Steve Jobs: “Open Systems Don’t Always Win”

Steve Jobs, Apple CEO, is unapologetic about Apple’s "closed" or "curated" approach, which is to tightly control how everything integrates from the chips to the software to the industrial design.

“Open versus closed is a smokescreen,” he argues. “Google likes to characterize Android as open and iOS as closed. We think this is disingenuous,” says Jobs.

The real difference between the iPhone and Android is, he says, “integrated versus fragmented."

There is some merit to that re-framing of the argument, though some will consider it a sophisticated bit of semantic gymnastics. Up to this point, Apple has been the salient exception to the "rule" that open approaches lead to more, and faster innovation.

But that is starting to change in the media business and with the rise of applications and closed user communities on the Internet. These days, in the content business, the options are "open," "closed" and "curated," which is another way of saying "fragmented," "integrated" or "annotated."

Steve Jobs: “Open Systems Don’t Always Win”:

Steve Jobs Predictably Disses 7-Inch Tablets

Perhaps predictably, Apple CEO Steve Jobs doesn't think much of tablets with a seven-inch screen, such as the Samsung Galaxy or Research in Motion Playbook.

“Given that tablet users will have a smartphone in their pocket, there’s no point in giving up screen size," Jobs says. "Seven inch tablets are tweeners — too big to be a phone, and too small to compete with the iPad.”

Some of us don't agree. For many users, who cannot work without a notebook and a smartphone, and who travel frequently, an iPad is one more device to lug around in a backpack or briefcase. Some of us now routinely travel with a videocamera, two smartphones and a notebook, possibly another device (iPod or DVD player) "standard issue."

That means lots of AC adapters and cables, plus the actual devices.

To the extent that a tablet is a content consumption device, not so good as a content creation device, there might be form factor and weight issues that could tip the buying decision in the direction of a smaller tablet.

Apple CEO Steve Jobs rips into tablet competitors:

The Dot Mob Era

Some say a "Dot Mob" era is coming, and coming fast.

Similar to the "Dot Com" era, it is going to be a time of incredible mobile advertising growth.

Unlike the internet advertising era that took time to develop mainly because the infrastructure of the internet was so immature at the time, that will not be the case with mobile advertising, some might argue.

Google broke out its mobile advertising as a unique line item and says it is a $1 billion a year business, perhaps on the way to being a $10 billion business at some point not too distant.

Apple and the Dot Mob Era

Mobile Price Study: Only As Good As its Assumptions

Predictably, people are pointing to a new study on mobile pricing, published by the New America Foundation, as proof that U.S. mobile prices are too high.

The United States tends to fall in a band of countries that charge higher prices to individual wireless consumers for everything except pure voice service where prices are comparable, a study by the New America Foundation finds. read the full study here.

But a study is only as good as its assumptions. Taking a look at single-user plans, the foundation finds that "across postpaid and prepaid voice plans, Canada, U.S., U.K., and Japan mostly fall in the high to middle price tiers while India, Hong Kong and Sweden fall in the low price tier."

The United States is in the highest price tier in the postpaid and prepaid text plans sharing space with U.K., Canada and Denmark while Sweden, India and Japan fall in the lowest price tier, the foundation says.

Finally, Japan, Hong Kong, U.S. and Canada feature in the high to medium price tiers while India, Sweden, and U.K. emerge as winners in the low price tier, the New America Foundation says.

In Canada and U.S., consumers have the highest minimum monthly charge for a complete postpaid cell phone service at $67.50 and $59.99 respectively, the New America Foundation says. Other countries that follow a similar cost structure at lower rates are U.K. at $32.40, Denmark at $39.00, and Finland at $40.10.

So here's the problem: In the United States, in 2006, fully 54 percent of adult mobile users subscribe through a family plan, according to the Yankee Group. That was up from the percentage of users on family plans in 2005, when 49 percent of adult subscribers were on a family plan.

Eighty-one percent of all mobile-using teens were on a family plan in mid-2006, up from 75 percent in 2004, the Yankee Group found.

A reasonable estimate might be that 60 percent to 70 percent of U.S. users are now on family plans. That is important when comparing costs and plans across regions and countries of the world because the New America Foundation study compares individual plans, not family plans.

That isn't to say the New America Foundation study is "wrong." But it compares plans that most U.S. users are not buying.

The plans selected for study are important. Some are pointing to an earlier study by the Organization for Economic Cooperation and Development as well.

The Organization for Economic Cooperation and Development, for example, suggests that U.S. mobile prices are "high," based on a standard set of usage buckets, mirroring the New American Foundation study.

But there's a problem. Most U.S. users talk about four times as much as some Europeans do.

The problem is that the OECD study uses definitions of "low," "medium" and "high" use that might describe usage in the Netherlands, but are wildly inapplicable to typical U.S. usage rates, says George Ford, Chief Economist of the Phoenix Center for Advanced Legal and Economic Public Policy Studies.

Specifically, the OECD analysis calls 44 outbound minutes a month "low," 114 outbound minutes medium and 246 minutes outbound "high" levels of usage.

The average mobile consumer in the United States uses 800 minutes a month, about four times as high as the OECD "high usage" level. Furthermore, the OECD considers 55 text messages a month to be "high use" where the typical U.S. mobile user sends or receives 400 text messages a month.

Since usage plans are directly related to usage, this is an issue that distorts the comparisons, difficult to make under the best of conditions. By definition, the "average" U.S. user is a "high usage" customer. So if U.S. users kept the same behavior patterns, but had to buy plans as the OECD baskets suggest, they would have to pay rates commensurate with very-high usage levels.

In other words, if users in a given country have low usage, and are on low usage plans, then average prices paid will tend to be "lower." In the United States, usage is vastly higher than in Europe.

Normalizing for usage volume, what one finds is that U.S. users pay modest prices for much-higher use. If users in the Netherlands had consumption patterns identical to U.S. mobile users, they would pay very-high prices.

In other words, one cannot simply compare low-usage plans in one country with high-usage plans in another, any more than one can compare low-usage plans in one country with high-usage plans in the same country. Nor can one compared plans that most users do not buy, and produce results that are terribly meaningful.

Who has the most expensive phone bills? North Americans!:

Tablet PCs Will Cannibalize Other Devices

Tablet PCs will cannibalize e-book readers, gaming devices and media players, in addition to some notebooks, says Gartner.

Worldwide media tablet sales to end users are forecast to reach 19.5 million units in 2010, according to Gartner, reaching 54.8 million units in 2011, up 181 percent from 2010 and surpassing 208 million units in 2014. As you might guess, such growth will likely cannibalize sales of other products.

“The all-in-one nature of media tablets will result in the cannibalization of other consumer electronics devices such as e-readers, gaming devices and media players,” said Carolina Milanesi, research vice president at Gartner. “Mini notebooks will suffer from the strongest cannibalization threat as media tablet average selling prices (ASPs) drop below $300 over the next 2 years.”

Low-end consumer notebooks will only marginally suffer from cannibalization. Gartner analysts also expect very limited cannibalization of smartphones, except for cases where a user has to justify buying either a high-end smartphone or a seven-inch tablet. In such cases, users might opt for the tablet, and buy a lower-cost smartphone.

Gartner Says Worldwide Media Tablet Sales on Pace to Reach 19.5 Million Units in 2010

How Much Demand for 100 Mbps?

While next-generation fixed-line broadband speeds will at some point increase dramatically to 50 Mbps, 100 Mbps, or higher, in some cases, just seven percent of European online households will pay more for higher speed, says Forrester Research analyst Ian Fogg. Some argue that will resolve itself in time. Up to a point, that probably is true. But between "here" and "there" is a transition period where deployed capital could be terribly wasted.

And it is not as though the communications industry has no experience with the dangers. An overly-enthusiastic approach to mobile 3G services nearly bankrupted many mobile providers across Europe in the first decade of the 21st century. All of that should suggest the wisdom of matching broadband supply to demand, when the transition from 3G to 4G, or 10 Mbps to 50 Mbps, does not necessarily provide an obvious end user value as great as the transition frm dial-up to broadband access.

One can argue that prices for higher-speed services are too onerous, but that simply begs the question. Given a choice, nearly all consumers opt for reasonably-fast or moderately-fast services, instead of the "blindingly-fast" services.

One can argue that the only reason is "price," but that argument is akin to saying that most people would buy a Lexus if it cost as much as a Honda Civic.

But more than 70 percent of U.S. broadband customers are happy with their overall service, ranking it between an 8-10 on a 10-point scale, according to Leichtman Research Group. A mere 3 percent scored their service with a 3 or less on the recently conducted survey, while just 26 percent said they’re “very interested” in receiving faster speeds at home. See http://www.leichtmanresearch.com/press/062210release.html.

Leichtman Research Group finds that 71 percent of US broadband Internet subscribers are "very satisfied" with their current Internet service at home (rating satisfaction 8 to 10 on a 10-point scale), while just three percent are not satisfied (rating satisfaction 1 to 3).

Overall, 66 percent of broadband subscribers rate the speed of their connection 8 to 10, while six percent rate it a 1 to 3.

None of that necessarily and directly speaks to the issue of how much demand there might be for faster services, though. About 26 percent of broadband subscribers are "very interested" in receiving faster Internet access at home than they currently receive, while 44 percent are not very interested.

What is not clear, though, is how much of that potential interest can be converted to actual buying of higher-speed tiers, and, if so, how fast those tiers would need to be, and how they would have to be priced, to move consumers to act. Many consumers might be happy enough to migrate from tiers operating in the 3 Mbps to 5 Mbps range up to 8 Mbps to 10 Mbps, particularly when there still is no compelling new application that requires such bandwidth.

"Next-gen broadband will not be such an easy sell, as there's little pent-up speed dissatisfaction," at least not yet, says Fogg.

Try and find any U.S. service provider, offering actual speeds of just 50 Mbps, talking about the take rates for such services. If you cannot find any company willing to talk about take rates, that is likely because the take rates are so low.

German cable network operator Kabel BW claims that around 40,000 customers are using broadband with speeds of 50 Mbps or 100 Mbps, at a time when 50-Mbps service costs about $41 a month.

 About three million homes are able to buy service at those rates. So buyers represent about one percent of customers. What is not clear is what percentage of those buyers actually are businesses, rather than consumers, either.

Skype’s Enterprise Ambitions Includes Call Center Products

Skype says it will soon be offering businesses Skype-powered virtual video call centers, allowing enterprise customers to talk to their own customers across multiple devices, platforms and geographies, says Skype General Manager and Vice President of Enterprise David Gurle.

A large financial institution, for example, wanted a custom Skype application to enable service representatives to use video calling to communicate with customers around the world. That sort of thing can be replicated in many industry verticals, Skype believes.

Skype’s VP Of Enterprise On Future Strategy, Products And Competitors