Some time back, I wrote a post where I asserted that Apple (and Steve Jobs) has done such a good job of teaching us to expect magic that when they merely execute, we hammer them because...well it isn't magic.
I called this knee-jerk response, "Punishing the Wizard" since, where I come from, discipline, execution and proof of same are to be celebrated (what's not to like about -- Step One: Make great products; Step Two: Wow your customer/developer base; Step Three: Print money; Step Four: Repeat Step One?), but that's not how we think when it comes to Apple.
Thus, it is with little surprise that I find myself dubbing yesterday's keynote, "Punishing the Wizard, Part Two."
Now to be fair, part of this is simply our culture of "buying on the rumor" and "selling on the news," which is to say that today's announcements (essentially, Snow Leopard, new MacBook Pros, iPhone OS 3.0, iPhone 3GS, $99 iPhone 3G) had largely been discussed, disseminated and re-assembled into a series of plausible best guesses well in advance of the event, so the shock and awe was less than it might otherwise have been.
Hence, some of this disappointment is akin to reading a "spoiler" in a movie review immediately before watching the film; gums up the element of surprise.
But, there are several nuggets from yesterday's keynote that underscore strategic narratives worth pondering in the days, weeks and months ahead:
- Apple is Playing Block the Kick with Focused Intensity: iPhone is the unquestioned leading device platform and ecosystem in terms of delivering a best of breed Mobile Broadband experience, albeit with Palm Pre and Google Android offering their own bits of goodness and differentiation. By preemptively: A) Upgrading iPhone OS 3.0 and SDK (see my analysis HERE); B) Replacing iPhone 3G as the flagship with iPhone 3GS (faster CPU, adds video support, better camera); C) Dropping the price of iPhone 3G to $99 to capture the low-end of the market; and D) Adding the ability to purchase movies, TV shows directly from iPhone to better leverage its iTunes Media portfolio (versus requiring download & sync from Mac/PC, as is the case currently); Apple is doing everything humanly possible to remain on offense, and prevent the competition from finding its footing; namely, a market wedge/niche that can serve as the beachhead to slow down Apple's momentum. Plus, the $99 entry point on 3G appears to be the lower margin product that Apple had alluded to months back in discussions about not leaving a pricing gap for the competition to outflank them.
- Pushing OS X Snow Leopard as a $29 Upgrade is Recognition that its 'Halo Effect' Opportunity Window (may be) Closing: Vista has been a debacle for Microsoft, and it has opened a door for Apple to grow OS X powered systems from 25M users in 2007 to 75M this year (inclusive of iPhone/iPod touch devices). But, Windows 7 is getting closer to release (October, 2009), and in the interim, Microsoft is intelligently bifurcating their strategy and messaging between being the enterprise standard (we support everything, we're legacy, legacy never goes away, there is no "serious" enterprise alternative) and the consumer standard (we're cheaper than Apple, ubiquitous and "good enough") as a way to stop the bleeding. My guess is that Apple sees their ability to meaningfully differentiate on the desktop as a window that is closing, and as such, need to make Snow Leopard ubiquitous, presumably both to drive converts (esp. as the economy improves) and as part of a push to go after securing new Mac developers before Windows 7 ships (iPhone developers not currently developing for the Mac represent the low-hanging fruit).
- AT&T and Apple - This Can't End Well: While there is no question that the exclusivity deal with AT&T provided the launch pad for Apple to create the afore-mentioned wizardry with iPhone, and of course, the rich subsidy is heroin for consumers and Apple alike, there is also no question that the relationship can't end well (or is highly unlikely to). Why? One, today's announcement spotlighted the liability side of the AT&T relationship; namely, a great phone on a crappy network with an iffy track record of customer care, not to mention, a carrier and supplier who are at strategic cross-purposes. Case in point, the audience booed the moment they realized that a touted tethering feature, which allows you to seamlessly use your iPhone as a broadband modem for your Mac/PC, won't be supported by AT&T; and another feature, MMS support, will ship later than with other carriers. Two is the simple fact that the way people buy mobile devices is through their carrier, and as long as Apple is selling exclusively through AT&T, that means that the Verizons, Sprints and T-Mobiles of the world have to sell something other than iPhone, which is the number one way Android and Pre will find its initial market. As was the story with the PC, at some point, mobile becomes a units game, so Apple must counter this one as soon as humanly possible, lest the volumes accrue to the carrier independent device makers.
- The (Hardware) Matrix is Coming: What is The Matrix? Envision a world where the Mac, Apple TV, iPhone, iPod touch, iPod HD Tablet (rumored) and iPhone Nano (rumored), respectively, can leverage a common SDK, plug into the App Store and integrate with Mobile Me (in addition to iTunes), and you understand that this implies all sorts of hardware abstraction decisions. No less, this implies Apple partitioning the platform that supports these form-factors between device-specific functions, open PC-like layers (i.e., download apps from anywhere), and managed/closed runtime layers (App Store is THE marketplace with a singular SDK, APIs, etc.). This is The Matrix, a potential hornet's nest of technical, user experience and ecosystem decisions. Connecting the dots, I believe that Snow Leopard is the conduit OS where these things converge, but that's a total guess, based on the assumption that derivative form-factors are a given; that App Store and iPhone SDK are the best practices approach with the biggest developer ecosystem; and that Apple's best way to win in the Mobile Broadband Era is by making their products work together in a unified, but more than the sum of the parts, fashion. This would be another reason to push Snow Leopard NOW at $29; namely, so that when The Matrix emerges, and there's a requirement that all interconnecting devices run Snow Leopard to work together seamlessly, it's less disruptive of a proposition than it might otherwise be. And more to the point, it offers developers the largest potential installed base to develop for (i.e., the 40M iPhone/iPod touch owners PLUS the ~35M OS X powered Mac owners).
Looked at from this perspective, today's keynote may come to be known (with the benefit of 20/20 hindsight) as the keynote that was The Calm Before the Storm. Stay tuned.
- Punishing the Wizard, Part One: On Apple and Jobs
- ANALYSIS - iPhone 3.0 Developer Preview: Block the Kick Strategy
- PC 1.0, iPhone 3.0 and the Woz: Everything Old is New Again
- Built-to-Thrive - The Standard Bearers: Apple, Google, Amazon
- iPhones, App Stores, Ecosystems: On Recipes for Successful Developer Platforms
- Holy Sh-t! Apple's Halo Effect: How and why gravity has become Apple's friend