Five Ideas That Matter

Continuing our attempts to understand the ramp up of the iPhone (good concept, poor product) we came across this today over at wikonomics.

It’s a post by Gautum Lamba about the Droid – Verizon/Motorala’s competitor to the iPhone which is being publicised through a list of the iPhone’s shortcomings on the droid website. Apple fans however have done it better (see the pic).

The phenomenal pleasefixtheiphone website has a couple of thousand ideas for a better iphone which is a) gratifying I am sure if you are an iphone designer and b) surely indicative of the phone’s shortcomings.

The site is not actually an Apple site – it is a fan site which makes it all the more remarkable.

Anyway enough said. We are a little closer to describing the iPhone phenomenon if not to understanding it. These comments represent, in previous ideas about product and customer service, something of a condemnation – many thousands of people saying many thousands of things are not good enough. Yet they sit in a perfumed garden of Apple adoration.

The final point is that iPhone has grown through the kinds of skewed dynamics typical of web information markets. It is remarkable to see that popularity persisting through fan efforts rather than the iPhone marketing department.

Mary Meeker’s presentation from Tuesday’s Web 2.0 summit is rapidly approaching Sequoia momentum (mementum?), but still worth a good close look for anyone that’s been living in a cave for the last couple of days.

Great data in particular on the underplayed market potential of mobile, although readers will not be surprised to learn that we view the heavy emphasis on Apple with some skepticism

Mary Meeker’s Internet Presentation 2009

John Seeley Brown is the writer that converted me to digital sociology and digital economics. The Social Life of Information is the classic social technology text, written prior to anyone talking about social technologies. Lately Brown, along with John Hagel, has been writing about asset returns:

“Corporate returns are under pressure from far more than the recession. The patterns we’ve uncovered span decades and deeply affect even the highest performing companies, with the single greatest driver of these challenges, and indeed future opportunities, being our underlying digital infrastructure. Regardless of when the economy shifts back to an upturn, the long-term implications for continued erosion of return-on-assets will continue.”

And worrying abut their decline in the USA

Among the key findings, U.S. companies’ return-on-assets (ROA) have progressively dropped 75 percent from their 1965 level despite rising labor productivity. Even the highest performing companies are struggling to maintain their ROA rates and increasingly losing market leadership positions.

The point to where Seeley Brown and Hagel’s thoughts are leading is a kind of vanishing point. Radical innovation on a scale and of a type we can’t imagine. I know, I know. they quote things like the impact of innovation in China and India on the west – blowback innovation. But I value more this sense that we can’t imagine or anticipate the radical changes we are due after 40 yea of relatively lethargic inactivity disguised as growth.

I see the problem slightly differently – as a gradual desertion of conventional demand and supply economics for social and moral reasons – because it increasingly failed to deliver fairness. That’s the subject of a paper I’ve written which I hope will be presented soon in Stockholm but if not Memphis in December.

UPDATE: Meanwhile…. isn’t the RoA paradox partly resolved if we look at the contribution of intangible assets to corporate reporting? I can’t believe JSB and JH would have overlooked this so I offer the explanation tentatively. If companies are adding intangible assets in (patent rights, brand valuations) then their RoA will appear to be down because their asset base will suddenly increase?

Continuing our occasional coverage of the evolution of the web as an information market, Joe Wilcox had a great article recently that picked apart the story around the iPhone.

We’ve been reviewing iPhone coverage here and here oh and here as well. Here is the tail end of Joe Wilcox’s article. the whole is well worth a read as are the comments.

“Many of my journalist peers are themselves obsessed about iPhone and App Store. The number of blogs in any given week just dedicated to new App Store applications is evidence enough. There is informational obsession with the device that defies reality.

IDC’s Ryan Reith agrees. “The view about American journalist obsession with the iPhone couldn’t be more true,” he said.

It’s that misguided obsession as expressed in two separate blog entries posted yesterday that prompted my writing about iPhone. At the Apple 2.0 blog, reporter Philip Elmer-DeWitt asserts that “iPhone’s share of the smartphone market hits a record 40 percent.” Really? In what alternate universe? He writes:

Apple now has a substantial — if not the largest — share of the smartphone market in every region of the world except Asia and Africa, according to a report issued Wednesday by AdMob. Overall, the iPhone’s worldwide share grew to 40 percent from 33 perent over the last six months. In North America, its share of the smartphone market is 52 percent, as measured by hits on AdMob’s ads.

This data — based on advertising measurements — doesn’t even remotely jive with Gartner or IDC smartphone unit shipments, nor even Apple’s figures. According to Gartner, Nokia has 45 percent smartphone marketshare in the United States. But the data makes sense perhaps looking at AdMob’s share on different handsets. This kind of persistent reporting makes iPhone appear larger than what it really is. It’s wonderful for Apple’s Stock price.”

Couldn’t resist this quote or the opportunity to reference Thought Leadership Group, TLG, from where I lifted the paragraph:

“Mr Seidman and Mr Shapiro have latched on to the concept of “outgreening”, a term coined by LRN and popularised by Thomas Friedman of the New York Times. “The old strategies for success – outmining, outdrilling, outconsuming, outspending – no longer offer a sustainable competitive advantage,” Mr Seidman says. But you can outgreen the competition. This is not simply a question of changing light bulbs. It is about changing mindsets. Think of it as a 21st century version of business process re-engineering, only taking place under a green banner.”

Personally I don’t think it will stick but then again I think I know how I could make it stick. We need to understand voluntary attitudinal responses to outgreening campaigns. Will come back with some thoughts on that.

We are not frequent posters – opting instead to get a post up here when we have an observation that helps the underlying argument. Hope that explains the radio silence.

Over the past week or so I’ve been trying to think how to get back to the core argument. This goes something like:

There are profound changes underway in the economy and society and they are taking place at a point where a set of new ideas meets a set of new practices. We think we can understand the probable success of the new practices by understanding the power (emerging popularity) of the ideas.

The image is of the Sintesi concept car from Pininfarina. The picture  is an example of new fabrication technology (one of the big ideas in auto) that represents one of these joining points in ideas and economic activity. It offers up an example of how resilience (a key element of new ecological metaphors or bioconsciousness)  and personalisation and customer-driven configuration (the ability to create or hack what I wish to) meet. Here is a couple more images:

So the obvious question is – why is it so interesting? The answer lies in the involvement of Materialize, who specialise in Freeform Manufacturing. Here’s how they describe their speciality:

Freeform Manufacturing uses additive technologies (also referred to as 3D printing technologies), fully automated processes that don’t require molds and thus allow a virtually unlimited freedom in design. Today, these technologies are increasingly used in the production of concept cars. Gradually, this production method will be applied for the production of final cars as well.

I came across the Pininfarina example at 3D Print. The link is this: desktop fabrication that can power the design and data output to make complex objects, cheaply, is upon us. Materialize’s facilities are desktop factories writ large.

In fact the DeskTop Factory project and others are aiming at providing that facility.

The interesting development (or evolution) in personal fabrication (well not quite personal but certainly local at $5000 a pop) is self reproduction in fabbing technologies.

Inevitably that idea is driven by an open source community. I think we are going to be surprised by what can be self-made and at the cost. The dream of self-fabricating things like autos is definitely one for the future but how absurd sane or is it?

I had the pleasure a few years back of seeing a few of the micro-cars created by impoverished engineers in the 1940s. For the most part I was looking at German microcars. They were made out of whatever an engineer could find in the rubble. Here’s an image from the Museum of MicroCars (mostly models from the 1940s and 1950s). MicroCars were homemades and they were production models. Their distinguishing feature was a skilled engineer who knew the product’s totality.

We might never get back to that but future production systems offer an opportunity for people to reinvent their interests and rebuild their communities. The term “bubble car” by the way seems to come from the aircraft cockpit inspiration for these early post War designs. Finally – talking about aircraft cockpits here are two pictures of the 1953 Messerschmitt KR175,

We’ve said a couple of times below that the success of the iPhone is an important case study in how the Web’s information dynamics work. In light of that I was fascinated to see this piece by Javier Marti. It was written in autumn 2007 as the initial hype around the iPhone was dying down.

The Obama election campaign and its aftermath has parallels – which we will come to below albeit only briefly.Why is it important to Five Ideas? The Western ethos of progress through criticism is important; changing information dynamics seems to threaten the principle that criticism is good, and needs to be effective. If information dynamics are changing then we need to understand what it means for what is “true” and what the “truth-to-reality” cycle is becoming.

First iPhone.

Marti being close to the action points out all the negative reactions to iPhone at the time and as importantly points out that the iPhone’s biggest early success was to turn the US into a more mobile using population.

This graph from Nielsen suggests that during the initial launch period the iPhone secured close to 0.75% of all blog posts everywhere, which is a pretty amazing feat.

Still, many of those early reviews were negatives:

3. The camera is a simple application that has one button: The shutter. Picture quality is no where near exceptional.
4. SIM card is near impossible to open, if at all.
5. Web browser is slow, even over WLAN. Even the simple OneList web app that was created takes around 20 seconds to load over WLAN. You can not highlight, cut, copy, or paste and text from a website, and you can not save any images you find from a website either. The only nice thing about it is the tabbed browsing, which crashed when visiting Engadget and YouTube on two tabs. This is the only application that allows you to use the keyboard in landscape mode.
6. The keyboard sucks. It gets slightly better after the iphone “learns” you, as the employees said, but even then, it’s not a device you can use with one hand comfortably, much less without looking.

And so on. Interesting that some of these are usability and interface issues. Experienced mobile users are accustomed to working with one hand and to tactile devices whereas the iPhone is very visual.

Anyway, the point is Apple managed to overcome rational critique and the “how” of that I think should be on every marketers mindd, and every sociologist’s too. So to Obama.

This is from the New York Daily News back in April 2008: “It seems like ancient history now, but not long ago Hillary Clinton argued that Barack Obama was getting a free pass from the media.”

It’s interesting because it comes well before the election. However, 8 months in and Obama’s style, rhetoric and capacity to change Washington are all pretty much subject to wider doubt than at any time when he was being hailed for his ability to connect to the voter.

This is from Newsweek in January 2009:  “Luckily for Obama, the public still likes and trusts him, at least judging by the latest polls, including NEWSWEEK’s.But, in ways both large and small, what’s left of the American establishment is taking his measure and, with surprising swiftness, they are finding him lacking.”

And this from the yesterday’s London Times: “President Obama is ready to retreat from a central part of his domestic agenda in order to achieve some sort of healthcare reform this year, two of his senior aides indicated yesterday.”

All politicians get an easy ride at some stage but I wonder is Obama another case study in the uncritical nature of open communications on the Web. If so what can we do to fix the problem. The great part of conventional information dynamics is its responsiveness, in principle, to the dialectic of criticism.

If I was a CEO or leader of a significant organisation, my response to claims that my company is threatened by, say Chinese competitors or climate change or indeed recession, would be, no: it is either safeguarded or threatened by my ability or inability to understand the changing patterns and dynamics of social interaction.

Everyone around me is equally affected by how people’s intentions change and what that says about their shared thought processes – the mutual future we are always building. Not understanding the speed with which people now recreate futures is why politicians are failing.

There is good harmless fun trend projecting and a couple of years back pure blogging listed a bunch of sites that do it well.

You can review those sites here. And we will review them all here soon.

My apoplectic response to apocalyptic trend spotting and critique goes something like this. Here is a dead easy futures portfolio.

1. The recession will last for a hundred years and you are all going to die. Pessimism sells well – in fact the author of Buyology Martin Lindstrom has shown the science of buying and selling is at one with fear. There is no shortage of futurology that tells folks it is all getting worse and will continue to do so until you listen to me.

2. The second version of futurology goes like this – Gen A (it could be x, y or z) is the ultimate slacker generation and determined to prove its slackiness is purer than the slackers who came before them (the mathematical formula is Gen = n [tusg]p where p = the present and tusg = the ultimate slacker generation.

3. The third category of doom apocalypse thinking is a combination of arguments that all say the condition of the world spells a sticky end soon. Climate, ascent of China, population growth, health care spending.

Behind each of these arguments lies a formulaic response which goes something like – if we get smarter, if we rely become more creative, adaptable, flexible, innovative (innovation is the new progress) then we can just overcome these problems.

When Chris and I started thinking abut metatrends one of the first things we noticed however is how well, how quickly and how imaginatively people are adapting to new circumstances. The brain and behaviour are the things we can change very quickly – curious fact, people continually talk about having attitudes and/or new ways of doing things in their DNA – my understanding is that genetic change takes about 40,000 years to work through in humans. Very little changes in our DNA – other than it becoming damaged or mutates.

It stands to a little bit of reason that change is therefore mostly social and interactive between people and the web is the place a lot of that interaction now takes place.

Here is a case in point During the recession the number of money saving blogs has been increasing as have their readers. This comes at a time when, the FT recently pointed out, old fashioned mutualism is dying out rapidly enough that Governments are trying to save it. American thrifts have had their day and European mutual societies got the high risk, high reward bug. Read all about it here.

By way of contrast we see a different mutualism growing. It is based around using the web as a source of mutual support and the primary weapon is not money but information.

Having said that, money is a focus of a new generation of peering systems, led of course by the ZOPA model. Even here in money, to date, information rules and includes the likes of wesabe and many more on that model.

In other words the adaptation of social DNA (the information repository for persistence) is well under way. We have written about it recently but only in private client papers. Hopefully we can approach the issue publicly soon. Understanding these trends and what they mean, before the opposition do is more important than the thought apocalypse.

We’re interested in ways of gleaning new insights from online data, and also in new ways of delivering those insights. So, our ears pricked up when we heard about a recently-launched iPhone application – called “Outbreaks Near Me” – based on MIT’s HealthMap resource.

From HealthMap.com

HealthMap monitors and maps semantic references to various illnesses through news reports and social media channels, giving users a potential early warning of outbreaks. It’s one among a number of interesting health data mashups that have cropped up, including Google Flu Trends – a similar initiative, which bases its findings on search trends, rather than media or blog comment.

Some are sceptical about the utility of these initiatives as standalone tools – false positives are an issue for example in both comment monitoring and search data. This scepticism is often justified, but we’re mainly interested in their contribution to metatrend analysis. Their value really becomes apparent when you look at combining the outputs from many different data sources together.

We can measure flu trends now by a combination of social media listening and aggregated search trends, but what else can we add to the mix? There have been successful attempts in the past to identify outbreaks through pharmacy sales data, and in the future technologies like FLIR (forward looking infrared cameras) might also have a contribution to make. More data, tighter insights, better value.

Because key economic drivers like the USA have already spent way ahead into the future, because of China’s desire to keep more of the value of what it produces, and because of the current inefficiencies of environmentally GOOD technologies our understanding of efficiency and productivity has to change.

A good example of this, which we rabbited on about down here, is the $7 incubator. Regular western incubators for infants cost $20,000. One can be built for $7 – $20 that does about 95% of the same things.

The big question is can low, low prices create more demand? Actually the chances are that new pricing models built around radically reduced prices will do exactly this. A new future = real productivity gains, really lower prices, and continuing value relationships between the firm, its suppliers and the customer.

We contrast this with Chris Anderson’s idea of Free. We think Anderson is missing the point. Free might be in the process of being reinvented as a selling technique, but nearly free is going to be a commercial imperative for design and the business model. The $100 computer and the $2500 car are good examples. As we have trended towards the $100 laptop the opportunity to give laptops away with a Net subscription has emerged as a booster for this category.

This got surprisingly little attention in August but there are reasons to dig deeper:

“Israel’s government on Monday endorsed the ambitious plan of a private entrepreneur to install the world’s first electric car network here by 2011, with half a million recharging stations to crisscross the tiny nation.”

What it didn’t say is that Shai Agassi, the man behind the plan, sees the future in subscription-based car sales.

Agassi’s Electric Vehicles will be trivial cost unless you drive a whole lot. At around $600 a month to subscribe they come in at the cost of what many people lay out on petrol a month. You can find out more about the company here.

The point is people are thinking about radical price reductions and transformative pricing models. Coming soon!