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Not iWatch; HealthWatch

August 4th, 2014 No comments

One of Steve Job’s greater accomplishments wasn’t design or marketing, it was negotiating with an intransigent music industry and convincing them to let the iTunes Music store sell music one song at a time. At that time, Apple was able to convince them that well designed products and an integrated ecosystem would sell more music than they had done in the past, if only they would make a risky change and invest in his vision.

Apple and Jobs performed a similar task with the new iPhone in which they mobile phone providers were slowly convinced to subsidize the steep price of the iPhone so that consumers would have access to then superior technology and user experience without having to pay the hefty premium Apple needed to get it to market.

The next big thing, so some pundits are saying, is the iWatch. We’ve been hearing about Dick Tracy style connected watches from Samsung, Motorola, as well as smaller start-ups such as Pebble for sometime while the market seems ready to wait and see what Apple brings to the table. But what could they do? What is the real use-case for these smart phone accessories attached to our wrists.

I can think of a few clever ideas beyond just talking into your wrist or rejecting calls but I really can’t imagine that being much of a justification for another screen within easier access. The wrist screen might be used to improve GPS guidance (think smart arrows), and, if it had cellular phone connectivity built in, we might be able to grab all of our music (and more) from the cloud, but, like many, I still don’t see how that justifies the likely cost of these things (or has the battery life to do it for long).

Apple may be focusing on fashion more than functionality (given their recent hires) and perhaps there is an opportunity here, but fashion certainly isn’t the game-changer that will prove Tim Cook is a worthy successor to Jobs. During the 2014 Apple World Wide Developer’s Conference (WWDC), apple released specs for their new Health Kit and Home Kit APIs and, hopefully, those may be hints that Apple has more to offer than just another smart-watch.

FitBit, Nike Fuel and a host of similar devices have demonstrated a vibrant market for wearable technology that provides user feedback about their health. Health Kit is aimed at integrating all these sensors into the iPhone. Unfortunately all these purpose built sensors measure only a few bits of data and don’t represent a platform on which vendors could build and scale.

Apple has a platform ready to build on.

Meanwhile, insurance companies regularly encourage customers to improve their health; sometimes offering competitions and inducements to participants at larger employee providers. Health wearables can offer strong encouragement to users to lose weight, get enough sleep, eat right and so on, and they do this by collecting the data and reporting it to the user (often on a smart-phone). Apple frequently looks at the short comings in an existing marketplace and puts together an ecosystem and a product to address it. The solution I hope they come out with isn’t the iWatch, it’s the HealthWatch.

The HealthWatch isn’t just a NikeFuel band or FitBit, it’s a an extensible platform that can accept heart-rate monitors, pulse-oxymeters, diabetes monitors and more. It coordinates with the iPhone to run these applications (and sell them) to users. It can provide the data to health insurance providers to reduce costs. But why would users want to provide this data to their insurers? If Tim Cook can repeat Jobs’ strategy, it’s because the insurers are the ones paying!

No one but Apple would have the clout today to approach Insurers with this pitch. Apple can provide a winning, extensible platform that is a goldmine of valuable information; but, so goes the pitch, they won’t be successful with this amazing new product if they have to compromise. And no compromises, means a premium price. In trade for that goldmine, insurers will have to pay, just like the music industry did a decade ago and phone companies a bit later: they’ll subsidize the cost. The insurance companies know that Apple has the platform and ability to execute like no other company in the market.

The HealthWatch will tell time and reject calls when there’s a phone nearby, but it’ll also have to have value as a stand-alone device. If it’s just a dongle off of a smart-phone, why bother? But if it’s storing insightful information about your health 24/7 even when you’ve left your phone at home. The data can be downloaded later to that smart-phone, or iPad, or even a web-page and suddenly the HealthWatch actually doesn’t have to be a wrist mounted phone to provide value; and that extends battery-life!

Further, in addition to selling apps on the App Store, the HealthWatch will start selling hardware, because sensors often require more than just programming; they have to get real data out of your body (or…out of your home: HomeKit could have a similar play, requesting subsidies from energy providers to revolutionize the SmartMetering market). Apple doesn’t have to make all of this hardware, but enabling the platform to link it all together and sell it to consumers is a huge competitive advantage that only Google can approach.

Let’s see what this Fall brings, but I sure hope Apple can meet or beat this idea; because, really, who really wants just a fancy iWatch?

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3D’s Not ready to come home yet

June 20th, 2013 No comments

Do you print your own books? Most of us have a printer at home, but we’re not doing that much with them these days. Sharing GIFs on Facebook has likely taken attention away from home printing. Somehow, though, despite more than a decade of predictions of its demise, the printing industry is doing just fine and our mail boxes are still filled with flyers and post cards promoting groceries and vacation rentals. Home printing turns out not to be an occasional need, but centralized industrial printing has stayed as steady as ever.

Meanwhile, 3D printing is all the rage in business media. In the latest bombshell, Stratasys, one of the leading manufacturers of rapid 3D printers for rapid prototyping just purchased MakerBot, the leading manufacturer of DIY 3D printers for hobbyists. 3D is tough to do at home. If you’re not a CAD specialist, you’ll need some sort of 3D scanner. Recently PrimeSense, the technology behind Microsoft’s Kinect, was kicked out of Microsoft’s latest Xbox in favor of a time-of-flight technology, but neither Xbox camera offers much resolution, after all, they’re for gesture recognition, not 3D scanning. While 3D scanning technology has been around for a while, most of the high-end systems cost many tens of thousands of dollars. Fortunately, there are companies like Chiaro Technologies, a Boulder-based startup developing 3D capture technology that might cost a bit more than Kinect, but offers an order of magnitude more resolution and accuracy, just what would be micro-manufacturers using 3D printers will need.

It sounds attractive, exciting, even intuitive that everyone would like to print 3D objects at home. It’s too bad that as great as it is to have a MakerBot in your garage, it really can’t do much and each print isn’t cheap. Each 3D printer is optimized for a different material and procedure, but in the real world, objects are made out of combination of materials. Making things with your 3D printer is far from point and click today. You need to get the data, either by modeling or scanning, then massage it to fit the printer you’re working with.

These challenges haven’t scared investors, who are surely excited that Stratasys acquired MakerBot. It justifies a great deal of investment in other 3D businesses. Yet, maybe 3D printing isn’t ready to take home. One company might have the right idea and that’s Shapeways. Shapeways has a manufacturing plant with dozens of different rapid prototyping machines. They have 3D Systems machines and Stratasys too. They probably have a few MakerBots! They also have a rather fun website where designers can submit 3D model designs and others can buy them, quantity one, shipped right to their door. It’s custom manufacturing brought to the smallest quantities, and you didn’t have to learn how to use the 3D printer yourself!

We don’t print books at home but that doesn’t mean we don’t want to print things. If home printer use has slacked, “How much,” Shapeways must have thought, “are you likely to use a 3D printer that does much less, costs much more and is much harder to use?” So they’ve capitalized on the 3D printing excitement by offering something all of us can take part in with very little friction at all.

Which brings me to 3D scanners. Everyone with an Xbox and Kinect has a 3D scanner already (and many are, indeed, using these with their 3D printers). Anybody with a camera, a bit of skill, and an Autodesk account can upload stereo images and download 3D data from the cloud. Neither have nearly the accuracy or resolution to really make much.

Kinect may soon be everywhere, but useful 3D scanning will likely wind up in your corner hobby store before being simple and inexpensive enough to take home with you. Even today you can walk into stores like Direct Dimensions and have your face scanned for your very own avatar. Real DIYer’s need enough accuracy to ensure that their new bike-grip-phone-holder fits all the parts the way it should, and for that they need a 3D scanner designed for 3D capture not gesture recognition. Companies like Chiaro are developing scanners that are inexpensive enough to be hosted anywhere, without sacrificing quality, even if they aren’t quite small enough to fit in your cellphone and take home with you yet. Together, scanners and printers will allow us to make amazing customized things. What remains to be seen is whether or not it’s something we need to do in the garage or whether we can just send the file out and get our new custom gadget in next day’s mail. Sounds like a good start.

One thing at a time

June 10th, 2013 No comments

A few hours from now, Apple will be hosting a keynote speech at their 2013 developer’s conference. Apple hasn’t released much for quite some time and is often the case around these events, rumors have begun to swirl like tornado in the plains. There’s a lot riding on this presentation because it’s finally time to start seeing if a post-Steve Jobs Apple can still make a big splash.

And that’s a big dilemma. The market, from Wall Street to main street is expecting products and announcements from new operating systems and user-interfaces for both desktop and mobile to new iPads, cheap iPhones, new ultra-thin portables and a power user MacPro.

If Jobs we’re still in charge I would confidently predict what Apple will do this afternoon: they’d release just one (maybe two) of those things (probably a MacPro, and maybe MacBook Air). They’d talk about software and keep things nuts and bolts for developers, letting the interface changes stay locked away for a while longer, while focusing on one or two products at a time.

Wall Street would punish them for not being innovating enough, but the media would focus on those products and the market would have enough time to digest the news and run out and buy whatever it is they want before the next bit of news is released.

With the stock price off more that 25% from previous highs and people grumbling about the lack of entirely new product spaces, CEO Tim Cook may feel compelled to placate and release news on all of these fronts.

If your small business is ever the power house of development that Apple can be, resist this temptation. There’s nothing in it for you. No matter how exciting and innovating each product is, only one of them is going to get the limelight, and worse, you might not be able to choose which one that is. It’s a waste of marketing effort and money, even if expectations are high.

As for Apple, I’m really hoping they resist the unusually high temptation to show it all, but if I had to bet, I’d say it’s going to be a big show. Too bad.

Categories: Business Tags: , ,

It’s an iPod, not an iWatch

March 21st, 2013 No comments

The internet is a buzz with prospects of Apple making an iWatch. And now, analysts are saying it’s not a good idea: watches have too little margin, their too competitive, and it’s just not a big enough deal for Apple.

Apple will be wise to ignore them.

Have you heard of the iPod? They’re not selling like they used to, but these little music players were once all the rage. They’ve mostly been replaced by phones, but in fact, many people, particularly exercise enthusiasts, still use theirs. Apple once made an iPod that even had a watch feature built in and it was so popular that people starting making their own wristwatch bands for it.

What could Apple do to revitalize its iPod segment? Why it could add useful features to the iPod. The iPod could have a built in wristband and receive information from your phone. It could start and stop music from your phone and pause when a call comes in. It might show you your heart rate and read outs from your GPS (all in an app in your phone). Wouldn’t this be better than an iPod? Might you consider upgrading your iPod shuffle or nano for one with these nifty features?

For some reason, all these analysts have missed this simple fact. An iWatch is a new segment they say. It’s building a new eco-system. Is there even a market for it? Since Apple has already made an iPod that worked like a watch, I am dumbfounded at how no one has noticed that this isn’t a new segment at all.

Apple has built up a reputation for life-changing devices and the stock market is expecting nothing less. That’s the argument given why Apple shouldn’t make an iWatch–they’ll disappoint the stock market. Except it’s ridiculous. It’s good business to make good products, even if they’re not ground breaking. The lowly iPod was the first step in remaking Apple; it seems almost sad that it’s all but forgotten now. Good thing Apple hasn’t forgotten it.

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Nouns are more important than adjectives

March 6th, 2013 No comments

Bloomberg quotes Thrivent analyst Nabil Elsheshai “It’s no coincidence that Google’s rise has coincided with Apple’s demise. Making money from services versus devices is growingly perceived as a better business model.”

Please, correct me if I’m wrong, but somebody has to make something for a service to actually be of any value at all.

You service your car; no car, no service.

You get information from the web about where to buy things; nothing to buy, no reason to search for info about it.

Crowd sourcing tells you which restaurant you want to eat in and Pandora streams music to your desktop, but the food had to be prepared and musicians had to create the music; everything, it seems to me, starts and finishes with things.

Right now, Google makes much of its revenue related to advertising. It’s genius really, all the ways they skim money from that business and what it’s done for them. For that Google should be commended. But to suggest that services are more valuable than devices seems crazy to me. On the plus side, Google makes money from the advertising of, well, anything. That’s, no question, a pretty big stream of money, but it’s literally pennies an ad. Margin per transaction is important for a business because each transaction, even with Gooogle’s efficiency, costs something.

Meanwhile, thing-makers, like the companies I usually work with, have to set aside some of their margins for advertising—money they’ll pay maybe to Google in order to get the word out about their new thing.That advertising dollar can never be greater than the money made from the thing in the first place though, can it? Google’s ultimate market, if unopposed and if they get every advertising dollar out there, is certainly large and, likely larger than Apple’s. Apple can make only so many different categories of iDevices after all. Except Apple, and all of us thing-makers (manufacturers) typically make quite a bit more money every time someone buys our object; even if we pay Google a little bit to help convince them. The broader suggestion, that services are more valuable than things is ludicrous.

It’s annoying because one thing may be true about this quote: perception. Small startups selling real live things you can touch and use have a hard time just competing for investor ear-time with thousands of software models based on some variation of ‘get a load of users for a service and then sell the users to advertisers.’ Usually this business model is called a service, but it’s driven by advertising, and there is only so much advertising revenue to go around. And it’s always going to be smaller than the revenue from selling actual objects.

In other words, without the nouns, there’s really no reason to bother describing them.

He was the only one who got it right

February 11th, 2013 No comments

Imagine you get a letter in the mail predicting who will win the weekend’s football game—and, it turns out to be correct. Before next weekend, another letter arrives and it too predicts the outcome of the weekend’s game. This amazing streak repeats for eight weeks in a row and at this point you’re absolutely amazed at the sender’s ability to correctly predict the outcome of these events—and that’s when the ask comes. That’s when the letter writer requests something of you in trade for his amazing predictions. Eight in a row sounds like a pretty good bet; so there’s little to lose, but, of course, it’s a scam.

It’s remarkably easy, after all. Our letter writer has prepared multiple letters split between predictions of which team will win. The next round of letters is sent only to those who received the correct letters in the previous week. You are simply the lucky recipient of a series of correct letters; but many, many others stopped receiving letters much sooner.

It’s virtually the same scam, perpetrated every day, by financial analysts. Take, for example, this New York Times article.

Last September, Apple shares hit a record $705. And to the overwhelming majority of Wall Street analysts, that meant one thing: buy.
By November, with Apple stock in the midst of a precipitous decline, they were still bullish. Fifty of 57 analysts rated it a buy or strong buy; only two rated it a sell. Apple shares continued their plunge, and this week were trading at just over $450, down 36 percent from their peak.
How could professional analysts have gotten it so wrong?

It may be no coincidence that the only analyst who even came close to calling the peak in Apple’s stock runs his own firm and is compensated based on the accuracy of his calls. Carlo R. Besenius, founder and chief executive of Creative Global Investments, downgraded Apple to sell last Oct. 3, with shares trading at $685. In December, he lowered his price target to $420, and this week he told me he may drop it even further, to $320.

Is Mr. Besenius really the only genius who called Apple’s retraction? Mr. Besinius certainly thinks so. “I’m paid based on performance,” he said. “I have to go to my clients and explain why they should pay for my research when they can get it for nothing from the firms where they pay their trading commissions.”

Really, though, Mr. Besenius is just writing letters and he makes it into the news when he gets a series of them correct. The other letters, the ones he falsely predicted, simply get ignored. And that’s what will happen to this one. Apple, for example, has climbed for a week from 440 to 480, and that’s after paying out a dividend. Surely someone called that too.

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