Sunday, May 07, 2017

Apple's India Problem

Based on Apple’s Q1 revenue call and guidance for the rest of 2017, they are looking to India and China as their future growth engines. Unfortunately, the status quo is bleak: iPhone sales are down in China and they never really picked up in India. In my objective estimation, Apple’s forays in these markets needs an infusion of new ideas if they are to turn things around. The problems stem in the product portfolio and overall Go To Market strategy.

Apple’s current Go To Market strategy isn’t going to work in these markets because of three critical differences between them and the West (USA and Europe):
  1. The degree of price consciousness in these markets is very high.
  2. The person(s) defining the strategy for these markets do not understand market dynamics intimately.
  3. Median income levels are a fraction of what they are in the West, while pride of ownership / status symbol importance might be 2x or 3x of that in the West.
I don’t truly understand the Chinese market, so I will focus my attention on India. There is a subtle fourth consideration that every successful company in India has embraced: The Indian consumer is not loyal to a brand; they are loyal to price and status appeal. This fourth consideration is a key to understanding why stickiness through Cloud-based services is hard to establish in India (WhatsApp is the sole exception to this rule). These numbers haven’t been tabulated but I can say with some certainty that revenue from Apple’s “Other” services in India is minuscule.

Translation: Apple cannot count on current owners of Apple device(s) being repeat customers (this stat has been calculated for China [1], it is low, but I couldn’t find an equivalent one for India).

On my recent long travels to India, I often fielded questions on why I chose the iPhone. The question invariably leads to a longer conversation on aesthetics, applications, services, design and personal preferences. When I turned the question back on my contemporaries, cousins and their Millennial friends, their answers to why they choose Samsung or OnePlus (or any other Chinese phone maker’s latest device) were eye-opening. While affordability was the number #1 reason, I heard one refrain over and over:
    This phone is just good enough…
Apple doesn’t necessarily believe in “just good enough”. It wants to be “the best”, not just in perception but in reality. Every benchmark that compares phones has the current stable of iPhones in the top-5. But Indians want good enough at a great price! So what’s Apple to do? How can a company that is renowned for being the “best there can be” cross this chasm? How does Apple balance the competing needs of affordability, style/status and performance to win over the fickle Indian market?

Let’s start with what it shouldn’t do: It should not release older models in India and expect success. Folks are extremely Internet savvy these days (thanks to > 50% smartphone adoption), and Apple’s PR and Marketing departments, along with the technology press, do a fanciful job of extolling the design characteristics of the latest devices. If there is a way to visually distinguish the iPhone model I have from the ones that others have, it will reinforce the class system and associated discrimination. This is against Apple’s ethos and really isn’t the way to profits in India.

So, don’t release older models even at more palatable price points - got it. But, the newer models aren’t selling because they are too expensive. We are at an impasse!

From my vantage point, the answer lies somewhere between these opposite ends of the spectrum. Pundits have commented, post Apple’s declining sales in China, that the fact that iPhone 6, 6S and 7 look almost the same is a reason for why folks are foregoing Apple devices altogether. This is where I think that Chinese and Indian consumers diverge: in India, iPhones that look similar but have different features is exactly the way to go. This means phones cannot be visually distinguished from one another, but enable the creation of pricing tiers that Apple can leverage to accelerate sales. In essence, the tagline for the strategy I am proposing is:
    Similar in Looks; Different in Function.
To the keen eye following Apple’s moves in India, it would appear that this is indeed the overarching plan. Unfortunately, it just needs to pick a play and execute better. Yes, in Tim Cook’s Apple, this is one of the rare instances in which I can say that better execution is needed. The knobs that the team can turn (with low end -> high end in parentheses) are:
  • CPU (previous generation -> latest)
  • Camera (single -> dual)
  • Display (720p -> OLED)
  • External materials (plastic -> aluminum (ALU) -> glass)
  • Storage (16GB -> 128GB)
  • Size (Regular -> Phablet)
Tim’s team can use this as a starting point for their thinking on SKUs:

Four for India
Specifically, for the entry level, “India only iPhone”®, the newest iteration of this device should be released in line with the flagship device every year (guaranteeing Freshness). What I am proposing is similar to the worldwide Apple Watch strategy (similar innards; different shells — Aluminum, Steel and Ceramic). Additionally, this iPhone can remove components and features that aren’t accretive to the Indian market (“Hey Siri” comes to mind) so as to reduce the overall BOM.

It remains to be seen what Apple will do to win in this space. One thing is for sure, the current strategy is doomed to fail.


Monday, November 14, 2016

Developers: Windows Linux Subsystem is a Viable Alternative

Update: Thanks to readers from HN and Microsoft; please continue the discussion on HN. To summarize this post,
I challenge an intrepid, influential developer from Facebook, Google or Amazon to attempt to replicate their development workflow -- code, build, debug -- on Windows using native Linux tools, and post their findings. If Gabe's (from Penny Arcade) experience is anything to go by, the Windows support team is hungry and will do whatever they can to fix any issues that prevent this captive audience from executing their workflow efficiently.
The first MacBook Pros are arriving at the doorsteps of their eager owners. And the reviews are markedly tepid, nay "meh". This piece on does a good job with capturing what reviewers are saying about Apple's marquee portable computer.

To Quartz's credit, the next link they present to the reader covers Windows laptops that might tickle your fancy if you feel disenfranchised by Apple. Apple has, like is its wont, left the door ajar for Microsoft, but they know they are untouchable. Despite the design and manufacturing strides that Windows laptop makers -- Microsoft included -- have made in the last few years, they cannot replicate Apple's status as the coveted laptop for "makers"; creative professionals and software developers.

A crease is beginning to appear post the last MacBook Pro announcement. The first contingent -- the creatives -- are already disgruntled, and have gone public with their sometimes extreme disappointment with Apple. It's the second contingent that's been relatively quiet so far, and this cadre of MacBook portable users fills Apple's coffers a great deal, without getting much love from analysts and bean counters. Developers who use MacBook Pros today rely on the Unix underpinnings of macOS and the Linux-inspired toolchain that translates almost 1:1 from Linux to macOS. Yes, there are differences and annoyances due to vagaries of macOS attributable to either the fact that it isn't a true BSD or an obscure broken API (e.g., the "poll" implementation). Developers overcome these shortcomings by modifying their workflow slightly, but for the most part, they *strongly prefer* MacBook XXX machines over Windows because of built-in support for their daily workflow.

Enter the Linux Subsystem on Windows 10! Now, there is a legitimate competitor to Apple for native  Linux toolchain support on a "usable", "laptop ready", consumer-oriented operating system.

To give you a sense of how user-friendly the Linux subsystem on Windows 10 is, here is what my friend did to get ViM on his Windows 10 laptop:
user@windows-x1:~$ sudo apt-get install vim
Reading package lists... Done
Building dependency tree
Reading state information... Done
Preparing to unpack .../vim_2%3a7.4.052-1ubuntu3_amd64.deb ...
Setting up vim (2:7.4.052-1ubuntu3) ...
update-alternatives: using /usr/bin/vim.basic to provide /usr/bin/ex (ex) in auto mode
After which he typed this:
user@windows-x1:~$ vim

BOOM! Yes, he installed ViM on his Windows machine using `apt` without installing anything else. The native `bash` support in the Linux subsystem for Windows makes this possible, including unraveling dependencies.

If all Unix utilities work as is on Windows -- cat, awk, grep, sed, etc. -- without recompilation, then this is the last straw that can break the Apple Camel's back. To translate this; all your bash scripts, and associated automation, will work out of the box in Windows. To make this more interesting, this is not a price sensitive market -- employers pay top dollar for developer laptops. Therefore, the ASP of Windows laptops increases, thereby enabling Microsoft to sell their own line of laptops and convertibles at higher price-points (ergo, higher profits). In other words, Windows is *finally ready* to capitalize on the opportunity afforded by the negative reaction to Apple's new MacBook Pro lineup.

The missing piece for Windows 10 is street cred. Which is where this post comes in: I challenge an intrepid, influential developer from Facebook, Google or Amazon to attempt to replicate their development workflow -- code, build, debug -- on Windows using native Linux tools, and post their findings. If Gabe's (from Penny Arcade) experience is anything to go by, the Windows support team is hungry and will do whatever they can to fix any issues that prevent this captive audience from executing their workflow efficiently. Maybe Windows 10 is not there yet, but it's only a matter of time. More choices are better for developers, everywhere.

You want to get Apple's attention. I cannot think of a better way to do it than voting with your wallets...

Saturday, November 05, 2016

Finding a Footing

The last 10-days, bookended by Apple's "Hello Again" event and a truly successful Digital acquisition kickoff meeting, have flown by.

Immediately post Apple's event, the Internet caught fire. The iPhone launch, specifically the removal of the headphone jack, had already incensed the Apple faithful. The MacBook Pro's launch fanned these flames and whipped everyone into a frenzy. The most vocal of the critical bunch were the professionals and creatives. They feel most disenfranchised by Apple, and I don't really blame them. Their use case is extremely niche: 32-GB of RAM, very high-end graphics, UNIX-like OS. Their loyalty to Apple thus far has been unflinching. This might change with the launch of the Microsoft Surface Studio.

Yes, I referred to a Microsoft product. Many a story has been published that describes Microsoft as "cool", and that products like the surface have forced a volte face in people's perspectives on Microsoft. A role reversal has occurred, and Apple needs to stanch the bleeding before it's too late.

The announcements and my experience with the new products has shaken my belief in Apple. The haptic engine driven Home button the iPhone has lower usability than the old Home button. The UX changes in iOS have forced users to change their workflow. Force touch still doesn't work well. The MacBook Pro's TouchBar is going to take some getting used to. These annoyances, not issue enough on their own, are tantamount to "death by a thousand cuts". This is very un-Apple-esque; usability of their products is the stuff of legend, and enables Apple to command a price premium.  With this edge dulled, not only will Apple have to reduce the ASP of their products, it opens the door for competitors to fill the void.

How did customers respond? They ordered the new MacBook Pro so much that the pre-orders broke all previous records. Weren't customers reading all the negative press and reviews? Don't customers care about all the things that the technology press cares about? No and No. I wrote about this widening chasm :here:

Like Apple, I had my own potential moment of reckoning this past week. Since starting at GE this January, I have completed a number of assignments, but this week was the first opportunity to cement my role in GE's vaunted M&A group. GE has grown through acquisitions for the last 100-odd years, and the Digital division has been busy with identifying companies to acquire to shore up its capabilities. I have been selected to own delivering outcomes and manage all integration related activities for one such Digital acquisition.

McKinsey and BCG posit that success of a complex undertaking such as an acquisition is predicated on a strong kickoff and planning session prior to implementation. This week marked the first planning session for the acquisition I am to manage, and the stakes were high. I spent three weeks coordinating, planning and building content for the 2-day kickoff. Despite the preparation and prior experience, I was nervous on Wednesday night. A lot was riding on how I ran this workshop...

To say I hit a home-run (the Cubs just won the World Series; baseball is fresh in my mind) would be an under-statement. I hit it out of the park! Every attendee complimented me on how I orchestrated the session, facilitated decision making, and kept discussions moving along when they were at risk of falling off the rails. One attendee said that this came naturally to me; I want to take a moment to thank my leadership team at Deloitte Consulting for honing this innate capability of mine. Peter Vanderslice and Rajeev Ronanki gave me the opportunities and coaching that have taken my skills to the next level. Thank you!

No trip to Seattle is complete without tennis with Tim. Over the years, our friendship has blossomed, with each interaction making the next easier and more relaxed. Tim is both zen and pessimistic, and his advice has made me a more strategic player at the "Game of Life". We played indoors today, and hitting tennis balls again was electrifying. I have worked hard on my mobility, breathing control and patience, and the results are starting to show on the court. Tater tots and burgers after a hard 75-minutes on the courts was the perfect denouement of a long 10-day story.

The Huskies and Seahawks play critical games this weekend. I am going to kick back, read and take a much needed break this weekend. To more phases like these in the future...

Thursday, October 27, 2016

Great career advice, courtesy HN

Often times, there are real nuggets in the comments section of a story posted on HN. I have, like my cohort who read HN, started reading comments first to determine whether the article is worth reading. While this doesn't give the requisite traffic to the source website and ends up taking up a lot more time than if I read the article, folks chiming in on the discussion have amazed me with their insights.

Here is the comment, pasted verbatim (thanks to braythwayt):
If you are sincerely interested in quashing abuse, and if the risk of being laid off does not frighten you, forget about the numbers and let’s talk about quashing abuse.
Twitter gets extremely mixed reviews from people who are the targets of abuse, and I believe I am putting that conservatively. So, what I would ask is not whether they are going to lay me off because they run out of money, but whether I am going to quit because when I get inside, I discover that they are not going to actually do much about it.
If Twitter has had a come-to-jesus moment about abuse, and there are no structural obstacles to doing something about abuse, this could be a job where you will one day look back and say, “I was part of the team that turned the corner on Twitter’s biggest problem. I made a difference.”
On the other hand, if Twitter doesn’t have quashing abuse in its cultural DNA, or if there are deep structural obstacles to quashing abuse, then you may discover that you cannot actually make a difference. That can be soul-crushing if you are passionate about the work.
I am not making a claim one way or the other about where Twitter is with this, I’m just suggesting that if you are motivated by making a difference, the biggest thing to figure out is whether you will actually be able to make a difference.
IMO, this matters more than the financial risk.
Note, not all commenters are this articulate. There is no dearth of trolls on HN. That's just the nature of online discourse.

Tuesday, October 18, 2016

Apple & Aluminium

Greg Koenig, the creator of Atomic Delights gave me goose bumps in his piece on Apple, Aluminium and whether the next iPhone will be all ceramic:
At peak production, Apple is manufacturing roughly 1 million iPhones per day. More importantly, every single one of those phones is sculpted to 10 micron tolerances, from a single block of aluminum, as is every Mac, iPad, Watch and many of the accessories. It is difficult to convey to folks without a manufacturing background how insane this is, but let me try.
He goes on to say (emphasis mine)...
A central pillar of Jony Ive's design philosophy is honesty of materials. It is one of those flowery phrases that I think gets glossed over most of the time, but we've seen Apple really evolve the entire aesthetic of the hardware lineup around it. 
What makes this product honest is that it isn't bullshit when Apple says the iPhone is "made from 7000 series aluminum." For almost every other big brand consumer products company, your "aluminum" phone would rally just be an applique, a veneer, a pretty cover on bog standard plastic guts. Yes, that phone would work just fine (again, Glock), but it wouldn't be honest.
With an iPhone, the very heart of the device's design and function is this single component. Like a Formula 1 car, this is a monocoque that serves as both the external shell and the internal structure. It isn't a case, or an enclosure - it is a chassis.
This last paragraph, the comparison to the monocoque of a Formula-1 car, drove the point home in the most articulate and emphatic way possible. The greatest Formula-1 drivers, Aryton Senna being one, trust this monocoque implicitly. They would be lost without the stability and flexibility it affords them on the race track.

I never gave much thought to the chassis that houses my precious iPhone; I will now.

Thursday, October 06, 2016

Should Apple give iCloud Storage away, a la Google?

Google and Amazon have consistently moved the needle forward when it comes to Cloud-based services. Apple, on the other hand, is a laggard; its services are plagued by outages and poor performance. Microsoft is an after-thought.

There was a time when all providers charged for personal file storage -- some did it directly, others not so much. Here are starting options with pricing from the Big-4:

1. Amazon "bundles" unlimited photo storage with Amazon Prime ($99 a year, $10.99 a month)
2. Microsoft has a free 5-GB tier, $1.99 a month for 50-GB (plan details here)
3. Google had a free 15-GB tier for all document types
4. Apple has a free 5-GB tier; for $0.99 a month, you get 50-GB

Google has upended the market with its announcement on October 4. Vlad Savov writing for TheVerge:
Endless cloud storage. Google will allow free unlimited storage for full-resolution images and videos shot with the Pixel. That's much like the standard Google Photos backup ability, but takes off the size limit and compression, even on 4K video shot with the new phone.
You read that right: unlimited, free storage, no strings attached (photos will be scanned for metadata to serve you better ads, of course).

Thomas Ricker, wriring for TheVerge feels like he is getting a raw deal:
I’m feeling like a chump after yesterday’s Google event. I currently pay Apple $2.99 each month in return for 200GB of iCloud storage — space mostly allocated to my iCloud Photos library. But my free space recently dropped to zero after upgrading all my devices to iOS 10 and macOS Sierra.
He goes on (emphasis mine) ...
Dropbox comes close to Apple’s exorbitant pricing model but Dropbox is in the business of selling cloud storage. Even then, 1TB Dropbox Pro subscriptions cost $99.99 per year. Just think about that for a second; Apple charges more than Dropbox even though iCloud storage is a fundamental requirement for the features Apple promotes to help drive hardware sales.
This is such a US-centric view. China is Apple's biggest market, and iCloud Storage related revenue in that region isn't even broken out, it's that miniscule.

He proceeds to then make this bold assertion:
It’s bad enough that iCloud’s storage pricing hurts Apple’s most loyal customers — people who want to synchronize their data across multiple iOS, macOS, tvOS, and watchOS devices and then share it with like-minded friends and family. But the pricing also inhibits new customers from experiencing Apple devices to their fullest potential because the owners are reluctant to pay for something they were told was free.
The fact that iCloud is charging its users and Google isn't (but only for Photos), is this an unfair, even deceptive, practice by Apple? Are Apple users in crisis because iCloud usage comes with a price tag, and if they choose not to pay up they have to live with hampered functionality?

Short answer: a resounding NO.

For the average user -- me included -- the $0.99/month, 50-GB storage tier suffices. I haven't turned on macOS Sierra's iCloud Drive Sync feature. But even if I did, Google's FREE UNLIMITED storage for PICTURES wouldn't have helped me. I have more than PICTURES on my computer! If I turned this on, the next tier, $2.99 for 200-GB would be plenty. Yes, plenty.

This story, my avid readers, underscores my point that "there is a growing chasm between the tech press and users".

Yahoo keeps the hits coming!

All this time, I have been a staunch advocate of Yahoo vs. Google when it comes to privacy and security. The last month has shown me how shaky the ground is on which I stand vis-a-vis Yahoo. First there was news that data for 500-million Yahoo accounts was compromised:
Yahoo has confirmed that a data breach from 2014 hit 500 million users, allowing hackers access to sensitive information, including poorly encrypted passwords.
A press release from Yahoo confirms the news, and follows reports earlier today that Yahoo was set to confirm the breach. If true, stealing the user credentials from 500 million users would be one of the largest hacks ever to hit a US company.
And now, this (quoting BGR):
Intelligence agencies wanted Yahoo to scan all Yahoo Mail emails looking for a specific signature. Apparently, agents of a foreign terrorist organization were communicating using Yahoo “with a method that involved a ‘highly unique’ identifier or signature.” The investigators did not know what email accounts were used, so they needed Yahoo’s help to discover them.
Not a good coda for Marissa Mayer's tenure at Yahoo.