STEVE JOBS REVOLUTION
The Religious Tech Wave of Decade 2010
by
Jason Schwarz
SMASHWORDS EDITION
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PUBLISHED BY:
Jason Schwarz on Smashwords
Steve Jobs Revolution
Copyright © 2010 by Jason Schwarz
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STEVE JOBS REVOLUTION
CONTENTS
Chapter 1: Historical Significance of Steve Jobs
Chapter 2: Eight Elements of Tech Evolution
Chapter 3: Ten Projections for Apple's Future
Chapter 4: Tipping Point of Critical Mass
Chapter 5: Precedents
Chapter 6: Religious Revolution
Chapter 7: Looking Back to the Future
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Chapter 1
Historical Significance of Steve Jobs
“Don’t forget your history, nor your destiny.”
Bob Marley
In honor of Steve Jobs being a big Beatles fan, let’s begin with a few lyrics from the hit song, Revolution:
You say you got a real solution
Well, you know
We’d all love to see the plan
You ask me for a contribution
Well, you know
We’re doing what we can
Like most innovators Steve Jobs has his eccentricities. He has a thing for black turtle-necks. He likes blue jeans. He works under a veil of secrecy. He sees things that nobody else does and is able to bring products to market before we even realize we weed them. Did I just write 'weed them'? Yes. That would be my hybrid version of want and need. When Apple came out with the iPod we wanted one and then eventually needed one. The iPhone took our weed to a new level. The same thing is about to happen with the iPad. Apple is solving problems we didn't even know we had. They are changing the game. The man with the plan is certainly Steve Jobs. His contribution is so vast that it can get lost in its own vastness. You'll see what I mean…
There are so many moving parts to the Apple story that no single article could ever provide an accurate portrayal of the company. Journalists and investors do their best to explain the short term news flow, but such procedures have a tendency to distort the long term fundamentals of the company. Apple is steadily changing the way the world works and the ramifications extend far beyond stock price. I felt it was important to compile my notes on Apple into one book as an attempt to get my arms around the scope of Apple"s reality within this Internet Age.
In a world obsessed with transparency it drives us crazy to know that Apple is innovating in the shadows. I wish I could tell you that I have an insider relationship with Steve Jobs but I can't. Very few do. But I have keenly observed the Apple culture from my front row seat as a Wall Street technology investor. This company has become the central topic of market gossip; on any given day you can read ten to twenty rumor posts that fill the vacuum of Cupertino silence. This is just one of the unintended consequences of Apple secrecy: analysts, journalists, bloggers, taxi drivers, and the next door neighbor have all jumped onto the Internet to formulate a new media that spits out Apple speculation as if the insane were running the asylum. So much speculation can make it easy to lose track of the truth. A lot of what we read on the Internet is fed by hedge funds trying to make money off the momentum, both positive and negative. Hidden agendas abound.
Apple is leading our global culture into uncharted technological waters and Steve Jobs is initiating the progress. Tech is changing the way we communicate, the way we travel, the way we work, the way we play, even the way we worship. As my wife Kelli and I were driving to a function she blurted out in disappointment, “I forgot to record our favorite show tonight!” After we had resigned ourselves to the fact we were going to miss out, I remembered that our satellite company had a new iPhone App that allows you to set your DVR remotely. Problem was, we didn’t have the app. Right there in the car Kelli searched for and found the Directv app in the App Store, wirelessly downloaded it within 10 seconds, entered our login information, instructed the app to record our show and bam! It was waiting for us when we got home. We looked at each other and laughed as this capability freaked us out. I'm sure you've had similar moments.
My purpose in writing Steve Jobs Revolution is to hopefully open your eyes to what lies ahead, not just for purposes of investment decision making but to help you come to grips with the large-scale societal changes that all of us will deal with sooner or later. Whether you are a teacher, a lawyer, a small business owner, a politician or work in a lumber yard, it is paramount that you understand the ramifications of what Apple is doing today so that you can adapt accordingly. We are experiencing a dramatic shift in the way society operates. Those businesses and individuals that fail to keep up with the times are doomed to be frozen in time. Look at the bankrupt newspaper companies or the empty music brick and mortar storefronts. Some of this lost nostalgia is sad to witness but it comes as a price for progress.
Periods of such large-scale changes in society are generally referred to as revolutions. Modern culture has benefited from multiple time periods in which advancements came about rapidly and seemingly out of thin air. What caused the light to go on in Henry Ford’s mind back in the early 1900’s? What brought about the Great Awakening of the 1730’s? Or the Renaissance of the 14th-17th centuries? Every so often the procedural norms of society change dramatically. While the core principles that govern life are unchanging and remain constant, the manner in which we go about our daily lives and exercise our agency can, and do reconstruct.
When the history books look back on this generation I believe they will refer to this as the ‘Tech Revolution’, similar to the Transportation Revolution of the early 1900’s and the Industrial Revolution of the 1800’s. Who is bringing to market the contemporary steam engine? Who is building vehicles to take advantage of the new roads? Without question it is Steve Jobs. Some may argue that Microsoft’s Bill Gates deserves the top spot but upon further review you will find that although Gates was savvy enough to jump on the software bandwagon at the right time, the real enabler of our time was and is Steve Jobs.
The Jobs/Gates comparison mirrors the Nikola Tesla/Thomas Edison rivalry of the early 1900’s. Those two went back and forth throughout their careers just like Jobs and Gates have done. It turned out that Edison’s Direct Current technology was inferior to Tesla’s Alternating Current electric system; as soon as Edison came to his senses and admitted that Tesla’s AC was superior he purchased interests in AC and established General Electric, one of the world’s great enterprises to this day. He profited from Tesla while Tesla moved on without recognition or wealth. Because of Tesla’s AC method, Edison’s light bulb flourished as it was able to be delivered widely, safely, and affordably1
Screenwriter Jonathan Nolan, who included the Tesla/Edison rivalry in his movie, The Prestige, had the following to say about Tesla, “The more research you do on Tesla, the less you like Edison. Edison used all manner of PR tricks including...hiring people to go to State fairs to electrocute elephants with alternating current generators just to prove how dangerous AC was, I mean these guys did some wild, wild things.”2
Through it all, Tesla never stopped innovating. AC was just the beginning for him. He went on to invent radio, x ray, the polyphase motor, remote control, radar, and he even demonstrated the ability to wirelessly transfer electricity with incandescent light bulbs. In fact it was Tesla who ushered in the first vision of what Steve Jobs is doing today when he wrote, “Distance, which is the chief impediment to human progress, will be completely annihilated in thought, word and action.”
Not a bad prognostication? Try this: “One person has to only look into the receiver of an ordinary telephone in one city, and, while talking to a friend a thousand miles away, he can watch the expression of the other’s face, criticize the cut of his new suit of clothing, or advise him what to do about that tired look about the eyes.”
That was a prediction Tesla made in 1899. He further prophesied about the coming revolution when he told Katherine Johnson, “The time will come when crossing the ocean by steamer you will be able to have a daily paper on board with the important news of the world...and by means of pocket instrument, you can communicate from any distance with friends at home through an instrument similarly attuned.”
Back in 1899 these forecasts were viewed as fantasy. I wonder what Tesla would think about the iPhone or the iPad running on a 3G/4G network. There are so many similarities between Tesla and Steve Jobs, they even seem to share the belief that CEO’s should earn a $1 salary. Tesla remarked “money does not represent such a value as men have placed upon it. All my money has been invested into experiments with which I have made new discoveries enabling mankind to have a little easier life.”3
When talking about the historical significance of Steve Jobs, even Bill Gates admitted to Walt Mossberg at the D5, “Jobs gave a speech once, which is one of my favorites, where he talked about, in a certain sense, we build the products that we want to use ourselves. And so he’s really pursued that with incredible taste and elegance that has had a huge impact on the industry. And his ability to always come around and figure out where that next bet should be has been phenomenal. Apple literally was failing when Steve went back and re-infused the innovation and risk-taking that have been phenomenal. So the industry’s benefited immensely from his work. We’ve both been lucky to be part of it, but I’d say he’s contributed as much as anyone.”4
Carleen Hawn of Fast Company had an interesting insight about Apple which she shared back in 2007, “You could say that the personal-computer industry itself began when the Cupertino, California-based company introduced the Apple II in 1977. Ever since, Apple has played the role of generous host, spicing up the festivities with one tasty offering after another. Following the PC, Apple served up many of the features that computer users have since come to take for granted, including the graphical user interface, the mouse, the laser printer, and the color monitor. Yet Apple has been forced to watch the celebrations from out in the alley, its nose pressed longingly to the window as others feast: Today, more than a quarter-century after its founding, it commands just 2% of the $180 billion worldwide market for PCs. Almost everyone agrees that Apple's products are not only trailblazers but also easier to use, often more powerful, and always more elegant than those of its rivals. Yet those rivals have followed its creative leads and snatched for themselves the profits and scale that continually elude Apple's grasp.”
Hawn continues, “Jobs may have unwittingly put his finger on what's wrong during his keynote speech in Paris. ‘Innovate’, he bellowed from the stage. ‘That's what we do.’ He's right--and that's the trouble. For most of its existence, Apple has devoted itself single-mindedly, religiously, to innovation...Truth is, some of the most innovative institutions in the history of American business have been colossal failures. Xerox Corp.'s famed Palo Alto Research Center (Xerox PARC) gave the world laser printing, ethernet, and even the beginnings of the graphical user interface--later developed by Apple--yet is notorious for never having made any money at all. Polaroid, which introduced us to instant images decades before digital photography, collapsed under mismanagement and filed for Chapter 11 bankruptcy protection in October 2001. The Internet boom of the late 1990s, of course, now stands revealed as a sinkhole of economically worthless innovation. ("I know: Let's offer online ordering and free delivery of $1.49 bags of Cheez Doodles!") And Enron was arguably the most innovative financial company ever.”5
Will Steve Jobs go down in history as another Xerox or Polaroid? Not if the next decade has anything to do with it. The Apple trend is beginning to take hold. Even more amazing than the individual products that Apple has produced (the first personal computer, the iPod, the iPhone, iTunes, the App Store, etc...) is the scope of imitation that has taken over the collective industries which Steve Jobs enters. You’d think that the experts in their specific fields would be able to come up with better products than a jack-of-all-trades company like Apple. Former Palm CEO Ed Colligan said as much back in 2007 when rumors of the iPhone were first spreading, “We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in." Poor Ed is no longer the CEO of Palm. Today Palm is trying to carve out a minute piece of the smartphone pie by following the lead of the iPhone.
Colligan wasn’t alone, Microsoft CEO Steve Ballmer laughed at the initial idea of an iPhone and actually offered some advice to Apple, a move that would apparently give Apple a fighting chance in the smartphone market. In an interview at the Churchill Club event in California, Ballmer sited the major weakness in Apple was that they integrate their proprietary software and proprietary hardware. He said the real winners in the smartphone market would be Symbian, Linux, and Windows Mobile because they were better positioned to provide a phone operating system to multiple manufacturers. In a USA Today interview on the topic, Ballmer said, “There is no chance that the iPhone is going to get any significant market share.” Makes you wonder how long Ballmer is going to last at Microsoft. Especially now that he is copying Apple’s iPod, Macbook Air, App Store and Retail Store ideas.
Most creative artists have a window of creativity that opens and then closes as they grow older. Look at the Beatles’ Paul McCartney. He is the most successful songwriter in the history of popular music. One of his songs ‘Yesterday’ is listed as the most covered song ever, by over 3,500 artists, and has been played more than 7,000,000 times on American television and radio. Yet not even McCartney has been able to prolong his window of creativity like Steve Jobs has. Jobs continues to roll out products that nobody else sees coming while the competition does their best to criticize and then to copy as quickly as they can.
As we approach decade 2010 it looks as if Steve Jobs is about to have the kind of moment that Nikola Tesla never got to experience in his lifetime. He’s going to witness market share madness.
Chapter 2
Eight Elements of Tech Evolution
“All evolution in thought and conduct must first appear as heresy and misconduct.”
George Bernard Shaw
There has never been a company more prepared for a particular generation than Apple is for the 2010 decade. It was only three years ago that mobile phones were used to merely talk to one another and it was only fifteen years ago that we were tethered to a wall by a copper wire. As a foundation to help us comprehend Apple’s potential in this decade, let’s analyze the general evolution of tech.
When a new technology breaks down a geographical barrier by providing enhanced methods of communication, you can expect an adrenaline shot to the economic system. A more unified population is a more productive population. Increased freedom invigorates capitalism. Contemporary tech evolution is quietly doing these things. However, a revolution doesn’t happen overnight. It can take a few decades for new technology to fundamentally change society. The United States transportation system underwent a similar, gradual transformation. America had a system of turnpikes and roads throughout most of the 1800’s but it took decades for the system to have a measurable impact on commerce and trade. The first roads were muddy, slow, and unsafe. Once speed and security were improved along the highways and the right vehicles were developed, the network delivered profound economic benefits to the cities it connected. Land sales boomed in newly accessible areas, settlement and agricultural development proceeded rapidly, and the geographical reach of competition increased exponentially. The country was no longer a sprawling collection of isolated townships.6
American roads enjoyed an initial stage of enthusiasm and awe before settling into a long, dull process of implementation and improvement. This intermediary stage was a tedious period of trial and error. What investors need to remember is that an even bigger wave of enthusiasm that proved to be both hugely profitable and long lasting defined the third stage of the transportation revolution. I see the Internet developing along the exact same pattern. The dot-com craze that hit in 1999 was the first bloom of excitement; the Nasdaq crash was the first hiccup. The initial enthusiasm was warranted but premature. From 2000-2010 we experienced that boring period of trial and error. The third wave of huge profits seems likely to hit in the decade of 2010.
I see two reasons why many companies had such a difficult time back in 1999: first, most had irresponsible and ridiculous business models. Second, the Internet was not universally available at high speeds. This was a big deal. Using dial-up Internet was like driving on a muddy, slow, unsafe road. Combine that with the fact that Microsoft’s operating system was often slow and regularly infected with viruses and you can see why investors became skeptical. In most households the Internet was more trouble than it was worth. Look around today and you realize how far we’ve come in a decade. The social structures of family, friends, entertainment and business can now be navigated on the Web without a hitch. Speaking of getting hitched, a reported 12% of newlyweds met online in 2008. This is becoming the new social platform to meet people, to sell products, and to advertise. We are finally on the cusp of the real dot-com run because our virtual roads are ready for the task at hand.
Universal access to a high speed, wireless Internet connection is the essential ingredient to jump start the third wave. By 2009 there were approximately 402 million 3G subscribers connected to the Web through their mobile phones. That amounts to only 13.4% of 3 billion mobile phone users worldwide, but the percentage is increasing rapidly. In the countries where 3G was launched first, Japan and South Korea, 3G penetration is now over 70%. According to a study by ABI Research, $18 billion is being poured into long term 3G investments that will produce 100 Mbps download speeds to mobile devices by 2014. China recently awarded its first 3G licenses and has only just begun implementing the high speed technology among its 3 billion citizens. 3G/4G is the technology that will truly make this a revolution that infiltrates every aspect of our lives.
To illustrate the changes coming as tech evolves into a 3G/4G environment, consider the following eight elements soon to become part of your daily reality:
1- Transparent Performance Data
Tech allows people to utilize data in ways our parents never dreamed of. In the tech revolution everything can be tracked, recorded, and comparatively interpreted. Apps can monitor vital signs when you are working out, when you are eating, and while you are sleeping. There will be no more secrets inside the body or outside. Your daily activities will automatically be tracked and inserted into comparative databases, thereby revealing a true depiction of yourself.
It can be quite motivational to review a recorded log of your own actions. It becomes easy to identify areas of improvement when the numbers are laid out in front of you. This is already happening with the Nike+ project. With Nike+, running data is captured instantaneously on the iPod and synched to the Nike website where start times, duration, and distance can be reviewed. I can browse graphs of my own workouts, I can set goals, and I can compare myself to friends in my running group. I love to see my speed going down a hill and then up a hill, to know exactly at what minute my efficiency declines. This kind of transparency allows us to get on a path to better health and better performance. Nike+ has enabled over 1 million people to track their running over 130 million miles and the burning of more than 13 billion calories.
On August 31, 2008, 779,275 people participated in the Nike organized Human Race; all the runners uploaded their data to Nike+ and together they ran more than 4 million miles across the world. If numeric analysis can happen to this extent in the running world, imagine the possibilities for brain activity, or food intake, or mood monitoring.7
2- A Global Social Life
Twitter and Facebook have showed us that Google search might have been a great way to access the old world of information but it is not the frontrunner for the 2010 decade. This decade is all about real-time and personalized news. Facebook is a platform that allows friends to throw their thoughts, pictures, and information onto the Web in a secure way. Facebook claims that as of July 2009, they had over 5 billion pieces of data that were stored on their servers. Numbers like these cement the fact that Facebook has emerged into a real threat.
When looking for information, people are enamored by the opinions and lifestyles of their friends and family compared to some stranger talking to them from the network news. Often the nightly news doesn’t accurately reflect the day-to-day reality of most of our lives. A nightly update on Facebook is replacing the cold reporting from the local networks. Essentially we are rebelling against the traditional news expert establishment. Why should my world be held hostage by the decision makers at the local news station? Facebook allows its users to tap into the social network of their choice; determined by ones locale, hobbies, or profession. Facebook allows friends to keep in touch no matter where one lives, it is a key element that gets us one step closer to living in a global neighborhood.
Almost every demographic has taken to the platform, making the service a vital way for companies to reach consumers. What better way to target ads than with the information you give about yourself on your profile? Facebook is growing revenue 70 percent a year and is on track to be cash flow positive in 2010. Board member and venture capitalist Marc Andersen says he expects Facebook to generate over $500 million in revenue this year. Facebook's automated online system that allows anyone to buy a targeted Facebook ad has seen its business triple in the past year. Facebook also works with big brands like Starbucks and Adidas, to help them pair ads with their profiles to best communicate and connect with consumers. There's something inherently appealing about ads in a social context if the company can manage that fine line between being helpful and being intrusive. Forrester Research's Josh Bernoff points out that friends are much more influential when it comes to marketing than plain old marketing messages from a company. If Facebook can get Facebook users to recommend products to each other, and place ads with those recommendations, it could be a gold mine.8
Twitter is equally a game changing platform in the evolution of news. A Google search yields results that can be a day, a week, or a month old. Twitter updates are real-time news items that have been posted that very moment. The difference between Twitter and the old style news is that anyone can post to Twitter from a mobile phone and it doesn’t have to be edited and reviewed by a staff. Because Tweets are limited to 120 characters, the news is more conversational in nature which is ideal for real-time news. It’s actually the only way it could be done. Twitter is brilliant.
The other advantage Twitter has is their ability to cut out the middle man. Instead of hearing someone else’s opinion about the latest concert or sporting event, I can now hear about it from the actual performer by following that person on Twitter. Entertainers such as Shaquille O’Neal and Ashton Kutcher were two of the first to reach 1,000,000 followers. As the benefits of Twitter become more widely known, I expect these trends to exponentially grow as people become more accustomed to checking for regular updates throughout the day. This platform is more efficient than text messaging, more efficient than email, and more efficient than surfing the Web.
In an article by Martha Irvine titled ‘Grudgingly, Young People Flock to Twitter’ she explains, “Every semester, Twitter is the one technology that students are most resistant to but it’s also the one they end up using the most...wireless devices are increasingly a factor in Twitter involvement, as in the more you have-the more likely you are to tweet.”
How does Twitter fit with Apple’s strategy? The pending Apple iPad is rumored to become the first product that can serve as a newspaper/magazine replacement. A 10 inch touchscreen, with built in 3G wireless might become Apple’s best selling product yet. The ideal tool for sorting through the clutter of newspaper/magazine sites on the Web is Twitter, as it gives you a live feed of the latest news stories of your choice.
Facebook and Twitter both enhance choice by bringing one’s chosen community out of obscurity and into the palm of your hand. Friends, family, celebrities, and business journals can now feed you your daily dose.
3-iDistribution
We live in a world where access and customization is desired above all else. We want custom homes, we want custom furniture, custom motorcycles, custom birthday cakes, custom blogs, custom software-custom anything and everything. This enabling trend of individuality allows us to express ourselves in new and exciting ways as the tools arrive directly at our fingertips.
In many ways this evolution of technology is similar to the advent of fast food. New mobile products and services are providing us with ‘Internet on the Go’ that caters to billions of global consumers. Do you know how many hamburgers McDonalds serves each year? Approximately five and a half billion! In the same way that we saw the volume of McDonalds burgers surpass Mom’s home cooked meals, we will see mobile app use surpass Web site use in decade 2010. Apps make it so every smartphone can be individually tailored to its user. This technology is game changing. What are we going to do with the increased capabilities?
The middle man is a dying breed. If I am an author why should I allow the bookstore to take all my profits when I can distribute direct? This is the underlying principle that has lead to the success of the Apple App Store. Online distribution of software was a genius idea. The App Store allows software developers to sell direct to customers who previously could only purchase the hardcopy products in a brick and mortar store.
This part of the Apple story is bigger than the Mac, it's bigger than the iPod, and it's bigger than the iPhone. Steve Jobs mentioned the App Store in a recent quarterly conference call and it deserves repeating, "We've never seen anything like this in our careers".
Jobs continued, “Competitors are scrambling to copy our App Store but it's not as easy as it looks and we are far along in creating the virtuous cycle of cool applications begetting more iPhone sales, thereby creating an even larger market which will attract even more iPhone software development. It is clear that customers are now attracted to iPhone not only for its amazing functionality and revolutionary multi-touch user interface but also for its unique ability to let users easily purchase, download, and use thousands of different applications, ranging from free games to financial planning and health management.”
The efficiency of distribution is impossible for the traditional model to compete with. Consumers are eating this thing up. During a quarter in which consumers supposedly quit spending because of the credit crisis (Q3 2008), Apple grew real revenue by 54.5% and grew net income by a staggering 81.2%. That kind of growth is absurd for a company as mature as Apple. That kind of growth is absurd during an economic collapse. But it happened. And it's just beginning. The App store is the gift that keeps on giving.
Apple brought a new twist to an aging industry and it worked. Steve Jobs further remarked on the conference call: “I think the traditional game in the phone market has been to produce a voice phone in a hundred different varieties. But as software starts to become the differentiating technology of this product category, I think that people are going to find that a hundred variations presented to a software developer is not very enticing and most of the competitors in this phone business do not really have much experience in a software platform business. So we are extremely comfortable with our strategy, our product strategy going forward and we approach it as a software platform company, which is pretty different than most of our competitors.”
In the Mobile Metrics Report from AdMob for July 2009 it showed that iPhone users download an average of 10.2 applications from the App Store per month, with 2.6 of those paid. However, iPod touch users appear to be more app-hungry, downloading an average of 18.4 each month, with two paid. Most users surveyed paid for their applications after upgrading from a "lite" version of the same application, suggesting most prefer to try before they buy. The average iPhone user spent $9.49 per month on the App Store, bringing in $125 million from the 26.4 million user install base in total revenue each month. Comparatively, the 18.6 million iPod touch users spend an average of $9.79 each month, capturing $73 million in sales.9
The company announced on September 28, 2009 another set of remarkable numbers for the app store for the iPhone and iPod Touch. Customers have downloaded more than two billion apps in the last year and a half, up from a billion in April and a billion and a half in July. Apple says there are now 85,000 apps available for the phone, up from 65,000 in July.
The blog AppleInsider further parses the numbers, calculating that an average of 6.3 million apps are downloaded a day, up from 4.1 million earlier in the year. The breadth and depth of Apple’s App Store is a big reason why the iPhone continues to maintain its lead against up-and-comers like the Palm Pre and the phones running Google’s Android operating system. “The rate of App Store downloads continues to accelerate with users downloading a staggering two billion apps in just over a year, including more than half a billion apps this quarter alone,” Steve Jobs said in a statement. “The App Store has reinvented what you can do with a mobile handheld device, and our users are clearly loving it.”
After the App Store launched on July 11, 2008, it took nine months to hit 1 billion, and only six more months to hit 2 billion, noted Carl Howe, an analyst at Yankee Group Inc. "The more devices that are out there, the more people want to download software, and they see it's an easy and fun experience," Howe said in an interview. It also helps that Apple has attracted 125,000 developers to its iPhone Developer Program, he noted. "You don't have to go to a store to a buy a disc and get the ultimate in instant gratification.”
Howe said one of the secrets of the App Store's success is the ease with which the apps are downloaded. "If you provide a friction-free way of buying things like App Store, which shortens the time it takes from an impulse to buy to actually buying something, you'll sell a lot," Howe said. "There's not a lot of time for buyer's remorse, and it's a lot like going past a magazine stand in a store and paying $3 for a magazine. There's not a lot of remorse in buying that item."10
A Yankee survey of 1,200 U.S. smartphone owners showed that U.S. revenues from applications will grow by 10 times between 2009 and 2013, reaching $4.2 Billion in 2013 . In that survey, more than 70% of all the apps downloaded in the U.S. were games. "It's interesting that you see how the App Store is doing when it was not that long ago -- about 2001 when the dotcom bubble burst-- that people were saying people would want information to be free on the Internet," Howe noted.
As I mentioned in the introduction, the secret to the market share success that generates from the App Store is the ability to customize the 'real' Internet in a way that has never been done before. We live in a world where customization is desired above all else. Items or services that are individually formatted for use tend to captivate customers. Apple already did this with the music industry, allowing listeners to purchase their favorite songs instead of entire albums. Customized playlists became all the rage. They have also done it with widgets on the Mac providing custom stock quotes, custom weather, or custom sports. Now they're doing it in a more formal way with their mobile mini computer-the iPhone. The apps for the iPhone allow users to educate themselves with their very own, individually-tailored curriculum.
4-Geographical Insignificance
From the Apple.com website: With 150 live-streaming cameras positioned at key surf spots around the globe and a sophisticated software system designed to predict wave conditions even a week in advance, Surfline.com is a surfer’s paradise. That’s why 1.5 million unique web users—and 500,000 more on mobile—use the site every month. To help keep Surfline functioning glitch-free, nonstop, Scientific Product Manager Graeme Rae uses iPhone. “The surf doesn’t stop,” he says. “And with iPhone, I can reboot a server from the beach. I can reboot a server from bed. I can even reboot it from work.”
iPhone has given Rae mobility and agility, two qualities he needs in a company that runs around the clock. “Safari means I can browse our website,” he says. “So if I get a call or an email saying that a particular page is broken or a service is down, I don’t need a computer. I can bring it up on Safari and see the same things they’re seeing.”
And Rae can usually fix the problem right from iPhone. “A lot of the tools we use to run our site are web-based. There are admin pages, and we have a powerful content management system that we can access from our iPhones. So if it’s as simple as going in and correcting a typo, or if it’s as complex as using our version control system to send up some new software, I can pretty much do all of that through Safari.”
In addition to Safari, Rae has a tech-heavy lineup of apps on his iPhone home screen. TouchTerm gives him access to Surfline’s servers. SiteCatalyst provides a quick overview of Surfline’s page views and visitors at any given time. Zendesk, the internal support ticket system at Surfline, has an iPhone app that offers access to new trouble tickets as they come in.
For Rae, there’s no doubt about the impact iPhone has had on his work experience. “My job is easier,” he says. “I’m not tied to a desk. No matter where I go, people can reach me. And I can do almost anything I need to with iPhone.”11
5-The Cloud
Cloud computing is the technology of putting software and services on servers "in the cloud" rather than on individual computer hard drives. The growing number of portable, Internet-enabled gadgets that can connect to the Web will fuel a move towards cloud computing. Consumers can expect to access their crucial data, software and information wherever they are.
VMware’s CEO Paul Maritz had this to say about the future of cloud computing: “We are in a big transition from a device-centric world to an information-centric world. It's going to be about how do you make the information useful and available and make that the center of people lives instead of specific devices. Devices will have to cleave to the information rather than the other way around. IT infrastructure, the plumbing, will fade away for most users and businesses, and will increasing be left to professional providers.” Internet research firm Gartner predicts that by 2012, 80 percent of Fortune 1000 enterprises will be paying for some cloud computing services, and 30 percent will be paying for cloud computing infrastructure services.12
A 2009 press release from Yahoo! Inc. is another signal that cloud computing is well on its way. “Yahoo today announced it has expanded its partnerships with top U.S. universities to advance cloud computing research. The University of California at Berkeley, Cornell University and the University of Massachusetts at Amherst will join Carnegie Mellon University in using Yahoo!’s cloud computing cluster to conduct large-scale systems software research and explore new applications that analyze Internet-scale data sets, ranging from voting records to online news sources. The cluster has approximately 4,000 processor-cores and 1.5 petabytes of disks.
Shankar Sastry, dean of the College of Engineering at the University of California, Berkeley added “Access to the cluster is a first step in helping us analyze the vast amounts of societal-scale information available on the Web, such as voting records, online news sources and polling data. The Yahoo! cluster will also enable us to conduct computationally intensive econometrics research, combining economic theory with statistics to analyze and test large-scale economic relationships.” “Our partnership with Yahoo! will enable us to attack problems ranging from wildlife preservation and biodiversity, to balancing socio-economic needs and the environment, to large-scale deployment and management of renewable energy sources,” said Bob Constable, dean of the faculty of Computing and Information Science at Cornell University.”
In the cloud, Individuals have an ever reaching voice like never before. Seeking Alpha, an investment website that I write for, is a cloud platform where investor voices can be heard. No longer is the investment community held hostage by the relatively few decision makers at the big networks. Seeking Alpha is utilizing the power of the Web to become a leader on Wall Street by collecting thousands of articles a week written by independent authors. A recent experience illustrates the power of Seeking Alpha. I wrote an article, “Etrade Appears Ready to Climb’ that was distributed across the Web to Yahoo Finance, Google Finance, aol, Twitter, Facebook, and multiple blogs. In the old days that would have been it. But now, I am able to interact with readers from various sites. I received hundreds of comments. The communication I had with readers actually changed my initial thesis presented in the article. We created a new reservoir of investment knowledge about Etrade because all of our communication could be stored and searched in the cloud.
The Internet has made it possible for all of us to access the flood of information available, but new platforms like Seeking Alpha are enabling us to enhance the context of the content. The more widespread the cloud becomes, the better our collective understanding will be. This next decade will bring the idea of living in a global neighborhood to reality. Seeking Alpha is doing it for investors, Facebook is doing it for friends and family, and Twitter is doing it for the general population. The weakness of the ‘old school Google’ Internet was the lack of user identity. Surfing the Web used to be as impersonal as watching the nightly news. Now with the ability to comment, collaborate, and interact with friends and colleagues, users are getting a taste of what 2010-2020 will be like.