Carpadium Consulting

There have been rumours for a while now that @jack from Twitter was working on a new payments venture. Well, it seems that those rumours are true with today’s announcement of SquareUp.

The home page has some information about what they are doing, but the service is in soft-launch / invite-only mode at the moment so full details are not yet available.

Straight away, SquareUp looks cool, and from what limited information is available on the site, it looks like it has the potential to shake-up the way small businesses work with credit cards to accept payments.

Two things stand out. Firstly, it looks like it is designed only for card-present transactions (as far as I can tell), and secondly, it uses a magnetic stripe reader to acquire the card details. The first point means that its not likely SquareUp can be used for online payments, and the second point will probably mean that it does not handle chip cards.

However, this does not mean the system is without a security overlay. One neat feature is that it supports a form of photo id check. When a merchant accepts a payment, the iPhone application shows them a photo of the cardholder, which they can use to verify against the payee. I have to assume that this only works for cardholders that have pre-registered a photo with SquareUp.

To some extent (but certainly not all), this gets around the need to use a chip card, although I wonder what the card schemes will have to say about this as they roll out chip cards and readers everywhere.

One final note about SquareUp that is specifically relevant to the Australian market (although I have no information about plans to roll-out the service here) is what it might look like against the proposed MAMBO payments service.

Is this another payments innovation that the big banks should take notice of, or something with a limited niche for use by small businesses currently lacking in ability to work with credit card payments?

My first impression is that it will certainly be successful in that niche, however you have to wonder what they might have up there sleeve. If we have learnt only one thing from the history of Twitter its that they understand how to build a platform.

M@

Update 1: Here’s some words from the Man himself. Pretty much confirms my initial thoughts. Still no CNP option, as far as I can tell.

I was reading a piece linked from DaringFireball yesterday and something really leapt out at me. Check out these two quotes pulled from the linked article, one from Tim Cook, Apple’s COO, and the other from Steve Ballmer, Microsoft’s CEO.

Here’s Cook’s quote:

“Windows 7, from our point of view, is just another opportunity to remind everyone to switch to a Mac,” said Apple Chief Operating Officer Tim Cook. “People are sick of all the headaches that go along with Windows.”

And here’s Ballmer’s quote:

“Let’s face it, the Internet was designed for the PC. The Internet is not designed for the iPhone,” Ballmer said. “That’s why they’ve got 75,000 applications — they’re all trying to make the Internet look decent on the iPhone.”

I really don’t understand Ballmer’s point. Leaving aside for a moment that there are 2 errors of fact and an irrelevance in the space of 3 sentences – what is he trying to say? It just does not make any sense. It even has an air of the Chewbacca Defence about it. Just what is their message? I have noticed this coming up again and again in recent Microsoft comments and not just from Ballmer. I guess if the message is confused at the highest levels, it’s difficult to see how it can get any clearer down the chain.

On the other hand, the message from Cook could not be clearer. And not only is it clear, but it’s said in a completely positive way. It’s a brilliant piece of communications that uses Microsoft’s own weight against it. It’s 31 words without a skerrick of weasel. It’s a piece of PR jujitsu.

M@

I’ve noticed quite an uptick in the use of Twitter lately, both in terms of its presence in the media, as well as increase in the number of followers for my own humble Tweets. I guess that when something gets talked about on Rove, you know that its hit the mainstream in this country.

I find Twitter an intriguing proposition because it is at the same time strangely banal, and yet somehow enormously appealing. When I first started using it back in May 2008 I made the point that it gave me a weird feeling, kind of like vocalising one’s internal monologue. I still kind of get that sense when I use it myself, and I certainly get it when I read some of the Tweets of others. And then there are the very rare Twitterers (Tweeters? What is the name for one who tweets?) who seem to have crafted a new art form out of the 140 character blurt of consciousness, going beyond the banal to keep me wandering back again and again.

Over the last couple of days, there has been a couple of really interesting articles by John Battelle about Twitter. The first one includes a comment to the effect that Facebook tried to buy the service $500m, an offer they turned down. Wow. I guess if you made a packet selling Blogger to Google a few years ago, plus a second significantly larger packet with a bunch of pre-IPO Google stock, then selling out is not necessarily the first thing on your mind. You are probably going to hold out for the righ deal, and “right” in this context might not be just about money.

The second one is a little more speculative, but it includes this line (my emphasis in bold):

Very soon, we will be able to ask Search a very basic and extraordinarily
important question that I can best summarize as this: What are people
saying about (my query) right now?

This is the first time I have heard anyone contemplate the idea of the web moving from something that was, to something that is. Or put another way, its a change from thinking about the web as a reference book that you can use to “look stuff up”, to something that exists in the present tense, something that has behaviour that changes from moment to moment, something that can truly be considered to be living in the now.

This fascinates me because the ability to distinguish between then and now is one of the building blocks of memory. By definition, memory concerns the past, and the past only makes sense if you can distinguish it from now. The ability to differentiate then and now allows us to time bind (see Alfred Korzybski and General Semantics), which is arguably a fundamental part of part of consciousness, or at the very least something that sets us apart from other, less sophisticated animals.

He continues:

All of us are creating fountains of ambient data, from our phones, our web surfing, our offline purchasing [MS: and I would add online too], our interactions with tollbooths, you name it. Combine that ambient data (the imprint we leave on the digital world from our actions) with declarative data (what we proactively say we are doing right now) and you’ve got a major, delicious, wonderful, massive search problem, er, opportunity.

The opportunity here is to go from was to is. Not “what was the web at some point in the past”, but “what is the web doing right now”. Google has been amazingly successful at giving us a picture of what the Internet was. Twitter on the other hand allows me to create a channel through which I can tell everyone else what I am doing right now. The opportunity here is for someone to come up with a way to inspect or query the Internet so that you can ask: what is the Internet doing right now?

Of course, its a huge leap to go from the notion of real-time search to a conscious Internet. The idea of real-time search might not seem like much, but the simple fact that we are able to contemplate this on something the scale of the Internet makes me really begin to wonder if the Singularity is near.

I genuinely hope it is.

M@

Update 1: Mabye this is part of the answer!

Update 2: Or maybe this is even closer to the answer (thanks @benjyforrest for drawing the connection). I wonder what Vark+Twitter would look like?

I had a few comments to the effect that it wasn’t Apple that was calling this a subscription. That’s entirely correct, and kind of my point. There has been ongoing talk (eg Rob Enderlie) about why Apple should release a subscription music service, but yet Apple stubbornly refuses to oblige. I suspect the reason Apple has not gone down this subscription path – at least in the form suggested by the likes of Enderlie – is because it’s a really dumb idea. We will see.

If the comments on the MacRumors and 9to5mac forums are anything to go by, a subscription along the lines of Ruckus or Napster or MP3.com is not the kind of thing that people want. It seems that the average punter [1] wants to buy music to own, and they want to be able to use it whenever and wherever they are.

The risks of the music disappearing when the subscription runs out or worse, when the service goes dark, are a little too much to stomach.

M@

[1] As an aside, some people in those threads read the headline and thought that Apple was going to charge people $20 for the iTunes client software, so perhaps they are not the best examples of what the iTunes / iPod community is thinking …

Apple and EMI have released the iTunes Pass. You can find a press release form EMI here, and the usual Apple commentary here and here.

This is being referred to as a subscription service in a few quarters, and on the surface it would go someway to disproving my comments from the other day where I thought it unlike that Apple would ever release a subscription service.

However, I’m not so sure this is a subscription, at least in the sense that subscription services like Ruckus work for electronic goods. With Ruckus, the idea was that you paid a regular subscription fee, and it gave a license the use the music, but you did not actually own it in the same way that you own a regular CD if you go down to the store and bought it with cash.

As far as I can tell from the iTunes Pass page in the iTunes Music Store, this service is more like a pre-payment that gives you a discount or special access to otherwise unavailable items for a period of time, but you still get to actually own the items you buy. From the EMI press release:

With iTunes Pass, music fans can get new and exclusive singles, remixes, video and other content from their favorite artists over a set period of time, delivered to their libraries as soon as they’re available

Nowhere in any of the publicly available material is there any suggestion that you lose access to the material when the “subscription” to iTunes pass runs out. This makes it very much like a subscription to a traditional paper-based magazine: while you keep your subscription up-to-date, the magazines keep arriving, but if you stop paying, then the magazine stops coming.

And I think that’s a really intersting differnce. The other music subscription services that I have seen give you access while your subscription is valid, but by virtue of some often draconian DRM, you lose access when the subscription runs out.

So I guess the answer to the question in the title is “yes”, which means that my earlier prediction wasn’t quite right. But in this case, I’m happy to be wrong. I think this is actually a useful idea, and a good way to get access to premium content that might not otherwise be available. However, it does have the obvious downside that I am effectively paying in advance without knowing what it is that I am going to get.

M@

Update: this is a great comment on iTunes Pass from the 9to5mac blog. That might just explain the underlying motivation.

I read this article today from the online version of the New Yorker, and thought that it was really interesting. I particularly like this bit:

… In a famous 1960 article called “Marketing Myopia,” Theodore Levitt held up the railroads as a quintessential example of companies’ inability to adapt to changing circumstances. Levitt argued that a focus on products rather than on customers led the companies to misunderstand their core business. Had the bosses realized that they were in the transportation business, rather than the railroad business, they could have moved into trucking and air transport, rather than letting other companies dominate.

I think this is precisely the same problem a whole bunch of the current crop of what we might call mainstream businesses are facing – from broadcast TV through to retail banks. They don’t get who their customers are, and so consequently, don’t really understand what business they are in.

Television is facing this problem as well (perhaps a little behind newspapers) but the evidence is clear that many of the established players are struggling for relevance. Their customers used to be advertisers, but as soon as you have a direct connection between content producer and content consumer, the real customers can bypass intermediators – especially when broadcasters treat content as little more than an inconvenient interruption between advertising messages. Punters no longer buy this, and are increasingly chasing alternative forms of entertainment.

The New Yorker’s comments are particularly germane to retail banks (especially in Australia) because very few, if any, seem to get the fact that their relationships should be customer-driven, not product-driven. They just about all focus on products, with the customer an incidental attachment that has more to do with how data is stored in the underlying technology than it does to do with valuing the relationship between institution and individual.

I blogged about this very point about 12 months ago, and Ian Verender in today’s SMH made some similar comments in his rather scathing analysis of the Australian retail banks.

So, in addition to coping with the global financial crisis, perhaps banks need to add something else to their list of external shocks: the death of the product-driven business model?

I wonder when we will see a truly customer-driven bank emerge in Australia? Given recent consolidation which makes our market even more concentrated than before the GFC, I’d say it will be a while.

M@

I’ve seen this kind of thing many times before in blog posts across the Internet. However, today it happened to me.

Not what you want to see in an elevator

I’m not sure what concerns me more: the fact that the controller in the elevator has failed, or that it’s using Windows. To be fair, it’s probably just driving the display and not the elevator control because the elevator still worked. Mind you, I didn’t stay in it for too long.

M@

If you can, then please give the London Stock Exchange a call. They need your help. Seven hours is a whole lot of downtime for the world’s 3rd largest market. I suspect it’s a long way back from there to meet this year’s SLAs.

M@

When the iPhone 3G was announced at the WWDC last month, I had the misfortune (or good fortune, depending on how you look at it) of being awake at 5:00am in the morning thanks to a pair of restless children. Making the most of the opportunity, I had a look at Apple’s web site and noticed that there were some links to where the iPhone would be available in Australia. Again, as luck would have it, the carrier that currently lugs around my BlackBerry, Optus, was mentioned as a source of iPhone 3G goodness, so I followed a few links [1] and found myself in what I thought was the privileged position of laying down a $50 holding deposit. Without really knowing what I was getting myself in for, I happily signed up for not one, but two new 3G iPhones. Of course, the fine print doesn’t promise anything of the sort (as we will soon see).

I was quite happy with myself for doing this, and there was certainly more than one occasion between then and today when I had gloated (quietly, of course) to friends and family about how I was on a short list to get an iPhone. I only kicked up my gloating ever so slightly when news spread that both Optus and Vodafone had stopped taking reservations. I though that I was sitting pretty.

However, this is just about when it all started to go pear shaped. After receiving an e-mail from Optus reinforcing my sense of hipness, I was encourged to log onto a special iPhone site, designed only for Optus customers. Perhaps “designed” is overstating the case a little. First of all, I simply could not log on. This was not a load issue, it was (apparently) an “incorrect registration code” issue. I tried again, to no avail, then checked the FAQ, which politely informed me that the problems were “mostly to do with people incorrectly typing in their passwords and registration codes”. Sure. The fact that you have to put an entry like that into the FAQ tells me something is wrong, and it’s not with the users.

After several failed log in attempts I tried a password reset, and that failed as well. I was starting to get concerned. I shot them off a quick “can you help” e-mail. And guess what? I got not response. Not even an automated one. Hmmm. This is starting to look grim. I tried again the next day (Tuesday of this week), and there you go, I’m in. I wonder if there had been some late night development work behind the scenes … or was it just that all of the users clued up at the same time? Who knows.

Anyway, what did I get for my efforts? A page that contained details of my deposit. Hot diggity. That was worth the wait.

Apart for the mind blowing 12 point Courier <pre> copy of my deposit, there were some instructions about what to do on iPhone day. The main nugget of advice was to bring a printed copy of the receipt, along with appropriate ID, to the Optus store where you had registered your interest. And it also informed me that I was very, very lucky indeed to be eligible to line up on iPhone Day in the priority queue. Tops.

To be perfectly honest, I wasn’t all that interested in going out of my way just to get an iPhone on the first day. I would have much preferred to have put in an online order (which I would have been happy to pay for in advance) and then just waited in the comfort of my own home for the thing to arrive. But no, for whatever reason, all of the local Australian telcos have decided that the only way to get an iPhone is to line-up like an knob out the front of a store. Like I’ve said before, I’m a fan of Apple kit, but I really don’t get all of this product worship crap. The beauty is in the use, not in the worship.

However, in this case, I was on a priority queue. So off I trundle this morning at about 7am for a nice morning walk up to my nearest Optus phone store. When I get there – perhaps not surprisingly – there was a lineup of about 250 people. Fair enough. But I’m in a priority queue. As it turns out, no I’m not. In fact, there is no such thing as a priority queue, it’s every person for themselves. All 250-odd of them.

And it’s right about now that it gets even better. I poked my nose into the front of the queue where there was a pair of Optus phone drones handing out raffle tickets to people in the line and asked them about the priority queue. Nope. No priority queue. You have to line up. Great. Next bit of news. There are only 5 16GB iPhones in the store. And they were already gone.

At this point, I shrugged my shoulders in disgust and walked off. There was no way – NONE – that I was going to wait in a line with 300 other people (yeah, it’d had grown by 50 people by now) to wait for the opportunity to be frustrated that I would not be able to get the phone I wanted. So, all I managed to get for my pair of $50 deposits was a nice walk through North Sydney on a crisp but clear winter morning. I’ll just have to wait a little bit longer to my hands on an iPhone. The really bizzare thing, however, is that when I checked my credit card transactions after the walk, I noticed that Optus had already given me a refund on the deposits. Very strange. Perhaps they knew something that I didn’t.

The puzzling thing about all this is that it would have to be the complete antithesis of my recent Mac purchase experience. Traditionally, Apple is an organisation that likes to exert significant control over the entire, end-to-end user experience. And for the most part, that experience is a very, very good one. In my case today, it wasn’t. It sucked.

How’d you go with your iPhone quest?

M@

[1] For those of you playing at home, the Optus website is perhaps only exceeded in its maddening horribleness by the Telstra BigPond website. For example, the Optus site is so bad, that if your session times out, you have to close the browser before it will let you back in. Both of these organisations are Telcos. I think there’s a pattern developing here …

[2] And to top this all off, we heard this evening that the first nutter in the queue at the George St Sydney Optus store … wait for it … was an Optus employee. Not a plant, says Optus. No, of course not! On reflection, I’m probably prepared to believe them on this – they couldn’t organise a simple priority queue, so why would I expect them to be able to pull of this stunt? Never ascribe to conspiracy what can be explained by incompetence.

So we are finally (officially) getting the iPhone in Australia! In what would have to be one of the most un-secret secrets in recent technology history, Steve Jobs today announced the second generation iPhone, along with a host of new countries where the uber sexy little gadget will be available.

Amid all of the fanfare about the iPhone, something struck me about the new Mobile Me service Apple will release in July. There has been past criticism from some quarters that Apple’s .Mac service was poor value. I think you could probably make that argument pretty easily. However, this new service seems to be something else. For a start, it has some truly amazing web design (possibly, even as amazing as this, or this). [As an aside, the kinds of things that people are doing now in rich Internet applications and with the full toolbox of Web2.0 tricks is simply mind blowing. I don't think anyone considered 2 years ago that we would have applications of this quality.]

Mobile Me does two things. Firstly, it elevates all of a typical user’s electronic stuff into the cloud. This is great, but certainly not unique – Google has been doing precisely this for some time. I think we can be sure that Apple will bring all of their usual user experience aplomb to the task, so the service will certainly be pleasurable to use. However, I think the real trick comes in the second part. Mobile Me also (at least on paper) appears to seamlessly synchronise this stuff across all of a user’s devices.

As anyone with more than 1 device (desktop PC, laptop, phone) will know, synchronisation is a total nightmare. I currently use a BlackBerry [1], and even today I find myself fragging the BlackBerry calendar and overwriting it with the Outlook calendar on each sync because if I don’t, then the BlackBerry will constantly double-up entries (particularly recurring appointments).

Perhaps more annoying is the fact that I have to start this bizzare and idiosyncratic little synchronisation application to make it all happen. As a consequence of the generally poor quality of synchronisation applications, most people have data that is out of sync or inconsistent, or they just don’t bother with the process at all.

If Mobile Me delivers on the ability to push my stuff to the cloud, and then allows me to have a seamless, consistent, up-to-date view of that stuff from any device – from desktop, to laptop to mobile phone – then Apple will have pulled off a real coup. My guess is that they will deliver on this promise, underlying again their ability to “innovate through simplicity”.

Which brings me to an observation about the relative approaches of Apple, Microsoft and Google – both in terms of technology and business model.

As we all know, Microsoft concentrates on the endpoint (at least traditionally), both on the PC and on the mobile device. It’s all about Windows Vista and Windows Mobile. To play in the Microsoft ecosystem, you need to buy a license of some sort, and in the case of the vast majority of PCs, you don’t even have a choice about it because the license comes as part of the purchase of each new machine.

Google is at the other end of the scale. Their entire service offering is in the cloud, and they give everything away for free, making (lots of) money on targeted advertising. Microsoft is certainly trying to respond to Google, but if you need any proof that they don’t have a plan or a clue about how to compete online, then just check out their recent attempt to buy Yahoo.

So where does Apple fit in? Clearly, they have a strong story at the endpoint. The entire Mac hardware range, from laptops to desktops, is well regarded, and if recent sales figures are to be believed, are selling amazingly well. The Mac operating system is also a stand-out, and in stark contrast to Vista, seems to get almost nothing but high praise.

In my view, Apple’s new Mobile Me offering places them equidistant from Microsoft and Google, with a service that makes the best use of their endpoint and operating system expertise, adds a cloud-based service layer that (on the surface) solves many of the traditional problems with synchronising multiple devices, mixed in with a subscription based charging model.

Such an economic proposition almost certainly means that Apple won’t achieve the user scale of Google Apps (Mail, Calendar, Docs, etc) for Mobile Me, but it does allow them to target the premium end of the market – precisely the same market that they target with hardware sales, and one that is exceptionally profitable for the company.

In many ways, you could probably think of Mobile Me as a premium version of Google Apps in the same way that you can consider the Mac and Mac OS X as a premium version of a Windows PC. Of course, some would argue that these things are not even playing the same game, but allow me to stretch the metaphor for the sake of the discussion.

The real question is this: Where does it leave Microsoft? As an organisation, Microsoft lacks Google’s capability in search or scale in advertising; Vista appears to be losing the operating system battle (at least in mind share, if not in volume) to OS X; and they do not appear to have anything nearly as compelling as Mobile Me as an online application. They will almost certainly attempt to turn the ship to deliver a suite of competitive services over the next 12 months or so, but where will Apple be in that time?

One final point that I think ties into this thread is the constant call for Apple to license OS X to third parties. Leaving aside all of the Hackintosh projects that are popping up, I do not think there is a snowball’s chance that Apple will ever license their OS to anyone (again). And in any case, why would they bother? A compelling Mobile Me service that generates US$99/year per subscriber will generate a tidy revenue stream that will not in any way jeopardise Apple’s healthy margins on the sales of Mac hardware. At the same time, Windows-based Mobile Me and iPhone users might be seduced to switch in the same way as the droves of iPod users who liked the seamless integration between the iPod and iTunes have done so up to now.

I expect that Apple has done its numbers properly to the point that any revenue lost through foregoing sharing argeements with carriers is more than compensated by a US$99/year subscription to Mobile Me. That is, of course, assuming that they can get enough subscribers. So I also expect that they will be trying to convert a big percentage of all new iPhone owners into Mobile Me subscribers as well.

The extent to which this is possible, I think, comes down to the success of Mobile Me. We have all been looking around for the next real killer application in the mobile space for some time [If you are wondering, the first two were obviously voice calls and SMS texting. UPDATE: Of course! Photos is number 3. Thanks Jen.]

Interestingly, the next killer mobile application may not be a mobile application at all, but rather, an application that makes it completely irrelevant and transparent that I am mobile. Regardless of whether I sit down at my desktop at home, my laptop in the airport lounge, or my phone on the go, I get the same, live, consistent view of all of my electronic stuff.

Apple really looks like they have cracked it with this one.

M@

[1] I was waiting for today’s announcements from Apple before I replaced my entire technology kit. It’s been over three years since I last splurged on decent technology infrastructure. So, come 9am this morning, I’m off to buy a new laptop and a new desktop. And I’ve already put my order in with Optus for a couple of 3G iPhones.