Andrew Ross Sorkin & Evelyn M. Rusli demonstrate the signature NYT understatement:
The appointment of Ms. Mayer, who was employee No. 20 at Google and was one of the few public faces of the company, is considered a surprising coup for Yahoo.
I’m mildly curious what this means for Yahoo, but while there’s still a lot of value in their properties and technologies, the days of them being a household name in any sentence that doesn’t begin with “Whatever happened to” are over. I’m more curious what this may mean for Google. Mayer was, as I understand it, responsible for some of Google’s good web UI work, from the very Zen main search page to the original GMail and News. Was she perhaps a little discontent with Google’s ongoing effort to reinvent itself as a “social” company? (“We think Google should be a little bit Facebook, a little bit Twitter, and a little bit TSA. You’ll love it!”)
So it looks like Amazon is entering the smartphone space as well. This is the obvious next step after the Android-powered Kindle Fire. The one glaring problem would be patents — as in, Amazon likely has little or no mobile patents — but the article suggests that Amazon is already hard at work on resolving that potential roadblock.
My initial thought is that patents are the third glaring problem. Here are the first two:
Mobile phone carriers. These yoyos bear far more of the responsibility for Android’s real fragmentation problem—a plethora of versions in use from 2.2 on, not to mention wildly inconsistent user experience and strangely deliberate efforts to cripple functionality—than Google does, more of the responsibility for WebOS’s death than Palm does, and… well, most of Nokia’s problems are their own fault, but carriers sure didn’t help by only carrying their not-even-Symbian feature phones.
Apple’s “our way or the highway” attitude meant the only carrier willing to deal with them originally was the very desperate Cingular, and even they wouldn’t accept Apple’s demands without getting that multi-year exclusive. I don’t think carriers are going to repeat that “mistake” twice unless it’s for a phone they think can (a) beat the iPhone and (b) let them keep as much control as they have with most of the non-iPhones.
What problem for consumers does an Amazon phone solve? Maybe it solves a problem for Amazon. But when someone asks, “Why should I get a Kindle Phone instead of an iPhone 4S or a Galaxy Nexus,” what’s the answer? “It’s the best way to get the pure Amazon user experience?” We’ve seen the pure Amazon user experience on the Kindle Fire, and I think it’s going to sell a whole lot of Nexus 7s.
There’s a lot of noise suddenly—again—about the supposed 7″ iPad that Apple will (or won’t) be releasing. Lorraine Luk of the Wall Street Journalwrites “Apple’s component suppliers are preparing for mass production in September of a tablet computer with a smaller screen than the iPad,” and that doing so “could help Apple maintain its dominance in a market that keeps getting more crowded.” John Gruber at Daring Fireball didn’t exactly confirm this, but in his linked list piece he wrote,
I bet Apple could make a $199 iPad Mini and turn a profit on it. It’s that simple. If Apple thinks people would buy a smaller cheaper iPad and that they can turn a profit making them, they’ll do it. No reason to overthink it.
Maybe, but since when has Apple—at least in the last fourteen years—ever been guided by that principle? I bet Apple could turn a profit with a $699 laptop. I bet Apple could turn a profit with the oft-wished-for “xMac,” a headless iMac aimed at people who want iMac power without building it into the monitor. You can go down a checklist of things that people have wanted Apple to build that they could almost certainly have made some profit on.
But they didn’t.
It’s not that Apple eschews making products that don’t fit with their noble all-encompassing aesthetic. (Two words: iPod Sock.) They eschew making products that are low margin. Horace Dediu estimates that Apple is making close to a 33% margin on iPads.
Apple makes as much money as they do—a whole lot of money indeed—by being strategic about what money they go after. They’re fine with being a “premium” brand. And even as good as their supply chain management is, I don’t think Apple can produce a 7″ iPad for $140. The iPhone 3GS’s unlocked retail price is $350; what do you think that makes its production cost? Apple’s operating margin across the iPhone line is estimated at 51%—some research says the 3GS is a little higher, and some says it’s a little lower. A 7″ iPad has to cost more to produce, though, and Apple would be getting less than 60% as much revenue. To hit that $199 price point, does the profit margin drop from 33% to 25%? 20%? Even 15%?
Granted, most consumer electronics companies would be ecstatic with a 15% profit margin. But Apple has never been. I wouldn’t rule out a 7″ iPad—but if it happens, I’d be surprised if it starts at less than $249. And I wouldn’t be surprised if it never happens at all.
Judge Richard Posner, who dismissed Apple’s suit against Motorola and stopped Motorola from seeking a counter-injunction against Apple, sounds surprisingly like, well, most software engineers. (Or at least a little like John Siracusa.)
I’m not entirely sure I agree with Posner; it’s clearly not a good thing for Company A to spend $100M developing a new product of some kind only to have Company B spend $50K on having four interns reverse engineer it over a month, and it’s precisely that kind of situation that patent law was intended to address. But the problem is the patent system as it exists in practice, in which the reality is often that Company A is extorting or shutting down Company B based on a slew of nonsensical patents that should never have been granted in the first place.
I don’t entirely blame the Patent & Trademark Office for the current state of affairs; through the 1970s and 80s they tried to hold the line against software patents but kept getting their rulings overturned by appeals courts until they eventually gave up. And, like most non-military/security federal agencies ever since Reagan, the PTO is woefully underfunded for the job they’re being charged to do.