The Wall Street Journal ran a piece today by Andy Kessler, who is apparently a former hedge fund manager who wrote a book called “How we got here” about the 1970s and how they shaped today’s society (and who also has a significant telecoms and technology background, according to his online bio). The piece is available on his website too in case you’re unable to penetrate the WSJ paywall. Unfortunately, the piece is misguided in some places and downright inaccurate in others, and needs some form of detailed rebuttal. I’m sure others will also feel the need to respond, and hopefully better than I can here, but here are some thoughts on the piece. It’s also about time we straightened out the facts on Google Voice, because so many of the pieces that have been written on the topic don’t really seem to grasp what Google Voice is, so I’ll try to kill two birds with one stone here. (I’ve written one previous post on the topic of Google Voice here, if you’re interested).

I’m going to go through the piece in order for thoroughness. First, the opening paragraph:

Earlier this month, Apple rejected an application for the iPhone called Google Voice. The uproar set off a chain of events—Google’s CEO Eric Schmidt resigning from Apple’s board, and the Federal Communications Commission (FCC) investigating wireless open access and handset exclusivity—that may finally end the 135-year-old Alexander Graham Bell era. It’s about time.

First, it’s not clear that Eric Schmidt resigned from the Apple board over the rejection of the Google Voice app – the small matter of an FTC investigation may have been a factor. In addition, there’s the fact that the two companies compete in the email, browser and now operating system markets, which meant that Schmidt was having to recuse himself from more and more discussions on the board anyway. Secondly, the FCC is very specifically investigating this particular case, not wireless open access or handset exclusivity in general, as a result of the Google Voice incident.

I have no real beef with Kessler’s next paragraph:

With Google Voice, you have one Google phone number that callers use to reach you, and you pick up whichever phone—office, home or cellular—rings. You can screen calls, listen in before answering, record calls, read transcripts of your voicemails, and do free conference calls. Domestic calls and texting are free, and international calls to Europe are two cents a minute. In other words, a unified voice system, something a real phone company should have offered years ago.

Except perhaps to say that a “unified voice system” is a bit strong – this “system” is entirely dependent on the existing phone systems offered by the “real phone companies”. Having said that, Google (or, more accurately, Grand Central) certainly provided some useful innovations and created a great service, and I’m a (small-volume) user of the service myself.

Apple has an exclusive deal with AT&T in the U.S., stirring up rumors that AT&T was the one behind Apple rejecting Google Voice. How could AT&T not object? AT&T clings to the old business of charging for voice calls in minutes. It takes not much more than 10 kilobits per second of data to handle voice. In a world of megabit per-second connections, that’s nothing—hence Google’s proposal to offer voice calls for no cost and heap on features galore.

The first sentence is important: contrary to the headline of the piece (“Why AT&T Killed Google Voice”), there are only rumors at this point, and AT&T has flatly denied that it blocked the app. The FCC investigation is seeking to answer in part the question of who blocked it, so a bit more nuance is probably in order there. But the bigger objection to this paragraph is the assertion that voice is simply a form of data, an idea Kessler returns to again and again throughout the piece. That needs a bit of examination, because it’s misleading.

While there’s a sense in which that’s true – all communication is ultimately “data” – it’s only true in the technical sense if it’s carried that way. Which it isn’t, on today’s cellular networks and most public telephone networks. Other than where voice over IP is used, voice is circuit-switched, which means it ties up an entire (virtual) circuit from end to end for the duration of a call, making it unavailable for other purposes. Data, on the other hand, is typically packet-switched, meaning that a data “connection” in fact only uses up network bandwidth when packets are actually being sent back and forth, otherwise freeing up that bandwidth for the use of others. As such, voice networks and voice calls use network capacity in a very different way from data, with different equipment required and different economics associated with them. It is therefore at best a gross oversimplification to say that “voice is data” in the current mobile market. In time, yes, we’ll evolve to voice carried over the data network, and at that point the statement will be true, but we’re a long way from that point yet.

What this episode really uncovers is that AT&T is dying. AT&T is dragging down the rest of us by overcharging us for voice calls and stifling innovation in a mobile data market critical to the U.S. economy.

For the latest quarter, AT&T reported local voice revenue down 12%, long distance down 15%. With customers unplugging home phones and using flat-rate Internet services for long-distance calls (again, voice is just data), AT&T’s wireline operating income is down 36%. Even in the wireless segment, which grew 10% overall, per-customer voice revenue is down 7%.

I’m not sure this episode uncovers anything about AT&T’s health as a company at all. While I think AT&T may be a little over-reliant on the iPhone (see more on that here), its financial results continue to be impressive. Focusing on the wireline results isn’t really relevant in the context of a piece about the wireless market, but yes, wireless voice revenues per customer are declining, because, erm, average prices are coming down, which rather goes against the grain of the piece. And it’s not clear that whatever action was taken in regard to the Google Voice application in any way stifled innovation in the mobile data market. (on the topic of wireline versus wireless revenues, this recent piece on MSN Money was a lot more insightful, but that’s not really the point here).

Wireless data service is AT&T’s only bright spot, up a whopping 26% per customer. How so? As any parent of teenagers knows, text messages are 20 cents each, or $5,000 per megabyte. After the first month and a $320 bill, we all pony up $10 a month for unlimited texting plans. Same for Internet access. With my iPhone, I pay $30 a month for unlimited data service (actually, one gigabyte per month). Is it worth that? The à la carte price for other not-so-smart phones is $5 per megabyte (one-thousandth of a gigabyte) per month. So we buy monthly plans. Margins in AT&T’s Wireless segment are an embarrassingly high 25%.

I’m not sure wireless data service is the only bright spot, but again the analysis here is odd. What is the point Kessler is trying to make here? That it’s embarrassing AT&T’s wireless margins are 25%? This from a former hedge fund manager? Is he objecting to the fact that AT&T allows you to text all you want for $10 per month when individual messages are 20 cents (in fact, it’s $20 per month)? I can’t tell what he’s objecting to here.

The trick in any communications and media business is to own a pipe between you and your customers so you can charge what you like. Cellphone companies don’t have wired pipes, but by owning spectrum they do have a pipe and pricing power.

That’s an odd statement if ever there was one. The very definition of providing a communication service is giving customers a way to communicate, which has traditionally meant a phone line (whether wireline or mobile). There’s no trick here, and the idea that the only reason for having a pipe to your customers is to gouge them seems an odd summary of the last 135 years of telecoms history. Spectrum isn’t the pipe either – the cellular networks carriers build out to make use of the spectrum are the pipes (or perhaps we should say “series of tubes“?).

Aren’t there phone competitors to knock down the price? Hardly. Verizon Wireless, T-Mobile and others all joined AT&T in bidding huge amounts for wireless spectrum in FCC auctions, some $70-plus billion since the mid-1990s. That all gets passed along to you and me in the form of higher fees and friendly oligopolies that don’t much compete on price. Google Voice is the new competition.

So, the point is there is no competition because the government forced the wireless carriers to spend billions on spectrum? Isn’t this supposed to be a piece about how the government can solve problems in the mobile industry? It’s also not clear how the spectrum fees have created a “friendly oligopoly” (note singular noun – I’m pretty sure once there are several oligopolies it stops being an oligopoly) – scarce spectrum has created the present oligopoly in the wireless market in the US, as it has everywhere else. And no industry wants to engage in price competition, especially if it has large sunk and/or fixed costs, and most would prefer to compete on features (e.g. exclusive phones). If price competition is your goal, you’re fighting a losing battle, for everyone concerned.

But now we come to one of the biggest problems with all the stories about Google Voice – the idea that it is somehow competition for the mobile phone companies when it’s running on their devices. As it currently works, Google Voice works on the basis of hooking up your existing connections (wired, wireless, whatever) to its service, not creating new endpoints. While there are workarounds, the vast majority of users see this as a way of integrating their existing endpoints into a more unified service. Since the US uses an airtime system (i.e. charging for inbound and outbound calls) for billing for mobile voice usage, every domestic Google Voice call that connects to an AT&T iPhone generates exactly the same usage and therefore the same charging as a call originated through the standard iPhone interface. AT&T is still very much in the picture here, and still making money off those calls. All that’s changed is the interface. AT&T (and even Apple) might not like the fact that the system bypasses their interface, but AT&T still gets the money, so this isn’t competition for revenue, just the UI. Others such as Skype and Truphone, which actually provide an alternative client for making calls over VoIP from the iPhone, thereby bypassing the carrier, are the true competition for AT&T in this space, but their apps are still sitting in the iTunes app store.

By the way, Apple also has a pipe—call it a virtual pipe—to customers. Its iTunes music service (now up to one-quarter of all music sales, according to NPD Market Research) works exclusively with iPods and iPhones. The new Palm Pre, another exclusive deal, this time by Verizon Wireless, tricked iTunes into thinking it was an iPod. Apple quickly changed its software to lock the Pre out, and one would expect Apple locking out any Google phone from using iTunes.

I guess this is why the stretched analogy about the pipe was introduced earlier – to somehow equate AT&T’s and Apple’s business models. There’s another factual error here – a pretty glaring one – in that Sprint, and not Verizon, has the exclusive on the Palm Pre. There’s a strange reference to “any Google phone” here too – as if it’s a theoretical possibility rather than a reality in the form of a growing number of Android devices, which as far as I know haven’t attempted to connect to Apple’s proprietary store.

It wouldn’t be so bad if we were just overpaying for our mobile plans. Americans are used to that—see mail, milk and medicine. But it’s inexcusable that new, feature-rich and productive applications like Google Voice are being held back, just to prop up AT&T while we wait for it to transition away from its legacy of voice communications. How many productive apps beyond Google Voice are waiting in the wings?

I’m not sure Kessler has really introduced any evidence on the topic of overpaying for mobile plans, but we’ll let that slide – the examples used seem to have been chosen more for their alliterative potential than for any sensible reason, but we’ll let that slide too. On to the real point here – that blocking Google Voice is somehow propping up AT&T. How so? Are we really “waiting for AT&T to transition away from its legacy of voice communications”? In what way? Didn’t Kessler say earlier that wireless data was the fastest growing area of revenue for AT&T? Isn’t the iPhone primarily about data, rather than voice? Yes, Apple desperately needs to make the approval process for apps quicker and more transparent. But I’m not sure there are lots of apps “waiting in the wings” – what would they be waiting for? There are lists of rejected apps, but many were rejected for good reasons and most later found their way onto the iTunes store in a modified form. If you’re waiting, go ahead and submit your app and see what happens.

So now the FCC and its new Chairman Julius Genachowski are getting involved. Usually this means a set of convoluted rules to make up for past errors in allocating scarce resources that—in the name of “fairness”—end up creating a new mess.

Some might say it is time to rethink our national communications policy. But even that’s obsolete. I’d start with a simple idea. There is no such thing as voice or text or music or TV shows or video. They are all just data.

The FCC is getting involved, in a very limited and specific way – by investigating the case of the Google Voice application in particular. It’s not clear under what authority they’re doing this, but since it’s just a fact-finding mission at this point that doesn’t matter all that much. Since it is just fact-finding, talk of convoluted rules seems a little premature too.

I’m also not sure how “rethinking our national communications policy” can be obsolete – doesn’t that by definition mean replacing whatever may be obsolete about the whole thing? And for all the reasons I explained above, it’s utterly over-simplifying and hugely erroneous to simply treat all voice as data today – the vast majority of voice is not data – it’s voice, with all the quality, cost, infrastructure and other implications that has. But more to the point: data, broadly speaking, isn’t regulated. Voice is. Unless you want to move to an unregulated voice market (which the carriers would love, by the way) or a heavily regulated data market, that’s an unworkable proposition.

Now, on to the specific proposals.

We need a national data policy, and here are four suggestions:

• End phone exclusivity. Any device should work on any network. Data flows freely.

Any device can’t literally work on any network, especially since we have both GSM and CDMA networks (and now also WiMAX networks) in the US. But it is already possible to take any unlocked GSM phone and attach it to the T-Mobile or AT&T networks. Verizon has also built a model for allowing devices to be attached to its network in response to the open access provisions attached to the 700MHz spectrum it acquired (thank you, Google). But that’s a separate issue from exclusivity. Exclusivity certainly has its pros and cons – it allows devices to reach market at lower prices because the carriers are willing to make concessions in return. But it means that, as a consumer, you have to pair networks and devices you otherwise wouldn’t. But this is one of the prices we pay for a relatively unregulated market – we don’t always get what we want, but we do get a lot of good stuff. We have to take the rough with the smooth.

• Transition away from “owning” airwaves. As we’ve seen with license-free bandwidth via Wi-Fi networking, we can share the airwaves without interfering with each other. Let new carriers emerge based on quality of service rather than spectrum owned. Cellphone coverage from huge cell towers will naturally migrate seamlessly into offices and even homes via Wi-Fi networking. No more dropped calls in the bathroom.

I love that Kessler uses WiFi as an example of interference-free networking. Anyone who’s tried to use WiFi in the presence of lots of other WiFi networks (e.g. in any relatively densely populated neighborhood) knows how untrue that is. Carriers have spectrum so they can provide predictable service and be able to make reasonable business plans. Would anyone roll out expensive 3G or 4G networks if they weren’t very sure they’d still have the spectrum to light them up when they were finished? WiFi is terribly suited for replacing cellular networks, which seems to be what Kessler is suggesting, even if it may be useful for extending coverage indoors (although femtocells seem to be the preferred solution for that problem in the US, without any regulatory intervention). And unless you have WiFi in your bathroom, I’m afraid there’s still a chance of dropped calls there.

• End municipal exclusivity deals for cable companies. TV channels are like voice pipes, part of an era that is about to pass. A little competition for cable will help the transition to paying for shows instead of overpaying for little-watched networks. Competition brings de facto network neutrality and open access (if you don’t like one service blocking apps, use another), thus one less set of artificial rules to be gamed.

A rather dramatic change of speed from Google Voice on the iPhone, but I’ll go with it. This has already happened, both at the municipal level and nationally through legislation. Competition for cable is coming both from the telcos (ironically) which are rolling out fiber-based networks, and through online-based offerings such as Hulu, iTunes (ironically) and Amazon. Interestingly, Kessler then employs the argument that competition provides de facto net neutrality, when he doesn’t seem to think the same argument applies with mobile networks (where there is significantly more competition and more choice than there is ever likely to be in local TV provision).

• Encourage faster and faster data connections to our homes and phones. It should more than double every two years. To homes, five megabits today should be 10 megabits in 2011, 25 megabits in 2013 and 100 megabits in 2017. These data-connection speeds are technically doable today, with obsolete voice and video policy holding it back.

I’m not sure how government “encourages” things – it can really only mandate them or ban them. The doubling Kessler talks about has actually happened over the last 15 years without any help from government (speeds available to many consumers have gone from 30kbit/s in 1995 to almost 30Mbit/s today). The highest speeds aren’t uniformly available yet, but they are spreading rapidly and available to more and more households – again, without regulation. Voice policy has nothing to do with the deployment of broadband. And video policy is one of the major drivers behind the rollout of these networks, since the telcos are aggressively rolling out TV services over their new faster networks.

Technology doesn’t wait around, so it’s all going to happen anyway, but it will take longer under today’s rules. A weak economy is not the time to stifle change.

Data is toxic to old communications and media pipes. Instead, data gains value as it hops around in the packets that make up the Internet structure. New services like Twitter don’t need to file with the FCC.

And new features for apps like Google Voice are only limited by the imagination. Mother-in-law location alerts? Video messaging? Whatever. The FCC better not treat AT&T and Verizon like Citigroup, GM and the Post Office. Cellphone operators aren’t too big to fail. Rather, the telecom sector is too important to be allowed to hold back the rest of us.

“It’s all going to happen anyway” is the best possible summary of why a heavy-handed government intervention is the wrong approach. We’ve never justified government intervention on the basis of simply speeding up something that is happening already and there are good reasons for that.

Data isn’t toxic to old pipes – it’s what’s keeping them relevant – old copper lines had new life breathed into them by DSL, and are being supplemented or replaced with fiber connections which are designed to deliver lots and lots of data (yes, including video and even voice). Data doesn’t have any inherent value: it all depends what the content is. And today’s model has consumers or advertisers paying for content on the one hand and ever bigger pipes to stream it through on the other.  Those pipes are provided by telcos, who don’t find them toxic in the slightest. And those new apps? Mother-in-law location alerts? Check. Video messages? Check. The telcos don’t need bailing out – you were arguing, Mr Kessler, just a few paragraphs ago about how high their margins are.

Look, I’m sympathetic to many of the points which are buried in the piece – above all, I don’t like the fact that the Google Voice app was blocked on the iPhone – I’d have used it on mine, and I think it was shortsighted of the AT&T/Apple combo to block it. But I don’t believe that justifies government intervention. It should spur me to either: use the web version (www.google.com/voice), which is what I have done, or find a carrier / device combo that will support it. I don’t believe the US mobile market is perfect as it stands: texting prices for individual messages are probably too high, mobile broadband is patchy, AT&T’s network coverage sometimes stinks, etc. etc. But I don’t believe any of this justifies the kind of intervention Andy Kessler talks about in his piece. Rather, I think “It’s all going to happen anyway” and players like Google can only help it on its way.

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There have been lots of articles recently about the iPhone and AT&T – each tackling an individual aspect of the relationship between the carrier and the hardware vendor. But I wanted to take a step back and look at the AT&T/Apple relationship as a whole, and answer a fundamental question: overall, has the iPhone been good or bad for AT&T?

(Warning – this is going to be a long post – skip to the bottom if you just want to read the conclusions!)

Note: I wrote this post on the evening of 22 July, whereas AT&T’s Q2 numbers were released the morning of the 23rd. A quick look through the Q2 numbers reinforces several of the points made here and doesn’t appear to contradict anything significantly. It appears the iPhone dragged down AT&T’s OIBDA margin by a couple of points – less than last time around, although that reflects the timing of the two launches in the quarters they impacted most strongly.

First, the good stuff

Let’s start with the positive aspects of the iPhone for AT&T. The obvious thing to look at is the impact on customer additions, and since very few (if any) mobile subscribers will choose an iPhone as their first device, the key metric to look at is customer wins from other carriers. Here’s a Morgan Stanley chart from late 2007 – based on their extensive surveys (all the usual caveats apply, but this is a really decent sample size and illustrates what I believe to be real trends):

(click to see a larger version)

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The iTunes store apparently has around 65,000 applications in it these days – an impressive number, to be sure. But with that sort of scale (and even at a tenth of that scale) comes a real challenge around application discovery. The iPhone 3GS can show up to 176 applications on its 11 home screens (that’s up a couple of screens and therefore a couple of dozen applications from the 3G version), so there’s a huge mismatch there in terms of how many apps are available versus how many you can put on your phone in a usable fashion.

But the bigger issue is how to find useful and relevant new applications. How I discovered the ones I have on my iPhone:

• I searched for them (i.e. I already knew roughly what I wanted)
• They were profiled on the front page of the App Store
• They were covered by one of the blogs I frequent
• They are extensions of services I’m already using.

Those four methods have worked well but they’re limited. What if a genius somewhere comes up with an application that’d be perfect for me but it doesn’t get covered in the blogs, doesn’t get highlighted on the App Store, isn’t connected to any service I’m already using, and serves a need I don’t know I have? That’s not that far fetched. Even when you do know what you want – the first of my four scenarios – finding what you want in the app store is tough, because there’s so much clutter in there. Scrolling through multiple pages of app logos (with no indication of what they do) gets tiresome quickly. There are 86 pages of “Productivity” apps in the App Store, and that includes (just on the first page) everything from a wind chime app to help you get to sleep to a database application to an app for keeping track of the movies you own. It’s overwhelming and it’s not likely to help you find what you need unless you know the name of it already. Ratings don’t help, because only apps that get used a lot have enough ratings to be assigned an overall rating, so the obscure apps that might be helpful don’t benefit.

Someone on TechCrunch suggested that the App Store needs a genius feature, akin to what’s available for music. That’s probably not a bad idea: it could even be a really simple format similar to the Amazon “people who bought this also liked this” feature and it would probably be helpful. But I think there’s always going to be a problem with the sheer number of apps in the App Store, which raises the question of what a useful number might be. A tenth of the current number – around 5-10,000 – seems about right. It’s certainly far more than Palm currently has in its Pre app store, but much less than the rapidly growing iTunes App Store.

In the meantime, I guess we’ll have to keep relying on whatever mediocre tools are out there. One I’ve come across recently is a feed that lists the latest apps added to the store. It’s a little overwhelming too – no filters to weed out the trash from the good stuff (and there does seem to be an awful lot of trash). But it’s another way to slice the data. There are some more tools listed here. But overall it feels like a lost cause, and a lot more about luck than quality when you do run across something worthwhile.

Footnote:

Two of my recent favorites are (with iTunes links):

• Prowl – an extender for the Mac notification system Growl, which allows you to push notifications to your iPhone for various events on your Mac, such as new Twitter messages via Tweetie, or IM messages from Adium. Apple’s push notification servers seem to have been playing up a fair bit recently, but when it works it’s pretty effective. It would have been nice to try this out before buying, but at $2.99 I figured it wasn’t too much of a risk. It would be nice, though, if more paid apps gave you a day or so to try them out before forking over money.
• Reqall – a great to-do app I used once long ago through the web version and forgot about. The new iPhone version is very nifty, and if you upgrade to the Pro account online it does clever things with locations too. Much cheaper and for my money just as good as many of the full-featured desktop Mac to do lists.

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OK, so this wasn’t actually my Mac – I was visiting the office of one of my parents. But this was one of my earliest experiences with a Mac, and I remember enjoying it a great deal. I think I probably mostly used the Paint function, which appealed to my sensibilities at the time. I was also into BASIC programming for a while around the same time, creating short programs…

At any rate, it had been quite a while since I’d used a Mac since I purchased a little-used Mac Mini a couple of years ago and then a MacBook a few months ago…

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So, I stood in line with about 100 other people outside my local AT&T store just under a week ago, in order to be one of the first to get my hands on the 3G iPhone. It was hot, and we were lined up down the side of the building in which the AT&T store is housed, which had a bright white wall, nicely reflecting all that heat back onto the waiting hordes, causing a nice sunburn and considerable discomfort. But, in the end, I got one, and almost the model I wanted – they ran out of black 16GB models just before I got inside, so I got a white one instead.

So was it all worth it? Well, as one man standing behind me in the line (possibly a Rabbi – in the center of the picture below) said:

You have to do something insane once in your life!

And that was more or less my opinion too – I don’t often stand in line for these things, but once in a while you want to be part of something like this. I sat out the first round – no 3G, stuck on a Verizon contract, don’t buy version 1 of anything and so on – but wasn’t going to do the same this time around.

I love the device. It’s a fantastic experience, and certainly the most fun I’ve ever had with a new phone. To date, I’ve downloaded and installed 23 applications, requiring four home screens altogether on the device (I have a separate one for web clips). I did have activation problems on the first day, along with everyone else, although they were relatively minor and solved by the evening.

I’ve read a lot of articles denigrating the iPhone in pretty strong terms over the past few days – two examples. The thing that strikes me about these articles is that they seem to assume that the iPhone is taking over the world. The Lifehacker article is titled, “Why You’re Better Off Avoiding the iPhone” and the other suggested the iPhone is going to kill the Internet.

Let’s tone that done a bit, shall we? For starters, Apple sold a total of 1 million phones in the first weekend and has since been largely sold out. Compare that with Nokia, which sells more devices than that every single day of the year, and you are quickly reminded that Apple does not dominate the mobile device market (or even the smartphone segment). Secondly, no-one is being forced to buy an iPhone – you have a choice about buying it as you do with every other device out there – and as a consumer you will weigh the pros and cons as you would with every other device. If you don’t like the relatively “closed” ecosystem and approach to applications, you don’t have to buy the phone. But, if you want the design, interface, web browsing, ease of use and so on and think the closed application environment is a small price to pay, then you’ll want to buy it anyway.

The most alarmist and hostile stuff I’ve read comes from the Free Software Foundation, which seems to have a definition of “free” which is much narrower than most people’s would be. But again, it seems to somehow assume that Apple has some kind of monopoly and that everyone is somehow tied into the Apple model whether they want to be or not. The Apple DRM approach in particular has come in for a lot of criticism, which is funny since it’s done at the behest of the record companies rather than any particular agenda Apple has. In order to secure for itself a strong position in online music sales, it acceded to the requests of the record companies to provide adequate copyright protection for their music. As the record companies have become more enlightened in their approach, Apple has begun releasing music in non-protected formats. But again, you have a choice – Amazon, Rhapsody, Napster and plenty of others offer alternative models for purchasing digital music online, and files bought from all those companies will play on iPods and iPhones.

Overall, I think Apple is adding a lot more to the mobile industry than it is taking away, and on a personal level I love the device and especially the ease of use of the device itself and the process of adding applications and media to it. It may not be everyone’s cup of tea – the FSF recommends the Free Runner, which strikes me as being an utterly uninspired (and uninspiring) device. But whatever floats your boat – and that’s the real point here: you have a choice. Stop moaning about the way Apple does things, and find a company that does things the way you like, and buy their stuff instead.

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I experienced two quite different sides of Apple today – the Steve Jobs keynote, and a personal experience with my troublesome MacBook.

The keynote was everything you would expect it to be – well choreographed, lots of big announcements, the best left for last and so on. Even despite all the rumors, there were still some surprises in there, and the crowd seemed genuinely appreciative of the new applications which were demoed, even though those demos did seem to go on a bit long. The iPhone 3G is, like its predecessor, a phenomenal device, and when I hear people say it doesn’t do anything differently or better than other phones out there, I just find myself wondering if they’ve ever actually seen one up close and played with it. The thing is in a league of its own for me, in terms of design, user interface, browsing experience, email, applications and so on. The only things preventing me from getting one previously were speed, price, and the sense that a better version would probably turn up soon. Come 11 July, I’ll be first in line at my local AT&T store.

On the other hand, my personal experience with Apple over the last few months has been wretched. My hard drive failed a few weeks ago, and the process of getting it fixed was tedious to say the least. I had to make an appointment for technical support at my local store, they determined the hard drive had failed, but wanted to charge me to copy my files off it. So I declined, did it myself back at home, but then had to make another appointment to take it back in. Picked it up a few days later only to discover when I got home that they had forgotten to install iLife on it. Took it back again, etc. Finally got it home, reinstalled everything, moved images, music etc. back onto it, finally had everything back the way I like it, and then today had the same early symptoms as last time pop up again. The thing no longer starts under Mac OS X, only Vista.

So I called technical support, since my local store had no technical support slots left today, and spent a total of 2 hours or more on the phone with various different people trying to convince them that simply repeating the process I went through last time wasn’t going to reassure me that this wasn’t going to happen again. Their standard policy is that they will fix a device 3 times before allowing you to receive a replacement, even if it’s a hard-drive failure as it has been twice now for me. It wasn’t until I had kept some poor customer service person on the phone for a good 45 minutes repeating over and over again that the solution she was proposing was unacceptable that she finally transferred me to someone with more clout who was willing to concede that giving me a new machine was the right thing to do.

The contrast between these two experiences – the real excitement associated with a new product launch from Apple, and the sheer frustration involved with being a customer when a product goes wrong – almost couldn’t be greater. Is this the same company? Yes. But does their customer service match the high expectations they create through their carefully choreographed keynotes, flawless demos and clever advertising at the expense of the hapless PC? I’m not so sure.

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I bought a MacBook a week and a half ago and have been playing with it since with a view to making it my main work computer. Since we normally run Windows XP and Microsoft Office, this meant I needed to have some form of access to those Office applications. I already own a copy of Microsoft Office and have found that the Mac versions of the Office applications can be problematic in some cases, including the fact that Entourage is an imperfect substitute for Outlook, so I decided to go the route of adding a Windows OS to the MacBook instead. I read up about the two main virtualisation options – Fusion (from VMware) and Parallels, and eventually decided to go with Fusion, though by all accounts the two are pretty similar in terms of performance and functionality. I also purchased a copy of Vista Home Premium – I was going to have to buy some version of Windows anyway and I had been curious to try out Vista after all the criticism of it since its launch.

So I’ve now been running Windows Vista and Mac OS X Leopard side by side for a few days, and have a good way to compare the two. Vista’s performance has been impaired by the fact that I’ve been running it on a virtual machine instead of as a booting OS, so the “Aero” graphics features of Vista have been missing in action because Fusion doesn’t allow the Vista virtual machine full access to my graphics capabilities. In addition, I’ve had network connectivity issues and also a relatively recent problem with windows minimising and maximising at random while I’m working in them.These things aside, Vista hasn’t been that bad. The constant security nagging is easily my biggest beef (you click on an application or a component of Control Panel and are asked whether you want to continue, every time – didn’t I just say that’s what I wanted to do?), as well as being told periodically that I need permission (what permission? from whom? and how the heck do I get it?) to move a file from point A to point B on the hard drive, within the Windows environment.

These are serious flaws, and from what I can tell (see below) they’re not solvable, even outside the Fusion environment. There are some changes from XP and other previous editions in terms of naming (the word “My” is dropped from Documents, Videos, Music, Downloads etc.), structure (the Start Menu is now kept in place rather than expanding to the right as you drill down into the folder structure) and functionality (Vista has built-in Contacts, Calendar and Mail applications). So there’s the usual learning curve that you have with a new OS, but none of these things is either dramatically difficult to get to grips with or dramatically more useful than the old way of doing things. You get the sense that Microsoft has learned from Apple that new releases need new cool stuff, but they’ve tinkered at the edges with things that don’t really matter instead of really making the experience truly better.

The new Mac OS, on the other hand, feels like an incremental improvement, but a real one in certain ways, over Tiger. The search function is better, the whole Time Machine concept is a good one, although I don’t have a separate hard drive large enough to test it, the iLife applications are better than in the previous iteration, and overall it feels like the OS has moved forward in small but measurable ways. The whole option of running two operating systems on the same machine is, of course, a huge bonus too, and includes the built-in Boot Camp option of running either OS from bootup as well as the Fusion and Parallels paid-for virtualisation options.

Today, I installed Vista again, this time using Boot Camp. I had been frustrated with the limitations on Vista’s new features imposed by running it in the Fusion environment, but also by the nagging network connectivity and other problems I was experiencing. I now have the full functionality of Vista (Aero included) in the Boot Camp version, and will likely delete the original Fusion virtualisation and replace it with a virtualisation of the Boot Camp version (which will still be crippled but will work well enough for the most part when I don’t want to go Windows-only).

It’s been an interesting exercise in comparing and contrasting the Windows and Apple experiences. Apple really seems to have improved things, while Microsoft seems merely to have changed things, including in some cases for the worse, although mostly in an indifferent direction. However, the mere fact that I’m virtually forced still to use Windows and Microsoft applications because they are the standard at work is the biggest reason why Microsoft survives and thrives despite all this. It works well enough and, for now at least, it’s still dominant.

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Apple has finally announced higher-storage versions of the iPhone and iPod Touch. Irritatingly, whereas some people were expecting them to allow the iPhone to catch up with the iPod Touch on the storage front, they simply maintained the 2x difference between the two (the new iPhone has 16GB, but the new Touch has 32GB). And of course still no sign of a 3G iPhone any time soon.

The storage and WWAN speed are the two biggest barriers to adoption for me personally, and combined with the high price (16GB for $500 plus a two-year contract) are still, I suspect, the biggest barriers to adoption for the iPhone in general. Add to that the carrier tie-in and anyone not on AT&T but in a two-year contract with another carrier is also unlikely to switch unless they have money to throw away. 30GB would just about cover me for storage since I’m a current 30GB iPod user.

One assumes this will just keep those “missing” iPhones sitting on stock room shelves for even longer, since few people are going to want to buy the lower-storage versions now – perhaps the price will come down to shift the inventory.

We also checked out the Mac Book Air in our local Apple store a few days ago – it is indeed impressive, and has that elusive cross-the-chasm charm that appeals to complete non-technophiles like my wife. But she was also able to quickly grasp its shortcomings when I explained the lack of optical drive, more than one USB port and so on. A niche product for sure, but an awfully good looking one.

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