Cloud Four Blog

Technical notes, War stories and anecdotes

NY Post iPad Policy: A Real Threat to the Web

Another big story yesterday was the fact that the NY Post is no longer letting iPad users access their web site and is instead forcing them to pay for an iPad app to read content. This has been one of my biggest fears for the future of the web.

The contributions that the web has made to the our collective knowledge are so large that they can’t be measured. It is this collective knowledge that I fear losing.

I am not a subscriber of the New York Times. On occasion, I am told that there is a good article in the New York Times that I should read.

Before the web, it is unlikely that I would have known about the article. If I did hear about it, then I would have to find a store that carried the New York Times and go buy it. Good luck finding the back issue of the newspaper if I heard about it the following day or week.

Today, I can simply follow the link and read the article for free. Removing the friction of physical distrubtion and having this information freely available is a tremendous boon to people everywhere.

John Gruber writes that the NY Post’s iPad policy “is a bad idea, and likely doomed to failure, but it shows just how problematic the web is, financially, for traditional newspapers.” There’s the rub.

All of this online knowledge that helps humans across the globe, but we’ve still not found a way to make it financially viable on the web. That is worrisome.

The promise for years was that there would be some sort of micropayment system that would help ensure a frictionless way to consume content on the web while ensuring authors and publishers got paid, but that promise hasn’t been realized.

I doubt that iPad apps are the savior for the publishing industry. But we do know that they have some things going for them that the web doesn’t including more reader engagement and easier payments.

Why shouldn’t more publishers follow the NY Post’s lead and drive people to their apps? In fact, if the web is losing money, at some point why wouldn’t they just stop publishing to the web at all and instead keep all the content inside the app.

I’m not opposed to paying for content. In fact, I want to do so, but subscribing to a newspaper that I only read one or two articles a month from doesn’t make sense. And that problem is amplified when articles are only available via an app that must be downloaded, installed and a subscription purchased.

The first time I read about the Financial Times success on the iPad and their pay wall, I wondered if our days of serendipitously finding useful articles will soon end. I don’t know how realistic these fears are, but I find it difficult to dismiss them.

People spend more time using apps than web. So what?

A blizzard of articles followed the release of a report by Flurry that says that the amount of time spent on mobile apps exceeds time spent on mobile and desktop web. Many are referring to this as a tipping point that shows that HTML5 isn’t going to catch native apps.

Yawn. Does this even matter?

I guess the assumption is that the total amount of time spent on the desktop web exceeds the amount of time spent in desktop native apps and that mobile is some new behavior here, right?

Except I can’t find any data on how much time is spent on the web versus using native apps when it comes to desktop computers. The closest I’ve found is research that looks at home usage of computers.

My assumption is that for the tasks that people do repeatedly, that they are likely to find specialized software. Sometimes that specialized software is web-based—salesforce comes to mind—but just as commonly that software is a native app like Outlook or Photoshop.

I wouldn’t be surprised if we looked at computer usage to find that native app usage exceeded web usage. I have iTunes running constantly while doing other things. Does that count?

What can you do with this information?

One reason I find discussions like this frustrating is not simply because it feeds into an argument that I’ve grown weary of—web versus native—but also because it is information that no one can really act on. What do you do with the information that people are spending more time using mobile apps than they are using the web?

Advertisers perhaps could use it to make decisions to put more money into ads running inside mobile apps. Of course, these ads would:

  • Be built using HTML5—even iAd is based on web technology.
  • Drive people to mobile websites.

Otherwise, the information doesn’t seem to be something you can act on.

One problem with average data like this is that heavy usage—like game play—skews the average. We don’t know median usage. But most importantly, we don’t know the usage patterns for your target customers.

I’m not disputing the results. I’m merely asking, now what?

Two Interesting Trends

All of the debate about web versus native obscures two more interesting trends in the data:

  1. Casual gaming, especially via a mobile phone, has really taken off.
  2. Most social networking started in the web, but has turned to native on the phones. Facebook is trying to go back to web on mobile. This is something to watch given how large a chunk of time is spent on social networks.

Plenty of Opportunity for All

For all of the talk about how mobile web is being left behind, I have yet to see a single study that doesn’t show exponential growth in mobile web usage.

Yes, people may spend more time playing games than browsing the web on their phones, but they are still browsing the web on their phones in record numbers. And if businesses want to reach them, they need to include mobile web as part of their strategy.

No “average” user looks at their phone and thinks, “Awesome, native apps are winning!” No, they rely on both apps and web on a regular basis.

If our customers don’t see this as a zero sum game, why do we insist on talking about it in these terms? I look at mobile and see a world of opportunity for both the web and native apps.

Ditching the Training Wheels: Why the iPod Touch Will Be Discontinued

Shortly after it was announced in September 2007, Steve Jobs described the iPod Touch as “training wheels for the iPhone”. Those training wheels have served Apple well over the last four years.

But I’m convinced that Apple is ready to ditch the training wheels—and the iPod Touch along with them. While it may not happen this year, I wouldn’t be surprised if it does. If the iPod Touch is still around three years from now, I will be very surprised.

Let me explain why the end of the iPod Touch is inevitable and why Apple might be closer to discontinuing the iPod Touch than most think.

Why Discontinuing the iPod Touch is Inevitable

By all accounts, the iPod Touch has been a very successful product. Apple has sold over 60 million iPod Touches which represents almost a third of all iOS devices sold. On recent earnings calls, Apple has noted that iPod Touch sales continue to grow and now account for over half of all iPod sales.

So why would Apple discontinue a successful product?

iPod Sales are Stagnating

Explosive growth is everywhere in mobile. I’m accustomed to looking at graphs with a sharp upward trajectory. So graphs that deviate from that pattern stick out like a sore thumb. Last October, Asymco published one that showed how iPod sales had been passed by iPhone sales.

Graph showing iPod sales have stayed relatively the same while iPhone sales have grown rapidly to surpass iPod sales

Since 2006, iPod sales have stayed at near the same volumes. There are seasonal growth spurts—many are sold during the holiday season. But overall growth has stagnated.

iPod revenue has continued to grow due the fact that an increasing percentage of iPod sales come from iPod Touch devices which have a higher price point. But even that growth didn’t prevent Apple from experiencing a decrease in iPod sales in Q2 with 9 million iPods sold compared to 10.9 million in Q2 2010.

No matter what silver lining you find, it is clear that iPod sales aren’t keeping up with iPhone and iPad growth.

The Market for the iPod Touch is Shrinking

When people talk about the market for the iPod Touch, they usually talk about three types of people:

  1. Teens and pre-teens who do not own an mobile phone
  2. Adults who have to use a different phone for some reason (e.g., a corporate-supplied blackberry), but want an iOS device for personal use
  3. An adult who cannot afford the price of an iPhone and its recurring fees so they have a cheaper phone

There is demographic data that supports reason number one. In January 2010, Comscore and Admob released a survey that found that 65% of iPod Touch owners were seventeen or younger.

Graph comparing demographics of mobile platforms including iPod Touch

However, the number of youth who don’t have mobile phones is decreasing rapidly. Pew Research found that in the United States the “bulk of teens are 12 or 13 when they get their first cell phone”. The average age that U.K. children get their first mobile phone is eight years old. The trend around the world is towards children getting mobile phones at younger ages.

age at which child got first cell phone - parent reported

This means that over time the 65% of iPod Touch owners who are under 17 are likely to convert to a mobile phone. If they can afford an iPhone, they’ll likely get one. Otherwise, they end up being very similar to the adults who want an iPhone, but can’t afford one—effectively collapsing those two segments into one.

As the number of people without smartphones decreases regardless of age, it really comes down to choosing the iPod Touch because the iPhone is too expensive. If only Apple planned on selling a cheaper iPhone to reach those people.

A Quick Aside: Tell Me Again Why Companies Should Make Products to Compete with the iPod Touch

Many people have wondered why more companies don’t make products that compete with the iPod Touch.

Let’s take a look at what we know about landscape for an iPod Touch competitor:

  • iPod sales aren’t growing
  • The core market is shrinking as more youth get phones
  • Soon there will be $85 smartphones

Given these facts, why would any company chase the iPod Touch?

Coming Soon: The Cheaper iPhone

There is no question that Apple is going to release a cheaper iPhone. The only question is how much it will cost, what will include, and when it will be released.

Why are we so confident? To repeat an earlier post, Apple COO Tim Cook, CFO Peter Oppenheimer and VP of Internet Services Eddy Cue recently met with Bernstein Research analyst Toni Sacconaghi who published an note to advise his financial clients1. Here is the key paragraph from Fortune’s summary of Sacconaghi’s note:

The analyst says Cook “appeared to reaffirm the notion that Apple is likely to develop lower priced offerings” to expand the market for the iPhone. Cook said the company is planning “clever things” to address the prepaid market, and that Apple did not want its products to be “just for the rich,” and that the company is “not ceding any market.”

So we can be confident that they are working on a cheaper iPhone, so let’s try to answer the other questions.

What will the cheaper iPhone look like? What features will it include?

I have no idea. It’s been fun trying to track the rumors of the next generation iPhone and try to figure out what might actually be rumors coming from the new, less expensive iPhone.

How much will it cost?

The Bloomberg reported that the target price for the cheaper iPhone is $200 without contract. The Wall Street Journal said that the cheaper iPhone “would be available to carriers at about half the price of the main iPhones. That would allow carriers to subsidize most or all of the retail price”.

When will the cheaper iPhone be released?

I believe it will come out in September with the next generation iPhone. Not only does the timing make sense, but I think it would have been irresponsible of Cook and Oppenheimer to discuss the cheaper iPhone with the Bernstein Research analyst if it wasn’t due this year.

Is there room for a cheaper iPhone and the iPod Touch?

The low-end iPod Touch costs $229. If someone can get an “iPhone Nano” for around $200 without a contract, why choose to buy an iPod Touch. Even if you don’t use the phone capabilities, you can simply use it on WiFi. If you can later afford to use it as a phone, you’re set.

Right now, the iPhone and iPod Touch can coexist because while the iPhone sells for less than the iPod Touch, that price isn’t the true price. It is the subsidized price and consumers understand the commitment they are making. A contract-free, $200 iPhone will cannibalize iPod Touch sales.

Would Apple Really Cannibalize its Own Product?

Yes. This is what sets Apple apart. It isn’t afraid to cannibalize its own products. Plus, Apple needs to sell cheaper iPhones for many reasons I’ve covered in the past.

More Signs that the Cheaper iPhone Will Replace the iPod Touch

I’ve suspected that the iPod Touch would get EOL’d for quite some time, but recent developments have made me convinced it is going to happen sooner rather than later.

First, in order for Apple to go after people who haven’t been able to afford an iPhone, they need to do more than simply provide a less expensive phone. They need to address some of the following issues:

  • The phone needs to work for people who don’t have a computer for syncing.
    Last week’s iCloud announcement now makes this possible.
  • If they want to pursue prepaid market, it needs to be available without contract.
    This is a constant in all of the rumors about the cheaper iPhone
  • Ideally, the phone would be unlocked so you can pick the best plan.
    For the first time this week, Apple started selling unlocked iPhones in the United States. This will allow people to use iPhones on regional carriers like MetroPCS, Virgin and Cricket.
  • Being unlocked won’t be as useful unless you can switch from carrier to carrier.
    Verizon’s CFO has confirmed twice that the next iPhone will be a “world phone” meaning that it will support both CDMA and GSM allowing it to hop between networks.

In addition, if they want to attract more of the teen audience, they should find a way to replicate the success of the Blackberry Messenger. Oh wait, that’s right. Apple now has iMessage.

So those are the tactical things that Apple needs to do in order to have a successful cheaper iPhone launch. What other signs are there that the iPod Touch might be nearing the end of it’s life?

And perhaps most importantly, the new iPhones are going to be announced at the event that Apple has traditionally used to launch its music products.

Will the iPod Touch Be Discontinued this Year?

I’m increasingly convinced it will happen soon. Will it happen this year? I’m not sure.

But it seems clear that Apple is preparing to take off those training wheels and go after the lower end of the smartphone market.

Join Cloud Four at the Breaking Development Conference

Lyza and I got so much out of the last Breaking Development conference that we’ve decided to send everyone in the company possible to the next Breaking Development conference. The conference takes place on September 12-14 in Nashville.

If you’re interested in mobile web, you should strongly consider must attend this event. The speaker lineup is fantastic. But it isn’t just the speakers. All of the attendees are people who are focused on mobile web. I learned a lot from everyone I spoke to.

And while the Gaylord hotels where the conference is held are crazy huge biodomes, they have a hidden advantage in that everyone ends up staying together for meals which means that the conference experience continues long after the sessions.

We’re putting our money where our mouth is. We’re a small company and sending everyone is a pricy endeavor. But we think so highly of this conference that we’re doing it. I can’t think of a stronger endorsement that we could make.

Tomorrow is the deadline for early bird registration. Register today because this is one conference you don’t want to miss!

Responsive Web Design Book Review

Ethan Marcotte’s new book on Responsive Web Design is both not what I had hoped for and more than I had dared to imagine.

First, let’s get my disappointment out of the way.

As I explained in a previous post, I’m struggling with a chapter on Mobile First Responsive Web Design for our upcoming book. I had secretly hoped that Ethan’s book would contain a never-seen-before blueprint on how to tackle Mobile First Responsive Web Design.

Alas, it doesn’t contain a secret decoder ring. And if I’m honest with myself, I knew it wouldn’t.

Ethan and I have talked multiple times about how much thought and work is going into the Boston Globe project. Responsive Web Design, particularly the mobile first variety, is still very young.

So it was unfair of me to expect Ethan’s book to magically make the tough stuff we’re all working on solving suddenly go away. It’s a testament to Ethan that I even thought he might be able to pull it off.

What the book did do is something I hadn’t dared to imagine: the book transcends the topic it covers.

I don’t know how else to describe it. From the first two paragraphs, Ethan paints a picture of how the world we’re living in is changing:

As i begin writing this book, I realize I can’t guarantee you’ll read these words on a printed page, holding a tiny paperback in your hands. Maybe you’re sitting at your desk with an electronic copy of the book up on your screen. Perhaps you’re on your morning commute, tapping through pages on your phone, or swiping along on a tablet. Or maybe you don’t even see these words as I do: maybe your computer is simply reading this book aloud.

Ultimately, I know so little about you. I don’t know how you’re reading this. I can’t.

With these words he sets a tone that continues throughout the book. A tone that is both reassuring and at the same time inspiring.

Now don’t get me wrong, it isn’t all inspiration and theory. Ethan does a great job of diving into how to build Responsive Web Designs. He walks you through the process, letting you see where you will run into problems, and providing suggestions for solutions.

Images from inside Ethan’s Responsive Web Design book

He anticipates problems that I wouldn’t have thought to include. For example, the fact that flexible images develop artifacts on Internet Explorer 7 and below.

At first, this IE artifact bug seems like a divergence from the main topic, but I quickly came to appreciate the fact that when someone completes this short book, that they will have all the tools they need to start building Responsive Web Designs.

Ethan ties the two threads—the inspiring view of the where the web is headed and the technical details of Responsive Web Design—together In the final chapter entitled “Becoming Responsive” where he covers mobile context, picking breakpoints, and responsive workflows.

It is in this chapter that you realize what he’s truly accomplished. He’s written a book ostensibly about making the web respond to its environment, but what he’s really done is transform you into a more responsive being.

Ethan Marcotte’s new book, Responsive Web Design, went on sale today. Needless to say, I highly recommend it.