Here’s the thing, it’s nothing new! Sony Ericsson had a video calling phone more than a few years ago. A colleague at Yahoo! reminded everyone about this with his tweet and link to some Germans on YouTube making avideo call using the Sony Ericsson k-800.

The difference is that the experience is way better now than it was then. The resolution, the camera’s and wifi mean that you’re not dependent on network access and it can be a pretty good experience. That’s all pretty big. Overall the technology is ready for mainstreaming, and Apple is great at releasing a technology when it’s ready for mainstreaming.

Launch a service too early and it’s restricted to the UberGeeks’s of the world. I have friends who had Sony Ericsson phones with video calling capability, problem was as most of us weren’t ready for the calling capability these friends spent most of their time using the phone and texting rather than video calling. It’s like people using email in 1991, facebook in 2001, twitter in 2008 etc. If the network isn’t ready for the technology it’s not going to really get adopted. I call this my technology mainstreaming theory and I’ve drawn up a little visual explaining the principle and how this might apply to video calls. Apple is potentially right on the money, launching right when the technology is ready for mainstream, I expect Android to follow suit quickly, and the fine folks at RIM, Windows to lag a bit – don’t even get me started as to when Nokia and Samsung will catch on.

(Note – if you have trouble seeing this, click on it for notes on the flickr page)

This seems to be a general trait with Sony Ericsson, they seem to be great at creating things when the technology is there, rather than when the technology has matured to a point where it becomes a really good experience. Which is what Apple’s doing here and done since their foray into smart phones.

As well, by launching Facetime as an open standard Apple’s hoping other phone manufacturers will build on it, but I’m sure they’re banking on most people wanting to buy and use the video calling capabilities on the iPhone 4. Not a bad bet by Apple.

“1. the marginal cost of a newspaper is zero. 2. there is perfect competition. conclusion? zero industry profit, paywalls or not.”

I’m sure I’ve written about the eventual doom in the newspaper industry as well but no one ever talks about how they could make it work and what would need to be done. Don’t get this twisted, I don’t think pay walls are a good idea, but I do think they could, repeat COULD, work if done right.

So here are my thoughts, I believe there are three principles to make payment for news content work:

1 – offer superb editorial/analysis/content that is unavailable elsewhere
2 – keep it cheap and painless to pay
3 – Consistency across competitors

First, pay walls work when you have superb analysis or original great content like the WSJ or the FT. Where people aren’t paying for the “news” they’re paying to read commentary and gain insights. It works for people like the economist and monocle for content creators with a large, affluent readership. If you don’t have content that is killer odds are you’ll put up a pay wall and users will go elsewhere.

The other element that could help a pay wall succeed is making it dirt easy to purchase. Think of iTunes, how easy is it to buy music on iTunes? How easy is it to do a purchase on Amazon. One click and you can purchase. For a pay wall to succeed you’ll need to make it super easy to for users to pay. Make it even a little complicated and the users are off. iTunes might be more expensive than some other 3rd party websites, but the fact that you can make the purchase easily means I save time from interactive with the complex shopping basket functionality that you see on other sites.

Lastly, if you don’t have specialist content you better make sure that your competitors are not close enough to you in terms of content and aren’t giving the content away for free. In the UK the BBC is likely to always give content away as long as that’s the case it will be difficult for anyone to really put up a viable pay wall. To really make it work you need consistent pricing policies but most people would call this collusion. So if you’re a news media company don’t bank on this third principle.

The Irish News really failed across the board, they didn’t provide great analysis and content that was original, they didn’t make it easy to subscribe and their price point was all over the place. So to make it succeed, focus on creating great content, providing analysis and features that people value and making it dead simple to purchase and don’t price it at a point where it becomes a competitive disadvantage and pay walls might, I repeat MIGHT, have a shot.

Don’t get it twisted, I really like Google and respect the Android OS, I love Apple and love working on a Mac and am itching to come up with a reason to get an iPad. But I’m pretty stuck on the blackberry.

Why? Simple. Blackberry does one thing really really well. The Blackberry messenger (BBM) feature is whole heap of awesomeness. A lot of my friends are on crackberries and the fact that we can message internationally in groups for free wherever we are has a whole lot of other people hooked. Not to mention university students who love to use the BBM with their friends and family across the world.

Sure Blackberry does a whole lot of other stuff well, emailing with a proper physical keyboard is nice, and for business email management it’s a great service. But for me it’s BBM that keeps me as well as a lot of other people hooked. So much so that the Blackberry still outsells the iPhone and Android handsets in most markets – in the US last quarter, iPhones had 21%, Androids 28% and RIM 36% of all smart phone sales.

The lesson here is to do one thing really really well. Most companies that are really successful do one thing absolutely, phenomenally well. Google does search really really well, this gives them license to develop and build other great things like maps and mail. Facebook makes it simple to share stuff really well, it’s not the best picture sharing sight, it’s not the best for updates or events, but because it does sharing this content really well it enables them to do events and photos etc and get traction in these other areas.

So when starting something, make sure you have one feature that’s absolutely fabulous that makes it difficult to compete with and this will help grow and maintain your market share.

I’ll always have a soft spot for Yahoo! it was part of the reason I joined. Having taught myself html on geocities, signed up to Yahoo! mail in the 90s, using flickr, delicious and mybloglog all before they were acquired, I loved Yahoo’s products. And in my 3 years with the company I have met some really great intelligent people that I know I will be contacts for life. I’m not leaving because I don’t believe Yahoo! will bounce in the right direction, I’m leaving because I’m excited about doing my own thing, something different and something where I believe I’ll be having a tremendous impact.

To all the Yahoo!’s I’ve worked with thank you for making the last 3 years such a blast. And I’m sure our paths will cross again. To all the haters out there, I’ll remind you that the in 1997 Michael Dell said that Apple should close down and return money to shareholders, think Steve Jobs is glad he battled through all the haters. I’m not saying that Yahoo! will have the market cap that Apple has, but I do believe when it comes to the internet market game it’s not even half time.

BUT, we’re really early in the industry today. So, when I see a piece of research claiming that Amazon will “win the eBook war” because they have 90% of eBook market share today it makes me laugh. To me it’s the equivalent of saying that Napster would win the digital music war because 90% of music downloads were done with Napster over 10 years ago. Or that Yahoo! would win the search war, or that Aol would win… whatever it was Aol was trying to do.

Don’t get me wrong, I think Amazon has a great chance at really killing it in the eBook industry, I would never bet against Jeff Bezos. Problem is I would never bet against Apple and Steve Jobs and I would never bet against Google and Eric, Sergey and Larry either. I think all of these companies have a chance to really redefine how books are read digitally.

Lot’s of rumours about an Apple Tablet machine have been circulating with lots of people talking about how they could launch an iTunes for books, like they’ve extended iTunes into movies. This could be pretty compelling. And if Google partners with Sony, Barnes & Noble and others to have a Book finder type tool, that could also be pretty powerful.

I have no idea what will happen with eBooks in the next couple of years and I really doubt that anyone else can truly predict this either.

“In every classic story, the hero fights the villain. In 1984, the villain, according to Apple, was IBM (IBM). Before Jobs introduced the famous 1984 television ad to the Apple sales team for the first time, he told a story of how IBM was bent on dominating the computer industry. “IBM wants it all and is aiming its guns on its last obstacle to industry control: Apple.” Today, the “villain” in Apple’s narrative is played by Microsoft (MSFT). One can argue that the popular “I’m a Mac” television ads are hero/villain vignettes. This idea of conquering a shared enemy is a powerful motivator and turns customers into evangelists.”

I believe having a villain can be a key to success. Not having a villain can lead to a lack of focus and a company’s products and messages can be all over the place.

At the same time an enemy doesn’t have to be a company, it can be a process or an industry as well. As long as the villain is defined well and easily identified. Let’s look at some examples, Nintendo saw the villain as new games consoles with more graphics, more R&D and more and more and more (think the Xbox and the PS series), they focused on what the villains were doing and flipped them with a simpler games console that appeals to more people. The villain was doing more, so the hero changed the game.

Voice mail could be an enemy for something like Google Voice. Crap notebooks could be seen as Moleskine’s villain. Whatever, just knowing who and what you’re up against helps make the message clear in side the organisation and outside, it’s just that not enough companies have that bull’s-eye up for all to see.

The question is what do you do to ensure long term success during a down turn? Our office had an interesting professor from IMD visit us and talk to us about macroeconomic trends and behaviour, basically addressing this very question a couple of weeks ago.

The answer, he said and I believe, is strengthen market share. Spend and deliver. I love what Adobe and Cisco are doing, buying up companies that offer complimentary services. I also love what Google’s doing with their Gone Google campaign (check out the twitter search for #gonegoogle), highlighting companies that are moving to their suite of applications. It’s a downturn, others are looking to cut costs, if you can spend and raise awareness, make people see the value of your offering at this crucial time that’s a pretty savvy move.

What goes up must come down, but the same should work in the reverse in markets. What goes down must come up, and when it comes up you’re in a much better situation then the competitors who’ve tried to cut costs and save their way through the downturn. It’s happened in the previous recessions and downturns, a lot of the great companies that started or succeeded after a downturn spent or started when things were difficult. One of the best stories in the book Flip is when the author speaks to a friend at Apple and asks how they’ll survive the downturn, the friend’s response, “Obviously, we’re going to innovate our way out of it” that’s the kind of thinking more businesses need right now.

Don’t get me wrong, I understand that spending money during a downturn isn’t easy, but heck spending money anytime isn’t easy, but you have to think beyond the short term and realise that it’s the long term that you’re investing for.

The great thing about spending during a downturn is that you often get a lot for your money. Whether its media which goes unsold and you get for cost or it’s a company that is looking for an exit and is undervaluing itself. Capital goes a long way in a market like this, if you’re wise enough to spend it.

AT&T, O2 and Rogers had a chance to really capture some serious market share for the longer term if they had priced and serviced iPhone users well. Instead, I believe, we’ll see a mass migration of users from one network to the others offering the device. As well, I believe we’ll see a heated battle over pricing of the devices and usage.

AT&T, O2 and Rogers went to maximise revenues over the 2 or so years that they’ve had exclusive rights to sell the device. But with markets tanking they should have worked hard to secure market share instead. Users are less likely to switch if the service is great and if the prices are reasonable.

The big winner in the new announcement is… me and you. Knowing that when we return to the UK that there will be competition around the device both the Bee and I want is a great thought.

I wonder if the donor’s generosity inspired Steve to open up the Apple App store to the Spotify and Real Media’s Rhapsody music streaming services.

I have to admit I didn’t think Apple would approve these apps, especially after their decision with Google Voice. So why? Why did Apple do this? Here’s my thinking on this.

I think there’s three prongs to this strategy:

Firstly the sales of iPods and iPhones to people who want these apps, then getting a number of these users to fall in love with the product and then move up to purchasing a mac will outnumber the loss of revenue that Apple will suffer on the iTunes music platform, I’m sure the margins on music are no where near the margins on hardware for apple so of course you push the hardware at the cost of the music service.

Secondly, this isn’t new, Apple allowed the Last.fm app and other music apps before, but Last.fm is not as good as Spotify and the Rhapsody apps, although Last.fm is free and Spotify and Rhapsody are pay for apps. And there in lies the rub, I bet the bulk of users spend less then the £10/month you need for Spotify or the $15/month you need for Rhapsody. Also there’s probably a group of users who want to own the music they buy, the old school users. And between these two groups of users the number of users who are left to move to Spotify and Rhapsody is not significant.

The third and most interesting prong is open competition. I love the Sun-tzu line “keep your friends close and your enemies even closer” and I think this is what Apple’s doing. Apple’s competing with the likes of Real Media and Spotify on their own turf. Apple’s launching things like liner notes (iTunes LP – think extra’s on a DVD), homesharing and other services with iTunes and trying to compete with these streaming services. I believe Apple is betting that their service is more integrated, easier to use, and all and all better then their competitors.
With all three of these prongs Apple comes out ahead. But Apple doesn’t stand still. My guess is if Spotify and Rhapsody do show a significant uptake Apple will offer a streaming service in the next 3 years.

I love Spotify and will probably subscribe to a premium subscription so I can use Spotify on the go, but if I were to bet on who will come out on top I’d find it hard to bet against Apple. Apple might not be as totally open as people would like – Goog Voice anyone? But you have to admit when they are open they really know what they are doing.

Google voice has been rejected (and Eric Schmidt stepped down from the Apple board), Skype’s not available in all markets, some apps are being censored and Spotify’s app will not be allowed – although Apple does have a chance to prove me wrong on that last one. So as great as the Apple App store is, Apple’s worried about competition to it’s other services rather than working on making the device the best it could be. Spotify will get on the G-Phone, as will Google voice. They’ll probably get on the Pre as well. Maybe even on the Blackberry. So Apple’s missing a trick here.

Apple did a great job revolutionising the way the music industry participates in digital music, they make great hard ware and operating systems, I haven’t done the figures but my guess is the revenue Apple might lose on iTunes and with carriers and revenue shares would probably be made up in the hardware margins and revenues in that stream. Not only that but there’s nothing stopping Apple from building competitive apps, changing iTunes so that it can compete with Spotify on a subscription model. But alas Apple chooses to shut apps out. I know there are partners to consider, but it’s not like Apple hasn’t put their teeth into partners for the sake of user experience before.

Mike Arrington wasn’t the first to dump the iPhone and at this rate he won’t be the last. Closed doesn’t win. People want access and will move to something that is more open every time. Apple will get taken out by whatever competitor will be open enough to provide the best experience. It might take years but unless Apple doesn’t change gears it will happen.