Congresses Continued Obsurdity: The Brow Beating of Apple

Matt Miller wrote a great post on Congress’ absurd hearings on Apple’s tax status:

Why are we publicly browbeating an iconic U.S. firm in an era in which we should be encouraging every innovative company to locate and expand high-value work in America? What kind of message do hearings like this send to firms overseas (or U.S.-based multinationals weighing their capital plans) about America being open for business and hungry for job-creating investment?

Once upon a time, Democratic senators like Paul Tsongas of Massachusetts wisely quipped that “you cannot love employment and hate employers.”

But common sense has given way to easy grandstanding.

Congress is always quick to point out it is someone else’s fault. Don’t like the way US companies avoid US taxes? Fix the damned tax code.

Or better yet, let’s combine the IRS “scandal” [1] with the Apple tax “scandal” and have the IRS audit all Congressional member tax records. Then we can really see who is skimming.

[1] Why is no one asking why these organizations are even being granted tax exempt status? We have a situation arise that would be the perfect opportunity to have a national debate but our President and Congressional members are busy hiding from partisan firebombs. Well, most of them anyway.

The Future Is Subscription For All Productivity Apps

To back up my comments about paid apps being dead, Ben Thompson writes about Adobe’s business model switch. [1] (If you missed it, all Adobe products will forever more be subscription only.) His point is that the economic surplus of productivity apps makes them far more valuable then the prices charged so a switch to subscription makes a ton of sense (for all productivity apps, not just Adobe).

(He makes such pretty graphs.) Ben’s comments:

The challenges facing Adobe are shared by almost all productivity apps.

  • Productivity apps are indispensable (and thus priceless) to some users
  • Productivity apps usually have high learning curves
  • Well-done productivity apps require significant investment up-front
  • Productivity apps require regular maintenance and upgrades

Unfortunately, app store economics don’t really work here.

  • If you have a low price, you need massive volume to make up for the upfront costs
  • If you have a high price, users are much less likely to buy your app, especially since there is likely a learning curve
  • If you can’t monetize over time, your users are extracting MUCH more value than you are receiving in revenue. That’s great if you’re a user, up until the company you love sells out because they can’t make money. Sparrow is the canonical example here. How many Sparrow devotees would gladly pay $5 a month to have the app available and continually updated?

The challenge here — and I think this is a huge challenge for Adobe — is that I’m not certain the traditional software apps can make this transition. Take Quickbooks for example. $20 per month gets you access and store your data with Intuit, and that price doesn’t even include everything the Windows version does for $100. Does Intuit make more? Sure, but it leaves me feeling bitter that Intuit is trying to extract $480 worth of value for what used to cost me $100. [2] My general feeling: over my dead body.

I have a hard time believing that my customers would accept paying even $20 per year for powerOne, even if it was available on all platforms and the web, synced templates and more. [3] powerOne is designed as a “buy one time” product, like almost all productivity apps of yesteryear. It’s not my customer’s fault that that product is now priced too low to support my company. That’s app store dynamics at work.

Re-thinking the product to go along with the model change is imperative.

[1] If you aren’t reading this guy, you should be. Amazingly good writer and thinker. Haven’t been this blown away since Horace Dediu at Asymco appeared on the scene four years ago.

[2] Most people I know only upgrade every couple of years.

[3] In fact I know I’d lose most of them. We asked about advanced features for even $5 per year and had very few takers.

Oops. Forgot to Carry The Two.

This makes me cringe:

If this error turns out to be an actual mistake Reinhart-Rogoff made, well, all I can hope is that future historians note that one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel.

I hear these reports of Excel errors [1] all the time but rarely do I hear of one that literally impacts the underpinnings for economic decisions across the entire world. In defense it sounds like this error by itself doesn’t make a huge difference but there are some other concerns with the model that, if true, means it is inconclusive at best. Public service announcement: always triple check your formulas.

The second thing I want to point out is that Excel is still the most indispensable piece of software in almost every business and government organization. The humble spreadsheet, nearly forty years old, runs the world’s economy. Considering this academic study shows that almost 90% of spreadsheets carry errors and, well, that should make us all want to hide our money in a box buried in the backyard.

Finally, many a word has been written over the past months regarding Microsoft’s “no compromise” Windows 8. Most have rightly pointed out that making no compromises is a compromise in and of itself and that legacy mode is horrible. But Excel specifically (and Office in general) is exactly why Microsoft made this decision. Could Microsoft have given users some of Excel in the Metro interface? Absolutely. But some of Excel isn’t good enough. When it comes to the power users who spend lots of money with Microsoft, Excel is an all or nothing proposition.

[1] I’m referring to data errors, not errors of Excel’s calculation engine. Excel does, however, have some calculation issues mostly because of backwards compatibility. As one example, when Visicalc wrote the original Net Present Value it actually didn’t calculate NPV; it calculated discounted cash flows. Lotus 1-2-3 copied it and so did Excel. =NPV() in Excel needs a modification to correctly calculate Net Present Value. (A great explanation is here.)

The Daring Fireball Effect

In February my post Apple’s Churning of the Gut was linked to by John Gruber at Daring Fireball and briefly went to the front page of Hacker News [1]. This is the third time since I started the blog that John has linked to one of my articles. It is an honor each time.

I’ve been curious, though, regarding the long-term impact of these kinds of links. The first two times I was writing only once a week. Since at the time of this third link I was writing every day, I was curious if those who clicked through would stick around. The short answer: no. See this graph [2]:

Screen Shot 2013-04-15 at 8.56.35 AM

There is absolutely zero up-tick in the numbers for my own blog in the months following the Daring Fireball post.

Honestly, I’m surprised. I found a lot of interesting people to follow once I started reading John’s blog, especially in the early days of iOS development when John linked to far more independent developers [3]. I thought a few would have stuck around but when looking at the numbers, there is literally zero change in readership.

One possible explanation is that these users are RSS subscribers. I don’t believe WordPress is counting RSS subscribers correctly (if at all) in these numbers and therefore the count is not accurate. Given that I don’t truncate my RSS feed [4], they very well may not be counted. (Update: I found my Google Reader following, which is 3x my daily web view rate. Others report Google Reader accounts for 1/2 their RSS following. I have no idea what this number was before the Daring Fireball link.)

None of this is to diminish from the absolute rush of having one of my posts recognized by what I consider the leading publication on Apple’s perspective. I will admit it is a huge time-sink for a day or two, though, as I combed through more comments then this blog has had in its lifetime! Given that, John, I’m happy to make the sacrifice any time. 🙂

[1] This was a funny experience, by the way. The Hacker News community pretty much concluded I was a fanboy idiot while Daring Fireball’s community was in total agreement with my conclusions. Thus goes the holy wars of mobile operating systems.

[2] I believe the light blue is page views while the dark blue is unique visitors.

[3] John seems to link most often to a select group of publications and friends. This is completely gut feel. He may actually link to a wider group than I give credit. I may just be more familiar with the names now.

[4] If you are unaware, you can set  the RSS feed to only include a portion of the post. This means the user has to come to the site, via a “Read More” link, to read the rest of the post. In addition, Google Reader, the leading RSS feed reader (for now since Google announced its cancellation), only reads the post once and then makes it available to everyone who has subscribed to it from that one read. Thus everyone who follows me on Google Reader may very well only count as one view.

Tenacity And Persistence Pays Off

From Fred Wilson:

I have known Scott Heiferman since the late 90s. He was one of the early NYC web 1.0 entrepreneurs. We were quite friendly with Scott but we were not early investors inMeetup, the company Scott started right after 9/11. Scott and I were at an event together and when asked about something he replied that he viewed Meetup as “a twenty year project.” He said that it would take at least twenty years for Meetup to achieve all that he wanted from it and possibly a lot longer. And that he was patient and committed to that timeline.

As Fred commented, Meetup is in its second decade and just passed its one hundred millionth booking. It seems that Meetup has been part of the web since there was a web. It has weathered many competitors. I have a ton of respect for people that have a dream, a vision, and stick to it for years and years. Congratulations to Scott Heiferman and the Meetup team.