Only slightly bent

One of the recent annoying trends in the mobile business domain has been the attitude towards apps. Most of the media extols apps as the next big thing, the gold rush everyone must get at now or miss billions of dollars of revenue – and your standard sources of industry opinions and forecasters like Gartner don’t exactly help calm things down by parading the figures and showing off impressive growth charts.

Then some people realize that oh dear, most apps don’t make any money! The whole paid app craze must be a mistake!

This backlash, though popping up occasionally earlier, was propelled to the “masses” by Tomi Ahonen’s post here and followed by reactions and other observations here, here, here and in many other places.

Suddenly a whole storm of comments for and against apps and the “app economy” ensued. And I’m left thinking what’s with all the commotion? It is, of course, an indisputable fact that most apps don’t make a lot of money for their creators. What I don’t get is exactly why this is a surprise to anyone.

Why would apps be any different from other, crudely similarly structured industries? I.e. industries where creators of various sizes are vying for the same market with vastly varying resources, creating products with quality and appeal ranging from total crap to great? Take, for example, the music industry; of the 100,000 albums released last year, 17,000 only sold 1 copy; more than 81,000 albums sold under 100 copies. The vast majority didn’t make any money.

Book publishing is similar; the average book sells less than 500 copies, with the hits badly distorting the average. In 2004, 950,000 titles out of the 1.2 million tracked by Nielsen Bookscan sold fewer than 99 copies.

A few big hits, small reasonably profitable middle ground, long tail of disappointments. Sounds a lot like the app economy to me.

A tough market? Of course, any competitive market is.

But somehow surprising industry dynamics? Hardly.

And definitely not worth losing your sleep over either way; if you think apps will magically save your business case, reset your expectations to something resembling reality. If you think they’re a fad that don’t deserve to exist, you are almost saying books and music are in the same category – and yet it’s highly likely you happily consume both. Both sides of the polarized debate should just get a grip, take a step back and reflect on it a bit.

The Brain Rules by John Medina has long been on my reading list and I finally got around to it. The book is constructed around 12 “brain rules”, each of which covers some aspects of the brain we know for sure. The we know for sure-part is important, because there is no shortage of books that speculate on what the brain does and how it does it, whereas all the “rules” in this book are backed up by numerous scientific studies. Perhaps surprisingly we don’t know much about the brain, but even more surprising is that what we do know is not being taken seriously.

For example, there are many aspects of how the brain works that are in direct conflict with how we try to use it – there is very compelling evidence that if we made the ideal learning or working environment, they would be pretty closely exactly the opposite of how schools and work environments look today. In the name of cost-effectiveness, we are implementing strategies that are directly opposing to proven methods of actually improving learning and working. I find that appalling.

One rule is about attention. The lack of true multitasking capabilities has been recently brought up in other fora like New York Times as well. The simple truth is that the human brain cannot multitask – we are biologically incapable of processing multiple attention-rich inputs simultaneously. We must jump from one task to another and the task-switching takes a remarkably long time. Speaking of the task switching process, Medina explains:

Incredibly, these four steps must occur in sequence every time Eric switches from one task to another. It is time-consuming. And it is sequential. That’s why we can’t multitask. That’s why people find themselves losing track of previous progress and needing to “start over”, perhaps muttering things like “Now where was I?” each time they switch tasks. The best you can say is that people who appear to be good at multitasking actually have good working memories, capable of paying attention to several inputs one at a time. Here’s why this matters: studies show that a person who is interrupted takes 50 percent longer to accomplish a task. Not only that, he or she makes up to 50 percent more errors.

Yet, the modern office is purpose-built to promote interruptions.

The attention-chapter also covers other truths, such as the attention span that we have – including many examples on how to overcome the fact that our attention span comes in 10-minute segments in, say, a presentation.

Other chapters explain, among other things, the importance of physical exercise and sleep, the importance of repetition to recalling and impacts of stress on how the brain works. In the chapter on sleep, we also return to the now-famous study that showed a simple nap can improve the performance of people by 34%. Yet, how many companies encourage or even condone their staff sleeping for half an hour during the day? Not many. Yet, if you sleep for 25 minutes and if it results in even a 25% performance improvement over the rest of the working day, the time “lost” will be more than recovered through improved performance.

And then there are the lessons on learning – and how learning in a unisensory environment is vastly inferior to a multisensory one (thanks to what is called the supra-additive integration – ironically, just reading the book is a unisensory experience so expect to forget a lot about it unless you take notes etc);

The groups in multisensory environments always do better than groups in the unisensory environments. They have more accurate recall. Their recall has better resolution and lasts longer, evident even 20 years later. Problem-solving improves. In one study, the group given multisensory presentations generated more than 50 percent more creative solutions on a problem-solving test than students who saw unisensory presentations. In another study, the improvement was more than 75 percent!
[..]
All explanations about multisensory learning also deal with a counter-intuitive property lurking at its mechanistic core: extra information given at the moment of learning makes learning better. [..] Stated formally: it is the extra cognitive processing of information that helps the learner to integrate the new material with prior information.

The Brain Rules also touches on the topic of reality – in that none of us really perceive reality but the reality we see is just our opinion of it, and that we are all hallucinating all the time; in short, the trust we place on our eyes to serve us a faithful, up-to-the-minute, 100% accurate representation of what’s actually going on is sorely misplaced.

The Brain Rules is certainly an interesting and even fun read. In addition to fascinating explanations on many interesting aspects of the brain, it provides many bits of practical and useful advice how you as an individual can make sure your brain works as well as it can. Like already mentioned, it also highlights major deficiencies in the way things are done in societies today that are just plain wrong in light of science – tackling these issues will take a bit longer than making sure you have enough sleep and exercise, but need to be resolved at some point anyway. The pinnacle of idiocy perpetrated by corporations globally is the destruction of productivity and performance in the name of increasing productivity and performance – and the refusal of school systems to change or even explore new strategies is also nothing short of stupid. Meanwhile, I’m sure you can glean a few interesting and useful bits of information by looking at The Brain Rules and implementing what you can.

The Melbourne Zoo has a very good butterfly house that especially our daughter loves visiting. The last time we were there, I took my real camera along and – despite the occasional butterfly landing on the camera – managed to capture a few nice ones:

Ever since the iPhone launched some years ago and ended up being, by most measures, a big success, I feel the tech press has been getting increasingly mean. And I don’t like it one bit. These days not a day goes by without someone reporting of an “iPhone-killer” device emerging.

What’s with all the negativity? Is Steve Jobs such a polarizing personality that all the hatred surfaced just because of him?

Alas, no. It turns out the iPhone is not the only thing other devices are out to kill, at least according to the press. Google for any even remotely popular mobile device + “killer” and you’ll end up with a depressing amount of articles. From the remarkable 2.5 million “iPad killer” items to half a million “iPhone killer” articles and pages to the tens of thousands of “Nexus One killer” items to thousands of rants about a “Droid killer”, it seems the industry is in a flat-out war. From Blackberries to Nokias, it’s kill this and kill that.

And it’s not just the press either. It’s the individuals also – so-called Apple fanboys who are seemingly blind to all criticism directed at Apple products have been joined by similar extremism from proponents of other platforms and manufacturers. As a result, it’s getting increasingly difficult to have a civilized, objective conversation about something as simple as mobile phones – that does not bode well when you think about the need for having such conversations about topics of far bigger significance.

One problem with this is that business is not, contrary to the popular analogue, war. The technology press shouldn’t be out there going from one “killer” device to another without really having even elementary understanding of the product positioning and other basics. For example, the upcoming Nokia N8 has been called the company’s “iPhone killer” in many, many publications. Except a quick glance at the portfolio strategy and pricing will reveal the devices are targeted at very different segments. The iPhone is meticulously positioned at the very top of the smartphone range (and priced accordingly), something where Nokia has explicitly said it will have MeeGo devices – on the other hand Symbian, which N8 is running, is about “democratizing the smartphone”. Second, the pricing? The SRP of the N8 is roughly half of the iPhone 3GS’s. They are hardly vying for the same user base – which is not to say individuals wouldn’t perhaps pit the two against each other and decide to get one or the other, but in general the N8 is not positioned as the “iPhone killer” the vast majority of the press sees it to be.

The iPhone does not need to be killed. It simply hasn’t deserved it – it or Apple hasn’t committed any mortal sins against anyone. Very few devices deserve to be “killed” and most of the time, the market takes care of their early demise just fine by refusing the adopt the monstrosities. If and when a clearly superior devices come out, the older models will be eased out, simple as that. And with most modern equipment designed to self-destruct soon after the warranty expires, fast rotation of the mobile devices is, unfortunately, guaranteed for the time being.

But unfortunately it’s not just about the killing either; the “killer” devices are just a symptom of a common lack of basic analysis and fact-checking which seems to be too much to expect from the press these days. That is a loss to all of us, and will lead us down a path even more dangerous than ignorance – one of misinformation accepted as truth.

The world of high tech is filled with tales of spectacular failure and sheer stupidity; it is some of these tales that In Search of Stupidity – Over 20 years of high-tech marketing disasters (2nd edition) by Merrill (Rick) Chapman chronicles. While hindsight is always 20:20, Chapman argues convincingly that most if not all of the disasters could have been avoided, given just a modicum of common sense and situational awareness at the time. Better decision making might not have been enough to completely turn the fortunes but most of the idiocy could have been avoided. Having said that, In Search of Stupidity makes for very entertaining reading precisely because many companies did act so idiotically.

The book covers a period of some 25 years from 1980s to the middle of the first decade of the 21st century. That means lots of fascinating things made it in but lots were also missed, such as Apple’s new-found success in the mobile business. The title is however somewhat misleading; it’s not just marketing disasters that caused all the disasters – in most cases it took the co-operative idiocy of the entire company to drive them to the ground as successfully as many did. It’s also not just about failed companies, but also a pointed criticism at the many assumptions and beliefs that corporate world still holds dear. At the very beginning the well-known book In Search of Excellence is, once again, convincingly debunked. For those unfamiliar with the book, In Search of Stupidity provides the best summary I have seen so far:

The basic thesis of In Search of Excellence isn’t complex and can be summed up succinctly: Excellent companies create corporate cultures in which success flourishes. (Yes, this is something of a tautology, but it’s a nice one and people always like reading it.) An excellent corporate culture is one that loves customers, loves its employees, loves the company’s products, and loves loving the company. Once enough love is flowing through the corporate veins, a company will organically become excellent and in turn create excellent products and services. This will lead to more customer, employee, product, and corporate love, lifting all concerned to an even greater heights of selling and purchasing ecstasy. The cycle becomes self-sustaining, and a universe of almost sybaritic business success awaits those who master the Zen of Excellence.

If that sounds kooky, that’s because it is. Many companies identified in Search of Excellence were not excellent. Like Lanier. In Search of Stupidity explains what Lanier really was, pointing out that:

In Search of Excellence thought Lanier was really excellent, a company that “lives, sleeps, eats, and breaths customers.” [...] The only problem with all of this was that Lanier wasn’t an excellent company; it was a dead company, a shot-through-the-head dinosaur whose sluggish nervous system hadn’t yet gotten round to telling the rest of its body to lie down and die.

.. and of course explaining why Lanier was dead and how it came to be. Well-known companies are given great coverage in the book; Apple, IBM, Digital Research, Microsoft, Ashton-Tate, Siebel, Intel (remember the bunnies? And the Pentium debacle?), Motorola, Google, Palm, Sun Microsystems, Value America, MicroPro, Novell, Borland, Netscape etc etc. If you’ve been involved in the high-tech industry any amount of time, it’s an excellent trip down the memory lane. And if some of these don’t sound well-known to you, well, maybe you should read the book.

But while dissecting the failures (and a few successes) of various companies in a very insightful, yet funny, way is the core of the book, there are plenty of other lessons to take away from it. Memorable lessons in product positioning, marketing, innovation, branding, handling journalists and PR, and many other facets are offered. Without going into those in any great detail, below are a few of my favorite parts of the book:

On the theories of bubbles – as applicable to the bubbles of today as the tech bubble of 2000:

Many reasons for the dot-com boom have been offered, but all are somewhat unsatisfactory. The most common explanations postulate the following:
[...]
* Wall Street is full of idiots. This theory is both popular and has a lot going for it.
* The people who bought stock from the idiots on Wall Street were also idiots. What?! Are you implying that the American people’s failure to, when confronted with IPOs that reeked of red ink and gobbled on about idiotic schemes to sell 30-pound bags of pet food directly to consumers at a guaranteed loss (Pets.com), not fall laughing hysterically to the floor before kicking these IPO turkeys out the door somehow makes them responsible for their own losses? This sort of speculation isn’t even worth a reply!

On the failure of Value America; this is something Google also recently failed at with the Nexus One:

The company also didn’t understand that when you sell something to a customer, you “own” that customer and all the customer’s associated problems, including the problem of customer dissatisfaction with a purchase.

On how Windows achieved it’s market position and on the difficulty of formulating and executing a “winning” strategy and actually, how corporate success is largely a matter of chance:

But for Windows to achieve its current monopoly position, the following events had to occur:
* Xerox, the original inventor of what we now call the graphic user interface, had to never develop a clue about how to commercialize most of the groundbreaking developments that came out of its PARC labs.
* Digital Research had to blow off IBM when it came calling for an operating system for the original IBM PC.
* IBM, which during the early years of its relationship with Microsoft could have crushed the company like a bug, had to behave as if prefrontally lobotomized from 1985 to 1995 as the gruesome OS/2 saga ground on.
* Apple had to decide to not license the Macintosh operating system, a decision that led to the company from approximately 30 percent market share in the early 1980s to 4 percent market share by 2006.
[...]
Now, how does one fashion a credible strategic plan that assumes your competition will agree to collectively shoot itself in the forebrain while unpredictable market forces break in such a way as to help ensure your eventual success?

The answer is that you can’t.

And as a final quote, several suggestions to the music industry are offered in order to improve their business, like stop suing people. Sensible, yes, but I still like this last recommendation the best

A final suggestion is that decreased drug use by industry executives might lead to clearer thinking.

Now, the book certainly has some shortcomings, but dealing mostly with established, well-known history they are nothing major. Ironically, history in the form of events that took place after the book was written (in the past 4-5 years), has made some comments invalid. For example, Amazon is poked a lot of fun at while the company is quite successful these days. Also, not everyone will like Chapman’s humorous style of writing, but if you were able to stomach the above quotes, you’ll be fine. Finally, the author’s prediction of it taking 6-10 years before e-books begin to disrupt the print business proved, surprisingly in the tech world, to underestimate the pace of development.

All in all however, In Search of Stupidity is a highly entertaining, educating and recommended reading if you work in the high-tech industry. And if you don’t, you might have a good laugh at us – and perhaps lull yourself to a false sense of security that spectacular failures are only limited to the high-tech industry…

Okay, the previous post got sidetracked from my intended point(s), so I will try to return to them here shortly.

1) You don’t need a smartphone to use advanced services

This is a point equally valid for service providers and users alike. Users often don’t realize everything their phone is capable of doing regardless of what type of phone they have. For service providers, the obsession with building, say, only an iPhone app for their service hugely limits the potential user base. Even in the most “advanced” markets, iPhones account for about 10% of the install base – by building only for the iPhones, you are effectively shrinking your potential market by 90%. For some services this is fine, but for many others it’s sheer stupidity.

Analysts generally don’t help with their smartphone-obsessed views. It’s therefore refreshing to see reports like this one from Strand Consult: Mobile operators forget to tell their customers that they do not need a Smartphone to be able to use smart services on their mobile phone.

Still, to offer advanced services on non-smartphones, you have to take into account their limitations. Browsing-based services, for example, are not very usable on old handsets. But remember SMS? ALL phones support that. And who says you can’t build “advanced” mobile services on top of SMS? Do electronic boarding passes as SMS not count? Or train or event tickets? Or paying for parking? All these and much, much more exist. The mobile industry is suffering heavily from not looking outside their own market for ideas – it’s very much like William Gibson has said; “The future is already here – it’s just not evenly distributed.”

Ironically, it’s especially the supposedly “advanced” markets that, while apparently waiting for smartphones to reach all subscribers in order to be able to offer advanced services, are in danger of ignoring the potential that is already there. A lot more ingenuity is happening in the developing markets.

2) People who have a smartphone don’t necessarily use it any differently

Back when 3G networks were new and cool, many operators desperately wanted to show how high their “3G-penetration” was. In Finland, operator subsidies were allowed for the first time for 3G phones, ostensibly to kick-start the usage of advanced mobile services. With subsidized phones, people did start buying 3G phones. 3G penetration figures increased. Everyone was happy – except that most people who bought 3G phones continued to use them just like before. Nobody cared about 3G services, the source of all that additional future revenue operators were looking forward to.

Even today, many smartphone owners just don’t use the phone for things like browsing. They may use the camera and the music player, but most of the time the usage of these doesn’t bring revenue to anyone, it’s just an additional convenience for the user. And is it really that big of a surprise? If people aren’t aware of the potential their “normal” old phone has, how would they know everything their smartphone is capable of doing?