I'm selling my beloved iPad Mini. I've used it as a smartphone, then as a complement to an Android phone, and now along with an iPhone. Since going back to an iPhone I've used it a lot less. My iPhone is always with me, and does everything the iPad can do. I still use the iPad for reading and web browsing on the couch or while in bed, but that's about it. I occasionally use it to play a game, check email, browse Twitter, or watch YouTube videos, and there are some great apps for gaming, drawing, DJ'ing, and music creation. However, all of those things can be done on a smartphone or laptop, some much more efficiently. Now large screened phones are becoming more mainstream and battery life is slowly getting better, and that will squeeze tablets even further. I think that's the challenge in the tablet market: inventing and communicating use cases where tablets excel. It will be interesting to see if Apple, Google, and developers can come up with those unique use cases. I should also mention that part of the reason I'm selling the iPad is to offset the cost of an unlocked iPhone 6 Plus (which costs $850!). I never thought I'd spend that much money on a phone, but it's easier to justify if it replaces my iPad.
A theory on the four categories of mobile apps and how to increase engagement
This is a thesis I'm working through in my head, so I wanted to document my thoughts and revisit it later. I think I have just four categories of apps on my smartphone and tablet, with the primary differentiator being the manner in which I access those apps:
- Apps primarily accessed through the icon
- Apps primarily accessed through notifications
- Apps accessed about 50/50 through the icon and notifications
- Apps that I never access at all
Obviously, nobody wants to be in category #4, but is there a 'best' category to be in, and if so which is it?
Apps in category #1 tend to be media, content consumption, games, and utilities. My engagement with apps in this category is bifurcated. There are the apps on my home screen that I use daily (if not hourly), such as Safari, RSS reader and read it later apps, podcasts, camera/photos, and weather. Then there are apps that I rarely use but won't consider deleting, such as Netflix, watchESPN, banking, utilities, content creation, shopping, etc.
Apps in category #2 are typically buried in a folder somewhere, but I still value their content. I like getting alerts of breaking news, a new clip discussing my favorite sports teams, new concerts in my area, and IFTTT triggers. This category also includes social networking apps that I don't use much, such as LinkedIn, Facebook Messenger, and Google Hangouts. Naturally, I only engage with these apps when I get a notification worth opening, which is rare. With news apps, the headlines usually suffice, and with messaging apps it's usually someone I don't know very well (otherwise they'd text or email me). Overall, my engagement with these apps is very low, but I don't want to delete them and miss their notifications either.
Apps in category #3 tend to be more social in nature, such as Messages, FaceTime, email, Instagram, etc. It also includes things like sports score/news apps and fantasy football. I don't play many mobile games or use Twitter a lot, but I'd guess they would fit this category for many users. My engagement level with this group of apps has the highest overall average.
If the app developer's business model depends on high engagement, then category #3 is clearly where to be (at least according to my usage habits). That doesn't mean every app needs to have a social component to it, though. I think a lot of apps in category #1 (and perhaps #4) could have more relevant and engaging notifications. For example: top new and expiring titles on Netflix and other media apps (Spotify already does a good job of this), new articles from select feeds in my RSS reader, or custom-tailored deals from the Amazon app. Even something as simple as a weather app could be enhanced with intelligent notifications based on location and the user's settings.
This isn't a once-size-fits-all approach to improving mobile app engagement, but I find it useful to categorize apps in this way. Quality and quantity of notifications must be balanced delicately. Once I turn off notifications for an app I rarely go back. Engagement goals should also be considered in the context of the app's business model. A banking app that provides a steady stream of financial tips and alerts may be more annoying than useful and overshadow important notifications. Conversely, a social networking app with inferior notifications may be deemed useless.
Google Voice integrated into Hangouts on Android - kind of
From Android Central:
"First, you're going to need the new Version 2.3 of Google Hangouts, which is rolling out this week in its slow, safe, rollout fashion. You're also going to need to opt in to "migrate" Google Voice over to Hangouts... And to make phone calls through your Google Voice number, you're going to need the new Hangouts Dialer app, which also requires that new v2.3 of the Hangouts app. Things get a little funny here, because once the dialer is installed and you open Hangouts or open Hangouts Dialer, they look and function exactly the same. So pick either one you want on a home screen. Doesn't matter which."
What a mess, this doesn't make me regret ditching Google Voice one bit. At least Google's actually making changes rather than neglecting Voice entirely.
If the Apple Watch is the original iPod I'm waiting for the iPod Shuffle
If the Apple Watch is the original iPod, then I'm waiting for the iPod Shuffle of smartwatches. Something inexpensive with great battery life and an interface so simple it doesn't even need a screen. Just like the iPod Shuffle made me realize there was a place for a small and simple device that didn't store one's entire music library, I don't need to launch apps or send doodles from my wrist. I would like to track my movement, sleep, and heart rate though. I would like to get a light buzz when I receive a notification, even better if I can select which apps send notifications to my wrist. I would be interested in using a wrist-worn device with Apple Pay or to unlock my Mac. Maybe it could also be used for basic controls like the Apple headset is (pausing/playing music, answering/ending calls, activating Siri, etc) . The Shuffle also greatly improved on the iPod's battery life. I anticipate the Apple Watch will need to be charged daily. A simple wristband without an LCD screen could last several days on a charge. Of course, it would also be less expensive and could come in several different colors.
I'm trying to reserve judgement on the Apple Watch until I get to personally use one, but I just don't see what it does that my iPhone can't (there are a few though, such as the remote iPhone camera viewfinder, which is pretty cool). A Jawbone Up is a simpler, less expensive, and more appealing option to me for the time being.
Notes from the iPhone 6 event
Apple made a lot of announcements today. Here are a few things that stood out to me that may be a little under the radar of the big tech blogs. iPhone 6 Differentiation: There are some subtle features (other than size and price) that differentiate the 5.5" iPhone 6 Plus from the 4.7" iPhone 6. The 6 Plus's screen is larger, and also has more pixels at a higher density. The camera on the 6 Plus has optical image stabilization, which helps reduce shaky videos and blurry photos, while the 6 only has digital image stabilization. The 6 Plus has a larger battery, which gives it better battery life across various use cases. However, the increase in battery life from the 5s wasn't quite as much as I'd hoped for. The 6 Plus's software also makes use of the larger screen in landscape mode in some apps, much like the iPad does. For example, you'll see a list of emails on the left quarter or so of the screen and the current message in the rest of the screen.
None of these features alone should be enough to convince average consumers to buy the 6 Plus over the 6. They do help justify the $100 price premium, especially for users concerned with battery life or photo enthusiasts.
Margins: The introduction of the 6 Plus at a $100 premium to the (already premium) 6 and some tweaks to pricing of storage tiers should be a boost to Apple's gross margins. The base models of the 6 and 6 Plus both come with 16GB of storage, but an extra $100 bumps up to 64GB (instead of 32GB on previous iPhones), and they added an additional 128GB tier. The 5s also starts at 16GB, but an extra $50 now gets you 32GB. 16GB is starting to feel pretty small, and this will likely entice more users to spend a little more to get more storage. That extra $50/$100+ is basically pure profit for Apple.
Branding: We got Apple Watch and Apple Pay, not iWatch and iPay. Will the 'i' prefix be deemphasized for future products and features?
Cloud Security: Apple didn't address last week's iCloud breach. They did unveil Apple Pay, which stores information in the cloud, but not actual credit card numbers.
Speaking of cloud, the live stream itself was atrocious. It cut out at least a dozen times, froze my Apple TV twice, and there was a very annoying and distracting Chinese language audio stream layered on top of the English stream for about the first half of the event. Apple gets a lot of things right, but cloud stuff just isn't one of them. I can't help but think Google wouldn't have had these problems.
I got phished
I have been spending a lot of time working with one of the accounts I use to run my websites over the past week, including several tech support calls. Saturday afternoon I received an email from that account saying that I was over one of my limits and my account may be deactivated if I didn't take action. This was surprising, but I figured that something just got a little messed up with all of the moving around we were doing, and needed some house cleaning. Nope, I got phished. Phishing is masquerading as a trusted entity to lure users into giving up sensitive information, such as financial info, logins, personal details, etc. When I get an email that requires action I try to manually navigate to the website and login, rather than just clicking on the link in the email. However, this attempt was successful in getting me to part with my password. It was a combination of the work I had been doing on that account, and me being in a rush to get out the door on a Saturday afternoon. I quickly realized my mistake and reset my password on the account. It was a unique password, so I didn't need to worry about other accounts being taken over. This highlights how careful we need to be online these days. Enable two-step verification on accounts that support it, use complex unique passwords, and always be suspicious.
How should we define phones, tablets, and computers a few years from now?
Smartphones are getting bigger, tablets are being used to make phone calls, and laptops bend and fold in all sorts of new ways. So, how should we define all of these device categories a year or two from now? Is anything with the ability to make a phone call a phone? Should tablets and phones be differentiated by screen size, maybe 6 or 6.5 inches? How about the line between PCs and tablets - should it be based on primary input method (touch vs keyboard/mouse) or the capabilities of the OS (file manager, multi-window support, etc)? Market research firms are going to have a tough time with these questions, and will shoehorn some devices into legacy categories where they don't seem to belong. Perhaps the most useful way to think about device categories will be based on their primary use cases: portable devices that one carries with them at all times vs productivity devices with a range of input methods and more software compatibility. There is probably another category in between them somewhere, and perhaps more categories on the edges. Time will tell, it will be interesting to see how this all evolves.
Thoughts on ARM powered Macs
There has been a fair amount of discussion and speculation on when or if Apple could build a Mac computer with a CPU designed around an ARM core. The A-series of CPUs that power the iPhone and iPad are designed around an ARM core, as are the CPUs of virtually all smartphones and tablets and millions of other devices. Most laptop and desktop computers are built around an x86 CPU from Intel or AMD, whether they run Windows, OS X, Linux, or some other OS. The ARM powered Mac discussion seems to center around benchmarking Apple's current A-series CPU against an Intel CPU and pointing out how Apple's designs are inferior to Intel's. However, I think these discussions may be missing the point. Rather than predicting when an ARM CPU may be powerful enough for a Macbook as we know it, I'd rather speculate on what type of device Apple could build around a state of the art A-series CPU. Could they build a laptop that would perform similar functions to a Chromebook? How about an 'iPad Pro' with more productivity features that could replace a laptop for some people?
An ARM based laptop would have to forego a lot of legacy technology, but Apple has never been shy about doing this. I can imagine a device with only the same I/O as an iPad, meaning no USB or Thunderbolt connectors, video outputs, or SD card readers. The Lightning port could be used for charging and some peripherals, but anything else would be connected over wifi or bluetooth. This device could run apps from the App Store. It wouldn't be able to run OS X apps from the Mac App Store or boot to Windows. It could feature a more usable multitasking interface than iOS does currently. It may not even have a touchscreen. This device could be even thinner and lighter than a Macbook Air and get better battery life. I'd imagine the starting price would be somewhere around $750.
An 'iPad Pro' would be more than just a larger iPad. It could feature native support for keyboards (whether attached as part of an official case or through bluetooth), the ability to view two apps at once, and improved multitasking. It would be used primarily as a tablet with touchscreen input, but the keyboard could be used for typing, navigation, gaming, etc if the user desired. I'd also see this device starting at around $750.
Maybe these two devices could even be the same thing. I believe the point is this: if Apple were to introduce an ARM powered Mac they wouldn't try to cram all of the Macbook's legacy ports, backwards compatibility, etc into it. They'd design a device from the ground up for a specific set of use cases. Just like the iPad is fully capable of replacing a laptop for some small portion of users, an ARM-powered device with native keyboard support could replace a laptop for many more.
Are smartwatches missing potential markets in women and tablet owners?
Several smartwatches have launched recently, but they fail to answer a fundamental question: why do I need this? Imagine a potential buyer asking a retail employee questions about smartwatches: It doesn't do anything my smartphone can't do already? I need to charge it every day? My phone needs to be nearby for it to work? It costs $200+? Essentially, the only benefit current smartwatches have is to reduce the number of times per day a user pulls a smart watch out of his or her pocket to check why it just buzzed. I do see a potential market that would value getting notifications on their wrist: people that carry their phone in a bag, such as women and people that use a large phablet or tablet as a phone.
I've previously used an iPad Mini as a phone and would have liked to get notifications on my wrist while the iPad was in my backpack. This may sound like a very niche market, but apparently is a trend in Asia, and I can see it catching on in the US with the introduction of larger iPhones. I'd imagine women that carry their phone in a bag would also appreciate getting notifications on their wrist. However, today's smartwatches are big, ugly, and don't give users much control over what does or doesn't get sent to their wrist. Maybe the Moto 360 and next-gen smartwatches will begin appealing to these market segments.
Why (streaming) a la carte cable TV won't happen and what we can do about it
Cord-cutters and many cable TV subscribers alike would welcome a la carte cable TV packages, whether they're delivered through traditional cable infrastructure or streamed over the internet. However, I don't think this will happen any time soon and we won't see ESPN offer a watchESPN streaming subscription or HBO do the same with HBOGO. Here's why and what we can do about it. In this article when I refer to 'cable TV' I mean all providers of live subscription video services (aka multi-channel video programming distributors) whether it's delivered by a traditional cable company (Comcast, Time Warner), a telco (Verizon, AT&T), or satellite provider (DirecTV, Dish).
The current cable TV model is unsustainable
Cable TV prices have been steadily increasing over the last few years and are forecast to continue rising. Meanwhile, the number of cable subscribers in the US has been growing for decades and now sits at around 100 million, although in 2013 the total number of cable subscribers declined for the first time in history, if only by about 250,000. Consequently, TV networks and the cable companies have enjoyed growth in revenues and profits despite increased programming costs for some channels and the worst customer service ratings of any industry. Forbes has a great article on how this is unsustainable with a lot more info.
I agree that the current model is unsustainable, but it won't change for many years. Cable companies know what they're doing - they lock consumers into bundles with internet, voice, and all the channels they could ever want just so someone can watch their local sports teams or a handful of cable dramas. Presently, if you want to watch your local NBA/MLB/NHL team every night or watch shows on HBO/Cinemax/Showtime there is no way to do it other than subscribe to cable. They offer promotional rates to get you hooked, and then offer them again when you threaten to quit. If you do quit they raise the price of internet and voice so that the less expensive option from a satellite company isn't quite as attractive as it seemed.
Furthermore, the industry is very profitable and controlled by a handful of risk averse companies. We've all heard the phrase 'content is king' and the content on cable TV is mostly controlled by five companies, one of which is owned by a cable company. The five large media companies and examples of their popular networks are listed below:
- Disney: ABC, ESPN, Disney, A&E, History
- Comcast: NBC, USA, Bravo, E!, The Weather Channel
- News Corp: FOX, MyTV, FX, Fox Sports
- CBS: CBS, CW, Showtime
- Time Warner Inc: HBO, Cinemax, TNT, TBS, CNN
A sixth company, Viacom, owns a number of mid-tier cable channels: MTV, Comedy Central, Nickelodeon, Spike, BET, etc. There are also two notable independent networks: AMC and Discovery. Then there is PBS, which is a non-profit.
The content these companies invest in and produce is then delivered by a number of companies that have regional monopolies or near-monopolies. How many choices do you have for a cable TV and internet bundle in your area? Most of us only have two, and many people only have one choice for an internet and TV package.
The cable companies collect money from consumers every month, and then give a pre-negotiated amount for each subscriber of every channel to the networks. For example, ESPN (just ESPN and not ESPN2, ESPNU, etc) reportedly receives $5.40 per subscriber from the cable providers each month, making it the most expensive cable channel.
Why a la carte cable won't happen
Let's use HBO's on-demand streaming service, HBOGO, as an example of why it won't be offered on an a la carte or standalone basis. Hundreds of thousands of people have asked HBO for a standalone streaming package, with the average person offering to pay a little over $12 per month. The same article mentions that HBO reportedly receives $7-$8 per month for each subscriber from the cable companies. So it seems like a no brainer, right? Offer HBOGO as a standalone package to anyone with a broadband internet connection and make an extra $5 per subscriber. It's not quite that simple, though. HBO's parent company, Time Warner Inc (not to be confused with the now separate Time Warner Cable), would never allow it. In addition to the revenue they get from every HBO subscriber, Time Warner also collects anywhere from a few cents to a few dollars per month from every cable subscriber that has a cable package including any of the channels they own (see the list above). In 2013 Time Warner Inc took in just shy of $30 Billion and made a net profit of about $3.7 Billion, which was an increase over 2011 and 2012. They don't want to disrupt this lucrative model. If they offer HBOGO as a standalone package, more people may get rid of their cable TV subscriptions and then Time Warner won't collect revenue from each of the channels they own that nobody watches anyway. They are content to let people continue to share their HBOGO passwords and to make Game of Thrones the most pirated show , rather than offer a standalone subscription.
To be fair, HBO invests a lot of money into producing new original content and acquiring rights to movies every year. They have to ensure they'll make a return on their investment, and they're accountable to shareholders. So it makes sense that they'd be a little risk-averse about disrupting a business model that has been working for decades.
There are also a number of other things to consider. With the current model, the cable company is responsible for customer support (insert 'or a lack thereof' joke here), marketing, billing, etc. HBO would have to invest a lot of money into these areas before offering their own service. They would also have to significantly upgrade their network infrastructure. HBOGO recently had two high-profile outages during the True Detective season finale and a few weeks later during the Game of Thrones season premiere. Obviously they're not ready for a large influx of new customers. They may also have to follow Netflix's lead and enter into peering agreements directly with internet providers to ensure high quality video streams. All of these things would require a lot of money, time, and new employees which would eat into HBO's profits and flexibility. Perhaps they are risks they're simply not willing to take at this time. (I'm sure there is much more they'd have to do before offering their own service, these are just the first few I could think of.)
The same goes for ESPN, which invests billions to secure the rights to live sports from various professional and college leagues in multi-year contracts. They too need to ensure they make a return on their investment. See the excellent What You Pay For Sports blog for much more detail on what individual sports channels cost you and how much they pay to secure rights to live sports.
Networks love the bundle
In addition to the money they make from ESPN, Disney also gets a nice cut from every cable subscriber that receives ABC, even though ABC is already free in HD with an antenna to the vast majority of Americans. The networks want to preserve this bundle model and keep getting paid for content regardless of whether or not every subscriber watches their channels. Of course they do want people watching though, because the ratings drive the fees and advertising they can charge. They fear that if the premium content offered by ESPN and other sports channels or HBO becomes available in a la carte cable packages or standalone streaming subscriptions then consumers will be able to get rid of their cable bundles and still watch the major networks such as ABC, CBS, NBC, FOX, and PBS for free or with a service like Aereo or Hulu+. If people only subscribed to a few channels then the overall revenue collected by cable companies and TV networks would decrease, and a lot of niche channels might disappear, along with the fees earned by them.
And the bundle is not going away
Several tech companies are trying to disrupt the cable bundle, without any results. Apple has been rumored to be working on a TV for years and it is reportedly hung up by content negotiations. Intel invested millions into a streaming television service, but ultimately decided it was too expensive and sold it to Verizon, which is now negotiating with cable companies. Intel's original plan was to offer cable subscriptions over the internet with the 'right bundles' that wouldn't necessarily be less expensive than a traditional package and they were reportedly prepared to overpay to secure the rights to content. Even that was apparently too risky for the cable industry. Senator John McCain has introduced a bill that would force cable companies to offer channels a la carte, but it has been met with resistance in congress and by the lobbying efforts of the cable industry.
What we can do about it - vote with our wallets
Unless we witness a miracle and an a la carte bill actually passes congress or a company like Apple, Google, or Verizon actually strikes a deal with cable companies there's only one way we're going to get what we want: stop paying for cable channels we don't watch. That means cutting the cord or at least dropping down to the lowest possible cable package you can manage. The industry won't change unless they lose enough subscribers to antenna and streaming options that they can't make up the difference with more aggressive rate increases. It may be tough for sports fans and HBO lovers, but there is a lot of content available without a cable subscription.
I'm no expert on the television network or cable broadcasting industries, nor do I have any details about the contractual agreements between the networks, cable companies, and sports leagues, but I hope this was an informative high-level view of how the industry is structured and the business models in place.