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From source to mighty flow

Jul 15th 2015, 12:06 by The Data Team

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IN THE summer of 1994 Jeff Bezos quit his job on Wall Street, and made for Seattle. With his wife at the wheel of their hired car, he sketched out a plan to set up an online catalogue retailing business. About a year later, the first book was sold by Amazon, a name Mr Bezos chose to reflect the giant scale of his ambitions for the company. The world saw a website selling books and assumed that the firm was, and always would be, an online bookshop. Mr Bezos, though, had bigger plans.

Today Amazon celebrates its website’s 20th birthday. In the last two decades it has changed how people shop—and much else. In the 1990s typing your credit-card number into a browser seemed insane; Amazon proved otherwise, sparking what is now a $1.5 trillion global e-commerce market. The Kindle, launched in 2007, popularised e-books, with low prices and instant delivery to the device. Less obviously, Amazon pioneered customer reviews and ratings, first of books and then other things. Professional critics were appalled; today everything from hotels to electrical appliances carry online ratings. And by renting out server capacity by the hour, Amazon catalysed cloud computing and powered internet startups from Netflix to Airbnb. Apple may have popularised digital music players, smartphones and tablets, but Amazon has arguably done just as much to shape the digital world.

NYT

Apple’s iPhone Continues to Break Tech’s Rules

SEPT. 9, 2015

Photo

Phil Schiller of Apple described the camera features of the new iPhone 6S at the company's event in San Francisco on Wednesday. Credit Eric Risberg/Associated Press

Farhad Manjoo

STATE OF THE ART

You will hear some carping, in the coming days, about a lack of revolutionary upgrades in the new iPhone. At its media event in San Francisco on Wednesday, Apple added just a handful of features to its latest smartphones, the 6S and 6S Plus, including a pressure-sensitive screen, better cameras and a new color — pink, or “Rose Gold,” in Apple’s marketing argot.

It’s the same kind of carping that happens every year. The iPhone is by far Apple’s most important product — it is, by most accounts, the single most profitable product on the planet — and for many analysts, that very significance highlights a vulnerability. So tech observers are once again wondering how much longer Apple can sustain the magic. Has Apple done enough to maintain its outsize lead in the industry? Can the iPhone still expect to vacuum up virtually all of the profits in the global smartphone business?

It’s time to ease off from the ritualized annual fretting about the iPhone’s future. After several years of uncertainty about the iPhone’s long-term prospects, it’s clear that Apple has maneuvered the device into an enviable position, whatever the merits of its latest features. The iPhone’s continuing dominance may not be a sure thing, but in the tech industry, it’s as sure a thing as you can find right now.

News Clips By REUTERS 1:26 Apple Executives Demonstrate New iPhones

Continue reading the main story Video

Apple Executives Demonstrate New iPhones

In San Francisco, Apple’s chief executive, Timothy D. Cook, called the new iPhone 6s and 6s Plus “the most advanced smartphones in the world.”

By REUTERS on Publish Date September 9, 2015. Watch in Times Video »

If this doesn’t surprise you, it should. In many fundamental ways, the iPhone breaks the rules of business, especially the rules of the tech business. Those rules have more or less always held that hardware devices keep getting cheaper and less profitable over time. That happens because hardware is easy to commoditize; what seems magical today is widely copied and becomes commonplace tomorrow. It happened in personal computers; it happened in servers; it happened in cameras, music players, and — despite Apple’s best efforts — it may be happening in tablets.

In fact, commoditization has wreaked havoc in the smartphone business — just not for Apple. In the last half-decade, sales of devices running Google’s Android operating system have far surpassed sales of Apple’s devices, and now account for the vast majority of smartphones in use.

State of the Art

A column from Farhad Manjoo that examines how technology is changing business and society.

For years, observers predicted that Android’s rising market share would in turn lead to lower profits for Apple (profits, not market share, being the point of business). If that had happened, it would have roughly approximated the way the Windows PC industry eclipsed Apple’s Mac business. “Hey, Apple, wake up — it’s happening again,” Henry Blodget, of Business Insider, warned in 2010. And again in 2011, 2012, 2013 and 2014.

None of those predictions came true. While the iPhone’s sales growth slowed in 2013 and 2014, it rebounded to near-record levels later last year, and its profits have remained lofty.

Instead of killing Apple, commoditization caused something stranger — it hobbled Apple’s main competitor in the smartphone business: Samsung, which until last year was gaining a creeping share of the profits in the smartphone business. At its peak in mid-2013, Samsung was making close to half of every dollar in the smartphone business, according to the research firm Canaccord. (Apple was making the other half.)

But the rise of low-end, pretty great Android phones made by Chinese upstarts like Xiaomi — and the surging popularity of Apple’s large-screen iPhones — put Samsung in a bind. In July, Samsung reported its seventh straight quarter of declining profits. Canaccord’s latest estimate shows Samsung making 15 percent of profits in smartphones, with Apple making 92 percent. (The numbers add up to more than 100 because everyone else in the smartphone industry loses money, so their share of the profits is negative.)

Technology By REBEKAH FERGUSSON and JESSICA NAUDZIUNAS 2:39 The Future of Touch Beyond Apple Watch

Continue reading the main story Video

The Future of Touch Beyond Apple Watch

Apple used haptic technology in its watch to deliver notifications by tapping on a user’s wrist. Now tech firms are finding more ways to, as one researcher said, let “people feel things that aren’t actually there.”

By REBEKAH FERGUSSON and JESSICA NAUDZIUNAS on Publish Date September 9, 2015. Photo by Justin Sullivan/Getty Images. Watch in Times Video »

You can expect Apple’s proportion to grow. As analysts at Credit Suisse explained in a note last week, only about 30 percent of the world’s 400 million iPhone users have upgraded to the large-screen models Apple introduced last year. Apple is bound to reap more money as the majority of its users inevitably jump to big phones over the next few years. In other words, for the foreseeable future, Apple stands virtually alone: It may be the only company making any money selling phones.

What’s driving the iPhone’s escape from the trap of commodity hardware is that it is more than a hardware device. Instead, an iPhone is a tightly integrated mix of hardware, great software, and several pretty good services rolled into a single gadget.

Apple’s suite of services is far from perfect; as I’ve argued before, for many people, Google offers a better range of cloud services to run on an iPhone. Still, Apple’s services are good enough for most people, and as the company keeps expanding its ecosystem — covering payments and home and health devices — it will continue to build in different kinds of lock-ins for different kinds of users. Some people stay with the iPhone for its better App Store, others for iMessage, and many grandparents for FaceTime video calling and iCloud photo sharing. Just about everyone stays because they find Apple’s iOS mobile operating system simpler to navigate, and easier to maintain, than the fragmented Android landscape. Put it all together and you get a package that few of Apple’s rivals can replicate.

But the iPhone is not just what it does, but what it means to its users — which is directly a product of the savvy way Apple has designed and marketed the device to produce global lust. As the writer Ben Thompson has argued, the iPhone is in many ways a “Veblen good,” the economic term for a product whose high price actually increases its desirability. Apple’s resistance to selling low-end phones may thus feed into its success. IPhone resellers in Asia, for example, say that for many people, lower-end iPhones — even used ones — are seen as more desirable than more powerful, brand-new, but cheaper Android devices.

Across large swaths of the globe, in other words, the iPhone is a status symbol, which is not to say that it’s frivolous — unlike a Prada suit, the iPhone is one status symbol that you’ll still find extremely useful.

Of course, Apple’s strategy is vulnerable to unpredictable shocks. Apple is betting on rising affluence across the globe to keep it in the black. If there’s a slowdown in this rise — if the Chinese economy plunges, for instance, or, in the longer term, stagnant wages in Western countries push down consumers’ desires to spend as freely on their phones — the iPhone will suffer. This explains why Timothy D. Cook, Apple’s chief executive, rushed to reassure investors about the company’s position in China during the recent Chinese market crisis.

For now, though, it’s difficult to conceive of a particular way in which Apple’s phone could fall to its rivals. Eight years after its introduction, the iPhone has won the biggest game in the world — and it will keep winning.

https://medium.com/@zeldman/ad-blocking-and-the-future-of-the-web-78e44e57edb9

Ad Blocking and the Future of the Web

YOUR SITE may soon be collateral damage in a war between Silicon Valley superpowers. By including ad blocking in iOS9, Apple isn’t trying to take down your site or mine — just like the drone program doesn’t deliberately target civilians and children. Apple is trying to hurt arch-rival Google while providing a more elegant (i.e. more Apple-like) web experience than user-hostile ad networks have previously allowed. This is a great example of acting in your own self-interest, yet smelling like a rose. Will independent sites that depend on advertising be hurt along with Google?

We have always been at war with Eastasia

We should be used to this war between digital super companies by now. iPhone and iPad users, consider your Amazon experience on the platform. Notice how you can’t buy books in your Kindle app in iOS? Apple supports Amazon to the extent of letting Amazon distribute Kindle software on the iOS platform. But if you want to buy a Kindle book for your phone, you have to go to a desktop browser (or open Safari on your phone and navigate to Amazon.com). Kind of encourages you to get your digital books in iBooks instead.

Same with Amazon’s video app on iOS. You can stream all the movies you want on your phone or iPad, but you can’t buy them in the Amazon Video app. You must use a desktop browser or navigate to amazon.com in the version of Safari that comes with iOS. Kind of encourages you to buy videos from iTunes instead.

You also can’t buy Kindle books or streaming Amazon videos in the Amazon shopping app for iOS, although you can use that app to shop for anything else.

See, Amazon doesn’t want to give Apple a cut of its media sales, so Apple won’t let Amazon sell products in its apps. In Apple’s reasoning, all other vendors pay Apple a cut; Amazon shouldn’t get a pass. And Amazon is serious about not sharing revenue, because Amazon is a ruthless competitor that has taken over nearly all retail sales in the U.S. by innovating service and delivery, and giving consumers the lowest possible price — a price that leaves them no margin to share with Apple. It’s also a price that strangles the companies that provide the goods Amazon sells. Oh, well.

Because Amazon is serious about not sharing sales revenue with Apple, and Apple is serious about blocking sales by any vendor that refuses to share revenue, Apple denies Amazon the right to sell products via its iOS apps. Who suffers? You, the consumer, as you put down your phone and toddle over to a desktop — or just shrug and do without. (Not that it’s the worst suffering in this world. But it is anti-consumer, and makes both Amazon and Apple look bad.)

And, of course, you can’t stream Amazon video on your Apple TV, and likewise can’t watch video content you’ve purchased through Apple iTunes on Amazon Fire TV without jumping through (possibly illegal) hoops. Not since Microsoft dominated the desktop software world in the 1990s have tech and media companies viewed success as a last-man-standing affair, with the consumer as collateral damage.

Still, we’re used to all this and don’t think about it.

Ad blocking is a different beast.

Certainly, at first, ad blocking seems like a different beast. After all, consumers may want to buy books in their Kindle app, but no consumer is clamoring for more ads. And media and advertising have only themselves to blame for the horrendous experience online advertising has become. We hate advertising so much, we’ve trained ourselves not to look at the top or right sidebar on most sites. In fact, it’s become a designer’s trick that if the client forces you to put the CEO’s pet link on the home page, you hide it in plain sight at the top of the sidebar, where no one but the CEO will see it. Popups and screen takeovers and every other kind of anti-user nightmare have made advertising a hated and largely ignored thing on the web.

There are tasteful ad networks, to be sure. The Deck, which Jim Coudal created with Jason Fried and me, serves one single, small, tasteful, well targeted ad per page. When we launched The Deck, I hoped other networks would take inspiration from it, and figure out how to increase engagement while minimizing clutter. I even tried to sell my studio’s media clients on the notion of fewer, better priced, better targeted ads. But of course the ad networks have done the opposite — constantly interrupting content to force misleading, low-interest ads on you.

Hip web consumers have long used third-party ad blockers to unfug the web experience, and great applications like Readability explored alternate content revenue models while boosting type size and removing ad clutter from web content. I served on the Readability advisory board. And I used to go around the world warning designers that if we didn’t figure out a way to create readable, clutter-free layouts for our clients’ sites, apps like Readability would do it for us — putting us out of work, and removing advertising as a revenue stream for media companies. As it happens, in the intervening years, many smart sites have found a way to put content first and emphasize not just legibility but readability in their layouts. The best of those sites — I’m thinking of The New York Times here — have found a way to integrate advertising tastefully in those large-type, content-focused, readability-oriented modern layouts. (Medium.com, of course, does an amazing job with big type and readability, but it doesn’t need to integrate advertising — at least not yet — as it floats on a sea of VC bucks.)

But advertisers don’t want to be ignored, and they are drunk on our data, which is what Google and other large networks are really selling. The ads are almost a by-product; what companies really want to know is what antiperspirant a woman of 25–34 is most likely to purchase after watching House of Cards. Which gets us into issues of privacy and spying and government intrusion and don’t ask.

And in this environment of sites so cluttered with misleading ads they are almost unnavigable, Apple looks heroic, riding to the consumer’s rescue by providing all the content from newspapers without the ads, and by blocking ugly advertising on websites. But if they succeed, will media companies and independent sites survive?

Consumer good vs. consumer good

What Apple’s doing wouldn’t matter as much if consumers were still sitting down at a desktop to get their news and cat gifs. But they’re not. Everyone does everything on mobile. Including browse the web.

Thus in The Verge today, Nilay Patel argues there’s a real risk that, in attacking Google’s revenue stream, Apple may hurt the web itself:

The collateral damage of that war — of Apple going after Google’s revenue platform — is going to include the web, and in particular any small publisher on the web that can’t invest in proprietary platform distribution, native advertising, and the type of media wining-and-dining it takes to secure favorable distribution deals on proprietary platforms. It is going to be a bloodbath of independent media. … Taking money and attention away from the web means that the pace of web innovation will slow to a crawl. — Welcome to hell: Apple vs. Google vs. Facebook and the slow death of the web

John Gruber thinks otherwise, at least for small indie sites like his:

Perhaps I am being smug. But I see the fact that Daring Fireball’s revenue streams should remain unaffected by Safari content-blocking as affirmation that my choices over the last decade have been correct: that I should put my readers’ interests first, and only publish the sort of ads and sponsorships that I myself would want to be served, even if that means leaving (significant) amounts of money on the table along the way. But I take no joy in the fact that a terrific publication like The Awl might be facing hard times. They’re smart; they will adapt. — Because of Apple

In Publishing Versus Performance, I looked at the conflict between advertising and content through the filter of performance. For those who didn’t read it (or don’t remember), I pointed out that most consumer interaction with the web happens on mobile, which means it happens on mobile networks, which, at times at least, may be severely bandwidth-constrained; so performance counts as it hasn’t in years. And while good designers and developers are working like never before to create performant websites, the junk ad networks spew interferes with their good work and slows websites to a crawl. This threatens the future of the web, as consumers will blame the web for poor performance, and stick to apps. But removing those ad networks isn’t an option, I pointed out, since, abhorrent or not, advertising dollars are the engine that drives digital media: no bucks, no content.

Well, now, Apple has decided for us. Removing those ad networks may not be an option, but it’s happening anyway. How will it affect your site?

NYT