@lindsay.at

So you say you’re concerned about Apple’s hegemony with the iPad. You’re concerned that the iPad is for media consumption only, and will quash creativity. You’re concerned that it’s a power play that closes off open formats. You’re concerned that it concentrates too much power in the hands of one gatekeeper to your applications. If so, then go away.

Go to the open source world, because there’s no closed-source corporation nimble enough to catch up with Apple on their touch-based OS.

Apple has just grabbed the high ground in this scramble, and some variation of their personal, slate-like computing paradigm will dominate consumer computing’s attention for years – if not decades – to come. The computer is growing up, and Apple thinks they have the key to turning a general purpose computer into a traditional consumer electronics device.

(Incidentally, I can’t name a player in the computer industry that doesn’t share this common goal of ubiquity. Consider Google’s overt actions in the past year. Nearly every major new effort Microsoft has made for well over a decade has been in this direction.)

So, if we accept that Apple will cast a shadow as long as it has with the iPhone, what is to be done? The only alternative I can see is to work on organizing the open source world into offering an effort that could compete.

Forget the tappity-tappity of single touch alone. Reviews of existing best-of-breed single-touch devices suggest that people already demand something more. Apple owns multi-touch (as in, has key interaction modalities tied up in US Patents), and you would do well to look at something else. Pen-based computing has been around for two decades. Go and improve writing recognition. Consider previous user experience successes (such as the Newton and early PalmOS), and integrate the best of their innovations.

What does a responsive pen-based web browser look like? Can you make it swoop and glide like Apple’s offering? Maybe that’s the wrong way to go about it, but you can be sure that consumers won’t accept either long times to refresh a page each time it is moved or the one-line-at-a-time emulation of a user holding down a scroll arrow in a window.

Consider ergonomics everywhere. Apple does. Study people with a pen, clipboard, and some set tasks. How do people act when standing with the clipboard cradled in their arms? When leaning back on a sofa? When poking at it on a table top? How do these three main body positions inform software interaction modalities? Can one UI design accommodate all three? Make sure you can accommodate left-handers easily, now (and others with disabilities).

Once you’ve cracked the basic interactions, make it easy to create an application: be opinionated. There’s already too much flexibility, especially in the open-source world. When presented with a choice, offer the simpler way of doing things. What developers need is a strong vision and the building blocks for making applications. Start with the basics: navigating a hierarchy, filling out a form.

Got that? Congratulations. If you’re very, very good, you might be able to compete with usability of iPhone OS 1.0.

So you say you’re concerned about Apple’s hegemony. So go. Go and run, because Apple has a huge lead.

Véro Pepperrell posted at her blog on the new iPhone announcement:

However, the biggest change isn’t in the physical device. It’s all in the perception. Last time around, Apple was looking for early adopters, geeks and IWOOTs* to test-run their product in a giant, live usability testing session. Now that they’ve been able to watch us use the device, it’s time to reach out to the normobs with lower upfront costs.

[* Def. IWOOT: “I want one of those”, otherwise known as saddos like me who can’t resist the latest gadget, even at exorbitant prices.]

Back in the day of frequent IM conversation with Fraser Speirs, we jointly coined a term regarding price points, OGOT. It stands for the rather British, "Oh, Go On, Then," and here signifying a price point that is perceived as being low enough for an impulse purchase. It's low enough to break through any price-based purchase resistance. It varies per product or per person, but you know it when you see it.

That's been the major focus of Apple's revamped iPhone, to address the reasons for purchase resistance head-on. The biggest reason that affects the most people has been price. In the UK, £99 sounds absolutely reasonable for a full-featured mobile on a £30-35/month plan. Oh, go on, then.

The iPhone steps out of the realm of the élite device into the mass market. Fantastic!

Hey, has anyone else noticed that there has finally been a boost to the iTunes Plus library on Apple's iTunes store? I noticed while browsing the iTunes Wi-Fi music store, but confirmed it using the normal store.

There are some notable things about it:

• The independents have arrived: it's not a cluster of further EMI songs, but rather they appear to be from small labels.
• The per-track price of the iTunes Plus (DRM-free, 256kbps AAC) tracks are $.99, not the increased $1.29 price. See, for example, the new Iron & Wine album's listing. The album costs $9.99, but the individual tracks are still only $0.99.
• As of this writing, the FAQ has not yet been updated: it still says that "iTunes Plus songs are available at $1.29 per song."

Which came first, the agreement with the indies on the new price, or Amazon's MP3 store? From where I sit, this looks like a reaction to Amazon, which seems like a first for Apple with the iTunes store.

Oh, in case anyone is curious, but hasn't been following my Twitter feed, I got an iPod Touch last week. It's magnificent, and a delight to use. It's even more of a joy to demo it to my colleagues and friends around here. They're very impressed with the price (£199), as well.

[Update: last weekend, I had a chat with the local O₂ store manager. It turns out that some of my assumptions about unlimited data, and how they will be rolled out to customers, might be wrong. Some of the more spectacular claims made below should be taken in that light.]

I perform a lot of speculation on this blog. I think my record speaks for itself. With that pinch of salt out of the way, I dug into O₂'s pricing structure, and noticed a few things.

First off, let me state my bias: I am an Apple fanboy. I wanted to be excited about the O₂ launch of the iPhone. From an Apple-partisan point of view, I think that O₂ flubbed the launch. The carrier's intentions are clear, and somewhat understandable, but to someone who wants to see Apple technology in lots of people's hands, it was a disappointment.

The £269 price was as predicted. It sounds high when converted to USD, but it's in keeping with what the local market could conceivably bear, and is consistent with Apple's pricing here, and in relation to the rest of Europe. The British Pound is extremely strong, but there are no guarantees that it will stay that way. Apple cannot afford to be punished should the US economy unexpectedly recover.

No, the disappointment lies in the premium prices for the subscriptions. O₂ left no doubt that it sees the iPhone as an exclusive product meant to attract and capture high-end consumers from all other networks. They're not interested in disseminating the iPhone as widely as possible: they want to get high-tariff customers on the network, and to keep them for at least 18 months (which is now the standard "long" contract in the UK — the market is in transition from an earlier 12-month lock-in period for contracts).

Unfortunately for O₂, we can quantify the premium they believe they can place on the iPhone. O₂ is refreshingly open about their tariff policy, and has a "Simplicity" tariff that is a pay-monthly SIM-only tariff: if you don't want to upgrade your phone, you can put it on the Simplicity plan and be locked in at a much-reduced rate. If you want a non-Apple phone to go with your monthly tariff, you typically pay £10 extra, which we can take as pure phone subsidies.

In other words, if you buy a phone from O₂, you should expect a discount of approximately £180 from the hardware cost. O₂ knows how to profit from its network whether you do this or not.

Interestingly, the current Simplicity tariff corresponds exactly with the voice and text portions of the iPhone tariff:

minutes	200	600	1200
messages	200	500	500
SIM-only	£15	£25	£35
iPhone tariff	£35	£45	£55

The iPhone has been raising a lot of eyebrows because it's "unsubsidised": consumers are willing to pay a full retail price for the unique, full-featured phone, and flock to the exclusive network for the privilege. The premium that customers typically pay for a new phone is pure profit, shared by the carrier and Apple, in a mutually beneficial agreement. As we can see, the difference between O₂'s price for the iPhone tariff and a tariff unattached to a phone is £20. The only differentiators are the unlimited data and the unlimited Wi-Fi.

The unlimited Wi-Fi partnership with The Cloud was a smart move by O₂: The Cloud is well-respected and a market leader. Partnering with them automatically pushes iPhone users' most demanding data needs away from O₂'s anæmic EDGE network. A consumer could subscribe to unlimited Wi-Fi with The Cloud for £6.99/month. I could imagine that a corporate partner of The Cloud could easily cut a deal for wholesale prices of £5–£6 per bundled user, per month.

I think a tactical error from O₂ was pre-announcing unlimited data for all of their consumers. As the Guardian reported:

Will the unlimited data package be available for other users?

[O₂ CEO, Matthew] Key: We'll roll them out on October 1 to our other tariffs.

Boom. Unlimited data for the iPhone is taken out as a differentiator, and explicitly absorbed into O₂'s cost of operating their network. Ultimately, this is probably a good move on the part of O₂ in finding customers, but it doesn't help sell iPhones one bit.

[Aside: I believe the fair-usage policy of "1,400 internet pages per day" equates to 100MB per day, but the wording is spectacularly vague on that count.]

I was shocked and surprised at the rumours reported by the Guardian that surfaced on Monday that "O₂… will return to Apple as much as 40% of any revenues it makes from customers' use of the device." Put in the context of O₂'s tariffs, though, it starts to be plausible. Forty percent of £35 is £14.

I believe that the lion share – fourteen pounds per month – of the £20 iPhone premium (over O₂'s SIM-free fees) is dedicated to paying Apple. Nearly all of the remaining six pounds of the premium go toward paying for the Wi-Fi access partnership. O₂ might see a pound or so extra income per iPhone user, but it seems entirely plausible that they're making all their ongoing profit on the base network fees. O₂ will also earn some retail margin on the iPhones that they sell in their shops, which probably strikes the carrier as a tidy bonus.

[edit: I didn't make it clear: since the "iPhone premium" stays the same for all tariffs, I believe the profit sharing with Apple stays at a constant £14/month, no matter which of the £35, £45, or £55 tariff the customer chooses.]

So, in addition to whatever wholesale margins Apple gets on the iPhone, they get £252 in profit sharing per customer. That's plenty of reason to break the hearts of other potential carriers. O₂ clearly feels amply rewarded in making this deal, gets a lot of buzz, and captures desirable customers. Will consumers go for it? I think they will, but not to the same extent that they did in the US.

I've had a lot more thoughts on Apple's recent moves since last posting. None is quite enough to post individually, but they seem to make for a decent set of thoughts.

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There has been a wide range of prices thrown around as possibilities for a new pricing structure for television shows on iTunes. Prices from $0.99 to $4.99 have been quoted. I have only seen the prices reported at their face value and only compared to $1.99 for the existing standard definition purchases. Has no one else considered that $0.99 might be for a rental, and higher prices might be for High Definition?

Incidentally, people should not forget that HD television purchases have had an established price for nearly ten months: Xbox Live has offered 720p download purchases for $3.00 since last November.

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Mike Lee's rant on the entitlement people felt on hearing about Apple's iPhone price drop was amazing, and expanded on my initial reaction perfectly. That said, Apple's premeditated response was perfect. I also see it as being a

1. one-time benefit to early adopters of any of Apple's products ("This is life in the technology lane." In other words, "I hope you've learned your lesson."), and
2. the product of a wide-ranged sociological experiment. (Would users take this sort of price drop? No? Okay, we've learned a lesson.)

Perhaps it was enabled by – or even the reason behind – Apple selecting a subscription financial model for the iPhone.

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I am a bit stymied by the specificity of the naming of the "iTunes Wi-Fi music store." At first, I got it: Apple's not going to deal with delivery over the mobile telecom networks, and they're not dealing with video. Fine. It's verbose, but clear.

On second blush, however, I wasn't so sure. Why couldn't this be used for purchases over the AppleTV? The same underlying model (and controller) surely would serve the AppleTV's interface equally well. In fact, the seven major store headings ("New Releases," "What's Hot," "Genres," "Featured," "Top Tens," "Search," and "Downloads") line up fairly well with the YouTube interface headings ("Featured," "Most Viewed," "Most Recent," "Top Rated," "History," "Search," and "Log In").

I would have thought the ITunes Wi-Fi music store was a sure sign that similar functionality was coming to the living room. Perhaps it is, but under a different name: "iTunes AppleTV store." That gets around the music-or-video question as well.

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Last week, I had thought the iPhone's closed API was because of the the mobile carriers. Apple didn't want to come up with a guaranteed API until it had all of its carrier agreements down, and there was no chance of the carriers pushing to have their own applications on the Springboard. Independent reverse-engineering and programming has been allowed because there's little chance of it appealing to institutions. Thanks to Ben Metcalfe, I now think that the iPhone interface may never be "open" in an official way:

Dave Winer has a good observation:

“Scoble wants an SDK so developers can create cool iPhone apps. Of course I do too. But I doubt it’s going to happen anytime soon. Look at all the deals they can do if they don’t. Starbucks wouldn’t need them if there was an SDK. And Tulley’s could do their own, as could Peet’s, and Whole Foods, etc etc. Apple wants all that business, I’m sure. And they want to be able to sell Starbucks an exclusive. They couldn’t if there was an SDK.”

When he announced the iPhone, Steve Jobs said there would be no SDK because you could do everything you needed to in a web-browser/web-development environment. Clearly that’s not the case - the Starbucks’ widget is not something that the rest of us can implement.

It’s bad enough that users will be forced to have Starbucks marketing on their iPhone/iPod Touch screen. It’s a kick in the face to have built that with hidden functionality that goes against the previous ideals that were made about openness of the platform.

Apple may well be trying to be the new "orifice" here, via its Applications and unique partnerships, to displace the mobile carriers' own entrenched positions.

Well, I'm glad I still own some Apple stock.

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I also noticed the iPod TV-out picture suddenly got more complicated. The new iPod nano and the iPod classic will not output video to the television without a (new) cable or accessory including an Apple authentication chip.

Could this be the start of Apple's (public) implementation of a "secure signal path" for the purposes of complying with Digital Rights Management requirements of High-Definition video content providers?

Also recently: iPod classic vs. Flash, Where's the HD?, iPhone vs. iPod touch, and Technical feasibility on HD delivery.

In the twitter commentary that followed Apple's iPod announcement, while I was getting caught up with the news, I realised that Mail was missing from the new iPod touch. I got to thinking that was an interesting omission, and reflected that the widgets, the stock, weather, and Google maps features, in particular, were particularly telling (rather than "curious"). It points to the fundamental (and very deep) way in which the iPod touch and the iPhone differ.

The iPhone is an always-on, lightly tethered communications device. It presumes that at least a minimal network connection is always available. Weather and stock information is conceivably continuously updated. Mail can be checked regularly or pushed to the device.

The iPod is about entertainment, as it always has been. It is the mobile "lean back" to the iPhone's "sit forward." The 'curious' thing about these two devices is driven by how the world is today: in 2007, an Entertainment device and a Communications device look remarkably similar. (And, as an interesting corollary, it exemplifies how Apple generally sees the web as it is today.)

And it's in that striking similarity and feature near-parity that the iPod touch necessitated a price drop from the iPhone, to something more in line with its feature differential. Really, you're paying subscription fees to AT&T wireless for having the communications device cum phone.

It sounds like a reasonable choice for people to make during the upcoming holiday season.

Ars Technica's article, iPhone to be subsidized or not? We're getting dizzy trying to answer, is a bit more muddled than their usual coverage:

Will the iPhone be subsidized by AT&T or not? Yes? No? Maybe? Reply hazy, try again? The theories are all over the map, but recent reports say that the answer is "probably not."

I really had the impression that this was nearing resolution (or consensus) already. In learning about Verizon passing on the iPhone, we learned what Apple was after: a share of ongoing revenue from the mobile carrier's subscribers. It seems like a reasonable substitution for subsidies: what would normally be discounted from the up-front price is instead paid out to the hardware supplier. Why shouldn't we believe that's what Apple got from AT&T/Cingular? It makes sense for Apple, as:

• It protects the price point of the iPhone and the iPod, the relationship of which is very critical.
• Such price point protection allows Apple control across markets – iPhones are not going to be radically different in price between the US, UK, Germany, and South Korea due to different network providers offering different levels of subsidies.
• It gives Apple an ongoing revenue model to allow for new feature updates, in keeping with Sarbanes-Oxley (a point we learned about with Apple's 2007Q2 conference call).
• There's clearly no need for Apple to lower their price point to the consumer in order to garner higher volume: if this is like most other Apple product launches, supplies are likely to be constrained in the first couple months as production ramps up.
• Prices will drop, not at the rate of new phones (often halved within six months, at least within the UK), but at the rate of iPods (more like $50/year for the top-of-the-line iPod).

No, there's no way we can know for certain until the iPhone is launched, but I believe this is in keeping with the Apple we know: hacking an entrenched system to work to its own advantage. It can't get around the network carriers being the gatekeepers to its hardware, but it can tweak the existing model so that rather than cheapening its product, it gets even more profit.