp programmers. I was a great fan of winamp until I switched to itunes (shortly after this guy left AOL/winamp). Up until now the songbird development builds were interesting but not really worth using (I played with 0.1 a bit and it was unusable). That is starting to change though and how! It’s still a developer preview so don’t bother if you don’t have the nerve to use that kind of stuff. But if you do you are in for some treats. If you don’t, there’s a cool flash demo on the website. And yes, so far it more or less works as advertised (to my surprise, I was expecting performance/lag issues).

So, songbird is well on track to replace my iTunes setup, just not right now, maybe (I’m tempted though). I just installed it and it imported my itunes library and it’s currently playing my music just fine (important for a music player). On top of that the user interface looks very nice and seems very usable and responsive. Since it is based on the mozilla runtime (i.e. the same toolkit that Firefox and Thunderbird use), it inherits a lot of nice features such as extensions and themes (or feathers in the songbird lingo). The itunes library importer is one of the extensions. Another one that I have not yet tried is the ipod extension (synchronization!), that’s two important features for an ipod owner: Apple should get worried, busy or both.

The default feathers of both the website and songbird are very nice and stylish. The little birdy is sort of cute and the style sort of resembles the Jip & Janneke theme many Dutch people should at least be familiar with. Except this one has a weird puff coming out of its ass :-).

In addition to the usual gizmos, it integrates a webbrowser. This is used to integrate the internet into songbird properly. I.e. there’s a whole bunch of alternative music stores integrated. And they just work. It’s like magic. I type frank black in the search box, and a website pops up with some frank black tracks. Then more magic, a playlist appears below with the tracks. Ok I click play. And WTF! it starts playing more or less instantly. Without a hitch. That’s just super cool. There’s buttons to add the track to my library and to download. Apparently it supports podcasts in a similar way. This is the way internet radio was supposed to work years ago and still doesn’t work in any other media player I’ve ever tried. The search box uses search plugins just like slashdot. The default one is called the hype machine (which I’d never heard of before).

I guess the ‘secret’ behind songbird is its ability to extract links to music files from web pages and automagically construct a playlist for whatever web page you are viewing. There’s no reason why a normal browser couldn’t do that although most lack the features to do something useful with a music file other than handing it to a media player. Songbird does have that ability since it is primarily a music player that just happens to embed the mozilla browser. This concept works extremely well for any website that has downloadable tracks, pod casts or links to streaming audio (e.g. shoutcast).

I’m sure it has much more to offer and I’ll be playing with it a lot over the next week. As I said, this is a developer preview so wait for the 1.0 later this year if you can’t handle that. I’m not sure if I’ll wait that long though.

porsche gets some good testdrive

It’s only two days ago that I bought myself a Lacie Porsche 0.5 TB usb drive. Yesterday evening, after a reboot caused by an apple security update weird shit started to happen. Basically windows informed me that “you have 3 days to activate windows”. WTF! So I dutifully click the activate now only to watch a product key being generated and the dialog closing itself, rather than letting me review the screen and opting for a internet or telephone based activation. After that it informed me that I had three more days to activate. Very weird and disturbing news! A few reboots and BSODs later (which had now also started to appear on pretty much every reboot), I took a deep breath and decided that the machine was foobarred and I needed to reinstall windows. I suspect the root cause of my problems was a reset a while back which resulted in a corrupt registry and repeated attempts by windows to repair it before booting normally. I thought the problem was fixed but apparently the damage was more extensive than I originally thought.

Considering I had a few more days to reactivat, which despite my attempts I could not do, I decided to back up everything I could think off. I.e. I have about 100 GB left on the external drive, bought it just in time :-). Copying that amount takes shitloads of time. Basically most of the backup ran overnight with the assistence of the cygwin port of rsync. After re-installing windows earlier this evening (which activated fine, to my surprise), I got to work reinstalling everything (I have a few dozen applications I just need to have) and moving back all my data. Some interesting things:

  • Luckily I thought of backing up my c:\drivers dir in which I stored various system level drivers for my motherboard and other stuff that I downloaded when I installed the machine a year ago. This included the essential driver for the lan, without which I would have had no network after the install and no way to get the driver on the machine (or to activate it). Pfew.
  • I reapplied the itunes migrate library procedure I described last year (and which still gets me loads of hits on the blog). It still works and my library, including playlists, ratings and playcounts imported fine in my new itunes install. Would be nice if Apple was a bit more supportive of recovering your stuff in a new install.
  • After installing firefox 2, I copied back my old profile folder and firefox launched as if nothing had happened. Bookmarks, cookies, passwords, extensions all there :-). Since I practically live in this thing, that pleased me a lot.
  • Then I reinstalled gaim and copied back the .gaim directory to my user directory. Launched it and it just worked. Great!
  • Same with jedit.
  • Then I installed steam, logged in and ran the restore back up tool that was created along with the 13GB backup. Seems to work fine and I’m glad that I don’t have to wait a few weeks for the download to finnish. Ok the restore was not fast either but it got the job done.

Lesson learned: backups are important. I had the opportunity to create them when it turned out I needed them. But I should have been backing up more regularly. A more catostrophic event would have caused me dataloss and much more annoyance.

So a big thank you to Bill Gates et al. for wasting my precious spare times with their rude and offensive activation crap. Fucking assholes! I’m a paying customer and very pissed. I will remember this waste of my time and genuine disregard for my rights when making any future microsoft purchasing decisions. And yes, that probably means lost revenue for you guys in Redmond. I’ve adopted opensource for most of my desktop apps by now. There’s only two reasons for me to boot windows on my PC: games and photoshop. I understand the latter is now supported by wine and I’m much less active with gaming than I used to be. Everything else I use either runs on linux or has great alternatives. But for the moment, I’ll keep using windows because I’m lazy.