Apple’s .plan

In Unix culture there is the idea of the “.plan” (dot-plan) file. It lives in the user’s home directory, and is a place to write updates about your life or work. It pre-dates blogging and Twitter by nearly a hundred years, but was typically updated much less frequently than either. The id software founder and programmer John Carmack had a somewhat famous .plan file for a while, blending both hardware-level graphics programming explorations with high-speed car racing on airport runways.
I think of Steve Jobs’ live presentations as Apple’s .plan file. What’s new, what’s up, what they are thinking about. The mainstream press focuses on the “literal” facts of the show – price cuts, happy customers, annoyed customers, new partners, projected earnings, impact on margins, etc. – while the Mac digerati focus on interpretations from the Mac/iPod/iTunes/iPhone ecosystem.
Here’s all you need to know about the recent show, though it’s still worth spending the 90 minutes watching the online stream if you are a student of design, marketing, or product and business development.
* Ringtones: Apple is making it fun to make ringtones. Customers are not just buying them, they’re making them. You can select any segment of the song, up to 30 seconds long, choose the looping, and it automatically adds the fades and syncs with the iPhone. Oh, and, by the way, the price of the song plus the ringtone is $1.98, less than the current phone carrier offerings. Sell to the prosumers, and ignore the legacy carrier approach. [Update: Gruber says there’s room for improvement.]
* iPod Nano: Revising the best-selling mp3 player in the world. New shape, and thinner. More memory for same price. The real news in this is that there are some major product design changes are under the hood. Pitched repeatedly as the “enhanced user interface,” the new iPods are driven by OS X, the same foundation as the iPhone, and today’s Mac OS. This is a very big deal, as an entirely new (and very rich) software platform is will be running on several million devices, offering new features like coverflow, along with potential bugs and the following requisite updates. [Update: Yup.]
* iTunes Wi-Fi Music Store: The fundamental change that iTunes brought to the market, from the consumers point of view, was the 30-second preview of every song, prior to buying. Instead of buying something based on a recommendation, you now buy based on what you hear. IOW, a measurement of the industry’s product merit was put in place. Prior to that the industry was measured on their ability to market product – now they are judged by whether the product is worth buying. Big diff. Is anyone surprised their sales are off? It’s not piracy, gents, its your product. Nuf’ said. [Update: Oh, the iTunes wi-fi music store? Accelerates the changes. More below.]
* Partnership with Starbucks: This extends the music preview and buying experience away from the computer and into the retail environment. Moves offline buying experience from music as store, to music as environment. Music stores tried selling coffee, didn’t work too well. Coffee stores selling music, this will be a blockbuster. Shows what’s playing now and the last ten songs played in the store. Because the physical roll-out will go through 2009, both companies will have incremental yet cumulative increases, and will have another dimension of progress to announce for the next two years. Expect more deals at other retail stores. [Major update: see below.]
* Everything you need to know about Howard Schultz’s presentation on the Apple stage: If you sell an addictive product, customers will buy it very frequently, and you’ll need to open a lot of stores to keep up with the demand. As the business progresses, you’ll make so much money that you’ll need to invent brand extensions to consume the cash. Steve and Howard are both old hippies, and they both thank their sweet lucky stars that they get to do all this for the love of music. Thank you very much.
Update: There’s one other thing worth noting here. Twice now, this year, Apple has done deals with another very large company, and convinced them to make fundamental changes to their “business operating system” – that is, the software that runs their customer-facing operations – to get the partnership deal. The first was AT&T, who had to modify their cellular telephone network software to create “visual voicemail.” Visual voicemail is a fundamental change in how the customer interacts with their device, their carrier, their messages, and therefore their whole cell phone communications world.
The second instance is with Starbucks, who will be installing the capacity to upload to iTunes HQ, in real-time, what song is playing at this moment is each and every Starbucks cafe around the world. This will become an international real-time cultural baraometer, par excellence. It becomes possible to imagine a “flash” hit single, that spreads around the world and could sell a million copies in an hour. In effect, Apple has announced Phase III completion of their re-engineereing effort on the music business. Phase I was the iPod. Phase II was iTunes. Phase III is persistent purchasing, buying whatever music you want, wherever you are.
Much bigger news than the iPhone price cut is this idea of Apple entering the enterprise software ecosystem. Instead of typical enterprise deals where the vendor supplies software or hardware to re-engineer, say, the purchasing department, Apple is doing customer-facing enterprise deals, where they build or specify the software customers use. This is huge. Major huge.
Even better, there’s a Sarbanes-Oxley rule where companies have to spread the revenue accounting of a product over two years if the company provides free updates that add features. Apple is doing this with the iPhone, AppleTV, and maybe some other products. This means that the revenue growth will show up slowly, over time, without much notice. Until say, in 2009, when they’re still recognizing revenue from your iPhone purchase last month, and you’ve already bought another one, maybe two.
You can safely go very long on Apple stock.