The Smartphone Wars: Exit Blackberry, pursued by a bear

Comes today the news that Blackberry is giving up on the consumer market. Of course this means the company will be as dead as Antigonus shortly.

Why do I say this? Because one of the most ironclad rules of the tech industry is this: retreat upward never works. If your company is failing, withdrawing from mass markets to focus on the high end may look like a smart move for a few quarters but it makes eventual doom more certain. The decline and fall of Sun Microsystems is probably the most recent major example but far from the only one.

Retreat upwards fails because it leaves space for your competitors to attack you from the low end – in effect, you’re pinning a sign on your backside that says “DISRUPT ME!” Also, in any hardware-centered business, process improvements happen fastest where volume is highest (that is, at the low end); retreat upwards means your competitors will capture those gains faster than you do.

More grim details. Company is not profitable and will no longer be issuing financial projections. Balsillie is leaving. The COO and CTO are bailing out.

Everything about this smells of death. Not that it should come as a surprise to regular readers, because I’ve been saying RIM was doomed and explaining why since last June.

161 thoughts on “The Smartphone Wars: Exit Blackberry, pursued by a bear

  1. Let’s hope they open-source QNX before crashing and burning utterly.

    QNX is a marvelous little embedded RTOS, POSIX-compatible, and used in so many applications that it needs and deserves to outlive the short-sightedness of its parent company’s management.

  2. @esr

    If your company is failing, withdrawing from mass markets to focus on the high end may look like a smart move for a few quarters but it makes eventual doom more certain.

    Is refocusing on enterprise the same thing as focusing on the ‘high-end’?

    A lot of the business guys I know who carry blackberries are given pretty much the cheapest model by their firms, because, after all, the company doesn’t really care that much about giving mid-level employees the greatest experience.

    By the way, I agree with you that RIM is doomed, but I just disagree somewhat with your line of argument on this specific point.

  3. Start the fight over Blakberries userbase.

    Who has the best chances?

    Given that Apple already has an enterprise deployment program in place for iPhone and iPad, replete with giving corporate IT the capability to approve bespoke iOS apps on company devices; and given that iOS still has the bulk of developer mindshare due to being easier to develop on, more consistent, and less fragmented than Android… I’d say this question isn’t too difficult to answer.

  4. >Is refocusing on enterprise the same thing as focusing on the ‘high-end’?

    Usually. Don’t focus so much on device cost-per-unit; what makes the corporate market ‘high-end’ is the fact that they can sell lots of support and ancillary services to IT managers who want a throat to choke when something goes wrong.

  5. @esr

    Usually. Don’t focus so much on device cost-per-unit; what makes the corporate market ‘high-end’ is the fact that they can sell lots of support and ancillary services to IT managers who want a throat to choke when something goes wrong.

    That’s interesting. So, would you agree that the kind of disruption that could damage RIM would be related to support and ancillary services? A rival manufacturer could offer some sort of low-cost support feature that would disrupt RIM’s ability to skim high-end margins from low-end products?

    Presumably it won’t be hardware or software disruption, because typically enterprise isn’t buying high-end handsets.

  6. IBM pulled off the retreat upward trick. There’s a fine but important line between retreating upwards and remembering to maintain focus, and most companies don’t know what it is. RIM is no IBM.

  7. Red Hat retreated upward years ago, and now we could see they are pretty successful

  8. >Red Hat retreated upward years ago, and now we could see they are pretty successful

    I wondered if somebody would bring that up. I almost wrote an explanation of this case in the OP but decided it would distract from the main point.

    Retreat upward is much more viable for pure software companies in the very rare cases that they can manage it. To see why, consider the problems with hardware companies attempting it that I noted and how they do (or do not) apply.

  9. >>Red Hat retreated upward years ago, and now we could see they are pretty successful

    >Retreat upward is much more viable for pure software companies in the very rare cases that they can manage it. To see why, consider the problems with hardware companies attempting it that I noted and how they do (or do not) apply.

    I’d say what RedHat is selling is support, consultancy, certification, and brand. Things coorporate IT likes. I suppose that protects them from CentOS (a.o.) being disroptive, as they only offer bits and source code; there’s no competition here.

    I don’t quite see what you mean with “process improvements happen fastest where volume is highest; retreat upwards means your competitors will capture those gains faster than you do.”.

    Also: how come Apple seems to able to pull off this “withdrawing from mass markets to focus on the high end” ?

  10. On the subject of who will take RIM’s enterprise customers (assuming RIM is totally done for in fairly short order) I have some thoughts.

    I don’t think Apple is well placed for this. Despite having some enterprise stuff in place, Apple has never been focused on the needs of IT departments. This has been their great strength. They focus on the needs of the end user, which in a large corporation are rarely the same as those of the IT guys. If Apple went down this path with iOS they would greatly weaken themselves. I think they know this.

    Android isn’t a company, so I don’t see the platform itself as well placed for this. It would have to be one of the vendors. Samsung or HTC or one of the other guys. But they’re just not set up for this. They know how to create hardware products. They have no experience in providing the kind of support and ancillary services required to appeal to IT managers.

    Nokia is a maybe, but again they don’t have the experience.

    Who does that leave? Microsoft! Microsoft has made it their business for the last two decades to do whatever IT departments demand of them. That’s why their products are so bad from the perspective of the end user. What’s more they have enterprise products like Exchange and Sharepoint that businesses know and trust.

    I think Microsoft is well positioned to take RIM’s enterprise business once it finally collapses. This might be their chance to rescue Windows Phone 7 from certain doom. They have the brand recognition and the marketing resources to pull it off. It’s a market they understand. And they’re nothing if not tenacious.

    I wouldn’t bet against it.

  11. >A rival manufacturer could offer some sort of low-cost support feature that would disrupt RIM’s ability to skim high-end margins from low-end products?

    Or better yet, ship a product so bulletproof that it doesn’t need support, then offer “support” at a lower price than the competition. Free profits…

  12. >I don’t quite see what you mean with “process improvements happen fastest where volume is highest; retreat upwards means your competitors will capture those gains faster than you do.”.

    This is manufacturing economics 101; just reread it and think for a while.

    >Also: how come Apple seems to able to pull off this “withdrawing from mass markets to focus on the high end” ?

    Note the “if your company is failing” part of the conditional.

  13. @Dan

    Pretty cool, but I’m wondering why – since the device is based on Linux – it seems to have an iPhone keyboard?

  14. I can’t cheer enough. I will buy cake when they cease operations.

    > Also: how come Apple seems to able to pull off this “withdrawing from mass markets to focus on
    > the high end” ?

    There is a difference between retreating to the high-end, and growing the high-end. As long as you are gathering more customers and revenue by moving up, you aren’t retreating. It’s when there is a ceiling or substantial limiter that you are running up against that this problem is most acute. Then you are just trying to ensure that you are maximizing the profit out of declining revenue.

  15. Retreat upward is much more viable for pure software companies in the very rare cases that they can manage it. To see why, consider the problems with hardware companies attempting it that I noted and how they do (or do not) apply.

    Which is why I keep thinking “commodity hardware, commodity hardware”. RIM needs to get out of the hardware business if they want to survive at all.

  16. @Winter:

    > Start the fight over Blakberries userbase.

    Dunno about userbase, but (according to Nielsen) in terms of new sales, Android’s growth seems to have stalled a bit (e.g. to the market average growth), and Apple is eating RIM’s lunch:

    http://blog.nielsen.com/nielsenwire/online_mobile/smartphones-account-for-half-of-all-mobile-phones-dominate-new-phone-purchases-in-the-us

    I don’t want to cue the interminable argument about whether high-end smartphones are subsidized to the same extent as Apple phones, but I will note that (as discussed in comments on previous posts) so far, in most markets with no or low subsidies, Apple is not doing nearly as well as they are in the US.

  17. @tom re: “What’s more they have enterprise products like Exchange and Sharepoint that businesses know and trust.”

    Correction: nobody trusts SharePoint…

  18. Of course, as I have mentioned earlier, polling “recent acquirers” without determining what handset they had before provides some misleading statistics. We know that lots of iPhone users upgraded recently, so we’ll have to watch the trendline on the new acquirer statistic to see how sticky Apple is there.

  19. Speaking as an enterprise messaging admin of ~4500 users, (disclaimer) and an avid android fanboy, I can honestly say that both Android and Apple are still years away from offering anything close to the Blackberry Enterprise Server experience on the enterprise side. Blackberries have a full time vpn connection right into the home network. All SMS, MMS, pin messaging and email is completely auditable. The granularity of security policies is outstanding and can control every facet of the device. Even with the best 3rd party utilities at your disposal neither the Android or Apple environment can compare, today. Having said that, I agree with ESR premise that this is probably the death knell for RIM, but IMHO it was their only viable option based on their resources on hand. I see RIM’s situation in the same light as Novell ~ten years ago. From the Admin point of view it was/still is the best system on the street, but the end user experience has become more and more broken as the years go by. Although the underlying tech is sound, their inability to move quickly to produce innovative user interfaces and hardware designs has been their undoing.

  20. and given that iOS still has the bulk of developer mindshare due to being easier to develop on, more consistent, and less fragmented than Android…

    You’re suggesting that ObjC has more developer mindshare and is easier to develop for… than Java.

    Thats a pretty good joke. You should take that on the road.

  21. @JonCB

    You’re suggesting that ObjC has more developer mindshare and is easier to develop for… than Java.

    No, I think he said that iOS has more developer mindshare and is earlier to develop for than Android. Quite different.

    Whether it’s true is a debatable point. But if we go simply by the number of apps available on each platform, and by the amount of money being made by each group of developers, it’s certainly not that hard of an argument to make.

  22. As long as you are gathering more customers and revenue by moving up, you aren’t retreating. It’s when there is a ceiling or substantial limiter that you are running up against that this problem is most acute.

    Both PCs and cell phones have pretty much hit saturation. Apple was able to grow the high end with the iPad by essentially legitimizing a new product category (the “plus one”, previously the domain of the netbook), but when it comes to phones, everyone who is getting one has one, and the same with PCs. Meanwhile, the “low end” catches up to the “high end” faster and faster.

  23. @Christopher Smith

    but when it comes to phones, everyone who is getting one has one

    Ordinary mobile phones may be a mature market, but smartphones is a market just getting started. I think that eventually every phone will be a smartphone. Right now they are only a fraction of the overall phone market. Still a long way to go there.

    And you are thinking about the iPad all wrong. Don’t look at it as the ‘high-end’ of tablets, you should look at it as being the low-end disruptor of the PC market. A LOT of people who use their PCs for web browsing, email, games, etc will be able to replace their PC with an iPad. That market is also just getting started.

    Plenty of space to grow into.

  24. Ordinary mobile phones may be a mature market, but smartphones is a market just getting started. I think that eventually every phone will be a smartphone. Right now they are only a fraction of the overall phone market. Still a long way to go there.

    Yes, but I believe that anyone who would be willing to buy a high-end phone already have at least a mid-level smartphone. Sure, plenty of people will upgrade their feature phones to low-end smartphones, but that’s just the natural feature expansion of the low end.

    And you are thinking about the iPad all wrong. Don’t look at it as the ‘high-end’ of tablets, you should look at it as being the low-end disruptor of the PC market. A LOT of people who use their PCs for web browsing, email, games, etc will be able to replace their PC with an iPad. That market is also just getting started.

    I keep hearing this prediction, but I haven’t seen either any evidence or a convincing explanation for why this should be so. On the contrary, tablets are, for the most part, media-consumption devices; yes, there’s e-mail, and there are some useful niche applications (Evernote jumps to mind), but for the most part, it’s hard to create stuff with them. Apple in particular seems to want to discourage the practice, in an ironic twist on its usual market posturing. This happens to be just when participatory creativity is breaking back into the mainstream culture after having been suppressed by centralized media for about a century.

  25. @Christopher Smith

    for the most part, it’s hard to create stuff with them. Apple in particular seems to want to discourage the practice, in an ironic twist on its usual market posturing

    Definitely untrue. Watch the last iPad announcement. It was hugely focused on demonstrating creative applications of the iPad. Apple itself has released capable apps for word processing/page layout (Pages), presentations (Keynote), music creation (GarageBand), photo editing (iPhoto), video editing (iMovie) and a great spreadsheet program (Numbers). This is not to mention the multitude of third-party text editors, drawing/painting apps, photography tools, and a million other things that for the moment escape me. People routinely shoot and edit whole film projects on iOS (short ones, admittedly). It is definitely very far from being a mere consumption tool.

    If you think about the things that normal people do with computers at home, like the web, email, casual gaming, photography, the iPad can do all these things. And it can do them *better* than a comparably priced laptop. That is why I see huge potential growth.

    There will still be a significant number of people whose needs will only be met by a fully-fledged PC. Programmers, pro video people, pro musicians, heavy photoshop users etc. But the mass market probably can get away quite nicely with only an iPad.

  26. Christopher Smith,

    I keep hearing this prediction, but I haven’t seen either any evidence or a convincing explanation for why this should be so.

    Not a prediction, friend. Actually happening. Like, right now. Upon the release of the iPad the netbook market was decimated. And what have the PC industry cooked up in order to stem the hemorrhage? Why, “ultrabooks”, better known as MacBook Air knockoffs. Not that that’s anything new; all PC laptops for the last 18 years or so have been knockoffs of Apple’s successful PowerBook design.

    As for whether the iPad is or is not a creation device — sure, you’re not going to edit a movie on a bloody iPad. Not this year. But for $10 you can buy Pages and write a novel. With a capacitive stylus it’s possible to create artwork on the device. Or how about music? iPads have been successfully used as MIDI controllers and digital musical instruments by pro musicians. That’s something no Android device can do. Pro audio requires real-time processing with latency as close to zero as the hardware will physically allow. iOS provides this with a special dedicated audio thread. Android has some crufty piece of shit called “AudioFlinger” that basically handles the common case of “play this sound clip reasonably soon, and while you’re at it mix it with these other sounds”, but doesn’t give you the hard real time guarantees that iOS does.

    The iPad makes digital content creation easy for those who are still daunted — or even simply annoyed — by PCs. And that’s what Apple was trying to do and has always done: make computing easier for everybody.

  27. “I think that eventually every phone will be a smartphone.”

    Not until the carriers scrap the idea that every smartphone on contract must have an expensive data plan, whether the user wants it or not.

  28. @Cathy

    Not until the carriers scrap the idea that every smartphone on contract must have an expensive data plan, whether the user wants it or not.

    Well, obviously if somebody doesn’t want data then they don’t want a smartphone. But I think the number of people who won’t want mobile data connectivity is going to be pretty small.

  29. “Which is why I keep thinking “commodity hardware, commodity hardware”. RIM needs to get out of the hardware business if they want to survive at all.”

    A couple of months ago RIM announced that its corporate software would support non-RIM devices. They see the writing on the wall very clearly.

  30. @Jeff Read

    sure, you’re not going to edit a movie on a bloody iPad. Not this year

    *cough*

    Shot and edited entirely on an iPhone 4:

    http://vimeo.com/12819723

    Shot and edited with an iPhone 4 and an iPad 2:

    http://vimeo.com/20953766

    Obviously we’re not talking feature-length hollywood stuff here. But for amateurs and aspiring film makers these devices already make great creative tools.

  31. Definitely untrue. Watch the last iPad announcement.

    Fair enough; I haven’t paid any more attention to the iPad “3″‘s features than skimming what news summaries pop up on Slashdot and elsewhere. Sketching on tablets and videography (though not in-depth editing) on phones have been obvious and useful applications for “sub-PC” devices for a while now, but I’ve heard more about tablets’ (particularly the more-common iPad’s) shortcomings in this area. It sounds as though this may be an artifact of the sorts of creating done by the people I’m hearing from, which as a class need at least a currently-moderate amount of CPU power and more precise input than a touchscreen and even an add-on keyboard.

    Not a prediction, friend. Actually happening. Like, right now. Upon the release of the iPad the netbook market was decimated. And what have the PC industry cooked up in order to stem the hemorrhage?

    At the time, though, almost no one considered the netbook a serious contender as even a low-end PC replacement, thus the “plus one” category. It seems now that the iPad may be experiencing the smartphone/tablet version of Zawinski’s law; that said, while I completely agree with Eric’s prediction that “PCs” (whatever those are) will shrink to portability and typically be docked for HID-particular use (my Thrive tablet can already do this rather easily), for the iPad and especially iPhone to cross the mental line between “PC” and “less than PC” will require removing some of the (artificial) distinctions Apple makes, such as lack of support for removable storage and at least some of the tie to iTunes.

  32. @Tom:

    > Well, obviously if somebody doesn’t want data then they don’t want a smartphone.

    Excuse me? I’d love to have a smartphone without a dataplan.

  33. Well, obviously if somebody doesn’t want data then they don’t want a smartphone. But I think the number of people who won’t want mobile data connectivity is going to be pretty small.

    Mobile data connectivity at the current extortionate rates.

  34. @Patrick

    Excuse me? I’d love to have a smartphone without a data plan.

    That’s different from not wanting access to data. You can have a smartphone with data but without a data plan.

    I have an iPhone without a data “plan”. I just buy £5 chunks of data whenever I run out. I go through one of these chunks about every month and a half. No contract.

    Unless you’re actually saying that you want a smartphone but you don’t want ever to connect to mobile internet. In which case, why do you want a smartphone?

  35. @Christopher Smith

    for the iPad and especially iPhone to cross the mental line between “PC” and “less than PC” will require removing some of the (artificial) distinctions Apple makes, such as lack of support for removable storage and at least some of the tie to iTunes.

    I don’t think anybody wants the iPad to cross into being a ‘PC’. The point of the iPad is that it is a new non-PC form factor for personal computing. It’s not ‘less than PC’ it’s just different from PC.

    Removable storage is going away. Apple sells a widget that lets you connect pretty much any camera straight to iOS and transfer data. For most other transfer needs we now have wifi and 4G networks.

    Also, iOS is no longer tied to iTunes. You just do not need to sync these devices any longer, unless you really want to. I haven’t connected my iPhone or iPad to my laptop for months, since the release of iOS 5. They’re now completely independent devices that use iCloud for data transfer where desired.

  36. @Tom:

    > You can have a smartphone with data but without a data plan.

    True in some cases. With AT&T, for example, you can’t have contract voice on a smartphone without having a contract data plan. Even with some of the prepaid carriers, you can’t have a smartphone and just buy voice. Most of the prepaid carriers that let you do this have really sucky refurbished smartphones (and you can’t use a phone you got elsewhere).

    > Unless you’re actually saying that you want a smartphone but you don’t want ever to connect to mobile internet. In which case, why do you want a smartphone?

    If, for example, you were almost always around WiFi. Or maybe you just want to not spend voice minutes when you’re around WiFi…

  37. @Patrick

    True in some cases. With AT&T, for example, you can’t have contract voice on a smartphone without having a contract data plan. Even with some of the prepaid carriers, you can’t have a smartphone and just buy voice. Most of the prepaid carriers that let you do this have really sucky refurbished smartphones (and you can’t use a phone you got elsewhere).

    Hmm. Sounds like it might be a bit different in the US. Over here in England you can get any smartphone you like and just decide whether you want to get minutes, texts or data as you like. Now, granted, I am talking about “pay as you go” here, not contract. I think it’s true that with most smartphone contracts you do have to get some data, but the cost can be pretty reasonable if you only want a low amount like, say, 250Mb a month. You could get that on a high-end smartphone with a lot of voice and texts for £15/month. I don’t know how that compares to what you can get in the states.

    Personally I just have my phone on PAYG. I almost never use texts or voice, so I just top up with some number of GB (I forget how many because I never hit the limit) for £5 every 5 or 6 weeks.

  38. Greg says “Which is why I keep thinking “commodity hardware, commodity hardware””

    I like that phraseology. We are rapidly reaching a point for HW commodity saturation. Not to derail the discussion into a transhumanist debate (Mr. Raymond posted about that recently) but it tickles me to imagine a world where some part of trade currency can be hardware and components. Sorry to OT, just geeking out in fantasy land for a minute there. If we had a number of truly open HW/SW platforms in the smartphone arena, it would cool to see what could develop out of the peripheral/integration market with today’s (even in the mainstream) culture of customize everything.

  39. Tom says “I think that eventually every phone will be a smartphone.”

    I can envision a near future where the majority of computing (well much more than that, the computer as a tool has proven to be quite versatile for handling a great many things for us) is being done on disposable devices (where comp tech has become so prevalent as to be likened unto a wheelbook and a pen), evolved from the emerging smartphone and pad technologies. Perhaps an interim step is that nearly every computer type device at the individual/personal level will eventually be small and portable (smartphone/pad). Particularly helpful to this is the infatuation with “the cloud” where people now can begin to sync/monitor/control/adjust many aspects of their lives.

    I have a friend that loves to demonstrate how he can sit back in his huge chair with his huge monitor and get a total picture of his life – work is displayed and aligned, he has dinner with his wife and children over videocon, and lets the dog out by opening his garage door from “the other side of the world.” Buys stocks, orders groceries, sets the house alarm, catches the news, schedules house maintenance, etc. etc. etc. And when its time to ship out, grabs is pad and goes. And as long as there is a net connection, he can use his pad to do most of this too.

    Kinda cool.

  40. Christopher Smith says “Mobile data connectivity at the current extortionate rates.”

    Yeah. I hate Verizon, but they are the only viable option for me. When I signed on, I had the unlimited data plan. Because I am using my smartphone like a computer a lot of times (within its capabilities). Now they have eliminated the unlimited plan. I screamed bloody murder about this, so they grandfathered me in – so I kept it. But they got me in the end. I had to change plans, no more grandfather clause.

    A friend of mine pointed something out to me recently, but I haven’t thought it through yet. He says that the carriers have to charge what they do and VZ eliminated unlimited data because they are advancing network technology (he says the ground work is laid, but not cannot be widely activated all at once) too rapidly to be supportable, so their costs are astronomical. Also that data usage is increasing so much, and therefore their maintainability/sustainability costs. He also states that when LTE 4G proliferates the costs will become far more reasonable, perhaps even low enough that most can afford it. I suppose that with the march of technology he may be right, but like I said, have not fully thought through all of it yet.

  41. @WCC

    Perhaps an interim step is that nearly every computer type device at the individual/personal level will eventually be small and portable (smartphone/pad).

    Absolutely. In fact I think that for a lot of people this is already a reality.

    The question is what the next major interface will be for mobile computing.

    We are now at the point where touch screens are mainstream, and voice is becoming mainstream (imagine going back ten years and telling your old self that!). Voice can only solve half the problem, though, because you still need some sort of display for showing information. There is a natural tension between wanting to be able to display as much stuff as possible while also having as small a device as possible.

    Are we going to move to some sort of HUD system using glasses or contact lenses, or even something that connects directly to the visual centres of the brain? I am sure that in some deep, hidden R&D labs at Apple and Google they are experimenting with next-gen interfaces.

    I can’t wait.

  42. @Tom, RE: “Removable storage is going away.”

    I think maybe not for the security and/or privacy minded. Also those not willing to trust that particular cloud providers will always be around – if they fold or are acquired, one might lose media that they acquired from them. The inability to download and back up those purchases, and have those purchases be playable by other components should that happen is ugly.

    Case: In 2006 a friend was buying (against vehement advice to the contrary) all his music from MSN Music. Spent about $2k. Then shipped out for a long time. Came back and the entire management and licensing structure had changed. Because he was away he was unaware an unable to make the changes/accept the new agreements to maintain continuity. Lost it ALL. The embedded DRM prevents converting to other formats and the new license/DRM could not be pushed to his current collection. Out $2k and NO compensation.
    All that said, this is the issue as I understand it, and as it came to me, so there could be some data gaps in the story. Still, an ugly situation regardless of its detailed actuality.

    Another case: The kid of a former love interest was in love with iTunes. Prior to going to iTunes, he had burned a rather large collection of his CDs to his hard drive. When he got iTunes, he accepted to import them all. When that happened it appears that DRM was applied to his previous collection – he could no longer burn and back them up to DVDs, convert formats, or make custom CD selections. Don’t know if he could play them on his laptop with services other than iTunes, or if he lacked understanding on how to do those things. Granted, he should have read his EULA and been more careful with his options. Now I don’t know what actually happened to make this occur (Applied DRM or what) and I don’t use Apple anything so I don’t know what their deal is. And again, this is the story that came to me, so again, data gaps?

    But, at basic premise, I for one do not bet on the cloud (or virtualization for that matter). I do wonder if in the end, it will be inevitable that most such services will be cloud-only.

  43. @Tom, Re: This comment

    Oh yeah, definitely agree with your thoughts here. Likewise, can’t wait. I’ve posted a number of comms here about it, I’m in the camp of wanting to develop technologies to enhance humans. A great passion of mine is to to research the advances in a number of fields and synth them into a whole to try to see where and how this is going. Was influenced by Kurzweil in this manner.

    OT, but somewhat related to our exchange, lately I’ve been thinking about the employment and living crisis that I believe is coming, in part driven by increasing class stratification. I wonder what the professions of tomorrow will look like – with the proliferation and accessibility of information exponentially increasing I see a high value/highly compensated role for “information integrators” – people who can sift through the mass of information and coalesce it into useful, critical data, particularly WRT predictive outcomes. Yes we have this to some degree with intelligence analysts (such as it is) and civil servants, and C-level execs, but I think the role may become much more pervasive and take on a whole new dimension.

  44. “Another case: The kid of a former love interest was in love with iTunes. Prior to going to iTunes, he had burned a rather large collection of his CDs to his hard drive. When he got iTunes, he accepted to import them all. When that happened it appears that DRM was applied to his previous collection – he could no longer burn and back them up to DVDs, convert formats, or make custom CD selections.”

    I can guarantee you that this story is false. ITunes’ DRM (when it existed for mp3s) only applied to files bought from the iTunes store. Apple even made a brief ad campaign about burning mix CDs from music imported to iTunes.

  45. Quote from arty:

    > Asked about a possible sale of the company, Heins said “it is not the main direction we are pursuing right now.”

    So they are pursuing a sale. And my prediction about RIM not being taken over or firesaled before next year is close to being falsified.

  46. RIM can easily become a very successful provider of business services. But they are dead as a force in smartphones.

    I expect all phones to convert to smartphones. But then mainly use WiFi for data (world wide). It is much cheaper to get people online by way of WiFi access points than over G3/4.

  47. @Winter

    RIM can easily become a very successful provider of business services. But they are dead as a force in smartphones.

    My view of this is slightly different from Eric’s. I agree that RIM is done in smartphones, and that this recent ‘focus on the enterprise’ announcement is the final, or perhaps penultimate, nail in the coffin. My main reason for thinking this is that if you are developing products for enterprise then your customers are no longer the people using your devices. Your customers are IT managers. They have different priorities than users, and therefore your priorities are going to change. If you’re no longer selling to the people using your devices then your devices are going to suffer. This is why RIM will no longer be able to compete. Their products will be shit. And it’s not like they were that good before.

    @WCC

    I think maybe not for the security and/or privacy minded. Also those not willing to trust that particular cloud providers will always be around – if they fold or are acquired, one might lose media that they acquired from them. The inability to download and back up those purchases, and have those purchases be playable by other components should that happen is ugly

    Just to address the general point, when I say that ‘removable storage is going away’ I am just observing a trend in the mainstream. I am not saying it is good or bad, but that this is where I see things heading. There will always be people/devices on the fringe that won’t accept trends. The new technological paradigm never completely replaces the old, but merely relegates it to a niche. People still use horse-drawn ploughs in first-world countries, even though we have combine harvesters. Not many people, but they exist.

    Also, I wouldn’t equate ‘cloud’ with the idea of networked file transfer. You don’t need to be using a cloud service to send documents to your devices on your LAN or over the internet. And we also have ‘device-to-device’ transfer. Plugging your phone into your computer, or your camera into your tablet. These things aren’t cloud-dependent, but they do largely eliminate the need for removable storage.

    On the subject of your two cloud horror stories, I sympathise entirely. However, I must agree with Wlad that you seem to be suffering from some ‘data gaps’ on the iTunes one. Unless there was some extraordinarily bizarre bug, there should be no way at all for music ripped from a CD to be DRMed by iTunes.

    I don’t use online music stores. However, I do know a little bit about iTunes and I can tell you that they have advanced quite a bit. You can indeed back up your iTunes-bought music files, and most (all?) songs are DRM-free these days. I still don’t use the service because the sound quality just isn’t there yet. Maybe in a few years.

    Will removable storage completely disappear? No. Not any time soon. Probably not even within our lifetimes. But we are rapidly approaching the point where it will be completely normal for consumer computing devices to have no removable storage options. It’s already true of phones and tablets. And phones and tablets are the future of personal computing for most normal consumers.

  48. @Tom:

    > Hmm. Sounds like it might be a bit different in the US.

    Yeah. When the companies realized that their incompatible technologies could be used for lock-in, there was no rush to change things. Even the iPhone 4s which can bypass a lot of that — if you buy it from AT&T, it’s locked for life. That’s right. Their policy is never to unlock them even if you pay full price.

    But you can find prepaid over here that works with a smartphone without having to buy data — you just have to work at it a bit:


    Finding the right pre-paid SIM that works with the hot new phone you want can be a nightmare, but you’re free to price out every component of your phone experience as you can afford it.

  49. @Patrick

    Yeah. When the companies realized that their incompatible technologies could be used for lock-in, there was no rush to change things. Even the iPhone 4s which can bypass a lot of that — if you buy it from AT&T, it’s locked for life. That’s right. Their policy is never to unlock them even if you pay full price.

    Crazy.

    However, (and I’m trying really hard not to sound like a smug English person here) I think the correct context for this is that we are looking at an anomaly that has resulted from one particular (hopefully temporarily) dysfunctional market, rather than something fundamental.

    I wish there were some obvious way to completely disrupt the carrier business by using a decentralised data network of some kind. We hear a lot of big talk from proponents of mesh networks, but nothing ever seems to come of it. The technology is extremely flaky, so say the least.

    Perhaps at some point in the future we will cross a threshold where the number, and density, of wirelessly-connected devices in our environment, and the bandwidth of those devices, gets high enough to support a stable network. We’re some distance off though.

  50. @Patrick
    My Nexus One came unlocked. After the contract expires this spring, I buy a SIM only one year contract with another provider. I keep my current number.

    It is everywhere in Europe like this. The law requires providers to allow any phone on their network. And to move phone numbers.

  51. As stated, a retreat to the high-end for financially sound hardware companies does sometimes work. IBM did it, Apple did it.

    But what’s also interesting is that a retreat to the low-end also tends to not work, either. Think SGI and DEC. Both tried to move into more commodity-type hardware and couldn’t compete with the already entrenched competitors who beat them with the classic disruption from below. (OTOH, IBM successfully did this in the 1980s with its original PC line, but then failed to wrest control from the clone makers for many years.)

  52. @Winter Patrick was very careful to say “if you buy it from AT&T.” He knows perfectly well that you can buy an unlocked GSM iPhone 4S directly from Apple in the US.

  53. @Tim F.:

    This is true. However, that same attitude of AT&T’s permeates most of the industry. Once you have the unlocked iPhone, I don’t think you can use it on Verizon without a dataplan. I’m pretty sure from things I’ve read (and posted in comments here) that you can’t use it on any of Verizon’s MVNOs.

    You can use it on T-Mobile, but there is a problem with that. And I don’t mean the thing people bitch about about being restricted to slower speeds. No, what I mean is the fact that T-Mobile won’t sell you data by the small increment. Last I looked, you had to buy it a month at a time.

    Sprint MVNOs also have this issue. There are reports of people being successful with BYOD, but iPhone is definitely not supported and they might cut you off at any minute.

    The bottom line is that, if you don’t want to pay the carriers a monthly for data, they want to insure that it’s very difficult or impossible for you to use a high-end phone. You can find anecdotes of people being able to do it, but those always come with caveats. I haven’t found any operator-backed official place where I can either BMOD with a high end device with assurances that it will work fine, or (a) pay full freight for a high end phone; and then (b) buy data a la carte. Perhaps you know differently; if so, please share.

  54. @Tim F.:

    He knows perfectly well that you can buy an unlocked GSM iPhone 4S directly from Apple in the US.

    And one other thing. I might know this because I’m paying attention. There are two points here: (1) not everybody knows this; and (2) Apple is complicit in letting AT&T get away with this.

  55. It doesn’t have with the “retreat upwards” nonsense. RIM is retreating to the enterprise business because they bombed in the consumer market (hardly surprising with the products they made) and they are retreating back to their castle (enterprise), instead of keep fighting a lost battle. Sure, it won’t be long before Android and iOS circle the enterprise (more than they have done now), but they RIM dudes have to try and save the company

  56. @Tom:
    “I think the correct context for this is that we are looking at an anomaly that has resulted from one particular (hopefully temporarily) dysfunctional market, rather than something fundamental.”

    I completely agree, Tom, and don’t see it lasting long-term. But I wouldn’t care to guess how long it will be before the market is disrupted, because of the capital involved, the regulatory regime, and the fact that none of the major players is likely to benefit from the disruption. It’s the customers who will benefit, and phone service in the U.S. has never been about the customer. And that attitudes predates cellphones.

  57. “…you can buy an unlocked GSM iPhone 4S directly from Apple in the US.”

    I have been following the evolution of the smartphone market pretty closely, and I didn’t know this until someone pointed it out to me here. I’d bet money that a majority of smartphone users do NOT know that Verizon will not unlock iPhones purchased from them, or that phones bought from Apple are unlocked.

    “And one other thing. I might know this because I’m paying attention. There are two points here: (1) not everybody knows this; and (2) Apple is complicit in letting AT&T get away with this.”

    Yep. Apple could agree to unlock any iPhone in their stores if the owner could demonstrate that it is fully paid for. Don’t hold your breath.

  58. “I’d bet money that a majority of smartphone users do NOT know that Verizon will not unlock iPhones purchased from them, or that phones bought from Apple are unlocked.”

    I’d bet lots of money the majority of US smartphone users do not care that they don’t know.

    “Yep. Apple could agree to unlock any iPhone in their stores if the owner could demonstrate that it is fully paid for.”

    Apple could agree with who? The consumer? No, the carriers stand in the way. With the carriers? Apple would love to agree to this, but the carriers do not want to. (See their embedded SIM plans http://www.appleinsider.com/articles/10/11/21/carriers_threats_force_apple_to_abandon_embedded_iphone_sim_plans.html or Tim Cook assisting an iPhone user to get his phone unlocked http://www.iphoneincanada.ca/iphone-news/tim-cook-helps-unlock-att-customers-iphone-to-use-in-canada/) This isn’t being “complicit” in some conspiracy to prevent a handful of nerds to feel like they have freedom. This is a business reality.

    Note that many leading Android phones do not include multi-baseband chips in their phones and have to be individually tailored for each (or most) of the American carriers so it is likewise largely irrelevant whether or not they can be unlocked.

  59. @Tim F.:

    This isn’t being “complicit” in some conspiracy to prevent a handful of nerds to feel like they have freedom.

    Right. It’s being complicit in a conspiracy to make it much more difficult for normal people to move to different carriers.

    This is a business reality.

    If, by “reality”, you mean a conspiracy to make sure that consumers stay locked in longer once they get a phone, then yes.

    Note that many leading Android phones do not include multi-baseband chips in their phones and have to be individually tailored for each (or most) of the American carriers so it is likewise largely irrelevant whether or not they can be unlocked.

    Right. And this, again, is the carriers’ doing. If a carrier (a) won’t support BYOD and (b) requires special stuff from whoever supplies the phone, then the manufacturers, when they have to do the special carrier stuff anyway, might as well shave a few pennies. But you can bet that if multiple mainstream carriers supported BYOD in a meaningful fashion (e.g. more a la carte by not requiring data plans for smartphones) and a significant non-carrier-specific smartphone market developed, most of those competing phones would be multiband/multistandard.

    In this particular instance, I’m not ragging on Apple so much as the carriers. But the iPhone is the primo example of this. For example, AT&T will unlock an Android phone once it’s off contract, but feel they “own” the iPhone (possibly because of the huge subsidy paid) for the life of it.

  60. @Kennon

    Good seems okay enough to have been the backup for BES and is used in many enterprise iOS deployments. It seems to work better for iPhones than android. IMHO it’s rather crappy but provides the provision/policy management enterprise deployment requires but iOS + ActiveSync doesn’t quite provide. On the other hand, as a separate app, IT can wipe corporate data from my phone without nuking my personal data and apps.

    Frankly, MS should by Good and kill iPhone and Android support and bake into the OS after making it not suck so much. Then the only credible enterprise alternative is WP unless RIM gives up and sells BES for iPhone and Android.

  61. @Tim F.:
    “Apple could agree with who? The consumer? No, the carriers stand in the way. With the carriers? Apple would love to agree to this, but the carriers do not want to.”

    Yes. We seem to be in violent agreement. :-)

    @Patrick:
    “In this particular instance, I’m not ragging on Apple so much as the carriers.”

    Again, yes.

  62. @Tom: Sketchbook Pro is a great example of an iPad app that proves its usefulness as a creative medium. I would also say that it’s far and away the best UI I’ve ever seen on any product from Autodesk. It’s interesting that in these massive companies like Autodesk and Adobe, the best work they’re doing these days is on iOS.

  63. Apple could agree to unlock any iPhone in their stores if the owner could demonstrate that it is fully paid for.

    Nope. Apple would love to be able to do that, but their contracts with the carriers prevent it. ALL hardware makers would benefit from doing away with carrier-locking, but they have to work within the situation we’ve got, not the situation we want.

  64. One thing I greatly regret is that I didn’t buy all the two-year puts on RIMM that I could afford on the day the iPhone was announced.

  65. @Tim F
    Providers in the EU are required by law to unlock your phone on request after a fixed time. It is also perfectly legal to get someone else to unlock your phone at any time.

    Furthermore, the providers have to accept any GSM phone.

    These were the reasons Nokia could grow so big in the 1990s.

  66. ” Of course this means the company will be as dead as Antigonus shortly.”

    I am not so sure about that. IBM, Java, Oracle are all in the enterprisey sphere and Microsoft largely retreated in that too – they know the only real reason to use their OS and Office is to have it connected with their enterprisey products, like the whole Dynamics range.

    Heck, even Microsoft IIS with its SQL Server and ASP.NET stack is not dead although it was the textbook example of closed source software retreating into an enterprise range because it cannot compete neither on quality nor price with the LAPP stack. (LAPP becase PostGresSQL is generally better suited for enterprisey applications than MySQL.) And still it is alive despite literally every alternative being leaps and bounds better – and free of charge. And the reason is integration with all the other their enterprisey stuff.

    I think enterprise Blackberry is only dead if it cannot acquire a meaningful integration with other enterprise products. If they say become the leading SAP mobile client or leading Microsoft Dynamics client or that sort, they are not dead.

    Integration is key in the enterprise world. In the FLOSS world too but there it is more about implementing open standards of data exchange while in the enterprisey world it is more about direct integration with products. When I got my first company-issue HTC Android phone I expected it to open Excel files and integrate well with Exchange. It did, but it is more of a coincidence than something to be expected as this is generally something hackers don’t really care much about, Excel and Exchange is not really on their minds much. Sun lost the enterprisey sphere only because they sucked at integration with the most popular enterprisey products IMHO.

  67. Perhaps somebody with more knowledge of the American situation could explain why the Government there doesn’t pass a law to regulate the carriers in favour of the consumer and thus create a better and more competitive market?

  68. >Perhaps somebody with more knowledge of the American situation could explain why the Government there doesn’t pass a law to regulate the carriers in favour of the consumer and thus create a better and more competitive market?

    Ha.

    Ha ha.

    Ha ha ha ha. You are so funny. Go google “regulatory capture”.

    To be fair, though, you’re not as funny as the people who think the regulatory-capture problem can be solved by…more regulation.

  69. I realize that some native speakers might not get the joke, but “passing motion” is slang for defacating in many Asian countries which have a British colonial past.

  70. @esr

    Ha ha ha ha. You are so funny. Go google “regulatory capture”.

    Is regulatory capture the inevitable result of state regulation of an industry?

    We seem to have a good counter-example in Europe to this. Here we have regulated the mobile carrier industry and it seems to have produced good effects for the consumer.

    By the way, does anybody else keep getting their connections to this server dropped?

  71. Speaking of iOS and the corporate world, I work in the pharmaceutical industry, and I have already seen three, 300+ person sales forces convert over to iPads, replacing their laptops, with two other, similar replacement projects in the works.

    I don’t know what other industries are like, but that’s the trend for my industry. The uptake by iPads has been crazy. Just two years ago, you’d walk into a meeting and everyone brings their laptop. These days, you see more iPads than laptops at those same, mid level meetings. I have yet to see a single non-iPad tablet, even though I see many android phones at those same meetings.

  72. Google has made some $550m from Android since 2008, according to numbers included in the recent Oracle settlement and crunched by Charles Arthur of The Guardian. By contrast, a huge amount of Google’s revenue in mobile comes from ads delivered to users of Apple’s iPhone.

    The figures in the Guardian report come from testimony given by Google in the Oracle trial.

    Right now Google makes some $2.5B a year in revenue in mobile, most of it from mobile ads, and the search numbers mean that a large chunk of that comes from iOS devices. This means that the earnings from Android are dwarfed by the chunk of those earnings that come in via iPhone.

    By some numbers, Google accounts for 97% of all mobile search queries, which is a massive, if not incredibly surprising number. But according to Google testimony, some 2/3 of that number originates on iphone alone, not Android.

    If you do the math, figuring that it has been three years since 2008, Android is extremely likely to have made in the millions in revenue from Android in 2011, making its earnings from the iPhone somewhere over $2B mark in the same year as the majority percentage.

    But it’s not just volume of searches that is the issue. Remember that Google is a company that makes its primary living on search ad revenue, period. While Google’s desktop search business is in good shape, it is clear that mobile is going to become the default way that most of the people in the world access the internet, sooner rather than later.

    The revenue from ads isn’t a 1:1 correlation to search queries, of course. But it does give us a basic yardstick that we can use to gauge how much of a market Google stands to lose along with the iOS platform. Android is growing at a rapid clip, with some 550K activations every day, and every one of those is a potential source of advertising revenue for Google.

    But iOS is growing too and the numbers show that far more browsing is done on iOS devices than on Android. Due to this, the impact on Google’s mobile revenue from Apple devices is massive, even bigger than that “2/3? number would imply.

    Android is a huge part of the market, but it earns Google almost nothing in comparison to the money that the search giant earns on desktop search. Whether the Android business is sustainable at this point is only something that Google can answer, but so far it doesn’t seem to be paying dividends. The problem, really, is that Google can’t afford not to be in the mobile business, but it’s costing it billions in revenue to stay there.

    This also illustrates just how dangerous it could be to Google’s mobile business if Apple succeeds in divorcing itself from Google as a mapping provider, and throughout iOS

  73. @daniel

    from here
    A report from the Guardian that Google only generated $543 million in revenue from Android is based on bad information, says a source close to Google.

    Guardian reporter Charles Arthur examined court filings from Oracle’s lawsuit against Google and seemed to figure out the revenue number.

    The key number he used for his report was $2.8 million. He believed this was a pre-settlement offer that revealed how much Google got from Android.

    In fact, according to our source, this is just a value placed on the patent, and it has nothing to do with Google’s Android revenue.

  74. @esr
    “Ha ha ha ha. You are so funny. Go google “regulatory capture”.”

    And I was wondering about a really Free-market mobile phone market. Just to show us how such a thing actually works in practice, instead of all kinds of theoretical musings we tend to see here.

    Know of any such Free-market? Or can anyone show how “more free” markets work better? Say, a “free-er” market that has more competition than the regulated EU market?

  75. Just a note on CD importing with iTunes. iTunes does not and never has applied DRM to ripped/imported music. But it does rip to AAC by default, not MP3, and this has been the case now for many years. That kid probably just tried to use an application which did not support AAC to burn CD’s (silly idea, iTunes does CD audio burning quite well)

    Note that AAC is simply MPEG-4 Audio. Patent encumbered of course, but no DRM unless you have iTMS-purchased songs from the DRM era (and even then, Apple provided a simple workaround, all iTMS songs may be burned to CD and reimported DRM-free)

  76. Someone who gets it (somewhat)

    Why Google isn’t worried about Android revenue
    http://gigaom.com/mobile/why-google-isnt-worried-about-androids-revenue/

    Five years later, Android is the only thing that has prevented Apple from completely taking over the mobile market. All Google ever hoped to do was provide a shell-shocked smartphone industry with the tools to build a credible alternative to the iPhone that didn’t come with Apple’s tight-fisted control. The potential upside was that those partners would expand the overall pool of people with access to the mobile Web, therefore ensuring that Google would could compete for mobile searches without having to kowtow to Apple.

  77. @Winter And? What do you think you are telling me that I don’t know or isn’t perfectly in accord with what I’ve said?

  78. @Cathy “Yes. We seem to be in violent agreement. :-)”

    No, you seem to think Apple can make something happen that it can’t. I say it cannot. I see no “violence”, “agreement,” or reason for smily faces — unless you mean to suggest that you didn’t mean what you were saying.

  79. @Tim F.
    “What do you think you are telling me that I don’t know or isn’t perfectly in accord with what I’ve said?”

    Just to complete the picture about locked phones and conditions on consumers. Every subscriber is legally allowed to use their SIM card in whatever phone they want without a change in the contract. That is different from the USA.

  80. @Tom:

    > Is regulatory capture the inevitable result of state regulation of an industry?

    Perhaps not, but we’ll never know. In general, two types of industries get regulated heavily (note that these categories are not mutually exclusive):

    1) Those industries which see the government as a useful mechanism for raising barrier-to-entry and decreasing competition. When an industry asks to be regulated, this is the kind of trouble you know you’re going to be in. Think funeral homes, florists, hairdressers.

    2) Those industries which are full of bad actors who abuse the consumer. The consumer rights organizations are quick to ask for regulation, but then don’t have the same focus and money to spend on legislators as the industry itself. Think insurance companies.

    An industry that doesn’t fall into at least one of those categories might not succumb to regulatory capture, but we won’t know because such an industry won’t be regulated heavily in the first place!

    I have a personal anecdote regarding the insurance industry. Around 3 years ago, my daughter was rear-ended in her (legally my) 1982 Honda Prelude. She exchanged insurance information with the other driver, and the company said the car was totaled and wanted to collect the keys and give us a check. We checked it out and it was still drivable, but the bumper and side suffered significant damage, so we did want some compensation.

    Fortunately a mechanic friend of mine suggested that I should be careful with this because of some recently passed laws. I actually couldn’t believe what he was telling me until I researched it. Research (and I’m not talking casual research — serious study of the relevant statutes, serious grilling of both insurance company people and people from the state) indicated just how bad the situation is currently.

    Caveat: my research was mainly focused on the effect of the laws on the consumer (e.g. me). The below discussion of how the laws came to be is mostly speculative and anecdotal, but the result is known.

    Auto insurance companies have gotten very good at getting rid of wrecked vehicles. In fact, they found that getting rid of vehicles was a lot less costly than fixing them up for people, and there was a lot more certainty in the process (insurance companies hate risk). In some cases, they can even actually make a profit on a car wreck. For this to happen, the car has to be totaled, and they have to be able to sell it (perhaps parting it out) for more than the market value. They were so good at this that there were lots of cars on the road that were the front end of one car welded to the back end of another car. Unfortunately, the welds aren’t that strong, and people died. Enter regulation.

    Of course when the regulation happened, the insurance companies were the main negotiator at the table. Even if they couldn’t piece cars together any more, it is still cheaper for them to total cars, so they wanted to be able to do that easier. Oh, and by the way, there was a lot of competition from stolen cars that were parted out that was cutting into margin, so they wanted the cops to help them stem the trade of stolen parts. And they were able to put together a really good coalition of special interests, from do-gooders who wanted unsafe cars off the road, to rich legislators who could see the benefit of getting ugly cars off the road, to police departments who love new investigative powers, to car dealerships who wanted to sell more new cars.

    An insurance company can apparently declare a car totaled whenever it wants (they have a guideline based on percentage of numbers that they make up). The consumer then receives cash, and can choose between accepting fair market value for the car, or keeping the car and accepting fair market value minus salvage value (what the insurance company would have gotten if it had sold the car on the secondary market).

    Of course, the starting point for “fair market value” (aka “actual cash value”) and “salvage value” are just made-up numbers by an “independent” company that the insurance company contracts with. Naturally, the former is as low as possible and the latter is as high as possible.

    Anyway, the do-gooders wanted to keep the welded-together cars off the road, so the idea was that if an insurance company totaled a car, it needed a special salvage title, and then could be rehabilitated (after a cop checks it out to make sure there were no stolen parts used to fix it) to a “rebuilt” title. This way any buyer would know what he was getting. The insurance companies were actually OK with this idea, because they could modify the law a little bit to make it not so onerous for them, and also charge more for insurance for cars with “rebuilt” titles (after all, those aren’t safe!), but (a) didn’t want the competition from people who kept their cars after wrecks, and (b) wanted to collect extra for insurance for “rebuilt” cars whenever possible.

    So the law as passed (in Texas) says that a car is considered totaled by the state whenever the “actual cash value” of the car before the wreck is less than (essentially) “the cost of repairs minus cost of painting.” The insurance company can still “total” a car that isn’t wrecked this badly and work its magic (keep doing the same old tricks) without a rebuilt title. But whenever an older model car is totaled, this economic equation will come into play. Even if the owner keeps the car.

    This is not publicized. It’s in fine print from the insurance company that there might be some issue with the state. But as soon as you cash a check from an insurance company for a car that is totaled by the state’s rules (using the insurance company’s numbers), the insurance company will report this to the state, and the state will send you a notice that you will suffer criminal penalties unless you immediately stop driving the car and get a salvage title for it. The cost of rehabilitating that to a regular title will probably be at least $150 plus time.

    It’s supposed to be a safety measure. But it has nothing to do with safety. It’s all about economics. If I have a car that’s worth $500, and it gets hit and there is $1000 worth of damage (by the way the insurance company figures it, which is stupid, because all I really want to do is spend $200 to pull the bumper out) and the insurance company claims the salvage value of the car is $480, then if I try to get the insurance company to make me whole, they will cut me a check for $20, and report it to the state, and I will spend money on titles (twice) and an inspection, and still not have the bumper fixed. BTW, if I don’t make an insurance claim, I have no personal duty to report it to the state or get a salvage title. It’s all about punishing poor people who dare to make an insurance claim.

    FWIW, by one measure I did really well out of the insurance settlement. I really only wanted around $500 to do a half-ass fix on the bumper, but we couldn’t get past the fact they were going to declare the car totaled to the state (based partly on their repair estimate of $1600 or so), or the fact their value estimates were way too low. At the end of the day, I got a cash settlement for more than I paid for the car a few years earlier, without it being declared totaled (around $1800 IIRC). OTOH my hourly rate for that money was abysmal.

  81. @Tim F.:

    > No, you seem to think Apple can make something happen that it can’t.

    There is no question that the carriers want this more than Apple. But let me get this straight: you are claiming that Apple — the only company that can negotiate conditions for carriers, the only company that can negotiate a guaranteed $15 billion deal with a carrier, the company that is a “must have” for carriers — you are claiming that Apple can’t even get as good a deal for its AT&T customers as Samsung and HTC? (AT&T will unlock Android phones.)

    So is Apple’s negotiating team incompetent, or is it just possible that they don’t care quite as much about their customers as they claim to?

  82. >Is regulatory capture the inevitable result of state regulation of an industry?

    If you had studied game theory and public-choice economics, you wouldn’t need me to answer that. Regulatory capture is asymptotically inevitable; that is, as time since the foundation of a state regulatory body increases, so does the probability that any given decision will be captured rises towards unity as a limit. This result is completely predictable from any model of all parties’ behaviors that includes agency problems.

    >By the way, does anybody else keep getting their connections to this server dropped?

    Yes, though the frequency dropped late last night. I suspect a configuration problem at ibiblio.

  83. @esr

    If you had studied game theory and public-choice economics, you wouldn’t need me to answer that. Regulatory capture is asymptotically inevitable; that is, as time since the foundation of a state regulatory body increases, so does the probability that any given decision will be captured rises towards unity as a limit. This result is completely predictable from any model of all parties’ behaviors that includes agency problems.

    Is there any empirical scientific evidence that backs this hypothesis up? Any kind of study that has looked at a sample of attempts to regulate industry and the corresponding results?

    @Patrick

    Those industries which are full of bad actors who abuse the consumer. The consumer rights organizations are quick to ask for regulation, but then don’t have the same focus and money to spend on legislators as the industry itself. Think insurance companies.

    There seems to be an assumption here that whoever has the most money to bribe legislators wins. That may be true in the US. It’s not always true everywhere, because we have laws governing campaign finance in some countries (in the UK anyway). It is the job of our elected representatives to do the right thing on our behalf. God knows it doesn’t always work that way. Every system is imperfect. It’s possible for regulation to go wrong. But it’s also very possible for it to go right. And the current regulation of carriers in Europe seems to really be producing good effects.

  84. >Is there any empirical scientific evidence that backs this hypothesis up? Any kind of study that has looked at a sample of attempts to regulate industry and the corresponding results?

    Yes. Documenting this sort of failure is a significant part of what economic historians do. The references in the Wikipedia article on public-choice theory are pretty good.

    >It’s not always true everywhere, because we have laws governing campaign finance in some countries (in the UK anyway).

    Naive of you. Capture doesn’t need to happen through campaign finance; in fact, some of its most potent mechanisms don’t involve elected officials at all. One is the practice by which retiring regulatory bureaucrats who have played nice are given sinecures in the industries they regulated. In Japan this practice is so well entrenched that there’s a slang phrase for it that translates as “ascension to heaven”; the point, of course, is to signal younger regulators.

  85. @Esr
    So the USA has misserable service now, but Europe wiil get misserable service in the long term.

    In the long term, when we are all dead.

  86. >So the USA has misserable service now, but Europe wiil get misserable service in the long term.

    Well, it’s either that, or we abandon the delusion that government regulators can beat unfettered free markets at serving consumers.

  87. @esr

    Yes. Documenting this sort of failure is a significant part of what economic historians do. The references in the Wikipedia article on public-choice theory are pretty good.

    Could you recommend out one or two that present a good overview of the evidence?

    Naive of you. Capture doesn’t need to happen through campaign finance; in fact, some of its most potent mechanisms don’t involve elected officials at all.

    Okay, but I was specifically responding to Patrick’s point about competing legislative lobbyists.

    Why is it not possible simply to put into effect a rule prohibiting regulators from accepting—now or in the future—payment of any kind from the industry they are regulating?

  88. Could you recommend out one or two

    I meant to say ‘recommend one or two’.

  89. Why is it not possible simply to put into effect a rule prohibiting regulators from accepting—now or in the future—payment of any kind from the industry they are regulating?

    It’s rather hard to recruit actual experts in a field with a rule that says, “By the way, you have an eternal noncompete; you can never work for any other employer in the field you’re expert in.” (Well, you can still get experts—if you’re willing to hire only zealots who so hate the companies that operate in the field they’re expert in that they already decided they’d never, ever work for a private employer in their field. This has its own drawbacks.)

    And you certainly have trouble if you make the rule actually complete, and tell legislators and their staffers they can never, ever have any private employment ever again.

  90. >Could you recommend out one or two that present a good overview of the evidence?

    Not any more. My intensive reading of this subject was more than fifteen years ago, back when I realized I was going to have to become good at praxeological analysis in order to do my papers on the economics of open source.

  91. Request for Information: When you speak of “regulatory capture” do you include capture by ideologically-driven zeolots? E.g. in the classic “baptist-bootlegger alliance” do you count the “baptists” as catspaws who are ultimately optional to the scheme, or as full-fledged regulatory captors who could, under the right circumstances, take control of the scheme all on their own?

  92. @Deep Lurker

    Please correct me if I am wrong, but from my brief reading on the idea of regulatory capture I believe that inherent to the concept is the fact that the captors have greater economic power and focus than those seeking to regulate in favour of the public. Therefore the “baptists” in your story would not be well placed to become captors. They would, however, benefit from capture by the bootleggers.

    Ideological zealots typically aren’t an ‘industry’ being regulated, so I don’t think the concept really applies.

    But, I have only spent about an hour reading about this stuff, so I stand ready to be corrected.

  93. >E.g. in the classic “baptist-bootlegger alliance” do you count the “baptists” as catspaws who are ultimately optional to the scheme, or as full-fledged regulatory captors who could, under the right circumstances, take control of the scheme all on their own?

    In all the historical instances I know of the baptists were basically optional cat’s-paws.

  94. @esr

    Not any more. My intensive reading of this subject was more than fifteen years ago, back when I realized I was going to have to become good at praxeological analysis in order to do my papers on the economics of open source.

    Fair enough. If anybody else can provide a reference to a book or some papers that spell this evidence out (perhaps a meta-analysis would be ideal) I would be very interested. I have access to the scientific literature, so even if the paper is not readily available on the internet I will still welcome a title, journal, and author reference.

    If indeed it is true that government regulation of industry can’t work then this is something I want to know. However, I want to look at the evidence myself before I accept the proposition.

  95. @Patrick: Look again at TMobile prepaid. Note that they will activate anything with a clean IMEI. The only way I’ve seen where TMo does anything that looks like screwing their customers is that they (from what I’ve read in my research) assess the daily charge on Pay-By-The-Day plans when you so much as get sent a text (even if you don’t read or want it).

  96. @esr
    “Well, it’s either that, or we abandon the delusion that government regulators can beat unfettered free markets at serving consumers.”

    Funny remark (and difficult to parse with the “negations”: abandon, delusion, beat, unfettered)

    Personally, I believe “Free-markets” can only exist under strict regulations. Like a good sports match is only possible with tight rules and strict referees.

    But you are not getting to the point. MS’ monopoly on PC desktops was “expected” to be ended by market forces. Or so I was told by many free-market types a decade ago (vague recollections that you were one of them). But we are now seeing that MS’ monopoly is outliving the PC desktop.

    So much for waiting a whole generation for a free-market in PC software.

    Meanwhile, the USA is living under two decades of mobile market pain with dismal services while believing in a free-market. At the same time, people in the EU have enjoyed all the benefits of a highly competitive mobile phone market under heavy regulation.

    And as it looks now, both the “regulatory capture” in the EU and the Free-Market in the USA are expected to kick after mobile ISP connectivity has become irrelevant due to VoIP and WiFi connectivity.

    So, in the end you most likely will have lived under the miserable service of US mobile providers waiting for a free market that never comes, while Europeans have benefited from a very competitive market under regulation.

    Anyway, isn’t the mobile phone market in the USA is the text-book example of regulatory capture? Here is an industry that seems it could do with some regulatory freedom.

  97. @esr:
    >If you had studied game theory and public-choice economics, you wouldn’t need me to answer that. Regulatory capture is asymptotically inevitable; that is, as time since the foundation of a state regulatory body increases, so does the probability that any given decision will be captured rises towards unity as a limit. This result is completely predictable from any model of all parties’ behaviors that includes agency problems.

    But how many failures of human institutions *aren’t* asymptotically inevitable? Might it be that it’s more a question of whether the probability of regulatory capture rises quicker than the probability a failure resulting from under-regulation? What if the only thing that can prevent either of the two outcomes from happening is the establishment of conditions that make the other inevitable?

    Secondly, I’ve seen several times in your writings that you seem to think that the existence of some form of intellectual property rights is a good thing (the first instance to come to mind, if not the one where you state it most directly, is this: http://esr.ibiblio.org/?p=1337). At the same time though, the course copyright law has taken over the last century or so seems to be a textbook case of regulatory capture (ever-increasing copyright terms in the US, the DMCA, the attempt to push SOPA and PIPA through), at times on an international scale (The Berne convention, ACTA).

    Do you concur that this is an instance of regulatory capture? Do the benefits to society of having IP rights outweigh the costs of regulatory capture? If so, might there be other situations where we just have to grin and bear the short term risk / long term certainty of regulatory capture? If not, what should the government do to provide IP rights while keeping the MAFIAA from writing IP law?

  98. @Winter:
    >Personally, I believe “Free-markets” can only exist under strict regulations.

    I wouldn’t say that. To the extent that a market is regulated, it is not free. So if your market is strictly regulated, then it isn’t very free. At the same time, the government isn’t the only actor that can cause a market to become unfree. Participants in the market can do so as well. So you need some regulation, but it needs to be a light regime of *carefully* chosen regulations. And then, as eternal vigilance is the price of freedom, you need to watch the government and the market like a hawk and scream bloody murder at the first sign of regulatory capture.

  99. @Jon Brase
    “So you need some regulation, but it needs to be a light regime of *carefully* chosen regulations.”

    Like, ownership (who can own what, and to what extend), contract law, cartel laws, tort laws, coercion and violence, dispute settlements, and a myriad of other regulations.

    But above that, history has shown that dominant market parties have so many ways to limit or abolish competition long term (eg, MS, IBM) and to fool and defraud consumers that without strict regulators I do not see many high tech markets stay open for long.

    To keep it real, say we compare the USA mobile market to the EU market. In the EU, anyone offering mobile services is required to offer any service to all comers, with a SIM card, on equal terms. That lead to a very competitive market. Cf, the USA case where full contract freedom and the battle of standards lead to a locked down market with very few competitors.

    So, how did the EU regulation reduced competition?

  100. history has shown that dominant market parties have so many ways to limit or abolish competition long term (eg, MS, IBM)

    The two examples you cite prove precisely the opposite of your position. They were both companies with a dominant market position, and they were both overturned by the market, not by regulators. IBM lost in the shift from mainframes to desktop machines, and Microsoft is losing in the shift from desktops to tablets.

  101. @Some Guy
    “They were both companies with a dominant market position, and they were both overturned by the market, not by regulators.”

    That is saying a a hypothetical monopoly on bicycles was overturned by the auto industry or vice versa.

    These monopolies were never “overturned”. Their markets became irrelevant. IBM stopped being a dominating force when computing shifted to a whole different category of machines, personally managed computer io mainframes. MS is losing out now again because their platform, desktop PCs, is losing out. In neither case did either of them lost dominance in their captive “market”.

    Free-market “theory” is not saying monopolies get busted by people switching to different completely product categories. They claim monopolies get busted in their own market.

  102. Further to some other observations upthread, in Australia we have a relatively muscular consumer protection and competition law regime.

    While telcos have resisted it, they are now required to allow SIM cards to be unlocked and phone numbers transportable.

    From the perspective of a consumer, the result is pretty good.

    (This is an example where the standard All Regulation is Bad “libertarian” ideology is duplicitious or at least deluded

  103. @Jon Brase:

    > So you need some regulation, but it needs to be a light regime of *carefully* chosen regulations.

    To the extent that regulations are even theoretically useful, they are an attempt to preempt bad behavior (often put into place after the bad behavior has manifested itself).

    If everybody is good, you wouldn’t need regulations (or at least enforcement). If everybody is bad, the regulators are corrupt (or paternalistically stiflling) and regulation is bad. Only in the middle, where some are good and some are bad and you can somehow guarantee that the ones in the government are good, can regulation work to the benefit of the common man.

    I think we could get rid of a lot of regulation if we implemented more stringent disclosure policies. Unfortunately, most of the people agitating to get rid of regulation are also agitating for “tort reform” which is, in most cases, yet more Orwellian NewSpeak.

  104. >But how many failures of human institutions *aren’t* asymptotically inevitable?

    Good point! But there is a difference in scale of the odds of eventual failure (and thus the expected time to failure) when incentives are arranged to favor outcomes with minimum deadweight and inefficiency – that leads to sustainable systems. The problem with state regulation is that there’s no way to design it that doesn’t lead to capture on a time scale of decades. Where incentives are properly aligned your system will stay in a good state for much longer than that – also, market failures are easier to recover from than political failures because they don’t have force locking them in place.

    >At the same time though, the course copyright law has taken over the last century or so seems to be a textbook case of regulatory capture

    I agree. You have identified the reasons why I think the anti-IP ideologues may well win in the end. If there aren’t any actual Schelling points there, then I think it would be better to accept that than tolerate continuing regulatory capture. But that doesn’t mean all the consequences will be happy. Utopia is never an option in any of these choices; all one can try for is the least bad outcome.

  105. The problem with state regulation is that there’s no way to design it that doesn’t lead to capture on a time scale of decades.

    In other words, when we’re all dead.

    Meanwhile, the EU has solved the problems surrounding a cell network consisting of multiple competing carriers, on a time scale of years (one decade, tops). It’s not even particularly onerous, socialist style government meddling, either, just basic “don’t screw your customer” type stuff.

    Americans tend to miss the fact that the power of government can be used for tremendous good as well as tremendous evil. A single judge with a single ruling ended slavery throughout the entire British Empire in 1789. That slavery was abolished in the USA only nearly a century later, and only then with considerable bloodshed, is an embarrassment.

  106. Speaking of IBM, I’d say that the BlackBerry is headed for the same fate as OS/2: obscured to the point of irrelevance in the broader market, absolutely essential to those who have come to rely on it.

  107. >To keep it real, say we compare the USA mobile market to the EU market. In the
    >EU, anyone offering mobile services is required to offer any service to all comers,
    >with a SIM card, on equal terms.

    I would like to correct what appears to be a misconception about how the US cell phone market works. It is true that both Verizon and Sprint have their networks “locked down” in that you need specific approval and permission from them to get a phone activated on their network. This is because their network relies on the built in hardware on the phone, not a SIM card.

    On the other hand, if you buy a SIM card from AT&T, T-Mobile or any of the GSM MVNOs, you can put that card into any compatible phone and use that phone on that network. I used my iPhone on Suncom, and after them T-Mobile since the day I got it, and neither company was any the wiser. Equally, I had access to 3 or 4 different phones while under Suncom and T-Mobile and in each instance was able to drop the sim card from phone to phone without any service issues.

    Now, whether the carrier will unlock a phone that you bring to them is another matter, but if you have an unlocked phone, and you have a SIM card, then it will work here.

  108. I would like to correct what appears to be a misconception about how the US cell phone market works. It is true that both Verizon and Sprint have their networks “locked down” in that you need specific approval and permission from them to get a phone activated on their network. This is because their network relies on the built in hardware on the phone, not a SIM card.

    By law all EU carriers must operate GSM networks.

    By law all EU cellphones are sold unlocked.

    By law all EU carriers must accept any GSM phone on their network, provided that phone has a network-supplied SIM card installed.

    Yes, it’s true that the GSM carriers sometimes tend to downplay or hide the options available to US cellphone customers, rather than engage in outright vendor-locking. But the point is, none of that happens in Europe because it’s all illegal there.

    The regulations have done their job.

  109. Oh, and one more thing: the EU requires all GSM phones to use the same frequency bands. AFAIK AT&T and T-Mobile have different frequencies for 3G, which precludes you from dropping a T-Mobile SIM into an AT&T iPhone and getting 3G speeds on their network.

  110. “But let me get this straight: you are claiming that Apple — the only company that can negotiate conditions for carriers, the only company that can negotiate a guaranteed $15 billion deal with a carrier, the company that is a “must have” for carriers — you are claiming that Apple can’t even get as good a deal for its AT&T customers as Samsung and HTC? (AT&T will unlock Android phones.)”

    No, this is what you are claiming. I claim this is a false premise.

    “So is Apple’s negotiating team incompetent, or is it just possible that they don’t care quite as much about their customers as they claim to?”

    Neither.

  111. @tmoney:

    I used my iPhone on Suncom, and after them T-Mobile since the day I got it, and neither company was any the wiser.

    Oh, they knew. They just didn’t care. The IMEI told them it was an iPhone. If you drop an AT&T SIM into the iPhone, AT&T will “helpfully” add on data to you service plan, to keep you from hurting yourself by buying data by the minute. If you ask them to remove it, they will refuse.

  112. @Tim F.:

    > No, this is what you are claiming. I claim this is a false premise.

    I never claimed that Apple couldn’t get such a deal for its customers. I think it could if it cared to, but would much rather get lots of extra money from the carriers instead. You, on the other hand specifically said “No, you seem to think Apple can make something happen that it can’t” which, read literally, means that you don’t think Apple is capable of doing this (e.g. that they’re incompetent).

  113. >>>> If your company is failing, withdrawing from mass markets to focus on
    >>>> the high end may look like a smart move for a few quarters but it makes
    >>>> eventual doom more certain. The decline and fall of Sun Microsystems is
    >>>> probably the most recent major example but far from the only one.

    Apple’s Macintosh was the prime example of this. The company was all but completely written off by 1997, and was only saved by the iPod and its successors.

  114. Latest example of regulatory capture:

    “A little-noticed provision in the new JOBS Act would allow companies to iron out disagreements with regulators behind closed doors before they go public—a provision that might have prevented investors from finding out about Groupon Inc.’s early accounting questions until after they had been resolved.

    “The provision, part of the bill passed by Congress and expected to be signed by President Barack Obama this week, would enable companies to submit confidential drafts of their initial-public-offering documents to the Securities and Exchange Commission before they file publicly.

    “Critics say that measure would allow a company like Groupon, which had well-publicized disagreements with the SEC over its accounting last year, to resolve such issues under the radar, without investors learning of them until later although still before any IPO.

    “The provision is getting increased attention in the wake of Groupon’s disclosure of further accounting problems.”

    http://online.wsj.com/article/SB10001424052702304023504577317932455874856.html?KEYWORDS=groupon+ipo

  115. @ O Bloody Hell

    Apple’s Macintosh was the prime example of this. The company was all but completely written off by 1997, and was only saved by the iPod and its successors.

    Not really. Apple’s recovery was already well underway by the time the iPod arrived on the scene. Apple’s problem before the return of Steve Jobs wasn’t that they were selling a premium product, it was that they has been disastrously mismanaged for more than a decade.

  116. “means that you don’t think Apple is capable of doing this (e.g. that they’re incompetent).”

    This is the false premise. Either Apple can do anything and everything (disagree) or it is incompetent (disagree).

    When you can ask a question that isn’t loaded with a bunch of pre-conceived, absurd notion that I have never expressed, maybe you’ll get an answer.

  117. @Tim F.:

    This is the false premise. Either Apple can do anything and everything (disagree) or it is incompetent (disagree).

    That’s a huge strawman. I’m not discussing “everything” — my premise has to do with a specific action — the unlocking of off-contract iPhones. For this particular action, I would posit that if Apple cannot do this technically, they are incompetent. (Note that many third parties have figured out how to do this.) If Apple cannot do this politically, again they are incompetent, this time at negotiating contracts. (Which, btw, I don’t believe.) So they have made a conscious decision to take a bit more money from AT&T and others and to not do this.

    When you can ask a question that isn’t loaded with a bunch of pre-conceived, absurd notion that I have never expressed, maybe you’ll get an answer.

    “Incompetent” is not necessarily as loaded a term as you seem to make it out to be, but in any case, here’s the question: Why, exactly, is it that Apple can’t make this happen?

  118. @Patrick

    Why, exactly, is it that Apple can’t make this happen?

    I think the fact is that we just don’t know. We don’t know how negotiations between the two companies go, and we don’t know the details of their agreements.

  119. @Tom:

    That’s an interesting opinion. Mine is obviously different — despite the fact that there are some unknowables, there are enough observables to discern the essentials of the process. Tim’s opinion is apparently different, too — “you seem to think Apple can make something happen that it can’t” implies that it’s impossible for Apple to make this happen. I’m curious what evidence he has to back up that this feat is impossible.

  120. @ ESR

    One is the practice by which retiring regulatory bureaucrats who have played nice are given sinecures in the industries they regulated. In Japan this practice is so well entrenched that there’s a slang phrase for it that translates as “ascension to heaven”; the point, of course, is to signal younger regulators.

    You may be correct in general, but not in Japan.

    In Japan the bureaucracy captures the interest groups.

    The phrase you had in mind is
    Amakudari which means “descent from heaven”.

    Japan is a very strange country. The bureaucrats have a tremendous power over industry, and one of their perks is this practice of taking a job paying multiples of what they were earning before in the industry they used to regulate. Japan is ALL about relationships; you can imagine how the communications between industry and the beuearucrats improves under this arrangement.

    Japan is a nation and a country. However,as described in “The Enigma of Japanese Power” by Karel Van Wolferen, it is not a “state” in that there is no “top”, no entity responsible for the country as a whole. The Diet (legislature) has only one true power: approving a new budget; they fuss and fight about many things, but they have essentially no control over anything else. Prime Ministers have influence but very little ability to change anything. There is no institution or person that is in a position to make agreements on behalf of the country.

    In Japan, consumer activist groups, and, in fact, any group that threatens the status quo, that can’t be stomped on, are captured by the bureaucracy, given official status, attention by the appropriates bureaucrats, and, in the end become neutered with all of the original purpose gone – the original group becomes just one more group that businesses belong to.

    Status quo is everything in Japan. Pretty much anything that disturbs it is absorbed by the system. But the status quo is only at the level of the vast number of groups and relationships. One of the more odd examples is the gangsters – they run the extortion and collection industries.

    But, bottom line, there is no head of state that can make agreements for Japan, and in Japan, the bureaucrats capture the interest groups.

    I could go on and on, but anyone that is interested should read the book: The Enigma Japanese Power. It is a long, heavy read unless you find it as interesting as I do.

  121. @ ESR Re: Japan not a state

    I realize that the idea that Japan is not a state (ie. there is no “top” to the power structure) has nothing to do with what you have posted. I brought it up because it is one of the most unusual aspects of Japan, and practically no one seems to be aware of it..

  122. Re: Japan

    There was another point about Japan that I forgot to mention that I, at least, find fascinating.

    We, in Western Civilization, try to control our lives and control our governments by having all the most important stuff simple and written down – the US Constitution being the classic example. We strive to change, to improve our lives by making them better.

    In Japan, they take basically the opposite approach. Power comes from relationships between people, and there are a LOT of different relationships and, except in the most obvious cases, they are never written down. The goal of almost all power in Japan is to maintain the status quo. They seek security by making the system so massively complex with so many relationships controlling power that the system can’t break.

    Unfortunately, because Japan is not a state, it cannot be steered, either – there is no one person or group that can do that. It moves in basically the same direction, constantly being tweaked by the bureaucracy, until change is forced from the outside.

  123. @Brian Marshall

    Well, that was quite interesting. Thank you. I really had no idea Japan was structured so strangely.

    I’d love to understand the culture, but unfortunately all my knowledge of Japan comes from Michael Crichton’s novel Rising Sun, so I don’t think I’m off to a very good start. ;)

    I have ordered a used copy of the book you recommended so hopefully that will help.

  124. @ Tom

    “The Enigma of Japanese Power” was published in 1990, when Japan was still trying to control their position in the world by spending any amount of money to dominate the manufacturing in certain industries.

    Another good book is “Dogs and Demons: Tales from the Dark Side of Japan”. It was published in 2002. and it describes how Japan is piling up vast quantities of debt building super-highways and tunnels and fantastically expensive but empty museums and apparently attempting to concrete over every stream and river and over much of its coastline. It would be silly but it is true. The country was forced onto a new course by changes in economies of other countries. Certain ministries “won”; concrete is the new way.

  125. @Brian Marshall
    “It is a long, heavy read unless you find it as interesting as I do.”

    Wonderful book. Loved it.

    Another thing that might interest readers is that there are no “companies” in the USA or European sense. Most companies are conglomerates of businesses that cross own each other. In the time of the book, these Keiretsu‘s were generally organized around a bank. The Germans have something like that, organized around, eg, the Deutsche Bank.

  126. @Winter

    2/3 of Android devices are running a version of Android originally released in December 2010? 23.1% are running a version released in May of 2010? Only 2.9% are running Ice Cream Sandwich, released in October last year?

    Is this supposed to be good? This ought to be embarrassing.

    iOS 5—released also in October last year—is now on 80% of all iOS devices (that was a month ago, I have no more recent numbers).

  127. @Tom:

    Perhaps it’s embarrassing to people who have drunk the Apple Kool-Aide and think that software, like fashion, needs to be recent or be a point of ridicule. Ask Andy Rubin if he’s embarrassed.

    Perhaps Apple stuff is such crap that everybody has to upgrade right away in the vain hope it will finally work. I’ll have to ask my daughter if her iPhone has quit crashing yet.

  128. @Patrick

    Perhaps Apple stuff is such crap that everybody has to upgrade right away in the vain hope it will finally work.

    Hilarious.

  129. Maybe everyone has to upgrade right away so that things don’t just STOP working. As app developers are pressured to build apps only against the latest iOS version, the App store becomes increasingly useless on devices not running the latest.

  130. Comscore reports that more iPhone users than Android users use both WiFi and the cell network for data.

    http://www.comscore.com/Press_Events/Press_Releases/2012/4/iPhones_Have_Significantly_Higher_Rates_of_Wi-Fi_Utilization

    A lot of pundits are interpreting this in various strange ways. Some think it means that Apple users are more sophisticated, because Android users are too dumb to know (or to care)they can use WiFi:

    http://www.intomobile.com/2012/04/03/nearly-70-american-android-users-cant-figure-out-connect-wifi-network/

    Others think it might reflect badly on Android phones’ ability to connect via WiFi:

    http://thenextweb.com/apple/2012/04/02/iphone-users-39-more-likely-than-android-owners-to-use-wifi-in-u-s-30-more-in-u-k/

    But I think most of the discrepancy can be explained much more simply. The Pew surveys consistently show that minorities (who are still, in aggregate, a reasonable proxy for a lower income group, with jobs that are less likely to have WiFi available for employees, and with worse credit reports) are much more likely to use their smartphone as their only network access. E.g. they don’t have home computers, so why would they buy internet at home?

    This same group of people have (historically) been much less apt to own iPhones, since those things have historically been expensive and only available on AT&T’s very expensive postpaid network, requiring both good credit and a large multi-year commitment. This may be changing somewhat now that Apple has $0 subsidized phones on a lot more networks; otoh the prepaid data offerings get better every month, and Apple still doesn’t seem to have a very good position in prepaid.

  131. @jsk

    As app developers are pressured to build apps only against the latest iOS version

    The only ‘pressure’ developers feel to require recent OS versions is that they want to use new APIs, and features like ARC. It’s good that they can feel free to do this, safe in the knowledge that ~100% of iOS devices are on either iOS 4 or 5, the most recent two versions.

    This is good for everybody, because it means that devs don’t have to test against a huge range of versions, they can use new features, and therefore the users get to use the new features. This is an all around win.

    If more than 20% of Android users are still on an OS from early 2010 then the apps available on the platform are going to be restricted by that. It drags the whole platform down and retards progress.

  132. @Patrick Maupin I think Google is probably unhappy about the carriers holding back Android upgrades. And the large number of “new” phones on “old” versions of Android.

    It makes developer’s life difficult in having to test and support many versions of old versions of Android. It also means developers are less likely to support new features.

    You disagree?

  133. @phil:

    > new comscore results

    You beat me. I just came here to post this.

    > I think Google is probably unhappy about the carriers holding back Android upgrades.

    Sure. They do lots of hard work to make something great and nobody gets to use it.

    > You disagree?

    No. OTOH, I don’t think google has anything to be “embarrassed” about here.

  134. @Patrick Maupin

    “embarrassed” is probably too strong. I’m sure they are frustrated.

    I think we all agree: the carriers suck ass.

    BTW, the discussion on the locking and unlocking of smartphones in the US may be a bit overblown IMO. Very few phones have the same SKU for different carriers because of all the frequency/band fragmentation (not sure what the correct lingo is for this). And it doesn’t appear to be getting better. Notice how the new iPad has a different SKU for Verizon and AT&T as the LTE frequencies are different. And these LTE frequencies are different from anything being rolled out in Europe.

    But perhaps new chipsets that handle everything will roll out at some point. I sure hope so.

    Does anyone know why CDMA phones don’t seem to be able to be unlocked? I can’t imagine it’s impossible, but from what I can tell – no one has done it.

  135. “Does anyone know why CDMA phones don’t seem to be able to be unlocked? I can’t imagine it’s impossible, but from what I can tell – no one has done it.”

    It happens all the time. The first issue is that CDMA doesn’t require a SIM to associate/lock a device to a network. (Again, most non-iPhone CDMA phones do not include SIMs at all.) However, there has been code for quite awhile (CSIM and R-UIM) to allow a CDMA phone to utilize a SIM card to change carriers or be used internationally. However, the physical association/locking to a carrier is primarily done in hardware. (This is not true internationally in the remaining CDMA markets which generally have rights comparable to those supporting GSM networks — they fully utilize the CSIM or R-UIM software to allow carrier migration.)

    As far as I am aware both Sprint and Verizon allow CDMA iPhones to be unlocked. I specifically know that Verizon only permits it once every 10 months for international travel (they will try to push their global (roaming) SIM, but you can and will get the ability to unlock and use a SIM for any local carriers if you state you do not want a roaming SIM plan).

  136. @Tim F. I’m talking about unlocking to switch between Verizon and Sprint. Yes, they can be used on a GSM network to work internationally.

  137. You are misunderstanding, phil, and I am talking about any and all markets. 1) In non-US CDMA markets which CSIM and R-UIM are used similarly to GSM + SIM, unlocking does occur. 2) Within the US, both CDMA iPhone carriers do allow unlocking for use on non-local networks (whether they are GSM or CDMA). 3) Between carriers in the US market, there is no “unlocking” — if your ESN (or whatever unique ID they use, I am unsure) isn’t in their database, it can’t operate on their network without 4) jailbreaking.

  138. another sign that T-Mobile USA is F’ed:
    http://www.theverge.com/2012/3/29/2912706/t-mobile-tower-sale

    It’s a way to raise some money now (say for LTE buildout) without borrowing, either on the open market or from DT. They’re certainly in better shape than Sprint. Note that the decrease in assets (the towers would go from TMo-owned to leased, no doubt) would make TMo a less-attractive buyout target.

    This is a practical move by a company that has plans it wants to pay for, in a responsible fashion. Not desperate measures (they don’t have Sprint’s debt problem, and seem wise to want to avoid that) or someone treading water looking for a buyer.

  139. @Patrick:

    The way you’ve been talking has me very curious so I’ve been doing a little research. It seems that TMo no longer offers any data option on their pay-as-you-go plans, *but* you are able to switch back and forth from pay-as-you-go to pay-by-the-day at will. I’m sure you can figure out a way to game that.

  140. @Greg:

    > *but* you are able to switch back and forth from pay-as-you-go to pay-by-the-day at will.

    I don’t remember whether it’s TMo or one or more of the other prepaid vendors, but in at least some cases where this switching at will is possible, you can lose money or minutes if you do it. But I’d be interested in where your research takes you on this.

  141. @wlad, Tom, and Adam Maas, RE: iTunes:

    No doubt you are right – I have no knowledge of iTunes or how it works, or what the boy’s technical capabilities were. But, thank you for the education on it, I do appreciate it.

  142. “The goal of almost all power in Japan is to maintain the status quo. They seek security by making the system so massively complex with so many relationships controlling power that the system can’t break.”

    Which must make life very difficult for young entrepreneurial types who want to achieve power quickly and build a new organization, or influence the organizations where they work to grow and, therefore, change. What would Mark Zuckerberg or Steve Jobs have done in Japan, I wonder?

    I’m fascinated by Japan, but its social model is so different from that of the West I still have trouble getting my mind around it.

  143. “Is this supposed to be good [that 2/3 of Android phones are running Gingerbread]? This ought to be embarrassing. iOS 5—released also in October last year—is now on 80% of all iOS devices (that was a month ago, I have no more recent numbers).”

    Talk to me again when Apple licenses out iOS to run on devices made by a wide range of manufacturers. Of course it’s easier to move quickly to a new OS version when you control all the hardware and all the software of the ecosystem.

    I recently updated my Froyo phone to Gingerbread, and haven’t noticed any great difference in the functionality. Nor have I ever tried to download an app and been told that it wouldn’t run on Froyo. I’ll keep an eye out for when ICS ROMs become available, but since LG doesn’t seem to care, it probably won’t happen until Cyanogenmod does it.

  144. @ Cathy

    I wrote (in part):

    “The goal of almost all power in Japan is to maintain the status quo.

    and you wrote…
    “Which must make life very difficult for young entrepreneurial types who want to achieve power quickly and build a new organization, or influence the organizations where they work to grow and, therefore, change. What would Mark Zuckerberg or Steve Jobs have done in Japan, I wonder?”

    “The goal of almost all power in Japan is to maintain the status quo.”

    My information about Japan is not current, but…

    They have bubbles and some people have become rich (often temporarily). But this is more speculating, as opposed to being an entrepreneur.

    A company becoming large basically only happens by accident in odd circumstances… It disturbs the status quo.

    The education system has a lot of affect, here… pupils are not taught to think – it is actually strongly discouraged. Pupils are taught to memorize many, many facts and are trained to pass tests. The primary purpose of schooling is to learn to be Japanese. They have a saying: “The Nail that Sticks Up will be hammered down.”

    The facts required to do well on the exams that determine a student’s level are not taught in school. To get them, students have to go to other special, expensive, private schools. It is an example of the vast number of structural rackets built into the Japanese system.

    In Japan, in general, if you have a hacker or entrepreneurial mentality, you are hammered on until you stop that.

  145. Sorry this is mostly off-topic, but it’s at least ‘Smartphone Wars’ material.

    I don’t remember whether it’s TMo or one or more of the other prepaid vendors, but in at least some cases where this switching at will is possible, you can lose money or minutes if you do it. But I’d be interested in where your research takes you on this.

    I’ve been looking into this for my wife also. She’s a *heavy* Skype user, only wants a cell for emergencies (doesn’t call much) and was tired of paying contract rates just for a subsidized feature phone. She’s also now on Tmobile prepaid, with a feature phone. I can confirm that you are able to switch back and forth between PAYG and PBTD without losing anything, I’ve done it with her phone to test. (She might be interested in a cheap smartphone w/o data, as she used to use a non-phone pda and liked it. But the PBTD option would give her flexibility.)

    I can’t say anything about their monthly prepaid plans (aside from the one I’m on that I do not intend to leave as you can’t then get it back) but I have read that if you switch out from one before the end of a month you lose the remaining minutes/texts/data/etc allowance you had for that month (that you’ve already paid for), and if you switch back it’s like starting a new month. There are forums where they talk about this kind of stuff. Good luck.

  146. They should have just made Android phones; people actually want those. In accordance with my primitive tribal instincts, I hate to see a Canadian company fail, but RIM completely deserves a quick death.

  147. >They should have just made Android phones; people actually want those. In accordance with my primitive tribal instincts, I hate to see a Canadian company fail, but RIM completely deserves a quick death.

    Yes, it was as clear a case of willfull corporate suicide as I’ve ever seen – a perfect clusterfuck of bad strategic decisions followed up by stupid product designs and botched execution.

  148. Has anybody mentioned the role of Blackberry Enterprise Server in this?

    I’ve always figured the main thing that’s killing RIM was their insistence on BES. I’m curious if that’s actually their main revenue stream. Prior to the iPhone, Blackberry was the only game in town with solid corporate Exchange server support if you shelled out big bucks for a BES server. The day I found out (mid 2007) the iPhone came with ActiveSync built-in I told myself that if RIM didn’t start making full AS support standard and ditch BES they were done for. To the best of my knowledge it still hasn’t happened.

    I’m guessing that by “upwards” they mean selling BES to big corporations that need better Exchange sync control than what ActiveSync offers. (And even then, MS keeps adding so many policy options that if iOS/Android start supporting them there may not be any market for BES much longer…)

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>