Thoughts on Apple Pay

I'm feeling very bullish on Apple these days. Despite the #bendgate controversy that began a few days ago, they've done a tremendous job with the unveiling of not only 2 versions of iPhone 6 but also the Apple Watch. I like them so much that I upped my holdings in its stock this morning.

The star of the show, in my opinion, was none of the gadgets Tim Cook revealed during the past 9.09.14 event. Sure the iPhone 6 is snazzy, loaded with the latest processors, camera technology, and even the bigger displays. It's bound to sell millions upon millions -- especially bringing back users who migrated to other platforms for bigger displays. The Apple Watch will also be a huge hit, mainly for its tight integration in Apple's ecosystem and as a fashion accessory. But both of these are just gadgets at the end of the day. The real star was: Apple Pay.

As a tech enthusiast, I've heard about mobile payments before and even have Google Wallet installed previously. But never before has a company with Apple's leverage entered such as space and it's bound to revolutionize the way we think and use mobile payments going forward. Want to know how much leverage Apple has? A good example is looking at the emails sent out by banks and credit card companies to announce their support for Apple Pay. Every single one of mine have sent me emails to profess their love and support. That is absolutely staggering. Not many companies are able to pull off Day 1 third-part support the way Apple has done it here. Rumors are transaction costs are bound to decrease as Apple Pay is supposedly more secure than other means.

More importantly however, is the ease of use. For the first time last week, I used the Starbucks app installed on my Android phone to pay for a couple cups of coffee at Starbucks. Nothing extraordinary about this event except for that it was: (1) my first time ever doing such a transaction, and (2) surprised by how easy and seamless it was. The latter in particular stood out as I returned the following day to do the same, with same results. I swear that the experience (not the coffee) was so good that I felt more attached and loyal to Starbucks. Yet Apple Pay promises to be even more seamless as you no longer would have to go through the motions of unlocking your phone screen and opening an app to pay the transaction -- if Apple's demo holds true, all you have to do is hold your finger to the fingerprint scanner for a second and pay the payment receiver with your phone. Voila! Takes about a second or two, and the transaction is completed.

Overall, I think the changes Apple Pay will usher in are two. On one hand, people will purchase more things and use their phones to pay more frequently due to how easy and seamless the process is. No longer do you have to take out your wallet (after finding it first), pick out the card you want, swipe it, enter your zip code, and (oftentimes) signing the receipt for the cashier. All you'd have to do with Apple Pay is pull out your phone, hold, tap, and done. It's that simple. The second change will be what I mentioned before -- strangely enough, I felt more attached to Starbucks despite McDonalds being my preferred coffee venue (disclaimer: coffee is a commodity to me, so the cheapest vendor gets my business). But likewise I can see myself going to shops and restaurants that accept Apple Pay more than those that do not. What you'll see then, is a domino effect of stores and restaurants scrambling after one another to install NFC-payment receivers for Apple Pay and other forms of mobile payment (e.g. Google Wallet).

Now, everything is not all rosy as Apple Pay has just been introduced and the public hasn't really been using mobile payments. But Apple does a heck of a job marketing its products and features, so I expect people to catch on quickly. The iPhone 6 will eventually give way to future generations and the same goes for Apple Watch. But Apple Pay as a platform is here to stay and it's going to be absolutely huge. I've put money in my mouth by investing significantly into Apple today, with a strong possibility to further increasing my holdings in the near future.

Oh and one more thing: Apple takes a cut out of every transaction made using Apple Pay.

iPhone 6: Expectations vs Reality

While I do not own any Apple devices and adamantly refuse to do so, I have a deep-seated interest on mobile technology and can't possibly ignore Apple's recent developments. (Return readers would probably notice the unusually high number of Apple-related posts I have written...). This interest is in part explained by the fact that Apple is in my stock portfolio. As a good friend recently said, "while I invest in Apple personally, you invest in Apple financially." All I can say is, Apple has been a solid investment so far.

But let us not detract from the purpose of this blog post, which is to provide commentary on the numerous rumors regarding the next iteration of Apple's popular iPhone device: the iPhone 6. As articles like this or this speculate, the iPhone 6 should be a major upgrade in both hardware and software. And therein lies the keyword: should. Amongst the many features these writers/bloggers are clamoring for, there are few very popular ones: (1) bigger display, (2) quad-core A8 processor, (3) NFC, (4) iOS8, (5) wireless charging, (6) element resistance, e.g. water, (7) better camera, and (8) eye-tracking. All of the aforementioned would be major enhancements to the iPhone, but I think if we're rational and review what Apple has done historically, only 1 or 2 of will actually be part of the iPhone 6 next year. In short, people need to be real and stop overhyping.

Historically speaking, the "S" iteration of every iPhone release sequence has included the biggest and most evolutionary changes to the device...at least on the hardware side. We've seen this most recently with the iPhone 5S -- with its superior camera, iOS 7, the M7 sensors and, arguably the most significant, the A7 SOC chip. The vastness of the 5S upgrade from the 5 is underscored by the folks over at AnAndtech labeling it, "quite possibly the biggest S-update we've ever seen from Apple." I'd have to agree, especially remembering that the biggest update from the 4 to 4S was the inclusion of Siri. So in other words, history has shown us that Apple tends to save its biggest "under-the-hood" updates to the iPhone for the "S" iteration.

With this in mind, I believe we can start debunking some of the wild rumors flying around. Let's go back to our original list of 8 and do a brief breakdown of each:

1. Bigger display -- Certain

The screen on my Samsung Galaxy S2 is still bigger than that of the iPhone 5S. Think about that for a moment. Apple is missing out a large part of the market by being fixated on a single screen side, and my best guess is that they will increase the size screen a further .5 inches to 4.5 inches. This should be the sweet spot for Apple as it won't alienate the current customer base while appealing to potential customers with a fetish for bigger screen sizes. The bonus is that this strategy would further differentiate between the flagship and the "C" iteration, and consequently sell more of the flagship device.

2. Quad-core A8 processor -- Likely, but...

...the performance update will be incremental at best. Think in terms of higher frequencies all around, rather than more physical cores per CPU and GPU. The A7 SOC already performs against the best other manufacturers like Intel and Qualcomm have to offer, and ushered in the 64-bit era to ARM chipsets. Apple might double the number of CPU cores to 4, but will certainly retain the quad-core GPU configuration. The potential for performance gain will fall on software developers to take advantage of the new architecture, rather than from the hardware side. 

3. NFC -- No

Apple is proud of its proprietary technology and I don't see them deviating from their current stance, unless NFC is somehow recognized as the de-facto contact-less payment and file transfer systems. 

4. iOS 8 -- Likely

The 7th version came out only six months after the 6th version, and I can see Apple continuing this trend. While the hardware on the iPhones is difficult to topple, it's another story on the software side. Android and, to a lesser extent, WP8 platforms have been on the forefront of innovations and iOS at this point comes off as an also-ran. It might be a big change too, considering the newer processing power available and Tim Cook's boast of "desktop-level" performance.

5. Wireless charging -- No

Just like the NFC above, Apple is into its own proprietary technologies and not about following others. 

6. Element resistance -- Unlikely

Aside from the usual resistance to fingerprints and scratches, Apple is not going to risk their profit margin on a feature that few customers will ultimately find useful. There's also an ascetic factor that can't be overlooked.

7. Better camera -- Likely

As good as the improvements to the iPhone 5S' camera, the resolution remains a mediocre 8 megapixels. An upgrade to 13 megapixels would be straightforward and bring Apple even to its other competitors -- all except Nokia's ridiculous 41 megapixel sensor.

8. Eye-tracking -- No

Just as Siri was cool but ultimately is proving to be relatively useless, eye-tracking is a gimmicky technology that customers are impressed by but won't be a deciding factor.

I'll add that I do also foresee the increase of the memory (RAM) from 1GB to 2GB for the iPhone 6 (before being doubled again to 4GB for 6S). This would be a no-brainer given the new 64-bit architecture now powering the iPhones. 

Economics of Apple's iPhone 5C

As the whole world is probably aware of it now, Apple's newest generation of iPhone was released last Friday and quickly sold out across many countries. This morning, the company reported a staggering 9 million units sold of both the 5C and 5S flavors. Very impressive for any company but, especially for Apple, it demonstrates that despite all the competition from Google's Android platform, its own iOS and iPhone devices still command a massive following.

What's interesting about all this is the attention and ridicule at Apple's decision to release a cheaper companion to their flagship iPhone. For the current (seventh?) generation, this means the iPhone 5C. The general opinion was that without a cheaper version of the flagship iPhone, Apple would be surrendering a significant portion of the market to Android handset makers like HTC and Samsung. After all, the $650 unsubsidized price for a top-of-the-line iPhone is beyond what most of the world's population can afford. One popular rationale is that the letter "C" in the "5C" represents China, a country in which iPhones have unsupported by its carriers until recently. In short, not pursuing this lower-tier market segment is akin to throwing away good money -- something unacceptable to any rational corporate executive.

Returning to the topic of the new iPhones (5S and 5C), let's review the differences between the two. The infographic below from CNET does an excellent job of comparing the two. In short, the 5C is akin to the previous generation with the exception of being a bit cheaper, lower build quality (e.g. more plastics involved) and available in different colors. Essentially Apple rebranded the previous iPhone 5 into an iPhone 5C, and released an upgraded version known as the iPhone 5S. Nothing too confusing, right?

As an economist, my insight on this strategy of releasing a lower-tier device to go along with a flagship device is simply: it's a very shrewd business decision. People, be them technology critics or the general populace, may whine and scorn Apple's decision to release the iPhone 5C, but they overlook the behavioral element that Apple is targeting.

In economics, this behavior is known as "relatively". One of my favorite economists, Dan Ariely, presented the case so well in his book "Predicably Irrational". Relativity refers to the human tendency to compare their environment or a good relative to another. However, the caveat is that we prefer to compare things that are easily comparable. Ariely first observed this phenomenon in an advertisement to subscribe to the magazine "The Economist", when he was presented with 3 different subscription options: a standalone mailed copy, a standalone online copy, or both a mailed and online copies. I forget the exact number he reported, but the last option was presented as much cheaper than the first two combined. The result is that "The Economist" probably sold the combination option much higher than the first two. (There's also a really good example about honeymoon options from the Wikipedia link above.) The bottom line is, when one is presented with comparable products but one is clearly superior, the superior product tends to get purchased.

Do you see why Apple released the iPhone 5C now? I get that its cheaper price allows greater market penetration than otherwise, but the iPhone 5C also indirectly (yet very effectively) promotes the purchase of the iPhone 5S. This is especially given that the 5S is only $100 more and provides essentially double the performance of the 5C. When your average consumer is presented with the choices of, say, a Samsung GS4, an iPhone 5C, and an iPhone 5S, the 5S would probably win out. Curiosity, it also dissuades any current iPhone users from jumping the ship. Apple ultimately may not move as many units of 5C but the company still wins in the end, regardless. And as the late Steve Jobs puts it so well, "If you don't cannibalize yourself, someone else will".

Follow up on the Xiaomi Phone

A month or two ago, I posted something concerning the newly announced Xiaomi M1 "superphone". While I was very impressed by the specifications of the phone, it was the (relatively) low price of $310 that really caught my eye. Other tech enthusiasts shared my opinion -- how could a dual-core 1.5 Ghz, 1 GB of RAM, 4-inch HD screen phone cost a meager $310? It just did not seem possible as similar spec-d phones retail for at least double that price. Needless to say, I was eager to see the reviews of the product.

Well, now Engadget released their review (a first in the English-speaking internet world) on the product and it is positively raving. To summarize, the reviewer(s) were impressed by the MIUI version of the Android OS, the large battery size, the transflective LCD screen, and (shockingly!) the Xiaomi phone's low price. The knocks/criticism was minor at worst: its relative heft and processor performance. All in all, Engadget's review validated the Xiaomi M1 phone as a successful product that will be sure to sell millions....under the right market conditions. Only problem is, the device will not be available outside China PR. I'm sure you can purchase it off Ebay or other international retailers, but that is a serious obstacle to the device's popularization.

So what's the point of this blog post? It's not just to regurgitate the contents of the Engadget review. Instead, I am declaring the very real possibility that I may purchase one in about a month's time. You see, my father will be traveling to China for a business trip and I realize that I could have him bring me back one (I would reimburse him of course). Furthermore, this possibility is made more real by the opportunity the Xiaomi phone presents to improve my fluency in Chinese. Figure that having a device in native Chinese would force me to re-learn some things, right? The Engadget review already mentions that the device should work with the AT&T network. Bingo.

For repeat visitors to my blog, you may remember my former discussions about possible gadget acquisitions from iPads to a new phone. Fast forward from then to now, we have seen the formerly "possible" devices become reality. For instance, the iPhone 5 is right around the corner, the Samsung Pad 10.1 has been released and, after much agonizing delays, the Samsung Galaxy S II phones have been released (or close to) at AT&T, Sprint, and T-Mobile. I am no longer in the market for a tablet computer, due to my company's expected transition to Windows 7 -- which nets me a Lenovo X220 laptop. But I am still very much in the market for a new cell phone. Do I risk purchasing the new phone from overseas? That is very much possible.

Xiaomi M1 Phone: a $310 "Superphone"?

Being back means that I will once again be providing some coverage of any exciting gadgetry or new technology announced. The latest is the so-called "Xiaomi M1" (translates to "smile" in Chinese) by a Chinese company of the same name. From all the information available, the company Xiaomi is a new Chinese start-up whose main goal is to profit from the ever-growing Chinese smartphone market. A combination of affordability and patriotism will surely score them points with at least the domestic population, if not across the seas too.

As reported by Engadget, the Xiami M1 is scheduled to be released in October 2011 but can be pre-ordered as recently as August 29th. It is an Android-running "superphone" that integrates Qualcomm new MSM8260 chipset that runs at 1.5 GHz, in addition to 1GB of RAM and a massive 4GB of ROM. Other features include a gigantic 1930mAh battery that promises at least 2 days worth of "real-life" usage, a 4-inch HD touchscreen, aGPS, Bluetooth, and a myriad of other sensors. What makes it very interesting --aside from the impressive specifications-- is its svelteness of mirroring the Apple iPhone 4's dimensions as well as weight. This seems to put it in the ballpark of the Samsung Galaxy S II too. Furthermore, the company announced that the superphone would ship with MIUI OS, which is a custom UI based on the Android 2.3 Gingerbread; owners of the device will even be able to flash whatever ROM their heart desires.

But by far the biggest draw for the Xiaomi M1 is its price: $310, or 1,999 renmenbi. While any other major handset manufacturer can probably build a phone with similar specifications, I highly doubt their price will be anywhere close to $310. You simply cannot buy an unlocked, dual-core superphone for that price. (For comparison purposes, the iPhone 4 retails starting at $649 unlocked or $199 subsidized from a carrier.) I am guessing that if this announced price holds, the Xiaomi M1 will make a killing against all its competitors -- possibly with the exception on the most fanatical of customers. It will create a market for itself.

While I personally will not be buying this phone (waiting to see what Nokia has in store), I can see the success of this phone radically altering the cell phone industry. It wouldn't be as revolutionary as what the iPhone has achieved, but will put heavy pressure for prices across the board to decrease. Customer loyalty holds little meaning when a similar alternative can be brought for 1/2 the price. In addition, I think this may mark a turning point for Chinese hardware manufacturers. Until now, manufacturers have been dominated by (outside of Apple), Taiwanese companies like HTC or Korean ones like LG and Samsung.

iPad Killer Alert: Lenovo ThinkPad Tablet

After lamenting last week about the unavailability of a solid alternative to the iPad (and even insinuating that I might even buy the iPad 3, whenever it comes out), I stumbled upon something that could be a "game changer". Yes, it is another Android tablet. But no, it's not like the other tablets released by the likes of Asus and Samsung.

The product I am referring to is a tablet made by Lenovo, now famous for its production of the ThinkPad products. The company is allegedly planning to release a ThinkPad-branded tablet on August 23rd. While the specs seem pretty standard (e.g. Tegra 2, 1GB ram, Android 3.1, dual cameras), there are a few things that make it truly stand out:

• Vast array of ports -- one of the missing links of tablets is connectivity and Lenovo addresses the problem head on. This tablet will have a full-size USB port, a mini-USB port, SD card slot, and HDMI port.
• Digitizer pen -- not only does the tablet have a built-in slot for the pen, but the pen allows a much wider array of uses for the tablet. The pen makes is perfect for students to take notes or for artists to draw on. Suddenly, it looks like I won't even have to buy notebooks for school anymore.
• Price -- the retail price is rumored to be less than $500, perhaps at $479 for the 16GB version of this tablet. The base price does not include the digitizer pen, but it'd only be a $30 add-on.
• Business usage -- tablets thus far have been mass-consumption devices. RIM took a step in the right direction with its PlayBook, but flopped on the hardware and software integration. Lenovo is primed to succeed in this area as they can leverage the security of its other ThinkPad products.

The more I read about this product, the more I like it. It's not exactly an "iPad-killer" but it holds tremendous potential. Given all the available information, I will make a premature prediction that this ThinkPad tablet will be the best Android tablet available. The only drawback I see is that age of the hardware, namely the Tegra 2 processor that will soon be replaced by the Tegra 3 ("Kal-El"). If Lenovo somehow sticks a Tegra 3 into this tablet, I will be placing a preorder at the earliest opportunity.

If you need any more convincing, check out the video below:

iPhone 5 Spotted in the Wild?

I can be a hypocrite sometimes and this might be true in the case of Apple products. After slamming the company over the fanaticism of its customers (e.g. trading a kidney or going into debt for a iPad 2), I am starting to warm up to some of its products. While a Macbook is out of the question, I have already floated the idea of getting the iPad 3 when it arrives...in November 2011. Now I've just read about the soon-to-arrive iPhone 5 and thinking to myself, should I spring for it?

As reported by this article ("Appolicious"? what a horrible name!), an alleged iPhone 5 was caught in the wilderness of San Francisco yesterday. A tipster apparently caught sight of an iPhone model different from his own iPhone 4, snapped some pictures, alerted the website 9to5Mac, and the rumor mill exploded. Although the open secret has long been that the iPhone 5 will arrive in two months -- in the month of September-- Apple has managed to keep a close lid on its specifications. But here we have it, someone outside of the company has glimpsed the new iteration of the iPhone.

Unfortunately, not much useful information could be derived from the "leak", aside from a larger and curved screen. The tipster reported what he saw to have the screen size comparable to the HTC EVO (which has a 4.3 inch screen) and also "thinner" as well as "wider" than the current iPhone 4. None of these revelations are groundbreaking news -- there were already rumors (coming from component manufacturers) that screen size might be different this time, and Apple is known to obsess about thinning their devices.

But what makes this post interesting is my new openness to the iPhone 5. Because as you see, my birthday is in September and I am thinking of finally upgrading from my trusty Nokia e71x. As a tech geek, I have long been fascinated with getting a new phone and I'm getting sick of waiting of the newer and better devices. The biggest reason is the lack of competing products from others: Android devices suffer from lag due to non-native integration of the OS into the hardware, HP is being timid with webOS phones, Blackberries stink, and Windows Phone 7s are being slow to release. I am hoping to at least try the Nokia N9 though, before making a decision.

Step Up to the Plate, Google Nexus 3 Phone

My trusty source of gadget information, Engadget, post an article early today announcing the soon-to-be arrival of the Samsung Nexus S smartphone on AT&T network on July 24th. There is nothing exciting about this announcement. When it was first released on Sprint last December, the Nexus S was an impressive piece of smartphone hardware. It boasted the newest version of Android OS, along with the impressive specifications of a 1Ghz processor and plenty of memory. But today, it has been outclassed by the flood of dual-core smartphones like the Motorola Atrix flooding the market.

All hail to the Neximus Prime!

Yet I picked up some interesting rumors in the comments section. A few people joked how the need to get the Nexus S when its iteration was just around the corner. As any good tech junkie would, I looked into the rumor and voila, they are true. An announcement has not been made yet, but all signs point to a release of the Samsung Nexus S Prime (going a little heavy on the Transformers theme, eh?). There is no fixed date, only an estimated of late 2011. The upcoming device is rumored to run on the next stage of Android development (2.4, Ice Cream Sandwich), packing a Super AMOLED HD display and a possible Tegra 3 processor. Pretty impressive specs.

Part of the reason I am writing about the Nexus S Prime is out of frustration about the Samsung Galaxy S II. As noted previously, there is no indication when the superphone will be arriving here in the United States. It seems to have arrived in every other country already. (What are you doing, Verizon and AT&T?) I refuse to believe the suggestions that it will arrive statewide in August until I see the device. Looks like I may forsake one Samsung smartphone for another eh? Good job Samsung, least you know you'll make money from me...the only question is, when?

Apple 2011 Q3 Earnings

It's that time of the year! Companies, especially technology ones, are releasing their quarterly earnings statements. One of the most awaited ones in recent years has been Apple's and its Q3 2011 earnings do not disappoint at all (perhaps only for competitors).

Apple's Q3 2011 earnings are its best ever, with revenue totaling $28.57 billion -- of which $7.31 billion is profit. Not sure where this ranks the company in total revenue, but these figures have to Apple within the elites. A brief breakdown of the revenue sources reveal something we already known for a while: most of the revenue come from hardware sales. The Apple juggernaut sold 20.34 million iPhones, 9.25 million iPads, and 3.95 million Macs. These are extremely impressive figures, with which no other hardware manufacturer can compete against (especially when you factor in the diversity, e.g. Samsung/HTC may ship more phones, but nowhere near the number of tablets). Even the slight blip in the earnings statement was expected: a decrease of iPod Touches from 9.41 million to 7.54 million.

While I am no fan of its products, I am a fan of Apple's sheer business savvy-ness as measured by the loyalty of its massive customer base. The ecosystem Apple built, while decried (rightfully so) by critics for how closed it is, looks to be sustaining the company's revenue growth. Customers who are lured into a single Apple product will ultimately buy other Apple products too. Case in point: my roommate started off with an iMac, but now owns a MacBook, an iPhone, and an iPad.

Well done Apple, Jobs well done (couldn't resist). I may even break my self-imposed embargo on your products by buying the iPad 3...if you release it soon.

Apple iPad 3 Preview

[I'm going to try something new in this blog post. Instead of the usual commenting on reports from other technology-oriented blogs, I will try something more original...]

Nope, I do not have special insider information about Apple's imminent iPad 3. Nor do I have one on hand to tinker around -- and afterward write about my experiences with it. This post is simply to make calculated suggestions about the iPad 3.

Are you disappointed? Well, I frankly do not see a reason to be. Rumor mills on the iPad 3 have been running rampant lately, with all sorts of reports floating around about the expected arrival time or supply predictions. One point I am proving to you (as in, right now!) is that rumors are just that: rumors. The culture Steve Jobs has so carefully constructed at Apple means that no Apple employee is going to leak anything involving the device -- I doubt not even if you put a gun to their head. Unless a third-party outs something, or Apple itself releases information, the best information we have is just a series of calculated predictions.

And there should be nothing wrong about making calculated predictions, especially if they are made with an honest intent. This is precisely what I am about to do. Although I previously may have expressed interest in alternatives to Apple's now iconic product, there are still no viable alternatives. The Asus Transformer was arguably the strongest contender to the iPad 2, but it has gotten a negative rap about build quality and the immaturity of Google's Android Honeycomb OS. I am very curious to see what Amazon has in store nonetheless.

Here's the list of my calculated suggestions (most of which are no-brainers) for the iPad 3:

1. Yes to "Retina" display -- Apple would be stupid not to do this. They need to implement the same display resolution used in the iPhone 4 into the iPad 3, if the goal remains to generate substantial revenue. Competitors are enhancing the resolution of their respective screens, and Apple can ill-afford to not follow suit in this increasingly competitive market.
2. No to quad-core processor -- this one will not happen, because the technology is not there yet. Not enough time has passed to be able to integrate a quad-core processor successfully into the next iPad (they could but the cost would be too high). iPad 3 will retain the same A5 processor used in the iPad 2.
3. Yes to 1GB+ of RAM -- one of the flaws of the iPad 2 was the pairing of a powerful processor with insufficient system memory. The result was the touting of amazing performance that could not be replicated in real life. Again, competitors are also pairing their devices with 1GB of memory.
4. No to an "iPad Mini" -- Steve Jobs himself has declared the lack of a market for tablets with screen sizes below 10 inches. What else needs to be said? This one is pretty obvious, unless Apple plans to phase out the iPod Touch completely in favor of the iPad.
5. No to lighter or smaller device -- there really isn't any point to doing this, in addition to the dangers of constraining the available space for circuitry boards. I believe we will see the iPad 3 have very similar dimensions and weight to the iPad 2.
6. Yes to the same pricing scheme -- unless a quad-core A6 processor is integrated into the iPad 3, I see the prices for devices to remain the same. This means $499 for the smallest capacity iPad 3 (probably the same 16GB hard drive) and $599 for the next tier up.
7. Yes to a late October arrival date -- Steve Jobs is too smart not to realize that if the release date is December or November, then there will be shortages and frustrated customers. If the release date is before late October, there is a great risk of cannibalizing the sales of the current iPad 2. In addition, this date allows Apple to compete directly with Amazon's alleged tablet.

So there you have it, a list of expected changes for Apple iPad 3. The keyword now is....patience.

The Economics of Usage-Based Data Plans

If you are a smartphone owner/user, then the term “data plan” should be a part of your daily vocabulary. All network carriers in the United States, such as AT&T, Verizon Wireless, and Sprint, mandate the customer to add a data plan if the cell phone of choice is a smartphone. This makes basic sense – smartphones consume data for functions like checking email or browsing the internet.

Yet until this past year, all the major carriers operated on a “one-size fits all” model for data plans offered. The premise is that, regardless of the amount of data one consumed, a fixed fee is levered (normally between $30 and $40). One assumption made is that because all smartphone use data, the amount of data consumed is ultimately insignificant. It was also more profitable to charge a fixed amount for an unlimited data plan, as the population of smartphone owners was smaller than the “dumb phone” ones (I am casting out a lot of jargon).

But this year, things have begun to change. Carriers have one by one have begun to shift their model from a “one-size fits all”, to a usage-based one. The word “unlimited” would no longer apply to data plans – unless the customer is willing to pay an arm and a foot for the privilege. If my memory serves me right, AT&T was the instigator of these changes: they offered a two-tier model of data plans, one much smaller than the other (250mb vs 5 GBs?). Now it appears Verizon has proceeded to follow suit (see left).

I am a strong proponent of investigating the basis for change, when change does occur. In this case, it is pretty obvious that the network carriers are being greedy and “want to screw the customer!” I agree with this sentiment, but there must be more fact-based explanations. For one, the population of smartphone users have grown from a niche market to the mainstream – people everywhere has opting for smartphone when given the option. The multiplayer battlefield between Apple’s iOS, Google’s Android, Microsoft’s WP7, and HP’s webOS has already been heavily fought over and over again. The result is greater strain on the capacity on the carriers’ data networks; everyone wants to be connected, to facebook and tweet on the go. In addition, the quality of data has become pluralized into the 3G and the 4G (latter being much faster than the former) worlds. All in all, it no longer seems fair to charge the same price for different usages and different speeds.

From an economic perspective, I am surprised it has taken this long for carriers to catch on. [T-Mobile and Virgin Mobile may be touting their unlimited data plans right now, but I think this will change.] The reason lies in the centuries-old practice of price discrimination. While outright price discrimination (e.g. first degree) is illegal in most countries, companies are allowed second degree and third degree price discrimination. For the case on hand, network carriers seem to be applying third-degree price discrimination – which entails creating a multi-level prices of entry, and having the customer voluntary self-identify by selecting the price of entry. As an example, if I know I consume more than 2GB but less than 5GB of data per month, I can opt for the 5GB plan outright. In this way, the network carrier can capture more of the consumer surplus than before – while also opening up the market to new potential customers.

I say I am surprised to see the length of time taken to see these changes come into effect because all network carriers have long practiced third-price discrimination. Think about it for a second: are these new usage-based data plans identical to voice plans, only they are for data instead of minutes? Network carriers have been charging more for the privilege of talking longer or texting more for decades! It’s puzzling it’s taken them this long to catch on; perhaps the increasing data-hungriness of smartphones has forced their hand. Other common examples of third-degree price discrimination are utilities such as electricity and gas, which are always levied based on how much one uses.

Don’t get me wrong – I am by no means happy that the usage-based data plans have become widespread. Charging $30 for a 2GB or $50 for 5GB of data is absolutely ludicrous. And is it realistic for anyone to opt for the 75MB for $10 a month plan? I’d call it an obvious trap for customers – and very good grounds for lawsuits against the carriers. But I wanted to take a step back, detach for a second, and look at the economic rationale behind these actions.

Samsung Galaxy S II: No Arrival in Sight

Samsung Galaxy S II, currently the holy grail of smartphones, has no release date in the United States. Thus far it has been released pretty much everywhere but here, in the U S of A. I want one; so does a multitude of other techies and non-techies alike out there. One simply has to glimpse into any smartphone forum to realize just how badly people want this device. Almost too badly, I should say.

To add insult to the injury, Engadget reported that the device is now slated to come out in Canada for the network providers Bell, Sask Tell (??) and Virgin Mobile. Is it slated to hit Bell on July 14th, with the other two providers offering the Samsung Galaxy S II the next after. Why oh why must this be so? Common business sense dictates that if there a demand -- which there clearly is-- then some company will create supply to meet that demand. In the case of the Samsung Galaxy S II, the device already has been built and so the only thing left is to find a carrier to offer it. Why won't U.S. carriers like AT&T, Verizon, and Sprint offer this thing of beauty? I am starting to suspect some conspiracy involving Apple, like Apple bribing the U.S. carriers to not offer the Samsung device.

Ranting aside, I give this device a maximum of one to one-and-a-half months to show itself in the U.S. before I abandon it for greener pastures. Nokia's first iteration of the Windows Phone 7 platform will soon be released, and I am sure other hardware manufacturers are scrambling to release competitors to the Samsung Galaxy S II. Viable alternatives on the horizon are the Nokia N9 and, heck, even the Nokia N8 looks appealing again.

I would like to politely ask that a U.S. carrier please step up and offer this Samsung device. If Virgin Mobile America decides to follow suit to its Canadian counterpart and offer this phone on their plans, I would drop my current carrier (AT&T) in a heartbeat.

Google Introduces Google+

Noticed anything lately while using Google's ubiquitous search page? What, the navigation bar at the top is now black colored? Congratulations! You have just caught a glimpse of the upcoming Google+ service -- better know as Google's long-awaited challenge to Facebook.

Courtesy of an Engadget report, Google appears to have finally launched its challenger to the behemoth of a social network better known as Facebook. I bet Zucks is paying close attention to this development. As a user of various services provided by Google (e.g. Blogger, Gmail), I welcome this fresh attempt by the internet services giant at developing its own social network. I will even go as far as say I am cheering for Google to succeed. Why? At least Google+ will probably be integrated with other useful services -- as opposed to Facebook, which holds little value besides stalking friends or creating the facade of having actual friends. This is not to say that Facebook is worthless (because it isn't).

First of all, let me talk a bit about the name Google decided to name its social network. Google+? Really Google, is that the best you could come up with? It's better (read: more creative) than slapping an "i" to the conventional name of a product, but I expected better. I expected something cool along the lines of "Google Waves" or "Googles". "Google+" offers no allusion to what the service actually is, which would worry me if I was a member of the marketing team.

Yet (without having tried this new service), I think that Google will give Facebook a run for its money. Rumors are that Google+ will also attempt to challenge Skype through offering video-chat services. It's like Google is waging war on two fronts: on the social network front against Facebook, and on the internet communications front against Microsoft. Maybe it's picking too many fights at once? Well, I believe the answer is no. Google isn't just some weakling in the playground -- it's the biggest kid who has thus far been picking his nose and kicking around rocks. In other words, Google has not made a concrete push on these fronts yet. Instead, it has been busy consolidating its core businesses and building a diverse ecosystem. Now it's turning its attention on building a viable social networking platform.

My opinion is that Google will win in the long term against the two incumbents. The reason is simple: neither Facebook nor Microsoft offers the diversity of integrative products as Google does. Facebook has become a display advertising giant, but has not expanded into nothing other than maintaining its social network -- its "Apps" are entertaining and recent business promoting a-la-Groupon holds some potential though. Microsoft is in a better position than Facebook, but not by much. Its Hotmail service has largely been crowded out by Yahoo! and Gmail, Bing is forever the underdog to Google Search, and the bulk of its true content pathways are funneled to its Xbox business. In sum, the recipe to Google's victory is its ability to streamline the integration of its many services into a single, user-friendly ecosystem. If Google+ becomes a place where popular services like Gmail, Maps, Search, Docs, and Translate can be brought together, then it will be an absolute winner. In other words, Google+ has to become so good that users cannot afford to stay away from it.

In economic terms, what makes Facebook and Skype so successful right now are their market share. Both have reached what is known as "critical mass", when the number of users skyrockets and the business takes off. It takes years to build out to "critical mass" but, once reached, incumbents are very difficult to unseat. But they are not "unseatable" -- all it takes is a novel approach, or a better experience to lure away users. The nature of businesses such as social network and video communications are their dependency on popularity; the more people use them, the more potential users will opt in. But Google has this popularity already through its myriad of different services. The task at hand is to bring everything together.

Nokia's N9 Debuts!

[Mia culpa for not posting anything for the past few days. It's been a ridiculous weekend, plus work has been busy. I hope to make it up to you readers...starting now.]

Courtesy of Engadget reports, I found out this morning that Nokia has taken the wraps off its upcoming N9 flagship smartphone. The significance of this revelation is that the N9 is Nokia's first phone running on the MeeGo operating system. It is interesting, to say the least, that Nokia has chose to introduce this phone --in spite of explicitly casting its full support behind Microsoft's Windows Phone7 OS.

Return readers to this blog probably already know that I am a big fan of Nokia products (namely phones). As a proud owner of a Nokia E71x, a device that has not failed me once over the past couple of years, I am definitely looking first for any potential replacements. The company is renowned for the quality, versatility, and long battery-life of its products. I can absolutely vouch for Nokia. So what so special about this device?

For starters, the Nokia N9 packs a 3.9-inch "Clear Black" AMOLED, Gorilla-Glass-protected screen, 1 GB of RAM, and an OMAP3630 (Texas Instruments) 1Ghz processor, along with quad-band capability, GPS, Bluetooth 2.1, and a 8 megapixel camera. All these features are in line with the best smartphone offerings out there -- perhaps with the exception of the processor, which is only single core. The camera resolution is also a slight disappointment given the Nokia N8 carried a 12-megapixel sensor, but the N9's supposedly carries wider-than-usual lens. What truly sets the N9 apart is its quad-band capability and, not surprisingly, the MeeGo OS. Quad-band capability is a great feature for those who travel around the world a lot.

Yet the point of discussion is the MeeGo OS. Based on the demonstration on Engadget's hands-on videos, I like the software but more thrilled about the hardware. MeeGo looks like a more mature version of Apple's iOS operating system, thanks to its multi-tasking capabilities. One negative is the number of apps I see displayed on the main menu -- why so many? Call me "old school" but I much prefer the native embedding of useful applications like music player into the operating system itself, rather than having to install it. This is the same reason I still have my E71x: Symbian may be outdated but it is reliable and gets the job done. I have to admit, however, that I was "wow-ed" by the demonstration of the N9's ability to connect via Bluetooth (by touch) into compatible devices.

Overall, this blog post is just to highlight a new development in the tech sector. (Or at least significant in my opinion.) I think Nokia's CEO, Stephen Elop, made the right call into switching to Windows Phone 7 for future Nokia devices. Inasmuch as MeeGo is usable, it cannot compete against the likes of iOS, Android, and Windows Phone 7 on the software development front. In other words, MeeGo looks very much like a product still under development -- not ready for prime time. And Nokia can ill-afford to wait until the platform matures. As Tony Starks says so well, "sometimes you have to run before you can walk".

iTunes Not a "Cash Cow" for Apple

This is certainly news to me. As reported by CNET, Apple is estimated to spend approximately $1.3 billion per year (that's $113 million per month) to run its iTunes and App Store portals. While that is a staggering operating expense, I always thought Apple makes many times that in revenues back. Looks like this may not be the case.

The cost estimation of $1.3 billion was computed by the market research firm Asymco, using the numbers provided at the most recent Worldwide Developers Conference, or WDC (quick recap here). Asymco concluded that given the price of songs and apps that Apple charges, the company runs both services at just "slightly above the breakeven point". This analysis is collaborated by the opinion of other analysts, who have stated in the past that the App Store has never been a source of huge profits for Apple. Piper Jaffray analyst Gene Munster estimated a year ago that the App Store only nets profits of $189 million since launch for Apple.

Now, how can this be? How could the two most popular music and application portals not contribute significantly to Apple's bottom line? I for one thought that their overwhelming usage alone (this is a no-brainer, as much as I like Amazon's stores, Apple's is just more popular) would translate into colossal profits. In wake of this news, it seems like the operating expenses are much higher than before. After all, the success of both services is contingent on Apple's ability to streamline payment processes, data transfers, and preparing capacity. All these can be expensive -- unlike Microsoft's cash cow "Office" or "Windows, or Google's ubiquitous search engine, Apple's iTunes and App Store require constant hands-on management. (Google probably has significant expenses to its search engine, but this is more than offset by advertising revenue.)

What is interesting about this news is that it points Apple's business model: maximize hardware revenue. While Apple's software may be adored by millions, new releases like OSX Lion and iOS5 are not for the express purpose of being innovative. Instead, they are to attract customers to its hardware like MacBooks and iPhones -- which (obviously) run exclusively on Apple's own hardware. The main point of software including App Store and iTunes is to differentiate Apple from the competition. This makes sense given the oft-ridiculous markup of Apple's various gadgets: because this is how the company makes the bulk of its profits. In economic speak, the profit margin is much much higher in hardware than in software. No wonder iTunes runs so sluggishly on my ThinkPad!

Arrival of AMD's Llano Fusion Chips

As a technology enthusiast (and an AMD shareholder), I was pleasantly surprised to come across news that the long-delayed AMD Llano series of Fusion chips have arrived. Or least they have begun shipments. This is a very positive development for consumers and shareholders alike, as the arrival of Llano solidifies the reemergence of AMD as a competitor to Intel.

So what's the big deal with the Llano? The Llano series of chips are the next step in AMD's expansion plans for the Fusion line of APUs (accelerated processing unit, which integrates the CPU and GPU together). Furthermore, these chips will be manufactured on a 32nm production technology -- that AMD's competitor, Intel, has been using for a year now. Reducing the chip size from previous 45nm production processes enables reduced costs, yet at the same time increasing performance and energy efficiency. While we have already seen the arrival of the Brazos/Zacate chips in the Fusion series, the Llano is a major breakthrough as it is designed to compete directly against Intel's i3 and i5 series. AMD has not been competitive in the mainstream mobile market segment (e.g. mainstream laptops) for quite some time now, and the Llano series have the potential to reverse the company's fortunes.

The Llano is formally branded as the Vision A-Series APU, first to be offered in three tiers: A4, A6, and A8. Each higher designation indicates an increase of graphics power, or number of cores over the previous one. The chart below (courtesy of tomshardware.com) should help to clarify matters:

Based on the benchmarks I have seen, the general consensus is that the Llano is an awesome piece of mobile silicon. Performance-wise, Llano chips generally triple the performance of the current Brazos line of Fusion-branded chips. The top-of-the-line Llano looks to be the A8, a quad-core beast with 400 Radeon cores. Although the benchmarks indicate the battery life to fall short of AMD claims "all day battery life" of 8+ hours per day, it is nonetheless impressive to say the least. Both AnandTech and Tomshardware run detailed tests on the Llano and results show Intel's SandyBridge line of chips retaining the speed crown.

But the story is different on the battery life front and video graphics: Llano at very least matches the battery life of SandyBridge series, and dominates in graphic-intensive tasks. This means that while it may not always topple comparable products offered by Intel in sheer processor power, the Llano is very competitive in battery life and graphical prowess. The latter we already knew --Intel's Achilles heel has always been video graphics-- but the competitiveness in battery life comes as a pleasant surprise. I currently manage about 4 hours of battery life on my Intel i5-equipped Lenovo Thinkpad. Just think of what you (or I) can do with double the battery life!

Whereas the first set of Fusion chips (codename Brazos) to hit the market primarily targeted the netbook market, these Llano chips solely target the mainstream (read: bigger). (AMD is also preparing the "Desna" series for the sub-Brazos market tier.) I am expecting Llano to be a hit, not a runaway hit like AMD's previous X2 processors, but a hit nonetheless. Given the current state of the economy, AMD's ability to better price their products will be a key selling-point to customers. The reality is that outside of geeks and gadget lovers, the average customer will chose the cheaper good when the performance is comparable -- or at least if they are told it is comparable.

Thoughts on the PlayStation Vita

Due to the lull in exciting technology news lately, I decided to revisit a gadget that first appeared during this year's E3 Expo: the PlayStation Vita. Originally the intention was to post thoughts on both the PS Vita and the newly-announced Nintendo U. I guess we'll save the Nintendo U for the next lull in interesting news.

For all those who have missed the news, Sony announced the next generation of its portable gaming device (formerly codename "NGP"). The device packs a 5-inch OLED (organic light emitting diode) screen, two analog sticks along with the standard PlayStation D-pad, dual cameras, and state-of-the-art sensors like proximity and accelerometer. It also comes uniquely with a touchpad in the back of the device. But arguably the biggest surprise was the price: the PlayStation Vita will be offered at $249 retail for the Wi-Fi version, and $50 more (at $299) for the 3G version. This makes it directly competitive with the Nintendo 3DS.

At first glance, the PlayStation Vita seems to be destined for market success. It is competitively priced against the rival Nintendo 3DS, but packs much more features. Sony seems to have finally created a device that can dominate Nintendo's growing iterations of the original GameBoy -- a process it embarked on beginning in 2005, with the release of the PlayStation Portable. The price of $249 definitely makes the Vita very attractive for potential buyers. Commenters and self-proclaimed market experts alike have proclaimed the demise of the Nintendo 3DS thanks to the Vita.

But I would be more cautious in jumping to any conclusions so early. For one, recent history indicates that we should never count out Nintendo from the video gaming market -- even when they seemingly offer a mediocre product. For example, I remember both the Wii and the DS being mocked when announced: it was obvious the Xbox 360, PS3 and the PSP all offered superior hardware. Yet superior hardware alone is not enough (just ask the creators of the first Xbox). We all know the Wii and the DS have dominated sales charts until more recently. As underpowered and battery-sapping as the Nintendo 3DS is, I need to see some sales figures before announcing the Vita's victory.

I also think tech enthusiasts are also forgetting a critical transformation that has swept through the mobile video gaming market. Whereas the PSP and DS competed directly against each other, their successors must now compete against cell phones and tablets alike. And competition sure looks fierce! Both cell phones and tablets alike are becoming exponentially more powerful (e.g. upcoming quad-core tablets and the Samsung Galaxy S II phone), in terms of both speed and graphical prowess. Therefore, I think the PlayStation Vita will be competing more with these devices than with, say, the Nintendo 3DS.

More specifically, Sony has to convince potential customers that the PlayStation Vita cannot be replaced by the versatility of a new dual-core cell phone. Or by the bigger screen size of a tablet. This is becoming more and more difficult due to the myriad of game developers flocking to develop for mobile operating systems like the OSX and Android. One way for Sony to win is to release appealing games (like the announced Uncharted: Golden Abyss), which has been a bread-and-butter strategy of Nintendo's. But Sony's gaming franchises are arguably much less cemented than Nintendo's Mario, Zelda, Star Fox, and many more. On the bright side, as Halo's impact on the sales of Xbox evidence, it sometimes just takes one game to change the fortunes for a device.

In sum, I am excited to see what the PlayStation Vita has to offer -- and how it sells against the competition. It certainly has ingredients for success.

Apple WWDC 2011 Recap: iOS 5, OSX Lion, and iCloud

The title to this post is a bit misleading. Although I own no Apple products (as noted here), I consider it a responsibility to follow all tech-related news. Therefore I cannot in good faith consciously exclude Apple announcement. To such effect, I had to follow Apple's WWDC 2011. (I am a couple days behind, I know...)

Although Apple introduced a host of new products/changes like the iOS5 and OSX Lion, I think the picture reflects on the most important announcement of this conference. As expected, Apple revealed its competing service to the Pandora, Amazon's Cloud Player, and Google's Music (Beta). Nothing new needs to be said, other than just greater detail than what was predicted before. Music labels will be much happier with Apple's approach than the other two behemoths (Pandora is technically a "music recommendation" service). I foresee some nasty lawsuits in the future.

The other two major announcements (iOS 5 and OSX Lion), pardon my lack of enthusiasm, were very underwhelming. Nothing significant was really introduced -- simply a myriad of implications to improve user experiences. Fanboys left and right are either bashing or commending Apple for its approach. I am indifferent about both. The reason? My answer: why fix something that is not broken? In addition, the competition is not that strong anyway. For example, Android OS is more powerful but lacks the proper interface to make it popular; Windows Phone 7 is more intuitive but lacks the brand power and hardware support. On the OSX Lion front, everyone knows that OSX will always be a distant second to Microsoft's Windows OS. Even Apple knows this very well.

What's more interesting is how Apple is consolidating its gains in the marketplace. Namely, they are streamlining their entire ecosystem so that consumers are likelier to keep buying their products. This is very sound strategy. For example, once you have an iPhone, you'd likely buy a MacBook to synchronize with your new phone. Not only would this lessen the chance your customers will sample other products, it also breeds fanaticism. Power of Apple indeed.

Time to Buy an Xbox 360 + Kinect?

This week is E3, which stands for "Electronic Entertainment Expo" or aka the annual gaming convention. Companies worldwide flock together to demonstrates their upcoming hardware, software, and games. It's a pretty exciting time for any gadget enthusiasts, especially if you are also a gamer. To sweeten the deal, Apple likes to schedule its annual WDDC (Worldwide Developers Conference) in the same week. Definitely much more exciting stuff than the recent (failure) of a Computex 2011.

To start things off, Microsoft went ahead and demonstrated upcoming changes to its Kinect motion-sensing controller. And boy did they hit a home run. Aside from a host of new exclusive games such as Gears of War 3, Mass Effect 3, Star Wars (doesn't everyone dream of dueling like a Jedi?), Microsoft also dramatically expanded its games offerings to the other audiences. The latter includes Sesame Street: Once Upon a Time and a Fun Labs that allows innovative uses of Kinect equipment, as well as the usual sports titles (Kinect Sports Season Two). I am personally thrilled to see the multiplayer capability of Dance Central 2, which before could only track the moments of only one player at a time. Now it can do at least two. It's time to learn some contemporary dance moves!

[It would be redundant to breakdown all the new offerings by Microsoft. You can check the Engadget articles here and here if you'd like. They have good photographs too!]

What I will do is provide a brief analysis of what these announcements mean to Microsoft. Obviously Microsoft is riding a wave of positive image right now -- Sony Playstation's reputation is smashed after its shutdown of its Playstation Network. I might even go out and purchase an Xbox (with Kinect of course) to take advantage of these new changes. Let's return to using our trusty bulleted formatting system to present some thoughts:

• Nintendo better reveal a solid successor plan to its Wii system, lest they want Xbox to also dominate them in sales. The Wii's novelty has worn off, especially now that with Kinect one no longer needs any controller. More alarmingly, Microsoft is bent on targeting a rounder demographic -- which has always been Nintendo's stronghold. Let's hope Nintendo's rumored "Wii HD" is competitive.
• Cable television providers also better watch out. As this initial revelation suggests, Microsoft is looking to expand its lineup of television offerings through the Xbox. I have friends who have already ditched cable television subscriptions for plans offered by Netflix and Hulu. Heck, even Netflix should be cautious as this new ability of the Kinect may pose a challenge to its business model.
• The emphasis on Kinect in this year's Microsoft E3 presentation hints that the next iteration of the Xbox will not be released for another 2 or 3 years at least. Microsoft is simply betting (with its development wallet) too much on Kinect to just forsake it after a year. Anyone holding out for the next iteration should just go ahead and buy the current one.

What does this mean to Microsoft's stocks? I'd recommend holding on as blogged about earlier. The pessimism is too heavy on the stock market right now. However, it doesn't mean you can't wait out the summer by buying yourself an Xbox 360 + Kinect (as I very well might).

Apple to Unveil iCloud Service Soon

To maintain the momentum of Apple-related blog posts (which is weird since I am definitely not a fan of its products), I wanted to share some thoughts about Apple's upcoming iCloud music service. It definitely won't be revolutionary but, given Apple's clout in the music industry, the service should make a tremendous impact.

Cloud-based music streaming is not a new idea at all. Although Amazon's recent release of its Amazon Cloud Drive marks a new chapter in its prominence, these services have existed for years. For instance, the music-streaming service Pandora is essentially a cloud-based music streaming service. You can't store music on Pandora nor directly purchase the music, it allows you to listen to (ad-sponsored) music anywhere you have internet connection. Its 48 million-strong subscribers is certainly invitation for competitors to entry the market.

What makes Pandora's service unique is, as mentioned, its inability to store music, ad-placement, and indirect purchase of music. Pandora primarily serves as a "music recommendation" service that offers customized playlists -- very useful for those who want to sample new music. But Amazon's Cloud Player, on the other hand, works much more like a traditional cloud computing service. The same can be said of Google's Music Beta and (theoretically) Apple's iCloud service.

For these three aforementioned services, the subscriber is offered varying amounts of storage data on a computer cloud that allows easy access anywhere to the internet. Subscribers/users have to upload individual songs onto the cloud before being able to play it. So therein marks a vital difference between these services and Pandora -- user input is necessary before the service becomes usable (almost like the characteristic of social networks discussed previously).

But as this article from the Boston Globe describes, Apple's iCloud service may be somewhat different from Google's and Amazon's. More specifically, instead of users having to upload songs onto the cloud, Apple's iTunes services could search a user's music library and automatically link the song to what Apple already has stored in its servers. This way, Apple saves bandwidth and the user saves the hassle of having to upload music. Sounds like a win-win scenario...except this means having to strike deals with music labels. There are reports that Apple has already ponied up considerable royalties to four major music labels (Sony, Warner, EMI) for iCloud music rights.

Having used Amazon's Cloud Player, I can see how Apple's approach could be more popular with users. It took me almost an hour to upload 2 GBs of music! Furthermore, Amazon's cloud service is not very well integrated with its own music store -- which is a competitive advantage of Apple's, thanks to the ubiquitousness of its iTunes system. But we can't fault Amazon for its effort. Not only was it the first on the market (Pandora aside), it offers users 5GB of storage on its cloud drive that isn't limited to music. Amazon's approach to cloud-based streaming also made sense because it did not want the hassle nor the big royalties paid to the music labels.

All in all, cloud-based music streaming looks like it is here to stay. Advancement in data networks and in portable devices would only help their widespread usage. In the long term, I see Apple's iCloud service sharing the marketplace with Amazon's and Google's products. Amazon should be the bigger rival since it has its own music store already -- only problem is integration. Services like Pandora would become niche, targeting users who want to sample different music from what they already have.