It seems to be an agreed-upon point of view within the Digirati crowd that AT&T is killing the iPhone. If “killing” is not your bowl of soup, then we can substitute “is highly detrimental,” “the Achilles heel,” or “the main reason I switched to another smartphone.” But aside from the few high-profile and outspoken members of the Digirati community, what real reasons exist to prove that AT&T is really the “dark side” in the relationship? In this article, I dissect the great plethora of FUD, bogus, and unfounded claims about AT&T wireless as it relates to the Apple iPhone.

It’s the network, huh?

Those who have voiced and continue to voice their opinions about AT&T’s quality of cellular service as it relates to the iPhone seem to be focusing their attention on one falsely-conceived assumption: that the iPhone would be better off on a different network, such as Verizon Wireless. However, those who think so haven’t thought it all the way through. Here’s why: the iPhone is the kind of device that is extremely easy to use. It makes many features very user friendly – SMS, email and web browsing all shine on the device thanks in part to its awesome user interface. Remember when those features were completely not user friendly on other phones? Both of my parents (who have never used mobile web browsing, SMS, or email on their Motorola RAZRs) now use SMS, email and the browser regularly on their iPhones. In that regard, the iPhone – by its very nature – increases the usability of data by an enormous amount! It’s a device that takes what have been “geek only” features and brings them to the mainstream.

Knowing this, we can conclude that iPhone users consume exponentially more data than non-iPhone users. So here is my question to all those who think that the iPhone would be better off on Verizon/another carrier: do you really think that another carrier would be able to handle the exponentially greater data load brought on by the iPhone any better than AT&T does?

Think about it before you answer. Seriously, keep thinking. If you think that GSM/HSDPA (AT&T network technology) is in some way inferior to CDMA (Verizon network tech) and you are not a wireless network engineer, you have no idea what you’re talking about. There, I said it! I’ve spoken to dozens of cellular network engineers around my area from all four major carriers, and all of them state that while the underlying technologies differ greatly, what really determines the quality of the network is its implementation and the quality of the backhaul.

So who is to say that Verizon, Sprint, or T-Mobile would do a better job than AT&T is doing with the iPhone, given the increased data load the device brings on the network?

Personal experience

Everyone has a personal experience with their cellular device. You hear these stories all the time: “I hate (insert carrier name here) because when I step into the very South East corner of my apartment, put on my cowboy hat, place my left hand on my right ear, and then stand on my tippy-toes I lose service.” Know what I’m talking about? Sure you do! Let me tell you my experience with iPhone 3G S: ever since it fell into my hands on June 19, 2009 (launch date), I have not had one dropped call and have never lost service (had zero bars). You read that right – it has never happened to me. Sure, I’m not in the Digerati capital of the world (San Francisco area). But I’m not in the boonies either – I live less than five minutes driving distance from Boca Raton, FL. Sure it’s not as densely packed as an urban conglomerate such as New York City or San Fran. But everyone I know has a cell phone and so do their 10 year-old kids (iPhones, even).

Show me the evidence!

Having said that, I see absolutely no reason to wish that the iPhone be available on a different exclusive carrier in the U.S. So after thinking it through, you should be careful what you wish for – as the saying goes. Actually, there is one reason that I want the iPhone to be available on multiple wireless carriers: competition, which can happen on multiple levels: plan price, quality of service, or device price, among others. But let me be clear: competition is good for the consumer (and in some cases, for the companies). I’m in no way dissatisfied with AT&T wireless when it comes to the iPhone.

Really?

Perhaps I’m not understanding exactly what is going on here and iPhone users in San Francisco are suffering terribly from dropped calls and poor service. If that is the case, AT&T should look into fixing its service in that area. But – again – let me point out that the dissatisfaction with AT&T as it relates to the iPhone is overblown, overhyped, and – in my experience – only affects the (very) outspoken few. So leave AT&T alone!

In a future post, I will discuss the technical reasons why it’s not in Apple’s best interest, or the interest of me as a consumer, to switch iPhone exclusivity from AT&T to another carrier.

As a member of the geek community, I tend to get asked a lot of tech questions. As soon as people see the screen on my iPhone, the first question I get is “Wow! How did you do that?” I have non-standard icons, an awesome unlock screen, and the ability to answer texts without unlocking the phone. Should you jailbreak? What is jailbreaking? Let’s look at the advantages and disadvantages of each.

Jailbreak

In geek-speak, a brand new iPhone is in jail. Jailbreaking would set it free from Apple’s tight grip. The benefits?

You get full access to the phone. Jailbreaking was developed after the release of the original iPhone in order to allow for third party applications, since – back then – the iPhone SDK* was not available, the App Store did not exist, and only “web apps” were able to run on factory iPhones. Developers and hackers wanted to enable the user to use the iPhone in ways that other smartphones were being used – with a myriad of third party programs. They developed such programs as WinterBoard (to change icons and background), SBSettings (to allow one-touch access to commonly used settings), and even found a way to get custom ringtones on the device (would anyone buy any other phone that didn’t allow for custom ringtones?). Due to Apple’s unrelenting control in the way third party applications interact with the device, the iPhone is severely hampered. Jailbreaking fixes all that. Here are three specific examples:

1. My biggest complaint with the iPhone is the inability to run background apps. There are exceptions to this rule – such as Apple’s few “chosen apps” (you can listen to the iPod while surfing the Internet, but not to Pandora). You can’t record video screencasts of apps in action. You have to quit an app to send a text message. Jailbreaking has solved all of these: no longer do I have to quit an app to send an SMS – iRealSMS (our review here) allows me to text from any open program. In fact, I can even reply or send a text while the phone is locked. While this seems like a small change, for me and for many others that text alot (I hear Alex is a big fan), this one change completely turned my opinion of the iPhone OS around.
2. My second biggest complaint with the iPhone is battery life. Jailbreaking doesn’t have a direct effect on this, but many jailbroken apps do. One of the popular apps that jailbreakers download is SBSettings. It allows the user – from any screen on the phone – to touch the status bar (the one at the top with the time, battery life, etc) and drag down, which displays a list of commonly used settings. The user is presented with such options as to turn on/off 3G, Bluetooth, phone mode, and WiFi. There are options to change brightness, respring (restart the OS without a hard shutdown), and even change the look of the program itself. Turning off active radios can lead to a dramatic increase in battery life, and SBSettings makes these settings much more accessible.
3. After I purchased my first iPhone, I (ironically) began to appreciate Windows Mobile. The fact that I couldn’t see a list of upcoming calendar events from the lock screen was one of my biggest gripes with the device. Jailbreaking solved that. Intelliscreen, by Intelliborn, is an app that displays items such as recent mail, news, and weathero on the lock screen.

There are many more apps that I could describe. However, the aforementioned jailbreak applications are the most important to me. Satirically, Apple has removed apps from its App Store, only to have them reappear as jailbreak apps. Some of these include PodCaster and Google Voice. There are also emulators for the PSX, Super NES, GameBoy, and other gaming consoles; MXTube allows you to download YouTube videos and keep them on the phone. There are hundreds of non Apple-approved apps and at least two full non-Apple app stores (Cydia, Rock Your Phone) for you to explore once you open this Pandora’s Box of awesomeness. While the sandbox that jailbreaking provides is really cool, the real beauty are the many new and ultra-cool toys (apps) in the playground.

Or Jailbreak Not

If Apple is the cool kid that owns the playground, you would be upsetting it if you started to play with toys it doesn’t want you to play with. Truth be told, the official Apple App Store is getting better – with more APIs being available to developers with every iteration of the iPhone OS. That makes many question the relevance of the jailbreak: as Apple makes the iPhone more open, the value of jailbreaking drops significantly – especially with the baggage that comes along with the process.

A jailbroken iPhone is a very fragile creature: install the wrong set of programs and BAM!, you are looking at a phone with a corrupted OS. I go through this about three times per month, and I am very careful about what I install. This is not that difficult to deal with, but seeing an iPhone screen with a sad face on it can be scary if you are not used to hacking technology.

Perhaps the biggest inconvenience with a jailbroken iPhone is the fact that you don’t get to install software updates immediately after they leave Apple’s headquarters. That is, not until the jailbreaking community finds a way around whatever new safeguards Apple has put included in the latest software revision. This process usually takes a few days for point revisions and can be months for a whole new OS (if at all). The newest jailbreak for the 3G S requires certain files to be saved so that the phone can be further jailbroken – not the most user-friendly of tasks.

Security also takes a back seat when you jailbreak. When you bust down the sandbox walls to play on the swings, you allow the ants in. Due to its severe limitations, the iPhone remains one of the most secure phones on the market in factory conditions. It has had a total of two bugs that are real security risks – which is simply awesome given that the device has been out for nearly three whole years. How can it be so secure? It’s the same reason apps can’t run in the background or have command line access: it’s a sandbox that keeps the user safe. Once jailbroken, however, it is much easier to run malicious code on the iPhone. While no major exploit has been discovered for jailbroken iPhones, this is still a very serious risk. So for the time being, security when it comes to the jailbreak is a double-edged sword.

What about the legal side of things? As of right now, the jailbreak stands on very shaky legal ground. There is no law that says it is illegal, and even the DMCA kinda-sorta supports it (search DMCA, reverse engineering for interoperability). So why worry? Apple is actively trying to curb the efforts of any and all exceptions to the DMCA that expressly allow jailbreaking of phones to be legal. The long and short of it is that it’s not illegal… but it’s not legal, either.

There is no try…

Jailbreaking is not something you should do if you are inexperienced with technology. I jailbroke a friend’s iPod Touch; it didn’t take the first time around and the iPod got stuck in a restart loop. Even though I fixed it, the owner freaked out. These are very valuable devices that can be irrevocably damaged. Seeing as how the price tags display several hundred dollar amounts, it’s a risk to say the least. If you are at all nervous about ruining your device, do not do it. I have yet to lose an iPhone or iPod to a jailbreak, but I know it is a possibility. Here’s my easy-to-follow recommendation: if you are comfortable with running beta software on your local machine (not of the Google Beta variety), you are most likely going to be comfortable, if not happy, with the jailbreak. If you are a person that does not know what version of the browser you are using, the jailbreak is not for you. While it is simple to use, the potential problems you may face could be well over your head.

*iPhone SDK: a software development kit (SDK or “devkit“) is typically a set of development tools that allows a software engineer to create applications for a certain software package, software framework, hardware platform, computer system, video game console, operating system, or similar platform (Wikipedia). In a nutshell, it allows developers to easily write native applications for a device. In our case, the iPhone and iPod Touch.

Facebook has announced its acquisition of real-time social network site FriendFeed. Financial details of the deal were not disclosed.

This is unmistakably a move to become more “real-time” and more competitive with Twitter. FriendFeed never caught on with the mainstream public like Facebook has, instead being used by passionate tech fans the world over. The social network was the first to deploy true real-time updates – which didn’t require a page refresh to update information. It did so all while maintaining a very clean interface. Sites like Facebook regularly “adopted” (read: aped) these features.

As part of the deal, FriendFeed will continue to operate on its own and all FriendFeed employees will join the Facebook team. Most importantly, Facebook will be able to call on FriendFeed cofounders — ex-Google executives – Bret Taylor and Paul Buchheit. As Facebook realized the true power of real-time networks (real-time search), it tried to acquire Twitter. That deal fell through.

I expect FriendFeed to operate independently for the next six months to a year, at which point the stand-alone service will be discontinued and FriendFeed’s features be rolled into those of Facebook. To become more relevant in the land of real-time, however, Facebook will need to do much more on the side of mobility, giving users a bigger incentive to plug information into the social network on their cell phones. Currently, Twitter dominates that space, with an abundance of mobile apps for multiple mobile platforms.

Full press release:

Facebook Agrees to Acquire Sharing Service FriendFeed

PALO ALTO, CALIF.—August 10, 2009—Facebook today announced that it has agreed to acquire FriendFeed, the innovative service for sharing online.  As part of the agreement, all FriendFeed employees will join Facebook and FriendFeed’s four founders will hold senior roles on Facebook’s engineering and product teams.

“Facebook and FriendFeed share a common vision of giving people tools to share and connect with their friends,” said Bret Taylor, a FriendFeed co-founder and, previously, the group product manager who launched Google Maps. “We can’t wait to join the team and bring many of the innovations we’ve developed at FriendFeed to Facebook’s 250 million users around the world.”

“As we spent time with Mark and his leadership team, we were impressed by the open, creative culture they’ve built and their desire to have us contribute to it,” said Paul Buchheit, another FriendFeed co-founder. Buchheit, the Google engineer behind Gmail and the originator of Google’s “Don’t be evil” motto, added, “It was immediately obvious to us how passionate Facebook’s engineers are about creating simple, ground-breaking ways for people to share, and we are extremely excited to join such a like-minded group.”

Taylor and Buchheit founded FriendFeed along with Jim Norris and Sanjeev Singh in October 2007 after all four played key roles at Google for products like Gmail and Google Maps. At FriendFeed, they’ve brought together a world-class team of engineers and designers.

“Since I first tried FriendFeed, I’ve admired their team for creating such a simple and elegant service for people to share information,” said Mark Zuckerberg, Facebook founder and CEO.  “As this shows, our culture continues to make Facebook a place where the best engineers come to build things quickly that lots of people will use.”

FriendFeed is based in Mountain View, Calif. and has 12 employees.  FriendFeed.com will continue to operate normally for the time being as the teams determine the longer term plans for the product.

Financial terms of the acquisition were not released.

Back in 2008, Microsoft announced Office Web Applications – the web-based version of its ever-popular productivity suite – Microsoft Office. We’ve come across more details recently, with the beta release of Office 2010: the online suite will be made up of Word, Excel, PowerPoint, and OneNote, will be capable of synchronizing with the desktop, will be platform and browser-independent, but will contain less features than the desktop versions of those programs. That should not be an issue, however, since most Office users use very few features in Office.

The suite will be available to everyone for free via Windows Live and to corporate users through different distribution channels. Since the announcement, such questions as “How would this affect Google Docs/Apps and the Zoho office suite?” have been widely discussed topics. Let’s take a pragmatic look at what we should really expect from Office Web Applications.

Office Web Applications vs. Google Docs/Apps

Microsoft Office is the 800 pound gorilla in the room, with a market share somewhere between 80-90 percent in the productivity software space. Google has been hard at work chipping away at those numbers, although we don’t have exact market share figures.

From a product perspective, not many people know about Google Docs. Before you write your emails, I understand that tech fans the world over would disagree. The reality is, however, that the mainstream consumer has no idea Google is a whole lot more than a search engine. Whenever I do consulting work and introduce organizations to Google Apps, they are amazed that Google has such awesome services with its Apps/Docs. And here is where Microsoft has the upper hand: from a brand name recognition standpoint alone, consumers are much more familiar with Microsoft Office than they are with Google Docs. This can be attributed to a generational factor in perception: Office has simply been around longer and Microsoft has had more time than Google to let people know about it, as well as for the people to get to know (and use) Office. Google understands this and has recently begun aggressively advertising Google Apps – all in an attempt to convert a few more users to the product before the other leg of the 800 pound gorilla makes its landing (the general availability of Office Web Apps, of course).

In that regard, the Office brand name will carry over to Office Web Applications in being an instantly-recognizable player in the productivity software space, leading consumers to try it out at a rate that – in my opinion – will be higher than the adoption rate of Google Docs. This is a perfect example of leveraging the immense power of an already-existing product (Office on the desktop) and carrying it over to the web – a move that should be commended. At a time when everything seems to be moving to the web, Microsoft’s software plus services approach looks like a surefire method to fuse the social collaboration features of web apps with the full-featured functionality of desktop programs.

Unfortunately for Google Docs and Zoho, brand name familiarity will drive many current Microsoft Office users to try Microsoft’s Office web suite. Something tells me that if one percent of the enourmous Microsoft Office user base would sign up for Office Web Applications, that number would trump the amount of users Google Docs and Zoho have, combined. And that’s not taking into account that Office Web Apps will be available to anyone using a Hotmail/Live email account (which trumps the amount of Gmail accounts).

Interface

Office 2007  as well as Office 2010 users will feel right at home using Office Web Applications, since the web-based version of Office will employ the Ribbon UI that has come to define the desktop software package. After using Office 2007 and a beta version of Office 2010 on the desktop, the Ribbon is a far-superior interface element than traditional menu-based layouts. This is yet another reason for users to turn to Microsoft’s web-based solution instead of those by Google or Zoho.

Cost

Microsoft has announced that it will initially provide the web-based suite free of charge to all users via Windows Live (rather than Office Live, which is being discontinued and rolled into Windows Live). That falls in line with what the competition is doing: Google Docs and personal versions of Zoho apps are also free. For organizations that require more than 50 users, Google charges a per-user fee for Apps; Zoho charges for corporate use as well.

Companies will have the ability to use Office Web Applications in two ways:

1. Host the Office Web Apps on-site
2. Access a hosted version as part of their Microsoft Online Services (MOS) subscription

That’s a solid strategy for Microsoft that makes a clear split between home/non-corp users and corporations, similar to Google Docs and Google Apps. Will organizations pick the lower-priced Google Apps over the more expensive Microsoft hosted solution? Common sense says “yes.” But it still remains to be seen.

Concluding Thoughts

There is no question that Office Web Applications will prove to be a strong competitor to Google Docs, Google Apps, and Zoho apps. As such, Office Web Apps will compete for two markets – the home (non-corporate) user as well as the business (small, medium, enterprise). With a very well-known brand name that has come to define the world of productivity software, Microsoft is sure to lure many new users to its web-based version of the suite. And if Zoho and Google apply each apply their marketing prowess, they can ride off the coattails of Microsoft moving Office to the web.

One important question remains: what’s the long-term strategy of Office on the web? Will Microsoft eventually charge all users to use the product, introduce a “fremium” model, or use the web version to entice consumers to purchase the desktop version of the software? In the long term, this blogger thinks that it’s more likely to be the former rather than the latter.

RadioShack is undergoing a major rebranding that will change the company’s forward-facing name to “The Shack.” The name change may hint at a new direction for the company, venturing into the general home electronics space thus far occupied by general technology retailer Best Buy. How will the move impact RadioShack and will it be a success?

Here’s the game plan: RadioShack stores will reflect the new name in displays this week, while store-front signs will be replaced by the end of the year. Only the corporate infranstructure will retain the old RadioShack name, however.

Financials

Financially, RadioShack stands on solid ground. The company posted an after-tax net income of just over $48 million in the second quarter of 2009. That’s a $5 million increase from the previous quarter and is attributed to cost-cutting throughout the company (overall revenue is down over $37 million from 1Q 2009). Compared to the year-ago quarter ended 6/30/2008, the retailer has posted an after-tax increase in net income of 17 percent. That’s a lot better than the giant electronics retailer Best Buy has fared in the down economy, which has posted a sharp 73 percent decrease in after-tax net income in Q2 2009 from the previous quarter. Perhaps the RadioShack executive team is predicting a change in market perception and/or shopping habits and is basing its re-branding decision on this forecast, caring to be proactive going forward with the company’s 4,453 company-operated stores.

Target market

Dating back to its roots, RadioShack is known for its supply of unique electronics and tech gear: adapters, cables, electricity converters – all these items are usually not available at a big-box retailer such as Best Buy or the now-defunct CircuitCity. In that regard, the company caters to the true tech geek. However, many see the name change as a sign of the retailer’s plans to make a greater push into the general electronics space. If that is the case, a move to rebrand the company is one thing, but if the name change will also bring with it a tidal shift to the type of products sold in the store (read: eliminating its unique product lines), The Shack faces the risk of alienating its most loyal customers. In fact, a commenter on this blog post went so far as to say that “The day I can’t walk in [Radio Shack] and buy a diode and some molex power connectors is the day I stop shopping there.” As with any unique product, RadioShack has built a small (yet powerful) cult-like following of hands-on tech fanatics. Therefore, I hope that if The Shack is planning on carrying more mainstream technology in its stores, it does not do so at the expense of the uber hands-on customer.

Hut or Shack?

Taking the word “Radio” out of “RadioShack” may have valid reasons. Radios today may be perceived old, outdated, and simply not hip, especially for generations X, Y, and Z. After the word”Radio” has been cut out, though, we are left with just The Shack. And here is where it may get a little shaky from a psychological interpretation perspective. When we speak about “living in a shack,” we usually refer to an environment that is not in pristine condition. Put simply, the word carries some negative connotations. So it looks like the branding folks at RadioShack were stuck between a rock and a hard place: radio is an outdated word and shack carries many not-so-positive associations. So they decided to put the word “The” in front of “Shack” to make this not just any kind of shack, but the most definitive shack in the world! Not sure about you, but without prior knowledge of RadioShack, I don’t think many would want to buy a 50 inch flat screen at a place that others call “The Shack.”

In June, Pizza Hut pulled a similar rebranding, slicing the name “Pizza” from the name to end up with “The Hut.” The move was held in conjunction with the chain adding pasta to its menu. Media and advertising trade publication MediaWeek characterized the name change as an attempt to transform its stores into hip hangouts. Is “hut” a little more positive than shack? You be the judge! At least there isn’t a “shed” – yet.

Concluding Thoughts

I see the rebranding as a way to make what otherwise is a hardcore geek haven a cool place for teens and tech fans to hang out: more traffic and more time spent in the store are surefire ways increase sales and customer interaction. To attract teens – many of whom are into gaming – The Shack would need to improve its gaming selection, perhaps adding functioning gaming consoles connected TVs. This would fall in line with the general consensus that changing the name to “The Shack” is part of an overall push into the general electronics space. As long as that doesn’t mean a pull away from its unique items such as diodes and molex power connectors, I think the plan has a good chance of success. Add to that the growing foray into wireless sales (T-Mobile will be joining AT&T, Sprint Nextel, and Alltel on The Shack’s shelves) and you’ve got yourself a recipe to keep those profits growing.

The company will hold launch events August 6-8 in New York City (Times Square) and San Francisco (Justin Herman Plaza) called the The Shack Summer Netogether and has launched a website dedicated to the event. Great name!

Image courtesy of lesjones.com

This was to be expected: Google CEO Eric Schmidt has resigned from Apple’s board today, citing a conflict of interest. Apple CEO Steve Jobs said that “Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest.”

For quite some time, Apple and Google have been serving the same markets:

• Web-based email, calendaring, and contact lists: Apple’s MobileMe and Google’s Gmail/Calendar/Contacts
• Cellular phones: Apple’s iPhone and Google’s Android
• Browsers: Apple Safari, Google Chrome
• Productivity applications: Apple’s iWork online and Google’s Docs
• Most recently, Google has announced that it will enter the desktop OS space with Chrome OS, which would compete head-on with the Mac OS

When initial whispers regarding the effectiveness of Mr. Schmidt on Apple’s board began to spread, many analysts pointed out that even though the two companies compete in many spaces, they have different business models for the aforementioned products: Apple charges a premium price while Google either gives its products and services away for free or doesn’t charge an OEM a fee for a license (in the case of Android and Chrome OS). As I’ve stated on our daily bit podcast before, this argument holds no merit: different business models or not, most consumers will end up purchasing only one of the above products/services – either an iPhone or a Google Android-based device. That is, unless the consumer has unlimited amounts of resources (read: money) – in which case the simple rules of economics no longer apply. The same goes for the rest of the markets in which the two companies have overlapping products/services. Now that any conflicts of interest are out of the way, I see the two companies becoming more competitive, especially in the following areas:

• Mobility: enhanced multitouch support on Google Android-based devices should more closely compete with the iPhone
• Productivity: Apple’s iWork online suite being made available as a standalone product to directly compete with Google Docs
• Operating Systems: Google’s Chrome OS not withholding any punches versus Mac OS X

Yet one has to wonder what words were exchanged between Jobs and Schmidt when Apple booted all Google Voice-related apps from its App Store last week. Would that alone have been a reason for Schmidt to step down as Apple board member? Most likely, not. But it must have played a role in his overall decision. Full press release after the break, if you’re interested: 

Dr. Eric Schmidt Resigns from Apple’s Board of Directors

CUPERTINO, California-August 3, 2009-Apple today announced that Dr. Eric Schmidt, chief executive officer of Google, is resigning from Apple’s Board of Directors, a position he has held since August 2006.

“Eric has been an excellent Board member for Apple, investing his valuable time, talent, passion and wisdom to help make Apple successful,” said Steve Jobs, Apple’s CEO. “Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple Board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest. Therefore, we have mutually decided that now is the right time for Eric to resign his position on Apple’s Board.”

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone.

You have an idea for a business. What’s the next thing you should do? Write a business plan?

According to Kevin Ryan, ex-CEO of DoubleClick and founder of six start-ups, the answer is a resounding “no.” Kevin’s advice is that writing a business plan – while helpful – won’t be as useful as putting together some seed money and starting the business. Kevin also advises not to work with an investor if he is going over the details of your financial model too closely: it’s a sign that he doesn’t know what he’s doing. Watch the man say it himself below!

I agree with Kevin for the most part! Sometimes, however, it’s useful to put together a plan of action, rather than a full-fledged business plan. Doing so will make the entrepreneur think of certain details that s/he has not yet thought of, and allow for making decisions in a proactive, rather than in a reactive matter.

This post is a part of the Yahoo! gets Microsoftified series – where we cover the facts, points of view, and details of the Microsoft-Yahoo! deal. To see all posts of the series, click here. More posts are coming soon!

This morning, Yahoo and Microsoft announced a 10-year search deal that will see the two companies join forces to take on Google. Basically, Microsoft’s technology will power Yahoo’s search results, while Yahoo will be charged with selling ads for both companies’ search sites. Here are the facts:

Basics:

• Yahoo is outsourcing search on its web properties to Microsoft
• Microsoft is providing the technology (Bing), while Yahoo will deliver the worldwide sales force for both companies’ premium search advertisers
• Ad sales will be handled by Microsoft’s AdCenter sales tool
• Microsoft is getting the reach (scale) that Yahoo has with its web properties while Yahoo is getting superior technology and the ability to save by not having a dedicated search team
• The companies will share resources and combine engineering efforts
• Combined, the two companies make up 30% of the search market, compared to Google – which still controls more than twice that amount
• The deal is for a time period of 10 years

Financials:

• There is no upfront payment of any kind exchanging hands (as previous negotiations would contradict)
• The deal will increase Yahoo’s profitability (less expensive search). It will not have an affect on revenue
• Once fully in place, Yahoo expects the deal to boost its annual operating income by about $500 million, reduce capital expenditures by $200 million, and increase operating cash flow roughly by $275 million
• Majority of search advertising revenue generated on Yahoo will be awarded to the company. Microsoft has also offered revenue guarantees to Yahoo
• As of market close on Wednesday, July 29, 2009, the stock price of each company is as follows:
• Yahoo: -2.08 points (-12.09%). $15.14 per share
• Microsoft: +0.33 points (+1.41%). $23.80 per share

Privacy Concerns

• Aspiring to stave off privacy concerns, the two companies noted that “the agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies.”

Other notes

• The deal must still pass regulatory requirements
• Two years after regulatory approval, the companies expect to have the partnership up and running in full force
• The collaboration is strictly limited to search, with both companies noting that “The agreement does not cover each company’s Web properties and products, e-mail, instant messaging, display advertising, or any other aspect of the companies’ businesses,” they said. “In those areas, the companies will continue to compete vigorously.”

Late last week, Google announced that its Latitude location-aware service is now available on the iPhone. Latitude is a location-aware mobile app, similar to services offered by Loopt and brightkite.

Latitude has been available for Android, Windows Mobile, Blackberry (most models with color screens), and Symbian S60 devices for five months, making the iPhone/iPod Touch the latest mobile device compatible with the service. Unlike on all the other major mobile platforms that have a standalone Latitude app, iPhone users must run the service inside the Safari browser. As such, it has received criticism of being crippled and worthless.

Here’s what transpired: Google already had a standalone Latitude app made for the iPhone, but Apple requested that the service be run from the web browser instead. Apparently, Apple thinks that if Latitude were released as a native app, users would be confused as to the difference between it and the Maps app, since both rely on a map for their functionality. But that’s not where the bad news ends, with Google Mobile Product Manager Mat Balez saying, “Unfortunately, since there is no mechanism for applications to run in the background on iPhone (which applies to browser-based Web apps as well), we’re not able to provide continuous background location updates in the same way that we can for Latitude users on Android, Blackberry, Symbian, and Windows Mobile. Nevertheless, your location is updated every time you fire up the app and then continuously updated while the app is running in the foreground. And, of course, you can check in on where your friends are, so we think there’s plenty of fun to be had with Latitude.”

So what we have here is an awesome concept crippled by (supposedly) the best smartphone on the market. The current implementation of Latitude on the iPhone dumbs down the functionality to a point that renders the service pointless: the real value of location-aware products such as Latitude, Loopt, and brightkite is the ability to share one’s location in real-time with friends, etc. This allows for spontaneous meet-ups and surprise visits, and all the other great uses the services are known for. Having to run Safari in order to share one’s location is not an ideal method of interaction with these services. Similarly, standalone iPhone apps from competing services such as Loopt and brightkite don’t have the ability to run in the background either. In effect, location-sharing apps that don’t constantly update the user’s location in the background defeat the purpose of such services. All this adds to my hunch that Apple will – soon enough – allow background processes on the iPhone/iPod Touch. But exactly when is “soon enough?”

The availability of Latitude on the iPhone comes after the announcement that Google’s Location Service (the same service that powers the My Location feature in many Google products) is now the default location provider in Mozilla Firefox 3.5. This means that Latitude is also available in Firefox 3.5 without any special plug-ins. This is significant, since it greatly lowers the barriers to entry for location-aware services on the desktop. To use the service on the desktop, users must add Latitude to their iGoogle home page. I have tested the service with Firefox 3.5 on the desktop and am pleased to announce that the service works like a charm: it detected my location on the Google Map and displayed my Google contacts who have enabled the feature on their end.

We all love Apple. Well, most of us do. The last few years, especially since the Vista launch, modern media has pushed on us the virtues of owning a Mac. Most of the top names in the tech blogosphere use Macs, and support almost all of Apple’s products. Leo Laporte, Ryan Block, and Peter Rojas are all self-admitted Macs (though they all come clean to using PCs). The “in” thing to do in the industry is to be a Mac. While this may put Apple in a position to become the leader in the PC industry, there are several reasons as to why Apple doesn’t want to and cannot do so.

Apple has long been the underdog of the PC industry. Right before Steve Jobs’ return as iCEO, we can see that this was for a good reason. Apple’s product line-up was a mess and the company was suffering through its worst years ever. Apple started out as a company that was all about the ability to “Think Different.” With Jobs’ return to Apple, this concept was embraced again, and the company started producing computers for the people. The original iMac and iBook are perfect examples: a colored and translucent computer was all about style and appealed to a younger audience. On the other hand, Windows PCs of the day were still considered the computers of choice amongst the tech elite and the business world.

Cut to today

Apple’s lineup of computers is amazing, to say the least. An Apple computer represents the latest and greatest in hardware: processors, graphics cards, RAM, connectivity technology, and enclosure engineering are all top-notch. The Mac lineup caters to both personal and business users and does so with extreme precision. Yet Apple is still the underdog of the personal computer market, having approximately 10% of U.S. market share. And this is exactly where the company needs to and wants to be, give or take a few percentage points.

One of Apple’s greatest strengths is its ability to manufacture both the software and the hardware that combine to make an amazing piece of machinery which outperforms all competition. But this level of performance comes at a price: the company’s second-greatest strength is the margin it enjoys. The last bevy of financial reports have pegged profit margin in the area of 30% or higher. Compared to rival companies such as Dell and HP, that’s an astounding number! It has turned Apple into a company that’s not only debt-free, but one that also enjoys tens of billion of dollars in the bank (and other short-term investments). But why can Apple charge so much more for its computers while other companies try so hard to earn even a 5 percent margin?

How can Apple get away with such a high margin?

1. The single most important reason is that Apple is a top-tier premium brand. Top-tier premium brands, by definition, are limited to the very few that can afford its products. If Apple were to gain a larger market share, it would do so by expanding down-market and diluting itself into something that doesn’t occupy a top-tier premium position. If this were to happen, Apple would not bring home as much money per item.

2. OS X is wonderful software, and the Mac is a great computer because of it. The sheer joy of using the two is thrilling: they just work. But why is that so? How can Apple’s product work in such great harmony while other computers don’t? It’s because of the limited product portfolio that Apple carries, a lineup with very well-known specs. This allows Apple to engineer OS X in a way that works best with the hardware it ships. Contrast that with Microsoft’s Windows, which has to support millions of components and hardware devices, all while not really being sure which combination of processor, motherboard, and graphics card will be used. Yet Apple’s limited hardware carries a price not denominated in dollars: there are some people whose needs are not fulfilled by the limited amount of products that Apple makes available. There are those that would like a netbook, or a smaller headless tower with the expandability of a Mac Pro. Such wants are simply not fulfilled by Apple. If the company were to fill every single void in its computer line-up, there would be a lot more hardware that Mac engineers would have to support.

As successful as it is, Apple still has to fight some uphill battles!

By having such a small market share, Apple is able to make only those products that its loyal customer base demands. In effect, this means that unless Apple finds a strong business case (iPhone, iPod, Apple TV) for certain products, they are simply not on the radar for the company. Many Windows PCs come in form factors and specs that simply do not exist in the Macintosh line-up (Tablet PC, anyone?). Many different manufactures produce thousands of different hardware combinations to make the Windows PC ecosystem as rich and abundant as it is. And while Apple seems like it is totally in control of its fate, the company does have its work cut out for it.

Price

Windows laptops are cheap; ridiculously cheap. A comparably spec’ed machine to the Macintosh line, while not as sexy, can range from $300 to $1000 less expensive. The company does not build OS X to support certain peripherals. Instead, peripheral vendors make supporting software (drivers) for OS X. This awards Apple the right to not have to go out of its way to ensure that every possible combination of peripherals work with its operating system. Microsoft, with its 90 percent market share, tried this once and the net result was Windows Vista, pre Service Pack 1. We all saw how that worked out for them (deservedly or not).

Compatibility is still an issue

On top of that, PCs are the industry standard and run many programs that OS X can’t natively. Many engineering and business applications only run on Windows. Sure there is BootCamp and various virtualization applications. But in my experience, most people prefer to have the same OS at home as they do at work.

Windows 7

Apple has dissed Windows 7 during WWDC 2009 – labeling it as Vista with a different name. That’s a great facade in and of itself. Internally, however, Apple must realize that the new Microsoft OS poses a threat to Mac sales. Many in the industry have cited Windows 7 as the answer to the problems that plagued Vista. Personally, I use Windows 7 on my daily machine and I can attest that this is an OS everyone will want to use. I feel that it combines the ease-of-use in OS X with the software compatibility (games!) that we have come to know and love from Microsoft. If Windows users are satisfied by Windows 7, it doesn’t give people a reason to switch to a Mac.

Still the underdog

Apple’s PR campaign has been an all-out attack on Microsoft. The “Get a Mac” ad series is very direct, calling the Windows world “stuffy,” filled with problems and vulnerabilities, and with people whose top priority is number crunching. Apple is able to do this because it is the underdog in the personal computer space. It is the David that everyone cheers for, versus Microsoft (the Goliath). Could you imagine if Microsoft took the same approach in marketing its products versus those of Apple? The closest and most effective approach the team in Redmond has come up with thus far are the “Laptop Hunters” series, which just calls MacBooks what they are: more expensive.

When it comes to malware, being small is an advantage!

A small market share also works to Apple’s benefit when it comes to malware. As a hacker/virus writer, why go after such a small installed user base when Windows machines are so much more abundant? Macs aren’t virus-free because they are inherently more secure. They’re free of malware because hackers don’t care enough right now. There is not enough money to be made by hacking Macs. And if hackers were to target the Mac, Apple would be forced to respond much faster in patching its software – something the company is known to not take very seriously.

The long and short of it is that first, Apple would have difficulty breaking out of the number two spot in the operating system world. And second, being number two is not necessarily a bad thing: considering the baggage that being number one brings, being at the top would put the company in a place it does not want to be. If OS X were the dominant force in the computer world, Apple would have to deal with the same interoperability issues that Microsoft faces today with Windows. In the race for the computer dollar, Apple is a distant second: and that’s where it should stay for the benefit of its customers and for its own good. That is, if it wants to hold on to its extremely high user satisfaction ratings. But will it be able to stay second? And if so, for how long?