The real story behind Jeff Bezo’s Fire Phone debacle

Fast Company on the real story behind Jeff Bezo’s Fire Phone debacle.

Introduced with grand ambitions last summer, the Fire Phone is widely seen as a fiasco. Originally priced at $199 (with contract) and intended as an iPhone competitor, it now sells for 99 cents, and Amazon has taken a $170 million write-down largely attributable to unsold Fire Phone inventory. Yet Bezos finally answers the question with the kind of reasoning that investors, customers, and pundits have come to expect from him: Amazon is going to pour more resources into its phone. Defending the Fire Phone as a “bold bet,” Bezos argues that it’s “going to take many iterations” and “some number of years” to get it right.

That’s $170 million gone but more to be pumped into the Fire Phone pipeline.

But lately it’s not an answer that Wall Street has liked. In October, Amazon shocked shareholders when it reported a $437 million net loss for the quarter, its biggest in 14 years. Quarterly revenue hit $20.58 billion, but the company’s growth rate, once a bright spot for those leery of Amazon’s lackluster profits, is slowing. And prospects for the fourth quarter, which closed after this story went to press, were not much better: Over the past five years, Amazon’s fourth-quarter growth rate has steadily declined, from 42% in 2009 to 20% in 2013—and the company was projecting between 7% to 18% for 2014. “For years, the story has been that Amazon isn’t profitable because it is growing so fast,” wrote hedge-fund manager David Einhorn, in a letter to his Greenlight Capital investors. “Now growth is slowing, but rather than unleashing higher profits, the slower growth is leading to even greater losses. One of the principal bullish assumptions supporting many bubble stocks is, ‘The company is growing too fast to be very profitable.’ We think Amazon is just one of many stocks for which this narrative will ultimately prove false.”

Is Amazon choosing the wrong battle to fight?

What makes the Fire Phone a particularly troubling adventure, however, is that Amazon’s CEO seemingly lost track of the essential driver of his company’s brand. It’s understandable that Bezos would want to give Amazon a premium shine, but to focus on a high-end product, instead of the kind of service that has always distinguished the company, proved misguided. “We can’t compete head to head with Apple,” says a high-level source at Lab126. “There is a branding issue: Apple is premium, while our customers want a great product at a great price.”

TAG Heuer and the future of the luxury watch industry

Matt Richman wrote about the TAG Heuer smartwatch.

TAG Heuer’s smartwatch won’t sell. There’s no market for it.

Apple Watch requires pairing with an iPhone, and TAG’s smartwatch will need to pair with a smartphone to even have a chance of being as feature-rich as Apple Watch.

Apple isn’t going to re-engineer iOS for TAG’s benefit, so TAG’s smartwatch won’t pair with an iPhone the way Apple Watch does.

In order to have even a chance of being as feature-rich as Apple Watch, then, TAG’s smartwatch will have to pair with an Android phone. However, TAG wearers aren’t Android users. Rich people buy TAG watches, but rich people don’t buy Android phones.

This is TAG’s dilemma. Its smartwatch will need to pair with an Android phone to be anywhere near as feature-rich as Apple Watch, but TAG wearers don’t buy Android phones.

Maybe they will pair it with a Vertu.

Thoughts on iPad sales

Jim Dalrymple wrote on The Loop about iPad sales.

Why iPhone and iPad sales are not the same:

I’ve maintained in all of my conversations about iPad sales that consumers treat the iPad more like a computer and less like the commodity device that sees iPhone sales continue to rise.

I’ve seen many people that were not eligible for an iPhone upgrade spend the full price of an upgrade, just to get the newest version. iPhone has a level of excitement surrounding it that very few other products have. It’s a combination of hardware and a new iOS that piques the interest of millions of users.

So far, with the exception of its initial release, the iPad hasn’t had the same excitement surrounding new versions.

In some situations, the iPad is enough of a computer for many users. Younger kids and seniors are two groups that come to mind right away. These groups would probably not have purchased a traditional computer, but have taken to the iPad for some computer-related tasks, such as Web surfing and email. Of course, there are exceptions, but for the most part, that seems to hold true.

The other group of people that purchased the iPad are those that use them to complement their computers and phones, especially when it’s more convenient than using a computer. You can see people in coffee shops, parks, airports, and thousands of other places, using an iPad, everyday.

The great thing for consumers is that the iPad is built so well, people don’t feel the need to upgrade them as often. Apple also ensures the new iOS is compatible with a couple of generations of iPads and developers often do the same with their apps.

When you consider the iPad is either a first device for one segment of the market that isn’t doing high-end computing, or a complement to other devices for another segment, the need to upgrade quickly is low.

People treat their iPad purchases like they treat their computer purchases. They expect these devices to last longer and do more than an iPhone. In a lot of ways, it’s a bizarre thought because of the similarities of the devices, but I believe this is what’s happening.

Simply put, the buying cycle for an iPad is a lot longer than it is for an iPhone.

Personally, I have owned the iPad 2 and iPad 3. The only factor that pushed me to upgrade was for the Retina display. Since then, I haven’t found an incentive to push me to upgrading from the iPad 3. It is good enough and runs the latest iOS and apps. The new form factor of the iPad Air and iPad Air 2 is tempting, but it is not a major factor for me.

For some, the smaller size of the iPad Mini is a compelling reason to make the switch. My girlfriend prefers to use the iPad Mini when she’s out simply because it is more portable and lighter. But when we are at home, she still picks up the iPad because of the larger screen.

Instead of comparing the iPad with the iPhone, we should compare it with tablet competitors:

What would concern me is if consumers were buying a competitor’s product instead of the iPad. That doesn’t appear to be happening. Samsung hasn’t been doing great lately and Amazon doesn’t release any numbers, so we don’t know for sure how they’re doing (although all indications are not as well as Apple).

In fact, when you look at surveys about consumer’s intent to purchase, the iPad leads over the competitors. There seems to be no direct reason, i.e. a trouble with the product, that would tell me there is a problem with the iPad.

Autodromo’s Bradley Price on the Apple Watch

Pico featured Autodromo’s Bradley Price, a watch maker from Brooklyn.

Price on watch design:

I agree. People focus so much on the movement, and they don’t think enough about the other aspects of why a watch is beautiful or special. People get so fixated on specs and not on what is special about these watches as a thing.

That frustrates me a little, because I put so much into the rest of the watch. I don’t have the wherewithal to develop my own movement, as many watch companies don’t. In fact, 98 percent of watch companies don’t have that wherewithal.

Let’s focus on the case finishing, the design of the case, the design of the dial, and the concept. What is the watch trying to say? What is the meaning of the watch? What’s the emotional content? I don’t ever see people internet forums discussing those types of things.

About the Apple Watch:

OM: What do you think about the Apple watch, the concept of it?

BP: It’s beautiful. As someone who designs consumer electronics and watches, the more I looked at it the more impressed I was. It’s got Marc Newson’s fingerprints all over it.

It’s clearly something he designed rather than Jony Ive. It’s funny they announced he was working with them after the watch. But to me that was the Apple way of underhandedly giving him credit for the design without actually saying he designed it. But it seemed to me very Marc Newson.

OM: Why do you say that?

BP: The most obvious giveaway was that the rubber strap had the exact closure method that the Ikepod had. But the way the strap integrates with the case is so him, this sort of inflated square.

Now, obviously any designer could do an inflated square. But Marc Newson’s Ikepod watch is a really influential design. I certainly have been influenced by it. If you look at the Monoposto [Autodromo’s first automatic watch], they’re that sort of bowl-like case. There was a little bit of that Newson flavor in that watch, even though it’s not a modernist watch per se. The Apple watch certainly is in that idiom, a lot like his other work.

More on Apple’s design philosophy:

OM: Those companies all go to design experts and designers. And then they design the device. This is so different from what Apple does, where engineering and design are in sync and ultimately guide the product. The design can leverage the gains from system-level engineering, and vice versa. I find they have a different view of thinking in products — of vertical integration.

BP: Then all these companies would be like, “We want to be like Apple” or “How can we even more be like Apple” or “We want a product like Apple’s.” I don’t know if it’s still like that, but this was five or eight years ago and Apple could do no wrong. But the thing was, they weren’t looking at the whole process. They were just looking at the end product. They weren’t looking at how that product got to be that way.

The key things that Apple does, aside from what you’ve mentioned, is that the decision-making is a lot more autocratic, and it’s a lot more direction given from specific important people that are tasteful, thoughtful people. That informs the whole world. It’s not just a bunch of middle managers and committees and stuff. You have one guy who was like “This is good or bad” and “I like this” or “I don’t like this.” That’s hard to replicate, but that’s what makes something great versus just OK. You need that person to be the arbiter.

Apple Watch: Initial thoughts and observations

John Gruber wrote about his initial thoughts and observations after the Apple Watch was announced. You might have noticed the consecutive Daring Fireball articles. I’m clearing the back log on my reading list.

He shared a quote from Andy Warhol:

“What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.”—Andy Warhol

And this concept of Coke for everyone applies to Apple:

That’s what the iPhone and iPad are like. There are hundreds of millions of people who have bought these products, and they now own the best phones and tablets in the world. A few years ago at SXSW in Austin, I saw Michael Dell waiting outside a restaurant. The thought that popped into my head: He’s a billionaire, but I know for a fact that I have a better phone than he does. Not everyone can afford an iPhone, not by a long shot, but everyone who can knows they’re getting the best phone in the world.

So what to expect from Apple?

Apple only enters markets where they can be a market leader in quality. They unabashedly claim to make the world’s best computers (portable and desktop), the best phones, the best tablets, and the best MP3 players. The best. Of course not everyone agrees with that. But many of us do, and even those who prefer, say, Lenovo laptops or Google’s Nexus phones and tablets, would agree, if they’re at all reasonable or have any sense of taste, that Apple’s products are in the running for “best”.

The Apple Watch only works for Apple if it is, in some sense, the best watch in the world. Not the best smartwatch. That’s not enough. The best watch, period. The best thing you can wear on your wrist. It doesn’t have to pass that test for everyone. It may well be targeted more at people who’ve stopped wearing or have never worn a watch than at those who love fine mechanical watches. But it has to pass that test for many people.

How does it compare to existing competitors?

My impression of Android Wear is that it’s best thought of as a wrist-worn terminal for your Android phone and for Google’s cloud-based services. An extension for your phone, not a sibling device. Android Wear devices are almost useless other than for telling time when out of Bluetooth range from your phone. I don’t think that’s a device that many people want; it’s a solution in search of a problem. Call me biased if you want, but I think Android Wear is simply the result of the rest of the industry trying to get out in front of Apple, out of fear of how far behind they were when the iPhone dropped in 2007. On the surface, they do look like the same basic thing: small color LCD touchscreens on your wrist. But all Android Wear devices are larger and clunkier than the larger 42mm Apple Watch, and none of them are even close to the smaller 38mm one. Is there anyone who would dispute that Apple Watch is far more appealing to women than any other smartwatch on the market?

About that button:

The most intriguing and notable thing about Apple Watch’s design, to me, is the dedicated communication button below the digital crown. The entire watch is fully operational and navigable using just the digital crown and touchscreen. You can go anywhere and do everything using taps, force presses, or turning and pressing the digital crown. There is no need for that extra button (which, in the unveiling video, Jony Ive described only as “the button below the digital crown”). Add to that the fact that Apple is notorious for minimizing the number of hardware buttons on its devices, and the fact that the existence of that button keeps the crown from being centered, and my attention is piqued. The only explanation is that Apple believes that the communication features triggered by that button are vitally important to how we’ll use the device.

These are just some parts of Gruber’s article that caught my attention. It is a long piece but definitely worth reading the full article if you are interested in the Apple Watch.

We are now in the early parts of early 2015. Exciting times.

Mozilla finally brings Firefox to iOS

John Gruber on Firefox finally being available on iOS.

That it took them until 2014 to bend to practicality — iOS has been growing in popularity worldwide ever since it debuted, and Apple was never going to allow them to use their own rendering engine in an iOS app — epitomizes everything wrong with Mozilla as an organization. I’m all for idealism, but Mozilla has been idealistic to a fault. (Exhibit A: their stance against H.264 video.)

So what made Mozilla change their minds? Mozilla VP Jonathan Nightingale tweeted:

http://twitter.com/lsblakk/status/539843892300898304

Safari has been shipped with iOS since the first iPhone and Chrome has been iOS since June 2012. Firefox is very late to the party. Even lesser known third party browsers have been out for some time. Dolphin Browser, one of the more popular third party browser, has been out since 2011.

Yahoo’s decline

John Gruber wrote a very good piece on Yahoo’s decline.

I would argue that Yahoo lost its way early. Yahoo was an amazing, awesome resource when it first appeared, as a directory to cool websites. Arguably, the directory to cool websites. It was hard to find the good stuff on the early web, and Yahoo created a map. Their whole reason for being was to serve as a starting point that sent you elsewhere.

Then came portals. The portal strategy was the opposite of the directory strategy — it was about keeping people on Yahoo’s site, instead of sending them elsewhere. It was lucrative for a while, but ran its course. And it turned out that the web quickly became too large, far too large, for a human-curated directory to map more than a fraction of it. The only way to index the web was algorithmically, as a search engine. And one search engine stood head and shoulders above all others: Google.

Yahoo reportedly had an opportunity to buy Google in 2002 for $5 billion. Yahoo, under the leadership of CEO Terry Semel, declined. And that was the end of Yahoo. We all know hindsight is 20/20. There are all sorts of acquisitions that could have been made. But I would argue that acquiring Google in 2002 (if not earlier) was something Yahoo absolutely should have known they needed to do. The portal strategy had played itself out. All they were left with was their original purpose, serving as a starting page for finding what you were looking for on the web.

Buying Google in 2002, at whatever cost, was the only way for Yahoo to return to those roots. Google wasn’t just something shiny and new — it was the best solution to date (even now) to the problem Yahoo was originally created to solve. In a broad sense, buying Google would have been to Yahoo what buying NeXT was to Apple in 1997: an acquisition that returned the parent company to its roots, with superior industry-leading technology and outstanding talent.

This highlights the importance of having a leader who understands the essence of a company, not just what the company does on the surface. Whichever Marissa Mayer might be, it is probably too late to turn things around.

Jenxi’s favourite apps of 2014

The release of iOS 8 and OS X Yosemite this year brought the Apple ecosystem closer together. My workflow has evolved through the past year and my app usage has changed as a result. Here are my top ten apps of 2014 in no particular order. The platforms that I use them are listed in the brackets.

1. Slack (iOS/Mac/Web)

Matt and I used to communicate via messaging apps such as iMessage, Facebook Messenger and Google Hangouts. It was a mess and keeping track of the different topics was a nightmare. We decided to give Slack a go and it has transformed our communications.

By being able to segregate our conversations into different channels, it helps us easily follow the multiple topics. One feature I really like is the ability to view a list of link shared in a channel. This is important since we are constantly dumping links for each other to consume.

2. VSCO Cam (iOS/Mac)

This is the only camera app you will ever need. I have tried hundreds of camera apps ever since I got my first iPhone back in 2009. The only app that I felt came close was Hipstamatic. I used Hipstamatic a lot but found the skeumorphism too distracting. When I tried VSCO Cam, I was sold and it was not long before I ditched Hipstamatic and most of my camera apps.

3. Instagram (iPhone)

This is the only social network app that gets a space on my home screen. I won’t count VSCO Cam as one. This is an interesting shift in how I engage social media, especially since I deleted Facebook from my phone.

I find Instagram posts requiring me to be less invested. Look at a photo, scroll to the next. Tap to like or comment if I have something to say. As opposed to seeing links on my Facebook news feed and getting sucked in when I open the link. In this sense, Facebook Paper allows me to browse my news feed in a manner more akin to Instagram. The ability to easily share from Facebook Paper to Pocket helped keep me from going down the rabbit hole, since I can save to Pocket instead of reading it the link there and then.

4. PhotoDesk (Mac)

The best app for browsing Instagram on Mac OS X. PhotoDesk, formerly InstaDesk, is a powerful Instagram client. It supports multiple accounts, allows you to sort your feed, lets you like many images with one click, and lists your favourite users and informs you if there are new photos from your favourite users. Power users will appreciate the ability to create comment templates for canned responses.

5. 1Password (iOS/Mac)

The many hacking incidents and password leaks in 2014 show that password security is something not to be taken lightly. The best way to avoid multiple compromises would be to avoid reusing passwords. This is where password managers help make your life easier and your passwords more secure. I have not tried the other alternative password manager. However, my experience with 1Password has been fantastic.

The app can create a unique password for each service and website you use. Since you don’t have to remember the password, you can generate passwords with high entropy. You don’t key in the password as 1Password inserts the password for you, thus circumventing the risk of key loggers.

6. Mail (iOS/Mac)

I used to rely on Sparrow for emails. However, since its demise after bring bought over by Google, I have been searching for a replacement. I tried Mailbox on iOS and it has proven to be useful for powering through my unread items. Airmail is a worthy successor to Sparrow on the Mac. However, due to bugs with Airmail, I switched back to the default Mail app.

The Mail app has improved tremendously since the last time I tried it back on OS X Lion. In fact, it has comfortably become the only email app that I use. The only thing I miss is the ability to sort through Gmail tabs, but the lack of such a feature does not stop me from using it.

7. Reeder (iOS/Mac)

Ever since Reeder was released on iOS, I have been using it to browse my RSS feeds. When Google Reader was closed down by Google, Reeder did not work until it was updated to support other feed syndicators. During that period, I tried options such as Feedly and Digg Reader, but I didn’t like them. When Reeder 2 for iOS was launched, it immediately became the only RSS feed reader on my iPhone and iPad. Reeder 2 for Mac was released a year later, an agonising wait during which I had to rely on other apps.

8. Pocket (iOS/Mac/Web)

Pocket has become such an integral part of my content consumption workflow, and a big aid in improving my productivity and reducing distractions. I save articles and videos to Pocket, instead of opening them to read and end up being distracted. Content from all sources are funnelled into Pocket, be it from emails, Reeder or links my friends share.

9. IFTTT (iOS/Web)

Automation takes repetitive tasks out of our hands and frees up time. IFTTT plays an important role in sharing content across platforms, such as automatically posting my Instagram photo on Twitter as an image.

10. MarsEdit (Mac)

This entry was drafted in MarsEdit. If you are a blogger, or create content for a blogging system, you should consider MarsEdit. It has transformed the way I blog and spurred me on to blog more frequently. I really like how I get live preview of my entries alongside the editor. The preview is configured to pull CSS from my sites so I get to see exactly how the articles would look like as I type. Markdown support is a plus.

Samsung shutters flagship London store amid falling sales

http://www.theverge.com/2014/12/24/7446097/samsung-experience-store-westfield-closure

Along with a centrally located Oxford Street shop, this was Samsung’s biggest — and thus most expensive and ostentatious — exhibition space in London. Samsung made a big point of promoting its Experience Stores, making them the destination to get the very first Galaxy S4 and, later, S5 units sold in the UK, but excitement and sales have apparently petered out after a strong start.

Drop in profits seem to be hitting Samsung hard.

Android hardware profits tanked in 2014

Ina Fried wrote on Re/code about Android hardware profits tanking in 2014.

While Android continued to gain market share in the global smartphone market, it saw a significant drop on another key metric: Profits.

Analyst Chetan Sharma estimates that global profits in the Android hardware market for 2014 were down by half from the prior year — the first year that there has been any significant drop.

A lot of that is due to the big drop in profits at Samsung, the largest player in the Android market. China’s Xiaomi gained significant market share, but is only modestly profitable thanks to its slim margins. Meanwhile, other players like Sony and Motorola lost money in their Android-based mobile businesses.

The race to the bottom continues.