The “Fabless” Gadget Firm…
Chris Dixon posted a perspective on horizontal specialization, titled “Making industries ‘garage ready’ for startups,” and this notion of fablessness, referencing the fabless semiconductor business model’s positive impact on entrepreneurial innovation.
I thought I’d re-post my comment which I posted at his blog:
Companies, small and large, that make gadgets have been operating “fabless” for a while. CE brands in particular have been outsourcing the manufacturing – and even some low-value-add aspects of integration and compliance – for devices in much the same way fabless semiconductor firms draw their lines between the make and the buy. Beyond the critical aspects like hardware design, specification, and acceptance disciplines, “fabless” gadget firms can further differentiate themselves with brand, distribution, platforming, and application software/UI/user experience.
As an aside, consider that Apple takes “fablessness” to an extreme, being “fabless” on manufacturing devices, but also traditionally fabless on microprocessor ASICs. Lab126/Amazon is another model of the “fabless” gadget, and indeed it’s aiming in Apple’s direction.
Also consider that there are plenty of mature consumer electronics brands, which as small to medium sized businesses, leverage the “fabless” gadget business model in order to scale. Firms like these typically find it harder to innovate, though, because their core business is so addictive, being able to simply crank – with sometimes very quick sub-9-month returns on investment and positive, yet fairly slim, margins. Still, some of the longest standing medium-sized CE companies understand the need for “intrapreneurship” and can reinvent themselves often enough, and just-in-time, to avoid commoditization, and death.
Hopefully, “fabless” gadget startups will be an evermore common reality in years ahead. I’ve found that early stage investors often balk at business models that involve hardware of any kind, even “fabless” approaches, due to a lack of experience with it, or a perceived lack of precedent for a break-thru success – even though cases can be made that Roku, Aliph, Boxee have all leveraged the “fabless” gadget model to get where they are today, and there are plenty of lower tech projects on kickstarter showing signs of life as well.
There are both perceived and real risks involved in sourcing from contract manufacturers (CM), but experience with gadget sourcing by an investor, or in the founding team, can mitigate both false perceptions, and real risks. So in some sense, it speaks to the “people” aspect of valuing an opportunity. It also helps when founders/entrepreneurs have actual experience in design, spec’ing, and verification of sourced hardware, as well. Founders who have existing relationships with manufacturers can also greatly help bridge gaps and mitigate risk in the early days.
On the other side of sourcing deals lies the CM. It is helpful to work with CMs who have an appreciation of disruptive product concepts, making such CMs amenable to lower MOQs and less risk-pricing tactics. This can significantly reduce some of the capital intensive inventory risk for a startup. Adventurous CMs might even accept warrants in lieu of NRE fees! There are also innovations in distribution to be explored that can offer means to reducing working capital, like selling direct, or taking (kickstarter-like) advanced orders.
Speaking again to a lack of strong precedent, maybe we are only a couple shining examples away from increasing the activity in the “fabless gadget” startup sector.
As for this happening in NYC area, I see no reason why it can’t, because “fabless” gadgeteering is already here, just not yet at volume in startup form.
Pineapple, man. (Taken with Instagram at Pineapple Fields)
At Apple, the Platform Is the Engine of Growth - NYTimes.com
Things look different for Apple in the market for mobile devices. There is some debate whether Apple has become a platform strategist by design or by default: When it introduced the iPhone in 2007, Apple did not have software tools for outside developers to make applications. That came in 2008.
“The iPhone was such a great product that lots of people wanted to write applications for it,” says Marco Iansiti, a professor at the Harvard Business School. “This was a case of the hit leading to the platform, and not necessarily voluntarily for Apple.”
These days, Apple is a platform player, though it is taking a hybrid approach. It has courted outside partners and suppliers but has fairly strict rules for how applications look and behave in its devices. Apple is offering users not just cool gadgets but also the software that glues together their digital lives — computing, online information gathering and entertainment.
Nice to see my old advisor, Marco Iansiti, weighing in on Apple’s ecosystem. Though the context his comments were placed in, as reported, seems to downplay what Apple has envisioned and accomplished. I find it surprising that one of business academia’s strongest articulators of commercial ecosystem strategies would be painted as a bit of a naysayer.
It can’t be argued that Apple hasn’t proactively, and expertly, fostered a vibrant app developer ecosystem with the iOS SDK. The iOS SDK launched in 2008, with far more than a year’s worth of reactionary planning under it’s belt. It’s more arguable that it was held back, delayed, by design, to allow early adopters to focus their experiences on as robust a set of minimal features as practical to “get right” the first time. This at least would be sound, disciplined product management.
I’m more willing to offer Apple the benefit of the doubt, than say they got lucky. Particularly in retrospect.
On a separate but related note, Apple has enabled a healthy 3rd party hardware developer ecosystem as well. This cottage industry has made innumerable user-experience extensions, and outfitters, for Apple products, such as:
- speaker docks (iHome, B&W, Sony, etc…)
- in-car entertainment integration (VW, BMW, Acura, Ford Sync, etc…)
- bluetooth headsets/headphone/speakers (numerous)
- headphone with in-line remotes
- health & wellness devices (Withings, iHealth, etc…)
- chargers
These accessories, when done with licensed Apple IP assistance, enable slightly more integrated user experiences, and give products an extra edge toward delighting users and gaining mass-adoption.
This would even further strengthen the arguments in favor of Apple’s prescience if NYTimes’s Lohr had cared to mention it.
Customers shitting on you…
never gets old.
AirPlay insights related to: "Ars reviews the Apple TV 2.0: little, black, different"
Ars does a great job putting a few moving parts together to form the best, most insightful review of the Apple TV to-date. In my opinion, Ars’s Jaqui Cheng hits the nail on the head when highlighting the impact and application permutations of AirPlay:
In fact, if a developer uses Apple’s built-in audio and video classes in their apps, they get AirPlay support for free. So, basically any app has the potential to stream video over AirPlay to the Apple TV: MLB At Bat could stream live baseball games (goodbye cable?), your favorite radio station’s app could stream a live feed, NPR could wake up and re-do its app so videos and audio could stream to the Apple TV, et cetera.
As Cheng details the consequences of functionality found in the iOS 4.2 beta release, it is interesting to note that iOS 4.2 will be capable of AirPlaying videos – from an iOS device, e.g. iPad, to the Apple TV, via AirPlay – which are streaming down from the internet. This means the iPad is acting as an intermediary to endless amounts of streaming video that any 3rd party app developer can serve from their own servers using HTTP Live Streaming codecs & protocols, and then have their app-users re-route that streaming content to their Apple TV for big-screen viewing.
Audio geeks can extend this logic to see that music from Pandora and other internet radio apps might be able to stream via AirPlay as well. Oh boy!
From a use-case perspective, this is dynamite. Ars’s Cheng agrees.
The potential for this is, of course, huge.
I’ve been quietly hoping since the Apple TV keynote in September, that AirPlay audio & video streaming from iOS would be open to more of the apps and content than what was simply natively stored on the iOS device itself.
AirPlay is not nearly as closed as much of Apple’s other ventures often are, and it makes the Apple TV a lot more expandable if you stream to it via a device that can do AirPlay, such as an iPad.
While the implementation isn’t perfect (I’ll say why later), it should be pretty robust and help users gain a tacit understanding a new paradigm for discovering and initiating content to watch or listen to on their TVs and speakers.
In a way, AirPlay is like Apple’s solution for not allowing third-party apps on the Apple TV for the time being.
True. I also don’t think Apple would ever launch a set of APIs as game-changing as TV-specific apps, or APIs for managing device-to-device place-shifting (a feature I think must be coming) without the use of their developer-relations platform, WWDC. So I would say, any Apple TV developer story is simply another 9 months away, or perhaps 4 or 5 months away. The last couple years have seen a preview in the early Spring of what new iOS features were coming, and then after the WWDC tickets sell out in anticipation of these, Apple unleashes the devs in a call-to-action at the conference.
Apps can run on your iOS device and, if they want to, they can stream content to the Apple TV as they see fit. It’s not as perfect a solution as actual apps would be, but it’s not a bad substitute either.
… and the above is where my philosophical resonance perhaps diverges from the Ars writer. I am not a true believer that the 10’ GUI is the right place to discover content. My feeling is that MANY apps that will be written for the 10’ GUI are going to fail where many others have failed before on the TV, i.e. expecting users to want to browse, search, and participate in an organic content discovery user experience. Mark my words. Give. It. Up.
10’ apps should focus on presenting user-specific prompts and queues, the results of user-based preferences or user time-shifting and place-shifting actions from another platform. Users will find way more things to watch during the course of their work-day on their computers, while they’re away from home on their mobile phones, and while they’re lounging on their couch perusing the web on their tablets – rather than thumbing their way through menus and apps on their TV.
Google bets you’ll browse the web on the TV and find stuff that way, which is why you’ll need a QWERTY keyboard and mouse pointer to use their system… you might say I find myself dubious of their hypothesis. That isn’t to say Android and clever app developers aren’t capable of reduction.
10’ apps should also figure out how to host now-playing info so other “2nd-screen” devices, like tablets and smartphones, can augment what’s playing with richer meta-driven infotainment, or even advertisements. Think IMDB, Wikipedia, or ad content promoting similar shows to watch or products to buy. These augmentation features could be had on the 2nd-screen so long as they were fed with info about what’s playing now. Folks are already experimenting with clever ways to make this happen, but the best way is for it to be native to the platform’s mechanics.
In the event users do need to dig deep and find something to watch in the moment, they’d be more rewarded by grabbing their 2nd-screen off the coffee table, rather than trolling into 10’ menus with a point-n-select IR remote or fumbling around with some godawful QWERTY remote control. Not to mention, having to interrupt or disrupt whatever content is currently being watched on-screen at that moment.
The magic of “TV 2.0” will be seamlessly gathering these “I want to watch this” impulses and appropriately handling them for consumption immediately or in the future.
Which bring me to my final point…
Even though streaming a video from YouTube, Netflix, or MLB.com down to an iPad, and then AirPlaying it to Apple TV is new/cool/great/amazing, and will deliver more feature-sizzle than navigating a bulky 10’ GUI, I don’t think it’s the best or only path to an end-game for iOS & Apple TV for a couple key reasons…
- The iPad and other iOS devices are battery powered, interactive touch screen displays with extremely optimized microprocessor resources. Thus, acting as a digital media transcoder and internet-content gateway isn’t the best use of its hardware architecture
- The iPad is most valuable as a 2nd-screen content discovery and augmentation tool. As such, it should be available to perform these duties while a piece of video is being played back. In iOS’s current and forthcoming incarnations, it isn’t a full multi-tasking and background-process power-house. So it’s not going to be good for much else while it’s forwarding rich media from the internet to the TV.
So am I saying AirPlay is flawed? No way! I am concluding, perhaps, that AirPlay won’t be the answer to a “TV 2.0” usage paradigm, long-term. AirPlay’s potential success may be in its simplicity and “crudeness.” It’s certainly great for the audio playback ecosystem of devices and device-makers. It’s also bound to be eye-opening for quickly sharing home-movies or photo-sets on a TV. It’s also likely that UGC and mainstream short-form videos will make lots of sense with AirPlay as well. These simple pleasures will duly resonate with a broad user-base, which isn’t too sophisticated at the end of the day.
At a wholly deeper level, AirPlay may serve as a spark which ignites some innovative thoughts by app developers about how they should/could be doing better when it comes to marrying 2nd-screen apps, Apple TV, and content in the cloud. If Apple TV opens up next Summer at WWDC, then perhaps the guys at Netflix, Hulu, ABC, MLB.com, NPR, etc… will simply architect their apps to work together to achieve the usably & architecturally optimal behavior.
My sense is that Google TV app developers may flesh-out some of these usage paradigms, first. With Android’s C2DM, it seems to be pointing the way to some of these user experiences. My lay opinion is that Apple could keep pace by opening up iOS SDK to Apple TV and offering a few extensions to their Push Notification service, namely allowing apps to be woken up from the cloud, or even via local Bonjour-mediated conversations.
But now I’m getting too prescriptive for comfort…
Apple TV will stop being a hobby when…
- it comes with a dock connector for connecting to third-party televisions, afterall, TV screens are rendering devices for video, like speakers are for audio. Asking them TV makers to do internet (really well) on their own is a still-born proposition, imo. So the cost-effective TV makers should love this.
- the dock connector has a serial protocol for indicating content wants to be played back, allowing TVs to power-up or mode-switch automatically, or per a user’s settings…
- it has iOS SDK support to allow any app on iOS mobile devices to push music, photos, videos
- it has iOS SDK support to allow iOS mobile devices to instruct Apple TV where to stream cloud content from, because using an iPad to handle streaming down from the internet, then AirPlaying it to the Apple TV makes no sense long term. It’s a battery powered device afterall, and the user will want to multi-task into other apps once they tee-up the content on the TV
- it exposes meta info API for current playback content (title, episode/cast info, current time stamp, etc) so iOS mobile devices, or app “extensions” running on Apple TV itself…could provide a secondary screen experience, or primary screen overlays, related to currently rendering media
I think when this happens, the 10’ GUI gets less important, and discovery becomes rightfully in the hands of app developers for iPad/iPhone/iPod touch apps. Augmentation and supplementation also become the realm of app developers… as you’d have the means for apps to drive meta-data-driven intelligence, monetization features, and further content discovery.
When variations on this kind of capability happen, I think Apple will stop calling their TV a hobby.
My nickel on Apple TV’s Take Two
If we are to believe that an iOS based $99 Apple TV redux is approaching in September, then let me offer the possibility that it may get positioned as an accessory to the iPad, iPhone, and iPod touch… rather than a standalone iOS device, per se. I mean why try to add another front-end UI experience to the mix when you’ve already created multiple ones you’d need for a great living room experience.
At $99, it certainly fits the accessory price-point, albeit at the high end for Apple-branded accessories. Their AV Cable is one of the more expensive at $49, but then add to this “AV-kit concept” features like wireless connectivity, and open it up for iOS app-developers to push content to… and you have the makings of something very special.
App developers would be given the ability to build extensions on to their existing iOS apps that let them render streaming video and audio content to the new accessory, which itself is easily discoverable and addressable via a flavor of Bonjour. At a minimum this would be a powerful addition to the at-home usage model of the iPad and iPhone and iPod touch… but with some clever developer extensions for placing content overlays, info pop-overs, sidebars, etc, you can can see a new branch of the iOS SDK going to serve a class of “remote displays” and this is where the usability of an Apple TV accessory would trump anything that Google can muster with it’s heavyweight, clumsy Google TV (as envisioned so far).
It simplifies things for Apple, too. It gives video content distributors (Hulu vs. ABC vs. iTunes vs. Netflix) the freedom to choose business models for distribution that differentiate themselves and place the burden on content rights to the app developers.
Just my thoughts on this… looking forward to see what happens.
How-to: push Chrome / Firefox links to your Android 2.2 Froyo device (video) -- Engadget
If you’re one of the lucky few running Android 2.2, you can get an extension for Chrome and Firefox web browsers that will let you push URLs, Maps and YouTube video links direct to your device using a Google Account.
The underlying C2DM framework should wind up being very powerful for a Google TV experience that is driven by organic browsing on a tablet/notebook/iPad device for discovery. With purpose-built apps on an Android-thing, or better yet the iPad, and a companion receiver app on Google TV (or maybe a gen2 Apple TV), you can see how a new natural television viewing experience will ultimately crystalize our drastically disrupted media discovery and consumption habits that have rendered laborious the current OSG+IR remote paradigm.
…hundreds of thousands of apps that you can use on your TV (perhaps interacting with them from an iPhone or iPad) could very well make the Apple TV a must-own device.
Apple TV Will Remain A Hobby Until Someone Shows Apple The Money (Or Apps)
I agree to an extent. Maybe not with the “App Store for Apple TV” part, or the “perhaps” (quoted above) but the key will be in a user interaction model elegantly spread across more than one device.
One of the hazards of a stove-top espresso maker is that when they are full, they are also incredibly hot and top heavy. V found this out the hard way yesterday.
So let me explain why I post this? These pics were sent to me on my iPhone via MMS, while I was at work nearing the end of my day. I was able to forward them to my friend via MMS who is a dermatologist. She called me back and was able to comment on the severity, offer immediate care options and guidance. Then she asked me to have V sms her DOB, a pharmacy phone number, etc so she could call in a prescription. V and I chatted about it real quick by cell phone while I was on my commute home.. during which time I looked up a drugstore on google maps on my phone which was on my route… V sms’d the info, my doc friend called in a Rx for some silver something or other for topical treatment. Fifteen minutes later, I picked up the cream and some non-stick gauze at the Duane Reade that was on my way.
Which brings me to my point: our patient experience was awesome. Even though it was a friend/doctor, so free for V, the doctor interaction was still very low cost by any real measure.
For my friend/doctor, the only way a simple 2D photo was enough for her was because she actually practices at a hospital-based clinic and so she sees real patients day-to-day, and so has a solid framework on which to make clear judgements about familiar-types of cases. For patients to get walk-in access to see a doctor about routine issues however, this often means going to emergency care clinics or the ER… which insurance companies may or may not cover fully.
I am not saying my friend/doctor should open cell-phone office hours… but as a way to take her hands-on experiences and apply them within channels of more efficient patient-engagement… well that may not only be good for business, but also for lowering the overall costs of healthcare.
Institutions that employ staffs of physicians, as well as independently practicing physicians should figure out how to best incorporate a nimble-interaction model for some percentage of doctors’ work-days as a way to segment services and price discriminate more effectively, not to mention extending the reach and effectiveness of primary care.
I know there are good folks working on making platforms to enable people without friend/doctors, and doctors without nimble process infrastructures, have similar experiences like the case I’ve just described.
Examples of success in this arena would be very encouraging, since there is no reason – in a culture that knows the meanings of operational excellence and customer satisfaction – that patient experiences can’t be both effective and delightful.
It’s the centers of gravity, stupid.
I wanted to write a little about interface standards in consumer electronics. My purpose here isn’t to write an exhaustive history of standards and formats – far from it, in fact – rather I want to…
