The new revenue stream

Originally published on Technorati as "The New Revenue Stream."

Remember way back before the Iphone or the I anything for that matter?  Those were the days when we went out and bought a piece of technology and whatever else we needed for it and Boom! we were pretty much done.  When we wore it out we went and bought a new one.

Getting a cell phone was a pretty simple proposition.  You picked the device and how many minutes you thought you'd need and paid your bill every month.  Now you'd be hard pressed to find a phone without features you'll never use but are charged for anyway.  Not to mention overage charges for data or unlimited plans that really aren't unlimited either cutting you off or degrading your service over a preset limit.

Everything's a subscription now.  Seems like you never stop paying.  Services like Netflix started it.  Used to be you'd pay a small subscription fee and get your choice of DVD's every month.  What made them successful was the elimination of late fees and the highway robbery of the chain video rental stores.  Now it's streaming movies at 8 bucks a month to any device that can use the service.  Even if you don't use it.

Yes, it's wonderful that you can go to Itunes and just buy the song you like for 99 cents and leave the rest of the selections on the curb .  Of course you've bought a lesser quality version of the song for roughly the same price as the same song on CD but hey, it's in your Itunes now, so long as you don't lose your password...

You can even subscribe to Microsoft Office 365 to essentially "rent" the use of office applications.  Too bad if you miss that monthly payment and want to open your Word document.

I can go to carbonite.com and back up my computer to the cloud automatically, for a fee of course.  That fee goes up if I have more than one computer and/or external device to back up by the way.

Gee, used to be I got a backup program with my operating system or I could get a better one and that was it.  I didn't have to subscribe to anything.

Buy an IPAD or an Iphone and you're not likely to have much fun with it unless you visit the app store which generally involves a purchase or subscription depending on what you choose from it.  Oh, and don't forget that 2 year contract and/or ridiculous initial cost of the device.

Let's not forget that our workplaces will have limits on our bandwidth and most ISP's impose bandwidth limits on how much data you can use per month.

Too bad if you were backing up you Terabyte Hard drive to Carbonite...

The point is that more and more products seem to be introduced whose very design is to work with this subscription model.  Product features tend to be stripped down for the sake of it.  Even the latest version of Windows dumped their email client in favor of the useless free Windows Live suite or online applications such as Hotmail or Gmail.

 I wonder when they'll dump notepad...

Yes it's true that application suites were prohibitively expensive but if you didn't need to be on the cutting edge you could always find a deal on the previous version.  You didn't have to keep paying for it either.   It seems we've been led to believe that the a la' carte model lowers the barriers of entry to productivity and recreational apps but the truth is that we're just spreading out our buying patterns. 

With every app you buy you end up on another mailing list.  There's also this false ubiquity that anything in the cloud is secure and accessible.  Yes, it may be so long as you pay the subscription.  Let's also hope they don't go out of business taking your data with them.  Read the Terms of Service,  if they're gone, so's your data...

There's nothing wrong with making applications more accessible but to rely on the subscription model and the cloud exclusively  is dangerous.  I'd hate, for example, to lose the ability to update my resume if I had to cancel my office 365 subscription after losing my job. 

I sometimes chafe when I hear some pundit advocating how the cloud should be our primary data repository.  Really?  You have that much faith in a web page with an e-commerce portal to secure your data? 

I can't accept that a commercial entity has my best interests at heart thus I have no faith in the assumption that they do.  Yet when I look around I see a consumer mindset that accepts the premise as reasonable. 

Whatever happened to Caveat Emptor?  I guess they don't teach that in schools anymore...

IT and Steve Jobs

As most of you know by now Steve Jobs passed away yesterday 10/5/2011 after a long battle with health problems. The tech industry may have seen it coming but it's a blow felt no less sharply.

I will say this. No Technology CEO, including Bill Gates, has ever been a more visible leader in any technology company. He was a marketing genius and had a public persona that inspired an almost cult following.

Here's where I lose the Cult of Mac....

His passion was undeniable and his vision unquestionable. Still his most valuable trait was that he was a brilliant opportunist.

Consider the following observation.

I've often said to colleagues over the past twenty years that IBM created nothing. IBM Chose instead to obtain innovation and mold it to their vision. Steve Jobs at Apple was not so different in method but his motivation couldn't be more different.

In jobs we had a conquering hero beating back the stagnation and rigidity of faceless corporations concerned more with quarterly profits than usability. He could not only mold someone else's idea to his vision but convince you it was in your best interest to come along for the ride. He knew how to speak to the consumer and convince him that his offerings were superior simply because he'd offered what you wanted before you knew you wanted it.

As far as IT goes, however, I can't be as upbeat about Apple in the enterprise. Apple products are designed from the outset to be consumer devices. That makes sense. Under Jobs' direction that was what technology was meant to be. Computing devices were meant to be enablers of a creative process not some turbocharged calculator.

I've worked with Apple products in organizations and it's blatantly obvious that they were never meant to be part of a typical IT enterprise. Most of the time I find Macs running Parallels just to properly interoperate with other network applications and resources. That's a good thing since replicating that functionality is difficult and in some cases impossible without such software.

I hear the wailing now but when you get past the fanboy devotion you find the real argument is that Mac folks believe Steve got it right and everyone else got it wrong. You'll never convince anyone on either side of the argument of the other's view so don't bother to try. In a way it speaks to how similar Apple's "Different" argument really is to the other guys.

In fact it would go against the core belief of "Think Different" if you believed that in spite of its failings, your way was the only way. In that case you're no better than the evil empires which you spurn.

If Jobs weren't the brilliant marketer that he was, Apple would have had no hope of survival. Over most of its history, Apple products have carried a price premium over and above what was considered tolerable by the market. Jobs was able to combat that by convincing the consumer that he offered a premium experience not offered by his competition. Whether it was worth it was entirely subjective.

Under Jobs Apple undoubtedly had great triumphs but also great missteps. One of the greatest in my view is the closed sandbox that remains central to Apple to this day. To promote change you must get your product into the hands of the masses. From a strictly business standpoint that's a difficult proposition if you're the only one manufacturing it.

Back in 2006 when Windows Vista was released it disappointed a lot of people. So much so that Microsoft finally admitted after a year of denials that it was indeed a poor replacement for the now stable Windows XP and virtually all press turned from Vista to an upcoming release that we now know as Windows 7.

In my view, it was during this time that Apple missed a golden opportunity. At that time Mac OS was at version 10.4 and capable of running on Power PC or Intel platforms. A handful of companies sprang up offering "Hackintosh" computers which were basically PC architectures running Apple's OS. Since MAC OS X 10.4 was less than $100 it was an opportunity for thousands of users to get the Apple experience for far less than the 30 to 40 percent price premium for the same hardware in an Apple branded case.

It was a missed opportunity because millions of dissatisfied Windows users were looking for alternatives to Vista. Many explored Linux, some jumped into Macs with both feet while most were forced to stand pat with Windows XP until Microsoft came up with a better option.

It's my belief that Apple could have grabbed at least another 15% of the market had they allowed OSX to run on non-Apple hardware. It would have allowed a lower cost of entry into the realm of Apple and accelerated the entry of Apple into the enterprise. It would have also, finally, offered a viable alternative to Windows.

Instead, at the direction of Jobs the Hackintosh movement was crushed and an opportunity lost. The message being, "Buy it all from us or go away".

I understand the advantages of operating in a sandbox. Your support costs are lowered since you have only have to support one platform. You minimize your vulnerability to the ills of the Windows platform by offering a smaller attack surface for malware. Finally you can exercise complete control over anything associated with the brand.

It's this last point that has Jobs written all over it. Jobs was fearful of Apple suffering the same fate that befell IBM with the PC and the clones that followed.
What was missed is that while IBM allowed for clones to use their architecture, the premium PC always had an IBM brand on it. If you wanted innovation on the platform you first looked toward IBM. Especially true for business customers who wanted and would pay dearly to have the support of IBM's vast resources.

But then, IBM was the evil empire and Apple was going to be different. Even if it meant being the same in the end. I think Steve misread his customer base. Sure you may have had a whole lot of new Mac users without an Apple logo on their case but you would have also had a lot of peer pressure.

I have no doubt that the Mac forums would have been filled with flaming statements like, " When are you going to get a real mac?" or "Apple hardware doesn't have that kind of issue." and eventually the "MacHacks" would have come fully into the fold.

In the meantime the Apple OS could have matured to become more business friendly without losing its identity. After all I'm talking about an alternative not an emulation.

Such are the failings of our heroes. There's no doubt that Apple owes its existence to the vision of Steve Jobs. I'm hoping that it is his spirit of innovation and not his execution that lives after him.