MattMaroon.com

I read an article this week asking the question “Why does Apple offer free engraving” on it’s iPods, iPads, etc. The conclusion the article came to was that it is to reduce Apple’s secondary market. While an interesting thought, I suspect it’s far off the mark.

People look at buying used gadgets about the same way they do at buying used underwear. People do it, for certain, and you can probably find a host of used iPods on sale on eBay, but only because they either can’t afford new ones, or they’re extremely thrifty. The number of people who buy a used iPod instead of a new ones is probably negligible.

The way mp3 players work is more or less the following, ranked in order of frequency.

Can afford a new iPod: If so, buy a new iPod.

Can’t afford a new iPod and aversion to buying a used gadget outweighs brand loyalty: Buy a Sandisk Sansa or some other mp3 player.

Can’t afford a new iPod but really want one: buy a used one.

The reason Apple.com gives free engraving is pretty simple, it’s so you’ll buy from Apple.com. There’s often no other reason to buy anything from them. Apple’s website is probably the highest-priced place to buy an iPod online. They sell almost all Apple products (other than refurbs and occasional sales) for MSRP. Amazon, a much more widely-used online merchant, sells almost all Apple products below MSRP.

Apple also is forced to charge sales tax in any state in which they have an Apple Store, which by now means most people. Amazon charges sales tax in only 5 states. For comparison, I added an iPod Classic 160gb to my cart on Apple.com. Total cost (with free shipping) was $265. On Amazon the same item (also free shipping) is $228. That’s an extra $40. The price is about the same at Wal-Mart, though they may have to charge sales tax too, I’m not sure.

Apple, of course, doesn’t get to keep the sales tax but they are getting $249 from the sale. Presumably when Amazon sells it they do so at some markup (probably a small one) meaning that every iPod sold on Amazon probably nets Apple less than $220. I wouldn’t be surprised if Amazon is buying them for something like $200.

Apple’s “free” online engraving is thus not free to Apple. It nets them probably at least $30-$50 every time someone chooses to buy their iPod from Apple directly rather than through Amazon. The cost of engraving is probably on the order of a buck or two.

Apple doesn’t need any nebulous and possibly inconsequential reasons like reducing the size of the secondary market to offer free engraving. They do it because it makes them money.

Undoubtedly the most humorous thing about the iPad’s, umm, lukewarm reception (to put it kindly) is the Apple fanboy response which has been, largely, to post every quote where anyone ever said some Apple product wouldn’t work. Some people hated the original iPod (which sold like 8 units total). Some people said the original iPhone (also an underpeformer) wasn’t going to be that big.

This, to the fanboys, is practically evidence of its impending success. Of course, nobody is pointing out quotes from people who said the Apple TV or Macbook Air were duds too.

I think there’s a large difference between the iPhone and iPod and the iPad. When the iPod came out, people were using MP3 players. A lot of them. I’d already had a few different models by then. It was a small portion of the eventual market, for sure, but nobody ever thought to themselves “Why would anyone want a tiny device that can store every song you’ve ever heard, half of which you downloaded for free on Kazaa, on it?” They debated whether people would buy that device from Sony or Creative or maybe Apple, but not that people wanted it.

Same with the iPhone. The smart phone market had existed for years before its release. Nobody with half a brain ever said “Why would anyone want to be able to surf the web and answer emails on the go?” People were already doing that. It was more like  “Why would anyone pay $600 with a 2 year contract for this?” or “Will anyone switch to AT&T for this?” or “Will a virtual keyboard be even remotely tolerable?”. Etc.

The question with the iPad is: “Does anyone want a device in between a smart phone and a laptop?” It’s not an issue of who they want to buy it from, or how much it costs, or what features it has. It’s whether, like the Apple TV, it needs to exist at all. If you go down a list of features and compare it to HP or Sony or whoever else jumps onto this market, it might well be like every other Apple product. It might look inferior on paper, and outsell them 10:1 anyway. That I would not put past Apple.

Almost as humorous as the twisted logic is the freetard reaction which is, humorously, that Apple is (or may be becoming) evil. On the one hand, it’s hilarious to see the farm animals, who’ve been decrying Microsoft for far less egregious things than the App Store for over a decade, react in real time when they realize the pigs have become human. Four legs good, two interns capriciously rejecting fart apps better.

I didn’t buy it about Microsoft then, and I don’t buy it about Apple now. They’re just doing what corporations do, trying to make the most money they can. That’s their job, and this is how they think they’ll accomplish it. If their tightly-controlled user experience does become too restrictive, people won’t buy it and Windows, Android, Ubuntu, or whatever else will win out. There’s not good and evil, only optimal and suboptimal, and time will tell which Apple’s chosen.

Now that I’ve had a couple weeks to play with the new phone, I can give a little more perspective on it. For one, the battery life isn’t as bad as I’d thought. Probably due to some combination of firmware updates (got the third one today), me not playing with it incessantly, and learning to turn instant messenger off when not in use, I’m now getting through the day with very little trouble. If I pull it off the Touchstone in the morning and head in to work, I’ve usually still got 50-70% when I get home. I’m going on a trip Sunday, so we’ll see how it performs on the road.

The Touchstone is pretty much the awesomest thing ever. You set your phone on it and it charges. If someone calls you can push the answer icon and it automatically goes to speakerphone. Or you can pick up and it automatically answers. The magnet in that thing is very strong, so even though you have to orient the phone just so to get it to charge, it’s almost hard not to.

The Pre is turning out to be one of the most hacker-friendly devices ever produced. Palm has published all of the open source packages they’ve used and modified. People have already got Doom up and running. And with one exception (in which Palm politely asked a developer forum to stop talking about tethering at Sprint’s behest in order to maintain positive vibes between all parties) they’ve been pretty encouraging. So despite the lack of a hardware-level SDK, I’m pretty encouraged about the future of the currently rather empty app store.

There are definitely a few improvements I’d like to see. For one, the ability to click a YouTube link found in a web page and have it load in the YouTube app. That app works perfectly, and that seems like a rather trivial feature to implement so I don’t really understand why this functionality is missing.

Tethering would be nice, if only so I could stop reading donkeys whining about the lack of it online. I had tethering on my previous phone (EVDO Rev A on Verizon’s network) and it worked as well as tethering does anywhere, but it still sucked so much that I just went back to purchasing the $10/day Wi-Fi from hotels. It’s one of those things that sounds cool, until you want to watch a YouTube video or download something from Bittorrent. Plus how often do you really want to use it? Especially with a device like the Pre, which already does much of what you’d use a laptop for anyway, it seems like a low priority.

I personally would like to see (and suspect we will before long) a soft keypad that works in landscape mode in browsers and apps. The physical keyboard is still unbeatable for typing out emails/SMSes/Tweets/IMs. But sometimes when you’re surfing the web, which for me is nearly always in landscape, you only need to enter a few characters (for instance to find a friend in Facebook’s search box) and for that an optional soft keypad would be really handy.

On the same note, I’d like a little more spelling correction and predictive typing. Apple had to add that to their phone to make up for the general crappiness of soft keypads, but Palm probably figured it unnecessary since they’ve got a dedicated QWERTY. And while they’re correct, it would be really, really nice. They do a little, automatically capitalizing the first word of a sentence, inserting an apostrophe into obvious contractions, and changing "u" to "you", but that’s about it. Because the keypad is such a superior input mechanism they should use a spelling-corrector that’s significantly less aggressive than Apple’s and just covers the basics, but they still should have that.

Better copy and paste would be very useful as well. As far as I can tell, right now all you can do is copy from one editable text field to another inside the same card. That borders on uselessness. I got a cool app to keep my encrypted passwords, but I can’t paste them into a browser. Since I use Roboform on my 3 computers, most of my logins are some 12 digit randomly-generated string of numbers and letters. Typing them is a major hassle, and involves me switching from one card to another and back again over and over. Please, oh please let me cut and paste.

Video recording would be a nice touch, and is one of the features whose absence I notice most. This is just software people, and any $20 clamshell can do it. It was ridiculous that Apple didn’t have that for 2 years (and still doesn’t on all but the newest model, despite the fact that third parties have proven it’s possible) and it’s ridiculous that Palm doesn’t now. I expect Palm will fix this too, since their current SDK wouldn’t enable a third-party to do so.

The IM client on the Pre makes iPhone users with their crappy third-party apps jealous, but I wish they’d do something about the battery drain like automatically logoff after ten minutes of non-use. I’d also like to see Yahoo! and MSN added, though people digging through the code have found what would appear to be those under development.

I love the way the Messaging app combines SMS and IM, showing me them both together in one thread and automatically responding using the last used protocol. It’s fantastic. What I don’t like is that it continues to use IM even when the person is signed off. In those cases I’d prefer it to automatically switch back to SMS, though at least they make it very easy to do manually.

Another goofy thing about the phone I discovered is that data roaming is turned off by default. Thankfully you just enable it once and then forget about it, but that’s sort of odd since Sprint requires you to get an all-you-can-eat plan in which that’s included, unlimited and for no extra charge. For only $70/month I get 450 peak minutes, nights starting at 7pm, unlimited EVDO Rev A data on both Sprint and Verizon’s networks (thanks to roaming) and unlimited text-messaging. (Anandtech’s awesome Pre review shows just how great Sprint’s pricing is, and hilariously shows a Target ad that’s clearly contextual because if you click it, it takes you to a light up plastic palm tree.) Maybe Sprint requested that of Palm in order to keep costs down.

Finally I had written that:

I’d also like the ability to easily clear email notifications. They stick around until you click them and load the email app, even if you delete it through your desktop client on Exchange (or presumably Gmail). It’d be nice if I could swipe them off to the side like you can do with many things to get rid of them.

Then I realized I hadn’t even tried it so I pulled out the phone and gave it a shot. It worked! Kudos Palm, kudos.

As they say at McDonald’s, I’m lovin’ it.

So I think Apple’s announcements yesterday were actually good for my under ten million iPhones sold by 2009 hypothesis/wager. The iPod Touch (which was somehow obvious, brilliant, and stupid at the same time) is going to cannibalize the iPhone. It has to.

As I’ve said 100 times, they made a product that only the BlackBerry set can afford (even still, after the price cut) but designed it in such a way that they cannot give up their BlackBerry. They’ve tethered it to a two year contract (making it ungiftable) and they’ve excluded the only other group of people who want this phone and can afford it (geeks like me) by not having 3g data. They’re selling only to fanboys, and even most of them were hesitant.

And now, on top of it all, they’ve made an iPod that has everything good about the iPhone (Wi-Fi, browsing, various iPod functionality) and none of the bad (AT&T), and threw in double the storage for good measure. Don’t get me wrong, it’s brilliant, because the BlackBerryers were all carrying an iPod anyway and they’re all going to upgrade to the Touch. But Apple had a lot of people sitting on the fence about the iPhone, and I have to think the iPod Touch went ahead and pushed them right off.

In some ways, I actually want the Touch. I’d love to have Google Reader look that sweet in my pocket at all times, and I’ll tell you right now, if they somehow make something like Google Gears for it (so I can read my RSS feeds when out of Wi-Fi range and sync when I get back in) I’m sold. Unfortunately Wi-Fi isn’t near ubiquitous enough yet for that to be useful, and by the time it is, Wi-Max will be a better option anyway.

I’d also love to have a media player with such a nifty interface and beautiful screen. I’m currently using a Zen Vision W, and while I love it, it’s just too bulky for day to day use. I can’t pocket it. And the interface is a step back from the Vision M, resorting to buttons. The multitouch screen would have to be significantly more enjoyable, even if it gets a little smudgy at times. I never leave the house without my Oakleys, so I’m never too far away from a microfiber bag to clean it with.

Unfortunately I just can’t bring myself to buy that product. There’s just too much annoyance involved. All of my music is in WMA format, so I’d have to convert it. Most of the best stuff is lossless at least, so the conversion shouldn’t be too bad, but it’s over 60 GB of tunes, which I then have to store twice. I’d have to convert it all to AAC, which is a respectable codec but useless for any other player I might own. I’m too much of an audiophile for mp3, which would require such a high bitrate that I’d have almost no music on my little 16 GB player.

Which leads me to problem number two, which is iTunes. That software is the biggest steaming pile I’ve ever encountered. Apple fan boys make fun of Microsoft and their overweight programs all the time, but iTunes is the very definition of bloatware. I’ll take Media Center over that (and WinAmp over both) any day. It took me forever to figure out how to select the songs I want out of my massive media collection and load my 4GB nano, whereas any Windows friendly player is as simple as dragging and dropping. I have a feeling iTunes’ syncing is pretty nice if you’ve got some giant 160 GB iPod and can continuously load your entire collection (and I have to give kudos to apple for pushing the storage capacity long after everyone else seems to have given up) but if you’ve got a nano and are a real music fan, you’re doomed.

And I will only buy music from iTunes when they make it DRM free and lossless, and if that did ever happen I probably still wouldn’t get it there since it would be cheaper on a competitor’s site. Until then I’d simply buy the CD and rip if some music is so compelling that I have to own it. I’m a Rhapsody guy, so I don’t really buy much music anymore, but if I did, that would be how I’d get it.

There is also the fact that all TV shows online (bittorrent is my personal cable company) come in XviD or DivX, which the iPod won’t play. So it will require massive amounts of conversion, or me also owning the Zen W. I don’t need or want two video players.

On a slightly more humorous note, I was looking around through some boxes in the basement and my office yesterday and realized I own 6 mp3 players. They are (with ratings, appropriate to when they were released):

4 gb iPod Nano (7/10)

60 gb Zen Vision W (8/10)

30 gb Zen Vision M (9/10)

5 gb iRiver h10 (2/10)

20gb iRiver H120 (10/10)

40 gb iRiver H340 (7/10)

I’ve also got a number of other items that can play mp3 files (Sony PSP, my car, a Treo650 and a Motorola Q). I’ll be visiting the local I Sold It On EBay franchise tomorrow. Think I’m tossing all but the Vision W. I’ll use my Moto Q for the little here and there music, and the Vision W for long hauls, and the rest can go towards whatever nifty player Creative comes up with next.

Courtesy of think ThinkSecret via Yahoo:

Sales of Apple’s iPhone, while solid, have failed to keep up with the company’s internal estimates. Think Secret sources report that Apple scaled back its touch-screen orders for the unit by half in August to avoid sitting on too many parts.

Far from game over, but I’m off to an early lead. After seeing my cofounder’s iPhone in action for a couple weeks, and having every call made to him be virtually incomprehensible, I’m not surprised.

Also, who the hell cares about unlocking this thing? It’s on every tech blog five times a day, despite the fact that it doesn’t matter. Hooray, now you can switch it from AT&T (while still paying your two year contract) to T-Mobile, trading one turd carrier for another. Enjoy that, morons.

Make it work on Verizon and you’ve got something.

Paul Graham wrote an essay that is very anti-stuff. I grew heartbroken as I read it. I’ll be honest, stuff is pretty much the closest thing I have to a religion. I guess that would make Engadget my bible. I felt, as I read the article, the way a Christian might if Jesus wrote “God doesn’t exist” on his blog.

If it wasn’t for stuff, I’d just sit in bed and cry all day. It’s stuff that makes me instead get up and take a shower. It’s stuff that makes me start website after website, in the feeble hopes that I’ll make a little more money with which to buy a little more stuff. Stuff, how I love thee.

One of my favorite things in the world is Amazon Prime. You pay $80 a year, and then whenever you buy stuff there, it comes to you in 2 days and you don’t have to pay any extra. If that’s not stuff nirvana, I don’t know what is. I use it so much that I get a personally signed Christmas card from Jeff Bezos.

I do own, for the most part, a relatively narrow range of stuff, namely gadgets. And I’ve never picked up anything from a curb. The thought of a yard sale makes me want to vomit. And I have an honest to goodness phobia of used bookstores.

And I’ve certainly never defined anything as “perfectly good.” Quite the opposite in fact, I’m usually saying something more like “hmm, this portable video player has 60 gigabytes, but the new model has 62. Oh man, they even increased the battery life from 5 hours to 5 hours and 17 minutes. I better upgrade.”

One of the best things that ever happened to me was eBay. Not because I’d ever buy any stuff there. It would be previously used, and that’s gross. No, eBay is great because when I get new stuff to replace the old stuff, I can sell the old stuff to some sucker who doesn’t know that stuff used by someone else is disgusting. And what do I do with the money I got from selling the old stuff? Buy more new stuff, of course, which then causes me to sell the old. It’s a beautiful cycle.

And, in fairness, a lot of the stuff I buy allows me to decrease my Total Stuff Owned (TSO). For instance my Logitech Harmony 880 remote. That sucker replaced 4 cheap remotes (and tons of button pushing) thus reducing my TSO by 3. Ditto for my Moto Q, which replaces a PDA and iPod nano. True, I didn’t have either a PDA or an iPod nano, but I might have bought them, so it counts.

Also, a lot of stuff requires other stuff to work, so they really just count as one stuff. For instance, Guitar Hero (definitely among my favorite of stuffs) requires an Xbox 360, otherwise you could have mine. And who wants to play any game on a screen less than 42″ and not in high def? Only a moron. So the guitar, the game DVD, the Xbox, and the television really only count as one, since I never use any them separately. I guess I do have 2 guitars, but still, it’s a relatively low TSO.

I don’t really feel beholden to my stuff. I feel empowered by it. When I’m looking to move I don’t need to find a bigger house to put all of my stuff in. I want to buy a bigger house so I’ll have more room for new stuff I haven’t even bought yet.

Also, we can’t neglect the fact that stuff has been known on occasion to save lives. EKG machines are stuff. Hmm, I don’t have one of those, better check Amazon real quick. Anyway, hospitals are full of stuff. Therefore stuff must be good. QED.

 

I love Apple fanboys. They never stop drinking Apple’s Kool-Aid. See this latest piece in support of the iPhone. It’s wrong in so many places. Let’s examine.

The original iPhones will start at $499 and $599 this June.

Nope. It’s $499 and $599 with a two year contract. As Lewis Black would say, “big fuck difference”. The 2 year contract is so odious that it counts, for all intents and purposes, as an extra $100, maybe more, in the mind of customers. Every single person in America has, by now, been stuck in a two year contract they wished they could get out of, and they haven’t forgotten that. It also serves to make the item ungiftable, more on that in a second.

Look at what happened with the iPod, which started at $399 in 2001. The average selling price for an iPod in Apple’s just-reported Q2 2007 was about $160; a year ago, it was about $200.

True, the original iPod was $400, but it didn’t sell all that much, and there’s a very steep curve when it comes to price and popularity. Cut an item’s price in half and ten times as many people will buy it. The difference between $400 and $500 with a 2 year contract is tremendous.

Most importantly, because the iPod has no contract associated with it it’s a Christmas/birthday gift. In fact, it’s the gift. What percentage of iPods were given rather than purchased by the end user? From data I’ve found, it appears to be over 27% for Christmas alone. Count in other occasions and we might be over 40%. That’s enormous. Not many people have the means to give someone a $500 phone and pay the contract for two years.

There’s a difference between “phones” and “smartphones”. I have no idea how one draws the line, but a good rule of thumb is that smartphones are expensive and regular phones are free (with plans) or very cheap. Apple isn’t trying to sell 10 million phones by the end of 2008; they’re trying to sell 10 million smartphones.

The definition of smartphone is certainly murky, but I’m not sure the iPhone counts. I personally tend to think of a smartphone as one that appeals to businesses. The iPhone has no corporate appeal whatsoever. It doesn’t have push email that any corporate user could want. No big business uses Yahoo for their email or ever would, unless they come up with something similar to BlackBerry Enterprise Server. Leaving data in another corporation’s hands is understandably unpopular. And it doesn’t have a dedicated keypad, without which typing emails cannot be a very good experience. Even if their touch screen is significantly better than any that came before, it’s not going to be good enough.

Maybe I’m the moron, but the way I see it, if the iPhone’s initial price is wrong, it’s too low, not too high.

Maybe, if that 499 is in pesos. If that’s USD dollars and you think it’s underpriced then yes, you are the moron.

There are millions of people who have already spent $399–599 on an iPod within the last few years. With the exception of storage capacity, the iPhone does everything these iPods do, and, well, a whole lot fucking more. Why wouldn’t these same people think about spending $499 or more on an iPhone?

Are there? Where are those stats? And how many of them had 4 gb of storage?

And have ten million of them at those prices sold in eighteen months? I doubt it. I’d be surprised if there are ten million people total who’ve spent that much. And again, there’s a whopping difference between an item that costs $499 as a giftable standalone, and an item that costs $499 with a two year cell-phone contract. And a 4GB iPod that costs around $200 and anything that costs $499 with a two year contract aren’t in the same ballpark. They’re not even in the same sport.

Think about how much people would spend on a next-generation iPod that does everything the iPhone does but without the phone: Wi-Fi networking, camera, full-size touch screen, OS X with email and web browsing. Apple could (and might) sell that for $499.

Not really, especially if it only has 4 GB and doesn’t play DivX. The people who could pay $500 already have far better email and a passable camera on their Blackberry. And once again, there is a whopping difference between $499 and $499 with a two year contract. You can’t ignore the difference repeatedly; doing so destroys your whole argument.

I really do think that the biggest disconnect between iPhone fanboys and reality is the two year contract. They talk about the phone as if it’s a $499 iPod. I can’t stress enough the fact that it isn’t. It isn’t giftable. And it’s really considerably more than $499, which nobody is paying for 4 GB of storage. Make it 60 GB and we’ll talk.

Why worry about the iPhone’s appeal to corporate IT?

It’s big and bulky. It’s not a gift, so the only kind of people who can reasonably afford it working in corporate America. Those who would want (and could afford) this phone already have a Blackberry, and because iPhone uses some crappy Yahoo email, they can’t give up their Berries. And because of that, they don’t have room in their pocket for a large media player and they don’t need a phone. Why wouldn’t they just buy an 8gb Nano and call it a day?

The iPod isn’t marketed to businesses and Apple has sold 100 million of them. The iPod is marketed to people, and the iPhone is, too. RIM sold 2 million BlackBerry devices in its most recent quarter; Apple sold 10.5 million iPods in the same period.

Any phone that costs $500 (with a 2 year contract, once again) might not be specifically marketed to businesses (though the push email tells me the iPhone will be) but that’s pretty much the customer base.

And there’s a huge, fundamental difference between these two markets. Businesses, typically, want to buy the cheapest things possible for their employees to use. When buying for themselves, people want to buy the nicest things they can afford.

Is it me, or is that the exact opposite of reality? Businesses often pay twice as much for the same things consumers (who sign contracts to get phones for free) do. People are generally cheap, businesses are not. I know a lot of people in corporate America, and they all joke about how even $50,000 servers are signed for without a question asked. And Blackberries are not cheap by any means, but they’ve viewed as the nicest device in their niche.

If you want to see how ridiculous that fanboy article really is, copy it into word and then go through it and replace each instance of $499 with “$499 with a two year contract”. Do the same with $599. You’ll see immediately why I’d gladly bet the under on 10 million iPhones sold by the end of 2008.

Don’t get me wrong, there are a lot of cool things about the phone. But it has way too many warts to be a hit. It doesn’t really have a niche, and it doesn’t create one. It sort of straddles a few, but it doesn’t allow you to replace the devices in that niche. And it costs far more than a Moto Q and a 4GB Nano. It’ll sell a couple million units to the many people who have wet dreams about Steve Jobs, and that will be about it.