Steinblogger

Here’s how I know FedEx Kinko’s is struggling, from a quick stop there the other day: none of the self serve printers were working; I couldn’t find someone who worked there for about three minutes; customers were literally yelling “hello, hello” and walking around behind the counter trying the machines; when an employee did appear, she had no idea how to put toner into the copiers; and of course, there was the candy rack at the check-out counter. I kid you not.

That’s right, Kinko’s is trying to win the big money by enticing you to make an impulse candy purchase at check-out time – that, folks, is what the MBA types call value-add. “I know, let’s sell candy at the counter! That’ll bring in the extra revenue we’re losing by being incompetent!”

This is what Network Effects are all about. Compatibility. Mossberg calls it versatility.

I already stopped by the Apple Store Soho to pick up iLife and iWork ‘08. They didn’t have it yet. I want to get my hands on Numbers. Finally, Apple is fully back in the business game. The only reason I use Word and PowerPoint is for group projects (and only when I have to share files). Most group presentations I do in Keynote now, because the people who work with me understand what a superior presentation they’ll get if they allow me. Let’s see if Excel stays in my regular stable of applications. I kinda doubt it.

Now all I need is a Keynote viewer for Windows…

I believe that Network Effects, an economic theory I learned the gist of from Nicholas Economides at the Sern School of Business, is behind the recent gain in Mac market share. And it’s why I think it will continue to gain.

There’s a pretty good explanation of it at wikipedia, but here’s my shot at a plain English version of the concept:

When a good becomes more valuable as more people own it, it becomes more valuable through a Network Effect. The telephone is a perfect example. If two people in the world have phones, only two calls can be made (one to from each phone). Add a third phone, and there are six possibilities. With four it’s twelve; five, 20; six, 30…do you see where this is heading? (The math: if there are n connections, each additional phone adds 2n connections). The amount of calls possible on the network is increased dramatically each time someone joins the network. That increases the value of each phone via Network Externalities — even the first phone purchased is worth more as more people join the network.

I’ll put this into action: a savvy shopper will likely be more willing to buy an ok phone (Phone One) that can talk with a million people on Network A than a superior phone (Phone Two) on Network B that only a dozen people use. It doesn’t matter how Network A became the dominant network. At some point, it hit a tipping point and the Network Effects made the phones that are compatible with it more valuable, even if they are of objectively lesser quality.

The catch is compatibility. If Phone Two was compatible with Network A it could compete and perhaps gain share against Phone One. This is how we ended up with compatible phone and cell phone networks. It’s normal in a Network Economy.

It is in this way that Microsoft became a “natural monopoly,” because it reached a critical mass that made it more valuable to own Windows-compatible PCs simply because that’s what most people owned. More people using Windows meant more support, more software, more peripherals, cheaper parts, etc. For whatever reason you want to pick (cloning, Apple made bad decisions, etc.), Microsoft is the beneficiary of Network Effects.

Another prime example of an arguably inferior product winning through the advantage of Network Effects is the VHS tape (vs. BetaMax).

I believe that, through a combination of culture shifts and some great decisions on Apple’s part, it is now taking advantage of Window’s Network Effects. It’s not just the ability to run Windows. It’s the proliferation of cross-platform standards. Remember when a PC couldn’t read a Mac floppy? When Photoshop on the Mac saved a file format incompatible with Photoshop on Windows? When Windows and Macs couldn’t talk the same network language? The age of web and other standards removes the advantage of the network effects and the better product wins. Why do you think Microsoft is so bent on controlling or damaging as many standards as it can get its hands on? Because it has subsisted as a natural monopoly — not completely because of how the Windows product brings value, but how the Network it exists in makes it more valuable.

Compatibility alone is what allows a superior product to compete with an entrenched Network Effects-driven monopoly.

Macs are essentially compatible with PCs that run Windows. Therefore, Apple stands to benefit from the same network effects.

(A side note: I wrote Professor Economides when Apple announced it’s switch to Intel. I’d read a bit about virtualization and thought it could pave the way for Apple to win serious market share from Windows. He disagreed. I’d still take a bet on it.)

Get your mind out of the gutter! Actually, the gutter, typographically speaking, may be the right place to be.

Whenever I visit my parents, who live in Louisville, I’m struck by the Courier Journal and how…insignificant it appeared compared to the New York Times. I always assumed it had a friendlier typeface or layout. Or maybe shorter articles. Now I know my (admittedly shamefully elitist) opinion was at least partially a function of its size, not the content.

When I picked up the Times today, it felt less substantial. It turns out, it’s physically true. As of today, the New York Times has altered it’s print size and layout to be like other papers. I had no idea that the Times was non-standard (hey, I always thought The Times was the standard when it came to newspapers).

What is striking to me is that I immediately felt that the paper was more casual and less serious, more like what I feel about the Louisville Courier Journal. That made me realize what an impact size has on my perception of a publication. I trust that there are “top people” working at the Times, but I’m sure that the Courier Journal and its employees are as serious, even if their format is smaller. It’s not the size of the paper, but the quality of the journalism?

Is this a necessary change for the Times? Apparently, it will save money in print cost, which is good. They have less words per page, and there’s no indication that they will increase pages in order to make up for that (no indication to the contrary, either), so it’s anyone’s guess if it impacts the content. They have cut a column of letters to the editor, which is a shame. That happens to be a section I read top to bottom every day. I doubt I’ll take the time to get online to read the rest of the letters, which is what they suggest you do.

One big positive, though: I can have an entire page open in front of me on the subway and not elbow the person next to me. 

People who buy the iPhone are 90% satisfied, according to a poll referenced in a USA Today article. My pocket book is excited that 40% of buyers haven’t owned an iPod before, and 30% are new to Apple all together.

I just tried to click my MacBook Pro’s display with my finger. That says something about what an improvement the interface of the iPhone is over my laptop. No longer are you moving a mouse on one plane (your desk) while an arrow shifts on a perpendicular plane (the monitor)*. When you’re first introduced to a computer, you have to learn how to do navigate. On the iPhone, you are physically touching, pushing, pinching and pulling the interface! If you’ve ever played with a child’s developmental toy, you can work the iPhone. You don’t have to think about how it works. With the iPhone, Apple made “it just works” mean something more: it does what you naturally expect.

* Props for this thought to John Gruber, who described using a computer this way at his talk at the Apple Store Soho.

I’ve had the iPhone working since Thursday morning, just enough time to form some opinions. I’ve been using a Palm Treo 700p with Sprint since January, so I’ll use that as my benchmark.

To summarize: I had high expectations, but the iPhone has exceeded them at every turn. This is a truly amazing device. If you care to wade through the details, here they are:

The weak points

AT&T
What do you get when you try to find a company that will let you have it your way? You get the only partner desperate enough to make a one-sided deal. Every time you strike a bargain like that, you won’t get the highest-quality player. I just hope Apple can help AT&T improve their operations.

AT&T’s customer service has to be the most convoluted system in phone history. Compared to my experience getting the iPhone up and running, Sprint was a dream (and that’s saying a lot). It took four days and 10 calls – with at least one transfer per call – to find out I had made a mistake with my phone number transfer from Sprint. Then, I was told it was fixed on two occasions when it was not. AT&T is a maze of departments: I found the Activation department, the iPhone Activation department, the Transfer department, the Port and Activations department, the Activation Status department, the Port Request department, and two separate Customer Service departments, plus Apple’s own iTunes activation line. That’s a recipe for the iPhone activation PR disaster we saw this week.

Signal strength
The signal strength seems to fade away inside buildings more than Sprint’s did. I’ve had two situations where I would have expected some sort of signal but wasn’t able to get one. Since I’m switching networks, I can’t tell if this is AT&T’s problem or the iPhone’s. Regardless, it’s a step down from Sprint’s coverage in the NYC area.

No iChat
Even though the free AIM client I picked up for the Treo, Toccer, was buggy as all get out, at least I had an option for chatting with Instant Messenger. I hope Apple adds this in an update, because I don’t want to shell out another $10/month for unlimited texting.

Slow Internet-over-cellphone
I’d like to have more speed on AT&T’s EDGE network. Still, I find I’m using the iPhone to browse the web more (see below), but that doesn’t mean that the speed is better than Sprint’s. It isn’t.

The strong points

Safari and WiFi
As I mentioned, browsing the web is a pleasure, even when I’m on the slower cellular network. I don’t fear what a site will look like, or if it will function, like I did with the Treo. My bookmarks are synchronized with Safari on my computer (thank you!). There are innovative interface touches, like the spinner that comes up with drop-down menu choices. It’s never been so much fun to pick a state while filling out my address.

For no extra cost, the iPhone gets on a WiFi connection when it’s available. When you live in New York City, you can find an open WiFi network on just about every corner, so this is invaluable. When I’m on my home WiFi, Safari appears to be avery bit as fast as on my MacBook Pro. Truly amazing.

The keyboard
Contrary to my expectation, I like the keyboard. I’m typing at least as fast as I did on the Treo because of the iPhone’s auto correct feature. Plus, the iPhone keyboard gets out of the way when not in use, leaving behind a ton more screen than the Treo.

Video
I never used the Treo for video, because it was such a pain to get video onto it and the quality was terrible. And it sucked down battery power like you wouldn’t believe. Instead, I carried a video iPod when to watch video. No longer! Video on the iPhone is stunning. The screen resolution and size is such that I am seriously considering selling my video iPod because, even though the iPhone only has 8GB of space, I don’t think I’ll ever watch a video on my video iPod again. Why would I?

The iPod
The interface, sound and overall user experience is, amazingly, superior than the iPod.

Mail
Mail on the iPhone is quite good. I get fully formatted mail (including HTML), a great interface and automatic synchronization of my Mail accounts (that’s right, I didn’t have to set them up on the iPhone. They simply came over from Mail.app on my computer). The Treo’s email was functional, but plain. All setup was done on the phone, and it sent and read only in plain text. You couldn’t even see HTML-formatted email.

The fun
I never had fun using the Treo. I have fun using the iPhone. Case closed!

Over 25 hours since I got my iPhone (update: 38 hours), and it still hasn’t been activated. Not sure it can help anyone, but here are all the numbers I collected. I hope you have better luck. I was told I just have to wait.

This shouldn’t be a surprise, I suppose. No cell operator is celebrated for customer service, and in my case I’m having to deal with two – AT&T and Sprint. Sprint, of course, has no incentive to make this process easy. Toyota regularly sends engineers to help their partners streamline operations, which gets them their car parts cheaper and faster. Maybe Apple needs to send in some customer support people.

Notice in my list there are six AT&T numbers, but only one Apple number.The list, in the order I dialed…

AT&T Customer Service
1-877-419-4500 – the number I called first, got right through gave me the port request number (the 866 down the list a bit)

AT&T Activation Status number (need activation order number)
877-800-3701 – the iPhone Activation Helpline. I waited 20 minutes, but they couldn’t help me since I haven’t been assigned an account yet. They gave me a number and told me to call myself instead of forwarding me…

Cellular Customer Service
800-331-0500 – AT&T Customer Care. Frigging only open Monday-Friday.

Port Request
866-895-1097 – Phone number to call about the status of the port request — tried this out, they couldn’t find my number, so I got sent to an operator. That operator said they couldn’t look me up.

Another AT&T number
877-777-4189 Another AT&T number even though it was called an “Apple support number.” My call was answered right away. The operator gave me another “port and activation” number, but also tried it herself and said it was “in process,” but that I could talk to an operator there if I want.

Port and activations line
888-898-7685 – I asked if there was something holding it up that I could help with. They also had trouble finding me and my account. Said there should be a pre-approval number on the receipt. No luck — maybe you get one when you buy at AT&T rather than an Apple Store. Third time I had to give my social security number! Ugh. She couldn’t help, so she’s sending me to an Apple support group.

Apple support group
800-694-7466 – Told me there was nothing to do but wait. At least this guy sounded confident.