Is Apple forcing us to rethink on how to innovate

There is something very disturbing about the success of Apple. Many a management guru has talked about the importance of openness, listening to customer and building partnership in fostering innovation. Here are 3 strongly held beliefs which Apple had been ignoring with impunity.

  1. Openness and diversity fosters innovation
  2. Listening to customer is stepping stone to great product
  3. Building an ecosystem around your product is prerequisite for market domination

Just look at these actions of Apple in the recent past.

These steps appear to be whimsical and there are unhappy users who are even willing to switch. Here is one – “…I used to feel that, to get the best Smartphone software and hardware experience, I had to live in Apple’s walled garden. Now, the walls are getting higher and life outside the garden looks better and better…”Apple is erecting a walled garden around its platform. If Apple wanted they could have easily retained these people – all they had to do was to relax the iron grip a little. Also, Apple could have taken several steps to increase their market share like signing up with more carriers.

So … Is their success “because of” or “in spite of” these actions?

It depends on what you define as success. Though there is lot of commotion in the internet about Apple overtaking Microsoft on market cap, if you take a dispassionate look their financial success is not really spectacular.

  • Market capitalization – It is like saying Juan Martín del Potro is more successful than Roger Federer because he has beaten Federer in 2009 US Open. Microsoft had held that position for years. Only during the dotcom boom in 2001 Cisco overtook Microsoft for a brief period. Microsoft.
  • Revenue – Apple is definitely not the leader. Top 5 IT companies are HP, IBM, Dell, Microsoft & Oracle!
  • Profitability – There is a company called Google whose profitability is 35%+ compared to Apple which is around 20%.
  • Market share – I vaguely recall that there is a company called “Research In Motion which” has 7% more smart phone market share compared to Apple.

So, Apple’s success is not very unique if you only take these financial parameters into account. However, if you measure it by the loyal fan following, I do not think anybody can come close to Apple.

Here are 3 interesting quotes I have picked up from a post by Farhad Manjoo – Invincible Apple: 10 Lessons From the Coolest Company Anywhere

  • “…That’s Apple’s audience: high-end mainstream, the folks who buy — or aspire to buy — Porsches…”
  • “…Apple cultivates religious fervor among its adherents in a number of subtle ways, including its mysteriousness and its suggestion that customers are among the chosen ones…”
  • “…If you want to live in the creative universe where anyone with a cool idea can make it and give it to you to run on your hardware, the iPad isn’t for you…”

Apple chases away customers who are not diehard Apple fans. Apple fans will gladly pay premium for anything. Apple is also systematically plugging holes for possible revenue leakage. What Steve Jobs is saying is – “I am only interested in the premium segment and I do not want to share any part of the kitty”.

Should we learn from and emulate them?

Farhad offers 10 lessons but what he forgets to say is that to make use of this advice you need to…

  1. … be a genius like Steve Jobs (there is no doubt that he is a genius – nobody else in the history has designed 5 path breaking product)
  2. … hit upon a technology which your competitors cannot match even after 2 years (nothing yet comes close to iPhone/iPad touch screen)
  3. … be at the right place at the right time where you can redefine a product category (iPhone did exactly that)

Otherwise, it would be wiser to stick to the traditional mantra of “Openness”, “Listening to Customer” & “Building Eco-System” for product innovation. Even Apple does not always get it right. They always designed beautiful products but it did not help them to get even 10% market share in the PC market.

Finally – If you are an Apple fan DO NOT read this – Apple’s iPhone 4: The joke’s on us.

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Android – Can you afford to ignore it

Yes – I suppose you can ignore Android if you only work on the server side and have nothing to do with how user interacts with your application or you have taken a vow not to touch anything that has Java in it. Otherwise it may not be very wise to ignore Android. Did you know that…

  1. In Q1 2010, Android based phones outsold iPhone in US – Report from OSnews
  2. Google TV which is scheduled for launch on fall 2010 will run on Android – Announcement on Google Blog

So What?

Till about 2 years back most computing devices which end users used were PCs or laptops running some version of Windows (I am sorry Mac or Linux users – you were in small minority). Release of iPhone changed all that and created a new category of user interface device called smart phones. There followed a rush of application which would run exclusively on iPhone. Though, mobile devices and mobile applications were around for some time it had not been popular.

Now the release of iPad is threatening to create another new segment of user interface device called tablets. Again, tablets were around for a long time but it never really took off. It looks like iPod will change that. Google TV and a possible revamped Apple TV is likely to create yet another class of user interface device.

In short, the types of devices through which users are interacting with computer are proliferation. This trend is likely to continue and we may see more types of devices coming up in the future.

And, they will all be programmable and they will all have an operating system. What will that operating system be? Unless it is a device from Apple it is very likely to be Android!

Why not Windows?

Windows will remain dominant on PCs and Laptops (not sure about Netbook) but it is very unlikely to do so for these newer forms of devices. Look at these facts:

  • For smart phone, windows have not worked
    • It has less than 20% market share and it is shrinking – about 2% per quarter
    • On the other hand Android share is growing rapidly – about 2% per quarter
  • For Tablets, windows have not been very successful
    • HP Hurricane Tablet will probably use Web O/S (result of Palm acquisition)
    • Dell Streak Tablets will be Android based
  • Google TV will run on Android

So … not much of windows … lots on Android!

Have I forgotten Apple?

Though iPad has sold more than 2 million in such a short time and iPhone has managed around 28% smart phone market share in US – Apple can never dominate the market the way Windows did.

Not unless all other smart phone manufacturers (Nokia, Blackberry, Motorola, HTC, Samsung, LG, Sony-Ericson …) go out of mobile business. Somehow, I don’t see that happening!

Why can we not stick to browser based thin client applications?

Don’t forget that we are having so many types of devices because each has some distinct feature and set them apart from the rest. Obviously, user will definitely like the applications to leverage them. Browser based applications, unfortunately, cannot take advantage of the native power of any of these devices.

Sure, some of the applications running on these devices would be browser based. But, the new generation of applications will need to take advantage of the unique power of the device.

As of March 2010, Android App Store market had 35,000 applications and the number has been doubling in about 3 month’s time.

What is special about Android?

Android is open source operating system specifically designed for touch phones. Though Symbian, promoted by Nokia, is also open source it was designed for previous generation of mobile phones. It has been steadily losing market share. Palm Web O/S is powerful but it is proprietary. The current owner HP intends to use it for its tablet.

Report from OSnews (see the diagram above) indicate that Android devices have just started outselling iPhone. Even Gartner predicts that Android will grab No. 2 spot by 2012 in smart phone market.

Google benefits by openness!

Google wants open access and open standard. It is to their advantage. That is how their business works. They will strive to make Android as open as possible.

Open Source applications becomes stable and more powerful over a period of time. There are so many examples. Not only do you have Linux, you have Apache web server, MySQL database, Mozilla browser, Eclipse IDE … and many more.

You will see more and more powerful and robust Android cropping up all over place.

What if you are…

  • …a specialist in .Net
  • …only into applications which runs on a browser

You should still get to understand Android because the front end for your next application may be an Android device. Such device would not run Windows and browsers would not allow you to access the native device features of that device.

2 Things You Need to Know About Open Source Licensing

If you are familiar with different types of open source licenses – you can skip this post. Otherwise – read on …

There are 2 importing facts that you need to keep in mind when you use free software. No, I am not talking about talking issues like reliability, support, TOC etc. which gets discussed in the context of open source vs. proprietary debate. I am talking about the possible complications that may arise from the licensing terms of the free software.

  1. If you are creating commercial software and include open source code, then the some clauses in the license may compel you to make your software open source.
  2. If you include certain class of freeware as a part of your solution, you may still have to pay a license fee.

Before I answer the question “how to find out” if such problem exist with specific free software which you are planning to use – let me give a brief overview of the 4 types of licensing terms that are very common.

There are 2 characteristics which are common to all of them:

  • Self-perpetuating nature of the licenses: The license require you to include the copyright notice if are distributing the software as is or in a modified form.
  • Author has no liability: The software is provided to you in “as is” condition without warranty or liability.

Though each license may be different, they fall into 4 broad categories. Here is a gist:

  • Exclusively your headache license:
    • For this type of license very few limits are imposed on what you can do with the software. You can modify the software and also include them in your commercial product.
    • MIT License (ex. Ruby on Rails) is probably the first of this type of license.
    • BSD license (ex. BSD Unix) was designed to protect the reputation of the creator as any modification to software need to be clearly indicated and the name of the creator cannot be used for promotion as modified work.
    • Apache License also grants free use of any patented work contained in the software.
  • Down with proprietary software – long live free and open source license:
    • These are categorized under Copyleft License
      = “…the practice of using copyright law to offer the right to distribute copies and modified versions of a work and requiring that the same rights be preserved in modified versions of the work…” – Wikipedia
    • The basic principle is that you have free access to the software and you need to provide free access to any software which is a modified version. You also need to give free access to everybody on any software that you create using these types of software.
    • GPL – GNU General Public License (ex. Linux kernel) most common form of this type of license. If you are looking to create proprietary works, the entire universe of GPL-licensed software is closed off to you.
    • LGPL – GNU Lesser General Public License (ex. Mozilla) is slightly less restrictive allows to link to libraries without having to make your software also as LGPL – however, the libraries cannot be shipped together.
    • Creative Commons License or ShareAlike Licensee is normally used for work other than software.
  • Carrot and stick license:
    • This type is also known as Dual licensing where a limited version of the software is made available through one the above mentioned license – this version is known as community edition.
    • The full version of the software is proprietary and priced.
    • Eclipse, for example is available under EPL – Eclipse Public License. On the other hand IBM-Rational tools which are a derivative from Eclipse are proprietary and not free.
  • I want to make money if you do so license:
    • The author makes the software available free for non-commercial use. For commercial use you will need a license.
    • This is not an open source license – the source code may not be available.
    • The usage may be covered under a Binary Software License Agreement (ex – Scieneer Common Lisp).

How do these licenses get enforced?

If you are wondering about the legal validity of these licenses then rest assured that there is a simple explanation of how it gets enforced. It happens because of the existence of the copyright law.

Whenever you write any software you become the copyright owner. There is no need for you to go through any legal formality. Therefore, unless you allow others the use of your software through specific license you have the protection of the copyright law. So, if somebody refuses to recognize your license they are bound by the copyright law and anyway cannot use or modify your software. So, only way they can freely use your software is by agreeing to your licensing terms.

Neat – isn’t it?

How to find out if there is a problem?

Here are some more reference materials

If you have the time, patience and need then there is enough material available freely on the internet to answer practically any questions you may have. Good place to start is, as always, Wikipedia. You can even get access to some online books on this subject:

If you are searching for a particular class of open source software the following may be a good place to start

Should you open source your software?

Here is an interesting discussion on this – When you should open-source your internal apps