A fistful of dollars/for a few barrels more
Everyone wants a strong dollar, right? In the U.S., politicians will pay lip service to the notion of a strong dollar – i.e., in their minds, a dollar that trades more evenly against the other major world currencies (sterling, euro, yen) – because A) it sounds good; B) it feels good for American travelers who travel to Europe and Japan and realize that their greenbacks go pretty far.
When I visited Italy in 2008, I remember that the USD-EUR exchange rate was unfavorable to me (I’m American) and accordingly I felt the pinch of 50 EUR cab rides and 14 EUR gelato cones in Florence. At the same time, I remember fuel being expensive that entire year, with it peaking at near $150 per barrel that summer when Russia invaded Georgia.
That all feels like a 1000 years ago now. The dollar has strengthened mightily against the euro and oil trading for less than one-third of what it did the summer before Barack Obama was first elected. King Abdullah bin Abdulaziz al Saud of Saudi Arabia, whom George W. Bush begged that same year to increase oil production as energy costs skyrocketed in the run-up to the Lehman collapse, is dead. Bush himself is reduced to speaking at events in the Cayman Islands, an unmentionable even among his own party. Russia, though still ruled with vim by Vladimir Putin, is in economic and diplomatic free-fall.
But the strong dollar isn’t everyone’s friend. For starters, it is burden on corporations that sell goods around the world. Tech analyst Ben Thompson recently framed the problem in stunning terms, in ridiculing the widespread perception that Apple is always on the verge of catastrophe:
“It’s difficult to overstate just how absurd this is, but here’s my best attempt: last quarter Apple’s revenue was downright decimated by the strengthening U.S. dollar; currency fluctuations reduced Apple’s revenue by 5% — a cool $3.73 billion dollars. That, though, is more than Google made in profit last quarter ($2.83 billion). Apple lost more money to currency fluctuations than Google makes in a quarter. And yet it’s Google that is feared, and Apple that is feared for.”
I have been trying to wrap my head around this all day. All those seemingly minor variations in currency trading, piled up over and entire quarter at the scale of Apple’s business, ended up taking a cut out of Apple larger than Google’s entire quarterly profit – and Apple still managed the best quarter of all time, with $18 billion in profit.
Apple’s turnaround over the past 18 years is probably the greatest business story of all time. if you look at a chart of all the biggest quarterly results in history, it’s dominated by oil companies (Gazprom, Royal Dutch Shell, etc.) and Apple and no one else. It’s a neat coincidence that Apple keeps outdoing itself at a time when oil – seemingly its only competitor in terms of product profitability – is taking a nosedive.
Growing up in the 1990s, this is all so surreal. For a kid growing up in rural America, at the peak of Windows (I had just turned 9 when Windows 95 was released) era, when every class at school was built largely around writing things in MS Works/Word and saving it to a floppy, Apple was nowhere to be seen. I remember reading about Macs when playing some Sierra On-Line games that were built for both PC and Mac, but I never even used one until 1999, in a school in Gallipolis, Ohio. Apple was on the margins.
Not anymore. To quote almost any stat about Apple anymore is to send the mind fruitlessly in search of anything else like it. The company’s iPhone business alone – just the iPhone, without even taking the iPad, Mac, iPod and iTunes into account – brought in more revenue than Google and Microsoft combined in the most recent quarter. Each quarter, it makes more profit than Amazon has ever made. It has enough cash to buy IBM outright at IBM’s current market cap – and still have tens of billions left over.
Paradoxically, the vast complexities of Apple’s supply chains as well as the efficiency of its manufacturing and marketing processes have ensured that simplicity wins out. The iPhone and its brethren feel natural and easy to use (despite mounting software issues, which is a topic for another conversation), reinforcing what I have always thought: that one significant part of the success of iOS in particular is that it eliminates the paradox of choice that is so paralyzing with Android or almost any other computing platform. It’s a good design, like John Gruber recently noted:
“Who knows how long Apple’s ride at the top will last, but this is a moment worth savoring. A toast to the value of good design.”
Reading articles about the “demise” of Nintendo is a good way to stumble over some terrible reasoning and misinformation. MG Siegler et al are all too willing to liken Nintendo to BlackBerry, despite the company’s excellent financial position (especially in light of its small workforce – Nintendo is not a gigantic operation like would-be competitor Microsoft, or like BlackBerry is/was) and its exceptional success with the Wii and DS over the past decade.
The angle of comparing Nintendo devices to “mobile” (an increasingly meaningless word applied to gigantic phones and laptop-grade tablets) is overplayed – certainly, there is some competition between devices for casual gamers who are now into Candy Crush but might have been into Nintendogs in a past era. But Nintendo isn’t really making “mobile” devices in any sense: the tablet controller of the Wii U is slightly awkward as a standalone device, and even the (3)DS is mostly a device for gamers at home, not on the go. It isn’t trying to make a play for the “mobile” audience – maybe that’s a bad move, maybe it isn’t. Twenty years ago, it looked like a mistake for Nintendo not to make full-fledged PC games, but it’s still around.
If Nintendo has competitors (I’m not sure if does – like Apple, they don’t give a shit about any other companies), they’re the home consoles – the Xbox and PlayStation lines. And it’s competing against them with not only the Wii U, but the (3)DS, too (more on this later). Sure, the console makers may be losing their asymmetric battle with “mobile,” but if they are, it’s hard to tell, in light of record-breaking opening day sales for both the Xbox One and PS4. Maybe there’s enough attention out there to sustain both consoles and “mobile.”
But then we come to the Wii U, the poster-child for both Nintendo’s assumed doom and the decline of the console business due to “mobile” and disruption and blah blah blah. The Wii U may finally cross the 4 million units sold threshold at the end of this year, making it a huge disappointment compared to any of Nintendo’s previous offerings, save the Virtual Boy. Sales could turn around; just look at the 3DS, which IGN hilariously declared doomed in 2011 but is now the most popular console in the world. However, I think it’s more useful to understand why it has struggled than to prognosticate on its future. That said, here are my three theories for why it has had such a rocky start.
Theory #1: It isn’t powerful enough
The argument: The Wii U has a PowerPC processor – that sort of says it all, what with almost every PC in the world now running x86 of some sort an everything else – mostly “mobile” – running ARM. Its technology is from a different era. It can output HD content, but not with the extra-fancy shading and high frame rates of the Xbox One or PS4. Developers won’t make anything for it because it doesn’t have the AMD chips found in its competitors and lacks the muscle to power yet another dystopian shooter.
My take: Developers are fickle. Many ended up scaling down their games for the standard-definition Wii last generation, then abandoned it near the end of its lifecycle (which didn’t matter – the console still received plenty of first-rate games, mostly from Nintendo itself). Maybe a system-selling title like Super Mario 3D world could cause a change of heart.
But all of that is secondary. Specs are mostly irrelevant – sure, there are Internet goons who only care about graphics and the newest batch of corporatized FPS crap, but if one looks back at the history of consoles – or even consumer electronics as a whole – being on the bleeding edge hasn’t always translated into “winning” the battle. The Wii outsold both the Xbox 360 and the PS3. The iPhone has outsold every single 1080p quad-core Android device.
The question is, can Nintendo and others put the Wii U’s particular strengths to good use, like they did with the Wii’s motion-sensor technology or the N64’s thumbstick. I think that the potential is there – just look at ZombiU or The Wonderful 101 – but more needs to be done to exploit the GamePad. On the HD side, Nintendo has already shown how even something as mundane as 1080p resolution can be reimagined with its subtle use of shadow and translucency in Super Mario 3D world. There needs to be more of this.
Theory #2: It hasn’t been marketed well
The argument (by way of anecdote): I was at a Target in downtown Chicago on Black Friday. A woman was trying to buy Just Dance 2014 for the Wii, but noticed that there was a Wii U version, too. She asked the sales associate what this “symbol next to the Wii” was – that symbol being the “U.” The associate had to explain to her that the Wii U was a totally different console. Customers don’t get the distinction.
The Wii U’s name is stupid. It should have been called the Super Wii for clearer differentiation. Similarly, the Wii U has all the capabilities of the Wii – the motion-sensing, Wii Remote compatibility, and the ability to play SD Wii games -, but most people probably wouldn’t even know this, despite the name similarity. It doesn’t ship with a Wii Remote, despite some of the bundled titles (like Nintendoland) requiring one for certain sequences. It wants to be a brand new console but also compatible with everything from the Wii, yet marketing has succeeded at making it seem like neither.
My take: Sure, the name maybe was an uninspired choice. But similar problems don’t seem to have affected names as bad as “Xbox One,” which is not the first Xbox, or the previous “Xbox 360” (compared to “Xbox”). Calling it the Super Wii and bundling a Wii Remote and something like Wii Party U could help, but it’s not the Panacea (dumb ZombiU reference).
Theory #3: It’s being cannibalized (by the 3DS)
The argument: Before you start worrying about parallels to Robinson Crusoe, think about this: Nintendo’s console business is unique. Since 1989, it has been supporting at least two consoles at one time, a portable one and a TV one. These two lines ran parallel for decades, with little overlap except for the IPs that made their way onto both platforms. The Game Boy was very different than, say, the SNES, and getting one system did not give one the same experience as the other. Ditto for the DS and the Wii.
But this has changed in recent years, largely because (I think) the 3DS was so underestimated during its first few years of existence. Even Nintendo seemed to struggle to wrap its head around what the 3DS should be early on – it wasn’t until Super Mario 3D Land and the much-needed 3DS XL redesign that the console began finding its footing. Prior to those two events, it was mostly a DS lookalike with some cool 3D graphics. But the run of first-rate software titles and a larger screen (the importance of the latter can’t be overstated) showed that the 3DS was something very different, something that realized the promise of the DSi and integrated console-level amenities like high-quality soundtracks and animations. I’ve argued that Nintendo is essentially a software company that dabbles in hardware, and the 3DS bears me out – it took good software to start moving hardware.
The perhaps unintended consequence of the 3DS’ maturity, however, is that it is cannibalizing Wii U sales. Cannibalization occurs when one of a company’s lower-priced products drives down sales for its more expensive ones, since they are targeting the same audience. The 3DS XL is nearly a Wii U GamePad on its own (and in Japan at least, the 3DS XL is way more popular than the standard-sized 3DS) and its software provides what could be called a “Nintendo fix” – Mario, Pokemon, Zelda, the full lot. Users get their fix from the 3DS and don’t need to get it from the Wii U, which doesn’t have a Pokemon or Zelda title and only recently got a truly new Mario title.
My take: Companies like Apple have long been conscious of cannibalization – in Apple’s case, of Mac sales by the iPad, or high-end iPhone sales by low-end iPhone sales. It’s a difficult issue to sort out, but in a way, it can be a good problem to have – at least something is selling, albeit perhaps not at the price point/profit one would hope.
The idea that Nintendo is cannibalizing its Wii U sales with 3DS sales probably doesn’t occur to many observers, since none of Nintendo’s competitors have a similar console business. Microsoft doesn’t do dedicated portable gaming machines, and Sony’s Vita is a failure compared even to the Wii U. Maybe Nintendo really isn’t competing with Sony or Microsoft – it’s not in a specs race, or a race for the best Assassin’s Creed 4 graphics, but simply trying to selling as many Nintendo devices – 3DS, Wii U, or otherwise – as it can. Given Nintendo’s history and resilience, that makes much more sense than arguments about the Wii U’s power or marketing
Microsoft has updated Bing so that it now pushes Klout results to the top of its many of its results pages. Ostensibly, this is a move to provide better content and to keep pace with Google’s own efforts at integrating Google+ results into Google Search. It also squares with Microsoft’s generally aggressive commitment to social search, which can be glimpsed in its relationship with Facebook and Facebook’s Graph Search functionality in particular.
“Microsoft believes that content is so powerful that is almost doesn’t matter whether Klout’s “experts” actually have any real expertise. If enough Klout users vote up an answer, it will still likely be a worthwhile addition to Bing results, Ripsher said.”
If one had any doubts about the internet’s objectivity or its “openness” (to use another overused adjective), then this peculiar development should allay them.
“The internet” is often characterized as an almost untouchable, coherent, self-contained system that can provide definitive knowledge and answers. The rise and insane hype around services like Quora and Klout are the current symptoms of this characterization, although it actually began long ago with Google and Wikipedia becoming (for relatively well-off internet users, at least: a relatively small portion of humanity) the go-to resources for queries, and with social networks then becoming echo chambers and in effect new realities for their respective users. As I have mentioned before, onlookers who regard these services in these ways seem to overlook the fact that the internet is actually a manmade thing and not a law of physics or deity.
On the contrary, the sheer volume of information available thru all of these channels in turn has led to the internet becoming, for many commentators, akin to the burning bush on Mt. Sinai, able to dictate authoritative wisdom at will, although it arguably one-ups even God’s favorite flaming plant, since much of that wisdom is “crowdsourced,” too. Now, the so-called crowdsourced structure of many online services – Google’s collection and subsequent application of user data, Wikipedia’s group editing, Reddit’s upvote/downvote system – is a hopeful development not because of the veracity of its content but because it, at the very least, shows that there are human agents who drive the internet, rather than some unstoppable, robotic force of nature that we often vaguely call “the internet.”
So how is that crowdsourcing intersects so snugly with the prevalent narrative of a self-driven internet? How is that search engines (the clearest, most obvious metaphors to a wisdom-producing computer from, say, Star Trek, yet another debt that tech owes to imagination and the liberal arts) are now, in many cases, conduits for social networks and other crowdsourced news? I don’t think it’s odd at all, actually, since it confirms that the internet, as a source of knowledge or truth, is just as subjective and contingent on human inputs as anything else. I mean, let’s look at some of the major drivers of internet content:
-Google: uses proprietary algorithms and integration with proprietary social networks (most notably G+). Results system can be gamed or “bombed” to promote certain results. All of this despite its promotion of “openness.”
-Twitter: proprietary social network that suggests certain celebrities or popular users to follow, primarily because said persons are the best evangelists for Twitter itself (as a tool/service).
-Klout: dependent on mostly amateur “expertise” and opinion, as noted above by The Verge.
So Microsoft is hardly putting anyone or anything newly “under the influence” of amateurs. The entire internet is built around these types of subjectivity that inevitably result from human input and tinkering.
-The ScreenGrab Team
Android and Me has a post up about the need for Google to build its own Nexus hardware. The argument goes: since the company’s complete control over the Chromebook Pixel, Nexus Q, and Google Glass resulted in outstanding products, the company should just go all-in on hardware.
I don’t think I agree. Of the three products cited, I would only really be proud of the Pixel, which, while expensive, has top-class features and could spearhead more disruption for the Windows PC market in particular. But body-wise, it’s still something that couldn’t have existed without the MacBook Pro as an antecedent, and its touchscreen, like the touchscreen in any Win8 ultrabook, suffers from odd performance but more broadly from a “what’s this good for?” syndrome, whereby touch is applied to ancient desktop metaphors rather than to touch-first/touch-only ones. The Nexus Q didn’t even make it to sale. And Google Glass? Well, I think it’s mostly hype, driven by a tech press that has yet to realize that categorical disruptions like the iPhone and the iPad and even the Android OS itself are the exception rather than the rule, and are usually organic and unpredictable rather than forced like Glass is. And then there’s the myriad privacy issues that Glass will only exacerbate.
Google’s current slew of Nexus hardware – the 4, 7, and 10 – are OEM products that are by and large fantastic. Perhaps they’re not ground-shaking innovations (although the Nexus 4 is arguably the first Android phone whose full experience is on par with the iPhone’s), but they’re beautiful and functional. So where does this desire for Google-branded Nexus hardware come from?
As much as it pains me to say it: Apple envy. But Google cannot easily be like Apple (this is not a normative statement, but a simple descriptive one). Apple makes its money in transparent, conventional ways: it sells products to end-users. For all of the bluster about Apple representing everything that’s closed and proprietary, Apple is straightforward when it comes to sales numbers, because that’s what Apple does: sell items to anyone would will buy them. Google, on the other hand, makes money in ways that most people on the street probably don’t understand, such as taking money from advertisers and promoters. Whereas Apple users have almost always directly paid Apple for their devices and services, someone could go about using most Google services without ever paying Google anything and instead paying hidden fees in the terms of opening themselves up to advertisers and data collection
Why does this difference matter? It means that, as currently constituted, hardware and integrated user experiences are not central to Google’s DNA, because Google doesn’t care that much about the end-user. The end-user is not Google’s customer; the advertiser is. This could change, sure. But I doubt it will change that soon, given that Google has gone all-in on making top-shelf iOS apps in order to monetize (via ads and data collection) what it must realize is the much more monetizable iOS user base. Google just wants its services (Maps, Gmail, YouTube, etc.) to be used by as many people on as many platforms as possible. Accordingly, it doesn’t have any existential drive or need to create a completely vertically integrated experience like Apple has done. Even when it has tried, such as with the Chromebook Pixel, the result is still a low-selling niche device whose capabilities likely won’t please the same broad range of persons who are sated by any iOS/OS X device.
The weak assumed sales numbers for the Nexus 10 in particular reinforce all of these points. Google is more than happy to use Chrome, or Maps, or Gmail to create trojan horses on other platforms so that it can keep its ad money flowing in, so why does it have to focus on device manufacturing, design, and sale? If it wanted to make real block-blusters that pushed the envelope for design and innovation, it would have to change its fundamental corporate DNA, and I just don’t see that happening for a while yet, if ever.
The tone-deafness of Glass and Sergey Brin’s justification for it are exhibit one in how far Google has to go on the hardware front. Or, just look at Microsoft: it, too, is struggling to get into the hardware business, because the Microsoft of late is a company that makes money not so much from selling to end-users as to businesses and OEMs. Since Apple cares almost exclusively about end-users, it still occupies a position in hardware that both Microsoft and Google will struggle to duplicate.
-The ScreenGrab Team