Waiting for the economy? That won't work.

by Adam Hartung

Every day it seems someone tells me they "are looking forward to an improved economy." When I ask "Why?" they give me a horrified look like I must be stupid. "Because I want my business to improve" is the most frequent answer. To which I ask "What makes you think an improved economy will help you?"

This recession/depression is the result of several market shifts. What people/businesses want, and how they want it, has changed. They no longer are willing to part for hard earned (and often saved) dollars for the same solutions they once purchased. They want advances in technology, manufacturing processes, communications and all aspects of business to give them different solutions. Until that comes along, they are willing to put money in the bank and simply wait.

Take for example restaurants. Many owners and operators are complaining business was horrid in 2009, and still far from the way it was years ago. And regularly we hear it is due to "the recession. People fear they'll lose their jobs, so they don't eat out as often." Nicely said. Sounds logical. Makes for a convenient excuse for lousy results.

Only it's wrong.

In "Dinner out Declines: Economy Not Sole Factor" MediaPost.com does a great overview of the fact that dining out started declining in 2001, and has steadily been on a downward trend. Across all age groups, eating out is simply less interesting - at least at current prices. When the recession came along, it simply accelerated an existing trend. Increasingly, people were less satisfied with cookie-cutter, similar establishments that had similar food (almost all of which was prepared somewhere else and merely heated and combined in the restaurant) and exorbitant drink prices. For years restaurant prices had outpaced inflation, and simultaneously family changes - along with the growth of better prepared foods at grocers and specialty markets - was enticing people to eat at home.

This is true across almost all industries. A revived economy will not increase demand for land-line phone service. Nor for large V-8 American autos costing $60,000. Nor for newspapers, or magazines - or even books most likely. Or for oversized homes that cost too much to heat and cool. In fact, it was the trend away from these products which caused the recession. People simply had all of these things they wanted, so they stopped buying. Fearful of economic change, they simply accelerated a trend brought on by shifts in technology and underlying ways of doing things. When we once again talk about better economic growth in America it will not drive people to these purchases. Rather, people will be buying different things.

For the recession to go away requires a change in inputs. Providers have to start giving buyers what they want. They have to understand market needs, and give solutions which entice people to part with their money. Waiting for "the economy" will make no difference. Government stimulus can go on forever, but it won't create growth. It can't. Only new products and services that fulfill needs create growth. That will cause spending (demand), which generates the requirement for supply.

There are companies that had a great 2009. Google, Apple and Amazon are popular names. Why? Not just because they are somehow "tech" or "internet" companies. 2009 saw the demise of Sun Microsystems and Silicon Graphics, for example. The difference is these companies are studying the market, looking to the future and introducing new products and services which meet market needs. Because of this, they are growing. They are doing their part to revitalize the economy. Not with stimulus, but with products that excite people to part with their cash.

Those who are waiting on the economy to improve are destined to find a rough road. An improving economy will be full of new competitors with new solutions who did not wait. To be a winner businesses today must be bringing forward new products and services that meet today's needs - not yesterday's. And if we start getting winners then we will climb out of this economic foxhole.





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Adam Hartung, author of "Create Marketplace Disruption", is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for "Forbes" and the "Journal for Innovation Science."

Keep Moving Forward - Apple, Microsoft, Google, RIM, Hearst

by Adam Hartung

Did you ever notice how often a large company will introduce a new solution (often a new technology), but then retrench from promoting it? Frequently, the market is developed by an alternate company that captures most of the value. We can see that behavior looking at smartphones.


Source: Silicon Alley Insider

In 2008, three early leaders were Microsoft, RIM and Palm. But Microsoft chose to invest in Defending & Extending its PC software business - with updates to the operating system in Vista and OS 7. As the market has shifted toward mobile computing, Microsoft has been clobbered. But largely because it remained stuck trying to protect its "core" while the market shifted away. Palm also tried to Defend & Extend (D&E) its early position with updates, but because it did not follow the pathway to greater usage with new applications it also has seen dramatic share decline.

Meanwhile, RIM has promoted new uses within the corporate world for mobility, and thus grown its market share. And Apple has made a huge impact by bringing forward dozens of new mobile applications, closely followed by Google. What we see is a classic example of the early entrant fading largely because they decided to Defend the old market, rather than investing in the new one. Really too bad for shareholders in Microsoft (losing 20 share points) and Palm (losing 10 share points), while good for shareholders of RIM, Apple and Google.

And in Apple's case we can see that the company continues using White Space to grow revenues by expanding the new marketplace. The iPad is off to a very strong start, with tens of thousands of units ordered last week. But of greater importance is how Apple is promoting the shift to mobile devices from traditional PC devices. At SeekingAlpha.com, in "How the iPad, Slates Will Evolve the Next Two Years," the reporter projects how demand for all laptop products will decline as more capability and functionality is added to mobile devices like smartphones and these new slate products.

Microsoft can keep trying to Defend & Extend PC technology, but it won't be long before their efforts largely won't matter. Don't forget that once Cray computers was a rapidly growing super-computer company. But increasing performance from much alternative products eventually made Cray irrelevant. Same for Silicon Graphics and Sun Microsystems.

Today the market capitalization of Microsoft is about $250B, about 4x sales. Apple's market cap is just over $200B, about 6x sales. Google's market cap is about $180B, about 8x sales. All reflect investor expectations about future growth. The D&E company is simply not expected to grow - and in fact is much more likely to disappoint than the companies growing share in growing markets toward which customers are shifting.

And any company can choose to participate in growth, versus Defend & Extend. While Tribune Corporation is trying to find a way out of bankruptcy, and struggling to figure out how to deal with market shifts away from newspapers, Hearst is taking positive action. The Wall Street Journal reports in "Hearst Jumps Into the Apps Business" how the old-line newspaper company has set up a White Space project, complete with dedicated people and its own funding, to begin developing mobile applications for news!

Even when business leaders see a market shift, far too many choose to Defend & Extend the "core." Unfortunately, that leads to disappointments. Keep in mind Microsoft and its rapid loss of Smartphone share as users move increasingly to mobile devices from PCs. To succeed leaders need to drive their organizations in the direction of market shifts, and growth. Like Apple, Google and even Hearst.


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Adam Hartung, author of "Create Marketplace Disruption", is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for "Forbes" and the "Journal for Innovation Science."

Are You Prepared to Lose Control of the Idea?

Photo by chavals
by Glen Stansberry

People are awfully protective of their ideas (myself definitely included). There are plenty of reasons for not sharing ideas:

• We're afraid people won't like them, or worse, won't understand them.
  
• Someone might steal them
  
• They might, in reality, be total crap
  
• They're hard to explain, especially when the proverbial ink is still dry in the mind
  
• etc., etc., etc.

But the biggest fear I have of sharing ideas is losing control.

There is an awful lot of ego that gets attached to our ideas, (see: the God Complex), and the thought of losing that grip is crippling.

One of the most intoxicating aspects of having an idea is having control over the idea. We thrive on building, planning, analyzing, almost anything but actually doing.

It's not just little companies or amateurs that struggle with letting go. Some of the biggest companies in the world suffer from these 'idea insecurities' listed above.


Microsoft's Decline In Innovation

I read an interesting sad article about the causes of the downward spiral of Microsoft's innovation. For the past ten years, Microsoft has been playing catch-up to companies like Google and Apple. Instead of creating breakthrough products that once made the software giant famous, the company has relied on a monkey-see, monkey-do approach to production.

The article goes on to explain that the top brass at Microsoft were directly responsible for the void of innovation, simply by harboring the fears listed above. Products were never made because of petty differences between divisions. The main reason for the lack of innovation was the stubbornness of division heads to work together on technologies.

They were afraid of losing their ideas in favor of someone else's better idea.


Letting Go of the Idea

Some people never understand that if they hand over control of the original idea, something better might come out of it. Flickr was set to be a gaming company until the founders discovered a really efficient way to serve photos. There are plenty of examples of this happening throughout history.

Letting go is one of the absolute hardest concepts to grasp as an entrepreneur. But sometimes our idea outgrows us. The trick is to swallow the thick pride and embrace the potential of what could happen.

If the powerful suits at Microsoft had put aside petty differences and allowed other departments to improve their products, who knows what Microsoft would be today. They might have had a Google killer, or the iPod. We'll never know.

This wasn't an excuse to single out Microsoft. Every single company and entrepreneur deals with control issues at some point. I know I have. The important thing is recognizing when we're holding on a bit too tightly on what's "ours" and not recognizing the full potential of the idea, with the help of others.

Related article - Microsoft and Creative Destruction - by Scott Berkun


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Glen Stansberry writes at LifeDev, a blog that helps people make their ideas happen. You can follow him on Twitter here.

Harsh Reality of Innovation

by Hutch Carpenter

Nothing like putting your heart and soul into innovation, and then getting this:


Man, tough audience. But very much in keeping with some the best advice on innovation. Which is, you can't have innovation without some failure along the way. It's inevitable.

That advice is both true, and glib. Innovation consultant Jeffrey Phillips catches the right spirit when he says:


"Another thing about 'failure' is that we try to kid ourselves that failure is a 'good thing' a learning opportunity. Well, not in most cultures.


This is the reality of innovation. It's tough. The more disruptive an innovation, the tougher it gets. And we're in the middle of seeing how it plays right now with Apple iPad and Google Buzz.

Let me ask you this: Do you personally think either the iPad or Buzz will be guaranteed successes for their respective companies? Be honest now.

My guess is you're like most of us: I don't know.

Well, truth be known, neither do Apple and Google. But they've got a history you'd bet on.


Apple and Google: Big Time Failures, Big Time Innovations

Both Apple and Google have had their share of duds in the market:


Obviously, these companies do not have a perfect record of successful innovations.

But they do have a record of pressing through failures and continuing to roll out innovations. In fact, they're consistently ranked the best in the world:


It pays to stick-to-it in trying out innovations. But can everyone?


Does Your Company Really Want Radical Innovation?

In Psychology Today, a professor at the University of Michigan gets to the issue:


From vaccines to Velcro, many inventions were spawned from accidents, seeming failures. But when Fiona Lee, psychology and business professor at the University of Michigan, explored which conditions help people experiment with novel ideas, she uncovered an interesting phenomenon: "Managers talk a lot about innovation and being on the cutting edge, but on an individual level, many people are not willing to try new things."


What's holding us back? A fear of failure.

Think about your own reaction to the question of whether the iPad and Google Buzz will be successful. It's easy enough to be uncertain as an observer. But imagine if you have to put shareholder capital in to it, affect your brand in the market and risk some career trajectories?

I will often read of the importance of taking risks and accepting some level of failure for companies to be innovative. This is very true. But it can be glib to summarily dismiss companies for not 'getting it'. When they're made up of people like you and me who possess ordinary... well, human characteristics.

Because how do you know when you're iterating toward a true high-value innovation, or you're just spinning your wheels? I'll turn again to Jeffrey Phillips:


"As Edison and countless others have demonstrated, you rarely get it right the first time, and if you are stymied by early failure, then you'll never find and implement the best ideas. Innovation, as has been pointed out by individuals with far more to say about it than me, will create some failures. Your job isn't to avoid the failures, since you can't predict them in advance, but to reduce the cost and impact of the inevitable failures. In other words, keep moving."


As I said before, I can't know for sure whether the Apple iPad or Google Buzz will be successful. But kudos to those companies for rolling out innovations that might fail. And in case you're wondering whether allowing employees some latitude to fail is worth it, check out the 5-year stock performance of Apple and Google versus the S&P 500:



Let's take this one out with the great speech from Teddy Roosevelt:

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

Indeed.


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Hutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

Entrepreneurs and Innovation

"Mr. Edison, please tell me what laboratory rules you want me to observe?"

by Janine de Nysschen

A good friend of mine once sat down to lunch with Stephen Covey and a group of fellow executives. During the course of the meal, one of the men commented on the unusual tablespoons, and said "Look at the backend of it." All the people at the table flipped their spoons over, but my friend - quite unintentionally - angled it up so he could look at the bottom tip of it. Laughter ensued. But Covey raised a hand and pointed out that my friend's actions suggested something interesting in his behavior: the ability to look at the world in an unexpected way. So I guess it's not surprising to hear my friend is one of the most innovative entrepreneurs I know, as well as a successful millionaire who has transformed the industry he is in.

The story reminds me of an important fact. Entrepreneurs are often at the forefront of innovation. They possess a unique set of skills that lends itself to inspired invention and driven change. Really good business solutions and radical transformations in history have one thing in common. Somewhere, someone believed that you could do something better, different or completely new. Someone challenged the status quo or saw failure as an opportunity to try again. Often, those people were entrepreneurs.

One reason is that entrepreneurs tend to see the world around them differently. As Thomas Edison said to his laboratory assistant:


"There ain't no rules around here. We're trying to accomplish somep'n!"


Innovation is most often simply a matter of having a different perspective than everyone else, and the perseverance to make it happen. For example, some of the most creative people I know had learning disabilities growing up. Forced to adapt so they could fit into a rigid school format, many developed alternative ways of making sense of the world.

Tony Buzan, father of the world-renowned creative technique of Mind Mapping, is a point in case. Tony admits he came up with mind maps because he was "doing badly at school." He was also smart enough to realize that the way people were measuring intelligence was rather limited. Quick experiment: in your mind's eye, picture the moon, the sun, the earth and a lemon. Which one is different? While you may be like most people and select lemon as the odd-one-out, Tony would point out that if you were using color as your filter, earth would be odd because it's not yellow.

Innovation is therefore inspired by understanding that there's not always only one right answer. Or realizing you may have an answer to a problem that doesn't yet exist. Did you know that the parachute was invented before powered flight? In a "fascinating facts" piece about Sir James Dyson, you'll read that his inspiration for cyclonic technology happened one day while he was vacuuming his house (in itself, fascinating!) and he realized his top-of-the-line machine was losing suction and getting clogged. Dyson refused to accept there was only one good way to build a vacuum cleaner, and the cyclonic suction, roller-ball Dyson vacuum cleaner was born.

Innovation is also about seeing an idea for what it's really worth. Think about all those stories of accidental invention. Like Wilson Greatbatch back in 1956, who was experimenting with a device he was building to record heartbeats. He grabbed the wrong resistor and connected it, and discovered that the circuit emitted a pulse. Voila, Greatbatch realized his device could be used to control heartbeat, and the pacemaker was invented.

Which brings me to a final point on inspired innovation. I believe the most profound and valuable innovation and creativity has to come from a sense of purpose or a powerful cause - it is unbounded thinking about how to make life and the world more meaningful that leads us to solve great challenges and achieve impossible objectives. Just look at how one company's mission transformed the lives of millions of people: Microsoft, with its tagline of "A PC on every desk." And behind that audacious goal, an inspired cause to find ways for people and things to achieve their greatest potential.

Innovation comes in many forms and is a tool that's wielded well by many entrepreneurs. Having a different perspective has inspired many of Apple's products - simply because Steve Jobs refused to accept that everyday things such as radios and phones and computers had to be mundane and ugly. Ergo: Apple is synonymous with easy, simple and beautiful. Sometimes the entrepreneurial way out has to be invented. Understanding that there's not always only one right answer gave us solutions like Galileo's telescope and Sir James Dyson's vacuum cleaner. Then there are the accidental innovations, like 3M's experimental polymer that turned out to be less of an adhesive and more of a sticky fix that today everyone calls a Post-It^TM note. Ultimately, there's the kind of innovation that really makes this world a better place, because it comes from a passionate sense of purpose. Like Google's search engine, motivated by the cause of organizing the world's information and making it universally accessible and useful.

Because entrepreneurs have had the courage to ask questions and take risks - wheels were invented, men learned to fly, machines were made to work more efficiently, and the world has moved forward. The spirit to invent and innovate lies at the heart of true entrepreneurship. Or, to loosely paraphrase Peter Drucker:


innovation is the specific tool that entrepreneurs use to increase their capacity to create wealth.


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Janine de Nysschen uses purpose dynamics to create unique change strategies for difficult problems, helping CEOs and companies increase their impact and performance.

Apple's Hidden Disruptive Innovation

by Braden Kelley

People often think that disruptive innovation happens overnight, but often it happens one step at a time. Before the iPod was an innovation, Apple had to not only launch the device, but also the iTunes Store for music, and the Microsft Windows version of iTunes. Apple also expanded the iTunes Store to include audiobooks, movies, and television, but by then it had already become a mass-adopted disruptive innovation that has changed the music industry forever.

Apple then launched the iPhone and changed the power paradigm in the mobile industry around mobile applications publishing - resulting in the App Store.

Apple is about to do it again, but nobody is writing about it.

In retrospect I believe we will look back and point to January 27, 2010 as the day that Apple changed the power paradigm of mobile data plans and subsidies in the mobile industry.

Up until now, the mobile postpaid market has been defined by mobile phones subsidized in exchange for two-year contracts (at least in the United States), and mobile data plans that also often require a two-year contract. Even when Google announced the Nexus One as an unlocked device, T-Mobile (or any other carrier) is still going to charge you the same monthly cost as someone who bought the subsidized phone. Meanwhile, The carrier partner announced for the iPad, AT&T, has two regular 3G data plans:

1. $35 per month (200MB limit)
   
2. $60 per month (5GB monthly limit)

AT&T sells two 3G data cards - free or $49 - both requiring a two-year contract. But Apple yesterday announced that AT&T will provide 3G service to iPad users WITHOUT a two-year contract (or any contract for that matter). Pay as you go data access that is actually CHEAPER than their regular 3G data plans:

1. $15 per month (250MB limit)
   
2. $30 per month (unlimited)

To my knowledge, this is the first time (at least in the United States) where a carrier has given a cheaper price for service to a customer bringing an unlocked, unsubsidized device onto their network. This is of course how it should be, but still this is a watershed moment. If other carriers adopt this model with the iPad, then eventually some carrier may start to do this with other devices, and it may open the door for a different subsidy to emerge.

If carriers finally start to acknowledge that people who bring unsubsidized devices onto their network should pay less, then it opens the door for someone like Google to start paying people to use their device. Google could leverage their ad-serving platform and Google Checkout to launch a phone that effectively gets cheaper the more and longer you use it, regardless of which carrier you use and whether you're using pre-pay or postpaid (standard monthly service).

This is the innovation that I thought Google would launch with the Nexus One, but they didn't. Can Google now lean on T-Mobile and others more now to offer differentiated pricing for owners of unsubsidized devices?

The data plans offered by AT&T for the Apple iPad may have not seemed very interesting on January 27, 2010. But, I think looking backwards we may very well see this as a defining moment for the mobile industry.

Thank you Apple.


To see what I think of the Apple iPad, please go here.

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Apple Tablet Article Rundown

by Braden Kelley

Today is the day of Apple's latest media event. This is the one where everyone expects Apple to introduce some kind of new tablet device (iPad, iTouch, iSlate, etc.). Because this could be another transformational device innovation by the company, and because insights should always come before ideas and solutions, we've been discussing some of the potential insights behind the device here on Blogging Innovation.

If you've missed some of these articles or would still like to join the conversation before or after the device is launched today, here is a rundown of the articles we've contributed to the Apple tablet conversation beginning with the article on the bottom on August 31, 2009:

1. Apple Tablet Won't Save Newspapers
   
2. Will Apple Introduce the Innovation Expected from Google?
   
3. Apple Tablet Won't Be Runaway Success
   
4. Microsoft - Apple - Google in Tablet Battle
   
5. 2010 - Year of the Man Purse
   
6. Where's the Innovation Google?
   
7. Apple Tablet Sneak Preview
   
8. What Innovation Could an Apple Tablet Offer?
   
9. Apple Tablet or iPhone Accessory?
   

The articles are not feature rumor articles, but instead a collection of conversations around why Apple might do a tablet device, what kinds of innovation they might offer, and the launch of such a device might affect human and market behavior.

I hope you enjoy them. And I, like everyone else, look forward to seeing what Apple actually introduces today.

Insights and execution drive business success. Let's see what insights Apple has chosen to build their device on, and if they can execute on delivering a solution powered by those insights that finds success in the marketplace.

We're waiting...

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Will Apple Introduce the Innovation Expected from Google?

by Braden Kelley

Some great conversations have sprung up around my previous articles on the rumored Apple Tablet (iSlate). In the past I focused on what innovation Apple's potential tablet device might offer and whether or not Apple is likely to make the rumored first year sales projection of 10 million units.

A recent comment from "Marketing Department" brought up the topic of subsidies and whether or not Apple might be on the verge of introducing another business model innovation. So, in this article we'll dig a little deeper into that possibility.

When Apple launched the iPod, they introduced the iTunes business model innovation which turned the music industry on ear, quickly followed by the television and movie industries. Then Apple launched the iPhone and introduced the App Store business model innovation and introduced a new way for people to purchase software that the competition quickly rushed to copy. Now, what could Apple create with a Tablet device?

Well, obviously the App Store and iTunes will be present on this new device, and the iTunes Store will likely be extended to cover books, newspapers, and magazines. An extension of the iTunes Store is more of an incremental innovation. So what disruptive business model innovation could Apple do that would catch the competition off-balance?

Well, in my mind, Apple could very well launch the business model innovation that I expected to come with Google's Nexus One smartphone (but didn't) - shifting the subsidy model.

Currently, when a customer buys the Google Nexus One or the Apple iPhone, the mobile service provider subsidizes the cost of the device by about $325 in exchange for a 2-year contract from the customer. This ties the customer to the carrier for two years (and usually longer). I was expecting the Nexus One launch to include an unlocked phone that Google themselves subsidized in one way or another. One way could have been to pay the customer to use the phone on whatever carrier they wished by depositing money every month in a Google Checkout account based on ad views. This did not happen.

But Apple could take this idea one step further. Not only are they moving into the advertising game with some of their recent acquisitions, but they already have the incredible reach and product offerings provided by the iTunes Store and the App Store. While several people expect any Apple Tablet (iSlate) to have a retail price of $800-$1,000, a mobile carrier subsidy might bring it down into the $500-700 range. Might not Apple then be willing to subsidize it even further based on expected future media and content sales to push the price down into the $300-500 range and make it cost competitive with netbooks and the Amazon Kindle?

After all, Apple makes money (or could make money) in a number of different ways after the device purchase:

1. Applications (Downloads, In-App Advertising, In-App Purchases)
2. Media (Music, Movies, Television)
3. Books and Textbooks
4. Subscriptions (Music Streaming, Movie Downloads, Newspapers, Magazines, TV)
5. Advertising (TBD)
6. MobileMe

You could look at this very much like HP and their ink cartridge business. But how much of a subsidy could Apple offer?

Well, some limited data I found indicates that from this particular data set that the average iTunes transaction is $7 and an average of three transactions per month are made. That would equate to about $21 per month or $250 per year. So, what if you add in games, applications, and other content?

To keep the calculations easy let's say that the $250 becomes $500 when other kinds of content are added in, and using Apple's 30% revenue share, that would give an estimate of $150 per year per user. Yes, I know this is highly simplified, and from a small dataset, but we're just imagining possibilities not doing financial forecasts.

From this point, you could go two ways, look at this as a customer lock-in possibility for Apple and a potential perpetuity, or look at a fixed device life. Again, because this is only illustrative let's simplify and say that over four years Apple might expect (using this data) to earn $600 in revenue per device (excluding advertising revenue) and if Apple decided to dedicate 25% of this revenue to a subsidy, they could allocate $150 to bring down the cost of the device and the rest to go towards costs and profits. Throw in some advertising revenue for good measure, and maybe it makes sense for Apple to subsidize this new device by the $200 that might be necessary to bring the price to customer down into the $300-$500 sweet spot.

But how much of this revenue is incremental revenue? Will the device be an incremental purchase (an additional device people buy), or will it replace a Macbook, iMac, iPhone, or iPod purchase? Would it really make sense to do this?

Hopefully these quick and crude calculations have helped you to see why Apple might consider launching their own subsidy with their rumored tablet device (iSlate, iPad, iCanvas, iTablet, Macbook Slate, etc.) and why they might not. It will be rather interesting to see what they do...


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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Apple Tablet Won't Be Runaway Success

by Braden Kelley

First we had incredible hype around Motorola's Droid and its sales so far have proven to be just okay. Then we had even more hype around Google's phone entry - the Nexus One - and its sales results so far have been meager.

So, now along comes Apple with its much-hyped (and only rumored) tablet innovation, which we expect to be announced on January 27, 2010 at a special media event in San Francisco.

There have been reports of Apple expecting to sell 10 million devices in the first year, and there have been rumors of a device price in the $800-1,000 range. If Apple's new device does in fact turn out to be a 3G tablet, and even if Verizon and/or AT&T (or possibly even Sprint/Clear for 4G) subsidize $300 of the cost like they do with smartphones, that would still be a $500-700 price tag with another $60 per month for data service.

Are 10 million people really going to be willing to spend between $1,000 and $1,500 in year one for a tablet device after probably buying a laptop, an HDTV, and maybe a smartphone in the last 24 months?



I don't think this will be the case. It took Apple over three years to sell 10 million iPods (Q4 2001 to Q4 2004). Three years! Apple took eighteen months to sell 10 million iPhones (2/3 of those coming in months 16-18 from iPhone 3G sales). People need to remember that even if someone launches an innovation into the marketplace, its sales don't take off immediately. Let's re-visit my definition of innovation:


"Innovation transforms the seeds of invention into a solution valued above every existing alternative."


It's that last bit (valued above every existing alternative) that will be a struggle for Apple's rumored tablet in the short term. Even if people think that the device is better in some ways than devices they already have, will people replace a smartphone with it? Will they trade their laptop in for it? Or will this be an additional device?

While the device will likely ultimately be successful, it won't set the world on fire out of the gate like people are expecting. It won't be another runaway success like the iPhone, say what you will. It won't exactly be the Newton, but its success will likely be more akin to that of the iPod.

It's a good thing too because cellular providers are going to need time to build out additional network capacity, and possibly to even acquire additional spectrum, before the whole world moves from fixed-line and WiFi computing to cellular-network-based computing.

While the smarter strategy would be to make the iPhone faster and more extensible (creating a true pocketable computer), if Apple does launch a tablet with incredibly innovative capabilities, it will probably take 18-24 months for Apple to sell 10 million of them. Apple will be held back by the speed of 4G network rollouts (currently expected between 2010-2012 depending on provider) and by competition from the iPhone 3GS, iPhone v4, Macbook Pro, and other computing and entertainment options.

Even if Apple's rumored tablet will take a while to catch on with consumers, it has already sent shock waves through the technology and publishing industries with every technology company under the sun rushing out either a new tablet computer or a new e-reader. Amazon is running scared. This week Amazon announced both better royalty terms for e-book authors and publishers, and new application development capabilities for the Kindle.

So, is Apple's stock overvalued?

Do you think I'm completely wrong?


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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Presenting Twitter in Search Results

by Hutch Carpenter

In a recent post, I described some ways in which tweets should be ranked in search results. A good follow-on question is...

How should tweets be presented in search results?

It's an interesting question - how exactly would you want to see tweets in your Google and Bing search results? And it's an important question, as searches are critical bases for discovering information and huge drivers of traffic.

Tweets are different from web pages. They are more ephemeral, but also much more current. They're short nature means we can consume them much more quickly than fuller web pages. In many ways, their brevity reduces their "burden of interestingness". Read, move on. Read, move on. Read, move on.

Tweets are small nuggets of insight, and pointers to good content. Web pages are the foundational information components. The value of the two digital forms is different. Thus, it makes sense to consider options for presenting these different types of information to people.

Three different designs for presenting tweets in Google and Bing search results come to mind:

• Separate tweets-only search page
  
• Tweets displayed in a box on the same page with web pages
  
• Tweets integrated into the overall search results

Let's take a look at the options. For added context, I've included appropriate musical selections.

At the bottom of this post, I've set up a poll asking which approach you'd prefer.

Tweets-only search results

Musical theme: Gotta keep 'em separated.

This is the Bing way. A separate URL for tweets. It's an acknowledgment that tweets really are different from web pages. The graphic below conceptualizes this approach, with a search on 'Madrid':


The graphic above puts tweets searches more in line with overall searches. Right now Bing has no link to tweet searches on its home page. You just have to know the URL exists. Of course, the Microsoft Bing team is working on incorporating the firehose into its search experience, so that may change.

Positives

• Dedicated page allows for much more creativity with presenting tweets, as Bing has shown
  
• Visible link/tab keeps tweet searches more in-the-flow of searchers' actions
  
• Users could easily toggle between the tabs for different types of information
  
• Minimizes risk of disruption to current "golden egg" of web searches

Negatives

• Forces an extra step to see potentially relevant information - click the tweets tab
  
• Somewhat diminishes the awareness of tweets' real-time, up-to-date nature by using same tab structure applied to more static web pages

Tweets in same-page box

Musical theme: Man in the box.

The presentation of real-time tweets on the same page is something Google is experimenting with currently. The philosophy here is that you're looking for multiple types of information in a search. Google already displays web page links, images, YouTube videos, maps, PDFs and other types of content. Tweets are just another type of content.

Something I'd like to see is a separate box of the tweets on the search results page, as shown below:


This design effectively distinguishes tweets from other types of content, while preserving the "all information on one page" philosophy. This is important for Google and Bing advertising, making the search results page even more engaging.

Open question: what's better for ad click volumes? Multiple pages of different content (e.g. separate tabs described previously)? Or a single page with more engaging content?

Aside from the information aspect of tweets, there is also a people aspect. Tweets are as much about the person as they are the content. The separate presentation of tweets distinguishes them from web pages, PDFs, videos and the like.

Positives

• Relevant, up-to-date content improves value of searches
  
• In-the-flow of existing search behavior
  
• Real-time nature is engaging
  
• Find people as well as content

Negatives

• Smaller space constrains presentation options
  
• Potential for a too-crowded visual presentation

Because of the volume of searches run through Google and Bing, there will be a premium on ensuring the quality of the tweets presented. This is important regardless, but even more so here with the number of times people will see the tweets. See Search Engine Tweet Ranking Algorithms for thoughts on how to do this.

Tweets integrated with overall search results

Musical theme: Happy Together

There is a third design option. Why not put the tweets right in the mix of overall search results? Treat them less as exotic new forms of content, and more as just another type for searchers to click on. The graphic below conceptualizes this:


A tweet is just another URL that can point searchers to relevant content. The challenge is that Google and Bing need to alter their ranking algorithms to allow tweets to be served up high in search results. Something like a pagerank for the twitter account itself. If it has relevant content and a high "Twitter pagerank", it gets served up higher in the search results.

Positives

• Searchers get tweets in a highly familiar way
  
• Minimizes risk of disruption to current "golden egg" of web searches

Negatives

• Undermines the fresh, up-to-date nature of tweets
  
• Will limit presentation of relevant tweets due to inadequate "Twitter pagerank"
  
• Reduces the people aspect of the tweets
  
• Lack of real-time flow diminishes engagement of the results page

Of course, tweets are served up in search results today. But that generally happens with very specific multi-word searches that match the tweet, or including the word "twitter" in the search. The design above brings tweets more fully into the pantheon of content, displaying them highly in search results for basic keywords.

I imagine smart folks can come up with other designs for displaying tweets. Leave a comment on these three or any other designs you think might be interesting.

Also, take a second and vote in the poll below. I'm curious what people think about the different possibilities for displaying tweets.

Thanks.

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Hutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

The Decade's Top Performing CEOs

by Adam Hartung

I was intrigued when I read on the Harvard Business Review web site "Do we celebrate the wrong CEOs?" The article quickly pointed out that many of the best known CEOs - and often named as most respected - didn't come close to making the list of the top 100 best performing CEOs. Some of those on Barron's list of top 30 most respected that did not make the cut as best performing include Immelt of GE, Dimon of JP Morgan Chase, Palmesano of IBM and Tillerson of Exxon Mobil. It did seem striking that often business people admire those who are at the top of organizations, regardless of their performance.

I was delighted when HBR put out the full article "The Best Performing CEOs in the World." And it is indeed an academic exercise of great value. The authors looked at CEOs who came into their jobs either just before 2000, or during the decade, and the results they obtained for shareholders. There were 1,999 leaders who fit the timeframe. As has held true for a long time in the marketplace, the top 100 accounted for the vast majority of wealth creation - meaning if you were invested with them you captured most of the decade's return - while the bulk of CEOs added little value and a great chunk created negative returns. (It does beg the question - why do Boards of Directors keep on CEOs who destroy shareholder value - like Barnes of Sara Lee, for example? It would seem something is demonstrably wrong when CEOs remain in their jobs, usually with multi-million dollar compensation packages, when year after year performance is so bad.)

The list of "Top 50 CEOs" is available on the HBR website. This group created 32% average gains every year! They created over $48.2B of value for investors. Comparatively, the bottom 50 had negative 20% annual returns, and lost over $18.3B. As an investor, or employee, it is much, much better to be with the top 5% than to be anywhere else on the list. However, only 5 of the top best performers were on the list of top 50 highest paid - demonstrating again that CEO pay is not really tied to performance (and perhaps at least part of the explanation for why business leaders are less admired now than the previous decade.)

Consistent among the top 50 was the ability to adapt. Especially the top 10. Steve Jobs of Apple was #1, a leader and company I've blogged about several times. As readers know, Apple went from a niche producer of PCs to a leader in several markets completely unrelated to PCs under Mr. Jobs' leadership. His ability to keep moving his company back into the growth Rapids by rejecting "focus on the core" and instead using White Space to develop new products for growth markets has been a model well worth following. And in which to be invested.

Similarly, the leaders of Cisco, Amazon, eBay and Google have been listed here largely due to their willingness to keep moving into new markets. Cisco was profiled in my book Create Marketplace Disruption for its model of Disruption that keeps the company constantly opening White Space. Amazon went from an obscure promoter of non-inventoried books to the leader in changing how books are sold, to the premier on-line retailer of all kinds of products, to the leader in digitizing books and periodicals with its Kindle launch. eBay has to be given credit for doing much more than creating a garage sale - they are now the leader in independent retailing with eBay stores. And their growth of PayPal is on the vanguard of changing how we spend money - eliminating checks and making digital transactions commonplace. Of course Google has moved from a search engine to a leader in advertising (displacing Yahoo!) as well as offering enterprise software (such as Google Wave), cloud applications to displace the desktop applications, and emerging into the mobile data/telephony marketplace with Android. All of these company leaders were willing to Disrupt their company's "core" in order to use White Space that kept the company constantly moving into new markets and GROWTH.

We can see the same behavior among other leaders in the top 10 not previously profiled here. Samsung has moved from a second rate radio/TV manufacturer to a leader in multiple electronics marketplaces and the premier company in rapid product development and innovation implementation. Gilead Sciences is a biopharmaceutical company that has returned almost 2,000% to investors - while the leaders of Merck and Pfizer have taken their companies the opposite direction. By taking on market challenges with new approaches Gilead has used flexibility and adaptation to dramatically outperform companies with much greater resources - but an unwillingness to overcome their Lock-ins.

Three names not on the list are worth noting. Jack Welch was a great Disruptor and advocate of White Space (again, profiled in my book). But his work was in the 1990s. His replacement (Mr. Immelt) has fared considerably more poorly - as have investors - as the rate of Disruption and White Space has fallen off a proverbial cliff. Even though much of what made GE great is still in place, the willingness to Defend & Extend, as happened in financial services, has increased under Mr. Immelt to the detriment of investors.

Bill Gates and Warren Buffett are now good friends, and also not on the list. Firstly, they created their investor fortunes in previous decades as well. But in their cases, they remained as leaders who moved into the D&E world. Microsoft has become totally Locked-in to its Gates-era Success Formula, and under Steve Ballmer the company has done nothing for investors, employees - or even customers. And Berkshire Hathaway has spent the last decade providing very little return to shareholders, despite all the great press for Mr. Buffett and his success in previous eras. Each year Mr. Buffett tells investors that what worked for him in previous years doesn't work any more, and they should not expect previous high rates of return. And he keeps proving himself right. Until both Microsoft and Berkshire Hathaway undertake significant Disruptions and implement considerably more White Space we should not expect much for investors.

This has been a tough decade for far too many investors and employees. As we end the year, the list of television programs bemoaning how badly the decade has gone is long. Show after show laments the poor performance of the stock market, as well as employers. We end the year with official unemployment north of 10%, and unofficial unemployment some say near 20%. But what this HBR report tells us is that it is possible to have a good decade. We need leaders who are willing to look to the future for their planning (not the past), obsess about competitors to discover market shifts, be willing to Disrupt old Success Formulas by attacking Lock-in, and using White Space to keep the company in the growth Rapids. When businesses overcome old notions of "best practice" that keeps them trying to Defend & Extend then business performs marvelously well. It's just too bad so few leaders and companies are willing to follow The Phoenix Principle.

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Adam Hartung, author of "Create Marketplace Disruption", is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for "Forbes" and the "Journal for Innovation Science."

Microsoft - Apple - Google in Tablet Battle

by Braden Kelley

2010 may be the year of the man purse, and it will be very interesting to see what people to choose to put in the new gadget bag they will keep close at hand.

In this article we've got a video sneak preview of another potential Apple Tablet application, and two videos of what Microsoft's entry into the tablet wars might look like. Microsoft might actually fire the first shot in the tablet wars at this week's Consumer Electronics Show (CES).

Apple (iSlate) and Microsoft (along with HP) are both already trying to re-imagine what my be possible in the mobile computing environment, and I'm sure Google with join the fray soon (along with HTC). The key thing to watch here though is not the technology that the companies come up with, but the changes that we are going to start seeing in people's computing behavior. That will be the fascinating bit. Computing is about to undergo a major transformation, and while I would rather see an extensible mobile phone than a proliferation of new devices, I think they'll help us get there.

First let's take a look at a video sneak preview of Microsoft's Courier:





And then here is another video showing a conceptualization of how Microsoft thinks people might use it:





And finally, Coursesmart, a digital-publishing joint venture of five major textbook publishers,looks to move beyond their current iPhone and iPod Touch offerings to woo students to adopt their planned eTextbooks for the planned Apple Tablet in place of regular textbooks. Check out the video here:





So what do you think?

Which device would you like to have close at hand in your gadget bag?

Follow the link for another sneak preview of a magazine application for the Apple Tablet.

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Value Networks and Innovation

by Tim Kastelle

Today I will tell you why it is so hard for you to get your innovative new idea to spread quickly. Well, one of the reasons, at least. It's because the economy is so interconnected. This is a bit counterintuitive - after all, I was just telling you how we can use networks to spread ideas. The good side of networks is that they can make it easier for ideas to spread. The problem with networks is that to get people to actually adopt your new idea, you often have to get them to break links within their existing network, and this can be very difficult. That is why it is important to understand how to build a position within the value network.

Value networks show up in most of the various business model frameworks. The idea is that when you have an innovation, you have to understand what products, services and routines are related to your new idea. Once you understand this, you can then figure out how much of the value network you need to control yourself. Anders Sundelin just wrote a terrific post on his Business Model Database blog describing how you can map the value network for your innovation, anlyse your position within it, and take steps to improve your position. He does a great job of explaining the mechanics of value network analysis. I would like to show you why it's important.

As an illustration, here is a model of the value network for mobile phones, adapted from the book Invisible Engines by Evans, Hagiu & Schmalensee. It shows the postion within the value network that Apple has taken with the iPhone:



Apple has chosen to control everything within the circle - in other words, everything! Even the application developers don’t have full autonomy, since every new app has to be approved before it shows up on iTunes. The advantage to taking a position like this in the value network is that it is easier to coordinate the system. Because Apple controls nearly everything, every time they have a new idea, it is relatively easy to decouple the existing value network, insert the innovation, and move along. The disadvantage is that having such tight control over the value network limits the scope of the innovations that can emerge.

In contrast, look at the position within the value network that Google has taken with Android:



They have taken almost the exact opposite approach, controlling only the operating system directly. This greatly increases the the range and number of innovation opportunities within the value network. There are two big downsides though. The first is that they are at the mercy of the other players within the value network. One of the reasons that there are very few Android phones here in Australia is that all of the handsets using it so far have been lousy. The second problem is that with less control over the network, all of the innovations within this network take longer to diffuse as there is no central coordination.

Google has the market pull to take a position within the mobile phone value network that is similar to Apple's if they choose to. So we have to assume that this is a strategic decision, and that their bet is that the increased innovation scope provided by their more open value network will outweigh both Apple's first move advantage, and also their relatively slow increase in market share.

And this illustrates the problem that most of us face with our value network - we can usually only control a small piece of it - as Google does with Android. This means that not only do our end users have to prefer our idea, but we also have to get others within the value network to stop using our competitors. This process is slow, difficult, and frustrating - and it adds an extra delay to the spread of our great new idea. Innovations require many players within the value network to unconnect from competitors before they can reconnect with us. This unconnect-reconnect process is often independent from the process of customers adopting our innovation, and it adds another delay to the spread of our new ideas.

There are many different models of business models available for you to use. I don't care which one you use, but you have to use one of them. They all include an element like the value network as one of the key things that you have to understand and manage when you try to get your innovative ideas to spread. The better your understanding of this network, the more effective you'll be at innovating.

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Tim Kastelle is a Lecturer in Innovation Management in the University of Queensland Business School. He blogs about innovation at the Innovation Leadership Network.

2010 - Year of the Man Purse

by Braden Kelley

I've been trying to decide whether to make any 2010 predictions, and I never thought that this would end up being the one that I chose, but here goes:

2010 will be the year of the man purse - thanks to the proliferation of netbooks, e-readers, and a new generation of tablets launching this year from Apple, Plastic Logic, Google, and others.

It probably won't happen in the first half of the year, but by the time back-to-school and christmas roll around, man purses will finally start to catch on.

Some people will call it a satchel to make themselves feel more manly, and others will see no shame in calling it a man purse, but the fact remains that people will want a way to keep close at hand the gadgets that they are beginning to see as an extension of themselves.

Way back in 2006 celebrities including Robert Downey Jr., David Beckham, and Cuba Gooding Jr. were using man purses, but they didn't cross the chasm because there wasn't enough value created for the average joe. But now, don't be surprised if by the end of 2010 you see more celebrities like possibly Shaquille O'Neil, LeBron James, or Chad OchoCinco sporting a man purse to help carry the gadgets they choose to use to connect with their fans.

For my money, the biggest unknown is not whether man purses catch on, but which devices will be their main residents. Which devices will earn the right to be worn?

Apple is not going to have this market to themselves, no matter how cool their tablet might be.

So, what kind of device will Google come up with?

Can Amazon counter with something to keep the Kindle relevant?

What do you think?

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Where's the Innovation Google?

by Braden Kelley

In the same way that there has been a lot of buzz around what innovation an Apple Tablet might bring, I've been seeing a lot of hype around how great the Google Phone is going to be.

The first Google Phone was an HTC-branded phone carried by T-Mobile USA, and the second is promised to be a Google-branded phone made by HTC and also carried by T-Mobile USA. The new phone is expected to sport an updated version of Android (Google's mobile operating system) and to be sleeker and better designed.

But after seeing some of the information about the phone and how it will be sold, that is slowly leaking out of T-Mobile USA and other places, I have to ask "Where's the Beef?"

You may remember the line popularized by a series of Wendy's spots a few decades back, and if not, here is one for nostalgia's sake or your general amusement:





Now don't get me wrong, the Nexus One looks like it will be a very capable phone, but where's the innovation?

While an FM transmitter, faster silicon, and an improved OS might be nice features, they're not innovations, and that's what people expect when they hear that Google is going to put their name on something.

While it may not be fair given that Apple already pushed smartphones up the steep part of the S-curve with the innovations they introduced, there were still some great innovation opportunities left open for Google that they haven't delivered.

Google more than anyone else has the organizational assets and capabilities to introduce some disruptive business model innovations, but it doesn't look like they are going to.



Instead it looks like Google's Nexus One will be sold just like every other phone - unlocked for $529.99 or at a $350 discount with a two year T-Mobile contract ($79.99 per month for unlimited voice/text/data). Despite what some people are saying about the $79.99 per month service price tag, you have to keep in mind that unlimited voice/text/data for an iPhone would cost you $149.99 per month on AT&T (nearly TWICE as much).

If Google truly wants to make a strong branded play in the mobile phone market, they need to leverage their organizational assets and capabilities and sell an unlocked phone that pays you to use it on the carrier of your choice. The longer you keep and use the phone, the cheaper it gets. Google could do this, but they are not, which leaves me the same question as at the start:


Where's the Innovation Google?


Image Credit: Gizmodo

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Innovation is Not Free

by Paul Sloane

One of the most common barriers to innovation is lack of time. People are just too busy doing their day job to spend time trying new things. The common assumption is that working hard and working long hours are good things and sufficient for success. The mantra is "focus on delivering this quarter's results." But doing more of the same is not enough - we have to try the new.

It is as though we are so busy building rafts to cross the river that we never look up to consider building a bridge, or a tunnel or a dam or fording the river or building boats or planes or all the other things we could do. We just focus on producing those rafts.

If you want people to be creative, then set the goal (e.g. crossing the river) and then challenge them to come up with ideas. Give them time and some resources to test their ideas - to build prototypes, or to investigate what people elsewhere are doing.

Google allows its people to spend one day a week on innovative ideas. Is this a wasteful luxury? No. It has led to remarkable innovations such as Google Earth, Froogle and Gmail. Genentech has a similar provision for its people. Most organizations could not afford to give up as much time as Google or Genentech but the same principle still applies - you have to create some slack time in which people can experiment. You do not get innovation for free - you have to allocate time, money and people.

For many years 3M has allowed its scientists and engineers to spend up to 15% of their time on any project that interests them. They do not have to ask their manager's permission but they do have to keep them informed of what it is they are doing. This permission to be free has resulted in countless ideas and innovations for 3M which is regularly rated as one of the most innovative companies.

The message is clear. The leader has to free time for innovation in order to empower people to come with great ideas and to explore them. Whether it is one day a week or one day a quarter, time for innovation is critical.

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Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader published by Kogan-Page.

What Innovation Could an Apple Tablet Offer?

by Braden Kelley

With all of the internet chatter about Apple's rumored tablet computer, I've been asking myself two questions:

1. Does it make sense for Apple to make a tablet computer?
2. What innovation could an Apple tablet offer?

These questions are not as easy to answer as they may appear at first glance. The main reason? When it comes to technology, just because technically you can make something, it doesn't mean commercially that you should. Technology often begins maturing before consumers are aware of the need or pain that the solution addresses and before the minds of consumers can visualize how it fits into their lives. So, when we look at the Apple tablet chatter and Question #1, we have to ask ourselves:

What is the proven or imminent customer need that an Apple table computer would resolve?

Tablet computers have been around for decades and Tablet PCs have been around since 2001 (offered by multiple vendors including Toshiba, HP, etc.). Tablet PC's have achieved very low market penetration in that eight years (outside of certain vertical success stories), but still every manufacturer has one.

There is already a MacOS driven tablet computer for sale - the Modbook - and it is not exactly flying off the shelves. Competitors are making noise about new tablet computers, too. Microsoft is reportedly working to launch a new Tablet PC platform called Microsoft Courier and there are reports of Android-based tablets coming soon too. All this noise despite Tablet PC sales being only a small fraction of overall PC sales. So what gives?

Well, computer manufacturers believe that a shift may occur to a new computing form factor in the same way that PC sales started shifting from desktop computers to laptop computers a few years ago. But despite Tablet PC's being out before netbooks by several years, it was the netbook that took off, not the Tablet PC.

At the same time, consumers are shifting a portion of their computing from desktops and laptops (and even netbooks) to the emerging class of always-connected handheld computers (Apple iPhone, Motorola Droid, new Blackberry devices, Amazon Kindle, Barnes & Noble Nook, etc.). Hardware manufacturers are making their bets now and have been for the last several years to maintain a complete product range and guard against any potential shift away from desktop and laptop PC's. There are even rumors that Dell may make a mobile phone.

If Apple launches a Tablet PC, they will not be successful, but I don't think that a traditional Tablet PC is what Apple is looking at. Apple does not launch me-too products. Apple seeks to launch products that offer greater value than the competition and products with new benefits so that they can justify higher prices and margins than the competition.

In isolation, my answer to Question #1 would be - No, it does not make sense, for Apple to make a tablet computer. There is no proven customer need that an Apple Tablet PC could solve.

BUT, there are some imminent customer needs that Apple could solve, IF it could create enough compelling innovation (see Question #2).


So what innovation could Apple offer and how would it satisfy imminent customer needs?

Well, electronic book readers haven't exactly taken off yet (Amazon still won't disclose how many Kindles they've sold - always a sign of hype), but prices are dropping and the recognition of their value in the minds of consumers is growing.

At the same time, most households own one or more portable DVD players and often one or more gaming consoles (including portable gaming devices) and one or more portable music devices. These taken together with the emerging market for electronic book readers, represents a huge number of portable entertainment devices.

Now, the screens for an electronic book reader and other portable entertainment devices are very different, but could Apple find a way to combine the two types of screens together in a single device? The Barnes & Noble Nook does this in a very primitive way. Apple could create some very interesting innovations to create a whole new form factor and create a whole new portable entertainment device category at the same time, one that:

1. Combines an e-ink display with a color LED-backlit LCD


2. Wirelessly connects to an iMac, Macbook, wireless keyboard, projector or other peripherals


3. Connects to your HD television


4. Is good enough at gaming to challenge game consoles for living room supremacy


5. Would provide a better video viewing experience than an iPod Touch or iPhone


6. Has the potential to disrupt the book industry even further


7. Has the potential to disrupt the video gaming and DVD markets even further


8. Has the potential to disrupt the Mac applications market (expanded App Store anyone?)


9. Integrates new human-computer interfaces like the iPhone did when it came out


10. Does something else that I can't imagine because I'm not close enough to the technology

This list, along with the imminent customer needs, makes it look reasonable for Apple to launch another portable form factor, but it doesn't make sense to bring out a device in the $1,000-$2,000 price range. So, if Apple comes out with a tablet, it won't be a computer per se, but more likely a portable entertainment device that happens to also have some computing capabilities. Kind of like the iPhone...

What do you think? Will Apple do it?

Will new display technology like that of Pixel Qi allow Apple to disrupt the Kindle by offering a device that combines the readability of an e-ink screen with the color and video capabilities of an LCD?

Will you buy one in the $499-599 price range? What about for $299-399 range if it is subsidized by a mobile carrier (probably Verizon or Sprint)?

Can this concept succeed until 4G is broadly available (2011 or 2012 for the USA)?

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.