Rob Simons Says

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The Top 400 Taxpayers: Happy Tax Day!

April 15th, 2010 · Economics

I couldn’t let April 15, Tax Day, pass without some post on the subject of economics.

I’ve had the opportunity to work with some incredible financial services firms over the past 15 years at Toolbox Studios. When we talk about the target audiences for branding and marketing, it’s not unusual for us to use two terms to describe the target audience:

  • HNWI – High Net Worth Individuals are people with at least $1 million in investable assets.
  • UHNWI – Ultra-High Net Worth Individuals are people with at least $30 million in investable assets.

After looking at the recently released IRS report on the top 400 tax returns from 1992 through 2007, I think we need to create a new class WTF-HNWI – I’ll let you figure out the acronym…

The report shows that the top 400 tax payers in 2007 accounted for 1.59% of the nation’s total household income, and they were responsible for 2.05% of all income taxes paid in 2007. Stop and consider that for a moment… I’ll try to put some perspective on that:

A total of 143 million tax returns were filed in 2007. The equivalent of the population of California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio and Washington, combined.

Yet 1.59% of all income reported in 2007 was from a group of individuals that could easily fit on a Boeing 747. (Assuming they had enough First Class tickets.)

And considering the hype and news about taxes being too high, it’s interesting to see that the average tax rate for the top 400 individuals was only 16.6% – the lowest rate since the government began tracking this group.

I think we need to stop all of the idealogical rhetoric and start talking about the real issues: our entire tax code needs revamping, and government spending is out of control and ineffective.

Props to my favorite economics blogger, Barry Ritholtz, and The Wall Street Journal for bringing this to my attention.

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First Week Conclusion: The iPad was designed to be an Amazon Kindle killer

April 13th, 2010 · Technology

After my first week with the iPad, I’m still pondering the most basic question, “What is the primary purpose and vision of the iPad?” I’m on my first trip with the iPad and I can’t quite figure out how it fits into my array of gadgets. The obvious answers include: an eReader, an Internet device, a mini-laptop (netbook), a multimedia player (photos, videos, audio) or a gaming device. I’m sure the practical answer is some combination of all of the above. But what was Steve Job’s vision for this device? And how does that vision work out in reality?

iPad, MacBook Pro 17For this four day business trip to New York and Chicago, I have an impressive arsenal of computing power, including: my trusty iPhone 3GS, 17″ MacBook Pro, iPad, iPod Shuffle, Magic Mouse, Canon Digital Elph SD990 IS and Sprint Overdrive 4g Wifi device. I decided at the last minute to leave my Amazon Kindle at home (probably a foreshadowing of my conclusion, below). With these devices my briefcase makes me a chiropractor’s dream client.

A lot of online conversations have described the iPad as a device for consuming content. It’s hard to argue that with that conclusion. During my first week I’ve been reading several books (both in iBook and Amazon’s Kindle App); reading news with USA Today, New York Times and AP apps; reading emails from multiple accounts; watching movies and TV shows (kudos to ABC’s wonderful app); viewing photos on the iPad in digital photo frame mode (a bonus feature I never considered); reading numerous web pages on a regular basis; and catching up with friends on Facebook. Heck, I even used the iPad to watch part of the Masters golf tournament in the back of a New York taxi. Yes. The iPad is a great device for consuming content. (It also has potential for creating content. The majority of this post was written on my iPad during a Continental flight at 35,000 feet.)

But during my first week of extensive iPad usage, I’ve discovered an interesting clue about the vision of the iPad based on the placement of the Home button and the docking connector. I have a hunch that the iPad was intended, first and foremost, to be an eReading device. This conclusion is based on one 90 degree decision — the choice to make the iPad’s natural orientation Portrait mode (vertically oriented) instead of Landscape mode (horizontally oriented).

While the iPad can be easily rotated, the iPad’s home button and accessories make the device predominantly a Portrait mode. That makes the device really an eReading device. Consider these common uses of the iPad:

  • Internet surfing: Most web sites are designed for computer screens that are almost exclusively Landscape mode.
  • Watching videos: Televisions shows, Internet videos and movies are all in Landscape mode. Any video you watch on the iPad will likely be in the Landscape mode.
  • Viewing photos: The majority of photos are taken in Landscape mode. I’ve decided I need to make a custom Portrait mode collection of my favorite photos to enjoy the slideshow view when my iPad is docked.
  • Office applications: Keynote on the iPad is exclusively a Landscape mode app. Numbers and Pages can be used in Portrait mode, but the most practical way to type is in Landscape mode.
  • Email: I really dislike the interface on the iPad when using the email application in Portrait mode. I think it works better in Landscape mode, when you can see your inbox and the current email message simultaneously.
  • Games: While many work in Portrait mode, more games seem better suited for Landscape mode.
So this begs the question as to why Apple made the Portrait mode default on the iPad when almost all of the applications described above are better in Landscape mode. In fact, a quick look at the preview videos of the upcoming notebooks like HP’s Slate shows a device almost always in Landscape.

So either Apple wanted to simply stay consistent with the design of the incredibly successful iPhone, or they really intended the iPad to be an eReader. I think it’s the latter. Most print books are in Portrait mode naturally, and the only way to comfortably hold the iPad with one hand is in Portrait mode. Most readers prefer to hold a book (or Kindle) with one hand. The only problem is that at 1.5 pounds, the iPad is a bit heavy for an eReader and the iBookstore and iBook app are currently poor competitors to Amazon and the Kindle franchise. (I’ll save that discussion for another post.)

With the amount of resources and effort Apple has placed into building the iBook and iBookstore market, it seems highly probable the iPad is a decision to go after Amazon and Kindle’s eBook market share which combined is around 95%. Put another way, if Apple had decided to make a full-on assault on the cable and movie industries, the iPad would have been designed to be naturally in Landscape mode. If it’s the eBook market that Apple wants, they need to work on iBook and the iBookstore.

What do you think about Apple’s 90 degree decision? Send your comments to rs@toolboxstudis.com or discuss on Twitter @robsimons.

PS: Before you send me your emails about the ability to simply rotate the screen 90 degrees, I’d point you to the accessories and the dock connector — even with the optional keyboard, this device makes much more sense to me to be able to place it in the dock in Landscape mode. Maybe a third-party firm will answer my needs with a clever aftermarket device.

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An iPad, a New York Taxi Cab & The Masters

April 12th, 2010 · Technology

I found myself traveling to New York for business on Sunday afternoon while Phil, Tiger and Lee Westwood were battling at the Masters. So what did I do? I pulled out the iPad and Sprint 4G/3G Overdrive:

Here’s the Picture-in-Picture version:

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Book Review: “Drive: The Surprising Truth About What Motivates Us” by Daniel H. Pink

April 6th, 2010 · Technology

“Motivation is simple. You eliminate those who are not motivated.” ~Lou Holtz

While I give credit for Lou Holtz being a great college football coach, I don’t completely agree with the above quote. After reading Daniel H. Pink’s book Drive: The Surprising Truth About What Motivates UsDrive: The Surprising Truth About What Motivates Us I believe we must first make sure we’re motivating people with the correct tools before we simply “eliminate” the unmotivated.

Like many entrepreneurs, I’m constantly trying to find the right tools to make sure my staff is motivated. And when a trusted colleague, Piyush Patel of Digital-Tutors, told me this book was really interesting for motivating employees, I immediately moved it up to the top of my wish list on Amazon.

DriveDaniel Pink makes a well-devised argument that we have historically entered into a new stage of understanding motivation. He calls it Motivation 3.0. He considers the basic biological instincts to survive, including the need for food and basic fight-or-flight instincts. Motivation 2.0 is the idea that rewards or punishment is what motivates people. He likes to reference it as the carrot and stick mentality. And finally, Motivation 3.0 is the new, much more effective way to motivate people today, and further more, it’s been proven over-and-over again by scientific and case-studies, but most businesses seem to ignore the evidence.

Motivation 3.0 is made up of three premises:

  1. Autonomy
  2. Mastery
  3. Purpose

By using these three concepts, we can effectively motivate people to achieve our goals. Autonomy is the autonomy of Task, Technique, Team and Time. Mastery is the belief that humans want to improve and become experts in their chosen field. And purpose is working towards a higher purpose than just basic accomplishment of a task.

The book is much more than just a history of motivation and Daniels view of the future. He cites numerous scientific studies and several real world examples of how to use the Motivation 3.0 technique to achieve success. It’s really hard to argue with his conclusions because he provides several great examples.

I highly recommend adding this book to your reading list if you want to understand what motivates you, and just as importantly, what motivates those around you.

Daniel Pink did a presentation at TED in 2009 that does a good job of introducing the subject. It’s only a 20 minute video, but it might change your views on motivation.

NOTE: This was my first book to consume as an audio book from Amazon. While it was a great way to pass time while driving, I prefer the ability to make notes and quickly refer back to previous sections of the book.

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The Apple iPad: First Impressions

April 4th, 2010 · Technology

As someone who remembers the excitement of upgrading from an Apple II+ to and Apple IIe – and just about every Apple device since then – I think it speaks volumes when I report that the new iPad completely exceeds my expectations for an Apple device. Considering the hype and online buzz that has been building for the past six months, the bar was pretty high for this half-inch thick device that is slightly smaller than a sheet of paper. And while the iPad is not perfect, many of the initial shortcomings that I’ve identified will fade with changes to online content and technology.

The Apple Brand Experience
First, I have to admit that my heart probably skipped a few beats when I saw the brown UPS truck pull up in the parking lot at my office. How many brands can elicit that kind of excitement about the delivery truck? And kudos to UPS, they really did a nice job handling the overwhelming task of delivering hundreds of thousands of iPads on a Saturday. I posted a Tweet about my upcoming iPad delivery from UPS and I received a quick, personalized reply from UPS. That’s a great example of managing the online conversation about your brand. Basically, UPS was able to ride the coattails of Apple’s brand launch to reinforce their brand.

iPadOf course, any review of an Apple product has to include experience of opening the packaging. As an owner of a branding firm (Toolbox Studios), I can assure you that very few brands achieve the dopamine rush that Apple achieves with simply opening the package. It’s a combination of the brand attributes established over many years in the marketplace, combined with simple and effective packaging.

The packaging for my Kindle 2Amazon Kindle 2 was efficient, but very businesslike. The iPad, cradled in a sturdy white box with clean visuals, creates the sense of a special, magical device. The care and quality that went into the packaging design conveys to the consumer that this is more than just a mass-consumer device. Of course, the oxymoron is that it is a mass-consumer device. But my brain believes something different. In Martin Lindstrom’s book Buyology: Truth and Lies About Why We BuyBuyology, he shows through scientific studies that branding can create the same neurological activity in the brain as religious beliefs. Maybe it was appropriate that Apple released the iPad the day before Easter.

As soon as you lift the lid on the box, you reveal the face of the iPad inviting you to pick it up and start using it. One of the strengths of Apple’s products are that they are so sexy they sell themselves with minimal “ad” messaging. In fact, Apple doesn’t even put a “Getting Started” or “Quick Start Manual” on top of the device. Why would they? The device is so easy to use that instructions would be redundant, almost insulting. And Apple also doesn’t have to put any brand messaging on the product – the quality of the device speaks for itself.

Again, comparing to my Kindle 2, Amazon included a thin paper wrapper around the device that include the words “Amazon Kindle” floating in a sea of letters. To access the Kindle, you ripped a tear-strip that included the copy “Once upon a time…” While that’s a clever and cute message, once you reveal the actual Kindle 2 device, it’s a bit of a let down – an off-white plastic device that looks more cheap than sexy. To be fair, the iPad is more than twice the price of a Kindle 2, but I believe part of that difference in price is Apple’s investment in product development and branding.

Also In The Box
The iPad uses the same USB cable as the iPhone (one less cable to carry) and a similar charger. (It’s worth noting that the charger supplied with the iPad is a 10W charger and the iPhone is a 5W charger. Maybe some electrical geek can tell me what that really means, but I’m guessing I shouldn’t try to charge my iPad with the iPhone adapter.) The box also includes a simple one-page quick reference chart with descriptions of the four buttons on the device: Power, Screen-Rotation Lock, Volume and Home. That’s about all you need to know how to use the iPad.

Two items that you won’t find in the box that you’ll definitely want is a microfiber cloth to clean the iPad screen and a carrying case. I was surprised that both items were left out of the $499 package. Being a touch device, the screen will need to be cleaned constantly, and Apple set a precedent by including a cloth with the iPhone. Additionally, the lack of a carrying case, even a simple cloth case seems odd. I was nervous that I’d scratch the iPad simply putting it into my briefcase the first time. I’m sure Apple could have provided a simple carrying case that doubled as a cleaning cloth (like many sunglass manufacturers provide.)

I ordered several iPad accessories, including a carrying case, at the time of my online pre-order, but those items have not arrived yet. I’ll update the review once I’ve had a chance to evaluate those items.

Setting Up The iPad
As with most Apple consumer devices, one item not included is software to setup and configure the device. This is actually a major part of the central strategy behind Apple’s consumer experience. While the iPad, iPhone, iPod and AppleTV can all work as a standalone device, they are really intended to be branches of your media hub, with your computer as the foundation – ideally a Mac computer. When I connected my iPad to my MacBook Pro, I only had to acknowledge a few brief questions before my music, photos, videos and iPhone apps were syncing to my iPad. The device was personalized for me almost immediately.

After my media files had finished loading, I quickly started exploring the iPad. For anyone familiar with an iPhone, the iPad is a very natural device to use. About the only hassle for me was setting up my email account. Instead of Apple’s MobileMe (which would have transferred my email account automatically), I use a Microsoft Exchange account that requires some manual configuration. Once that was completed, my contacts, calendar events and emails quickly populated the iPad.

Using The iPad – First Impressions
The quality and resolution of the screen is absolutely gorgeous. At 132 pixels per inch, the text resolution is very crisp, although a bit small on most standard Web pages since designers assume 72-90 pixels per inch of resolution. I think over time, more Web sites and applications will be designed with the iPad and other notebook computers in mind. For now, expect the need to two-finger zoom occasionally to easily digest Web text. On a similar note, Web sites that are not mobile-device friendly also have buttons and links that are hard to click with a touch device like the iPad unless you zoom the screen view. Again, a minor inconvenience that will be resolved as more Web sites are made to be iPad friendly.

The speed of the iPad is extremely responsive. I was really pleased with moving around thousands of images in the Photo application. While the Photo app is similar to the iPhone app, Apple added more features and a richer interface to take advantage of the larger display. Flipping through long photo albums is very quick and enjoyable. And the quality of the screen is incredible. I think the iPad will be a great device for sharing photo albums with friends and family.

Surfing the Internet using Safari was also quick and a positive experience. I should note that I was surfing over my high-speed office WiFi network. The version of the iPad with built-in 3G (like the iPhone 3Gs) is not available until late April. I’m not concerned about the lack of 3G on my iPad, but that’s a subject for a future article. Let’s just say that the iPad wasn’t the only new electronic gadget I purchased on Saturday.

I’ve read several concerns about the comfort level of using the iPad, both in regards to typing without a physical keyboard and the basic act of holding the device. While the touch screen keyboard is quite easy and effective to use, I will admit that it’s a bit awkward to try and hold the device with one hand while you type. Expect a lot of one-finger hunt and peck actions. Also, the iPad is a bit heavy for just one-handed use. At 1.5 pounds, it is a substantial device to hold. It definitely feels better nestled in your lap. The Kindle 2 is the perfect size for one-handed reading. But that’s also an unfair comparison since the iPad has a much larger screen.

Favorite iPad Apps – Just The Beginning
With less than 24 hours under my belt, I haven’t had a chance to fully explore many of the new iPad apps. And from what I’ve seen, my developers were probably rushing to get apps in the Apple Store on the iPad launch day. Over the next few months I believe we will see developers refine their apps to leverage the power, screen and experience of the iPad. But there are several apps worth noting:

Kayak – I travel frequently for business and pleasure and I think the greatest site for booking travel arrangements is Kayak.com. The iPad app for Kayak takes an already amazing tool and raises the experience to the next level. This free app is a great example of using the screen real estate efficiently. They’ve also added a nice social networking feature that shows recent searches from your home city. It’s nice to know one of fellow San Antonians is planning an escape to Kahulul, Hawaii, in mid-June.

Media Apps – At Toolbox Studios, we work closely with many publishers across the country to help them leverage new technology. And while many people report the demise of the traditional media companies, one look at the apps from USA Today, NY Times, AP News, BBC News, NPR and ABC, will open your eyes to the possibilities of improving the user experience with media. I think USA Today and the NY Times also demonstrate how to effectively carry the brand over to the iPad. I’ll dedicate a future blog post to these media apps.

iBooks – At first glance, the iBooks application is an amazing eBook reading experience. The publishing industry is currently in a transition period with numerous file formats, reading devices and reading applications. Similar to what Apple did for the music industry, I predict iBooks will start the move towards standardization in the eBook community. The fact that before the iPad was even shipping to consumers Apple had already changed the pricing structure of all eBooks online, tells you the power behind Apple’s vision and market clout.

iWork – I haven’t had a chance to use Keynote, Pages or Numbers, but I’m thrilled to see them available for the iPad. I can already envision that the iPad may be the only device I’d need to take on business trips. These apps cover all my needs: writing, spreadsheets and presentations.

Mail – Since the iPhone, Apple’s email app has handled Microsoft Exchange like a champ. In fact, I’d say that it’s better than Microsoft Entourage on my laptop. And with the larger display, I can now easily view my inbox and the email messages simultaneously. That is a major improvement over the iPhone. To see this view, it does require that the iPad be in landscape mode, but that’s a minor issue.

Line2 – While I haven’t tried it yet, I was intrigued with the idea of using Line2 – the voice over IP (VOIP) app to turn my iPad into a telephone. Just the idea that this could become a telephony device is mind-boggling. Again, probably a topic for another blog post.

What’s Missing?
In my blog post about the announcement of the iPad, I was very critical about several items, but now that I’ve had a chance to experience Steve Job’s latest revolution, it’s time to reconsider some of my concerns:

  • Flash – The lack of Adobe’s Flash is still a disappointment. Today, with an emphasis on today, the true Internet experience requires Flash. (Even my company’s Web site depends on Flash.) But I also believe that there is a major movement towards HTML5 and CSS3. I heard numerous developers at the recent SXSWi conference talk about migrating towards a non-Flash world. It’ll just take time to see if this really happens. In reality, I surf the web on my iPhone every day and I rarely “need” Flash.
  • 3G – I opted for the WiFi only version of the iPad. Instead of a built-in 3G solution, I’m looking at several options for a mobile 4G WiFi device that can support my laptop, iPhone and iPad simultaneously. I’ll report on my research in a future blog post, but I can tell you that right now I’m very satisfied with my decision to purchase an Overdrive from Sprint.
  • Screen Resolution – I was really expecting a 16×9 form factor screen. That’s mainly to incorporate HD video. But that decision may have also created an odd-shaped device. The iPad has the same rough proportions of a letter-sized piece of paper. So it feels very natural. Similarly, the Kindle 2 is basically the size of a paperback book – again, it feels right for the purpose of the device. Maybe my expectations were that the iPad would be more video-centric, but in reality, it’s probably more of a Web and eBook centered device.
  • Camera – I do think it’s really odd that they didn’t include a camera. At Toolbox, we are using video teleconferencing on a regular basis. This device would be perfect for remote video teleconferencing. Maybe this is a feature that Apple will use to drive purchases of the next iPad version. (Interesting note: Would it make more sense for the camera to face the user for teleconferencing? Or face away from the user to make the iPad a camera?)

My Initial Conclusion
After less than 24 hours with the device, I’m ready to conclude that the Apple iPad exceeds my expectations. I can’t wait to use it on a regular basis over the next few weeks to see how this device fits into my personal and work life. As an early indicator of the potential success, I showed the iPad to a few of my neighbors at happy hour last night. The reaction was overwhelmingly positive from a group of friends that I would describe as Late Majority consumers in the Diffusion of Innovation model. Yet, I kept hearing comments like, “With this device, I really wouldn’t need my laptop.” And, “This is amazing. I need one of these.”

And while it’s probably too early to predict a complete consumer revolution for the Apple iPad, I’m not going to bet against it based on my first 24 hours with the iPad.

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