Verizon & Google Start to Tip the Scales Against Apple

Great news for Apple, with the 70% surge in quarterly earnings. Things look mighty good, at least in the near-term. On the other hand Google's prudent long-term plan in entering the wireless market with a competing mobile platform to better enable connectivity and search capabilities, and oddly not to sell smartphones, is proving to be a winning strategy. After all Google's core competency is search as well as displaying relevant ads, not smartphones. With the increasing popularity of Android based phones, Google is reaping huge long-term rewards. Just recently Apple announced that the iPad will be sold in Verizon stores, and that the iPhone will be sold on Verizon's network next year. (On a side note, some suspect the iPhone will only be released for Verizon's 3G CDMA network. But I'll wager a humble bet with anyone that it will be released for their new 4G GSM network as well. More to follow via my tweets at grochejr.) Why is this significant and how is this news tipping the scales against Apple?

Some may argue that moving their products to work on the Verizon network was all in Apple's eventual and original plan. Why would Apple choose to purposely stay exclusively on AT&T's network? I'll tell you why. Apple, I suspect, was leveraging consumer demand for their iPhone in their negotiations with wireless providers, and hoping to do the same with the iPad. Why? Some quick history first...

Back prior to the launch of the iPhone, AT&T was quick to bow to the whims of Apple and agree to give them a considerable chunk from the monthly data plan fees they charge consumers. All for the temporary exclusivity to sell the iPhone and gain more of the untapped smartphone market share. Apple felt, and probably still does, that the demand for their products will be so great, with the threat of having tons of customers switching wireless providers, that eventually the other telecommunication companies would follow suit and agree to the terms of sharing the profits from their monthly consumer data plans. This would mean huge recurring monthly revenues for Apple that far beat the old one-time hardware sales model. This same sales model is probably playing a significant role in Apple's quarterly earnings announcement yesterday. But the sudden news about the iPad being sold in Verizon stores this fall season of 2010 points to the fact that things didn't go exactly according to plan for Apple.

It's rumored Verizon, with its larger customer base, was first approached by Apple but declined to share the data plan fees. And like a scorned lover, with the foresight of potentially losing market share to AT&T, Verizon made a concerted effort to combat AT&T and Apple. By partnering with Google, HTC, Motorola, as well as other handset makers, true rival mobile touchscreens arose to challenge the iPhone. They then employed their strategy to heavily market and promote the branded "Droid" phones, thanks to Lucas Arts. The Droid phones of course were based on the Android mobile operating system (OS)/platform by Google. And as sales have shown, especially due to Verizon's reputation for a more reliable network than AT&T, consumers were and still are flocking to Droid phones. [Update: Verizon has done well for itself as a result.]

Given strong demand and competition that Android based phones have shown, and Verizon completely keeping its revenues from their monthly data plan fees, perhaps Apple sought to make a peace offering. They no longer can afford to ignore the combined Google-Verizon threat. Therefore Apple is now warming relations with Verizon and them giving an opportunity to sell the iPad. Granted it will only be WiFi enabled, but it will work with Verizon hotspots and mobile MiFis. The 3G enabled iPad will be reserved for AT&T stores, so as to not to let AT&T feel Apple has been ungrateful to them.

In making the recent iPad-Verizon announcement, Apple acknowledges the (Google) Android-Verizon threat. More than anything else, the Android-based touchscreen phones powered by Verizon's network and strong customer base has shaken Apple to the point where they don't necessarily see the scales tipped in their favor any longer. Let's be perfectly honest, selling the iPad in Verizon stores isn't really a peace offering. Given the strong fight Droid phones have given the iPhone, Apple is definitely seeking to preemptively stem the flow of sales to the upcoming Android Tablet by Google and Verizon, slated to come out early next year.

Yes, there are gaps in the user experience on Android phones unlike the superior ones found on the iPhone. And yes, Google isn't making this a priority since they are focused primarily on their core competency, search. This is explanation given by Apple for their onerous and stringent rules for authorizing apps that can be sold on their platform. The goal, to ensure quality with the best (simple) user experience. But with the open platform by Google, the marketplace can provide opportunities for companies to bring about these efficiencies on their own. Enter Amazon, which has now announced they will be publishing their own controlled app store for Android based systems where the quality control issues can be addressed.

The small headline here is that the previously viewed invincible iPhone could be at risk for becoming commonplace. An Apple monopoly on touchscreen devices seems unlikely now. The big news is that due to this fierce competition on pricing, revenue, branding, and innovation, the consumer ultimately wins.

Innovation vs Privacy on the Battlefield between Google & Facebook

Innovation and Privacy are at war on the battlefield where the machinations of both Google and Facebook are at work. These two companies have dynamic competitive opportunities. On the one hand, to stay competitive and profitable both companies need to continue the innovation spawned from their existing platforms and products. On the other, how do they continue to balance user privacy successfully. Facebook has had several close-calls with the pushing of the privacy envelope. While suffering some user backlash, they've been managing it well thus far. Google risks being left competitively behind and losing momentum if it doesn't more aggressively look to use its super rich user data (a combination of Gmail, Google Docs, Android OS, and search data).

A simple truth that challenges Google's supremacy: web visitors funneled from Facebook spend an average 20% longer on the site than from search engines like Google. The combination of Facebook's profiles and networks of friends provides rich user data that makes advertising more relevant than based on search terms used on search engines. This could be considered a close equivalent to the phrase: "virtual word of mouth." With Facebook nipping at their heels, Google needs to consider how to leverage user tracking data profitably without committing privacy evils.

In one Google example they are combining the power of its Android mobile operating system with the synergies of Gmail, contacts synchronizations, and Google maps that can help lead to more relevant ads. In a similar example Facebook is leveraging it's "I Like" feature on web sites and the discerning tastes of users gained from the profiles and social interactions on their platform. Both companies are developing powerful tools to better sell targeted ads for advertisers. The problem is can they continue to, as Google unofficially says, "do no harm."

Ultimately I believe that some privacy will be forsaken in the name of better customer value - through innovation. It's the price that the public will probably have to pay for "free" services. Now both Google and Facebook will not outright eliminate privacy, as it would risk corporate suicide. But to continue to be competitive and profitable, I suspect some of that privacy will be interpreted and handled differently in the name of innovation.

BEWARE! If you wish to keep complete anonymity, then consider other providers or only share what you don't mind to have publicly known (even as there are privacy controls in place today, they are not 100% fool-proof).

The public will find it difficult to stymie this web/mobile trend of leveraging innovative synergies to provide rich customer value over privacy. Until a reasonable and just as innovative fee-based service appears that can serve as a counter to what may be perceived as violations on privacy, consumers will have little choice. And as a result of this a potential future trend may materialize for the paying for such services when compared to, as I reported in an earlier post, paid-for content/news from media organizations (like the Rupert Mudroch News Corp model).

Discover Your M&M Early Warning System

Dan and Chip Heath, the authors of the best selling "Made to Stick" and "Switch", wrote a clever article in this month's Fast Company titled: "Business Advice From Van Halen." The famous rock band developed their very own early warning system for detecting problems (especially big ones). As the article states it "was the canery in the coal mine." How did they did do it?... by requesting a "brownout" of M&Ms. The article is definitely worth the read. The ingenuinity of Van Halen, and the Heath brothers' point, was determining problems early on with your projects can be simple and effective.

In keeping with my theme of my last two posting regarding agile approaches to technology development, I have my own set of tools that detect early warning signs of tactical or strategic problems with the project(s) and/or the organization. Tactical warning signs detect a team's trouble with their immediate deliverables. Solutions for addressing these issues can usually be easily solved. Strategic warning signs reveal more serious organizational problems with either the team or the overall larger company and are more difficult to address. These issue can stem from cultural differences, management weakness, and lack of focus. Here are some examples of tactical and strategic warning signs:

Tactical Warning Signs for Projects:

• Decreasing scope/committments during iterations, or worse under-delivering to your customers/sponsors.
• Tasks that span longer than the planned effort, especially those that were estimated to be relatively simple.
• Impediments to the iteration's committments revealed during daily stand-ups and retrospectives.

Strategic Warning Signs for Projects and the Organization:

• Missing vision/goals for the project and it's iterations.
• Velocity for the highly prioritized features of the project are considerably low (regardless of the overall velocity for all work completed by the team, which may include effort spent on items outside of the focus of the particiular iteration).
• Large spikes of scope increases over the course of several iterations during the project.
• Lack of consistency in following/practicing the agreed to agile practices.
• Morale, team dynamics, organizational changes, and other soft management issues discovered during team retrospectives and/or one-on-ones with individual team members.

Tools such as leveraging velocity tracking, release goals, and prioritization are great ways to quickly assess the state of your projects. More importantly though is maintaining the pulse of your teams. At the end of the day, the two most effective ways to measure a team's strategic success is through your retrospectives and individual one-on-ones. Nothing replaces the human aspect of building rapport with your team members. I've personally witnessed managers lose entire teams through a domino-effective of voluntary attrition for lacking this crucial element to their management approach. All your hard reporting and tracking methods in the world will never provide you with the health status and morale of your teams without relationships built through conversations.

Israel Gat, The Agile Executive, shares his own thoughts on early warning signs for agile projects. Definitely a recommended read.

Successful Blue-Collar Jobs Employ Agile Practices

Inc's magazine February 2010 cover has Nick Sarillo, a blue-collar millionaire who owns Nick's Pizza & Pub. To create a successful business with high profits, low turnover, and very satisfied customers he instituted a framework akin to the lean principles of Agile. He compares his model to that of Navy Seals, where they're self-managed teams.

Created a backlog of daily tasks:

Nick was excellent in managing the daily tasks of activities to handle the huge volume of orders. But in order to scale he needed to successfully duplicate himself. As the interview in Inc states:
"So what did he do? 'I built a system to replace me,' Sarillo says. 'I put together a checklist of things that had to be done by 4 p.m., so we could handle the volume. It took about four weeks until it could work without me. Now we're nailing it."

Established their own form of a task board:

If you have a self-managing team the team becomes responsible for the work, not a specific supervisor who you are dependent on to make things happen by telling everyone what to do. Mr. Sarillo instituted his own form of a task board to get the process of opening and closing the kitchen down to a science, and something anyone on the kitchen staff can do:

"Take the process of opening and closing the kitchen. In a typical restaurant, a supervisor is responsible for both, has a long checklist of things to be done, and tells everyone what to do. At Nick's, by contrast, the whole kitchen crew is responsible. To help people keep track of what needs to happen, there is a laminated "ops card" for each task involved. Each ops card is red at the top and green at the bottom and has its own slot in a converted timecard holder. In the morning, when staff members come in, the ops cards are in the slots with the red end showing. Whenever a task is completed, someone turns over the corresponding ops card so the green end is showing. By closing time, all the cards are showing green. It's then the manager's job to make sure they are all red again before people arrive the next morning."

Trust & Track versus Command and Control:

Many business owners claim that no one cares about the company as much as an owner. In the successful Agile frameworks I've instituted in the past, the best way to get the team to care about the work and the business is by empowering them. Encourage self-organization and that the team is smart enough to know what's best. It's what'll keep them coming back every day to the office, because they know they have a direct impact on the decisions and direction of the projects they're undertaking. Nick Sarillo understood this fact and instituted his system, albeit unknown to him akin to an Agile framework, to create a trust and track culture:

"The system is an important mechanism for creating a trust-and-track culture and for breaking the habits of command and control. 'Managers trained in command and control think it's their responsibility to tell people what to do,' Sarillo says. 'They like having that power. It gives them their sense of self-worth. But when you manage that way, people see it, and they start waiting for you to tell them what to do. You wind up with too much on your plate, and things fall through the cracks. It's not efficient or effective. We want all the team members to feel responsible for the company's success."

Nick Sarillo's story is another example of how of lean principles and practices found in Agile, especially with Scrum in my experience, are frameworks that can work with almost any team in almost any industry or environment. What you find are highly motivated, self-managed, high-performing teams.

Click here to read the entire Inc interview with Nick Sarillo.

But the Business Doesn't Care How Successful IT Works!

In my experience most business managers are more concerned with getting results out of their IT resources than how to get them. There was a time that I wanted to zealously evangelize the business about the benefits of Agile and other lean concepts that lead to high-performing engineering teams and quality IT development. I'd receive the invisible rolling of the eyes, the gentle long sigh, or the blank stare with a merciful yes-nodding of the head out of kindness. As an eager, sometimes naive, and ambitious young professional I tried not to let these reactions dissuade me from continuing. I thought to myself, "...eventually someone will listen to what I'm saying and help me make it happen."

These business leaders, of some the companies I've worked for, heard my words but didn't necessarily listen to them. They're all fine with following the latest proven productive trend if it lets them claim that they're a better organization for it. But the bottom line is that most don't really care how a successful IT project is implemented so long as it gets done with the results they expect. My answer to this problem is don't worry about explaining the "how" to them...just show them. Nowhere is this even better expressed, in my experience and that of my other professional colleagues, than within the financial industry. Everything here is about "P&L". Profit and Loss.

Now for those of you reading my past posts, you know I have a bias towards leveraging an Agile approach to successful software development. The problem that I and other Agile advocates face is that some business managers hear all the Agile jargon and perceive it as "touchy-feely", or even downright confusing. Here are some of the reactions I find to some of the Agile/Lean concepts I present to them. Heck, some are just plain good management practices:

Concept 1: Self-managing & self-organizing teams

• "We're losing control by doing this. Some times you need a top-down approach to getting things done."
  
• "It's no wonder there isn't focus on the work that needs to get done...we've got everyone acting like chiefs since they're self-managing."
  
• "How will we know who's working on what?"

Concept 2: Estimating in Points, Using Velocity & Burndown Charts

• "How the heck am I going to know when something is going to be done if there aren't days and hours attached to each and every task!!"
  
• "Points are meaningless. This kind of talk is childish and full of garbage."
  
• "Where's my Gantt Chart, the critical path tasks and the assignees for each?"

Concept 3: Priorities and Identifying Release/Sprint/Iteration Focus

• "We already told you what's important, and what we're trying to sell/build. Just get started and get it done ASAP!"
  
• "We've got a lot of contracts pending on all of these projects, so they're ALL IMPORTANT!"

Concept 4: Motivating & Empowering Your Teams

• "If we get this product completed by year-end, we'll be able to close on a $3 million deal. Isn't that motivation enough?"
  
• "These engineers get a guaranteed salary and generous bonus every year without having to worry about making any sales numbers. What more do they want?"

In the coming days and weeks, I'll be writing about my past experiences with the issues surrounding these concepts and the solutions I implemented to address them. The main point is I started to walk away from the jargon (Agile-speak). To make successful IT development work at these organizations I began focusing exclusively on just doing it and showing them the results they wanted.

Have you had some notable quotes and reactions to any Agile/Lean concepts you presented like the ones listed above? If so, what was said and how did you manage it?

Risk Management Applications Win on SEC Vote to Propose a Ban on Naked Sponsored Access

Today the SEC votes on publishing a 'concept release' on high-frequency trading, dark pools and the structure of markets. The concept release document lists the SEC's concerns, and proposals on how to remedy them.

In a previous posting I wrote about the business of sponsored access, and the SEC's and Congress' concerns around 'naked' sponsored access. The SEC is officially proposing today that brokers would be required to implement "risk management controls" before trades are made and design them to ensure orders to not exceed a "pre-set credit or capital threshold." This positions NYSE Euronext's division, NYSE Technologies, perfectly as they've built out a hosted solution that provides risk management controls for anyone trading on a number of different markets not just the ones they own (NYSE, Arca, Euronext, but Nasdaq, Bats, and others.).

This concept release document is basically a feeler to see how the industry reacts, solicit and review feedback from industry experts, and refine the proposed new rules before finally approving them. In the meantime, there's no question that the SEC plans on instituting new rules that tackle the concerns around credit or capital thresholds for brokers' sponsored clients. With that truth well understood in the minds of all market traders, NYSE Technologies and other risk management developers like them are going to be in huge demand. Their customer base has now expanded beyond just high-frequency traders, but to anyone trading on any US market through sponsored access.

Click here to read the SEC Press Release: SEC Proposes New Rule to Effectively Prohibit Unfiltered Access and Maintain Market Access Controls

Click here to read WSJ's article: "SEC Proposes Banning 'Naked Access'

Secuities Industry News article to "...Set Risk Management Standards"

Click here to read the Bloomberg article on today's SEC vote.

In the Digital Age: Paying for Quality Independent News

The Wall Street Journal published Rupert Murdoch's December 1st remarks to the Federal Trade Commission's workshop on journalism and the Internet in today's paper. It's clear Murdoch is running headstrong through new frontier. He stated that there are two principles media companies need to come to grips with:

• Provide the people with news they want.

• Quality content is NOT free.

There have been some rumblings the past couple of weeks around the topic of paying for quality news content online. It was recently reported that News Corp has been in talks with Microsoft in making all their online news content available on exclusively on Microsoft's Bing search engine, for a price. This leaves Google and other search engines out in the cold. Perhaps a bold move by Microsoft to disrupt Google's dominance by taking away some prevalent and respected news content. News Corp owns a slew of media outlets, such as: The Wall Street Journal, The New York Post, The Times of London, the The Sun, etc.

In a move to appease the likely move by more media giants, and avoid legal wrangling, Google has just recently made it possible for companies to avoid turning up on their search engine by embedding some special tags in their web pages.

In my opinion, Murdoch delivered a compelling argument in his remarks before the Federal Trade Commission.

• The experiment with online advertising is not bringing in the revenue that media companies have been looking for, and quite frankly need to sustain the independent and quality content being delivered.

• People will only pay for content if they believe that they're receiving value. With this, media companies can support their business model to deliver this quality content to the people.

• The need to protect and recognize the professional investments of time, effort, and resources of distinguished journalists to provide this quality.

Without what Murdoch is proposing, think of the alternative. Unable to manage a profitable business model, more and more print media are closing their offices. There are several reasons for this, but part of it has to do with trend towards digital media. Without reputable and independent media sources to provide quality content, it will be difficult to discern what digital news is worth noting and listening to in the massive sea of the web. Just search the blogosphere. You won't need to search too far to find a ton of misinformation being spewed on there today. Wikipedia has already had trouble keeping their entries clean, not to mention maintaining incentives for volunteer contributors to continue to contribute their content.

To stay ahead of the technology curve, News Corp and other media outlets are also pursuing an innovative mobile strategy to provide their print and televised content on any number of mobile devices. (I plan on following up on the potential impact of this for the Amazon's Kindle, Barnes & Noble's Nook, e-readers, Blackberrys, iPhones, etc., in another posting.) This strategy I believe will be the catalyst for these media moguls to find the balance between a sustainable and profitable business model, and delivering independent quality content to customers at a modest price.

To read the WSJ's article on Rupert Murdoch's remarks to the Federal Trade Commission on December 1st, click here.