Everything You Need to Know About Apple's New Inaccessibility Features

In case you missed it, Apple last week launched what is perhaps their biggest new product strategy since the iPhone.  It’s called “inaccessibility”, and it’s soon going to be integrated into every piece of hardware and software the company sells. 

What is it?

Inaccessibility is the umbrella term for Apple’s new products and services designed specifically to appeal to less than 1% of its wealthiest users, while being unobtainable by the rest.  The program was launched alongside the new Apple Watch last Monday, and includes as one of its first components a $17,000 gold version of that watch, which, while functionally identical to other versions, has a price designed to put it out of reach of virtually all of the company's usual customers.  

One configuration of Apple's new luxury watch, with an 18 karat rose gold case and leather straps.

Tim Cook, Apple's CEO, has spoken to the need for inaccessibility, which very wealthy people use a sort of yardstick for how successful they are and how much they’ve surpassed other members of society.  In general, the appeal of products to this 1% of people is closely tied to the them being very very expensive and unaffordable to the other 99% of the population.  Cook cited internal research done by Apple which found that without the ability to buy extremely overpriced and extravagant objects, wealthy people can suffer from lowered self-esteem, and in some cases, moderate to severe malaise.  Thus, inaccessibility is a program designed to limit certain Apple products and services to fewer and fewer people, and make them completely out of reach for the rest.  As part of this initiative, Cook says the company will start integrating new inaccessibility features across all of Apple's products and businesses in 2015 starting with:

• The $17,000 gold Apple Watch, crafted out of a special “extra dense” 18k gold alloy.
   
• The upcoming MacBook Platinum, which is the largest fashion or technology product ever to be crafted out of a single piece of platinum.  Cook has not announced a price for the MacBook Platinum yet, but did say that they would be charging the standard 1,500% luxury premium on top of the cost of materials and manufacturing.  It was also confirmed that the internal components will match those of the new standard MacBook that was just released.  
   
• Retail Apple Stores will be integrating a luxurious, carpeted and velvet-roped exclusive shopping and genius bar area, which for now will only be available to patrons wearing the gold Apple Watch on their wrist or carrying in a MacBook Platinum.  More qualifying products will be released over time.
   
• A line of luxury cases for phones and tablets, and laptop bags, all made out of exotic animal leathers (ostrich, crocodile, rhino) and precious stones and metals.  These accessories will start at $8,000 and run as high as $500,000.  Cook has stated, however, that future accessories will likely be priced even higher than that range, and there is theoretically “no limit” on what can be charged for these products.
   
• Special inaccessibility features built in to both iOS and OS X. Referencing Apple’s control over hardware, software, and services, Tim Cook pointed out that no other company has the ability to create seamless inaccessibility throughout their entire product lineup.  As a next step, starting this fall with iOS 9 and OS X Beverly Hills, both operating systems will gain inaccessibility settings options.  Wealthy users will be able to unlock these these features with the purchase of a $10,000 / month subscription which can be obtained directly within the the settings or preferences section of the respective operating systems.  When unlocked, these special inaccessibility features will include:
   
  • An entirely new user interface designed personally by Apple superstar designers Sir Jony Ive and Marc Newson.  The pair say they collaborated on the the brand new interface to make sure it would "embody the essence of personal luxury”.  Users must sign a non-disclosure agreement when enabling the interface promising not to show it to other people, or take screenshots or photos of the exclusive design.  Jony Ive points out that letting the general public glimpse the user interface would violate the entire premise of inaccessibility and exclusivity, but did hint in a recent interview that the design is unlike anything people had ever seen before or would likely ever have an opportunity to see.
     
  • An upgraded version of Siri called “Siri Direct”.  Rather than being processed by one of Apple’s computer data centers, requests made to Siri Direct are routed directly to a staff of 24/7 concierges located in or around wealthy cities (US only at launch, but extending to the UK and EU shortly afterwards).  Siri Direct concierges will manually handle all normal Siri tasks such as sending messages, or creating reminders or calendar events.  But beyond those functions, they will also accept personal shopping requests and arrange things like limo or helicopter transportation.
     
  • Bug fixes 6 - 12 months before they are released to 99% of users.  Tim Cook cited as an example the WiFi issues that have plagued both iOS 8 and OS X Yosemite since their release last fall.  These issues have been solved for some time, but will be rolled out first through the inaccessibility program, allowing only the wealthiest of users to enjoy those improvements to start with.  

Leaked screenshot of iOS 9 settings screen.  NotE the new inaccessibility menu item.

 

The Big Picture

Cook was excited to elaborate on the vision behind the new inaccessibility program:

“Experts are saying that by some time later this year, 50% of the world’s wealth will be controlled by 1% of the population.  When you take a close look at that, it becomes very clear that the most efficient business model is one that targets the most revenue from the smallest pool of customers.  And that’s exactly what inaccessibility helps us to do.”

Apple’s CEO further pointed out that inaccessibility, rather than decreasing demand from the remaining 99% of the population could in fact increase that demand.  “We know that the existence of unattainable high-end products and services does not discourage low-end users from wanting them.  This has a dual effect for us. First, low-end users will spend even more money on the ‘entry level' versions of our products, which they will believe to be more valuable due to their very close similarity to the expensive premium products. Second, as more and more people want and can’t have something, that something becomes even more valuable to wealthy and status sensitive buyers, allowing us down the road to charge, for example, up to $100,000 for a product like the gold Apple Watch.  It's the exact opposite of the race-to-the-bottom pricing strategy employed by other companies.”

The company’s press release also included a statement from Jony Ive, who recently took over responsibility for human interface as well as industrial design: “Serving hundreds of millions of users inherently dilutes focus, and requires continuous effort to address bugs and complaints from the multitudes. On the other hand, we have found that our wealthiest users care very little about the functionality of our products, but instead let us focus on fewer challenges such as making them shinier or out of new precious metals. In fact, a majority of the wealthy users we asked to test the gold Apple Watch did not even notice when the battery was depleted and the watch was no longer functioning for 2, 3 and in one case up to 17 days.  That’s the beauty and simplicity of turning technology into a jewelry product.  Fortunately, there is a natural affinity between the new inaccessibility strategy and my goal of changing Apple’s focus from technology to jewelry.”

The Rollout

The first product to be launched with inaccessibility built-in is the Apple Watch, which goes on sale April 24th.  In order to test the market for inaccessibility, there is also a stainless steel version of the Watch, priced to be around 1000% more expensive than the vast majority of stainless steel watches on the market.  The thinking behind this, says Luca Maestri, CFO of Apple, is that inaccessibility can be created both within categories as well as by categories.  “By making the stainless steel Apple Watch with a non-plastic strap cost between $750 and $1100, we are actually making the product inaccessible to people who would normally consider themselves able to afford a stainless steel watch.  We will be watching closely to see how this translates to efficiency and higher product margins. If we can sell 500,000 steel watches with profit margins around 400% (or $800 per watch) instead of 5 million with profit margins around 50% (or $100 watch), we will consider this a successful experiment.”

To help reach out to their newly focused target market, Apple is also launching a TV and print ad campaign, which uses a slogan adapted from the famous motto for the original Macintosh computer in 1984.  Tim Cook describes this as “The natural evolution of Apple’s brand.  The ‘computer for the rest of us’ campaign propelled the Macintosh out of a niche market of technology geeks and into the much more lucrative market of mainstream consumers.  Our new campaign takes that a step further by moving the Apple Watch out of the reach of the mainstream consumer, and targeting the most lucrative market in the world: wealthy elitists.”  Leading this charge will be the new slogan “Technology for the other 1% of us."

The first print ad for the Apple Watch highlights inaccessibility as the primary feature.

For the long-term, Cook sees huge potential in this new direction for Apple.  “You can expect to see more and more of our ecosystem updated with inaccessibility features going forward, and more attention and focus on catering to our wealthiest markets.  What’s really exciting about this is that only Apple controls the hardware, software and services needed to implement this sort of strategy, and demand these kinds of prices. To frame it in even more inaccessible terms, we are doing what everyone else in the world wishes they could do, but simply can't.”

Why The Apple Watch Won't Be As Expensive As You've Heard

Yesterday, noted Apple blogger John Gruber released his list of predictions for the Apple Watch in advance of tomorrow's event.  The post is pretty much required reading for anyone interested in speculating about the near future of the watch, and it focuses mainly on the topic of pricing.  While I usually find myself agreeing with Gruber's perspective on things, I think he is completely misjudging Apple's plans for the watch, and particularly as regards to cost.

As a quick recap, Gruber is guessing the following as a few of the price points (I'm listing what he thinks will be the prices for the smaller, 38mm version):

• Apple Watch Sport, $349  (Apple already announced $349 as the starting price)
• Apple Watch, steel, Sport Band (plastic):  $749
• Apple Watch, steel, Link Bracelet (steel): $1499
• Apple Watch Edition, Modern Buckle (38mm only): $9999

Apart from the already announced $349 at the low-end, Gruber is predicting significantly higher price points across the range than what others have been guessing to date.  Factoring into his conclusions are the prices for similar styles in traditional premium watches.  Why does pricing matter, particularly if it is high?  Well, high prices will both increase the perception of the Apple Watch as a "luxury item" which appeals to some people, but those high prices also simultaneously make it unaffordable for a large percentage its possible market.  Gruber predicts that there will be massive "shit-fits" in the tech industry around these high prices, and you can read his full rationale in his article.  What I want to focus on here are the reasons why I simply can't see Apple charging those kinds of prices and why I think the Apple Watch will be much more affordable than Gruber is predicting.

 

Apple is a technology company.

Apple was not started to be a fashion or luxury brand.  Those sorts of things were never the mission of Steve Jobs, nor are they now the mission of Tim Cook or Jony Ive.  Thinking that Apple is going to price their smartwatch at a very high premium simply to to better be perceived as a competitive fashion brand is completely misunderstanding the company.  Apple humanizes technology and succeeds by making the best computing or technology experiences, not the fanciest bling.  What luxury watch companies and jewelry companies charge for their nice watches is completely irrelevant to what Apple will charge for theirs.  

Apple DOES usually charge more for their products than comparable competing products, but that difference is rarely higher than a 20% premium over a similar quality and similarly specced competitor.  The more premium segment of the existing smartwatch market is priced at about $300 (Motorola 360, LG G Watch). The $349 starting price of the Apple Watch fits right into Apple's usual range of premium cost.  Moving up to the pricier versions of the Apple Watch (the steel and gold lines) will be priced according to the higher quality and cost of materials, but not marked up dramatically beyond that, because Apple is not making a Rolex, they are making a smartwatch with beautiful design and style options. 

And despite the buzz over the last year or two about "maybe Apple is becoming a lifestyle brand or a fashion brand", there is zero evidence in their marketing or product announcements to suggest this.  I don't count the fact that they hire extremely talented people like Angela Ahrendts and Marc Newson who have both worked in premium fashion brands previously as evidence that they are making those types of products themselves.  Remember that at one point they hired John Browett from the cheap electronics chain Dixons (now Dixons Carphone) to run Apple Retail.  I doubt the vision there was to turn Apple Stores into Carphone Warehouses.

Everything real and rumored in Apple's product pipeline is ALL about technology:  Apple TV, the rumored car, the next iPad, the next MacBook Air.  Even Beats Music (which some pundits thought was a "fashion brand" acquisition) is really just stylish technology priced at a 20% premium over competitors.  And the big news from that acquisition a year later is a new streaming music service, not Apple branded sneakers. 

 

Apple isn't going to price their next computing platform (watch computers) for only a small niche segment of the market.  

Apple does currently target the top 20% of income earners with their products, in general, and I'm sure that will continue with the Apple Watch.  But the difference between targeting the top 20% and the top 2% is literally an order of magnitude.  For a company that wants to change the world through technology, a starting price of around $800 for the normal / for everyone steel Apple Watch is unlikely to win a wide audience.  Having the regular, steel Apple Watch with steel link bands topping out at about $2000 makes it even more unlikely.  

Let's put it this way.  how many people do you know today who own a watch or even a computer / phone / tablet that cost $2,000 or more?  Of that likely small number, how many of those people are likely to spend another $2000 on a discretionary tech product like the Apple Watch?

The argument that the Apple Watch Sport is the "entry level" version that is meant for widespread adoption doesn't hold water in my opinion.  If that were the intent, it would be called the "Apple Watch Basic" or something like that.  I'm going to take Apple at face value on their naming, and assume that the target market for Apple Watch Sport is people who want to use the watch primarily for fitness activities.  And I'm going to similarly assume that the "Apple Watch" without any qualifier at the end is targeted to the average user / most users in general.  Using that reasoning, would Apple really try to launch this new computing platform (which is not yet as technologically capable as a phone, a tablet, a desktop) for your everyday person at a price range of $800 - $2000?  I don't see how they think that would work.

 

Would Jony Ive really force people who can't / won't spend $1000 or more on a watch to only be able to wear an aluminum Apple Watch with a plastic strap?  

According to Gruber's pricing table, the regular steel Apple Watch with the cheapest leather / non-plastic strap would be around $900.  And the majority of strap options for that watch would put it at over $1000.  I really don't think that Apple or Jony Ive think that making the jump from an aluminum sport watch to a steel watch you can wear to work should require a $600 - $1600 extra investment in price.  Nor do I think that the cost for the cheapest gold option would be priced 30 times (yes THIRTY) times higher than the base-level watch, when gold is the option I think the large majority of women and a significant percentage of men would choose stylistically for wearing to work or even everyday.  It makes far more sense that the gold edition will be priced at a premium roughly comparable to the added cost of the gold and the manufacturing process used to produce it with an extra 20% or even 30% on top of that.  I'm no expert on what those costs would be, but I think the $2,000 range is much more plausible for the gold watch than the $10,000 range. 

Also note the positioning of the different watch models in the Apple Watch fitness promotional video from last September:

https://www.apple.com/watch/films/#film-fitness

The people wearing the Apple Watch Sport are clearly athletes and fitness enthusiasts, while the guy shopping for fruit and riding on a bicycle with his family is wearing the regular steel Apple Watch.  The woman wearing the Apple Watch edition is a young working professional with stylish attire, but not someone who looks particularly wealthy based on her activities and portrayal (she drinks Starbucks and looks like she is a graphic designer or is an executive in a company that does graphic design).  

Nothing about Apple's marketing to date implies different levels of wealth as a way of tiering the Apple Watches.  Instead, it's all about utility (sports vs. everyday) and style (casual vs. upscale professional).

 

It doesn't matter what watch-lovers expect or are willing to pay for a nice watch.  

A recurring theme in Gruber's pricing speculation is that even at the high prices he is guessing for the Apple Watch, it would be strikingly affordable compared to high end watches in the traditional watch industry.  However, the market for luxury watches is a niche within a niche.  For example, the most successful couple of watch brands I was able to find after an hour of searching online (TAG Heuer, Rolex) have annual revenues around $1 - 5 billion.  The watch brand that sells the most units (Swatch), which includes mostly cheap (under $100) models sells around 16 million units per year. These best of the best yearly numbers (16 million units sold, $5 billion in revenue) wouldn't even constitute a good month for Apple and just the iPhone.  Even if Apple stole the entire watch industry (they won't), it wouldn't move the needle because that's a niche market.  And the luxury segment of that market is even tinier and more niche.

Apple isn't targeting the expectations and acceptability of watch enthusiasts specifically.  To be a successful computing platform, the Apple Watch needs to be on the wrists of tens or hundreds of millions of people.  That segment is hundreds of times larger than all the premium watch wearers on planet Earth combined, and frankly, if no premium watch enthusiast or member of the 1% of the wealthiest people in the world bought the Apple Watch, it would still be easy for Apple to sell a couple hundred million, assuming it was within reach of the next 20% of all people, cost-wise.

 

Watch enthusiasts aren't that interested in the Apple Watch anyway.  

I've spoken to the few watch enthusiasts I know personally, and they are most interested in the intricacy and accuracy of mechanical movement and a unique style for a watch.  The Apple Watch will neither be unique in style (it is a factory made, mass produced item) nor will it have any mechanical movement at all.  Again, this is a technology product that looks like a watch.  Not a traditional watch being made by Apple.  

Watch enthusiasts may pay $10,000 or more for a watch, and it might have gold or other high end materials as part of it.  But unless the watch is being purchased mostly as diamond encrusted gold jewelry (Cartier), all the premium bells and whistles are framing for that intricate Swiss or German watch movement inside.  There is no way even a passionate watch lover would pay $10,000 for a Chinese factory-made watch that is identical to a $349 Chinese factory-made watch, except for the fact that the case is a gold alloy instead of a different metal in the $349 version.

I'm sure Jony Ive of all people knows that.

 

Apple doesn't NEED to charge so much.  

Apple's margins are generally between 35% and 40%.  That allows them to be wildly profitable and cover any financial needs they could conceivably have, while also reaching a large market with their technology.  There is literally NO GOOD REASON why Apple needs to or should create a new product with margins that go as high as (according to Gruber's predictions) the 300% to 500% range or more.  Not only is that not necessary, but it drastically limits the market for those products, which cuts across Apple's real mission of changing how people interact with technology.

So, to summarize:

• The Apple Watch is not a premium Swiss or German watch made by Apple, it is an Apple computer made to look like a watch.  That means the public for the product are people who want a nice-looking Apple computer on their wrist, not people who want a precision luxury watch that happens to talk to their iPhone.
   
• The Apple Watch is Apple's next computing platform, not a niche fashion play.  It needs to first and foremost be personal and relatable to a large market as a personal computing device.  That will not be accomplished by making the ONLY sub $1000 option a aluminum / plastic / glass sport model, and tripling that cost to get to the steel / everybody version, and then multiplying the cost by another ten times for style-conscious people to get a watch they really like in gold. 
   
• There is absolutely no precedent or need for Apple to charge 200% - 500% margins on a product, and what the watch industry does with pricing in its small niche is utterly irrelevant. 

So, what are my pricing predictions?  I think the Apple Watch pricing will be more along the lines of:

Apple Watch Sport - $349 (again, already announced)
Apple Watch (Steel) - $499 - $799 (depending on the strap type)
Apple Watch Edition (Gold) - $1,999

Fortunately, we only have to wait until tomorrow to find out which set of guesses turn out to best match Apple's plans.  I can only say that I personally could not view Apple as a company the same way as I do today should they go down the path of super high-margin luxury fashion items, that segment users by income rather than intended use.  And I hope that Gruber and others who see Apple going in that direction turn out to be as mistaken as I believe they are today. 

I think Samsung smartphones have peaked. Here's why.

The fact that the Samsung Galaxy S4 is not meeting sales expectations has already been discussed several times in recent months.  What I don't think has been fully considered is how the Android smartphone landscape has changed in the last year, and I believe these changes will make it virtually impossible for Samsung to maintain its recent dominant position. 

First, let's consider a brief history of the market.  The release of the iPhone created a new category of smartphone:  a keyboardless, touch screen, almost PC-level computing device.  The iPhone was the first and enjoyed almost no competition in this new space until the release of the first Android phone nearly a year later.  

Android phones spent a few years lagging behind the iPhone in capabilities, both hardware and software, and it was only last year (2012) that most people started agreeing that Android phones had finally caught up in terms of software and hardware.  Throughout the rise of Android, no single model, no single manufacturer came even close to the iPhone in terms of sales, reputation, mass appeal and brand recognition.  And that's probably still true today.  During this time of Android catch-up, there were very few good reasons to buy an Android phone instead of an iPhone.  I will sum them up like this:

1) iPhone not available on my carrier

2) Android phones are cheaper

3) Some Android phone has a specific feature I value so much, that I won't buy the iPhone because it doesn't have that feature (examples:  physical keyboard, 4G). 

4) I don't like Apple / iOS, or I love Android because I think it's more "open" , customizable, I just like it better, etc. 

The first genuinely successful Android phone (the Motorola Droid)  was a hit entirely due to point 1 above.  Verizon didn't have the iPhone and marketed the heck out of the Droid with a massive campaign that actually sold a lot of phones.  I would say that some of the early HTC phones were also successful only on this basis.  Because they were the only option for Verizon, Sprint and T-Mobile customers (as well as most international carriers as well), they were heavily marketed and sold to the customers of those carriers since the iPhone literally wasn't even an option. 

Over the past couple years, Apple has almost entirely eliminated this reason to choose Android over iPhone, as it is available on all major US carriers, and has broad distribution with international carriers as well.  With the recent release on NTT DoCoMo in Japan, and the possible availability on China Mobile later this year, this reason will be pretty much eliminated for the majority of the smartphone market.  

So 1) iPhone not available on my carrier can pretty much be crossed of that list now.

The second reason to buy Android over iPhone is because many many Android phones are cheaper.  This is still true and will continue to be true.  However, outside of Samsung, no Android phone manufacturer is profitable.  And outside of Samsung and HTC, none of them ever really have been.  The primary reason for this, is because Samsung (and previously HTC) were the only Android manufacturers actually selling high-end phones that competed with the iPhone in the same price range in any volume.  Most Android makers don't successfully sell expensive Android phones because a) they don't make them, they only make cheap Android phones, or b) they make them, but if people want to spend that much on a phone they are buying the iPhone, not an Android phone (because the whole reason that we are discussing herefor buying an Android phone is because they are cheaper, right?).   

So reason 2) still exists, but it's a market that doesn't make anyone any profit.  So Apple isn't going after that market, and frankly, although Samsung does go after that market, it's not where they are making their huge profits and not where they really want to be either.  We can safely assume that reason 2) isn't a valid approach for any vendor (Apple or Android manufacturer) that wants to make money and be profitable.   So we can eliminate it as a viable way to differentiate Android from iPhone.

Reason 3) is some specific feature that an Android phone has that the iPhone doesn't.  I believe this point can be broken down into two further categories: a) specific features that only a few people care about and b) specific features that a LOT of people care about.  Category a) includes physical keyboards, NFC (that's right, I'm saying VERY few people actually think no NFC is a deal breaker because how useful is it really?) , and things like louder speakers, a stylus, etc.  There will always be niche products like these, and they serve such a minor part of the market, that they can be eliminated as a successful way to differentiate from iPhone, because the market they do serve is too small.

Category b, i.e. features that a LOT of people care about, IS a successful way to differentiate and sell phones profitably.  This category used to include 4G.  For over a year, no iPhone would work on 4G data networks, so Android phones were the only way to get those speeds.  That was a legitimate and successful differentiator and I believe it was the reason for the success of phones like the HTC EVO 4G, etc.  However, Apple removed this differentiator when they brought 4G data to their iPhones, and they have done a great job providing broad international compatibility for 4G since then.

So here's where we get to Samsung.  Samsung started succeeding modestly with 4G Android phones before the iPhone had 4G, but the real feature that surprised many people (including Apple, I think) as a key differentiator was simply screen size.  Samsung started building phone with larger screens (like the Galaxy S2 and S3 and then the Note and Note II) and discovered a LARGE market of people who like larger screens on their phones.  This was not only something that the iPhone did NOT have, it was for almost 2 years something that other Android manufacturers did not have either, or least not to the same extent as Samsung.  

But, unfortunately for Samsung, essentially every Android device released by any manufacturer anywhere in the world for the last 6 months features a large (4.7 inch or above) screen now.  Not only this, but Samsung has run out of bigger screen sizes to make, because after the Galaxy Mega at 6.3 inches, you are basically running into tablet territory.   

So now, other Android makers match Samsung phones on display size at every level.  This means that while Samsung can still differentiate from the iPhone (for now), it can no longer differentiate from other Android phones that have equal or higher resolution, equal or faster processors, equal or better cameras, and equal and usually better build quality and design.

All of which means, at best, Samsung will now have to split the high-end Android market with more and more other players who will start eating into Samsung's profit share and market share.  At worst, Samsung will have to start competing on price for their flagship phones, and if all the Android manufacturers start a price war on flagship phones, they will be back in the world of no one making a profit selling Android phones again.

And if / when Apple does release iPhones in larger-sized flavors, it will take away the one last major differentiating feature that Android phones have to combat the widespread brand awareness, desirability, and overall quality of the iPhone.  

Unless Samsung can come up with a feature that again is something that a LOT of people want and isn't available on the iPhone, then Samsung is left only with competing on price (a losing strategy) or competing on equal footing with other Android manufacturers and no longer dominating the high-end smartphone market. 

Because ultimately, the difficulty of being an Android phone maker is that the point of differentiation: point 4) I don't like Apple / iOS, or I love Android because I think it's more "open" , customizable, I just like it better, etc.   There is certainly a decent sized market of such consumers.  However, they can get Android anywhere, and from anyone to satisfy this factor.  In fact, many of them don't appreciate the skins and modifications Samsung adds to stock Android on their phones at all.  So ultimately, while this last point will differentiate a Android phone from the iPhone and appeal to some consumers, it doesn't differentiate one Android phone from another.  

Samsung has tried adding gimmicky software features, invested in their stylus approach, built the Galaxy Gear watch that only connects to Samsung phones, etc. but I haven't heard of a single person who bought a Samsung phone specifically for any one of those minor features.  To date, it's been all about the screen size and the general awareness Samsung has built through massive marketing efforts.  

As Android phones once again become essentially non-differentiated equivalents of one another, we will see what happened to the PC / laptop / netbook market happening in smartphones.  The only competition will be on hardware specs and price, which drives manufacturers, including Samsung, to put in more expensive components and charge less for them, squeezing their profits, and eventually even crippling the margins Samsung needs to fund their massive advertising campaigns.  And once again, it will be a bunch of manufacturers (including Samsung) clawing at each other for the low end of the market, while Apple walks away with the majority of profits and the high end. 

The only other options I see for Samsung are:

1) Continued dominance through advertising.  But advertising is hit and miss, and I have yet to see it work consistently enough and price effectively enough to sustain Samsung's dominance on its own. 

2) Superior design and build quality.  But Samsung has simply never excelled at this. 

3) Discovery and implementation of some new feature only Samsung phones have that is extremely desirable to a large number of people.  They seem to be trying the curved screen phone as the next great hope, but I suspect that isn't going to pan out. 

So unless Samsung pulls a huge surprise out of their hat, I'm calling their peak right now, this quarter.  From here on out, we will see Samsung profits and share of the high-end market start to decline, and continue to a point where even if they lead other Android phone makers in profit, revenue, and / or market share, it won't be by the large margin they do today.   And they will certainly not be significantly competitive with Apple on profits or high-end marketshare.

Does the TSA just make this stuff up?

​I was in San Francisco for the Game Developers Conference last week and had yet another head-scratching encounter with the TSA on my way back.

​I was rushing to catch an early morning flight out of San Francisco Airport and I had a single carry-on bag that included a few souvenirs I picked up for my wife.  One of those items was a small jar of hazelnut spread (like peanut butter, but a different kind of nut).  I won't go into the normal ridiculous details of how much time I spent in security checkpoint lines (which I had to go through twice, as a punishment for riding the subway into the airport, I suppose).  However, the second time I went through a security checkpoint, my bag was pulled and the jar of hazelnut butter was brought into question.

​Here is the approximate conversation:

TSA Agent:  You can't take this through security; it's more than three ounces.​

Me:   Yeah... but it's not a liquid, plus the other security checkpoint let it through with no problem.

​TSA Agent:   Well, you can't have more than 3 ounces of liquids, lotions, or gels. 

Me:  This is like peanut butter.  It's not a liquid, a lotion, or a gel. It's ground-up nuts as you can clearly see.

TSA Agent:  Basically, the rule applies to anything that is not hard​.

​I was then given the option to go back and process the jar of hazelnut spread as a check-in luggage, or throw it away.  Since I couldn't waste any more time, I chose the latter.  

However, I'm left with 2 questions regarding the nebulous policies of the TSA:​

1) Is there really a rule so vague and ridiculous as "You can't bring onto a plane more than 3 ounces of 'anything that is not hard'"?​  Or do their agents have the latitude to make this stuff up as they see fit?

2) If there is such a rule, should I be worried that one TSA scanning station in the same airport, 10 minutes earlier did not catch and enforce my infraction, when a second, essentially identical station did?  ​

And of course, we still have the basic question as to whether it's worth ​approximately $8 billion dollars of our taxpayer money per year to pay these people to (sometimes) ensure that peanut butter and similar substances don't make it onto planes, while routinely letting loaded guns get through and perpetrating all kinds of abusive behavior.

Why Google is the most dangerously anticompetitive company today

As I continue to see Google portrayed in the media as a sort of benevolent "company of the people", I'm more and more concerned about what Google's expansion and business model really means to the future of tech.

On the surface, it seems great:  Google makes useful products like Google Search, Google Maps, Gmail and Android, and lets everyone use them for free!  Sure, they collect your personal information and sell it to advertisers, and show you ads wherever / whenever possible, but it seems like a small price to pay right?  And a lot of Google fans I know even have the opinion that all software should be free, since their usage and attention should be exchange enough if a company (like Google) can monetize them.

Here's why the "everything should be free" concept that Google loves to encourage is horrible for everyone but Google (and maybe Facebook):

1) Making software, or anything really, costs money.  Businesses need to make that money back in order to invent, maintain, and improve their products

2) In order to successfully make a profit on software or hardware based on advertising alone, it requires tens or hundreds of millions of users, extremely sophisticated software to manage the advertising and tracking, and relationships with lots of advertisers.  It's a business in and of itself.

3) Therefore, to offer free software, apps, services, etc. a new company would have to have a large ad infrastructure, sales force, and user base.  For a startup trying to focus on a new product itself, this is nearly impossible.

4) Therefore Google can and does undercut every competing product and service by pricing theirs for free, and making it nearly impossible for anyone else to compete in the realm of online docs, maps, voice call handling, online video, search, email, RSS feed management, travel info / ticket pricing, etc. etc. ​

To further compound this problem, Google tends to acquire companies ​who have a product in a market Google isn't already competing in.  Google then makes their product free (with advertising) and starts the process of shutting out other competitors and usually fails to innovate much on the original product anymore (I'm looking at you, Google Voice, Google Docs, Google Reader, Gmail, and more).  

​All the while, Google continues to build up more and more advertising dominance while making money on their only real product - users who can be targeted with advertising across multiple interests and channels. 

​I don't know about you, but I'm not interested in a world filled with mediocre (yep, sorry, most of Google's non-search, non-maps products are pretty bland and mediocre) free apps that push any other competing products out of the market because competing products can't charge nothing for their software and services.

I hope to see new business models, coalitions of competitors pooling their users and resources, and government regulation start to break Google's dangerous anticompetitive run in the markets it operates in.  Then maybe we'll see faster and better innovation in online documents, email, video and voice solutions, and true competition starting to make a comeback in these areas.​