Category: Technology

A Quantified Value of the iPod Design

This study — Who Captures Value in a Global Innovation System? The case of Apple’s iPod — is one of the best I’ve heard of in a long time. The researchers traced the parts and assembly of the iPod and attributed the value generated by each step by part and by country. A few key stats: of a $299 video iPod, Apple gets the largest piece of the pie: $80. The other portions are relatively small; China only gets $4 for assembly.

Hal Varian of the New York Times made this key observation about how Apple’s capabilities generate their benefits:

The real value of the iPod doesn’t lie in its parts or even in putting those parts together. The bulk of the iPod’s value is in the conception and design of the iPod. That is why Apple gets $80 for each of these video iPods it sells, which is by far the largest piece of value added in the entire supply chain.

Those clever folks at Apple figured out how to combine 451 mostly generic parts into a valuable product. They may not make the iPod, but they created it. In the end, that’s what really matters.

I’m encouraged by studies that highlight the value of concept design given my work in this area. Here’s a question for you: how would you most like to learn more about concept design: a book? videos? something else?

When Engineering Defines the Limits of Design

I’ll get the plug part of this post out of the way right here: I worked on a preview of Bill Scott’s upcoming webinar on What Every Designer Should Know about Interface Engineering and I think it’s both very good and very important, and what’s more it’s a topic that I’ve never seen addressed outside project work.

I was reminded of this in a meeting the other day. We’re working through a Flex application that asynchronously queries the server with each criteria specified on a form, a little like what Kayak does, but with more data coming back from the server. Unfortunately the latency in that data transfer is simply too high, with too much customer time spent watching the spinning cursor. It’s unfortunate, because the design of the form itself (not mine) is clever, and I found myself thinking, “This is how Google would do it.” But the infrastructure in question is not as robust as Google’s infrastructure, and so the design needs to be modified to fit the latency of the system.

And this is the kind of situation that Bill refers to. When designers understand the limits and degree of difficulty in the technology needed to implement their designs, the designs are better.

Web 2.0 Strategy: Customers Create Value

Note: Over the next few weeks I’m blogging my notes on Amy Shuen’s book Web 2.0: A Strategy Guide: Business thinking and strategies behind successful Web 2.0 implementations. (O’Reilly Media). The book is both a good introduction and a synthesis of diverse theories that should offer something to even experienced strategists.

Background: What is Web 2.0?
Wikipedia entry
What is Web 2.0?, the seminal article by Tim O’Reilly

Chapter 1: Users Create Value / Flickr

  • Alvin Toffler predicted the “prosumer” in his 1980 book The Third Wave, and with recent technical advances in web and digital technology his vision is being realized.
  • Like so many startups, Flickr started out doing one thing (a game) and by listening to customers transitioned to another offering, online photos. The small team including technically-smart founders could turn customer feedback into rapid release cycles. A key to Flickr’s growth was making photos public by default.
  • The freemium business model was first described on Fred Wilson’s blog: “Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.“
  • Flickr’s platform was timely in compounding the positive network effects of broadband, digital cameras, blogging, social networking, and online syndication.
  • Flickr’s core business message: Don’t build applications. Build contexts for interaction.
  • Stages in the open systems movement: Linux; APIs; user-generated content. Flickr combines the last two to compound their use.
  • Flickr’s interestingness algorithm factors in popularity, interaction, identity, and time.
  • Flickr uses the first three of the six kinds of revenue models: Subscription/membership; advertising; transaction fee; volume/unit-based; licensing and syndication; and sponsorship/co-marketing/revenue-sharing.
  • They managed to avoid the four major cost drivers (inventory, payroll, IT, and marketing/advertising/CRM) compared to retail photo printing and online stock photo companies.
  • In March 2005 Yahoo! brought Flickr for an estimated $40 million, a value that can be calculated using a customer-based formula in which revenues are directly tied to customer fees, not unit prices. Tracking customer behavior and metrics on an ad-supported site can result in an average revenue expectation per customer; in 2006 it was $13 for Google. Flickr had advertising, premium services, and partner revenue, making the average revenue per customer about $20. Multiplied by Flickr’s 2 million customers, we arrive at the $40 million valuation. More sophisticated formulas might give different weights to customers based on how actively they use the platform.

Nokia Offers New Email Accounts Via the Mobile Phone

Niti has an intriguing post including this quote describing service for the Nokia 1202:

the new devices will allow users to set up an e-mail account on Nokia’s Ovi Web portal without ever going near a PC. That’s an important distinction for the millions of mobile-phone users who live in regions without reliable electricity, much less computers and Internet connections. “It gives those millions of users their first identity on the Internet,” says Alex Lambeek, Nokia vice-president in charge of handsets aimed at low-income users.

A brilliant move, IMHO, and makes me wonder about which other bits of the PC-oriented Internet could be mobilized.

But Niti goes on to explore how an email address changes our identity or online presence differently.

Social Media as a Product Testing Audience (e.g. for Motrin)

To catch you up, Motrin posted the below ad and people, particularly baby-carrying mothers, were so offended that the makers of Motrin pulled the ad.

Many of the offended people (“Motrin Moms” there were dubbed) were on Twitter, as well as blogs and YouTube. As a result, marketers are starting to get scared of social media, just as social media is taking off as a legitimate communications approach.

But another way of looking at it is, better the Motrin ad underwent a social media firestorm than a mass media firestorm.

Continue reading Social Media as a Product Testing Audience (e.g. for Motrin)

Creative Commons: Good for Nature

At Overlap 08 this past weekend we talked a lot about sustainability in all its forms, including sustaining nature. This was on my mind this morning as I cycled over the Brooklyn Bridge and saw a small video crew capturing some footage of the bridge. Surely, I thought, there’s so much footage of this bridge already, you hardly need more. But of course they do need their own shots since most of the existing video is copyright protected. So crews all over the world today are traveling and otherwise consuming resources to recreate what was created yesterday.

Creative Commons is the legal infrastructure to change all that, helping us share all our media which gives us no competitive advantage, such as video footage of the Brooklyn Bridge. I’ve been sharing and using creative commons media for my work, and it occurred to me this morning that CC not only makes media available for everyone’s use, it encourages reuse which is one of the better ways to preserve our natural environment.

Put simply, reusing existing media is a more environmentally sound approach than creating media.

Lifehacker has a great list of 6 ways to find reusable media.

creative commons logo

Happy Birthday Noise Between Stations

This here blog turns 9 years old tomorrow. Quantitatively speaking, she’s got 2,041 posts, 590 comments, and 130 categories. Checking the PageRank, it’s a 6, the same as generalmills.com, whatever that means.

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Location-Aware Ads Have Arrived

From the New York Times, In CBS Test, Mobile Ads Find Users…

CBS plans to announce on Wednesday that it is trying one of the first serious experiments with cellphone advertising that is customized for a person’s location. Its CBS Mobile unit is teaming up with the social networking service Loopt, which allows its subscribers to track participating friends and family on their mobile phones.

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Kevin Kelly on Eight Uncopyable Values

Kevin Kelly established himself as an Internet pundit with true foresight with the 1998 New Rules for the New Economy which is still a classic, if showing a little age with its dot com bravura. Now he’s working on a new book piece by piece on his blog. The latest chapter examines the future of value online. In Better Than Free he posits:

“When copies are super abundant, they become worthless.
When copies are super abundant, stuff which can’t be copied becomes scarce and valuable.
When copies are free, you need to sell things which can not be copied.
Well, what can’t be copied?”

His answer is eight uncopyable values, which he calls “generatives”:

Immediacy — Sooner or later you can find a free copy of whatever you want, but getting a copy delivered to your inbox the moment it is released — or even better, produced — by its creators is a generative asset.

Personalization — A generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound perfect in your particular living room — as if it were preformed in your room — you may be willing to pay a lot.

Interpretation — As the old joke goes: software, free. The manual, $10,000.

Authenticity — You might be able to grab a key software application for free, but even if you don’t need a manual, you might like to be sure it is bug free, reliable, and warranted.

Accessibility — Ownership often sucks… Many people, me included, will be happy to have others tend our “possessions” by subscribing to them.

Embodiment — …PDFs are fine, but sometimes it is delicious to have the same words printed on bright white cottony paper, bound in leather. Feels so good.

Patronage — It is my belief that audiences WANT to pay creators… But they will only pay if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators.

Findability — …no matter what its price, a work has no value unless it is seen; unfound masterpieces are worthless.

The State of Video Education

Having started a school of sorts, I’m interested in anyone pushing the envelope of what can be done to teach people, and lately I’ve turned my attention to reaching more people with sessions online rather than only in the classroom. The first generation of “distance education” from universities mostly sucked; schools were sold software that forced them to shoehorn pedagogy into a particular medium (discussion boards, online text, chat rooms) and it really only worked when you had a perfect storm of content that fit the medium, students and teachers comfortable and patient enough to use the medium, and classroom instruction that filled in the gaps. I taught an information architecture class at the New School/Parsons School of Design years ago and it was a royal pain in the ass, but for those few people in Asia that had no other option, it was probably fairly useful.

Fast forward several years where Web 2.0 meets the classroom. Specifically, with broadband our palette of media opens up to include audio and video, and our business models open up to include architectures of participation. YouTube is now the richest playground of education experimentation online. Here’s two examples:

You Suck at Photoshop
Boring, technical techniques are thwarted with dark humor. Perfect for graphic designers.

Team Ukemi Parkour Tutorial
Instructional techniques lifted from technical illustration, mixed with attitude, and applied to video (“just take the marker and draw right on my back”)

Awesome, but this just scratches the surface. How can we use this approach to teach business, design, and business design? I’d love to hear your thoughts.

We’ll Reach the Semantic Web One Small Step at a Time

XFN and FOAF were two small steps in that direction, and Google just built on them with the Social Graph API (watch the friendly little video intro).

Any day now we’ll see an application that not only helps us generate XFN and FOAF data, but does so in a way that manages our online identities, particularly with regards to search. It’ll tip the balance of art and science in SEO toward science.

Top-down semantic web visions were judged by skeptical-but-realistic critics to be overly systematic. Well, yes, but if we get there a piece at a time, helping people understand, implement, experiment, and capitalize with each little piece, we’ll get there in an organic way.

Time to go generate some XFN…

Links to what others are saying.

Fighting Spam and Apologies in Advance

An off-topic post…

Apparently I have a high enough Page Rank that spammers love my site. I actually have two different anti-comment-spam plug-ins running on my WordPress installation. But lately there are been hundreds of spam comments per day that the system can’t decide are spam or not, and so it offers them to me for moderation. I just don’t have time to sort through them all, so I simply delete them.

I haven’t heard any complaints, but if your comment falls into the pit of false positives, my apologies.

Update: I installed another WordPress plugin that asks you to answer a simple math question before posting, and this seems to be working perfectly so far.

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