in an iPod world

Kindle survival: Myth or real?

There have been a series of news about Kindle. First, last week, Kindle announced that the sales of e-books exceeded that of hard copy books. Second, yesterday, Amazon announced that Stieg Larsson, the late Swedish author who wrote the trilogy of "The Girl with Dragon Tattoo," "The Girl Who Played with Fire," and "The Girl Who Kicked the Hornet's Nest," became the first author to sell more than one million e-books through Kindle. Third, Newsweek had a column, entitled "Why the iPad hasn't killed Kindle."

According to the article, Amazon has managed to sell about 3 million Kindle so far since its introduction in November 2007. On the other hand, Apple sold 3.3 million iPad in 3 months. Hmm. This looks like a pretty ugly game for Amazon. Sure. Amazon is surging the sales of ebooks. But, remember, iPad has Kindle app. In fact, buying an iPad did not stopped me from buying ebooks from Amazon. I've bought only two books on iBooks. But, I've bought over 10 books from Amazon and carry more than 30 books through Kindle app on my iPad. Before we conclude that Kindle as a hardware device is surviving, we need to look at the data on how many ebooks were sent to Kindle and how many to iPad. My guess is that a lot of those ebooks were sent to those 3.3 million iPads as much as they were sent to 3 million Kindles.

The real story behind this is decoupling of what used to be known as book into hardware, network, software and contents. Both Apple and Amazon seem to benefit from this decoupling.

Thoughts on Samsung's Galaxy S and Innovation

In response to iPhone phenomenal success in its South Korean home market, Samsung introduced Galaxy S, an Android-based smart phone. I have not seen it. So, I cannot comment on how good or bad it is. But, based on many reviews that came out, one thing is clear. It is not going to be an iPhone killer.

(picture borrowed from Engadget)

If you want to kill an innovative product like iPhone that has redefined what a mobile phone is, you need something very different from iPhone, not something that is somewhat different and possibly a bit better in some areas. We often talk about differences in degree vs. differences in kind. What Samsung needs is a mobile phone that is different from iPhone, not in degree, but in kind.

But the dilemma that Samsung has is that Samsung is extremely good at producing something that is different in degree, but not very good at creating something that is different in kind. Over more than a decade, Samsung competed with Sony -- trying to make what Sony makes a bit better, a bit cheaper, with some additional features. Samsung has developed its capability of being a very aggressive, fast, and competent second mover. It is able to copy its competitor's products and make them better, packing them with more features. Its products can be better, cheaper, smaller, thinner, bigger, larger ... or whatever it can possibly do with them ... than its competition.

When Samsung finally caught up Sony in 2004 in revenue and profit, it finally had a chance to define itself without invoking the image of someone else. Samsung's operating profit of $3.4 billion in 2009 was twice as big as the combined operating profits of nine biggest Japanese electronic manufacturers during the same period. Yet, between 2004 - 2010, Samsung looked hesitant, timid and reluctant in making its own bold statement through its products. I don't have data to suggest what was Samsung's internal innovation strategy during that time. However, what is becoming increasingly clear is that Samsung needs yet to develop its own capability for innovation in kind. Samsung's challenge is that the capability for innovation in kind is quite different from the capability for innovation in degree.

So, what does it have to do with Galaxy S? Well, it seemed to me that once Samsung passed Sony, it seemed not sure what to do, as it never developed the necessary capability to excel in that position. However, once Apple showed up in its radar, Samsung seems to be running with its full throttle open. Samsung finds itself in a familiar place -- chasing an innovative rival that creates innovation in kind. This allows Samsung does what it does best -- innovation in degree. Apple is now new Sony to Samsung.

iPad: is it good or bad?

I have had an iPad since it first came out. I use it a lot. I read books, papers, and news papers. I watch movies on it (particular now I am here in Japan by myself). I plan to use it for my teaching tool as well. I take it whenever I travel -- now I don't have to carry a pile of papers with me.

However, I am surprised to see still so many negative reviews -- people often say it is too closed and does not provide enough features. (One of the most recent ones is by a friend of mine, Joel West). And, I can understand why they say that. That is, when you look at it as a computer.

But, I don't see it as a computer. I see it as a replacement of books, newspapers, magazines, and many other things. When you see it as a computer, it is a terribly closed system. You cannot program on it. You cannot add new hardware. Apple dictates you how to use a computer. And, that is not right. After, a modern computer is supposed to be open, allowing you to do whatever you want to do. An iPad is completely closed, yet very successful -- which puzzles those who believe in the principles of open computing architecture.

However, if you see it as a newspaper, a book, and a magazine, it is amazingly open and flexible. It allows you do a lot of different things: it communicates, memorizes, calculates, etc, etc. You can add new functionalities and it is incredibly flexible: simply add new apps.

I don't think Steve Jobs introduced iPad as a Tablet PC. He introduced it as a smart appliance to replace many of these familiar everyday things. And, iPad makes them incredibly flexible and open. As an illustration, just see what iPad is doing to Kindle. Rumor has it that Amazon is hiring mobile app programmers to make Kindle more open and flexible. Instead of making computer industry more closed, iPad is making other industries more open. What users are experiencing is not computing experience, but everyday experiences with hidden digital capabilities. This is what I argued in a paper recently published in MISQ. No wonder, iPad does not have a keyboard, mouse and any extension board. Any appearance that links it to a computer has been deliberately eliminated from it.

We will see which interpretation of iPad will survive. My bet is that people who are inclined to hack their own computers are likely to see it as a computer. However, a whole bunch of non-hacking folks (those who do not set their VCR clock or struggle to program their TiVo machines) will not see it as a computer. Instead, they will see it as a welcome sign of mundane stuffs becoming more open and intelligent. It is a "non-computer" computer that Apple introduced. As long as you see it as a computer, you are missing the point.

A simple life in Japan

It has been about 10 days since I came to Tokyo. Now, I have an alien registration card, a bank card, a Suica card and a faculty ID card. With these four, I feel like I am settled here. Except that I can't speak Japanese. I manage to do most daily things without any problem - I even managed to get my shirt dry cleaned at a local cleaner (the picture below).

I enjoy my new simple life here with small delightful indulgences that I allow myself into -- like delicate local ice cream, very tiny canned beer, incredibly delicious fruit juice at train stations, etc. Other than that, it is a fairly simple routine. I wake up in the relatively early in the morning. After chatting with family back home, I go to office around 9 or 9:30. I write until 3PM or so. Then, I read books and articles. Recently, I read books and articles written by business historians, like Chandler and Langlois, which I found wonderfully insightful. Since I am working on a couple of papers on the industrial consequences on digitalization of products, these readings are very helpful. Particularly, the historical accounts of computer industry are not only useful, but really enjoyable, just for sheer pleasure.

When I come home, I usually continue to read or have conference calls with colleagues back in the US or Europe. Before going to bed, another chance to chat with my wife and boys. Skype is indispensable here. Then, I read newspapers on my iPad or some random stuffs that I saved on Instapaper. One big disappointment was that Netflix on iPad does not work outside of the US. I was hoping that I could watch some movies using iPad. Instead, I used iTunes movie rental last night. It took awhile to download the movie.

What I want the most here is a bicycle. It would make getting around the neighborhood a lot easier. Particularly when I am carrying bottled water and other stuffs that I bought at a local grocery store, I almost have an urge to steal one of many bicycles that are parked.

When a phone is no longer a phone

New York Times has a story that in the US the data traffic exceeded the voice traffic for mobile phone usages for the first time. The article reports that:

The number of text messages sent per user increased by nearly 50 percent nationwide last year, according to the CTIA, the wireless industry association. And for the first time in the United States, the amount of data in text, e-mail messages, streaming video, music and other services on mobile devices in 2009 surpassed the amount of voice data in cellphone calls, industry executives and analysts say.

This shows a unique pattern of digital innovation where evolution of a technology over time leads to the changes in the basic meaning of the technology. In other words, a phone is no longer just a phone. In fact, on many smart phones, phone has become one of many apps and in some cases, users may have more than one "phone" apps on their device. Right now in Japan, I never use the built-in phone app on my iPhone; instead, I use Skype exclusively when I call back home and Korea.
In 2004, DoCoMo surveyed its most active users under the age 30 to study their usages pattern. They found that 100% of them use their mobile phone for e-mail. But, only 2/3 of them ever used their mobile phone as phone. Back in 2004, this was a stunning finding to DoCoMo. 1/3 of their most active users never use their phone as a phone. As DoCoMo saw itself as a mobile "phone" operator, it was a wake-up call. They started looking for a way to redefine mobile phone something other than a phone and came up with the idea of "lifestyle infrastructure".

As digital technology evolves, the key issue that companies need to wrestle with is "idea" that defines the evolving meaning of the product and mobilize its resources in order to support the new meaning. As a part of lifestyle infrastructure strategy, DoCoMo became a mobile bank, offering a full suit of retail banking services. As we can see here, an unintended consequence of digital innovation is the deconstruction of the meaning of product. The idea of product as a fixed and stable concept is becoming less and less useful.