What Does the iPhone Teach Us About Technology & Commerce?

Iphone The reviews for the iPhone are coming in, and they are breathless (see below).

Rather than add to the over-the-top-hype about the gorgeous little thing, I would rather think about what lessons can be drawn from its mere existence.

I believe there are quite a few practical things to be taken away from the development and marketing of this. An education is available to those companies, corporate mangements, engineers, inventors and investors who are paying attention:

1. Committees Suck: The old joke is that a Camel is a Horse designed by a committee. As we have seen all too often, what comes out of large corporations are bland-to-ugly items that (while functional and reliable) do not excite consumers.

When a company decides to break the committee mindset and give a great designer the reins, you get terrific products that sell well. The Chrysler 300 does not looks like it was designed by a corporate committee. Think of Chris Bangle’s vision for BMW — and its huge sales spike — and you can see what the upside is in having a visionary in charge of design.

Better pick a damned good one, though . . .

2. Present Interfaces Stink: How bad is the present Human Interface of most consumer items? Leaving the improving, but still too hard to use Windows aside for a moment, let’s consider the mobile phone market: It was so kludgy and ugly that the entire 100 million unit, multi-billion dollar industry now finds itself at risk of being completely bypassed, all because some geek from California wanted a cooler and easier to use phone.

What other industries may be at risk? 

3. Industrial Design Matters:  We have entered a period where industrial design is a significant element in consumer items. From the VW Bug to the iPod, good design can take a ho-hum ordinary product and turn it into a sales winner.

4. R&D is Paramount: While most of corporate America is slashing
R&D budgets (and buying back stock), the handful of companies who
have plowed cash back into R&D are the clear market leaders this
cycle: Think
Apple, Google (Maps, Search), Toyota (Hybrid), Nintendo (Wii). A well designed, innovative product can create — or upend — an entire market. Even Microsoft did it with the X-box;

What other companies have the ability to disrupt an entire market?

5. Disdain for the Consumer can be Fatal: As we have seen with Dell, Home Depot, The Gap, Sears, etc., the consumer experience is more important than most corporate management seem to realize. Ignore the public at your peril.

What other lessons are there for companies in the business of designing products for consumers to use?

For the moment, let’s put the iPhone aside and answer the questions above:  What markets, companies, products , segments are at risk due to their poor designs?  (Use the comments to answer).


Note:  Some of the commenters are missing the point of the post — this is about the business of creativity and innovation.

We are not looking for a discussion of Apple in general; Off topic comments will be unpublished.



The WSJ and NYT reviews of the iPhone are below:


Graphic courtesy of NYT

The NYT’s David Pogue:

phone is so sleek and thin, it makes Treos and BlackBerrys look obese.
The glass gets smudgy — a sleeve wipes it clean — but it doesn’t
scratch easily. I’ve walked around with an iPhone in my pocket for two
weeks, naked and unprotected (the iPhone, that is, not me), and there’s
not a mark on it.

But the bigger achievement is the software.
It’s fast, beautiful, menu-free, and dead simple to operate. You can’t
get lost, because the solitary physical button below the screen always
opens the Home page, arrayed with icons for the iPhone’s 16 functions…

E-mail is fantastic. Incoming messages are
fully formatted, complete with graphics; you can even open (but not
edit) Word, Excel and PDF documents.

The Web browser, though, is
the real dazzler. This isn’t some stripped-down, claustrophobic My
First Cellphone Browser; you get full Web layouts, fonts and all,
shrunk to fit the screen. You scroll with a fingertip — much faster
than scroll bars. You can double-tap to enlarge a block of text for
reading, or rotate the screen 90 degrees, which rotates and magnifies
the image to fill the wider view.

Finally, you can enlarge a Web
page — or an e-mail message, or a photo — by spreading your thumb and
forefinger on the glass. The image grows as though it’s on a sheet of

He goes on to lament the AT&T network, but then adds:

even in version 1.0, the iPhone is still the most sophisticated,
outlook-changing piece of electronics to come along in years. It does
so many things so well, and so pleasurably, that you tend to forgive
its foibles.

The WSJ’s Walt Mossberg loves the iPhone; He too is far less sanguine about AT&T’s network:

Our verdict is that, despite some flaws and feature omissions, the
iPhone is, on balance, a beautiful and breakthrough handheld computer.
Its software, especially, sets a new bar for the smart-phone industry,
and its clever finger-touch interface, which dispenses with a stylus
and most buttons, works well, though it sometimes adds steps to common

Despite its simple interface, with just four rows of
colorful icons on a black background, the iPhone has too many features
and functions to detail completely in this space. But here’s a rundown
of the key features, with pros and cons based on our testing.

Hardware: The iPhone is simply beautiful. It is
thinner than the skinny Samsung BlackJack, yet almost its entire
surface is covered by a huge, vivid 3.5-inch display. There’s no
physical keyboard, just a single button that takes you to the home
screen. The phone is about as long as the Treo 700, the BlackBerry 8800
or the BlackJack, but it’s slightly wider than the BlackJack or Treo,
and heavier than the BlackBerry and BlackJack.

The display is made of a sturdy glass, not plastic,
and while it did pick up smudges, it didn’t acquire a single scratch,
even though it was tossed into Walt’s pocket or briefcase, or Katie’s
purse, without any protective case or holster. No scratches appeared on
the rest of the body either.

Mossberg’s Bottom line: "Despite its network limitations, the iPhone is a whole new experience and a pleasure to use."

Video:  WSJ’s Mossberg on the iPhone

Smartphone Comparo via WSJ:


Graphic courtesy of WSJ


The iPhone Matches Most of Its Hype   
NYT, June 27, 2007

Testing Out the iPhone
We Spend Two Weeks Using Apple’s Much-Anticipated Device
To See if It Lives Up to the Hype; In Search of the Comma Key

WSJ, June 27, 2007; Page D1

Free WSJ

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What's been said:

Discussions found on the web:
  1. H Roseff commented on Jun 27

    Isn’t this such an old story. Why not tell us about the Chrysler and Empire State Building? Or the Coke bottle? Corbusier? Better yet, tell us about Leonardo Da Vinci!

    What the iPhone really tells us are that even financial journalists can get caught up in the hype and forget their job.

  2. Jimi commented on Jun 27

    What does it tell us? That fads are good for business?

  3. Peter Colosi commented on Jun 27

    The main lesson here is that consumers have been entrained to long for, and readily buy, a lot of rather trivial techno junk that usually doesn’t really work. iPhone is pretty unremarkable: a telephone (how revolutionary!), email with a shitty little key board (wow, worse that my computer at work and at home and at the coffee shop and why do I need this thing?), voice mail (new! new! new!), a camera phone (can’t live without that, want to see a picture of my…..?) and maybe shitty little movies on a microscreen (no comment needed). I guess the revolution is that it may actually work. Anyone remember “Built to Last”? No revolution here, and probably no customer service either. I guess the iphone is really just a pathetic remembrance of a time gone by. Revolutionary!!

  4. James commented on Jun 27

    If the iPhone is disruptive technology (which I think it is because I find the experience with any cellphone company irritating at best) is it also going to have a disruptive effect on AT&T? Cingular/AT&T is a company that has a reputation for poor customer service.

  5. V L commented on Jun 27


    You are holding Apple shares and your objectivity has been clouded by iPhone hype and promotion. Here are some other opinions to make your constant iPhone hype more fair and balanced.

    BR: Your are incorrect: As I make crystal clear in the disclosure page, I clearly reveal all of my positions on any and every post.

    I own no Apple stock, nor have I for some time.

    The fast track to losing commenting privileges are these sorts of false statements . . .

  6. mhm commented on Jun 27

    Segments at risk? I’d say the car industry.

    The entry and mid-level designs are so alike and boring I can’t tell which car it is or who produced it. There is no identity anymore and to me that is key in this current crisis.

    I can’t afford a Porsche and there is not one car I can afford that I want to buy.

  7. me commented on Jun 27

    What V L said plus, Mossberg must be sleeping with Jobs. All he ever do is gush about Apple. I was surprised to see him actually criticize the crappy network it runs on.

  8. J Mellon commented on Jun 27

    I think “blogs” fit all five of your criteria. The user interface hasn’t changed since Day 1, and it’s still just newspaper columnist wannabes and their letters-to-the-editor junkies. Commenting on a blog entry is so obviously inferior to posting one that you don’t get much synergy or collaboration. But I’d better save my best ideas on this for my own blog. ;)

  9. LAWMAN commented on Jun 27

    Apple is the King Kong of fad. That said, they do it well. But like many of apple’s products, with the iphone they have built a “way cool” gadget, but forgotten who their market is.

    You want to revolutionize the world? Develop a keyboard that is not designed to slow people down when they type, as the QWERTY keyboard was so designed. Hell, for that matter develop so decent voice recognition software.


    br That was done years ago — ITS CALLED DVORAK


  10. Charles commented on Jun 27

    I’m a little confused by the Xbox comment. What market did Microsoft create or upend with the Xbox? Online console gameplay? It certainly wasn’t the console hardware market. They got hosed last generation and will get hosed again this generation (if they’re not careful) at the rate the units seem to be failing.


    BR: The dominant player was the Sony Playstation — Microsoft manged to bypass them. Sony is now the #3 firm in the space.

  11. JustAGuy commented on Jun 27

    V L quotes some comparative reviews that contain good points, but they are mostly irrelevant points in the same way the iPod comparative reviews were. That is to say there were lots of iPod competitors who could say, “Hey, the iPod is overpriced and underfeatured! Ours has more buttons and everything!” It was true. And it just didn’t matter. The iPod-iTunes universe worked so smoothly and effortlessly, it rocked the category.

    Tech companies think in terms of tech (“We got more features!”), but the iPod worked in the consumer world. The iPhone is positioned to do the same. I look at this thing and I think that for the first time we have a consumer device that looks like Star Trek technology, not just in the form factor (cell phones have looked like Trek communicators for a while) but in the way you interact with the touch screen and the icons. I’ve never seen anything like it in a hand-held, consumer-targeted device. It is, quite simply, a category breaker.

    So I’m sure the tech competitors will again roll out the same old arguments (“Overpriced! Undertechnology! We got more buttons!”) they used against the iPod. And once again it won’t matter.

  12. JKB commented on Jun 27

    Wow, so much hate for the iPhone, yet no one can stop talking about it. Just to point out to the business and technogeek users, the iPhone was not designed for you. It was designed for the exec’s wife and kids. (1 exec – 1 wife, 2 kids, that’s a 3 to 1 market increase) It was designed for the young urban professional. It wasn’t designed to run spreadsheets and enter sales data. It was designed to provide access to the lifestyle parts of the web. The Safari interface will allow the spreadsheets, databases and sales data to be used on the iPhone but that isn’t it’s purpose.

    You can list and list all complaints but it is coming readily apparent that the iPhone will be a runaway success. It is apparent that the interface will become the new standard for all phones. All of Barry’s points are right on the mark and it is time this happened to the mobile phone industry.

  13. paul commented on Jun 27

    Funny what history tells us.

    1. We all bought Dell computers when we should have purchased an Apple.

    2. Who cares how business reacts, they have always stayed away from innovation, they now have their employees “locked into their” Blackberrys, at great cost. It’s the drone effect. To loosen up their employees they gave them an edict that they can be casual on Friday – and guess what, the employees filled their fridays. But, for the most part, Monday thru Thusday are still – uniform as usual – even after 15 years.

    Let’s move the drones – so they were told to buy SUVs – so they did – except their wives had to still have a Van. Look at the driveways – an SUV next to a Van. A little more money and they have a 3rd car – something little and sporty.

    Actually, the drone is moved to mediocrity peer pressure, employer pressure, by big business conservative pressure….and along comes a “Maverick” (steven jobs) with a hand held device which looks (and acts) like a Porsche – and Mr. Mediocrity with his acceptable haircut, jewelry, and clothing – wants an iphone in his pocket and when he pulls it out – watch the smile come to his face.

    All of the “talking heads” and poo poo’s of the media – who always miss “the move” are at it again. Good for you Walt Mossberg – and it is always why I listen to your reviews – Walt is his own man! This Next Month will be “big” for Apple Recognition. “Big” as in WOW!

    Steven Jobs is one of the Great American Stories. I am very impressed and, Other than Walt, I can’t remember any of the names of the reviewers…nor will they ever cause a ripple in american business.

    One thing for sure – Barry will have at least one iphone in his family and that is why I check in with Barry – He even knows who makes the worst coffee – where the best hambergers are AND why the CPI is Bull $hit!

    Thanks Barry!

  14. James Bednar commented on Jun 27

    C’mon guys/gals, we all know this has nothing to do with “revolutionary technology”.

    Apple is a marketing firm first, and a technology company second.

    What do white headphones have to do with technology? Nothing. But from a marketing standpoint? Absolute genius.


  15. S commented on Jun 27

    I suspect the biggest lesson to be learned is how moronic it was for APPL to give its competitors a huge head start by announcing the Jesus phone, the phone that walks on watter, so far in advance of the roll out.

    MOT, NOK, ERICY, and Samsung will be very well prepared for the Christmas 2008 selling season.

  16. Boston commented on Jun 27

    1. What people are failing to realize in their ready-to-disregrd-the-iPhone rants is that this piece of equipment can surf the internet on WiFi with a real browser interface.

    2. Granted, the iPhone does have its limitations, but soon you will see consumers demanding more from their portable devices and the “fad”, as many choose to call it, will turn into a trend in mobile devices, with Apple leading the way. It’s a mistake to compare it to the Blackberry. The majority of iPhone’s initial customer base will not be current or potential Blackberry buyers. (Watch how many “regualr consumers” will suddenly be in the market for a smartphone – but only the iPhone.)

    3. The iPod was not “new” technology either, remember, and it was criticized by most reviewers. Soon, it won’t be enough to have “just an iPod” that can’t surf the internet or take pictures, even if it does play videos (these iPod’s will soon be “less cool”). Oh, wait, the iPhone does all that AND can make and recieve phone calls?

    4. My 19-year-old lugs around a digital camera, a 30 gigabite video iPod, and a cell phone, and still, with all these devices (totalling over $800 in cost price), she can’t surf the internet. (My daughter, and all her friends, would NEVER buy a Blackberry: “Ugly”. Functionailty is important but “cool factor” trumps it by about 1,000 times. Period.)

    5. Although the price may be steep for now, expect it to drop over time, expect more funcionality and features to future iPhone models, and don’t expect that this is a “fad”. Within the next year to year-and-a-half, you will being buying an iPhone, if not for yourself, as a gift for that tech-savvy Gen Y son, daughter, niece, nephew, or grandchild.

    6. And how convenient that Apple & AT&T have set things up so that you don’t have to activate a new line just to purchase one… makes gift giving a whole lot easier.

    Full disclosure: (Long AAPL and worked 7 years for Cingular in Sales. The majority of sales between November and January were gift purchases for relatives. Expect iPhone to be on lots of Christmas lists this year.)

  17. yoshi commented on Jun 27


    We all bought Dell computers because, at the time, Apple’s laptops and computers -sucked- (performa anyone?). Now everyone is buying Apple computers because Dell computers now -suck-. Of course – Dell has figured this out and is improving and streamlining their product line (see yesterday’s Dell announcement on new laptops). I also find it interesting that many of the comments here are very similar to comments made about the iPod when it was introduced (too expensive! too big! no one cares about the interface! what?!? no FM!). Quite frankly I am sick of the bile and the lovefest put forth by those who come to so quick opinion about a product -that hasn’t even shipped yet-.

    But back to the original questions. I would say the appliance industry suffers from poor interface. Controls are confusing. Some make no sense (the fact that I have to turn my $600 stainless steel dishwasher off and on to start a new cycle is annoying to say the least). New appliances with graphical interfaces are worse than phones. Who the hell cares if it can tell me I am out of milk – why don’t you tell me the darn temperature that you are set at?

  18. Jim B. commented on Jun 27

    Hey, Barry.

    I’m so cynical about this whole subject that I just couldn’t bring myself to comment in public. Nevertheless, your question is very worthwhile, and I’ve pondered it off and on these few hours, and in one form or another, thirty years. I’ve developed more products, have more Patents, and have written more than some entire (large) technology companies (and have damn little to show for it) so I think my opinion is, if not of value, at least somewhat informed. So, here goes…

    “What markets, companies, products, segments are at risk due to their poor designs?”

    Good Answer #1: All of Them. Because (chuckle) better designed (har har har) products (giggle snort) will beat out… I’m sorry for shooting milk out of my nose, but I just can’t say this with a straight face. How about simply, “all SHOULD be at risk”? All damn well OUGHT to be at risk.

    Better Answer #2: None. Because hype, branding, hucksterism, image, politics, payoffs, favoritism, elitism, corruption, self-interest, celebrity, connections, marketing, and plain old bullshit are way more important than design. This is assuming of course that you were referring to the design of the product (as opposed to the design of the box, the ads, the promotions, and so forth).

    Correct Answer #3: Some, but who knows which? Because it’s an imperfect world, so sometimes the better product does succeed (which happens so seldom it is newsworthy), and because sometimes the sleaze merchants die of auto-erotic self strangulation, flee the country, or some such before they manage to complete their evil deeds (which, unfortunately also happens so seldom it is newsworthy).

    As to your points:

    1. Committees Suck — especially when the members are largely looking out for themselves or their constituencies instead of a shared, common goal. Which is virtually always the case. Some (such as Congress) don’t even PRETEND to work toward a common goal.

    2. Present Interfaces Suck — no question at all — iPhone included, sight unseen. And they suck for wrong and completely unnecessary reasons — cost, perceived adequacy, laziness, incompetency, fast-time-to-market, especially ivory-towerism (meaning designs by people who were never actually FORCED to use what they design).

    3. Industrial Design Matters — yes, but, again for the wrong reason. In a completely “marketing” driven, celebrity-based society, products mustn’t be good, they must be DISTINCTIVE (this is why most long-term entertainer’s voices — good or bad — are instantly recognizable). It ain’t all that easy being “new and different” (unless you have been branded to be automatically perceived as “new and different” in which case you are by definition and are pretty much home free).

    4. R&D is Paramount — wrong, wrong, wrong. Well long-term right, short-term wrong. Today, image and crowd pleasing group-think is everything. Don’t hide your eyes, plagarize. Shine up that pig, give it a nice name and a pretty cover, let Paris Hilton hawk it. You specifically said to not discuss the i-thing, but I challenge you to find a single novel, original thing about it.

    5. Disdain for the Consumer can be Fatal — one upon a time, no longer. Go call an India call center if you really believe this. Go to the DMV. Turn on reality TV. Go buy concert tickets. These days, you have to set your customers on fire (and give them e-Bola) to get them to even THINK of going elsewhere. Of course, if the other celebrity tells everyone you have disdain for the consumer…

    Will I go buy one of them thar iPhones? Don’t know yet. I’m tempted to get one just to play around with to see what all the fuss is about. On the other hand, I already KNOW what all the fuss is about (or at least, how the fuss was generated). And, the last “new and innovative” thing I bought ended chopped up and thrown into the pool. So, is it worth $1K or so (taxes, contract etc.) to sneer at Steve? Don’t know yet. Maybe I’ll hide the ax and borrow somebody else’s.

    Maybe some marketing guy’s.

    Jim B.

  19. ECONOMISTA NON GRATA commented on Jun 27

    I agree about Nokia. However, I also believe that iphone is a pretty f$&#ing impressive first effort. I’ll reserve my judgement until I see what comes out of the Apple pipeline…

    Right now it appears to be more fashion than function kinda like a pair of sensible six inch heels… I am anticipating some great things….


  20. Mike Nomad commented on Jun 27

    Wow, funny to see how many people are missing the point.

    The iPhone is not a cell phone with lots of cool stuff & a slick interface.

    The iPhone is a a computer that has cell phone capability. The phone runs OS X. (addressing the post about how the Nokia 95 walks on water) Running OS X indicates that the iPhone can in fact support Java. How the lame network forced on iPhone users affects their ability to use Java is another matter.

    It is so obvious the iPhone is a test bed for the thing that Jobs could have and should have released years ago: A Newton replacement.

    There is plenty crappy to point out about the iPhone. However, an interface that doesn’t suck is not on the list.

    No, I don’t own Apple stock. And I won’t be buying an iPhone. It takes more than getting the software right.

  21. KP commented on Jun 27

    Apple used to have some computing chops when the Woz had more pull. The Woz said himself that he was disappointed that people didn’t take more time to understand how computers worked in order to be able to use then more effectively. He was opposed to the philosophies that Jobs now actively runs the company by.

    It amazes me the arrogance and ignorance the Apple suckers display while deriding those not hypnotized by Jobs’ b.s.

  22. Ironman commented on Jun 27


    It’s more than just marketing – Apple’s core strength is it’s design talent, which makes the job of a marketer much, much easier.

    What separates good design from so-so or outright bad design is that everything in a good design has been thought out – nothing is there just because it worked somewhere else.

    Good design not only identifies and solves problems that people have, it also delivers surprises – first at how well it satisfies the reason why someone might have bought it, and then with what it can do that the buyer later discovers.

    Where Apple has really succeeded however has been in its choice of market to take on with it’s design strengths. The music entertainment industry in particular has routinely turned out horrible products over the past 30 years.

    Here, I’m not referring to the music, I’m referring to what they put the music on and the requirements they demand of the music enthusiasts. Sure, the CD produced outstanding sound, but the CD jewel box has got to the the worst designed product, ever, in common everyday use.

    Flimsy, easy to crack or break, it arrives in a plastic shrink wrap that’s excessively difficult to remove. And they all cost too much (thanks, RIAA.) And then you have to pay way too much for a bunch of less desirable songs to go along with the ones you really like.

    There’s a reason why the electronic formats for audio really took off, even though the sound quality is generally recognized as not being as good. It’s good enough (and getting better), lets you choose the songs you really want, and you don’t have to deal with the damned jewel box.

    Apple has pretty much succeeded at designing and implementing solutions at nearly every level of the music industry. Now, if they could do more with the mobile communication networks….

  23. Rusty commented on Jun 27

    A couple of other at-risk products/markets:

    Newspapers – and I’m talking about the form factor here. Why do they come in several sections, that require two hands and a lot of room to peruse? USA Today created a breakthrough design 20 something years ago, but the market for news, already suffering due to the digital revolution, is vulnerable to another paradigm-changing layout. Think the WSJ in a tabloid format.

    The DVR market should be owned by Tivo’s interface, but hasn’t been. I thought Apple’s iTV would breakthrough here, but hasn’t. I still think it’s a vulnerable space, operating in a look-and-feel world.

    What about watches? Imagine an Apple entry into that market, with a watch that has a touchscreen and functions such as temperature, heart rate, pedometer, map, etc.

  24. rebound commented on Jun 27

    What does the iPod teach us about technology?

    #6 Innovation opens you up to scorn and jealousy. Cell phone interfaces suck, so why should Apple feel entitled to put out a product that might not suck? Who the hell do they think they are?

    #7 Ignore naysayers, take a chance, profit.

  25. Rob Dawg commented on Jun 27

    All these great comments (and not so great complaints). Yet no one has hit upon the theme that hold the iPhone, Chrysler 300, et al together. The company treated their professional staff like assests and not cost centers. BR is quite correct that slashing R&D budgets is eating the seed corn. The sameful gutting of this countries’ technical classes will continue to hurt us for another generation.

  26. James Bednar commented on Jun 27


    Oh, don’t get me wrong, Apple really hits the mark when it comes to design, and not just usability, but visual design as well.

    But I don’t understand why you are giving Apple credit for digital music? The mp3 format, as portable players that utilized this format, were widespread at the time of the iPod release. You can’t give Apple credit for that.

    Heck, if anyone should get the credit for revolutionizing portable audio, it should be the Sony.

    You want to talk revolution? Let’s talk Walkman.


  27. sam commented on Jun 27

    BR is getting carried away..
    the screen too small for internet experience..
    cannot replace blackberry!!

    people who would like to buy this would already have Ipod as well as blackberry/palm..so will carry 2/3 gizmos??
    beside extensive usage og iphone would mean constant worry about charging the damn thing..

    what a waste of human resource is this
    of course just like Blackstone, this is marking the apple TOP..

  28. Greg0658 commented on Jun 27

    What does the iPhone Teach Us About Technology? hum

    That another computer is squashing the markets of many?

    That we are going mobile and downsizing the old school standard dream for it?

    I don’t know. I give.

    Are we tracking if they are bought in cash or credit and the projected pay off day? Does that really matter in the big picture?
    Cause it seems its all about moving stuff at the moment.

  29. Rob commented on Jun 27

    Because of the state monopoly on public education, schools are not at risk because of their crappy design, but they should be. (Think curricula as the process, and students as the product.) Take a look at some of the decision making Americans make (What is the bankruptcy rate these days? What are the average and median per capita revolving debt level? How many people have even a functional level of financial literacy?). What about tech knowledge and skills? If we want to compete, we’re going to have to radically change education. And the only way to spur change is the marketplace. We acknowledge that monopolies suck, yet do nothing about some of the most pernicious.

    I won’t delve into other government “services” (especially the entitlement programs) such as Social Security, FAA, etc. Of all entities, government should outsource (via contract to American companies) the most.

    As for other tech products/processes that (in the Joker’s words) need an enema–how about the traffic light/road interface on the macro level (how much ga$ do we waste because of traffic lights–$$ that buys bullets, bombs, and bull$hit propaganda for Al Qaeda? Why has the Bush administration not figured out that this energy dependency is a noose around our neck?), all the different websites that have my personal information (mostly financial) with their defense-in-depth labyrinth paths to my info, and the process of updating/patching any software product while simultaneously keeping your guard up with firewall/anti-virus software in place (which, I guess, is really a complaint against both the design of the web, and the predominant OS).

  30. JustAGuy commented on Jun 27

    The Walkman was indeed a breakthrough in the area of carrying your music wherever you went. The iPod merely continued this breakthrough. But what the iPod did that was revolutionary, something impossible for the Walkman, was to allow you to carry ALL of your music wherever you went. That was a second breakthrough in the area of music, and it was revolutionary. No need to choose which CDs to bring with you that day — you had them all, all the time.

    The iTunes breakthrough was the triumph of the single over the album. No longer were we forced to buy 8 so-so songs to get the 2 we really wanted. Sure enough, singles sales soared. iTunes is now the #3 seller of music overall. It worked.

    So if you want to say that the iPhone’s screen is too small for the Internet, note that it is bigger than anything else on the market. And if you think people won’t buy because they already own an iPod, you ignore the iPod market where many people have bought a 2nd or 3rd iPod in time, and now they will buy the iPhone. And if you say they already have multiple devices to carry around with you, well this is the solution to that. So the only thing I think is a real objection are the Blackberry users. They might not go for the iPhone. For everyone else, it’s a revolution.

    What Apple excels at is not having the very best technology. It’s having the good-enough technology that works more smoothly than anything else. The geeks of the world can handle any user-hostile interface. The rest of the world that wants things that just work can go for the Apple solution.

  31. Rusty commented on Jun 27

    Another comment – what the iPhone teaches us about technology: I think we’re going to learn a great deal about whether the coattail effect works for worst-of-breed networks like Cingular.

  32. Tero Kuittinen commented on Jun 27

    I hate to disagree with Barry – ’cause he’s cool – but I definitely think we need to wait for the consumer response. I don’t think the first wave of reviews got iPhone right.

    At the moment I see Apple having considerable contempt for the consumer. The last leg of the TV ad campaign was geared towards building iPhone up as the coolest vessel for portable browsing you have ever seen.

    But downloading a regular web page takes 1-2 minutes. This is a crime against geekdom. Tech-savvy consumers know they will need WiFi and are prepared. I know for a fact many regular consumers don’t realize how ill-suited the EDGE technology is for mobile data.

    I think the marketing campaign is a bait-and-switch operation. This gadget may be a terricic music/video player. But it’s not a smartphone – it cannot access mobile data over mobile infrastructure at tolerable speed. I do not believe mainstream consumers are ready for the WiFi configuration rumba for their phones.

    It’s a particularly exciting launch, because the iPhone lacks so many features that other high-end phones have (like video capture, photo-messaging, videos-streaming over mobile network, etc.) But it has truly innovative features such as the great virtual photo album and perhaps the best voice mail system evah.

    It’s always interesting when you see such an unusual mix of pluses and minuses. But I have to think that seductive NYTimes.com browsing ad was a big ole mistake from Apple.

  33. Michael Donnelly commented on Jun 27

    Bad design is what we are talking about right?

    I hate my camcorder and my movie feature on my digital camera.

    Taking my 2 hour block of video from the camera and chopping it into smaller pieces onto a DVD and creating chapters, naming the chapters, sorting stuff. It’s a major pain in the neck.

    Using the tiny 1 to 5 minute files from the camera phone, same problem. I’ve got movie files all over my hard drive, not well sorted or named. I’ve got to collect them all get them onto a DVD insert the DVD into the 50 inch TV.

    Either way video is still in the stone ages. And youtube doesn’t count. I don’t want to watch it on a monitor and searching for stuff on YouTube still isn’t that great.

    getting my own video from

  34. Matt commented on Jun 27

    This is a great way to punch back at cell phone manufacturers that have made mp3 playing cell phones. maintain market share of mp3 players and challenge competitors on their home turf. In 2-3 years time, parents will be buying these for their 10 year olds to break and need replacing.

    Remote controls for TVs, Cable boxes, integrated home theater remote controls could use some changing. The remote control has not progressed much since the 1980s. (I visit my parents and can see the limited progression) Companies just added VCR controls onto the TV ones for DVR remotes. How about voice command functionality added to remote controls?

  35. JustAGuy commented on Jun 27

    I agree that EDGE is the problem in the equation, and it’s the reason I’m not getting an iPhone at this time. I know down the road there will be network and hardware improvements, and when you can download video at faster speeds, and when the iPhone v2.0 has improved whatever needed to be improved, then I’ll get it.

    Will consumers who do not live in big cities with lots of WiFi availability be disappointed with EDGE? For Web browsing, yes. The one saving grace for Apple is that consumers are totally trained to hate cell phone usage — ever try to navigate RAZR menus? — so they may view this as par for the course while enjoying the other aspects of the iPhone (iPod, etc).

  36. Joshua commented on Jun 27

    I am really glad you mentioned Xbox. The Xbox 1 and 360 both have one thing in common: top to bottom they were devices designed by and for people that play a lot of games. The first Xbox had a built-in hard drive (no ludicrous $25 for 8 meg memory cards) and built in ethernet (no stupid $40 cards that would only go to 1/4th of the installed base). They built a really good online service that had a unified friend list (before every game had its own friend list – how insane is that?) and required broadband (no dialup slowing things down) and required voice (for better strategizing – in theory).

    The 360 obviously took this all to a new level, with required HD support, wireless controllers, downloadable demos, add-ons, and now you can download HD movies. There are twice-yearly updates which add a whole bunch of features, mostly all requested by fans.

    Sometimes I wonder just why the Xbox team is so different from the rest of Microsoft – they are a fast-moving, creative, receptive bunch that care about what their customers say.

  37. Tom B commented on Jun 27

    “Now everyone is buying Apple computers because Dell computers now -suck-. Of course – Dell has figured this out and is improving and streamlining their product line” Yea, Dell is trying. But what do they have to offer in terms of an OS? The best they can do is Ubuntu, which is too geeky for most people. Distant second? Windows XP, which MSFT could easily EOL to drive Vista sales.

    The key feature of the iPhone: it is defensive. It means Nokia, etc. will never be able to get serious traction with an MP3 player/phone for people who want that. The iPod franchise is protected.

    Disclosure: I DO own Apple stock– most of which I added around 2001– pre-iPod, but after the time I felt confident that OSX was going to ship and not suck.

  38. Tero Kuittinen commented on Jun 27

    Yeah, I think much depends on whether consumers expect a smartphone or simply a high-end iPod with some phone features. I don’t get why Apple marketing stressed browsing so much.

    I love how Nintendo positioned Wii – they never tried to claim it has competitive graphics or big processing power. They just stressed the fun new motion control technology and slapped on a low price that compensated for the hardware shortfalls. No overreach.

    It’s terrific that major companies like Apple and Nintendo are simply reshaping existing product categories – cutting off some features and adding others. I hope more of this will happen instead of the deadly grind of RAZR-PS3-Xbox360-type brand extensions. But when a company creates a new product niche, it has to be very careful not to mislead consumers about the key characteristics.

    Or maybe not – maybe consumers just don’t care about browsing or video streaming all that much. It’s going to be a hectic weekend in blogland!

  39. Tom B commented on Jun 27

    “Sometimes I wonder just why the Xbox team is so different from the rest of Microsoft”

    Part of it is the fact that hardware and software are designed by one unit, like Palm was before they started to suck.

    Many people like their Xbox’s, but I understand the Xbox division loses money, so I doubt you could call the XBox a successful product…

  40. LAWMAN commented on Jun 27

    Y’know, the basic principle of all innovation is the KISS principle. All revolutionary gadgets incorporate KISS in some way or another…which is why the gadget becomes the industry standard.

    As it pertains to the iphone: how many buttons do you need to push to turn on your current phone an call your wife? Two. How many buttons (or, I should say, “finger movements”) do you need on the iphone to make the same call? I count 5 or 6.

    Explain to me how this is an improvement on current cell phone technology. After all, this is the “iPHONE”, not the “iswissarmyknife”.

    One of tech’s flaws..and apple is as big a violater here as any…is “distain for the consumer.” Sometimes they are too smart for their own good.

    If a tech company wants to “save the world,” all they need to do is develop a tech product that will save the newspaper industry. Develop a light, flexible product that can act in lieu of a newspaper, and update itself constantly.

  41. Lorenza commented on Jun 27

    In all the hype and criticism of the iphone – I failt o hear the most releveant fact:

    Virtually the entire cell phone market is made up of $ 100. or less sales.

    The iphone will either flop or be a victim of it’s own success. If the price factor doesn’t flop it, it’s success will.

    It’s competitors will simply copy it, and sell it to the point that APPLE has no more margin.

    Apple’s stock has what I call the “shark syndrome”. If it stops swimming, it dies.

    By the way I own some Apple stock.

    But reality is reality – the only way to monetize a 1600% gain is to sell it.

  42. Bob A commented on Jun 27

    To answer your question: people will pay more for things that look nice. But then we already knew that didn’t we?

  43. Bob A commented on Jun 27

    and please see Tero Kuittinen and Cody Willard on Realmoney for the down-to-earth realities of the Iphones shortcomings. Sometimes those pretty things have fleas.

  44. Ben commented on Jun 27

    My vote for poor design is Starbucks:

    1) Filty seating areas and condiment bars
    2) Move to automatic espresso machines instead of pulling shots by hand. Saves time but how does SBUX differentiate from McDonald’s and Dunkin Donuts who’ve installed their own machines? Why not form separate lines for plain drip coffee and custom espresso drinks?
    3) Salads? On top of overpriced deli sandwiches in shrinkwrap and unappetizing breakfast sandwiches? Focus your menu design on coffee not food.

    Just my two cents. I don’t own the stock but love the coffee (which I can get in my cafeteria for the same price).

  45. dark1p commented on Jun 27

    another lesson: design and attitude appeal most to younger people.

    apple has captured a nice slice of several generations now, each time expanding its reach and building on its existing base.

    question: why do people who will never buy an apple product get so upset by them? like all products, apple’s simply give a certain customer something they like and identify with. weird. wonder if it has something to do with youth envy? cool envy? being republican? ;-)

  46. Lorenza commented on Jun 27

    Let me expound for those average folks like myself ( and what the so-called ‘smart’ money already knows ).

    At this point, APPLE is already priced for success with the iphone.

    The stock has more than doubled since last summer.

    Therefore at this point, the most probable outcome is at least a meaningful consolidation – likewise with the Market as a whole.

    Because of the way APPLE is going to book the revenue for the iphone ( an important clue ), failure or success won’t be clear for a while ( and “success” isn’t popularity, it’s revenue ).

    As such, this only reinforces the likelihood of consolidation at the least.

    Now after that consolidation, assuming were still in a Bull Market, and assuming the iphone is a success over the short term, the stage will be set for the next leg up.

    If not, like always, the average ( You and I ) will be left holding the bag in 120’s.

    There is no better time to monetize a gain, then the period when “belief” is the strongest.
    And the smart money will sell it to you “believers” all the way down.

    Also a warning: quietly over recent months huge new put positions have been opened in the Jan 2008 series, way out of the money – all while the stock was trading over $ 100.

    Pay attention.

    Us “average” folk don’t drop a cool million + on deep out of the money positions for nothing.

    The recent price-volume action in Apple supports what I’ve just outlined.

    Caveat emptor.

  47. Eclectic commented on Jun 27

    What you’re looking at – the iPhone – will probably in just a couple of years look comparatively like the WWII army walkie-talkies look relative to cell phones today.

    Anybody that thinks Apple has not bridged the gap to the next generation is just not being objective. Stock position or no stock position.

    Apple I’m sure already has designs on the table that would make their own product obsolete. This thing will be 1/10th the size, maybe 1/20th… within 5 years. Battery life will be 24 hrs or more with permanent use. Speed and storage will pentuple in 6-10 years. You may be able to wear it in your ear… you may have a screen wearable near your eye such that perspective can overcome screen size issues.

    There might be inexpensive “slaved” screens that feed off of WiFi.

    Basically, what you are looking at will morph into a combination of tv, radio, stereo, Internet, gaming, telephone… and probably point of sale credit card payment.

    One thing Barringo mentioned is the problems of innovation regarding “committees” and committees kill this kind of thinking.

    Jobs is best today at killing Apple’s committees… probably just as fast as he sees them forming. That’s what took Apple out of the catbird seat about a decade ago, and that’s what’s put them back in the catbird seat again today… killing the committees that didn’t allow innovation.

    In 10 years you can put some flowers on your desktop, because there will be a big empty place where the old PC (or Mac) sat.

    Your company servers will “serve” your personal device. They’ll link to a convenient screen and speakers in your work environment (slaved), if you want that, but it might not be necessary to even have those, depending on your occupation or activities.

    Moving parts in computers will be like vacuum tubes now are to radios. The heat sink from chip devices will be cut by 50-90%… the electrons will be freed from the confines of ancient circuitry and r-e-s-i-s-t-a-n-c-e.

    Devices are headed marginally toward philosophical infinity regarding human productivity, and the residual values they provide will take on the nature of pure i-n-t-e-l-l-e-c-t.

    Remember that I’ve written that “productivity is not a philosophical arbiter of the availability of goods or services in a given era, but merely the *real arbiter of costs* of goods and services in real time present value.”

    This represents another step in mankind’s relentless drive to meet its real subconsciously expressed economic objective… the reduction of costs of goods and services marginally toward zero.

    And committees don’t think like that either, Barringo.

  48. jswede commented on Jun 27

    wow, folks are missing the boat…. “why yes, Mr Customer, you can activate the phone at home – just go to your computer and download APPLE iTunes for your PC”…. (“by the way, yes this is the place where you manage/buy/store your media for your new phone”)

    “sure Mr Programmer, you can write applications for the iPhone, and you, Mr User, can download and use these applications for use with your iPhone – just go to your computer and download APPLE Safari for your PC”… (“why yes, it IS faster and better than IE, thanks for noticing”…)

    “oh, so you like your APPLE experiences thus far, do you, Mr Customer? well, we make computers that look and run and feel and perform just like the iPhone and the Safari and iTunes applications”… (“viruses? nope… Why yes sir, they are much faster. Glad you noticed… of course you can run your existing Windows/PC applications on them”)

    iPhone is NOT an attempt to put Blackberry out of business – this is about getting everyone else.

    Just like the iPod has increased Apple’s personal computing market share from 5% to 8% in the last few years, iPhone will continue the momentum. What’s going to drive AAPL to 300 and beyond is the PC marketshare it will keep gaining… it can go to 10% in the very near future – a 25%+ gain from today – and still hardly have a dent in the total market… a tiny share, but a HUGE gain for AAPL… then it’ll go to 12%… 15%… MAYBE by then some folks will start see the real heart and strategy of this company.

  49. peachin commented on Jun 27

    OK – iphone and appl – may not be the investment – so let’s “what if”

    The connection to the internet – via T is considered less, much less, than the best.

    But what if T – remains quiet – and then announces “its surprise” a better faster
    mode thru the same connection – and the announcement is near or on this Friday!

    Look at T stock – off the highs and not expected to move on news.

    T is a pretty big company not to capitalize on the iphone introduction….

    I bought some T today – why – because I think APPL is not the play at this time.

    who am I,……nobody

  50. Unpretentious commented on Jun 27

    My candidate for out-of-touch products is the Microsoft Office suite, along with other non-consumer-focused apps.

  51. Aaron commented on Jun 27

    Apple has always been a hardware company whose agenda was to build computer based appliances. One of the original design criteria for the Mac was to fit on the kitchen counter, under a cabinet.

    Not that they don’t have excellent R&D and not that they don’t innovate, it’s just that if you look at them as a computer company like MS or Dell, you might give them a little undue credit for thinking outside the box. They were never that box…


  52. mp commented on Jun 27

    When Apple comes out with an iPhone that includes a wine cooler, hot tub and orgasmatron, I’ll be impressed. Until then, it’s just another damned phone.

  53. Michael Donnelly commented on Jun 27

    More bad design

    Why does it take 5 minutes to turn on my computer.

    Why are my garage walls only 18 inches wider than my car? I have to perform the human contortionist every night. I need at least 5 feet to open my car door, walk around the door and enter the car. The garage space has too be the cheapest square footage in the entire home. It’s just raw space. Would it kill you to make the garage 7 feet wider?

    Why can’t I access the shower or bath drain like I can the sink. The S curve of the drainage pipe should be cleaned out from time to time.

    I wish the government would mandate a common recharge plug adapter, I must have dozens for the phones, cameras, gameboys, laptops, etc…

    Good design idea (from Scott Adams Dilbert home) have 2 dishwashers in every home. Once you run one, the stuff is clean, no need to take it out and stack it in the cabinets (waste of time) merely use the clean dishwasher as your storage place and take out as you need. Then put the dirty dishes in the 2nd dishwasher. Flip and repeat.

  54. Estragon commented on Jun 27

    I think you can throw out your first four points. Only #5 matters, and to the extent the first four are relevant at all, it’s only as a consequence of #5. In order to have game changing products, we need companies to really understand what the customer needs and wants.

    Committees aren’t necessarily bad. A lot of great work (including Apple’s BSD OS core) comes from open source, which is a committee writ large. Industrial design, interface development, and R&D shouldn’t be functions, but should be an integral and ongoing part of the delivery of products and services at all levels.

    The genius of Apple is to know what they’re selling. iMacs weren’t computers as much as they were desk art for creative types. iPods weren’t MP3 players, they were a fashion accessory and brand extender. Likewise, the genius of Starbucks was (maybe less so now, based on comment above) not selling coffee, but using coffee as a way of getting paid for the use of their store as social space.

    As for other products and services ripe for disruption, I’d have to say linear media and the surrounding advertising model is a candidate. Pipe owners (telco/cable) have failed to recognize and internalize the changing way people use media. As a consequence, there’s an opening for a new pipe, WiMax perhaps, to be disruptive.

  55. jswede commented on Jun 27

    “Apple has always been a hardware company whose agenda was to build computer based appliances.” -Aaron


    say what? Did you just hear of Apple this week? Who’s been writing the OS’s for 20 years? Who’s been writing the iTunes/iPod code? Apple has always been BOTH hard- and soft-. that’s THE thing that’s made them able to operate as they do – that’s THE thing that’s made them different and able to do what they’ve done in the last 5 years.

    (Regarding “it takes 5 mins to turn on my computer”… Macs are on and good to go in 5 SECONDS.)

  56. The Financial Philosopher commented on Jun 27

    What other industries may be at risk? The music business…

    Ironically, it is Steve Jobs innovating in this industry as well. Consumers do not want to be told what product designs they want and how the product should be delivered (the primary mistake of the auto industry). I worked in the music business for several years and I can tell you that the end user is almost never considered in the A&R (product design)process. The primary consideration is not even the music — it is all in the package itself (looks, marketability, etc.)

    As much as I like to make fun of American Idol, their process is almost completely centered on the end user. One of the only real parallels to the “real” music business is that the most talented “artists” never “win;” however, the end user is engaged in product selection and delivery and that makes for a successful model. Millions of album sales and several Grammies can’t be wrong.

    When I want to listen to some “real” music, I’ll just dig into my own music collection and stay tuned to resources, such as The Big Picture, for some good music recommendations…

  57. V L commented on Jun 27

    Do any of these LLCs hold AAPL shares?

    Ritholtz Capital Partners LLC
    CKF Holdings LLC
    CK Asset Management LLC
    Index Securities LLC


    BR: NONE

    I own no shares, I control no shares, clients do not own shares.

    What part of the disclosure discussion I previously pointed to are you having a hard time comprehending?

    (Strike two)

  58. Estragon commented on Jun 27

    Oh, and one more for the flamethrowers out there, I think the US in general risks being disrupted. Despite huge advances in travel and communications, the US is an increasingly inward looking country, with a largely inward looking media.

    How much external news, aside from Iraq, do people get? How many Americans have passports? How many Americans can name the top 2 destinations for American exports?

    The marginal customer is increasingly non-American. Are Americans equipped to know their customers?

  59. ZackAttack commented on Jun 27

    Agree with several of the previous posters – Windows franchise is at risk, longer-term.

    Just remembering that the threat has always come from smaller, simpler devices. Think IBM vs DEC and DG; then DEC got dinosaur’d by the PC; now the PC begins to get chow’d by the iPhone. Operative word is ‘begins’.

    Big winners have to be the content providers; the guys that own the things that will be downloaded/viewed over YouTube, etc.

  60. Aaron commented on Jun 27

    “say what? Did you just hear of Apple this week? Who’s been writing the OS’s for 20 years? Who’s been writing the iTunes/iPod code? Apple has always been BOTH hard- and soft-. that’s THE thing that’s made them able to operate as they do – that’s THE thing that’s made them different and able to do what they’ve done in the last 5 years.”

    If selling their software is on the agenda, why can’t you buy it on anything other than their hardware?

    I admit, there are subtle shades of grey. But taking the macro perspective seems appropriate here.

    My first computer was a ][e in 81. I learned to program on an Apple. I was an Apple rep in college. I think I understand them as much as you think you do.

  61. michael schumacher commented on Jun 27

    It really does’nt matter how poorly or polished a design is. If the marketing hype works and peole buy it is that not enough for the exercise to be called a success??

    Apple excels at this in a way that can best be described as:
    “we’ve decided THIS is what YOU want”

    If enough people decide that they want it then you have people lining up to buy the thing four days before it’s released.

    Design has nothing to do wit it. Perception has everything to do with it.

    I’ve said this before: “apple could release a turd from steve jobs, put the grey apple sticker on it and it would instantly sell 1 million units…..iCrap”.

    If anything sells more than 1 million units does it really matter how well or poorly it is designed? That’s what is at work here…

    Hype and perception


  62. fatbear commented on Jun 27

    Entities that are approaching the toxic zone, per your points:

    Banks – very little concern for the retail customer, except perhaps for Commerce – most are interested in the customer as a revenue unit to be exploited by x-promotion – wrong – give me a good product, well-designed, and then the cash will follow

    Brokerages – mainly the same comment – add in that they’re exploiting the retail customer for their own proprietary trading and you get even more self-aggrandizement vs. the customer

    Most media giants – despite all the focus groups, etc., very few are actually concerned with what the customer wants – p2p media is rising fast, and self-entertainment (no, not that kind) is rapidly reaching critical mass (fan fiction, dress-the-doll, mash-ups on YouTube, etc.) – if it weren’t for the backlist, most entertainment entities would be near the brink

    Government, especially the Feds – as run by the current bunch no real concern for the customer – it can work, there can be good design and good product, but first you need a management group that actually wants to serve the customer

  63. Whammer commented on Jun 27

    Some good comments above. Home appliances largely have horrible interfaces, and even worse, now the new “fancy” interfaces and features seem to cause precipitous drops in reliability.

    Schools is a good one — the essential methodology for educating students has not changed in a long time, and it is pretty clear that a certain segment of students is not well-served by the “teacher in front of the class tells you stuff” model.

    Home entertainment in general is totally ripe for the plucking, and lots of folks want to do that. Add home networking into the equation and this will certainly be the next big battlefield. How can I integrate my STB, DVR, HD TV, DVD player, CD player, iPod or equivalent, internet access, telephone, and whatever the heck else into a package that is usable, useful, reliable, and doesn’t require $5K or more worth of installation and tech support.

    What about non-consumer products? What is bad in the B2B space, or just around the office? I think the copy machines have become a nightmare lately, but maybe that’s just me.

    Corporate voice mail systems are pretty abysmal right now, IMO. Nobody should use a “spell by name” directory — we really need voice recognition so we can not crash our cars while we’re trying to connect to someone…

  64. Todd Mentch commented on Jun 27

    A little late to the game:

    First, I have lots of reasons to dislike Apple, but I still admire their design and software innovations. They are not just a marketing firm – they innovate. Salon.com’s tech guy has a nice piece today in which he concludes that the iPhone is important for all cell phone users because it will cause competitors to upgrade and improve.

    But I want to honor our host, and play Barry’s game:

    What other industries may be at risk?

    Rather than think about whole industries (like automotive, which first came to mind) I thought about product categories – like “cell phone” or “portable cd player” both long standing dinosours Apple has attacked.

    Laptop:The next giant leap will be 6×9 inch device with a wireless ¾ size keyboard/mouse setup that folds up into a small compartment. It will run in the Apple and Windows environment, and switch between the two effortlessly. It will be a portable DVD player with a display that puts those units in the back of your headrest to shame. It will have the HD and RAM memory to replace your 3+ pound laptop at half the weight. In just a few months after its release, it will be a common sight to see guys walking around with one stuffed under their belt in the small of their back.

    What other companies have the ability to disrupt an entire market?

    Microsoft: Let’s face it, if they ever get their COLLECTIVE s*** together, they have the resources to recruit the talent and make it happen. In lots of categories. I seem to recall that Xbox happened because they created an autonomous unit and just let the geeks have their fun. They should do this across all categories. It won’t happen until the old guard of Gates/Ballmer just goes away and allows the culture to change radically. And if they don’t do it quickly, Google will make any software innovations irrelevant. They have the best shot at creating the laptop scenario described above, but so does Apple, and Apple can pull off the Osx/Win environment miracle – they have already started the process.

  65. jswede commented on Jun 27

    Aaron, if you don’t see the advantage in their model and the advantage of sellign hardware and software together in ONE package, then we are on different planets. very likely. sorry to hijack. take care.

  66. Tom B commented on Jun 27

    “Microsoft: Let’s face it, if they ever get their COLLECTIVE s*** together, they have the resources to recruit the talent and make it happen.”

    Last I heard, they were opening big R&D facilities in China. Same old MSFT thinking–forget about actual QUALITY, just write lots of lines of code.

  67. Estragon commented on Jun 27

    Tom B:

    To suggest that MSFT doing R&D in China necessarily means they’re destined to get lots of low quality code is the worst form of bigotry, and incredibly naive. It reminds me a lot of the comments about Japanese cars a generation ago.

  68. pjp commented on Jun 27

    The cynicism of the anti-design folks is a sign there’s still a lot of profit to be made from well-designed products. Their attitude is a reflection of the dominant marketplace. Where you find this cynical, anti-design, anti-customer attitude in spades -architecture, medicine, journalism, you’ve got a chance to get in there and disrupt things by actually giving a damn.

  69. Brendan commented on Jun 27

    To answer the question in the post, a few at risk industries come immediately to mind:

    1. The PC OS (Windows): This was already discussed, but I would add the need to create an attractive OS for small businesses, or even better, an integrated OS. People like me use my work computer for personal stuff too. I wouldn’t be running crappy MS software if I wasn’t forced to by the convenience of using MS software for small businesses.

    2. Visa/MC/Am Express: Huh, you ask? The ancient art of carrying plastic, paper and endless store discount cards could be updated into something more compact that stores all of your information on a single card. The implementation wouldn’t be that difficult, but would require some outside-of-the-box thinking, which the committees would squash. But if any one of those companies (or a fourth upstart) commits, they could put the others at risk. The quick pay devices that you can use at about 2% of retailers are a start, but only scratch the surface of revolutionizing the wallet.

    3. The Laptop industry: As handhelds become more powerful, the laptop industry needs to respond with increased ability to interface with those handhelds, which can potentially store everything you need. If, say, Apple, creates a laptop-like docking station for their handheld devices, the traditional laptop could become obsolete, along with Dell, HP, etc.

    4. The entire car industry (except perhaps the Korean makes): With Hyundai building both cars that rival BMWs and cars that rival Fords on many levels (and it’s not all just advertising hype), aging luxuary car buyers, image woes for American car makers, the “bling,” SUV and “rice” fads all dying, there’s a serious void being created for those who want to stand out, and a lack of incentive for buyers to go the dealership to be pressured by obnoxious salesmen. Will people continue to pay a $20K premium for cars with a few extra features that look like the Kias that copied them? Not to mention that increasing reliability across the board is going to start creating an oversupply of cars. The entire car industry can’t continue on it’s current path. I’m not sure what the next fad will be, but perhaps hybrids or pure electrics have a chance to “break out” of the mold to inspire people to buy new vehicles with decent profit margins again. Though, I’m pretty sure the hybrid is already too commonplace amongst soccer-moms to be hip. I think the entire car industry is positioned for a massive nose dive (ala the Airlines in 2002) if they don’t start thinking outside of the box.

  70. JustAGuy commented on Jun 27

    “Where you find this cynical, anti-design, anti-customer attitude in spades -architecture, medicine, journalism, you’ve got a chance to get in there and disrupt things by actually giving a damn.”

    That’s very well said. Creativity and innovation is about going beyond the status quo. For every existing vendor (in any field) who sits around saying it can’t be done, somebody in a garage comes along who just does it and makes a fortune. The key to good design is the realization that yes, you can do it.

    The public recognizes good design when they see it even if they don’t fully realize they are recognizing good design. They might just think, “Oh, they solved that problem!” But that’s enough. They’re sold.

  71. Tom B commented on Jun 27

    “To suggest that MSFT doing R&D in China necessarily means they’re destined to get lots of low quality code is the worst form of bigotry, and incredibly naive”

    No bigotry implied. Right now, the best scientists and engineers leave China. In ten years– who can say? Maybe Chinese per capita income and freedom of the press will have risen enough to be attractive to people.

  72. rob zenilman commented on Jun 27

    Great post

    Design by committee can be a death sentence in high tech. Look at Microsoft’s rollout of Vista (yawn). For a committee to be successful in this business, you need a visionary as its catalyst (think Steve Jobs or Linus Tovarlds).

    While it is important to note Apple’s success in integrating function and design, I think the company to watch is Nintendo. The success of the Wii is due to the human interface and Nintendo’s ability to keep the cost down – bluetooth, motion sensors and 802.11g wireless in a $250 box. Their DS also has a user friendly interface, with a touch screen and wireless capability (I always wondered why PDA software was never written for the DS.)

    The question is can Nintendo leverage their engineering and current market position to go after Apple – MP3/MP4 players, cell phones etc. I believe that their emphasis on usability and cost places them in a unique position to give Apple a run for its money.

  73. jankynoname commented on Jun 27

    Products in need of a revamping:

    Alarm clocks- seriously, I’m sick of waking up to the same ghetto out-of-tune FM station. Here’s what I want. When it’s time to get up I want the lights to come on, the coffee pot to start brewing, my stereo to start playing some album(where it left off the day before), and the shower to start running. By the time I get to the shower the water will be hot and I’ll be all set to go. Come on engineers. The age of “The Jetsons” is upon us, it’s time to start living like they did.

    Roads – I live in SoCal and occasionally make the drive up I-5 to the Bay Area (along with a few million other people). It’s a straigt shot, and nobody really exits for 400miles. We need frictionless sections of roads to save gas. You get up to speed on a friction covered section and then let her glide the rest of the way. When you need to exit you pull onto another friction band to slow down. Of course autos would need some modifications to make this work, and we may need magnetic devices or something along the sides of the road to adjust steering. Talk about saving gas. Of course by this point we’d all be driving electric powered by nuclear plants anyways, so what’s it matter?

  74. Tom B commented on Jun 27

    “We need frictionless sections of roads to save gas”

    Just move to the Snow Belt.

  75. Estragon commented on Jun 27

    VL – “Why are you selectively answering my questions and deleting my posts?”

    Maybe because he explicitly and repeatedly asked that this not be a discussion about AAPL, and said he’d unpublish posts that don’t comply. His house, his rules.

    What’s so hard to understand about that?

  76. Barry Ritholtz commented on Jun 27

    V L:

    Reach me privately by email later this evening.

  77. V L commented on Jun 27

    Maybe if iBarry stops selectively controlling the hype and anti-hype about iPhone, you will see that I was discussing iPhone (not AAPL).

    DISCLOSURE: I have never had any positions in APPL, AAPL derivatives, ETF’s and indices containing AAPL stock. I also have no affiliations with other funds trading/holding AAPL and its derivatives.


    BR: This post is NOT about the iPhone or Apple — its about whether corporations use a superior or inferior method for designing their products, and how they select what they are going to build.

    If you stop your reflexive Apple hatred, you will see this is not about them.


  78. pjp commented on Jun 27

    One thing I thought I’d mention:most of the time, when you start seeing new “programmable” versions of your favorite products, the logic is something like this. The manufacturer’s interest in switching from a mechanical to electronic interface is cost. The additional “features” that exhaust us with their complexity are added because the hardware is already there and the software has to be written, so they add in, say, Internet-based control of your dishwasher because they can.

    Alan Cooper, one of the fathers of interaction design, wrote a book called, “The Inmates Are Running the Asylum” about this several years back. He named these feature-laden, overly-complicated new products “dancing bearware”, akin to a witnessing a dancing bear, because when you see a bear dancing, you don’t care that he’s a bad dancer; you’re simply amazed that the bear is dancing at all.

  79. Larry commented on Jun 27

    What really makes the whole thing work is that Apple has the pull to make AT&T adapt to Apple, not the other way around. Unlike the other cellphone/smartphone vendors, Apple realizes that the end-user is the customer, not AT&T.

    As for the iPhone itself: no individual technology in the iPhone is anything special. It’s all available “off the shelf”. The hardest part is the integration, packaging and software.

    I can already see iPhone + 3G and iPhone + GPS, as batteries get better and MIPS per Watt increases. In fact, that’s what I’m waiting for: iPhone + GPS + Google Maps/Yelp. Hmm, that’s another category Apple can take over: location based services.

    Autos certainly can use an iPhone like makeover, especially now since they now have to deal with GPS, climate control, MP3 players, cellphones, RFIDs, etc. I’m starting to see bits and pieces here and there: networks (CAN), touch screens, head-up displays (HUD), etc.

    Other markets: home automation systems. thermostats, alarm clocks (like someone else said, also see Chumby), home theater systems

  80. Tom B commented on Jun 27

    “As for the iPhone itself: no individual technology in the iPhone is anything special”

    It kills me to hear pundits ripping the iPhone on spec numbers.

    The girl of my dreams has two eyes, one nose, two legs– the usual number of all the other parts. But everything is just put together better. It’s all in the gestalt– and usability.

  81. tox commented on Jun 28

    things that are uglier than they need to be:
    hearing aides
    light dimmers
    shopping carts
    us *and* asian cars
    us houses
    us workplaces
    home depot
    and on and on…

  82. Quiddity commented on Jun 28

    I just want to second BR’s comments on industrial design / user interface. Man, it’s is horrible out there. Especially with software. I tutor people on how to use PCs with Windows, and I really wonder if they benefit from “dynamic” elements like “recently/most used” functions showing up (or not) on menus. And how about the latest MS Internet Explorer on Vista? No menu until you hit the ALT key. So obvious. And those pre-packaged browsers that come with DSL install packages? Two or three rows of toolbars that are a distraction, not to mention gobbling up valuable screen real estate.

    Now to be clear, I’m dealing with non-tech types. Your typical consumers. More and more each vendor wants to capture them with ultra-sticky applications that hide the underlying structures they are built on (mainly directory hierarchies). I’ve seen this with scanners, cameras, MP3 utilities, etc. It stinks.

  83. sam commented on Jun 28

    Jack of all trades, master of none.
    A good capitalist system will punish such wrong-footed hubris.

  84. pjp commented on Jun 28

    Ah, tox…. You have hit on something huge.

    You mentioned walkers and hearing aids.

    Also, wheelchairs, electric scooters, and other assistive devices. Anything made to assist the aged, especially those who are boomers and used to having some sort of style.

    But design means more than making useful things look attractive, which is more important than many realize. It also means recognizing real human needs, it means creating “human artifacts” (things, software, written works, television programs) that reflect a sense of empathy for others.

    Look up Victor Papanek http://en.wikipedia.org/wiki/Victor_Papanek
    or Buckminster Fuller, or J. Baldwin or Donald Norman. They’ve all got fascinating and amazing things to say about design, culture, and cognition.

    (Also, Norman Potter’s “What is a designer?” is a fantastic read.)

  85. michael schumacher commented on Jun 28


    Try switching to de-caf…

    You might want to preface your posts in the same way that you’ve flamed people talking about apple here. You have provided the link to apple in form of a nice shiny picture for everyone to look at…but wait….it’s not about that….

    Given the example of form, function and design that you choose to lead off in the article it’s no wonder it was a dicussion about Apple….

    A different example would have made more sense.


  86. Kaleberg commented on Jun 28

    There are a lot of great ideas here. It’s amazing how bad design is, especially now that so many things are being made in China so that the sellers have no connection with the manufacturers. For example, I had trouble finding a TEAPOT that could whistle, but also could open wide enought to be filled from a faucet.

    The commercial gains of market disruption do not necessarily go to the technological innovator. The European transistor was beaten by the later Bell labs transistor, and it was the Japanese who broke through with cheap transistor radios and built an industry on it. Eastman didn’t invent photography. Carnegie didn’t invent steel. Gates didn’t invent the operating system.

    There are areas wide open for innovation, and a big problem is that the designers and users are often different people. You can try to get good observant, empathetic designers, and give them enough time, money and access to users to get good designs, or you can design your products so that the users can customize them and learn from what they do. Most companies do neither.

    Cellphones work well enough, but they are closed systems. Compare the original late 1960s cellphone prototype with a modern one and contrast how little it has changed with how much computer interfaces have changed. People have been prototyping better cellphones for ages, but you cannot put your prototype on any existing network, unless you are Steve Jobs. Think of the iPhone as the Ericphone (or however it was spelled) decision that opened the network to innovation.

    Any business model which is based on controlling rights is usually ripe for innovation. Who says people won’t buy the same song a hundred times? Sell music for workouts in the form of disposable mini-players at gyms and health clubs. Sell it at party stores either as miniplayers or custom CDs. Everyone gives bootleg CDs these days, even the Bush girls. Fighting it is leaving money on the table.

    Look at this tiny textbox. Isn’t it amazing that no browser, except Safari 3 beta, lets me resize it? It’s time that attitudes about control start changing. I can change my font size, why not the font color for those black on gray sites? Why should it take more than a single click to get to my banking or brokerage transactions? The increased security of frequent inspection would more than offset the infrequent theft of password problem. Why doesn’t the financial industry support secure RSS feeds with standardized reporting formats? (I was just looking at a Mac program, QIF Master, that converts Quicken Interchange Format standard files from one QIF format to another! Not that I begrudge the guy a few bucks, but why does this need to exist?)

    As for electronic appliances, I’ve always wondered why no one has proposed an IP based standard for controlling televisions, recorders and so on. Even an HTML based API would let people design better remote controls. If my TV, DVR, DVD player and the like had usable interfaces I’d watch TV every day instead of once or twice a month.

    My hobby is cooking, which is all about transforming food mechanically and thermally. Everything is basically late 19th century. Why can’t refrigerator or stove top temperatures be set in degrees? Ovens let you do this. Why doesn’t my blade coffee grinder have a timer so I can consistently grind my coffee? Why are mandolins so dangerous?

    I’m not going to get into automobile design. My Honda lines up the steering wheel and the digital speedometer so I can’t tell how fast I am going. It isn’t just the Americans. Have you drive a Prius? That recover energy setting on the transmission is actually dangerous! It should handle engine braking and recovery by analyzing your pedal positions. (To be honest, I never notice what a car looks like from the outside since I am usually inside it when I am using it).

  87. cm commented on Jun 30

    I have to second (at least thematically) JKB and MS on their assessment of the marketing aspect. Most of it is about projection of image and lifestyle. Relatively few products are sold on technical merit.

  88. LB commented on Jul 1


  89. JustAGuy commented on Jul 2

    Jack of all trades, master of none.
    A good capitalist system will punish such wrong-footed hubris.”

    We must be living in a bad capitalist system then.


    250,000 in 2 days? American Technology Research estimates

    500,000? 700,000? Bloomberg story

    Depends on which analyst you believe. One thing is clear: it’s selling at an unbelievable rate. Assuming these analysts are correct, Apple will soon be able to announce the one-millionth iPhone sold, and perhaps as soon as later this week.

  90. Bob Lefsetz commented on Jul 9

    I was at the psychiatrist today, and on my way out, I noticed a new fob on his keychain. Instead of the SAAB logo, it had the Acura logo. I asked him, HAD HE GOTTEN A NEW CAR?

    An Acura TSX!

    I told him I’d test-driven that car. It was a lot of automobile for the money. Furthermore, it came with BUILT-IN XM! What did he think of the XM?

    He hadn’t listened. Well, he’s a shrink. I figured he was talking on the phone. But NO! You see his new Acura came with an iPod connection!

    He’d gone Mac a couple of years back. I’d like to think it was all my stories during sessions. I’m not sure, but he first went for an iBook, which came with a free iPod, and then an iMac.

    This is no geek. This ain’t no C++ programmer. This is just a regular guy, older than me, utilizing the new technology. And if this guy has forsaken radio, FREE SATELLITE RADIO, then what chance is there for this industry to SURVIVE?

    You can’t say you love satellite radio anymore. People laugh. Like you stepped in doo-doo. Howard Stern and Mel Karmazin tarred the reputation of the category, and now it’s fighting to remain a niche. Better management, a better sale of its story, might be able to stanch the bleeding, but it seems America just ain’t buying, just ain’t INTERESTED, even when it’s FREE! Because people have discovered the iPod, which lets you listen to EXACTLY what you want WHEN you want. And they’re not going back to the old ways, never ever.

    Even Pandora and LastFM have usurped satellite radio’s buzz. What kind of crazy fucked up world do we live in where people have more faith in a COMPUTER than PEOPLE! Everything’s hand-selected at satellite radio, but the public doesn’t give a shit, they DON’T TRUST THE HANDS!

    No iPod, satellite radio is a winner. But with choice and a seamless car interface, satellite radio is a boy band with a minor hit, never to be heard from again. Kind of like LFO.

    Thinking about all this, I wondered, WHAT ELSE HAD THE iPOD KILLED?

    1. Rio

    The iPod wasn’t the first, just the best. Rio had a head-start. It bungled the ball. First and foremost because it had inferior software. The iPod might LOOK cool, but it’s software that makes it work so well, such an attractive product. So, the iPod didn’t only kill Rio and Creative (check, their numbers are in the toilet, they’re pulling back), it killed Sony Connect.

    2. Sony Connect

    It just didn’t work well. And it was half a solution. You need a store AND a player. Sure, Connect was hampered even more by an incompatible format, but the lame software coupled with the equally lame hardware doomed the service. Usability is more important than appearance. Stunningly, iPod/iTunes had both. Sony was only interested in the packaging. You had to be a geek to use their players, and most people are not geeks, and even geeks get frustrated sometimes.

    Any competing store will not be a threat without a competing player. Amazon selling tracks? Probably a disaster. (Hell, wasn’t Yahoo supposed to steal Apple’s thunder?) Because even if you know how to BUY on Amazon, what the fuck do you DO with said tracks?

    The average person has no idea what folder to place downloaded tracks into. The average person has no idea where the tracks download TO! They can’t even find what they’ve BOUGHT!

    And, even if you don’t want to move the music to an appropriate folder, HOW THE FUCK DO YOU ADD IT TO YOUR iTUNES LIBRARY? People know how to buy from iTunes, and rip CDs. But the average person has no idea how to import. And why do so if it’s such a HASSLE!

    And before I move on, the iPod didn’t only kill Connect, it put a huge dent in SONY INC! Suddenly, Sony was no longer the leader, no longer the desirable product. The twin prongs of Apple and Samsung damaged Sony’s reputation IRREVOCABLY!

    3. The CD.

    Napster wounded the CD, but the iPod killed it.

    It came down to this. Do you want to be able to take YOUR ENTIRE COLLECTION WITH YOU, or a bunch of scratchable CDs and a large portable player that skips. I mean try JOGGING with a portable CD player. And then, as iPod penetration became greater, it became positively UNCOOL to own a Discman. Further killing the CD format.

    A 45 held two tracks. An LP forty minutes. A CD seventy minutes. An iPod? DAYS WORTH! So, the ART FORM was challenged. How long should an album BE? Should there even BE any albums? Stunningly, both labels and artists are still debating this, still clinging to the album format when consumers only care about ONE THING! That the music be GOOD! They want a LOT of good music, and NONE bad.

    4. The Major Labels

    Oh, they’ll survive, in some ultra-merged fashion, focusing on their catalogs. But the iTunes Store flattened distribution. Anybody can get on the service, and anybody can get paid. The majors controlled distribution, they no longer do.

    5. Terrestrial Radio

    The iPod not only put a dent in satellite, but terrestrial music radio too. Radio’s only hope is topicality. News and discussion thereof/talk. To play the same old tracks over and over again? People only tolerated this when they had no options. Now, with the iPod, the public is extending a middle finger to radio, and RADIO DOESN’T EVEN REALIZE IT! Radio thinks it’s a monopoly, that people MUST listen. No way. And, iPod penetration will only increase. And music radio’s numbers will continue to go down. And labels won’t have controlled spheres within which to hype their products…

    6. Palm

    Did you catch the numbers?

    RIM will survive. BlackBerries are e-mail devices. Corporations are not about to switch to iPhones, which do e-mail much more poorly and sans as much security. But all those things you do on your Treo? With that fucking stylus? Lamenting the constant crashing? You’re gonna do those with your fingers on the iPhone. The e-mail on the iPhone is every bit as good as that on the Treo. And the device is slimmer, cooler, and ultimately MORE USABLE!

    The iPhone IS an iPod. And it was only the success of the iPod that allowed Apple to make such a splash with the iPhone.

    7. Dell

    An industrial box, sans identity, with tech support in Bangalore, as opposed to a badge of honor that works. Which you can get tech support on FOR FREE by a genius at your local Apple Store! Corporations will continue to be Windows/PC, but the movement amongst the hoi polloi, everyday people, to the Mac is stunning.

    This is hurting not only Dell, which thought it was about price only, but MICROSOFT!

    8. Microsoft

    No longer the indomitable beast. Today, the “Wall Street Journal” told the company to spin off its never made a profit Xbox division. Heard of anybody buying a Zune recently? Eager to get a Vista box?

    Microsoft ain’t going away. But when it comes to new products, usability, STOCK OWNERSHIP, one goes with Apple.

    It was a trojan horse. A supposedly overpriced device that only worked on Macs. Now, the iPod and its attendant store are viewed as behemoths, which rule the world of music with an iron fist.

    How funny.

    But even funnier is that the consumer is on APPLE’S side. No one professed love for their Dell, certainly not for Windows, but Apple can sell ANYTHING based on the reputation it built with the iPod.

    So, what have we learned?

    It’s not about price, it’s about focusing on a need, that many people don’t even know that they have, and delivering a solution. It’s about usability. It’s about cool. It’s about design from the top down as opposed to committee. It’s about excellence as opposed to lowest common denominator.

    And the juggernaut continues. In the future, people will want only basic mobile phones or FULL-FEATURED ONES! Mobile high speed networks will MEAN something, people WILL WANT to surf at high speed whilst on the run. So, cell service in America will IMPROVE, all as a result of the iPhone, a direct descendant of the iPod. Hell, AT&T is upgrading their network AS WE SPEAK!

    It used to be about muscle. Controlling distribution. Now it’s about quality. Google gives you the result you’re looking for, and Apple lets you take your lifestyle on the run. You didn’t foresee either solution, but now YOU CAN’T LIVE WITHOUT THEM!

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