This summer Piper Jaffray (NYSE: PJC – News) analyst Gene Munster dug through component suppliers and found evidence that Apple is gearing up to produce a real TV set by late 2012. Venture capitalist Stewart Alsop, a former board member at TiVo (Nasdaq: TIVO – News), has published rumors that Apple has a television coming. And Steve Jobs himself hinted last year that Apple might build a real television unit.

“The television industry … pretty much undermines innovation in the sector,” Jobs said at the All Things Digital Conference in July 2010. “The only way this is going to change is if you start from scratch, tear up the box, redesign, and get it to the consumer in a way that they want to buy it.”

It’s been over a year since my last post. And not much has changed. RIMM is dying a slow death. Google still can’t build a product that can compete with Apple for consumer mind share. The iPad is still a deeply flawed, beloved device. And the next big thing is still the TV. If the rumors prove to be true and Apple executes with TV no better than it did with the iPad,  this company will dominate the entertainment and consumer electronics industry much like Standard Oil and General Motors did in their industries.

The potential  impact of  a  ”real” TV from Apple cannot be overestimated. The iPhone, iPod, iPad were momentous, like hurricane Irene. Real Apple TV will be much more like the Great East Japan Earthquake and Tsunami.

Apple today announced that it sold its three millionth iPad™ yesterday, just 80 days after its introduction in the US. iPad is a revolutionary and magical product that allows users to connect with their apps, content and the Internet in a more intimate, intuitive and fun way than ever before. (June 22nd Apple Press Release)

Revolutionary? Magical? Are we talking about the iPad? The dirty screened, awkward-to-carry, odd-sized, camera-less, phone-less, text-less tablet. Try editing an EXCEL spreadsheet on an iPad. You need more than magic. You need an act of god.

Sorry Steve. Yes, a step forward. Yes, a brilliant marketing move. (Apple has defined a new market, and is forcing its hapless competitors into a catch-up game.) But this is not revolution. In fact, by some measures, the iPad is regressive. You left behind convergence (no telephone, text, or videochat capabilities), and you shied up way from the true target of the revolution, the TV.

Steve, unfortunately, Tim Beyers got it right in his open letter to you:

Dear Steve,

It’s time to end the charade. Apple TV was never a hobby, and it isn’t one now. You need to stop talking as if it is, because you’re out of time. Smart TV is here. Apple will either lead this market or be left behind. (By Tim Beyers  June 22, 2010)

Well, you retort…what about the millions sold! What about the wisdom of crowds.? Could so many be wrong?  Of course not, Apple is hot now. But mass hysterical acceptance of a new product is a poor predictor of future durability of a trend. Remember the Hula Hoop:

Wham-O trademarked the name Hula Hoop…and start manufacturing the toy in 1958….Twenty million Wham-O hula hoops sold for $1.98 in the first six months.

So back to the iPad. It is a transitional device, destined for your junk drawer. (Make room iPod shuffle.)  Either Apple moves decisively to conquer the living room, the large format screen, broadcast TV, or we will look back with our fascination with all things Apple in the same way that we now look back at the Hula Hoop.

Nintendo has designated Apple (AAPL) as the “enemy of the future.”

The Times Online reports that the video game company is “preparing to unleash the full force of its development and marketing artillery against Apple,” having come to the conclusion that it has already won its console game battle against the Sony (SNE) Playstation 3. The real threat, the company seems to think, is now from the iPhone and the iPad, which post a particular threat to the company’s DS handheld games.

Well,  I agree. The iPhone and iPad are existential threats to Nintendo.  Unfortunately the war is already over. The converged gaming, communication, computing, entertainment device has triumphed. And this is sad–because Shigeru Miyamoto, the design genius behind Nintendo, is a true visionary.

When Shigeru saw that the world had changed and video games were slipping from the computing  avant-garde to irrelevance, he  decided to target a new market that would  use the video game platform in a radically different way. Instead of over-caffeinated teenagers and aging executives who are experiencing mid-life crises, he targeted families, in particular women:

Eighteen months ago, just when video games were in danger of disappearing into the niche world of fetishists, Mr. Miyamoto and Satoru Iwata, Nintendo’s chief executive, practically reinvented the industry….Their idea was revolutionary in its simplicity: rather than create a new generation of games that would titillate hard-core players, they developed the Wii as an easy-to-use, inexpensive diversion for families (with a particular appeal to women, an audience generally immune to the pull of traditional video games).

The gesture-based interface that Shigeru pioneered with Wii will dominate gaming and home based communication and computing. Within three-years, families will routinely stand in front of their large format screens gesturing, talking, commanding, playing.  But Nintendo, unless it undergoes a radically transformation, will not be providing the experience.

The gesture, voice and touch memes will coalesce into an environmentally stable set. We will touch the devices that we hold. We will gesture to the devices that we hang on walls. We will command our devices to obey whenever it is convenient and effective. The company that realizes this vision wins.The contenders: Apple, Microsoft, Google, HP.

My top pick?

If Steve Jobs decides that Apple is smart enough to figure out how to turn Apple TV from a hobby into a real product, Apple wins. If not, the  field is wide-open for the converged device players.  Kindle, Nook, Wii they are all heading to extinction.

“I’ll tell you a secret. It began with the tablet. I had this idea about having a glass display, a multitouch display you could type on with your fingers. I asked our people about it. And six months later, they came back with this amazing display. And I gave it to one of our really brilliant UI guys. He got [rubber band] scrolling working and some other things, and I thought, ‘my God, we can build a phone with this!’ So we put the tablet aside, and we went to work on the iPhone.” (Steve Jobs at the D8 Conference, June 2nd)

When I read, and re-read this quote from Steve Jobs, I was most struck by the viral process that set loose the Touch  meme. In a flash of inspiration,  a foreign meme, Touch,  was injected  into the iPhone product development process.  And this meme, with prodigious speed and fidelity, replicated itself throughout the smartphone and computing eco-system, successfully competing with (and I predict ultimately crowding out) the mouse/keyboard meme.  However, one good meme is not enough.  As we explored in Galapagos, to have a lasting impact, we need a set of related, rapidly replicating memes to achieve evolutionary stability (i.e., have an enduring impact).

I think Apple with the iPhone/iPad has come close to achieving this “evolutionary stable set” with a few notable exceptions, most critically around a gesture-and voice-driven converged device that will compete with and ultimately replace TV.  And for those smug Apple acolytes who think the battle is over and Apple’s dominance is assured, read the following Steve Jobs’ quote below very carefully:

It’s not a problem with the technology, it’s a problem with the go-to-market strategy….I’m sure smarter people than us will figure this out, but that’s why we say Apple TV is a hobby. (Steve Jobs at the D8 Conference, June 2nd)

If smarter people do figure it out, I believe that Apple’s entire paradigm is at risk and the iPhone and the iPad will go the way of the hula-hoop and the get-rich chain-letter. A sobering thought for those who are hoping to ride their Apple stock to 10x its current value and retire worry-free.

See below for a list of what I believe are an evolutionary stable set of memes. And note that the iPad  scores poorly when rated against these criteria. (See The Next Big Thing for a discussion on why the iPad is only a transitional, not transformative, device.)

Evolutionary stable set of memes

1. Voice.  Interfaces that use voice as an overlay technology to supplement touch and gesture.
2. Touch. Multi-touch display that you can type on with your fingers
3. Gesture. Gesture- driven display when touching is impractical or undesirable (e.g., Wii)
4. Collaboration-enabled. Conferencing (including video), screen sharing, online-participation
5. Location-aware.
6. Mobile-enabled.
7. Multi-purpose. Device becomes the preferred tool for at least three major functions (e.g., voice recorder, camera, gaming, book reader)
8. Converged. Brings together telephone, TV, computing to a single hardware platform.
9. Fast-evolving  devices. Devices change shape, size, portability to fill new niches in the eco-sytem. (Example: iPod, iPod shuffle, iPod nano)
10. Fast-evolving symbiotic devices.  Add-on products (portable speakers, alarm clock docking stations, etc.) proliferate rapidly.
11. Apps.  Nearly limitless supply of no-cost or low-cost self-contained applets that cater to specific needs, e.g., Point me to Mecca. What species of tree is in front of 220 Mott Street?)
12. Single source distribution. Corporate-mediated single source distribution platform for  apps (e.g., App Store) and content.

…there’s Touch.

Flash was designed for PCs using mice, not for touch screens using fingers…Besides the fact that Flash is closed and proprietary, has major technical drawbacks, and doesn’t support touch based devices, there is an even more important reason we do not allow Flash on iPhones, iPods and iPads….Flash is a cross platform development tool. It is not Adobe’s goal to help developers write the best iPhone, iPod and iPad apps. It is their goal to help developers write cross platform apps (Steve Jobs, Thoughts on Flash)

*****

The genius of the Internet is its almost infinite openness to innovation. New hardware. New software. New applications. New ideas. They all get their chance….As the founders of Adobe, we believe open markets are in the best interest of developers, content owners, and consumers….We believe that Apple, by taking the opposite approach, has taken a step that could undermine this next chapter of the web — the chapter in which mobile devices outnumber computers, any individual can be a publisher, and content is accessed anywhere and at any time. (Chuck Geschke, John Warnock, Our Thoughts on Open Markets)

*****

Flash as a format has become very widespread on the desktop market and created a market dominance. General web statistics company estimates availability at 95%,^[16] while Adobe claims that 98 percent of US Web users and 99.3 percent of all Internet desktop users have the Flash Player installed.. (Wikipedia, Flash)

****

QWERTY (pronounced /ˈkwɜrti/) is the most used modern-day keyboard layout on English-language computer and typewriter keyboards. It takes its name from the first six characters seen in the far left of the keyboard’s top row of letters…. It was designed to minimize typebar clashes,^[1] became popular with the success of the Remington No. 2 of 1878,^[1] and remains in use on electronic keyboards due to the network effect of a standard layout and the failure of alternatives to prove very significant advantages. (Wikipedia)

Early in my consulting career, I went on a sales call to the office of a very quirky decision maker at Gartner Group. He had an “MS-DOS: Just say No!” poster on his wall.  Gartner Group, in the early 1990s had standardized on Apple desktop computers and was building corporate applications using Apples’ object-oriented software development environment, Hypercard.  “Hmmm,” I thought, “an emotional position to take on an operating system.” When I asked about the poster, he went into a ten minute rant about the gross inferiority of the Intel/IBM/Microsoft personal computing paradigm. Well, we know how that story ended…QWERTY.

“We don’t care about your 20-year-old reminiscences,” you moan;  “we want  predictions for the future. QWERTY, Apple, Adobe. “

OK, here you go, my top ten :

1. Adobe fails to extend its dominance of the desktop to the mobile space.
2. Apple continues to march out a succession of devices for mobile use (bigger, thinner, fold-able ipads); better smart phones; smaller, smaller smartphones (think, smartwatch)
3. 4G Networks change the way we access entertainment and the way we communicate with each other. (Everyone videoconferences all the time. )
4. And the big news. The iPhone paradigm is not a mobile platform. iScreen replaces AppleTV and more importantly decisively ends the era of the purpose-built television.
5. Adobe slides into irrelevance.
6. Apple dominates consumer technology. Consumer technology drives innovation.
7. The 2010s become the golden age of publishing.  We look backwards. We publish beautifully illustrated books that would put medieval monks to shame. Our poets write to us, chant to us directly. Finally, computer-technology delivers art.
8. Home PC and consumer laptop sales decline drastically.
9. Google and Microsoft fight for dominance of the desktop and browser-based computing. No one, but corporate America, cares.
10. Business users hate their desktop computers, their suddenly retro-looking laptops. The Web is no longer cool and browser-based user interfaces feel like slide-rules. Powerful executives stare disbelievingly at their hard-wired phones, their keyboards, that ridiculous mouse and fume. CEOs, CMOs scream at their CFOs and CIOs and ask why their 11-year-old daughters have better technology than billion-dollar corporations. CFOs and CIOs mutter something about PCI compliance and the insecurity of the “cloud” and publish yet another memo on why users need to keep their corporate mailboxes under 10 terabytes of data. The foundation shifts. The Microsoft era ends.

“But what about QWERTY”, you ask;  “The network effect?”

The network effect only applies if you attempt to change an established dominant culture. Apple has gone down a different path; Apple is creating a new culture.

All good families resemble one another, but each unhappy family is unhappy in its own way. (Anna Karenina)

So here you are. Your TVs are aging. You don’t want your guests to feel like they have stepped back in the previous millennium when they walk into your hotel room. You’re feeling really sorry for yourself; damned if you do; damned if you don’t.

Yes, you are in a tough spot. The pressure to do something is enormous. Here is a list of ways you can almost guarantee that you will be unhappy. The list will not be exhaustive, and I will add to it over time as I hear more stories of the bad things that happen to good people.

******

1. You blindly sign any deal that gives you new equipment with no up front capital expenditure. You rationalize it by saying, “Seven years isn’t really that long.”
2. You sign a deal with a vendor who will give you hardware for free based on their “advertising” model. Seems to good too be true.  You say, “So what if they go bankrupt, it won’t be my problem.” They go bankrupt. It’s now your problem.
3. Your in-room technology solution has cool touch panels.  Yes, touch panels were cool last month.
4. You close your eyes and pretend that iPad/iPhone-like devices with high-intensity projectors won’t be available in the next two to three years and that people will really want to watch the warmed over proprietary content that will be displayed on your flat-screen televisions. You say “flat-screen television” a few times and you get a queasy feeling that you sound like your father saying Victrola when you showed him your new stereo system in the eighties.

At any rate, when a subject is highly controversial…one cannot hope to tell the truth. One can only give one’s audience the chance of drawing their own conclusion as they observe the limitations, the prejudices, the idiosyncrasies of the speaker (A Room of One’s Own, Virginia Woolf.)

The plane lands.  I turn on my iPhone. Press the iTravel app. I see an offer from my hotel for the “arriving late, hungry, thirsty and tired” meal and entertainment offer. It makes me smile. I grab a cab. My phone prompts me with a notification, “Let the hotel know that you are on the way, estimated arrival time 28 minutes.” I press, “Yes”.

Start checking my email, voice mails and start thinking. “I am hungry, tired, and thirsty.” I press the iTravel app. I see a special (feels like it is tailored to me) Spider Crab Roll, Sam Adams, Pellegrino…$14.95 with the following free entertainment options: John Coltrane Radio OR the the latest House episode. I decide to browse the room  service menu. Hmm…interesting, but that special is so convenient and cheap. I purchase it.  Another notification. I have been automatically upgraded, and I can go straight to my room (4502) when I arrive.

I get out of the cab. Go straight to my room. I can hear the strains of John Coltrane as I push open the door. The attendant in the room asks me if I she can open and pour the beer for me. I say, “Sure.”

I see another notification on my iPhone, inviting me to perform an entertainment ”mash up” and asking me if I would like to use my iPhone as my entertainment control panel and hotel phone. I respond yes to both.

My iPhone is visible as an Icon on the 65in screen hanging on one wall. I see My TV Shows, My Movies, “Suggestions from the Concierge”.

I also notice on the lower left hand corner of the screen ” Local Attractions.” I won’t have time, but I am curious, so I browse the offers from local restaurants, movie theaters, bars….

It’s 10:00 central time. Need to call home. Yes, its $4.95 for an unlimited video conference and my cellphone is free. But I pick the video conference. My wife is “available”. I select “Teleconference”.  I see her image. She says, “Nice room and a beer already. That’s the last time I feel sorry for you for having to travel so much….”

After chatting with my wife,  a prompt on the screen invites me to order breakfast and suggests a “Large pot of coffee, fruit and yogurt–16.95 (perfect)” I touch, “6:30 A” on my iPhone. I notice the cab and wakeup icons on the bottom border of the screen. I fill in the prompts:

Cab? 7:45 AM
Wake up? : 6:15 AM

I start watching House…fall asleep…show ends…lights dim….

No laptop, no remote, no hotel phone, no front desk…the next big thing.

Lies will flow from my lips, but there may perhaps be some truth mixed up with them; it is for you to seek to out this truth and to decide whether any part of it is worth keeping.  (A Room of One’s Own, Virginia Woolf)

You’re tired. You arrive at the hotel. You stand in the “members only” line to check in. It’s moving more slowly than the regular line. Only two more people to go. You feel vaguely stupid because the regular line is now empty. And there you are waiting. You get to the front desk. The clerk’s pin says she is from Belarus. “Belarus?” you start thinking, “Is that even a country?” With horror, you realize that you sound like your father. You give your name. She asks for your membership number. You feel the anger rising in you. Then you remember: can’t get angry, breathe deeply. Then you ask if there are upgrades available. She says she will check with her manager. You tell her to forget it.

You open the door to your room. You breathe a sigh of relief. The view is fine. The room is clean.  A real bathtub and a separate shower. A large flat screen TV.

Ughh…you see the remote…you flip through the channels, look at movie selection…boring and expensive.  You wonder,  ”Can I plug in my laptop?”…No…”iPhone”?…yeah, right there into the cheap bedside alarm radio. You’re hungry. You look for the room service menu. You’re getting frustrated. You finally find it. You pick up the phone and call. Hotel front desk greets you and asks you how they can help.  You wonder, “How does pressing the room service button on this cheap plastic phone get you to the front desk.” You say, “Room Service.” Phone rings three times. Front desk picks up again. You give up.

It’s 10:30 Central. It’s late, but maybe your wife is still up. You try to call from your cell phone. No signal. You look at the ugly, faintly dirty-looking  phone on the side table. Just the thought of calling tethered to that phone annoys you. You spend a couple of minutes trying to figure out how much a five-minute call home will cost. “2.95 for the first minute…..” You give up.

How did it come to this? You’ve been around the block a few times (in fact a few too many times). You remember when the technology in the hotel room was a perk. Now here you are, sitting in bed, lonely, hungry, your reading glasses on, streaming video to your three-year-old laptop.

You grab your iPhone and set your wake up alarm. You’re just about to fall asleep and you think, “Damn, I forgot to put the room service menu on the door.”

# 1 Apple’s good — but not that good. It’s just that the competition is so bad. Nokia, Microsoft , Samsung, Palm : From smartphones to Internet tablets to computers, it’s hard to believe so many big companies have blown it so badly. And they’ve committed mainly unforced errors, such as terrible user interfaces….As long as the competition acts like this, Apple will keep winning. But its success owes less to the genius of Apple than the incompetence of everyone else.

#4 Steve Jobs’s ego. I don’t care how much of a genius he is: Nobody is perfect….If and when he makes mistakes, who is going to stop him? A small but telling example: One thing keeping Apple from lots of extra iPhone sales to business users is that Mr. Jobs, for some reason, has a thing against keyboards. There’s no business reason for it. It’s a silly, unforced error.  (From: 7 Reasons Apple Shareholders Should Be Cautious, WSJ April 23rd)

Brett Arends, the author quoted above, is obviously not reading my blog.  If he had, he would not have committed such a “silly unforced error.”

Yes, Mr Job’s hates keyboards and rightly so. (I was thinking of changing my blog from “Death of the Mouse” to “Death of the Keyboard”.) What Mr Arends has failed to understand is that Apple has tapped into a latent consumer demand for a keyboard-free, mouse-free, remote-free way to interact with smart-devices. Steve  Jobs is not alone. Shigeru Miyamoto had  a similar inspiration when he created Wii (See Resistance is Futile, NYT.)

So Apple is not winning, as Mr Arends, hypothesizes, because of the incompetence of everyone else. Apple is winning because the competition is looking for its vision in the rear view mirror. They  are stuck in the keyboard-, mouse-, hyperlink-centric world of the past and present. Apple is designing for the voice centric, multi-touch, gesture-driven future.

And Brett, I think Apple’s vision extends past e-books straight into your living room.

Prediction:  Within five years, Apple SmartTVs dominate the living room much like the iPhone dominates the smartphone space today  (See The Next Big Thing).

MediaTek’s chips were a boon to shanzhai manufacturers—the hundreds of small producers that sell an eclectic mix of handsets, including knockoff Nokia Corp. models with built-in electric razors, to palm-sized “mini iPhones” that mimic the Apple Inc. best seller, to phones that look like cigarette packs. ….[and] models with louder speakers so Indian farmers can hear them ring, or others for Islamic markets with electronic compasses that point toward Mecca (WSJ 4/19)

In Galapagos and the Next Big Thing, I wrote that Steve Jobs is building his own ecosystem and has rejected the entire personal-computer-centric paradigm that has dominated the information technology industry for the past two-dozen years. At the heart of this new ecosystem is the idea that the cell phone, not the computer, is the winner for the battle for the next generation converged device (see The convergence struggle is over). This is certainly true on a global scale. As the author of Two Billion Laptops? It May Not Be Enough (NYT 4/16) points out, there are many structural issues that prevent the widespread adoption of laptops, even when you try to give them away. The cell phone on the other hand is spreading like wildfire. In one admission of defeat, even Microsoft abandoned the PC as the primary device for staying connected in rural India:

Among the infrastructure problems that the Microsoft research team saw in rural India was unreliable electrical power. It spurred another Microsoft research project that provided farmers in one district with cellphones that supplied the same information via text messaging that the farmers had obtained from PC centers. (NYT, 4/16)

So how is the competitive landscape here in the developing world reacting to this global paradigm shift. Well, the competitors are behaving as if there is no paradigm shift at all. Read between the lines of the NYT April 12th article, After iPad, Rivals Offer Variations on a Theme. Yes, they are all offering variations on a theme. The problem is that they are varying the same old theme: let’s make a lighter, smaller, thinner, more mobile computer…maybe even one that you can write on…Or, let’s make a new special purpose electronic device like an e-reader. Here is the new theme: all access to information and entertainment will get more and more cell-phone like. Your NextGen communication/entertainment/information center will be much more like a cell phone than like current-state TVs, stereos, and computers.

I think this is great news for our two-handed species (see, If we only had three hands). The keyboard, mouse, monitor were adequate for editing lines of program code (much better than card punch machines [go ahead click on the link; it's worth it]) and were a big leg up on the typewriter. But it’s the wrong paradigm for NextGen technology, and rearranging a few deck chairs is not going to cut it.