Business, Technology

Why I’m excited by Apple’s recent announcements

It had almost become a pattern in the last few years:

Apple schedules an event → Tech blogs and websites waste tons of (digital) newsprint making predictions → Apple fans almost wet themselves in anticipation → The announcement is a damp squib which still make fans orgasm in delight → Apple makes tons of money.

This year’s event wasn’t too different. For the most part, the script was the same as the previous years. However, this time there were a couple of announcements that got me excited. Not excited enough to go and actually buy an iPhone, but certainly excited about the direction in which Apple can move the mobile phone industry (and other related industries!) in. Love them or hate them, you’ll be a fool to deny that if anyone can cause massive shifts to happen, it is Apple.

1. Fingerprint Scanner (Touch id) + iBeacon = Fast, secure mobile payments (Also, death of NFC?)

The code for mobile payments hasn’t been cracked yet. There are a multitude of technologies and standards present in the wild, none of which has been able to gather momentum and really take off. The announcements from Apple and Paypal in the past few days make me hopeful that finally we may have a genuine winner in our hands.

For starters, Bluetooth Low Energy (BLE) is present in a majority of new consumer devices. On the merchant side, all it needs is an iPad, a laptop or just a basic smart phone connected to the internet – It doesn’t require the merchant to buy a new point of sale terminal.

The third, and most important, aspect in mobile payments has to be security. And this is where Apple may have finally cracked the puzzle. The fingerprint is one of the most unique authentication mechanisms present with us. And we carry it all the time. Leaving out the extreme edge cases of thieves chopping off your finger or making a mould of your fingerprints, it cannot be duplicated easily. It is much faster to put a finger on your phone’s scanner than typing out a PIN and way more secure.

If Apple can make TouchID work and are able to combine it with a secure payment mechanism, it will be a massive game-changer. And it looks like they already have made some progress on it.

touchid_heroOn the technology front, whether we like it or not, Apple’s endorsement of a technology does cause the rest of the industry to start taking it more seriously. e.g. NFC. Even though it’s part of the patent linked to above, it hasn’t made its way to the present generation of iPhones. And this is a technology that has been around for ages. It is even present in a majority of Android devices that are coming out in the market. But it has never taken off.


There are multitude of reasons for it and all of them very well-documented. One of the biggest is the fact that Apple has not supported it yet. Another point against NFC is that it doesn’t really make mobile payments faster. Instead of going to a point of sale terminal and swiping your credit/debit card, you go to a terminal and swipe your phone. It just replaces a dumb piece of plastic with a (much) smarter piece of plastic. NFC doesn’t really help the customer in dealing with long, lines of customers waiting to make a payment.

Like David Marcus, president of Paypal, said in a blog post last year, “Is tapping a phone on a terminal any easier than swiping a credit card? I don’t think so – it’s not solving a real consumer problem and its not providing additional value to encourage me (or anyone else for that matter) to change my behavior”.

Back to the point, BLE combined with fingerprinting for authentication has enormous positive implications for mobile payments.

2. 64-bit Processor = Faster, better, more energy-efficient apps (eventually)

“It doesn’t mean anything for consumers”. “It is still years away from having a practical impact” etc. You know what, all of these objections are meaningless.

It’s like the famous quote attributed to Henry Ford, “If I had asked people what they wanted, they would have said faster horses.” Specially when you talk about things like the architecture of the processor, it will never mean anything for a consumer. It’s the job of the company to create a demand for bigger, better technologies. And Apple has done just that by releasing a phone with a 64-bit processor and an OS that can use the power of the processor. The effects of this announcement are already evident – Samsung (in typical style, straight after an Apple announcement :)) has already announced that they will be coming out with a phone with a 64-bit processor. Even though this doesn’t have any significance until Google releases a 64-bit version of Android, it is still a very positive development.

As Ben Bajarin points out in his article on this topic – “Performance doesn’t matter. Until you don’t have enough of it.” (Read the article)

Apart from these two, the rest of the announcements demonstrated why Apple is one of the most valuable companies in the world. By not going with what the analysts were predicting and charging full price for a plastic covered version of the current iPhone 5, they’ve sent a clear signal out – We are a premium phone maker, and we are not afraid to charge for it.

For the people making fun of the 5c – Step out and have a look at the number of people who slap pink “Hello, Kitty” rubber covers on their phones. This phone is for them. Do you know any Android phone manufacturer who can charge $39 for a rubber case? No. In fact, the company which made the best Android phone yet, is reportedly finding it hard to survive.

arbit, Business, Computers and Internet

Gmail and Facebook – Substitute Products?

Logging in to twitter tonight i found a pretty interesting tweet from Daryl Mather. He said “If Google could leverage it’s email infrastructure Facebook would be obsolete”. Okay.

Now lets think about why we use email in the first place. To send messages. To keep in touch. To send pics. To share interesting things with people we know.

In one word, to “Connect”.

But wait a minute. Isn’t that what the social networking sites are for?

Now imagine what would happen if we turn around Darly’s statement?

What if we say – “If Facebook could leverage it’s email infrastructure Google would be obsolete”

Does it make sense?

I mean, if Facebook could provide an email address (, provide the ability to fwd mails and messages, tag and group mails and do all the other cool things that gmail allows us to do, wouldn’t that be awesome? It already has all the other things with it. It is already the biggest database of photographs. You can embed videos in it, you can share links with people. Almost everything that you would want from an email id is right there.

Or is it?

(P.S. These are just a few thoughts that came to my mind after reading Daryl’s tweet. I am considering Google = Gmail here. Do let me know if it makes any sense. Comment, Mail or Send me a tweet or scribble on my wall)

And yeah, if you miss me around here, you know where to find me now :D)


Network Effect and valuing Free Customers

Came across a pretty interesting paper in the HBS working knowledge site yesterday. The paper talked about how a "free" customer can be valued. This can be particularly useful while valuing new age business like ebay and the various job sites because these sites generally have two types of customers: job seekers (or "buyers" as the paper calls them) and companies (or "sellers"). the companies pay the sites for putting up their jobs and every person recruited thru them while the job seekers are normally free (at least for the basic services). Now a seller can be directly valued by finding out the revenues that the site gets from him but how do u value a free customer?

The concept of valuing a free customer comes from Metcalfe’s law which basically says that the value of a network (like YouTube, Ebay, Monster etc.) increases with the number of users connected to it coz every user attracts other user to the site and also the greater the number of users the greater the number of sellers who will be attracted to the site or the network. This law is generally accepted to be the explanation behind the rapid growth of the internet and a recent article in Strategy+Business also blames the oversimplistic implementation of this law as one of the major causes of the sky high valuations during the boom.

Coming back to the paper, the authors, with the help of a whole lot of mathematical mumbo jumbo, analyze the value of a typical job site (they have not given the name due to reasons of anonymity) and come up with the result that the network effects of buyers on seller are nearly six times the effect of seller on buyers. so more buyers attract more sellers but more sellers don’t attract buyers to the same degree. So, in effect the value of a buyer is more than the value of a seller, even though there are more buyers than sellers.

Also, the marketing efforts of such a company should be more concentrated more in the start of the business to build the initial critical mass of buyers, after which the marketing efforts can be cut down.

The only catch here is that the model created in this study can only be applied in two sided markets. i.e. with buyers and sellers. So orkut and you tube cannot be valued by this model. Wonder how Google valued Youtube?