Business Insider points out some depressing numbers for Amazon’s Kindle device…

AT&T said yesterday that it activated 400,000 to 500,000 3G-enabled iPads in the U.S. last quarter.

How many Amazon Kindles and 3G-enabled Barnes & Noble Nooks did it activate?

Fewer than "roughly 900,000."

That comes from a press release from wireless carrier AT&T, which announced today that it activated "roughly 900,000 connected devices" in Q2, including the Amazon Kindle, 3G-enabled Nook, and around 850 other devices, "such as eReaders, netbooks, digital photo frames, personal navigation devices, home security monitoring and smart grid devices.

Let me say upfront that I don’t think these numbers are good.  Even if all 900,000 are Kindles that’s not a lot considering it’s prominent spot on the Amazon home page.  But at the same time if the Kindle disappears tomorrow I think it will have served it’s purpose. 

By jump starting Amazon’s digital efforts it allowed Amazon to extend its dominance into e-books and that’s a big deal.  Try this: Name the companies that have managed to beat Apple in the world of digital distribution of content. 

If you came up with a company other than Amazon you’ve thought of one more company than I have.  Apple has been on a role since the original iPod debuted.  Music, Movies, and TV have all been dominated by Apple despite the best efforts of their competitors.  But in books it’s all Amazon.

(It is beside my main point but I’d like to point out that Amazon is even dominant in audio books since iTunes uses Audible’s content and Audible is owned by Amazon)

This is important for two reasons.  First, as stated above, Amazon needs to hang on to it’s core business (printed media) when that business transitions into the digital age.  Kindle allows it to do that.

But the second reason is perhaps even more important.  This keeps Amazon in the digital game.  Amazon has not given up on its digital media aspirations and dominance in e-books makes people accustomed to buying digital content using their Amazon account.  If Amazon’s smart they’ll do everything in their power to ride Android’s success and become the dominant digital media provider for those devices.  If Amazon can become the “iTunes for everyone else” they’ll be in a very good position in the future.

So while the Kindle Device itself might fade into history Amazon will owe much of it’s future digital success to it and it that sense it may very well have saved the company as a whole. 

So this Old Spice Responds to Questions Thing is getting a little out of hand.  Apparently even Google’s CFO felt the need to interrupt a conference call to say it was “a glimpse of where the world is going”. 

I want to make a couple points on this but just so there’s no misunderstanding let me be very clear: The campaign was brilliant.  It was as perfect as I could imagine an ad campaign being.  They knew when to be funny, knew when to be human and most importantly knew when not to wear out their welcome.  But at the same time I think it’s spawned some false conclusions. 

This Wasn’t Social Marketing

I disagree that this was a  “social campaign” as many have said.

The character didn’t have a conversation with these people he simply used what they said as a jumping off point to be funny.  It was an amazing act of improv on the part of the writers and Mr. Mustafa but it was a performance.  It was aimed at a larger audience than just the person being spoken to.  So it really wasn’t “social” by the commonly accepted definition. 

This Wasn’t a “New Kind of Ad”

What the ad agency (Wieden+Kennedy) did was the same thing that any great ad agency would do: They used the tools available to them to make ads that didn’t feel like ads. 

But that’s what great advertising has always been.  If you’ve ever listened to the radio you’ve heard one of those contests that says “be the [whatever number] caller and win tickets to [some event]” .  In the back of your mind you probably realized that was advertising but the fact that it’s a contest obscures that fact.  Which is exactly what makes it great advertising. 

The person who first thought that strategy up was no different than Wieden+Kennedy are now.  They had a radio station and a phone and they used creativity to mold them into great advertising.  Just as the Old Spice Ads used YouTube, Twitter, et al. to do the same thing today. 

Conclusion

The point I’m trying to make here is you have to focus on the real lessons .  The lesson isn’t “do what the Old Spice Guy did” it’s “Be Creative”.  It’s not “Twitter is the future of media” it’s “know the tools available to you and use them”.  These are all old rules and they still apply.  Which leads me to my last point.  Because anyone who knows advertising knows one of the cardinal rules is this…

Brilliant ad campaigns are amazing. Those who do direct copies of those campaigns are Lame. 

So unless you can come up with a new spin or you actually WANT TO BE the “lame copy of the Old Spice Guy” I’d put this whole thing out of your head and rely on your own creativity.   

I read a lot of blogs.  A LOT.  So trust me when I say these are the biggest complaints regarding Google Android’s App Store

1.  It’s Hard to find Applications

2.  The quality of the applications are lower than what you find on the iPhone

Given those points I find this move by Google odd…

App Inventor is a new tool in Google Labs that makes it easy for anyone—programmers and non-programmers, professionals and students—to create mobile applications for Android-powered devices. And today, we’re extending invitations to the general public.

So Google is essentially going to flood the market with even lower quality apps?    Really?!? Doesn’t seem wise to me.

But there is one good argument for this tool in the post and that’s the educational angle. 

One student from Professor Wolber’s class told us: “I used to think that no one could program except CS people. Now, I've made dozens of applications for the Android phone!” Another student, who struggles with dyslexia, was inspired by App Inventor to take more computer science classes and is now learning Python.

I’m all for getting kids interested in programming and Google should be applauded for doing that.  But there’s a better way and this is the last thing Android needs right now.

Anyone who has studied Apple knows the main problem they had for the 5 years before Steve Jobs came back was strategic vision.  Apple’s always been a company people are passionate about and they could always draw engineering talent because of that.  But without someone to pull it all together and focus it they turned into a company that couldn’t get all their great technology into a coherent product.

Google needs to learn that lesson here.  They have a strategic goal which is to empower the web and their focus should be to very slowly pull Android into the fold.  That means allowing professional developers to create apps so Android is competitive with the iPhone while slowly making the web app experience richer. 

So while the goal of educating people on how to make simple apps is great it would be much better if focus was put on the web and not on Android native apps.

One Last Point… A valid counter point to the argument I lay out above is that web apps require someone to know how to host their own server, deploy to it, etc…  I’d disagree with that.  Google could allow people to deploy these apps easily (and for free) on their already existing cloud host Google App Engine.  Or if they wanted to avoid connectivity problems they could have the tool create locally hosted web apps (Android’s supported HTML5’s offline abilities since the “eclair” release).

I love numbers.  I think they’re the quickest path to truth.  But numbers can be misleading if used that way and I think that’s what Microsoft’s Corporate VP of Communications is doing in his post entitled Microsoft By The Numbers.

This isn’t a full refutation of his points and I even skip over a few for time but this should at least tell you that his overall theme is misleading.  He’s using numbers out of context to make Microsoft look a lot stronger than it actually is. 

Getting Started…

150,000,000
Number of Windows 7 licenses sold, making Windows 7 by far the fastest growing operating system in history.

Yes, but Vista sales were lack luster by Microsoft’s own admission and people need to upgrade after 9 years (XP original release date was 2001).  So what Windows 7 sales indicate is that (a) there was pent-up demand for a decent OS and (b) Windows still doesn’t have any viable competitors (if you don’t want to deal with Apple).  Neither of those facts are Microsoft specific strengths.

7.1 million
Projected iPad sales for 2010.

58 million
Projected netbook sales in 2010.

355 million
Projected PC sales in 2010.

Again the PC number is related to the above point.  But it should be pointed out that he used “Projected” sales from IDC.  What he doesn’t say is that IDC initially projected a 5.6% increase in IT spending for 2009 but that IT spending actually fell by 4.5% (which isn’t a criticism of IDC whose predictions were in-line with all the other firms).  So projections don’t mean much.

On the Netbook issue he fails to mention that the growth of netbooks has been at the expense of Notebook PCs.  Notebook revenue was down 7% in 2009 and that’s bad for Microsoft (who wants to sell full versions of Windows 7 not the starter version loaded on netbooks).  Also his iPad source is from April 2nd and doesn’t take into account the products explosive initial sales.

<10
Percentage of US netbooks running Windows in 2008.

96
Percentage of US netbooks running Windows in 2009.

This is a somewhat fair point but netbook sales were only 11.4 million in 2008 so it was really a niche market.  The bigger point is again that Microsoft is making 1/4th of the profit off netbooks as it would off a full scale PC or Notebook

0
Number of paying customers running on Windows Azure in November 2009.

10,000
Number of paying customers running on Windows Azure in June 2010.^[source]

700,000
Number of students, teachers and staff using Microsoft’s cloud productivity tools in Kentucky public schools, the largest cloud deployment in the US.^[source]

Well Azure wasn’t a product in 2009 and we don’t know what a “paying customer” is so the first two points don’t mean much.  I tested Azure a few weeks back just to get a feel for how it works which would make me a paying customer but not an ongoing one (or one who paid more than $20 thus far)

As for the third number I notice there’s not a point for  “2 Million” Zoho customers or “25 million” Google Apps Users.

9,000,000
Number of customer downloads of the Office 2010 beta prior to launch, the largest Microsoft beta program in history.

Office has a lot of users.  That’s not news.  The fact that the Office 2010 beta program was big only reflects that Microsoft allowed it to be that big.

21.4 million
Number of new Bing search users in one year. [Comscore report – requires subscription]

Again “Users” is a meaningless statistic.  I try Bing every time they announce something new so I’m likely counted in that number but I use Google primarily.  If anything this number is low because it means most of the billion users going to Google aren’t even giving Bing a chance.

24%
Linux Server market share in 2005.

33%
Predicted Linux Server market share for 2007 (made in 2005).

21.2%
Actual Linux Server market share, Q4 2009.

Again this is a meaningless number.  If you look at the source it’s based on an IDC report on server hardware revenue.  But anyone who understands basic computing knows that more expensive hardware is cheaper per user.  On that note the majority of the $799 small business servers are running Windows while the majority of the $50,000 web servers are running Linux.   So hardware revenue share does not equate to usage share

8.8 million
Global iPhone sales in Q1 2010.

21.5 million
Nokia smartphone sales in Q1 2010.

55 million
Total smartphone sales globally in Q1 2010.

439 million
Projected global smartphone sales in 2014.

Yes but Microsoft’s platform isn’t even in the market yet and when it gets there it will find itself facing a superior platform (Android) that’s cheaper than Microsoft’s offerings.  There’s a lot of potential in smartphone growth but Microsoft isn’t poised to take advantage of it right now.

$5.7 Billion
Apple Net income for fiscal year ending  Sep 2009.

$6.5 Billion
Google Net income for fiscal year ending Dec 2009.

$14.5 Billion
Microsoft Net Income for fiscal year ending June 2009.

But these are companies of vastly different size and comparing revenue without looking at size is misleading.  Let’s look at the numbers with size taken into consideration.

Number of Employees

Microsoft: 93,000

Google: 20,621

Apple: 35,000

Net Income per Employee

Microsoft: $155,913

Google: $315,212

Apple: $162,857

So Google and Apple are much smaller companies making much more money per employee. 

$23.0 billion
Total Microsoft revenue, FY2000.

$58.4 billion
Total Microsoft revenue, FY2009.

Yes but Microsoft has acquired at least 85 sizable companies since 2001 so the question is what was the combined revenue of all those companies vs. Microsoft’s revenue today?

Brad Burnham of Union Squared Ventures puts forth an interesting theory.  He basically lays out the idea that platform companies like Apple and Facebook are like governments…

A lot of people have begun using the term ecosystem to describe these big platforms. That captures their decentralized, emergent character, but ecosystems do not have a central point of control. Apple decided to eliminate third party analytics between one release and the next. That doesn't happen in an ecosystem. The right analogy is a government.

Facebook is a government. Facebook's users are citizens, and Facebook's applications developers are the private companies that drive much of the economy. Apple. Twitter, Myspace, Craigslist, Foursquare, Tumblr and every other large network of engaged users (including some services of Google) plays a similar role.

He then suggests we view these companies through that lense in the future…

So as you watch the large web services evolve, think about how they are balancing the relationship between the state and the private sector? What does Facebook's introduction of Facebook Credits say about its monetary policy? What is Apples foreign policy? Do they act unilaterally promoting their own proprietary standards or do they act multilaterally embracing international standards? What is Twitter's industrial policy? Do they invest in state owned services or encourage decentralized economic development? The choices these platforms make reveal a lot about who they are, and ultimately how well they serve the companies operating in their economies and the citizens who live there.

The implied point here being that companies like Facebook, Apple, et al. should be mindful of this comparison and start to act like responsible governments would and not like dictators.  I don’t agree with this. 

Mr. Burnham’s analysis certainly has some truth to it.  But in my opinion that makes it more dangerous than helpful and I want to explain why.  To do that let me make two points…

All Successful Companies are Dictators…at first.

When I was a kid there was a company named 3Dfx (or 3dfx depending on when you ask).  They had a graphics chip called Voodoo and a proprietary API for that chip called Glide. 

They also had the coolest logo ever….

…but that is beside the point.

Almost every developer hated 3Dfx’s creation of Glide.  The argument was always that their time would be better spent helping along abstraction layers such as OpenGL which wouldn’t force developers to write programs specifically to 3Dfx hardware. 

Eventually that’s exactly what 3Dfx did.  They stuck with their proprietary solution as long as they could but when companies like nVidia became able to compete at the same hardware level 3Dfx abandon their proprietary API and embraced a more open solution. 

This is a cycle that plays itself out over and over again in the technology industry and it’s a successful one.  Because it allows companies to make a bunch of money by being proprietary and then to use that money to stay successful once they can’t maintain that anymore.  Microsoft is alive today because they made a bunch of money during their proprietary phase and are living off it now. 

In the case of 3dfx they had so much money that they were able to buy a video card company called STB and start manufacturing not just the chips but their own video cards.  A move that could have allowed them to dominate the entire video card industry and it’s a move they could only afford because of the money they made during their proprietary days.

(What actually ended up happening is the move distracted them from making better graphics chips which allowed nVidia to leap frog them at which point their company died)

Edit: Kindle Review has a great post on this that points out how companies are entitled to this advantage because of all the effort it takes to build a platform.  Read it here: http://ireaderreview.com/2010/06/12/do-users-own-the-company-whose-products-they-use/ 

Companies Come and Go but Governments are for ev…much longer.

The reason dictatorial governments aren’t acceptable is because the residents of a country can’t choose another government.  At least not without leaving their entire identities behind.

A dominant company can look like a government at the height of its dominance because you don’t seem to have a choice to leave it.  Everyone’s on Facebook right?  So how can a user really leave? 

But that ignores the fact that no company stays dominant for very long.  Who could be more dominant than Microsoft was in the 90s?  Yet even they could only hold on to that dominance for a little over a decade.  Less than 15 years after Windows ‘95 they’re struggling to enter new markets because they see their primary business eroding. 

Compare that to the longevity of countries where even the most backwards government (I’m looking at you North Korea) can easily survive half a century.  That longevity is what makes a dictatorial country so horrifying.   

Conclusion

As I said from the outset there is definitely some truth to Mr. Burnham’s analysis.  But insight is only helpful if it provides you with a prescription for successful future behavior.  This advice does the opposite.  It tells you to abandon a successful strategy based on a flawed analogy.  It suggests you abandon the very strategy that has worked time and time again in the business world. 

Addendum: I write this blog with one central value in mind and that value is truth.  I tell the truth as I see it and while it means I get some very nasty emails and I’ll never be as popular as Scoble that’s the line in the sand I’ve chosen to draw.  Which of course makes me look like a jerk much of the time and I accept that.

But occasionally I chicken out and this is one of those occasions.  So please pretend this paragraph was in the first point above (where I initially deleted it from)…

[Cut Paragraph Begins] 

What about the users?  

As much as I hate to say it the users don’t matter in the very limited scope of this discussion. If you’re dominant enough to be having this discussion than the users don’t really have a choice to leave you just yet. 

Moreover users don’t really care about openness.  They’ll scream about it but in the end they’ll pick the product with the best features not the open one.  Your users might think you’re a jerk but as millions of Apple fans have proven they’ll stick with you if you continue to create a great product. 

Deciding when to open up is completely dependent on your competition.  When they mature enough to start drawing away early adopters that’s when you open up.  At which point your users will accuse you of bending to competition and they’ll be right but if you still have a better product they won’t abandon you and if you open up enough they'll eventually forget you were closed in the first place (does anyone remember how proprietary Netscape was back in the day?) 

[Cut Paragraph Ends] 

In the world of economics the G20 has reversed positions and is now advocating Governments cut spending in order to save themselves from bankruptcy.  This makes Paul Krugman of the New York Times very unhappy…

It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labor market progress in the US.

But don’t we need to worry about government debt? Yes — but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt. Costly, because it depresses the economy further; ineffective, because by depressing the economy, fiscal contraction now reduces tax receipts. A rough estimate right now is that cutting spending by 1 percent of GDP raises the unemployment rate by .75 percent compared with what it would otherwise be, yet reduces future debt by less than 0.5 percent of GDP.

The right thing, overwhelmingly, is to do things that will reduce spending and/or raise revenue after the economy has recovered — specifically, wait until after the economy is strong enough that monetary policy can offset the contractionary effects of fiscal austerity. But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.

Now I’m not saying Mr. Krugman is wrong because the political issue itself is not my concern.  My issue here is the fact that he doesn’t seem to have been exposed to the most basic counter arguments (that Government Spending doesn’t create revenue or help unemployment) so his opinion isn’t worth much (and that’s why people aren’t willing to pay for it)

Follow me here: creating insight via the written word requires you address all sides of an argument.  Because even if you make a persuasive argument for your own side people reading your piece will have doubts if they go somewhere else and read an equally persuasive argument from someone who disagrees with you.  Only through addressing those competing arguments and giving your reader an answer to those doubts can you effectively convince that reader you are right. 

So when Mr. Krugman writes something like this he’s failing his readers because he’s not addressing the most basic counter point which is that stimulus funds didn’t manage to create jobs.  As shown by the famous graphic below (updated to May 2010 by the good folks at innocentbystanders.net)…

Now again my intent isn’t to take sides here.  It’s more than possible that the recession was just deeper than anyone expected and if that’s true than it could be argued that the Government Stimulus did in fact create jobs. 

The issue here is that Krugman didn’t even bother to address this.

If Mr. Krugman had simply skimmed memeorandum.com on Friday he’d have been exposed to this argument and would have at least known enough not to write a piece that treats “Government Spending = Jobs” as a given.  The fact that he didn’t address that point places him under most liberal bloggers in terms of insights IMHO (because most liberal bloggers read conservative blogs and argue against them rather than living in a bubble)

Which again supports my point about the paywall.

Arguments against a paywall on news sites like the New York Times are built around the assumption that the content being produced by those papers is high quality.  Hence people blame the paywall because it is keeping people away from high quality content that they'd normally read.  

But if the quality isn't high than the whole argument falls apart because it isn’t the paywall that’s preventing people from paying it’s the shoddy quality of the content.  That is my argument here.

Mr. Krugman is not good enough at making his points to be of value to anyone who doesn’t already agree with him and those that already agree with him might read him for validation but probably aren’t willing to pay for simple validation. 

Addendum: Please pardon the dip into politics here but I just want to address one political issue so I don’t get a bunch of angry e-mails saying…

“How could government spending not create jobs if it’s literally the Government hiring people for new jobs?  You’re an idiot”

The argument against government spending is that it worries business people and investors.  So while the Government might in fact create new jobs they’ll be doing so with money they don’t have which will make business people and investors worry about the future of the economy.  Those civilians than cut jobs or hold off on hiring people because of that worry which in turn negates the job growth created by government hiring. 

Please note my intent here is not to argue either side of this political issue.  Just to expose everyone to both sides to prove Krugman is a dope.

Boy Genius Report has it from “highly placed sources” that Verizon is currently testing the Apple iPad on their network and predictably bloggers are going crazy about the imminent release of a Verizon iPad. 

But there’s no reason to believe that’s the case and I’ll tell you why.

Follow my logic: If Apple only had a GSM version of the iPhone than they’d be completely at AT&T’s mercy in the U.S.  (they certainly aren’t going to take it to 4th string T-Mobile). 

So they’d be fools not to have a CDMA version of both the iPhone and iPad locked and ready to go. 

Beyond that Steve Jobs has admitted (by refusal to comment) that he’s been in talks with Verizon.  Which brings us to Verizon’s self interest.  There’s no way they enter talks with Apple unless they know a  product actually exists and will work with their network.  Meaning they’d have to test it themselves.

So all this rumor proves is that “Apple has talked to Verizon” which everyone and their brother already knew.  Mr. Jobs' even admits he went to Verizon before he went to AT&T so the talks have more than likely been on-going since the iPhone first debuted.  I’m not saying there couldn’t be a Verizon iPad soon but this is clearly a story of two companies whose differences are keeping them from doing business together and this rumor doesn't say anything about what those differences are or whether they're any closer to being resolved.  

I know it seems like I’m becoming an Apple fanboy but I’m really not.  They just happen to be on a hot streak right now and my purpose on this blog is to take lessons from the people doing smart things in the technology industry.  So that leads to increased Apple talk.

Which brings me to this latest rumor recently posted by Barrons…

Trip Chowdhry, an analyst with tiny Global Equities Research, contends that 7 minutes of the June 7 keynote by Apple CEO Steve Jobs has been blocked off for a presentation by Microsoft (MSFT) to talk about Visual Studio 2010, the company’s suite of development tools. Chowdhry says the new version of VS will allow developers to write native applications for the iPhone, iPad and Mac OS. And here’s the kicker: he thinks Microsoft’s presentation could be given by none other than Microsoft CEO Steve Ballmer. (Or if not, at least Bob Muglia, who runs Microsoft’s server and tools business.)

Now if this is true the most likely scenario is Silverlight being ported to the two Apple platforms.  Microsoft just released Visual Studio 2010 a few weeks ago and there’s no Apple support in sight.  But Silverlight is a technology that was made to run on all platforms (being it’s Micrsoft’s answer to Flash) and is also a focus of VS 2010.

More importantly Silverlight is FANSTASTIC technology.  Microsoft has iterated quickly on it to the point where it now matches Adobe’s Flash almost feature for feature and is a lot friendlier to work. 

But it’s what this move would do for Apple that is really interesting.  Consider the following…

1.  It defuses the Flash complaints.  If Apple supports Silverlight they can credibly say they aren’t keeping competitors out and that the poor quality of Adobe Flash really is the issue

2.  It would allow programs to be developed with a common code base for Windows Phone Series 7 and the iPhone.  This is great for Apple because the new Windows Phone doesn’t look promising.  So this allows Apple to look like it’s supporting cross platform development while they’re really just propping a weak competitor up.

3.  It opens the door to a lot of new developers.  Yes, it’s true Microsoft’s developer ranks have diminished but there are still a lot of MS developers out there and they’re exactly the type of people who wouldn’t be developing for Apple products right now.  Microsoft’s unique web technology (ASP.NET) has created a group of developers who build web solutions but who have very little experience in HTML, Javascript and CSS which makes it hard for them to develop even web apps for the iPhone or iPad.  Porting Silverlight would fix that.

(Of course not all ASP.NET developers are like that but there’s a significant number who are)

4.  It starts Apple down the road to building an anti-Google coalition.  Apple’s best move right now is to find ways to paint Google as the bad guy.  The easiest way for them to do that is to start working with other companies (who are also afraid of Google’s growing power and who will also paint Google as the bad guy).  

In the end Apple has very little to lose by supporting Silverlight and a lot to gain. 

(For the record I don’t think any of this is true.  I think Microsoft is being given time because the next iPhone will use Bing as it’s default search engine.  But it never hurts to hypothesize)

Steve Jobs had an e-mail exchange with Gawker’s Ryan Tate over the weekend in which they discussed Apple’s vision and why Mr. Tate was opposed to it.

A lot of the criticism (and sensationalist headlines) focuses on a single line from one of Mr. Jobs’ e-mails.  The commentary on that line seems to miss the point so I wanted to talk about it briefly.  Here’s the line…

Yep, freedom from programs that steal your private data. Freedom from programs that trash your battery. Freedom from porn. Yep, freedom. The times they are a changin’, and some traditional PC folks feel like their world is slipping away. It is.

I can’t speak for Steve Jobs but I can speak to my own experience and I think that can shed some light on this comment. 

In meetings I like to tell people that software is all about automating tasks and, for the business folks, that’s what I want them to believe.  But that’s not what it is to me.  To me it’s a way to show people the wonders of a world that they can’t see.  A world where all the information they could ever want is at their fingertips and to get to it they need only ask.

For them to see that world the way I do everything needs to be perfect.

But it never is and when things go wrong it literally causes me pain.  Physical pain.  More to the point nothing makes me angrier than when the thing that went wrong wasn’t my fault.  

That, I believe, is what Steve Jobs is trying to say.  The issue isn’t porn or Adobe Flash but the ruined experience of computing.  It’s the fact that people are afraid to touch a button on their computing device for fear it might crash.  Afraid to let the kids go on the Internet because some porn site might popup.  And so on. 

That fear ruins computing for many people and what Apple is trying to do is fix that problem.  To create a perfect environment.  In pursuit of that goal banning certain software is no different than beveling the edge on a hardware component. 

Commentators get upset over this because they think the company is trying to take over the world but that’s never been the case.  There will always be Android Tablets and Windows PCs for those who want an unfiltered experience and I don’t think anyone at Apple objects to that. 

They’re just trying to create something better for Apple customers. 

Addendum: One point that didn’t really fit the flow of the above post was Mr. Tate’s claim that…well…I’ll just quote it…

…I don’t think it’s a technical issue at all -- it’s you imposing your morality, about porn, about ‘trade secrets,’ about technical purity in the most bizarre sense.

There’s a difference between imposing one’s morality (to force someone to adopt your moral code) and creating an environment in which you only want people who already share your morality.  An Atheist business man might want to join his local Catholic church for all the business contacts but he has no right to demand they drop the requirement that he believe in Jesus so that he can join. 

The gaming meme of late has been that Apple is becoming THE serious gaming competitor and that everyone in that industry needs to watch out.  As Nicholas Deleon of CrunchGear puts it…

The last time Nintendo took a big hit in profit, it resulted in the development of perhaps the most successful video game console of all time in the Wii. What’s Nintendo’s response going to be this time around? Yes, the big N has seen its profits drop from $3.03 billion to $2.48 billion—still a fair a bit of money perhaps to you and me, but cause for panic in the house that Mario built. While a traditional rival, Sony (with the PlayStation), was responsible for the previous rough patch, this time it’s Apple. Will Nintendo allow the iPhone to push it around?

So I wasn’t surprised when this completely unsourced quote appeared in the Times Online…

Satoru Iwata, the Nintendo president, is understood to have told his senior executives recently to regard the battle with Sony as a victory already won and to treat Apple, and its iPhone and iPad devices, as the “enemy of the future”

This seems odd since just a few days ago the highest ranking Nintendo executive in the United States was publicly saying this in response to questions about Apple…

"We have not seen any impact on our DS business. In the first three months [of this year] we've set two new sales records for the Nintendo DS. We think that through April that we’ll have the best four month time period to kick off a new calendar year that we’ve ever had with the device. So certainly we’re seeing momentum, [Apple is] seeing momentum. I think two products can succeed at the same time."

The above quote is notable because he didn’t dismiss Apple.  He specifically pointed out that Apple is showing momentum too and that he thinks they can both exist.  That’s not something you necessarily say if you’re scared of a competitor (you want to lessen competitors not acknowledge their success) 

The question of Apple and the Game Industry is a lot more complicated.  On one hand Apple has created a very threatening mobile platform.  Life-To-Date the Nintendo DS (in its various incarnations) has sold 128.9 million units compared to the iPhone/iPod Touch platform which is now at around 85.5 million (plus a million or so iPads).  That looks impressive on the surface.

But you have to consider a couple things…

1.  Repeat Business: While I’m sure some people have bought more than one Nintendo DS device the truth is they’re pretty durable and Nintendo hasn’t given customers any other compelling reason to upgrade.  So the customer-to-DS ratio is probably around 1-to-1.   While it’s not uncommon for someone to buy every other version of the iPhone PLUS an iPod Touch (I’m responsible for 3 of that 85.5 million plus 1 iPad).  So the numbers don’t equally translate into people.

2.  Purchase Intent: When someone buys a Nintendo DS they want it for gaming.  That isn’t true with the iPhone or iPod Touch.  So you really can’t compare gamer to gamer.  Again I use myself as an example.  I really don’t game on my iPhone or iPod Touch (there are a few on there but I rarely play them).  So that’s 4 sales taken off Apple’s total and I doubt I’m the only one in the non-gamer category.

Meaning the numbers don’t tell the whole story.  Then you have to look at the companies themselves.  There are a few factors that work against Apple…

1.  Licensed Material:  As anyone in the game industry will tell you the most valuable commodity in gaming is a good license.  You can get decent sales out of a game where someone flies through the air shooting but make it a game about Iron Man and you have a blockbuster.  License holders know that and accordingly they (a) expect to be paid a lot and (b) expect to be sucked up to.  Apple is too used to being in that role themselves to treat others in the same way.

2.  Game Creation Prowess: Say what you will about a platform the biggest names in gaming continue to make most of their money off making actual games and not the hardware.  That’s why Microsoft scooped up Bungie Studios (makers of Halo) and Nintendo continues to turn out Mario games with reckless abandon.   

3.  Customer Focus: Right now Apple is peddling one device to everyone.  Business Customers, Kids, Gamers, etc… That could change but in the meantime that gives Nintendo a big advantage because they can make concessions based on their specific market.  To use the above example a Nintendo DS is a lot more durable than an iPod Touch and that’s why the parent of an 8 year old is going to buy the DS instead. 

Bottom Line

Apple is in a great place.  They’ve managed to become a player in the gaming industry without even trying and they’ve made major inroads with the casual gamer who would never buy a dedicated device. 

But that’s a far cry from being ready to take on companies that are dedicated to just gaming.  Nintendo spends millions if not billions on research, development, licensing and so on and Apple just isn’t matching that. 

I have no doubt Apple could compete if they were willing to put the effort in but so far they haven’t shown that willingness.