Tag Archives: Apple

Innovation is not only technical

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Invention, which is to say, innovation, is dealt with in entrepreneurial circles all the time. It’s dealt with so much, it borders on singularity. It has gotten to the point, in fact, where innovation and entrepreneurship have become synonymous, at least in some of these circles. This is understandable, because enterprise must always introduce new things – even if these are merely improvements of older ones – in order to grow, or, to begin with, get noticed. Less understandable, however, is the relative scarcity of discourse around a subject that is as important to entrepreneurs as that of invention: the context in which invention occurs, which is to say, the human experience. One could argue, just to be argumentative, that in the past several years the most successful new ventures in digital media and related technologies have been quite light on innovation. One could argue, just to raise the point, that these companies have, on the contrary, excelled in a most untechnical field: the humanities.

For example, there is Zynga, whose consumer-facing platform is, on the surface, uniquely un-innovative; the company almost takes pride in this. That Facebook launched and thrived at a time when MySpace and Friendster had already introduced the social networking idea and its general framework is well known. For the hundreds of millions of Twitter users, that platform’s technical weakness has become a feature (i.e. the Fail Whale). Yet these companies became enormously valuable because they hit home where it most matters, and where hitting home is the most difficult to do: with people and their fickle ways.

An even clearer illustration of the point may be the contrast between Apple and Google, both technologically ultra-superior but approaching the market from diametrically opposite directions. Apple, on one hand, uses its technical prowess in a highly controlled, highly designed, almost artistic style of product creation, with emphasis on popular appeal through esthetic form. Google, on the other hand, is a rapid-fire new-product launching pad, brimming with features and dazzling functionality. Apple has turned media, telecommunications, and entertainment on their respective heads through a handful of sector-defining innovations. Of Google’s dozens of product launches, we still mainly use it for search (and email). Almost all of the popular others, such as YouTube, Earth, Analytics, were acquisitions, and Android is a platform rather than a product per se. Google famously emphasizes engineering above all else, while Apple’s CEO prizes his study of calligraphy and has, in addition to Apple (more than once), also created a movie company called Pixar. The relative stock charts of the two competitors illustrate their respective trajectories.

To be clear, the argument is not in favor of the arts (or the humanities) at the expense of technology, but in favor of the combination and against either one alone. The argument can, in a certain sense, be distilled to Groupon Now versus the myriad ad placement and filtering platforms that presently populate the world of web media. The Internet ad networks, exchanges, and other intricate targeting mechanisms are built on highly complex algorithms that seek to improve the efficiency of contextual placement through demographics, time sensitivity, page location, click-through functionality, and a variety of other nuances designed to extract the additional fractional penny from a low-margin advertising product. This is pure technology. Groupon Now, undoubtedly complex behind the user interface, is built on two consumer-centric options – “I’m hungry” and “I’m bored” – which, come to think, summarize the human condition absolutely. Groupon has grown to $1 billion in net revenues in less than two years, although it has invented little.

What Groupon, Apple, Facebook, and others mentioned or unmentioned in this article seem to grasp, is that human nature can’t be understood by algorithm. And even if it could be – although it can’t – but even if it could, the builder of the program would first have to understand human nature.

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Mass movements & collective thought where we expect independence

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When you read a book that rings true, you are bound to see its insights everywhere you look. Reading Eric Hoffer, it’s possible to come away seeing mass movements everywhere, and in so doing apply Hoffer’s observations about the causes and effects of these universally. Although composed as a socio-political thesis, The True Believer does not have to be taken literally – that is to say, as a discourse on religious and political movements strictly speaking. If regarded from the perspective of collective behavior more broadly, such movements can be seen in many other realms, and it’s mainly a matter of how far from the literal bulls-eye one is inclined to travel.

In a sense, consumer trends are mass movements. In some cases these even border on fanaticism and party lines in the manner they are prone to behave. Apple “fanboys,” for instance, can undoubtedly be as animated and steadfast a group as any of the early bolsheviks. The reverence, allegiance, and indiscriminate support for all things that Apple represents for members of this circle are only a nuance away from religious passion. (I kid, sort of, though often feel myself swept up in the emotion.) But there are other consumer trends we can point to, surely, considering the ways that some spring up with nearly miraculous speed, breadth, and magnitude. Perhaps the very terminology of “network effect” – used to describe the value of a product that exists as a link between large numbers of users – is in a sense an allusion to mass movements in consumerism.

Another realm in which lately I detect such traits – in an almost political sense that at times makes me uncomfortable – is entrepreneurship. This field is now populated by recruiting missions (e.g., pitch contests and demos), rallies (e.g., meetup groups), organized message dissemination (e.g., venture blogs), and all manner of more blatant propaganda that can hold its own with any of history’s best campaigns. There is even villainizing of the enemy: That would be a corporate job, especially on Wall Street. Whether or not these initiatives offer legitimate support and advance a noble cause is not the point, as many mass movements – in fact, according to Hoffer, all of these – are born from necessity and practical circumstance. The point, rather, is whether individual decisions are made in bulk, on the basis of collective rather than individual reflection.

While we’re at it, we should also consider if trends such as a market run-up that nearly defies reason, angel investing that seems almost in vogue, secondary private trades for a concentrated basket of names – in short, the bubble whereof so many lately speak – is not also another term to describe mass movements. The subject of herd investing was discussed previously here, and regardless of whether we are now experiencing a bubble or not, the fact remains that capital is being funneled into singular directions en masse. This too is a movement, even if not political, or social, or religious, although in certain figurative respects it is a little bit of all these things.

In any case, the subject is complicated, and is probably not interesting as an observation in itself, but rather as a way of understanding market patterns. To the extent that these are sometimes based on mass behavior – that is, of a collective whole rather than confluence of individuals – Hoffer’s explanations of such movements can help us to see economies and enterprise more completely. By extension, we can also consider asset valuations and the drivers of these in a farther reaching context. Lastly, Hoffer’s book is fascinating as a subtle academic study composed by a self-taught longshoreman who worked the San Francisco docks between library visits: A true independent, an entrepreneur in the classic sense.

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Apple’s commercial disruption still ahead

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When the Internet disrupted the retail experience with online commerce, this was only the start of commercial disruption. Although the effect of it can’t be understated – as we watch Borders and Blockbuster file for bankruptcy almost simultaneously, while Netflix and iTunes thrive, and as we see online purchases of hard goods expand at the expense of offline shopping – these changes pertain to only one aspect of the consumer experience: the form of procurement. In the more comprehensive context of merchant-consumer interaction, we are now beginning to see the other pieces adjusting to the pattern.

Advertising – which has served the perennial intermediation function, (i.e., the form of solicitation, bringing customers to the store) – was initially invaded by networks, exchanges, lead generation technologies, and other filters that in ways have diminished rather than enhanced efficiency. But that was nothing, that wasn’t really disruption. The disruption is happening now as the segment rapidly migrates to the much more expeditious, much more effective, consumer solicitation: direct offers. Coupons, daily deals, flash sales, Groupon and its many clones… these are the new means of advertising, these and not display ads are the new hook to bring the transaction home. By way of evidence, Groupon has gone from nothing to somewhere approaching $1 billion of net revenue in less than two years’ time. That is $1 billion in commissions for merchandise hand-offs worth a good deal more.

And as much as the above may seem monumental in its potential to change competitive landscapes, this still only scratches the surface when compared to what may prove the far more profound and universally impactful prize: the form of payment. Whether online or off, whether by way of conventional advertising or by way of daily deal, the one aspect of commerce that will always be its defining core is money changing hands. The way in which this occurs – credit card swipes and online checkouts notwithstanding – has been standard fare for some time, and has brought comfort to its enablers for (what seems like) ever. Banks, finance companies, credit card issuers, point of sale vendors, and other participants in the system have rested on more or less firm ground. But what’s progress if not a way to crack those solid surfaces? Here it comes:

Apple introduced its second-generation iPad the other day, and amid the gasps and sighs and tearful disbelief there was a smaller announcement that was nearly lost in the commotion. The company has in the last two months alone sold 30 million iPhones. As enormous as this figure may be, it takes on far more staggering proportions when it is understood that an iPhone is no longer just a mobile device for personal communication and entertainment, but is expanding its domain into point of sale technology, receipt processing and collection, and consumer payments. iPhone-integrated platforms like Square make it possible for the retailer to do without a stationary register; barcode scanning apps make it possible for prices to be checked, discounts to be credited, and receipts to be tallied up; and iTunes integration will allow consumers to leave their wallets home.

The effect of these new ways and means is still at this moment mild and, as it were, in beta trials. But changes happen fast these days and mass acceptance can be almost instant. As it so often seems to do, especially with hindsight, Apple plans out its moves and the sequence of its product introductions with a long-term view. And often these seem to come together elegantly in a natural package. While we have all paid close attention to the high-profile rollouts of the iTunes Store, the iPod, the iPhone, iPad, and other Apple products, many of us have been less mindful of Apple’s retail outlets, which have been opened in the past several years. Or, if noticing these, we considered the strategy to be marketing related. These stores, however, have also served another purpose: They have allowed Apple to study and understand offline retail, they have allowed Apple to test new retail features and systems inside its own controlled laboratory. And with the experience under its belt, with 100 million iPhone devices now sold, Apple proves still to be thinking far, far ahead, where the rest will follow.

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The long tail’s value to the vital few

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In recent commentaries about the business of journalism and blogging, the power law is invoked with sundry associated notions about long tails and the 80-20 rule. In a variety of contexts, and supporting a variety of arguments, the case is typically this: In publishing (and the same holds true for other media, no doubt) the top 20% of popular content generates 80% of readership and, by extension, the vast majority of media economics. The remaining 80% of published content – the long tail – produces a fragmented and marginal return. The principle, as illustrated here in a specific manifestation, describes the impact of all top performers, not only in media but in all realms marked by a multitude of performers who compete.

I am wondering, however, about a different relationship between the long tail and the vital few – one that is maybe as important – and whether studies exist to quantify it. In particular, I am thinking about the support that the long tail provides to the concentrated top end, (as opposed to the mere proportion between them). As I understand the statistical observations described above, these enable us to estimate the relative distribution between parts, and are not ways in which to take the absolute measures. But maybe there is also another correlation – beyond the 80-20 and 20-80 – that has something to do with the positive effect of the tail upon the vital. Is it possible, for example, that the few are made more valuable by the existence of the many? Not by comparison, not as a result of grandeur through contrast, so to speak, but absolutely, as a result of enhanced flow.

To rephrase the question less abstractly, returning to the subjects of journalism and media with which I began, can it be said that the most popular articles will be more widely read as the long tail increases the size of the overall audience? Intuitively, one might think so. And one would think that it is in the interest of the vital few for the long tail to thrive, because out of it arises interest, attention, participation, and larger scale. Until I stumble upon one or two statistical studies to prove or disprove the correctness of my intuition, let’s go along with it and, in so doing, digest some of the latest news in media accordingly. A few examples:

AOL’s acquisition of Huffington Post, after TechCrunch and Engadget, marks a content consolidation play that is not a diminution of the long tail, as each of the acquired properties is kept intact with the full fragmentation of their respective authorships and audiences. This is a different variation of a similar theme at Demand Media, Yahoo!, and for that matter AOL itself, as these all continue to publish selections from the popular filter in which the long tail is the breeding ground. Finally, Apple’s new publisher subscription system can, in one respect, be seen as aimed at the long tail of published content, and a means to enhance the distribution of media’s less popular base.

If my thesis about the value of the long tail to the vital few is correct, Apple is – in one respect, and seemingly unbeknownst to popular media outlets – doing them a potentially good turn. Whether Apple’s 30% cut of the action (and ownership of user data) is appropriate for the value created, that depends on math and studies and economic substantiation. I’m only going with my hunch, and maybe so is Apple for now.

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Time for Google to embrace its role and thrive

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To make a point, we will consider the case that follows on the basis of generalities and absolutes. This won’t be a pure mirror of reality, because in reality there are differences in nuance, shade, overlapping definitions, and all manner of other murkiness that keeps most arguments from ever truly transcending theory. Nevertheless, there is sometimes a bit of truth in theory, and we rely on it when reality is difficult to pin down due to its complexities.

First point: It is increasingly possible to segment the new media landscape into three categories – information, entertainment, and social, (leaving aside for purposes of the present discussion the more recent manifestations of transactional, the subject of a previous article here). Second point: It has also become accepted that Apple, Google and Facebook are now the dominant forces in the industry. Third point: It follows, I believe, that we should be able to assign each of these three a leadership position to correspond with one of the three sub-segments, in such a way as to preserve their individual dominance without overlap and establish a boundary around their leadership domains.

For the sake of simplicity, we can start with the most obvious designation: Facebook is the lead in social media, and this statement requires no belaboring. The next case is perhaps less straight-forward, because there is more overlap between the subject competitors in the entertainment segment. We give the lead, however, to Apple on account of its iTunes and App Store prowess, the iPod/iPhone/iPad trio that deliver the entertainment possibilities of iTunes and the App Store in a way still unmatched by any other platform, and Apple TV, which, among its peers in web-television hardware-software combinations, is the front-runner of the pack.

This leaves Google with information media, the remaining chair in the game. But it is more than process of elimination that brings us to this point, because Google – synonymous with “search” – really is about information. This is a notion that should be as obvious, on reflection, as Facebook’s synonymity with social media. If such a conclusion is not always automatic and maybe even at times debatable, that’s because Google has made efforts in the last few years to expand out of its natural zone and define itself broadly. It has tried to compete with Facebook in social, it has tried to compete with Apple in entertainment (and other things), and it has tried to enter a variety of new fields even. Despite all these attempts and their mixture of results, Google remains the lead in information, almost without trying.

Now, while Google has been restlessly seeking to branch out every which way, its co-leads in industry domination have for the most part stuck to their core. Apple did put forth a half-baked attempt to enter social media, but Ping is really an adjunct feature of iTunes – an entertainment product. And, yes, Facebook has talked about search, but really as a social media tool and most notably in partnership with Microsoft. All the while, both Apple and Facebook have worked diligently to perfect their respective cores and foremost to explore new angles and new areas within these.

Can the same be said of Google? Has Google made an honest effort to explore all the possibilities of information media – a field that extends far beyond search – and has it sought to redefine what information media means… that is, in a similar way that Apple and Facebook have done in their fields of entertainment media and social media? These questions are asked rhetorically, because on the surface the answer seems to be in the negative. Now with new leadership, or with the same leadership in a new format, perhaps there is an opportunity for Google’s approach to change. Maybe a focused segment vision, as described, can unlock enormous potential and tap into untapped value yet.

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Apple, Facebook, as they age

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It has been a week of large and unexpected change in digital technology. The week began with Apple’s announcement about the departure of Steve Jobs and his temporary replacement by Chief Operating Officer Tim Cook, and it is ending with Google’s announcement about the departure of Eric Schmidt from his Chief Executive Officer position, to be replaced by Larry Page, who will be focused on execution. A COO emphasis at Apple, and execution focus at Google. Such perfect bookends for a week to kick off earnings season.

These themes taken together serve to remind us that the sector is entering a season of maturation. In one way or another, we talk about maturity and mature issues when we talk about operations, execution, big changes at high levels, and for that matter very sizable cash balances that continue to accumulate. To be clear, maturity in the context of this article does not imply diminished growth, but a diminished rate of acceleration, at least in contrast with the 10-15 years past. Attention to detail and competitive positioning, in this context, takes on paramount importance, and a COO background for the CEO may be the ideal calling card. (The subjects of innovation and execution were covered in a previous article here already.)

And when we talk about such mature issues involving Google and Apple, we really should not leave out Facebook from the discussion. Because just as Google may be challenged to find a substantial growth area outside of its core search business, and as Apple may not be able to continue its 10-year roll of disruption much longer (iPod, iPhone, iPad, etc.), so too Facebook is at some point going to test a few limits. For example, December data shows that Facebook’s U.S. growth has probably plateaued, with the U.S. contributing only 5% of new users during the month. Applications supported by Facebook are arguably only beginning to crystalize, but revenue growth will always be closely linked to user growth, and the subscriber statistic referenced is not insignificant.

All of the above notwithstanding, it’s too soon, undoubtedly, to throw around maturity labels – especially in any financial sense – in a discussion about Apple, Google and Facebook. Nevertheless, it may not be too soon to speculate and to think about next steps for these three sector giants. Projecting out a few years… what? And what, especially, given market valuations predicated on growth for a long time to come, (in the case of Facebook most of all)? In mature industries – say, like digital technology and consumer media in a few years, when Zuckerberg’s like 30 – participants begin to consider consolidation possibilities or other strategic combinations. (In the media industry more recently, the cable segment consolidated, and then Comcast bought NBC.) Projecting out a few years… what will Google, Apple and Facebook muster up?

Oh, I don’t know, but it is great fun to speculate, and as I play around with permutations and combinations among the subject trio of this article, my conclusions seem always to point to one likely outcome: Apple and Facebook. I usually begin my speculations with the idea that Facebook’s vulnerability will always be the sources of its revenue, which will always create an internal conflict with Facebook’s source of popularity – private user information. Were Facebook not under pressure to make money, this conflict would not exist. By extension, Facebook can only reach its full product potential when advertising revenue is eliminated from its business picture.

A combination with Google will not resolve this issue, but will in fact aggravate it, and for this reason (among others) any strategic combination between Google and Facebook is likely to face some regulatory obstacles. Apple, on the other hand, does not sell advertising. Apple, moreover, quite possibly never will. Apple sells product as a hardware vendor, and Apple sells software as an app retailer. In neither of these cases is the use of private data of any consequence or advantage. What Apple does not have, however, is a network with a network effect, and this adds pressure to the company to keep creating new products that are better than last year’s, every year.

Now, we’re talking about a maturation scenario, remember, in which Apple at some point in the future may no longer be able to keep this up. And we’re talking about Facebook in a scenario in which subscriber and advertising growth are in a natural state of tension. Would it not make sense, at such a point, for Facebook and Apple to combine in a unified business model that does not require advertising or use of private data, and that is based off a unified content distribution platform? Considering the emphasis on operations, execution, and sundry subjects of maturity for all parties involved, maybe this point arrives sooner than one would expect. And anyway, why wait?

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Growth by execution: Apple leads the way again

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The situation at Apple is emblematic of the broader media and consumer technology segment in some ways. In other ways, the rest of the sector population could only wish that Apple were emblematic of it. The second comment alludes to Apple’s stellar earnings report, handily beating all expectations. Any company, in any industry, would wish to be like Apple at such a time. The first comment, on the other hand, refers to a different reference point, one having to do with the descent of invention and ascent of execution in the ranks of relative visibility – and relative value – for both Apple and the industry it leads.

Coming out of a 10-15 year stretch during which Apple, and consumer media more broadly, gave rise to a string of innovations that is unprecedented, such a run will be difficult to sustain. For Apple, the list includes iTunes, the iPod, the iPhone, the iPad, Apple TV, and the App Store – all of these segment-redefining in greater or lesser degrees. For the Internet, the list includes Google, Facebook, Twitter, now Groupon, and Apple. While we can’t go so far as to claim that popular media innovation has reached its absolute limit, a case can be made that probability at this point favors incremental adjustments – a steady progression of enhancement – rather than revolution and the breaking out of brand new systems. There are only so many times that telecommunications, consumer devices, and popular entertainment can be torn down and recreated in the span of a generation or two, let alone 10-15 years.

Still, while the social network can no longer be invented, it can be perfected. Digital communication exists, but can be improved. Digital advertising is everywhere, but has a very long way to go. And online commerce is only beginning to test out possibilities, despite having been around since Amazon and eBay. As Apple has just demonstrated, substantial growth can be realized even if only one novelty – and really just a giant iPod Touch at that – is introduced in the course of a year. Growth is now likelier to happen on the heels of execution, successful competition, and tight management.

With all this by way of background, the Apple news that everyone has been thinking about these past couple of days can be taken in context: The unfortunate departure (hopefully temporary, if not brief) of Steve Jobs from his regular position. While this is truly sad for Mr. Jobs, it is not catastrophic for Apple, and the stock market seems to agree. It is to Mr. Jobs’s credit, in fact, that he has succeeded to implement a system, a set of values, and a brand, that necessitate his presence less and less to preserve at Apple. Given the more probably evolutionary than revolutionary changes in the industry ahead, a well oiled machine with emphasis on operations will fare quite well. Competitors, entrepreneurs, innovators, investors, should take note, as Apple once again leads the way into what will undoubtedly be a lasting trend: To grow by execution.

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A deal surge in media, which is actually commerce

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Upon the report of a major Facebook financing, registering third after Groupon and Twitter had also announced spectacular funding rounds in the space of one month, the question was asked: What about Zynga and LinkedIn? Where are they in this spectacle? Such a question implies that there might be an indiscriminate craze for the best names in media, and that the popular names absent from festivities may soon arrive upon the scene as well. This could certainly be the case, and perhaps even beyond Zynga and LinkedIn there are other spectacular rounds being planned as we speak, some of which may well provide the “bubble” chatter with all sorts of additional nourishment. There is, however, a different way to see recent events, so that the particular selection of three names – Facebook, Groupon, Twitter, (in size order) – no longer seems incomplete but rather very particular. And by the same token, the absence of Zynga and LinkedIn and others would come across as less of a lapse than a different grouping entirely – one that does not belong in the pattern at all.

Putting size order aside for the time being, and forgetting relative valuations and the appropriateness or inappropriateness thereof, the key to the question is one of definition. Because Facebook’s is the largest and most recent of the three deals, we may be inclined to see it as the defining event, the anchor transaction by which the other two are to be taken in. By that standard, the three deals are milestones in social media involving the most outstanding names in the field, and by that standard it is correct to wonder where the others are, (for example, Zynga and LinkedIn). But what if the defining event, the anchor transaction, is not Facebook at all but instead Groupon? Seen in this light, from the special angle of what sets Groupon apart, then the trio of situations is not anything like popular media at large, or particularly even social, but three unique platforms that facilitate retail and online commerce in specific ways, and that may find themselves at the start of a massive industry evolution. Seen in this light, Zynga and LinkedIn simply don’t belong, but Yelp or Foursquare or Gilt well might.

From such a perspective, the eye-popping surge of Facebook, Twitter and Groupon in the world of private investing, may have fewer public market parallels at, say, Google, Microsoft, Aol, or even Apple, than they might at Amazon and eBay. Out of the first-mentioned group, Apple (also surging) is closest to e-commerce (ref. iTunes and the app store), and Google is, for a variety of competitive reasons, most anxious to get in. (I note, by way of evidence, the effort made by Google to acquire Groupon, and I suggest, by extension, that Twitter may not be a terrible second choice.) This being neither here nor there, I would nevertheless put forth, and with confidence, that the notion of Apple, Google and Facebook dividing the world between them – a notion that among industry observers has for some time become a standard rule of thumb – is a flawed and antiquated notion. We should not rule out the commerce plays: Increasingly the distinction between commerce and media is being blurred. (I note, by way of evidence, that Groupon has begun to direct much attention to editorial quality and is providing organized training to its copywriters, as though it were a real content shop.)

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New banks for a new economy with old strengths

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It is said that America is good at technology innovation, and it is easy to understand why this is said. Companies like Microsoft, Oracle, HP, IBM, Intel, and a host of others have established a firm competitive foundation dating back decades or longer. It is also said that we are good at media and entertainment – fields that have straddled with technology to form an integrated segment – and major innovation by Apple, Google, Netflix, and for that matter Facebook and Twitter and countless advertising networks and related platforms, have provided ample basis for saying so. Lastly, it used to be said, before the financial turbulence of 2008, that we are good at finance. Say what you will about Wall Street, but it’s had a solid run and has been at the forefront of global money flows for more than a century. Let’s hold on to these thoughts, to which we will soon return.

A couple of financial trends have been observable lately, which warrant attention: While on one hand certain businesses are unable to tap into capital markets for being too small, others, at the opposite end of the size range and with ample access to funding of all sorts, have been hoarding their profits and preserving cash. This latter trend – particular to the present time – appears (interestingly enough) most pronounced in the assortment of sectors identified above, and especially within the group of afore-named technology and digital media titans. (The hundreds of billions of dollars on the balance sheets of these corporations are of special significance, moreover, for being relatively unencumbered: these are all companies with clean and comparatively debt-free finances.)

And so it seems strange – doesn’t it? – almost counterproductive and a missed opportunity, that while important parts of the general economy are in distress on account of either inadequate capital access or too much debt, there is perfectly good cash without offsetting liability just sitting there, and continuing to pile up. This cash, moreover, is being hoarded by corporations with a substantial vested interest in the well-being of our economy.

Where this collection of observations and economic considerations is leading to, is the following suggestion: It may behoove the listed cash-rich technology and media behemoths (and others) to use portions of their cash piles to establish finance companies. In so doing, our national skill set, our strengths in innovation and financial product, would be combined for optimal economic benefit. The subject entities could use their massive excess capital to make loans to small businesses that can support such loans, or equity investments into businesses that need to deleverage or to finance growth but are limited in their access to financial capital, or venture investments in startups that may be constrained by a shrinking venture segment.

It could be quite lucrative for the described companies to pursue such tracks – financially, if the return exceeds that of idle cash, and strategically, if the targeted counterparties represent vertical integration or other expansion opportunities (including local manufacture of technology) or potential customers for end-product. (The model described, incidentally, was implemented with good results – until excesses proved detrimental – by GE Capital for three decades. Excesses don’t negate the idea or model, but may serve as a cautionary tale moving ahead.)

Of course, there is at least one imperfection in the argument laid out, notably in regard to the proposition of idle cash that is hoarded. There is no idle cash, technically speaking, as long as this is not stored in safety-deposit boxes and under mattresses in Silicon Valley. Rather, large quantities of such cash are invested in Treasury securities, and the tech segment is thus already a banker of sorts, only not to the private sector. This is a major issue that needs to be addressed, because competition for private capital from public sector demand does not bode well at all, for any of the parties concerned. But that is a whole other can of worms that would exceed the scope of this narrow article.

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Unity: the next stage of Apple’s value proposition

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The rare and much publicized appearance by Steve Jobs the other day, during Apple’s quarterly earnings call with analysts, was falsely interpreted by tech punditry as a rant. More likely this was, in keeping with Apple custom, choreographed. The point of the so-called rant was not to vent or complain or to do any of the emotionally charged mischief commonly associated with ranting, but rather to set the stage for the more obvious choreography that would be on display two days hence. The central subject of Mr. Jobs’s monologue on the analyst call was unity, (in opposition to fragmentation). The most important announcement made during Apple’s new product rollout that followed was a new OS X operating system that is set to unify the Apple desktop and mobile experiences. For the consumer, the two will move towards each other in appearance as well as functionality.

The direction that Apple is thus pursuing – a direction that its CEO alluded to quite strongly in his impromptu visit with the spreadsheet scribes – is to create a universal standard, rather than keep building mobile and desktop products separately. Carrying the Apple imprint, this standard will not only be recognizable from afar by the consuming population, but should as a result of its consistency be easier for developers and publishers to populate with content. Regardless of the Apple device that we would choose to utilize at a given time and for whatever purpose – iPhone, iPod, iPad, Macbook Air, Macbook Pro, iMac, or Apple TV box – the home screens will interoperate. No readjustment required, no translation necessary, no settings to get used to. That the interface, moreover, happens to be beautifully designed and functionally sleek surely won’t hinder enjoyment.

In the mass market, as in many things, unity has its advantages and a record of success. Consider the keyboard, the remote control, the website layout with horizontal headings on top and finer print at the bottom, the menu bars of web browsers and email clients that resemble the menu of any Windows product. Regardless of individual peculiarities, the form factors are largely the same. Consider the layout of newspapers, of magazines, of city traffic. There is a comforting quality about steadfast repeatability and consistency. In a media consumption environment, variety is rendered through fragmented content selections, so that inconstancy in the viewing interface can be a counterproductive excess.

If Apple’s principal market alternative, Google’s Android platform, will ever come to boast any kind of universality, it will have been purely accidental – offered as it is through a multitude of independent vendors, each customizing and altering the product until there really is no Android per se for the consumer, but only, really, for developers and other techies. Openness, Android’s principal differentiator, may have been advantageous if there was a shortage of customized content in the marketplace. But this hasn’t been the case for some time. If Apple’s closed system makes it difficult to procure an app that counts the bristles on a toothbrush, this in itself is hardly a wide enough window to push an opportunity through.

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