[16 May 2012: Brian: Re-posting this from 9 weeks ago. It still hasn't sunk in with analysts. I have written previously that most analysts continue to miss the potential of iOS. It has the very real possibility of reaching a 1 billion device install base. Easy. What's more, it is a ecosystem. An ecosystem that *competes* with the web. Apple's ultimate goal is far bigger than you imagine.]

In its last full quarter, Apple sold 37 million iPhones. CEO Tim Cook said it was a "decent quarter." 

Which is Tim Cook-speak for 'you got punkd bitch'. 

But Cook also said he expected the global market for smartphones to reach 1 billion units by 2015. I think Cook is lying here. In my original 2016 predictions, I predicted a billion smartphones sold annually by 2016. That turned out to be wildly conservative. Probably, the world will start running through a billion smartphones every year in 2013.

Cook -- and Apple -- are gunning for a very large share of those. I expect they will get it, too. 

The question is: how many?

I ask not to guage Apple's success or determine how much $AAPL stock I should purchase. Rather, at what point do we have a platform?

A web-alternative platform?

I'm completely serious. At what point do Apple users not need "the web" at all?

As regular readers can attest, I have little patience for and will call out those who run -- or fall victim to -- VC-led pump and dump schemes.

Michael Arrington and his sycophants, for example, put a small amount of money into an app no one has, Highlight, for example, talk it up to their friends in the VC-funded blogosphere, get a million page views or so, create an artificial demand for 'ambient mobile location based sensory' technology, or whatever the hell it's called and then -- wisely -- sell their stake to some big company, like Facebook.

Because, really, it was never about building a business. 

That's too damn hard.

This is the scenario I expect to happen and it's getting played out over and over. Fast, easy money split between the VCs, VC-funded tech press, and the developers, who wind up with a decent chunk of change and a nice titled position at Big Tech Co.

It is because of this scenario that so many inside and outside Silicon Valley believe that the region is thinking small and doing small. And not in a good way.

They have a point. But, they are missing a larger picture. There is real potential for "small" apps and services to have a massive impact on people, on work, health, social media and more.

Only, because it's happening on smartphones, for example, the true potential can be overlooked.

Instagram has 27 million registered user. Path has over half a million. Yelp receives over 30 million visitors a month. That's close to how many watch the most popular show in America, American Idol. 

These are "small" apps, with a limited purpose. True. But they expose a much larger opportunity. They are part of a thriving eocsystem -- built on iOS instead of TCP/IP or HTML, for example. Consider the tens of millions, possibly hundreds of millions, who regularly (dailiy) use Facebook or Twitter on their iPhones. 

I think for all the talk of Apple's success, iPad and iPhone's success, that people still don't understand its potential. iOS is a web rival. Actually, considering how easy it is to find, receive and enjoy books, music, television shows and movies, iOS is superior to the web in so many ways.

But it's catching up to it in scope, as well. While "the web" likely will always have far more users, iOS will still have hundreds of millions, possibly a billion users, and they will use iOS for far more and far more often. 

A lot of the apps and functions on iOS remain "small" or silly or don't much solve a problem as alleviate a minor need. But this is how it begins. 

Give Brian some sugar. A day after I wrote about the primacy of apps, the big tech blogs and major media promote the 'rise of the app'. From my earlier post:

The desktop metaphor ruled the PC. The app metaphor rules -- and will continue to rule for years at least -- the smartphone.

As the world is going mobile, rapidly, the mobile has already gone app. Apps replace search. Apps replace services. Apps simply work better. The app can be optimized for the device, for the screen, for the hardware, for the functions.

The web, as we know it, can never match the app. Instead of a "Google search" app there should be, say, ten Google search apps -- spanning various important search needs.

The smartphone is the new personal computer and the app powers the smartphone. It will be thus for at least the next five years. Apple will likely *extend* its lead over its rivals during this time.

Today, a study reveals the growing importance of apps! 

Via TechCrunch:

With smartphone penetration now at 50 percent in the U.S., the world of apps is seeing a knock-on effect in their popularity: according to a new report from Nielsen, mobile consumers are downloading more apps than ever before, with the average number of apps owned by a smartphone user now at 41 — a rise of 28 percent on the 32 apps owned on average last year.

But at the same time, there are hints of people possibly approaching a limit to how much they might use them: despite the rise in app numbers, the amount of time that people are spending in apps has remained essentially flat: collectively, they are being used for 39 minutes per day today, compared to 37 minutes in 2011.

Nielsen also notes that apps seem to be taking a bit of time away from mobile web usage (perhaps this is where the extra two minutes comes from…): it says that users are using apps 10 percent more than the mobile web, compared to last year.

As I wrote before this study came out:

iPhone quickly went from revolutionary computing device to app phone. This is the equivalent of the PC embracing the desktop metaphor. It is the primary consensual hallucination that we all accept and embrace for personal computing.

The app is the means with which we access the data, services, hardware and functions of our smartphone. The smartphone is our personal computer. You must build for this reality. You must accept this reality. Once again, like Moses coming down from the mountain, Apple brought us the singular digital metaphor for computing and interactivity.  

Worse for Apple's competition is the fact that, even today, in mid-2012, Apple does not simply make the best smartphone -- it makes the best phone and the best platform for apps. It's lead in profits and popularity should widen. Android was *not* optimized for apps. Nor Blackberry. Nor even Windows Phone. Think of a PC company in 1996, say, that didn't get desktop and folders correctly. 

From AllThingsD:

Judging by two of the most hyped deals in recent Silicon Valley history — Facebook’s acquisition of Instagram for $1 billion and Zynga’s acquisition of Draw Something for $200 million — it seems like a foregone conclusion that the era of the app has arrived.

And some new numbers from Nielsen that chronicle the rise of “AppNation” on Android and iOS between March 2011 and March 2012 back up that notion. The study shows the average number of apps per smartphone has jumped from 32 apps to 41, and growth in time spent on app usage outpacing the growth in mobile Web usage on smartphones by a hefty margin.

With respect to deals like Instagram, you must understand: an app is not an app. The app phone, particularly the iPhone, is a platform. The new web. The app is like a site on the new web. 

This makes it easier for people to comprehend, though we still cannot know just how the monetization of content and the delivery of data and engagement will fundamentally change in this era of the app.

Last week, I asked in that way of mine, "will the big tech blogs ever call Tony Hsieh an asshole?"

We have our answer.

No.

Probably he doesn't deserve such a label. If he did, his PR firm will certainly never tell.

The reason I continue to expose the inter-connectedness of the VC funded blogs and the stories, businessses, people and products they focus on is because it reveals what a *non-meritocracy* Silicon Valley has become. The big blogs take the big money from the rich insiders. They promote the myth, build the buzz, and cheer when their latest non-revenue generating venture is purchased for big money.

While you remain some nerdy Jean Valjean hungry for crumbs.

The incestuous, tightly connected relationship between big blogs, serving as PR firms, and venture capitalists, who have become masters of the fast flip, further reveals, dear reader, that there are many gatekeepers you must pay before your grand idea or wonderful business gets the press it so richly deserves.

As I've said many times: there is a reason why rich insiders fund the big tech blog media sites -- despite the fact that they will *never* earn a acceptable payout on their investment.

Because they are getting paid in so many other ways.

In my post last week, I noted that Tony Hsieh, head of Zappos, before he sold it to Amazon, is an "investor" in PandoDaily.

He also employs PandoDaily's founder's spouse.

A writer for PandoDaily is launching an online magazine. With funding from Mr Hsieh. Possibly, all its funding. 

Mr Hsieh's *other businesses* are "paid sponsors" of this funded online magazine.

That buys a lot of good press. Literally.

Today, in PandoDaily, from the founder:

She was, of course, talking about Zappos, and it was clear by listening to the ensuing conversation that this woman works at Zappos for one big reason. It’s not the discounts on shoes or the crazy headquarters with different noisemakers on every aisle or the almost cultish, feel good all hands meetings. It’s because she’s insanely, ridiculously proud to work at the place that made insanely expensive customer service that almost no company could justify into a $1 billion exit. She lives her life looking for reasons to brag about that very fact to complete strangers.

That alone is an astounding fact, if you think about the trend corporate America was on with outsourced, voice recognition software and endless phone tree call centers just a few years ago. And Zappos isn’t alone. Increasingly, middle America is reclaiming the call center. Don’t call them “fly-over states” anymore, you coastal snobs. Thousands of people in America’s heartland may no longer be farming or building cars, but thousands more are making all of our lives way better every day call by call.

Something well beyond Zappos is happening here. And it’s similar to the move from commerce mega sites to curated content-driven experiences. It’s not too dissimilar from our own ethos at PandoDaily that page views are not what build a big business, rather seemingly crazy investments in what we consider to be good work does. It’s a move from a slavish reliance on machines and metrics towards things that humans are uniquely good at, things that can not be automated. It’s a reaction against the phone tree, voice-recognition software, the algorithm and any too-good-to-be-true shortcut that companies embraced over the last five to ten years.

Is it too much to say that the outsourcing wave was wrong, that the business pendulum is swinging back en masse to expensive investments in making customers happy? Probably. (Unfortunately.) But these four companies — and doubtlessly others like them — are setting an important precedent in how short-sighted the outsourcing and automated customer service boom was.

Zappos, GoDaddy, Qualtrics and Braintree have proven that spending money on customer service isn’t throwing money away — it’s investing in the business. Done well, good customer service is the difference between a mediocre business and a great one. You can get shoes anywhere, and Zappos’ site design has never been that amazing; its entire success is wrapped up in treating people well. GoDaddy doesn’t view its call center as a “cost center,” arguing it has actually generated more than $100 million in annual revenues. And Qualtrics — and loads of other new enterprise companies like them — have effectively substituted these call centers for expensive sales people and marketers.

Everything in business moves in cycles. If this is the beginning of a move back, it’ll be a temporary one. At some point, skimping on customer service will again be on the vanguard of cost-cutting. But until then, let’s enjoy the pampering.

Oh, and Zappos.

Oh, and those proud folk in flyover states are doing god's work by answering your calls. Go pat them on the head.

Oh, and no mention anywhere in/around the post that I can tell of the relationship between PandoDaily and Zappos's moneyman.

Will your business get this type of glowing, gushing coverage? Will your awesome commitment to customer service get singled out?

We already know the answer.

Since I almost certainly will be using an iPhone this year and next, at least, I hope I am wrong about this though I think not. 

Via Parislemon:

I haven’t heard anything specifically about this [offering turn-by-turn navigation], but my guess is that Apple has been hard at work on it for some time. The fact that the maps update is coming seems like a good sign.

They know this is one of the remaining “low-hanging fruits”, as John Gruber calls them, that they can add to iOS. It’s also an area where Android is, without question, winning.

Do not get your hopes up, dear reader.

Mapping and navigation are not Apple strengths. Improved mapping and navigation functions can better support app developers and social media platforms on iOS. But for the most part, mapping is only marginally connected to Apple's larger strategy and business model.

Let's get confirmation that Apple will be replacing Google Maps in iPhone, and that it will offer something TOTALLY AWESOME in its place, before we start hoping for free, embedded, Apple-y turn-by-turn support.

My assumption is that this will remain a rather expensive add-on service long after iPhone 5 (or whatever it is called) is released.

In 2007, Apple introduced the iPhone. It was a revolution in personal computing. In five years, it has achieved what was once unthinkable: Apple towers above Microsoft and Google in revenues, profits and industry influence.

Microsoft has yet to recover. Google, to their credit, moved rapidly to embrace mobile and to copy iPhone. They got one piece wrong.

iPhone quickly went from revolutionary computing device to app phone. This is the equivalent of the PC embracing the desktop metaphor. It is the primary consensual hallucination that we all accept and embrace for personal computing.

The desktop metaphor ruled the PC. The app metaphor rules -- and will continue to rule for years at least -- the smartphone.

Google has tried desperately to have it both ways. To follow Apple, but to preserve their lucrative 'web-based' services, in mobile form.

Android requires deep integration with Planet Google. Gmail. Google calendar. Search. Google Play and more and more with each passing day. But these typically are developed with a web-first mindset. This will never succeed.

As the world is going mobile, rapidly, the mobile has already gone app. Apps replace search. Apps replace services. Apps simply work better. The app can be optimized for the device, for the screen, for the hardware, for the functions.

The web, as we know it, can never match the app. Instead of a "Google search" app there should be, say, ten Google search apps -- spanning various important search needs.

Google spread Android as far and wide as possible. This strategy has paid off in terms of market share, but not in terms of revenues. The reason is because we don't want Google web services, we want apps. And apps work better when they can focus on the particular OS and device. This is not possible with Android.

This chart reveals how badly fragmented Android remains -- and suggests how its apps, which are the new power -- can never match those on the highly focused iPhone:

TechCrunch has the nasty details:

That there are gobs of Android devices floating around out there isn’t exactly a shocker, but data like this really drives home the issue. With so many devices running so many versions of Android with who knows many carrier- and manufacturer-mandated tweaks onboard, how is a developer supposed to make sure that all of their users gets a consistent experience? They can’t, unless they’re willing to test like crazy.

Google chairman Eric Schmidt famously downplayed the term “fragmentation” at this year’s CES, suggesting instead that people call it “differentiation.” It’s hard not to agree with sentiment on some level — after all, one of Android’s key strengths is how easily it fits into different niches and price points. But according to him, as long as every Android user is able to use the same apps, there’s no problem here

That strikes me as a rather shortsighted way of looking at it. Downloading and installing apps is one thing, but what I think really counts — the user experience — can still vary from hardware configuration to hardware configuration. Not a day goes by without new Android hardware (or rumors of new Android hardware) making the rounds — hell, just an hour or so ago, the Wall Street Journal reported that Google will soon be filling out the new Devices section in the Google Play Store with new, unlocked “Nexus” hardware thanks to cooperation from up to five hardware manufacturers.

And of course, fragmentation isn’t just a hardware issue — the OSM post points out that the two most used versions of Android now only account for 75% of the devices they surveyed, down from 90% last year, yet another issue for developers to grapple with.

"Differentiation" of devices -- personal computers -- may be fine when all of them point to Google/web. In an app world, however, they do not. They never will. The app demands specialization, focus -- and optimization.

This can *never* occur under the existing Android business model.

It does not matter if you (or Google) prefer the 'web' to the app or if you still believe in 'open' vs closed or if you enjoy taking advantage of different form factors and hardware specs. It does not matter if Windows Phone 'live tiles" construct should rule our smartphone interfaces, nor perhaps that it might had Microsoft introduced these in, say, 2008.

The smartphone is the new personal computer and the app powers the smartphone. It will be thus for at least the next five years. Apple will likely *extend* its lead over its rivals during this time.

Of course, this is not merely bad news for Google Android, but for Facebook. Facebook was born before the iPhone. They made a terrible strategic decision to not offer their own smartphone operating system. 

Locked out, they have sought refuge in 'open' 'web' 'standards', hoping to use these standards and their reach as a counter to iOS and Android. This is doomed to failure. 

A great post from Mobtest:

So what is wrong with the iOS app?

• app is slow 
• inconsistent information notification icons say there are new messages or responses, actual window does not show anything new.
• app is slower than mobile web site while everybody is used to speedy apps, the Facebook mobile web site is faster than iOS app, and offers almost the same functionality.
• tons of other bugs scrambled views, photo upload, text boxes disappear, no sharing.

The author provides solid reasons for why Facebook has chosen their particular path for their mobile/iOS app efforts. They are good reasons, thought fundamentally wrong. Because the app must be optimized for the smartphone. There can be no compromise on this. Integrated as deeply as possible with the OS, with the camera, with the location of the device, with the personal physical and virtual connections of the user, with the current and historic searches containted within that device.

iOS and Android will continue to do all they can to lock Facebook out of all the data that smartphones offer. 

And web standards will simply never replace the optimized app. 

With their purchase of Motorola and their continued abandonment of the "open" web and hints of offering a single device type and updated OS across carriers and handset makers, Google at least understands the reality of their situation. I believe Facebook continues to fool themselves into believing that the web will save them. 

The smartphone is the computer. The app is the means with which we access this computer. Ignore that at your financial peril. 

This Mumbai Times piece, "Is Apple the next Sony or RIM?" is so chock full of stupid that I wonder if it's all a lie; a not-so-subtle way of bashing Apple for not having a major presence in India.

Begin...

(In 2007) the CrackBerry craze seemed unstoppable. Nokia owned a $150 billion market cap on a parabolic rise. Apple knew nothing about mobile phones. How could an iPod Touch with some phone circuits possibly challenge the entrenched top dogs?

But that's what happened. Today, RIM and Nokia are on life support while Apple is the world's largest company by market cap. There's no stopping the Cupertino cash machine.

History is apt to repeat itself, my friends. Apple and Android are killing the Nokia and BlackBerry platforms, which already destroyed Palm, pagers, and PDAs. There's always another revolution waiting just around the corner. How do you know Apple's head won't be next on the chopping block?

Laugh it off if you want, but don't act too surprised when Cupertino's collapse comes. It's been lonely here in the land of Apple skeptics, but that's changing as we speak.

This is the problem with the Apple skeptics. They have zero evidence. Thus, we are reminded that Apple bested Nokia and RIM therefore someone else may best Apple. Actually, Apple could continue to grow and surpass $1 trillion market cap. In fact, there's more evidence of that happening than any near-term collapse.

You might remember High-Tech Strategist editor Fred Hickey as the guy who called the demise of RIM before it happened. 

Hickey is back with harsh analysis of the new profit leader. The latest installment of his newsletter says that the "parabolic fever" for Apple stock has broken, perhaps forever. "If so, Apple's stock will continue to break down, frustrating the Appleholics who will buy on every dip, citing the 'low' valuations," Hickey says. "They will buy it all the way down."

Hickey's motivations for shorting Apple ring all too true: "Only in hindsight (years later) will they know that Apple's $600 billion valuation could not be sustained, that Apple is a consumer product company subject to the whims of consumers. That Apple sells commodity type products: phones, PCs and PC-type products (tablets) where margins could not possibly be sustained at current levels."

If I had a nickel for every analyst who said SELL APPLE, I'd be rich. Not as rich as if I  had simply purchased $AAPL, but still pretty damn rich. That the author used Motley Fool to guide her says far too much.

Have you ever thought of Apple as a simple commodity player? But it's true. If every iPhone suddenly disappeared from the market today, you could pick up an Android or a Windows phone instead. The Macbook Air is a fine machine, but Intel (NAS: INTC) presents the Ultrabook form factor as a solid alternative. The chip champ is pouring $300 million into marketing the concept. iPads own the tablet market, but is it because they're so much better than the Android competition, or is it simply a result of brilliant marketing with a first-mover advantage?

Delete the iPhone, iPad, and Mac from today's markets, and they would surely be missed -- but they would be easily replaced. "Commodity" may be a strong word to use here, but that's the way the cookie is crumbling now.

And this, dear reader, is always the conclusive sign of some poor fool who suffers from Apple Derangement Syndrome.

IT'S A COMMODITY! 

THESE OTHER PRODUCTS ARE EXACTLY THE SAME.

If you believe this, you are dumb. I realize I shouldn't call people dumb but some leave me no choice. 

There is no contest between iPad and its competition. iPhone is well superior to the very best -- and newest -- Android and Windows Phone wannabes. To equate the Ultrabook as the same as the MacBook reveals a rather chronic case of profound ignorance.

Always it becomes about the marketing. PEOPLE BUY APPLE CAUSE OF THE MARKETING. JUST YOU WAIT. Now Intel is "pouring $300 million" into marketing Ultrabook.

Fine.

It still will be *years* behind MacBook Air. But, yes, a bunch of sheep and fools will be swayed by marketing. Sad, really. 

Apple is fighting an epic battle against history while trying to avoid some very scary pitfalls here. CEO Tim Cook could very well solve every problem discussed here, but he stares down some long odds. Chances are, several of these factors will combine to bring Cupertino back to earth.

Apple makes the best laptops in the world. The best tablets. The best smartphones. The best media players. Has the best ecosystem. Is building out globbal distribution and retail. If it falls to Earth, its competition will likely be buried in the Earth. 

You make you own decision. I know I have.