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The Most Interesting Fact About the Apple Watch

Regarding the pricing… did you notice it too?

The low-end price is $349, but the high-end price starts at…? Not $9,000. Not $9,995. Not $9,999.

$10,000.

They rounded up the price! Even luxury brands like BMW round their prices down.

What is the last mass-market product you can recall that was priced like that? This is a very interesting marketing move since people will now “round up” the value of an Apple Watch.

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Industry

Social Payments: the Future is Unified

Physical credit cards will soon be a thing of the past. Is the rest of the US startup industry ready?

The next real-world cash-replacement could be powered by Facebook, Google, Apple, Square, Intuit, Paypal, or some other company hiding in the wings.  There are a few obvious names in there, and then there are a few left-field ones to some people. This post isn’t about how those left-field plays could happen. I simply wanted to explain how the landscape is changing.

There’s a convergence happening right now between social, payments, and e-commerce. Imagine this predictable future:

You buy some coffee at Starbucks. You take out your phone and swipe it at the terminal. Your [insert phone app name here] Bucks (from here forth known as: “Phone Bucks”) are deducted from your account. Your purchase is optionally posted on your Facebook/Twitter stream. You get highly-targeted Groupon-clone notice for a Starbucks coupon redeemable online immediately. You decide to buy it using your Phone-Bucks — no signing in, no additional authorizations — by clicking a button.

We’re talking about a future where your online wallet (today, known as Paypal, Facebook Credits, etc.) follows you into the real world and ties directly into your mobile phone. This represents a single unified wallet. And it makes sense. That’s the future. That’s where we are headed now. I’ve been watching this trend happen for the past few years, and it’s exciting to finally see some big players waking up to this reality. Which players are the closest to achieving this? In this order:

1. Facebook – Due to its large install base (virtually all smartphones) and an existing currency platform (Credits), they are best positioned to move into the real world. And they recently made a huge move indicating a desire to do exactly this (creating a subsidiary is the first step in buffering liabilities that come with real-world payments).
2. Square (or Intuit depending on how things play out) – They would solve this from the other direction: they have a stronger real-world presence, and moving into the digital space might be easier than vice-versa.
3. Google – They will approach this from the platform (Android) by opening it (Google Checkout 2.0) up to developers and creating an ecosystem. They also recently stole a key exec from Paypal, so you know they’re serious.

It’s my belief that any startup entering the e-commerce landscape right now needs to make sure they are thinking about this convergence. To get big valuations, I think a startup needs to not only understand these trends but be the first to market in the new paradigm that will be coming (really soon!). This convergence will create an opportunity for new players to emerge and destroy existing leaders. All mobile startups around commerce, Groupon, Paypal, and even the advertising arm of Google are probably already adjusting to these trends. Is your startup?

Think about it.

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Industry

Google’s Real Goal Behind All Their Free APIs

Ever wonder why Google gives away so many web-developer tools? Tools that otherwise seem like complete money-and-bandwidth-pissing schemes (notice how most of these don’t directly show ads):

This is all about obtaining browsing behavior in a long term bid to increase ad efficiency. Nothing else.

  1. It is not about making things more “open”
  2. It is not about making web development easier
  3. It is not about making an online operating system
  4. It is not about competing with Microsoft
  5. It is not about making the Google brand more ubiquitous
  6. It is not about showing ads in new places

If any of these above things happen, they are a (likely planned) side effect. For example, if a particular API makes something easier, that is good because it will encourage other developers to adopt it as well. But as I will explain shortly, the commonly held beliefs about Google doing Good or Google making the web more open are simply not the reason for these initiatives.

If you notice, all of their APIs use JavaScript. This means all of their APIs have the ability to note what computer a given request is coming from. This means that on top of your search preferences, they can eventually begin to correlate your browsing habits based on the sites that you visit that use Google APIs.

For example, if my blog were to use a YouTube embed, it would be possible for Google to read a cookie originally placed on your machine by YouTube and correlate it as traffic coming from this site. This means they can uniquely track every YouTube video your computer has ever watched since the last time you cleared your cookies. YouTube is just an example because most of Google’s APIs are far less obvious to the end user. For example, the unified AJAX libraries could be used by a good half of the “2.0” websites out there without impacting performance (and in many cases would make the sites load faster for the end user). But because everything is going through Google, it’s possible (although I’m not saying that are) for them to track which sites you visit.

If this isn’t extremely valuable information, I don’t know what is. Don’t forget that the AdSense API is, in itself, a means for Google to track every website you’ve ever been to that uses AdSense, and for a way for Google to know exactly which type of ads interested you in the past. Once they know what sites you visit, they can surmise what a given site is about, and then determine, for example, what sort of products would interest you.

It’s the classic advertising chicken and egg problem: If I knew what my customers wanted, I could sell it to them, but they won’t tell me.

…And Google found the chicken. For the time being, they haven’t started using this information (at least noticeably), but I am sure they will as market forces move to make competition in that area more necessary.

Say goodbye to privacy. =( Oh wait, I’ve been saying that for quite some time now.

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Industry

The Future of iPods

In another blog prior to this one, I wrote about a prediction I have for iPods. Because I plan on fully retiring that blog in the near future, I thought I would port the post here to keep the prediction alive. Note: I wrote this post long before the recent flurry of iPhone headlines.

Here’s my prediction: The next iPod will be the new hook Apple will use to enter the cell phone market.

A little history:

  1. First Apple introduced an iPod. It played music well.
  2. Then Apple introduced color iPods with photo capabilities. A mostly useless upgrade, but still cool.
  3. Then Apple introduced a video iPod. Suddenly portable video became a hit.
  4. Then Motorola introduced the completely shitty Rokr iTunes phone. Nobody cared.

The reason why no cell phones have been successful with music playing integration is that the two tasks require use input methods that are starkly different. Making calls requires a number pad and the ability to browse through a phone book. Sending text messages requires typing abilities. Browsing music, on the other hand, requires volume control, music selection, and play control. Let’s not forget the entire device must be able to sync the music files too. Dumber people in the past have speculated Apple would release a phone iPod that had an old fashioned digital number dial type of thing that would superimpose over the click wheel. Wrong. Dead freaking wrong!

Let’s fill in the gap. Recently there have been very prominent rumors about a new version of the video iPod that has a giant touch screen with a digital click wheel that only appears as necessary. Sounds cool, right? Now you’ll be able to enjoy videos more than ever! But wait, there’s more.

Apple’s newly rumored screen-only interface is the key. No, not because they can superimpose numbers over it when you’re in “phone mode.” Like I said above, wrong! Rather, because when you go into “phone mode,” the click wheel disappears and is replaced by a cell phone style keyboard. That’s right. The new all-digital front panel allows Apple to overcome the problem of mixing two different devices with completely different input methods. The new iPod will simply drop the click wheel if you aren’t doing a music or video related action. It’s genius.

Imagine an iPod that has a small, albeit low-quality, speaker that allows you to use the iPod as a phone as well as hear your movies. Imagine newly upgraded iPod earbuds that allow you to make and receive phone calls without ever taking your iPod out of your pocket, all while simultaneously pausing your music. Imagine a phone where your ring tone could be any song you own.

Apple won’t be pushing this new idea forward any time soon. The world is not yet ready for an all-in-one device. But the day will come. The current big personal electronic devices are:

  • Camera
  • Music player (iPod)
  • Movie player (iPod)
  • Cell phone
  • PDA
  • Internet device

It’s clear that some devices are best left independent. Apple won’t want to make their pristine products murky by adding mediocre peripherals such as a crappy 3.0 megapixel camera; not to mention such a hardware extension will probably compromise the sleekness of an iPod. That said, cameras are likely off the list forever merging with the iPod unless they can integrate it without messing up the smooth curves on the device.

Apple could go another route by integrating Internet access, but I predict that Internet access has too many geek-only issues such as security that may confuse or annoy consumers — Apple will probably never merge Internet access with the iPod. However, they may integrate wireless networking functionality to allow syncing with iTunes on a computer located nearby. And maybe, just maybe, on some random whim, Apple could integrate Internet access simply to allow direct purchases from the iTunes store. However, a consumer who can’t trial samples of music is less likely to buy anyway, so, again, I predict Apple probably won’t introduce this feature in order to protect its “just works” iTunes music-purchasing experience.

Before the cell phone is introduced into the iPod, I predict Apple will test this different-interface idea by introducing a new sub-feature into the iPod that will make use of it. Potential applications are:

  • Ability to sync with your iCal program (PDA integration). This would introduce a new task managing/calendar interface.
  • A different interface to browse photos.
  • The ability to edit music tag information (such as artist or song name).

Apple will be careful about this. They will avoid the (noob) trap of creating 18 different interfaces for 18 different types of situations. Likely, there are only a few types of visual interface layouts they will introduce:

  • Buttons (like on a web page)
  • A number pad like on a phone
  • Yes / No / Cancel dialog

I predict this will be introduced in early 2007 and polished by year-end. Tell me I don’t sound right.

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Industry

YouTube and Google?

Techcrunch just covered the possibility that Google is looking to buy YouTube for $1.6 billion.

I think this acquisition makes a lot of sense. While it was pointed out that Google would be unafraid of the copyright issues, I think another reason why the acquisition is a safe bet is that Google can support the infrastructure and bandwidth costs. Owning YouTube would not be a significant strain on a company’s hardware resources. Seeing as Google seems to have a genuine interest in the video market, signified by the presence of Google Video — which was NOT a free-time-project-gone-gold — I’d say this acquisition has a lot of potential to be true.

If the future of the web is in streaming media, owning the current #1 player would be the smartest way for Google to maintain their edge. What’s surprising is how little speculation there was of this acquisition until this post. It seems like a completely random shot in the dark.

I will say that the acquisition doesn’t sit right with me 100%. Google is not a content provider, and owning YouTube and investing $1.6 billion dollars pretty much guarantees they MUST focus on being a content provider as well as an ad broker. Perhaps they’re starting to realize that in order to keep Microsoft off their toes they need to own some of the content as well? Of course, then they’d be competing with AOL, Yahoo!, and MSN for content, but having YouTube certainly would help in that race.

Of course, this all assumes the rumor has any substance.