the onda

Back in the 90s, I was a huge fan of Mercata (during its fleeting existence), the predecessor to all of today's group buying sites. And it doesn't take long these days in any conversation about the consumer internet for Groupon to come up, at which point anyone who has been around a while will usually point to Mercata and say something like "clearly it was too early for the concept."

Outside of how much information people are willing to publish about themselves, I find this to be a poor excuse for why something didn't work before. And as it happens in the case of Mercata/Groupon, I've finally discovered why. Listening to Andrew Mason (the Groupon founder) on Mixergy over the weekend, it becomes clear quickly that he was applying a key lesson from his failed attempt at a "collective action platform" (The Point): getting the audience super-focused by providing limited choice. More importantly, he did this in the local space— where unlike Mercata's attempts in electronics— it was fairly easy to overwhelm a local merchant with a relatively small user base. This online/offline lever quickly proved the concept both to themselves and to the merchants upon which they relied to drive the "deals" that grew the site.

In these heydays of lean startup mania, everyone talks about focus as the key way to find your initial product/market fit, but this kind of "limited features that please a small number of people across the Internet" is a bit different from Groupon's leveraged approach for early traction. For sure the early merchants were underserved when it came to performance marketing channels which is most likely what has helped the category explode both in the US and abroad. But the better early lesson for small startups might be that finding the right source of overwhelming leverage to prove out a an early business model (i.e., send your 400 Facebook friends to your local coffee shop on a given Saturday morning) might provide some interesting avenues for getting started.

Especially as mobile and location seem to be the race du jour, it would seem that thinking through applying this online/offline leverage might yield better early outcomes that obsessing about the first million users and being stuck with fundamental user density challenges.

This iPhone antenna thing is insane, both because of how much airtime it has gotten (this is my last iPhone/Apple post for a long while) and because of how ridiculously careless Apple has been about wasting all of the accumulated trust it has collected with its customers over the years. The whole thing makes me remember Phil Schiller who claimed that Apple's comeback strategy was predicated on their becoming the "Sony of personal computers" while he was trying to recruit a bunch of us out of grad school in 1999.

Back in the 1980s, I (and just about everyone I knew) bought Sony stuff just because it was Sony. VCRs, walkmen, headphones, and even totally commodity products like media. Then Sony bought content companies and got its head completely turned around on how its devices would relate to digital content. But in a much worse move, to justify their own stupid strategies, they started lying to their customers. They lied about the superiority of the DRMed formats, the performance of their proprietary flash storage, even about the relatively high costs of repairing one of their VAIO laptops (which were built with mostly standard components).

The result? They destroyed all of the accumulated trust that allowed them to charge a premium to their customers, even on products like blank CDs. A child of the 1970s when the Sony brand stood for the pinnacle of consumer electronics, there is almost nothing that they could sell me these days that didn't have a rock bottom price attached to it.

Apple is getting dangerously close to the edge of the same mistake. The press conference last week was a joke, and having their PR department grinding out videos to knock the better radios Motorola is shipping in the Droid phones just looks desperate. We may all keep buying their products, but increasingly it will be only in categories where the competitors are so weak (i.e., HP/Dell craptops running Windows). And once that trust is gone, they will be forever sailing against the wind with every new product introduction.

If I were them, I'd think hard about that before letting this get papered over via free rubber cases and attack videos aimed at the competition.

Lately it seems that I'm seeing iPhones everywhere. And if not iPhones, ham handed attempts at "improving" the iPhone by jacking the screen size up 130%— thus making a mongrel device that looks like the product of an iPhone and an iPad.

It just can not be that this is the one form factor to rule all of going forward in smartphone technology. And yet, outside of RIM* and the much ridiculed HTC G1, who is trying to do anything with real buttons anymore? Who remembers that not that long ago we all ridiculed a future filled with consumers stroking glass all day, unable to feel the satisfying poggle of a well-built physical button?

Back in 2005, I sat in the back row of a cross country flight with a guy who had just gotten a Nokia e70, the coolest cellphone I had ever seen, both because it had a numeric keypad and the greatest full keyboard implementation I have ever seen on any mobile computer. Where is that sort of form factor innovation today?

Despite the fact that everyone loves to write Nokia off, I'm hoping that they go back to their roots and start building products like the e70 again. When combined with their moving to Android (as opposed to their confused Symbian/Meego story on the OS side), this could be the genesis of a real formidable world wide attack on the open face sandwich form factor that Apple and all of its competitors are foisting on us over and over.

Diversity is good— especially in something as personal as a mobile computer.

* And while RIM nailed the email use case, they've not done anything in terms of hardware diversity since 2001. And what is more, their software sucks the big one for anything that is outside of the sweet spot app.

Design is not just what it looks like and feels like. Design is how it works.
Steve Jobs

Despite how easy it is to write the story of how this iPhone 4 antenna snafu has to do with the esthetes at Apple being obsessed with the look of the device, I suspect that the motivation for the design change is much deeper, and likely speaks to Apple's strategy for staying ahead of the rest of the smartphone players.

On the 3GS, 3G, and original iPhones, the antenna was coiled around the bottom of the back of the phone— where you now have a smooth glass surface that seems remarkably similar to the front one. In fact, outside of the hard edges, it is this symmetry that you first notice on the device after coming from the more rounded predecessors: the back feels exactly like the front, so much so that it is sometimes a pain to figure out what the front of the device is when you are fishing for it in your pocket.

Now why would a company that seldom sacrifices function for pure looks do this, both when it is less convenient for the user and when it resulted in this controversial antenna issue (especially if the rumors are true that Apple was aware of the likely problems)?

My brother was the person who suggested the right answer to me after hearing me complain about it: because Apple is getting us ready to introduce a multi-touch panel on the back of the device, likely for simple gestures at first (think Mighty/Magic mouse) to be followed by more complex interactions most of which we can't even conceive of at this point.

Think about it: every time any of the keyboards have to come up, you've automatically lost 45% of the screen (this was the last remaining benefit of hardware keyboards on mobile devices). More importantly, imagine all of the new types of on-the-go interactions that having a touch-sensitive back would enable. Try this: if you've got an iPhone 4, hold it in the death grip position and try some swipes over the back glass with your index and middle fingers. Pretty natural right?

And yes, because Apple fans so obsessively try to read the leaves of the patent database, the obligatory proof that someone in Cupertino has thought of this.

It is precisely because this is a credible hypothesis that the smartphone platforms are so exciting. We are still so early in this type of fundamental interface/interaction innovation that there is no telling where this might go. As Steve Cheney wrote, at the hardware layer, mobile innovation is just blowing away anything that came before it in personal computing.

[One final note: despite the fact that it runs totally counter to the way Apple does things, this is exactly what I would highlight in this morning's "Antenna Gate" press release: by letting folks know why they had to suffer through an untested and novel antenna design, the company would earn back a lot of the goodwill they've lost over the past few weeks]

If you are running a giant lottery, the most important thing you can do is give people faith to keep buying tickets. You put up signs along the side of the road that say things like: "Wanda won!" and picture an average looking woman in a normal kitchen pumping fistfuls of hundreds into the air.

Equally important is having lots of little bits of evidence along the way: little payouts for people whose tickets end in the right digits. As the lottery runner, most of this money will come back in more ticket fees anyway but the real reason to do it is to give the rank-and-file hope.

This is exactly the game that Apple is playing with the AppStore. Very few people are making a living at it; and yet Steve got up on stage last week to tell us they've paid a billion dollars out. A few developers are often featured as the guys that can move millions of dollars of apps. Pure Wanda tactics at play.

But if you are in the bulk of the developers, making $10-100/day from your paid apps, you need those small rewards to keep you going. Which is exactly where this iAds nonsense comes in. Today the AppStore is such a novelty that people will download almost anything. And when it comes to most of the categories, all else being equal, folks will pick off the top of the "Free" top 20 more often than they will off the "Paid" list.

But no matter how much hype exists around the promise of location-based advertising, reality is setting in. There is a ton of inventory on the publisher side— which as with the web, is driving CPMs to the floor. More importantly, the recent bandwidth caps imposed by AT&T (and others will follow) are about to turn consumers into bandwidth pinching cheapskates which means that extra payload is going to be scrutinized much more aggressively (this BTW is also likely to affect games built on platforms that "stream" assets in at runtime).

This last point is a biggie: if Apple were really serious about the long-term prospects and scalability of in-app advertising, I doubt they'd be that happy about the end of the all-you-can-eat data phase of the smartphone. Especially as Steve takes the stage to display rich interactive ads based on HTML5 blobs sucking up precious bytes on the wire.

Finally though, at a gut level, it just doesn't make sense. The smartphone screen is very constrained real estate. Most of the usecases are for quick in-and-out activities, and for those that aren't (games), a rotating banner or immersive ad is like a stick in the eye of the overall user experience.

Location aware coupons delivered through an appropriate messaging channel? I can see that. But the web experience ported to a smaller form factor that is used completely differently? Come on.

Just because Google got hot and bothered and paid up for the promise of AdMob didn't make it all of the sudden a sensible strategy for building a big business.

Selling hardware based in part on the energy and work of hundreds of thousands of ticket buyers hoping to win the lottery? Now that is a good business.