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Timothy Perdian
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Investing in stocks or twenty years, undergraduate degrees in Englis and Genetics from the University of Wisconsin. M.A. in Creative writing from University of Wisconsin-Milwaukee. And a Doctor of Chiropractic degree from NCC. Post graduate Certificates in Worker's Compensation (California),... More
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  • The Three Hundred Billion Dollar Thumb Or How Apple Wasted A Five Year Lead In The Post PC Era  0 comments
    Mar 17, 2013 7:34 AM

    Tim Cook's astrological chart indicates that he will be a very poor CEO. He was a terrific foot soldier in Steve Job's Visionary army. He could help bring the products to the market in time in the right number. But astrology does not really count for much, we know that. Just because Bob Dylan has a plethora of stuff in Gemini, the sign of writing and communication, does not mean that he will be good with words. On stage in 2007 Steve Jobs announced a revolution in the mobile phone/computing industry by introducing three new products. First a wide screen iPod, then a revolutionary phone with a touch screen interface and finally internet communicator/access device. All three devices were one-the iPhone. The god Phone as it was called. No more did we have to suffer through Verizon's or ATT's interfaces the use of which must be one of the Circles of Hell in Dante's Inferno. This day marked Apple's rapid rise to the top of the corporate world, the return of Apple to the top of the tech world and the end of the Steve Jobs or Bill Gates debate. Gates was a clever guy who figured out that IBM would pay dearly for an OS to operate its PCs, he figured IBM was careless enough to let him license the OS to others and then he went out and bought DOS from someone who was a very good programmer. Gates simply maneuvered his way to becoming the richest man in the world and one of the most respected man in tech along with Jobs. Jobs now leap frogged Gates to become a man equated with Edison, Ford, Franklin and the other great visionary American leaders and inventors of the business world. Jobs was now the preeminent tech man of his generation. He was the Bob Dylan of silicon. His legacy was secure and he was the most loved and admired man in the world of business, maybe in the world period. The later introduction of the iPad just added icing to the cake. The iPhone was the beginning of the end to beige desktop PCs and the birth of an entire new phase of the internet era. Steve Jobs like Mohammad Ali came back off the canvas to become champion of the World a second time. He was the Greatest again now once and for all.

    In 2007 Research in Motion (RIMM now BBRY) had a smart phone called the Blackberry. Palm, Motorola, and Nokia also had a smart phones. No one else was in the game. The regular cell phones were an abomination. They were hard to use, ugly and annoying. No one actually wanted one. They were merely tolerated because cell phones were useful and there was little choice. Apple's smart phone "competition" had tiny screens because half of the phone was dedicated to a "25 cent plastic keyboard" and software that was five years of development behind Apple's iPhone. The larger screen of the iPhone suddenly made accessing the internet useful, easy and enjoyable rather than costly, slow and aggravating. Soon Safari familiar to Mac users would be running on every iPhone. Now the mobile phone was like a good friend not a prison guard having a bad day.

    Surprisingly the competition was not stunned as you would have expected (with the only exception being Google who at that time was not making a smart phone and appeared to no one to be the competition). Mostly RIMM and the others took the phone without even an after thought. Blackberry users were tied to their corporations or governments

    and were never going to give up their tiny keyboards so Research in Motion was not worried. Apple devices would never be used in the enterprise or by governments who were obsessed with security. BBRY was invincible, just ask the Mouth of the Street, Jim Cramer. BBRY was one of the Four Horseman of tech and would be there until shortly after the horns blew in the red sky and the Apocalypse started. The BBRY stock peaked at 148 in June of 2008-more than one year after its downfall was a certainty. Curiously the same month the first Android phone was announced. Palm had a loyal following and was making their devices for pennies in China and selling them for hundreds of dollars a piece in America. I remember my last Palm Treo. I went through seven on warranty. Yes that is right seven of the devices broke and had to be replaced under their limited one year warranty. Each replacement necessitated a drive to the nearest Sprint store, an hour wait on line to register my complaint, turning in the phone for 3 days so it could be evaluated, waiting for a week or so to hear the results of the evaluation, waiting in line again to agree to the replacement of the phone and then finally waiting in line again days later when the new phone arrived (the new phone was merely a reconditioned model designed to last until I got out the door-not a new phone). Calling the Treo junk was an insult to junk. Nokia had Europe and Motorola filled in the spaces.

    The forward looking Apple fans and Mac addicts saw the future immediately. Soon everyone would have an iPhone. Everyone in the entire world who could afford one would have one. Kids in China who could not afford to access the internet with a computer would be able to eventually get a phone from the Black Market or their older cousin to get online. This was the future of tech. iPhones like iPods would be available in a variety of sizes, models, colors and price points. The future was total domination of the mobile phone industry and the post PC world. The Wintel global domination was over. And thank God. No industry other than cable was despised as much as the mobile phone industry and the Wintel duopoly. For Apple to eliminate dependence on both with one mighty stroke was wonderful, a dream come true for the long suffering Mac lovers who were tired of playing second fiddle in an orchestra where they should have had the solos. The iPhone, just as the iPod totally dominated the portable music business, was ready to rule. No more Nokia torture chambers and no more carrying a boom box on your shoulder while walking down Broadway or wearing Sony headphones and listening to your cassettes. An iPod would be in every phone. Game over Sony, Verizon, AT&T, MSFT, BBRY, PALM, NOKIA and Intel.

    Accessing the internet was the key, not running Office or Photoshop. The PC era just put a foot in the grave. And kids all over the world could network with just a phone. It was becoming a small world after all.

    It took Apple at least two and a half years of dedicated work to develop the iPhone. But before that they were working on the iPad and before that on the Newton. The touchscreen interface was initially designed for an iPad. A tablet computer not a phone or personal data device like the original Palm Pilot had been planned prior to the iPhone. But when Steve saw the touch screen in operation for the coming iPad he realized the scrolling by fingers and other touch features would be perfect for a phone.

    So he ordered the troops to switch their focus to a phone. Then two and one half of years of intense, steady work on the hardware and software produced arguably the most innovative product in computer technology ever. No one outside Apple knows the total amount of hours it took to develop the software and hardware that went into the "god phone" but Steve's statement that Apple was 5 years ahead of anyone else might just be true. It might have taken really good programmers and hardware designers five years to build an iPhone from scratch or without cheating. Maybe that is why BBRY, Palm, Nokia, and Motorola did not even bother to copy the phone. They new it would be very expensive and by the time they got there they would still be 5 years behind, if Apple kept the peddle to the metal. Instead they choose to say it was a typical Apple product that was a fad and would not last. They thought their markets were secure and were ready to ride their ponies to their graves. They choose to just suspend belief rather than confront reality. The millionaires in their boardrooms could not stand up and say: We are five years behind Apple and if we are to survive we have to work day and night to make phones people want. It was a lot easier to say Apple got it wrong, who cares about them.

    All except Google. At Google from the moment Steve Jobs raised the possibility of a phone with a touch screen interface to the Apple Board of Directors, Goggle began to worry. You see Eric Emerson Schmidt was on the Apple board of Directors. So they were Apple's competition from the start even though Apple had no clue that Google was competing with them.

    Google suddenly saw a future with search being done from handheld devices, not PCs. This meant goodbye Google. Google could be replaced by any company who perfected or worked on mobile search. At best Google would share search with some other company, possibly Apple if Apple decided to go that route. Google was a one trick pony whose pony was looking more and more like glue. Google would also fall in the coming crusade that would mark the end of the Wintel duopoly. But of course Schmidt did not leak a word of Apple's ground breaking technological innovation to the software engineers at Google. He took the entire idea hook, line and sinker. Al Capone would have blushed. Don Corleone would have shaken has head and said that man has no honor.

    As Eric Emerson Schmidt, the CEO of Google, sat on Apple's board and heard Steve Job's plans to once again change the world he took it all in. But he also took it all out. He immediately began gearing up Android to compete with Apple's iPhone OS before it even existed. He was privy to every idea, every ground breaking technological breakthrough and every hurdle that took an immense amount of work to get through. He knew where the roadblocks were and what features were hard to get exactly right. Google was right there to take Steve's ideas and run with them. The same tech company that went bananas because China did not respect the integrity of its search information just stole the most valued product in the history of technology with no remorse, no payments to Apple, no royalties and no contrition.

    No one outside of a small circle of Android insiders knows what Android actually was prior to Schmidt's inside scoop on the iPhone. Prior to the iPhone Android did nothing, it operated no computers, no phones, no Palm like devices, and no pads. It was another linux idea that a few software engineers played around with. Android was just a linux idea of limited value and no practical use. It was nothing special. Google probably bought it for pennies. There were hundreds of linux ideas always floating around.

    Google was probably worried that Microsoft might just eliminate it the way it did with so many other companies. All the Wintel machine had to do was build their own search and make it integral part of the operating system. If you wanted to Google you would have to load it on as a program and figure out how to make it work. Like Netscape before it, Google could just fall off the table and be only a memory. So more likely Android was being birthed as an OS for a netbook device. They were popular at the time and the idea of running a browser and a few other free linux programs on an ultra cheap device just might take off. And it would protect Google from being eliminated by Microsoft.

    On January 9th of 2007 Jobs announced that iPhone was something that he had been waiting two and a half years to tell the world about. It was released June 29th of that year. So more than three years of intense work on the software and hardware been done since Steve brainchild the phone. But this work was built on years of research done as far back as the 90's on the Newton. Summarizing, Jobs said that Apple had a five year lead on all the smart phone competitors.

    But not on Android which at that time did not even exist as a real operating system for anything. It was still under intense and evidently secret development at Google. Nonetheless merely one year after the iPhone shocked the world, Android phones started to appear like mushrooms. The first came out in June of 2008 - the same month RIMM stock peaked at over 140. The linux geek community embraced the openness of the system and while the linux geeks had completely struck out in the PC era they saw a chance to go after iPhone and to have a voice in the post pc era.

    Android hardware makers and especially Samsung made sure their phones were the visual equals of Apple's iPhone. Basically you could not tell which was which from a few yards away. Samsung and Google were targeting consumers who did not want elegant state of the art phones. They just wanted a better experience than the one they were having on their Nokias. Samsung copied everything about the iPhone and have admitted such in court. Samsung stated they made a list of all properties that iPhone had and their phones did not. Then proceeded to update their phones. That saved years of research, testing and design. Meanwhile Google was developing Android to look like the iPhone interface with much less security so programs could be added quickly and developers thus were encouraged to develop programs for Android called Apps.. In addition Cell phone companies could make there OS ride on top of Android and force their customers to interact with their advertisers and try to sell them more features. The App store of course was another Apple idea which soon was an Android or Google feature as well.

    In a few years the interface of Android was, while not as elegant as iPhone, a thousand times better than the cell phones of Nokia and others who were upgrading to their first smart phone. To them the Android interface must have been a godsend.

    Android like Windows was good enough. This is the threat to the dominance of Apple in both the tablet and phone markets that are the computers of the post pc era. Consumers don't need the best phone or tablet. They need one that is just good enough. Such phones are still significantly better than regular cell phones (called feature phones). The same is true with tablets. The experience has to be good, not insanely great. And price matters. To some it is the only thing that matters. Think of all the landfills full of cheap PCs. They made someone rich. And everyone who used them never had the delightful experience of using the Mac OS.

    People also want and need different computers for different reasons, there was and is a market for desktops, laptops and so called net books. The same is true for price. There is a market for the cheapest PC possible and the best MAC you can afford. In the post PC world, there replacements then would seem to benefit from the same sizing and pricing differentials. There should be a market for really cheap but good enough smart phones, elegant wonderful smart phones, better looking but not too expensive smart phone, small smart phones, mid-size smart phones and large smart phones, iPads of various prices and sizes and most obviously a market for a hybrid that functions as a phone, eReader and tablet. Really every tablet can do this for people who want to use an ear piece. The point is there will not be a reason to have two devices for many, many people. For many people the coming together of the smart phone and tablet mirrors the merging of the iPod, phone, Palm Pilot, and "internet communication device." The original iPhone was a product that included three devices in one. Now the next step is to include a phone in a device big enough to replace your laptop.

    That is what Apple missed on the corporate level and the question is why? The theft of the OS by Google and resulting law suits unfortunately remind one of the suit against Microsoft for the theft of the MAC OS. Relying on the courts to even the playing field was a huge mistake then and now. The legal plan of going after the hardware makers instead of Google was also a huge mistake also. Apple could have sued Google for tens of billions of dollars and the hardware makers as well. But first the case against Google should have been laid out and Eric Emerson Schmidt should have been forced to testify exactly how much Android borrowed from iPhone and how much information was disclosed to the hardware manufacturers if any. His violation of his duties as a board member that might have resulted from information disclosed could have helped Apple share holders as well. Law suits would have followed if he disclosed information to Google's software engineers. And it is hard to believe that he did not. But with a law suit his version of the truth could be heard under oath. If Apple does not sue Google we will never have the opportunity to find out how much was stolen from the iOS and how much of Apple's hardware design was disclosed to the hardware makers.

    Apple though had the market for smart phones as a replacement for PCs in 2007 and 2008 more or less to themselves. RIMM was clearly not even trying to compete with the iPhone. RIMM was relying on its IT salesman to keep governments and corporations from using anything else. The other smart phones at the time were just better feature phones. They were like hybrid Palm Pilots (before the name was changed to PALM) and cell phones. But they had nothing like the magic of the iPod built right into the device. For many iPhone users there first experience with an MP3 player was the iPhone.

    The first iPhone hit the sweet spot. The screen was much bigger than screens on the Nokia, Blackberry and Palm smartphones. The annoying buttons were gone. The 25 cent keyboard was replaced by screen space. At that time the iPhone was a phone with a large screen. That in addition to the ease of use of most if not all of the features was something that mattered.

    But fast forward a few years and then a few years more, and the iPhone is the same size. It is still easy to use, a little faster, a little this and a little that. No major changes until Siri. Siri was strangely loved by the public but panned by the geek press. The 4s sold well. But it also happened to be released when Steve Jobs died. The resulting publicity helped sales undoubtedly. What percentage of the sales were due to the deluge of stories about the greatness of Apple is unknown. It would be speculation to guess, but reason says the publicity and sentiment helped sales.

    All seemed well with Apple after Jobs died until July of 2012. For the first time in a while Apple missed Wall Street's expectations on growth and earnings. The pace of growth slowed but the much anticipated iPhone 5 was thought to breathe new life into Apple's growth. The iPhone 5 was rumored to be larger, faster, lighter, and just better. This caused the stock to rise emphatically despite the missed earnings through August and into September.

    Meanwhile Google had been busy. The Android OS was mysteriously very similar to Apple's OS for the iPad and iPhone. The Samsung phones looked like clones of the iPhone. The big difference was neither company sought to create the perfect phone. Google just wanted an OS that was good enough to run any phones produces by Samsung or other hardware makers. They use a linux system that had the appeal of "being open" so developers, phone companies, geeks, and manufacturers could create more or less what they wanted. Google wanted to make sure they made money from the search features and other methods of advertising now and in the future on the phone. Mostly they wanted to make sure Apple did not have a monopoly on smart phones and tablets. Their goals were clear and simple. Most importantly they had nothing to do with making the best phone possible. Their goal was to make phones that had Android on them period.

    Samsung quickly realized the market for smart phones was diverse. Most people did not use all the features on any phone. Most people were looking for something special that suited their needs. Most of the hardware manufacturers using Android split the

    market for less expensive mobile phones. Samsung though decided to more or less duplicate the iPhone experience and offer a variety of sizes and prices. And they did not stop with the phones. When the iPad came out, Samsung saw the potential there as well and most importantly they saw the potential of all in one hybrid. Many people would be asking themselves why carry two devices when one would do the trick?

    Apple on the other had rejected the all in one out of hand. Of course the reasons are only known to a handful of insiders at Apple who made the decision. But what is known to everyone is that someone in Apple became obsessed with the thumb. As sales of the Galaxy S3 sky rocketed and sales of the hybrid Note reached 10 million, it became clear to the most devoted Apple fan that the market wanted a larger phone and an all in one hybrid. In fact there was and is no reason to offer any touch screen device of any size that can't do both. Even an eight by eleven and half inch iPad that would be a perfect clipboard sized device for retailers to interact with customers on the floor would need a phone. That way the salesperson equipped with the iPad and a bluetooth ear piece could communicate easily with upper management and the customer. Questions and concerns could be dealt with immediately without having to close the iPad, take out a phone and then call management. It seems like a no brainer.

    But then comes the thumb. In the most unusual product presentation in Apple's history, the post PC era waited eagerly while the new gurus of Apple took the stage for the iPhone 5 presentation. The expectations for a large iPhone to compete with the S3 and an all in one to compete with the Note were very high. Why Apple had kept the phone at one size since 2007 was also a mystery. Ipods and computers are available in different sizes and price points so why shouldn't phones be given the same treatment?

    It seems self evident that the market for various sizes of phones is there-and at various price points.

    Shareholders and customers wanted a larger phone. People who had an eye to the future expected an All in One. Instead Apple introduced iPhone 5 which was 4.8 inches long and the same width as the 4s. In fact the same width as all the other iPhones more or less. The 4s is 4.5 inches long. So to compete with the S3 and the Galaxy Note, Apple added less than one half inch in length and nothing in width to the phone. And the beauty of the S3 was that it was wider not just longer. The S3 looks nice. The iPhone 5 looks out of balance. What was the rationale for this mysterious disappointment to consumers and investors?

    The iPhone 5 was greeted with the usual hoopla that surrounds a new Apple product but then disappointment and wonder began. Mapplegate was a side show that Tim Cook completely mishandled and fueled the Apple is done headlines. All he had to say was Google has refused to update its map program on the iPhone and iPad. Therefore we have been forced into the map business and we have cobbled together a few programs we purchased. The program is not a finished product but does have features that are missing from Google's map program. With your help and feedback we can get the program going and make into the best map program out there. We need our

    customers to tell us where the program is wrong and how to correct it. The program redraws faster than Google Maps and refreshes much faster than the Google version, however it is an unfinished product and will need to improved over time. That statement would have ended mapplegate and made it a positive instead of a negative. Instead Tim Cook fired Scott Forester in what appears to have been a power struggle.

    But there was an overwhelming sense of disappointment with the iPhone 5. Apple was slammed from every corner and the stock dove.

    It turns out that someone in Apple's hierarchy had the idea a phone should be only wide enough so that it can be held in the hand and operated with the thumb. Therefore the length of the human thumb determined the width of the phone. Whoever came up with this odd rationale for the size of phone must be very powerful, in fact an emperor of Apple. And that emperor wears no clothes. Not only did Apple make a big show of the rule of thumb at the presentation they followed up with an advertisement that stated a phone should only be as wide as the thumb. Never mind the obvious problems with that logic is that people have different size thumbs. Second most people who really need to use the phone one handed are driving and it is illegal to do so in many states. Sit in a cafe for a bit and notice all the people turning the S3's on there sides to use them. They don't use them vertically which totally negates the odd rationale of the rule of thumb. Finally shouldn't consumers decide what size phone they want? It is understandable that in 2007 Apple would have a phone in one size when that screen was bigger by far than what people were used to. It seemed large. But time passes and taste changes. People began to use the internet, text and read emails on the phone extensively. To do so with more screen space and on the side so you can see more text is comfortable. Looking at text that is long and narrow is just not the way people read. People want to read across not down.

    Amazingly at the earnings conference in January of 2013, after another miss according to Wall Street, Apple executives doubled down on the rule of thumb. Clearly the sales of the Samsung S3, Note, and plethora of other larger phones now appealing were to misguided customers. These customers were wrong in their choice of phones. Apple made it clear that the iPhone was the right size and phones did not need to be any bigger. This despite the facts that tens of millions of their potential customers were buying bigger phones from Samsung for three primary reasons, first they were bigger, second they had simple things people liked like Swype to text with and an updating home screen, finally they were priced right. Mysteriously Apple did not get a product like the Note to the market years ahead of everyone else and now we know why. The phone part could not be operated with the thumb. How this urban myth could come to dominate the thinking of the world's most innovative company must be an interesting story. Who inside Apple's boardroom and executive suites made this decision and why did everyone follow along like sheep? Regardless of who made the decisions Tim Cook bears the responsibility for them. He is responsible for the decline in Apple's growth, the abominable iPhone 5, and the troubling lack of innovation we have seen in Apple's OS both on the computer and the iDevices. The MAC OS has been beset by bizarre changes that don't improve the user experience, rather they appeal to some arcane

    need of a group of designers. For example: the shrinking of the scroll bar on the Mac OS and its subsequent disappearance is really annoying. You have to be more precise now when you scroll and that wastes time and lead to errors. The separation of the search and website bars in Safari was brilliant and made search easy to use. Combining them together appealed to someone's idea of simplicity but in reality is just confusing and harder to use. Change for the sake of change. Apple is clearly becoming Microsoft. Since Office 98 on the Mac have there really been any changes to Office worth the price of the upgrade? No. The cash cow keeps being milked and now with online word processing just over the horizon, it looks like it may be retired soon. Innovation and choice are what customers want to pay for and are willing to pay for. Customers don't respect companies that make changes for the sake of making changes or charge for upgrades that are not worth it. Apple is now alienating the most loyal customer base the world has ever seen. Customers don't want to be told what size of phone to buy. Just as they don't want to pay for a worthless upgrade to Office every time the OS of their computer changes. And they want to draw with a pen or pencil.

    Apple is going to be in for a rude awakening if they don't come out with a larger phone the size of the S3 and an all in one to compete with the Note. The next upgrade cycle will see a mass desertion as many people see the iPhone now as a small phone and they don't want small phones. The Android OS is not as good as Apple's. But it does not have to be. It just has to be much better than the cell phones most people have used for years. Much more time now is spent reading and surfing the web on the phones. Size matters, it is that simple. Developing some James Bond wrist watch while the market is simply demanding a choice in size and price is absurd and another indication of really bad management. When you are paid hundreds of millions of dollars like Tim Cook you are supposed to be a leader. To be a situation where you have blundered away a five year lead in software and hardware is not acceptable. It is only a matter of time before the wolves start howling and Cook has to take a co-CEO who is in charge of product design and innovation or just simply step down. It is clear his expertise in bringing the goods to market is not enough in the competitive post pc world. He has proved he does not know and does not have lieutenants in place who are willing to tell him what the market wants.

    Another flaw in Steve's vision for the iPad was his distain of the stylus. True with Palm's limited screen size and arcane alphabet that you had to learn, the stylus entry of data was inefficient and not fun. But people have been using pens, pencils, brushes, and stylus's to write and draw for thousands of years. Drawing with a pen or painting with a brush is fun. This is something people like to do. Writing short notes with a pen is also very efficient and pleasant. Sticky notes are a huge success because they tapped into that vibration. It is a lot easier to write "bread" and "milk" on your list with a pen or stylus than by using the virtual keyboard especially if you have large hands or fingers.

    Jobs completely ignored this and focused on the limited utility of Palm's stylus. Rather he could have incorporated Apple's handwriting technology which he stated was the best in the business from the beginning of the iPhone and iPad. Drawing programs and painting programs would have rapidly followed. People like to do that. Strangely the art

    of calligraphy requires a stylus. A class in calligraphy that Jobs audited is credited with shaping his amazing aesthetic taste and why he produced beautiful fonts for the Mac. The success of Adobe is owed to the fact that Jobs was acutely aware of calligraphy, fonts, and the beauty of script. Curiously that was completely ignored when the iOS was created and no one bothered to suggest to Steve that drawing on such a device was likely to be done with a pen and painting with a digital "brush". Artists are not likely to want to finger paint all the time. Hence the success of Wacom tablets that let artists draw and paint digitally with a pen or brush on their monitors. The use of Apple products by artists both musical and visual is a large part of the cool reputation of Apple Products. So how could this be overlooked?

    The answer is a story waiting to be told. But it is clear Tim Cook is the one responsible and that the failure to have products to compete with the S3 and Note years after their introduction is his responsibility. Never mind superior products should have been in the stores years before the Note and S3 were introduced. Apple has not changed the size or basic utility of the iPhone since 2007. That is unbelievable and unacceptable. Apple was forced into marketing an iPod Mini after the huge success of the Kindle and Nook.

    So this begs the question who should be running the product development side of Apple? Clearly no on there has the power, vision or authority to lead the markets. Apple is now behind Samsung and not even trying to catch them which is incomprehensible.

    The three hundred billion chopped off the stock won't return until either Tim Cook steps down or a co-CEO is named. The most likely candidate is SAP's Bill McDermott. He understands the enterprise market which Apple still has a chance to dominate and has charisma. He speaks with more enthusiasm about how SAP's products look on the iPad that the current crew at Apple speak about their new products. He would be a good candidate for those reasons. As far as misunderstanding the market, Apple has to really look at who made the decisions that cost them over 100 million in iPhone sales and an absence in the All In One market. It is not to hard to see a future in which there is only one device, the phone, pad and laptop all merge to create a digital device which is capable of meeting the needs of 90 percent of the world's population. The device could easily power a larger monitor at home and be portable enough to be taken everywhere. While the rationale for the size of the iPhone is the rule of thumb and the "I like to put it in my front pocket", geek tradition, clearly that is just temporary. Women want a larger device and can carry it in their purses, men in their brief cases, back packs, and man purses which are the rage in the orient. Apple's "The Emperor has No Clothes" moment has cost the stock holders 300 billion dollars. It has prevented the company from completely dominating the post pc era. In fact the failed litigation with Samsung like the suit agains Microsoft's Windows before this may have distracted Apple from focusing on what their customers want. Samsung took a shot gun approach and made a bunch of phones to which ones sold. Not a bad concept, and now Apple may be forced to license its OS to Samsung so Apple's customers can get the phones they want.

    Another logical step would to buy Wacom and integrate their stylus technology into Apples pads and phones so artists would have the perfect instrument. Making sure Painter and Photoshop run on the pads, all in ones and phones should be a priority to. And Apple should be willing to take whatever steps are necessary with Adobe and Painter to make this happen, even if they have to buy the company. If you want to lead you need to lead on all fronts.

    The iPad should be available in many sizes. Currently there is the iPod touch which is basically a small iPad, the iPad Mini which is mid size and the iPad. Clearly there is room for an eight and one half by eleven clip board sized iPad, a super large 3 or 4 foot artists canvas size iPad that artists could paint on, send the completed work to a gallery and have a print made in real time. Now that would bring the awe factor back to Apple. Imagine an artist in Hawaii on the beach painting and sending the finished product to Tim Cook while he was on stage making the presentation. Good showmanship. Barnes and Noble watched while Border's went out of business. Try using the bathroom at Amazon a sign read on the window of our local Border's. Apple blundered here as well. Amazon is their competition along with Google. Apple should have partnered with Border's and Barnes and Nobles to create an iNook with the black ink technology that is easy to read. People like to read outside on the beach, near the pool, in the sun in their yards and under trees at the park. The Nook is much easier to read in those conditions and there is no reason why it should not have iOS. Such a device would have helped B&N compete with Amazon. Apple should have bought Borders and merged them with Barnes and Noble for a percentage of book and other sales on the Nook. Selling hardcover and paperbacks with the digital version included for free seems like a no brainer. Millions would have then bought a Nook or Barnes and Nobles could have given them away with a 500 dollar purchase. Anything to get the customers into their ecosystems and Apple's and away from Amazon's. But Apple missed this obvious opportunity as well as many others. The Nook is a great size, using it is like holding a paperback, familiar and comfortable.

    The All in Ones like the Note don't have to have independent sizes. Any iPad should be available with phone. Another area where Apple blundered was the clever magnetic cover that turns the iPad on and off. The problem here is that people grab the cover and the iPad falls to the floor and breaks. How many times has this happened? Samsung got it right by attaching the cover to the device with the note. Again this seems obvious. Why have a detachable cover? There is no reason not to have several sizes of All in Ones and Phones available. The golden rectangle has been pleasing to the eye for thousands of years. All Apple has to do is approximate the Golden Rectangle and release two or three sizes of phones and once again 99 percent of the market will want one of their phones. Now they are faced with the reality that a huge portion of the market is very disappointed with the size of the iPhone 5 and is going to leave next upgrade cycle. Apple is about elegance, ease of use and design. The iPhone 5 is not elegant. People who wanted a bigger phone want a wider phone not a longer phone, the iPhone 5 looks weird and feels out of balance. The original iPhone which was not changed for 6 years had a great form. If you want a small phone it is perfect. Apple's elegance is present in that phone. But why self impose limitations?

    Elegance and beauty of design are qualities that can apply to inexpensive products too. There is no law saying that it is not artful or insanely great to produce a phone that people in third world countries can use and enjoy. Why the obsession with the best and most expensive phone, why not turn out the best affordable phone? The question is how far down will Apple's stock have to go and how much will growth have to slow before the major stock holders start pressuring the board to appoint a new CEO? Time will tell. A lot has been written about why the stock of Apple fell so much in so short of time after the iPhone 5 was presented. I wondered that myself until I walked into a Verizon store and looked at the competition. Now I wonder how Apple employees and executives could stand around and applaud the naked CEO on the throne. Steve Jobs had a reason for missing the use of the stylus and the inevitability of the all in one. He was extremely ill and not at the top of his game. But now some one must be held accountable for the bad decisions that Apple has made up and down their product lines, from dumping the 30 inch Cinema Display matte monitor that was loved by those in the visual arts and those who are near sighted to ignoring the need for consumers to have a choice in the size of their phone, missing the All in One market altogether and ignoring hand writing recognition and the needs of the painters and photographers that for years have used Apple products because they loved them and they were the best. In the legal arena Apple has gained little to nothing. The suit should have been directed at Google and the hand set makers. By dividing the suits and delaying the inevitable suit against Google Apple has let Google put Android on hundreds of millions of phones. The wine can't be put back in the bottle. Even if Apple wins suits the damage has already been done. The reality is this is a bad time for Apple investors and customers. As long as the emperor struts around naked and talks about his two hundred million dollars in stock bonuses, his gown of green and gold, the company is in trouble if no one dares to state the obvious: Apple has blundered seriously and needs major changes to get back on track and back on top. The S3 and Note are products people want. The iPhone 5 is not. If the 5 had been the same size as the 4s probably the same amount of phones would have been sold. The next upgrade cycle will be a disaster if large phones are not available from Apple. The entire Apple ecosystem will be abandoned by people wanting a better experience on the phone or a larger phone or a cheaper phone. The All in Ones are the future. The tinkering with products that produces no substantial changes, like one millimeter thinner or a more narrow scroll bar is just crazy. No one buys products for these reasons. The lesson for Apple is simply sell products people want and find out what they want. The visionary is gone. There is no one there who knows what people will want five years from now. So stop pretending that you understand the markets with ridiculous ads that ridicule your customers and coming up with arcane rationales for your failed products. Sell people what they want and need. It is that simple. From the ads to the products Apple has for better or worse become Tim Cook's company and he must be held accountable for its failures.

    The Three Hundred Billion Dollar Thumb or How Apple Wasted a Five Year Lead in the Post PC Era

    Tim Cook's astrological chart indicates that he will be a very poor CEO. He was a terrific foot soldier in Steve Job's Visionary army. He could help bring the products to the market in time in the right number. But astrology does not really count for much, we know that. Just because Bob Dylan has a plethora of stuff in Gemini, the sign of writing and communication, does not mean that he will be good with words. On stage in 2007 Steve Jobs announced a revolution in the mobile phone/computing industry by introducing three new products. First a wide screen iPod, then a revolutionary phone with a touch screen interface and finally internet communicator/access device. All three devices were one-the iPhone. The god Phone as it was called. No more did we have to suffer through Verizon's or ATT's interfaces the use of which must be one of the Circles of Hell in Dante's Inferno. This day marked Apple's rapid rise to the top of the corporate world, the return of Apple to the top of the tech world and the end of the Steve Jobs or Bill Gates debate. Gates was a clever guy who figured out that IBM would pay dearly for an OS to operate its PCs, he figured IBM was careless enough to let him license the OS to others and then he went out and bought DOS from someone who was a very good programmer. Gates simply maneuvered his way to becoming the richest man in the world and one of the most respected man in tech along with Jobs. Jobs now leap frogged Gates to become a man equated with Edison, Ford, Franklin and the other great visionary American leaders and inventors of the business world. Jobs was now the preeminent tech man of his generation. He was the Bob Dylan of silicon. His legacy was secure and he was the most loved and admired man in the world of business, maybe in the world period. The later introduction of the iPad just added icing to the cake. The iPhone was the beginning of the end to beige desktop PCs and the birth of an entire new phase of the internet era. Steve Jobs like Mohammad Ali came back off the canvas to become champion of the World a second time. He was the Greatest again now once and for all.

    In 2007 Research in Motion (RIMM now BBRY) had a smart phone called the Blackberry. Palm, Motorola, and Nokia also had a smart phones. No one else was in the game. The regular cell phones were an abomination. They were hard to use, ugly and annoying. No one actually wanted one. They were merely tolerated because cell phones were useful and there was little choice. Apple's smart phone "competition" had tiny screens because half of the phone was dedicated to a "25 cent plastic keyboard" and software that was five years of development behind Apple's iPhone. The larger screen of the iPhone suddenly made accessing the internet useful, easy and enjoyable rather than costly, slow and aggravating. Soon Safari familiar to Mac users would be running on every iPhone. Now the mobile phone was like a good friend not a prison guard having a bad day.

    Surprisingly the competition was not stunned as you would have expected (with the only exception being Google who at that time was not making a smart phone and appeared to no one to be the competition). Mostly RIMM and the others took the phone without even an after thought. Blackberry users were tied to their corporations or governments

    and were never going to give up their tiny keyboards so Research in Motion was not worried. Apple devices would never be used in the enterprise or by governments who were obsessed with security. BBRY was invincible, just ask the Mouth of the Street, Jim Cramer. BBRY was one of the Four Horseman of tech and would be there until shortly after the horns blew in the red sky and the Apocalypse started. The BBRY stock peaked at 148 in June of 2008-more than one year after its downfall was a certainty. Curiously the same month the first Android phone was announced. Palm had a loyal following and was making their devices for pennies in China and selling them for hundreds of dollars a piece in America. I remember my last Palm Treo. I went through seven on warranty. Yes that is right seven of the devices broke and had to be replaced under their limited one year warranty. Each replacement necessitated a drive to the nearest Sprint store, an hour wait on line to register my complaint, turning in the phone for 3 days so it could be evaluated, waiting for a week or so to hear the results of the evaluation, waiting in line again to agree to the replacement of the phone and then finally waiting in line again days later when the new phone arrived (the new phone was merely a reconditioned model designed to last until I got out the door-not a new phone). Calling the Treo junk was an insult to junk. Nokia had Europe and Motorola filled in the spaces.

    The forward looking Apple fans and Mac addicts saw the future immediately. Soon everyone would have an iPhone. Everyone in the entire world who could afford one would have one. Kids in China who could not afford to access the internet with a computer would be able to eventually get a phone from the Black Market or their older cousin to get online. This was the future of tech. iPhones like iPods would be available in a variety of sizes, models, colors and price points. The future was total domination of the mobile phone industry and the post PC world. The Wintel global domination was over. And thank God. No industry other than cable was despised as much as the mobile phone industry and the Wintel duopoly. For Apple to eliminate dependence on both with one mighty stroke was wonderful, a dream come true for the long suffering Mac lovers who were tired of playing second fiddle in an orchestra where they should have had the solos. The iPhone, just as the iPod totally dominated the portable music business, was ready to rule. No more Nokia torture chambers and no more carrying a boom box on your shoulder while walking down Broadway or wearing Sony headphones and listening to your cassettes. An iPod would be in every phone. Game over Sony, Verizon, AT&T, MSFT, BBRY, PALM, NOKIA and Intel.

    Accessing the internet was the key, not running Office or Photoshop. The PC era just put a foot in the grave. And kids all over the world could network with just a phone. It was becoming a small world after all.

    It took Apple at least two and a half years of dedicated work to develop the iPhone. But before that they were working on the iPad and before that on the Newton. The touchscreen interface was initially designed for an iPad. A tablet computer not a phone or personal data device like the original Palm Pilot had been planned prior to the iPhone. But when Steve saw the touch screen in operation for the coming iPad he realized the scrolling by fingers and other touch features would be perfect for a phone.

    So he ordered the troops to switch their focus to a phone. Then two and one half of years of intense, steady work on the hardware and software produced arguably the most innovative product in computer technology ever. No one outside Apple knows the total amount of hours it took to develop the software and hardware that went into the "god phone" but Steve's statement that Apple was 5 years ahead of anyone else might just be true. It might have taken really good programmers and hardware designers five years to build an iPhone from scratch or without cheating. Maybe that is why BBRY, Palm, Nokia, and Motorola did not even bother to copy the phone. They new it would be very expensive and by the time they got there they would still be 5 years behind, if Apple kept the peddle to the metal. Instead they choose to say it was a typical Apple product that was a fad and would not last. They thought their markets were secure and were ready to ride their ponies to their graves. They choose to just suspend belief rather than confront reality. The millionaires in their boardrooms could not stand up and say: We are five years behind Apple and if we are to survive we have to work day and night to make phones people want. It was a lot easier to say Apple got it wrong, who cares about them.

    All except Google. At Google from the moment Steve Jobs raised the possibility of a phone with a touch screen interface to the Apple Board of Directors, Goggle began to worry. You see Eric Emerson Schmidt was on the Apple board of Directors. So they were Apple's competition from the start even though Apple had no clue that Google was competing with them.

    Google suddenly saw a future with search being done from handheld devices, not PCs. This meant goodbye Google. Google could be replaced by any company who perfected or worked on mobile search. At best Google would share search with some other company, possibly Apple if Apple decided to go that route. Google was a one trick pony whose pony was looking more and more like glue. Google would also fall in the coming crusade that would mark the end of the Wintel duopoly. But of course Schmidt did not leak a word of Apple's ground breaking technological innovation to the software engineers at Google. He took the entire idea hook, line and sinker. Al Capone would have blushed. Don Corleone would have shaken has head and said that man has no honor.

    As Eric Emerson Schmidt, the CEO of Google, sat on Apple's board and heard Steve Job's plans to once again change the world he took it all in. But he also took it all out. He immediately began gearing up Android to compete with Apple's iPhone OS before it even existed. He was privy to every idea, every ground breaking technological breakthrough and every hurdle that took an immense amount of work to get through. He knew where the roadblocks were and what features were hard to get exactly right. Google was right there to take Steve's ideas and run with them. The same tech company that went bananas because China did not respect the integrity of its search information just stole the most valued product in the history of technology with no remorse, no payments to Apple, no royalties and no contrition.

    No one outside of a small circle of Android insiders knows what Android actually was prior to Schmidt's inside scoop on the iPhone. Prior to the iPhone Android did nothing, it operated no computers, no phones, no Palm like devices, and no pads. It was another linux idea that a few software engineers played around with. Android was just a linux idea of limited value and no practical use. It was nothing special. Google probably bought it for pennies. There were hundreds of linux ideas always floating around.

    Google was probably worried that Microsoft might just eliminate it the way it did with so many other companies. All the Wintel machine had to do was build their own search and make it integral part of the operating system. If you wanted to Google you would have to load it on as a program and figure out how to make it work. Like Netscape before it, Google could just fall off the table and be only a memory. So more likely Android was being birthed as an OS for a netbook device. They were popular at the time and the idea of running a browser and a few other free linux programs on an ultra cheap device just might take off. And it would protect Google from being eliminated by Microsoft.

    On January 9th of 2007 Jobs announced that iPhone was something that he had been waiting two and a half years to tell the world about. It was released June 29th of that year. So more than three years of intense work on the software and hardware been done since Steve brainchild the phone. But this work was built on years of research done as far back as the 90's on the Newton. Summarizing, Jobs said that Apple had a five year lead on all the smart phone competitors.

    But not on Android which at that time did not even exist as a real operating system for anything. It was still under intense and evidently secret development at Google. Nonetheless merely one year after the iPhone shocked the world, Android phones started to appear like mushrooms. The first came out in June of 2008 - the same month RIMM stock peaked at over 140. The linux geek community embraced the openness of the system and while the linux geeks had completely struck out in the PC era they saw a chance to go after iPhone and to have a voice in the post pc era.

    Android hardware makers and especially Samsung made sure their phones were the visual equals of Apple's iPhone. Basically you could not tell which was which from a few yards away. Samsung and Google were targeting consumers who did not want elegant state of the art phones. They just wanted a better experience than the one they were having on their Nokias. Samsung copied everything about the iPhone and have admitted such in court. Samsung stated they made a list of all properties that iPhone had and their phones did not. Then proceeded to update their phones. That saved years of research, testing and design. Meanwhile Google was developing Android to look like the iPhone interface with much less security so programs could be added quickly and developers thus were encouraged to develop programs for Android called Apps.. In addition Cell phone companies could make there OS ride on top of Android and force their customers to interact with their advertisers and try to sell them more features. The App store of course was another Apple idea which soon was an Android or Google feature as well.

    In a few years the interface of Android was, while not as elegant as iPhone, a thousand times better than the cell phones of Nokia and others who were upgrading to their first smart phone. To them the Android interface must have been a godsend.

    Android like Windows was good enough. This is the threat to the dominance of Apple in both the tablet and phone markets that are the computers of the post pc era. Consumers don't need the best phone or tablet. They need one that is just good enough. Such phones are still significantly better than regular cell phones (called feature phones). The same is true with tablets. The experience has to be good, not insanely great. And price matters. To some it is the only thing that matters. Think of all the landfills full of cheap PCs. They made someone rich. And everyone who used them never had the delightful experience of using the Mac OS.

    People also want and need different computers for different reasons, there was and is a market for desktops, laptops and so called net books. The same is true for price. There is a market for the cheapest PC possible and the best MAC you can afford. In the post PC world, there replacements then would seem to benefit from the same sizing and pricing differentials. There should be a market for really cheap but good enough smart phones, elegant wonderful smart phones, better looking but not too expensive smart phone, small smart phones, mid-size smart phones and large smart phones, iPads of various prices and sizes and most obviously a market for a hybrid that functions as a phone, eReader and tablet. Really every tablet can do this for people who want to use an ear piece. The point is there will not be a reason to have two devices for many, many people. For many people the coming together of the smart phone and tablet mirrors the merging of the iPod, phone, Palm Pilot, and "internet communication device." The original iPhone was a product that included three devices in one. Now the next step is to include a phone in a device big enough to replace your laptop.

    That is what Apple missed on the corporate level and the question is why? The theft of the OS by Google and resulting law suits unfortunately remind one of the suit against Microsoft for the theft of the MAC OS. Relying on the courts to even the playing field was a huge mistake then and now. The legal plan of going after the hardware makers instead of Google was also a huge mistake also. Apple could have sued Google for tens of billions of dollars and the hardware makers as well. But first the case against Google should have been laid out and Eric Emerson Schmidt should have been forced to testify exactly how much Android borrowed from iPhone and how much information was disclosed to the hardware manufacturers if any. His violation of his duties as a board member that might have resulted from information disclosed could have helped Apple share holders as well. Law suits would have followed if he disclosed information to Google's software engineers. And it is hard to believe that he did not. But with a law suit his version of the truth could be heard under oath. If Apple does not sue Google we will never have the opportunity to find out how much was stolen from the iOS and how much of Apple's hardware design was disclosed to the hardware makers.

    Apple though had the market for smart phones as a replacement for PCs in 2007 and 2008 more or less to themselves. RIMM was clearly not even trying to compete with the iPhone. RIMM was relying on its IT salesman to keep governments and corporations from using anything else. The other smart phones at the time were just better feature phones. They were like hybrid Palm Pilots (before the name was changed to PALM) and cell phones. But they had nothing like the magic of the iPod built right into the device. For many iPhone users there first experience with an MP3 player was the iPhone.

    The first iPhone hit the sweet spot. The screen was much bigger than screens on the Nokia, Blackberry and Palm smartphones. The annoying buttons were gone. The 25 cent keyboard was replaced by screen space. At that time the iPhone was a phone with a large screen. That in addition to the ease of use of most if not all of the features was something that mattered.

    But fast forward a few years and then a few years more, and the iPhone is the same size. It is still easy to use, a little faster, a little this and a little that. No major changes until Siri. Siri was strangely loved by the public but panned by the geek press. The 4s sold well. But it also happened to be released when Steve Jobs died. The resulting publicity helped sales undoubtedly. What percentage of the sales were due to the deluge of stories about the greatness of Apple is unknown. It would be speculation to guess, but reason says the publicity and sentiment helped sales.

    All seemed well with Apple after Jobs died until July of 2012. For the first time in a while Apple missed Wall Street's expectations on growth and earnings. The pace of growth slowed but the much anticipated iPhone 5 was thought to breathe new life into Apple's growth. The iPhone 5 was rumored to be larger, faster, lighter, and just better. This caused the stock to rise emphatically despite the missed earnings through August and into September.

    Meanwhile Google had been busy. The Android OS was mysteriously very similar to Apple's OS for the iPad and iPhone. The Samsung phones looked like clones of the iPhone. The big difference was neither company sought to create the perfect phone. Google just wanted an OS that was good enough to run any phones produces by Samsung or other hardware makers. They use a linux system that had the appeal of "being open" so developers, phone companies, geeks, and manufacturers could create more or less what they wanted. Google wanted to make sure they made money from the search features and other methods of advertising now and in the future on the phone. Mostly they wanted to make sure Apple did not have a monopoly on smart phones and tablets. Their goals were clear and simple. Most importantly they had nothing to do with making the best phone possible. Their goal was to make phones that had Android on them period.

    Samsung quickly realized the market for smart phones was diverse. Most people did not use all the features on any phone. Most people were looking for something special that suited their needs. Most of the hardware manufacturers using Android split the

    market for less expensive mobile phones. Samsung though decided to more or less duplicate the iPhone experience and offer a variety of sizes and prices. And they did not stop with the phones. When the iPad came out, Samsung saw the potential there as well and most importantly they saw the potential of all in one hybrid. Many people would be asking themselves why carry two devices when one would do the trick?

    Apple on the other had rejected the all in one out of hand. Of course the reasons are only known to a handful of insiders at Apple who made the decision. But what is known to everyone is that someone in Apple became obsessed with the thumb. As sales of the Galaxy S3 sky rocketed and sales of the hybrid Note reached 10 million, it became clear to the most devoted Apple fan that the market wanted a larger phone and an all in one hybrid. In fact there was and is no reason to offer any touch screen device of any size that can't do both. Even an eight by eleven and half inch iPad that would be a perfect clipboard sized device for retailers to interact with customers on the floor would need a phone. That way the salesperson equipped with the iPad and a bluetooth ear piece could communicate easily with upper management and the customer. Questions and concerns could be dealt with immediately without having to close the iPad, take out a phone and then call management. It seems like a no brainer.

    But then comes the thumb. In the most unusual product presentation in Apple's history, the post PC era waited eagerly while the new gurus of Apple took the stage for the iPhone 5 presentation. The expectations for a large iPhone to compete with the S3 and an all in one to compete with the Note were very high. Why Apple had kept the phone at one size since 2007 was also a mystery. Ipods and computers are available in different sizes and price points so why shouldn't phones be given the same treatment?

    It seems self evident that the market for various sizes of phones is there-and at various price points.

    Shareholders and customers wanted a larger phone. People who had an eye to the future expected an All in One. Instead Apple introduced iPhone 5 which was 4.8 inches long and the same width as the 4s. In fact the same width as all the other iPhones more or less. The 4s is 4.5 inches long. So to compete with the S3 and the Galaxy Note, Apple added less than one half inch in length and nothing in width to the phone. And the beauty of the S3 was that it was wider not just longer. The S3 looks nice. The iPhone 5 looks out of balance. What was the rationale for this mysterious disappointment to consumers and investors?

    The iPhone 5 was greeted with the usual hoopla that surrounds a new Apple product but then disappointment and wonder began. Mapplegate was a side show that Tim Cook completely mishandled and fueled the Apple is done headlines. All he had to say was Google has refused to update its map program on the iPhone and iPad. Therefore we have been forced into the map business and we have cobbled together a few programs we purchased. The program is not a finished product but does have features that are missing from Google's map program. With your help and feedback we can get the program going and make into the best map program out there. We need our

    customers to tell us where the program is wrong and how to correct it. The program redraws faster than Google Maps and refreshes much faster than the Google version, however it is an unfinished product and will need to improved over time. That statement would have ended mapplegate and made it a positive instead of a negative. Instead Tim Cook fired Scott Forester in what appears to have been a power struggle.

    But there was an overwhelming sense of disappointment with the iPhone 5. Apple was slammed from every corner and the stock dove.

    It turns out that someone in Apple's hierarchy had the idea a phone should be only wide enough so that it can be held in the hand and operated with the thumb. Therefore the length of the human thumb determined the width of the phone. Whoever came up with this odd rationale for the size of phone must be very powerful, in fact an emperor of Apple. And that emperor wears no clothes. Not only did Apple make a big show of the rule of thumb at the presentation they followed up with an advertisement that stated a phone should only be as wide as the thumb. Never mind the obvious problems with that logic is that people have different size thumbs. Second most people who really need to use the phone one handed are driving and it is illegal to do so in many states. Sit in a cafe for a bit and notice all the people turning the S3's on there sides to use them. They don't use them vertically which totally negates the odd rationale of the rule of thumb. Finally shouldn't consumers decide what size phone they want? It is understandable that in 2007 Apple would have a phone in one size when that screen was bigger by far than what people were used to. It seemed large. But time passes and taste changes. People began to use the internet, text and read emails on the phone extensively. To do so with more screen space and on the side so you can see more text is comfortable. Looking at text that is long and narrow is just not the way people read. People want to read across not down.

    Amazingly at the earnings conference in January of 2013, after another miss according to Wall Street, Apple executives doubled down on the rule of thumb. Clearly the sales of the Samsung S3, Note, and plethora of other larger phones now appealing were to misguided customers. These customers were wrong in their choice of phones. Apple made it clear that the iPhone was the right size and phones did not need to be any bigger. This despite the facts that tens of millions of their potential customers were buying bigger phones from Samsung for three primary reasons, first they were bigger, second they had simple things people liked like Swype to text with and an updating home screen, finally they were priced right. Mysteriously Apple did not get a product like the Note to the market years ahead of everyone else and now we know why. The phone part could not be operated with the thumb. How this urban myth could come to dominate the thinking of the world's most innovative company must be an interesting story. Who inside Apple's boardroom and executive suites made this decision and why did everyone follow along like sheep? Regardless of who made the decisions Tim Cook bears the responsibility for them. He is responsible for the decline in Apple's growth, the abominable iPhone 5, and the troubling lack of innovation we have seen in Apple's OS both on the computer and the iDevices. The MAC OS has been beset by bizarre changes that don't improve the user experience, rather they appeal to some arcane

    need of a group of designers. For example: the shrinking of the scroll bar on the Mac OS and its subsequent disappearance is really annoying. You have to be more precise now when you scroll and that wastes time and lead to errors. The separation of the search and website bars in Safari was brilliant and made search easy to use. Combining them together appealed to someone's idea of simplicity but in reality is just confusing and harder to use. Change for the sake of change. Apple is clearly becoming Microsoft. Since Office 98 on the Mac have there really been any changes to Office worth the price of the upgrade? No. The cash cow keeps being milked and now with online word processing just over the horizon, it looks like it may be retired soon. Innovation and choice are what customers want to pay for and are willing to pay for. Customers don't respect companies that make changes for the sake of making changes or charge for upgrades that are not worth it. Apple is now alienating the most loyal customer base the world has ever seen. Customers don't want to be told what size of phone to buy. Just as they don't want to pay for a worthless upgrade to Office every time the OS of their computer changes. And they want to draw with a pen or pencil.

    Apple is going to be in for a rude awakening if they don't come out with a larger phone the size of the S3 and an all in one to compete with the Note. The next upgrade cycle will see a mass desertion as many people see the iPhone now as a small phone and they don't want small phones. The Android OS is not as good as Apple's. But it does not have to be. It just has to be much better than the cell phones most people have used for years. Much more time now is spent reading and surfing the web on the phones. Size matters, it is that simple. Developing some James Bond wrist watch while the market is simply demanding a choice in size and price is absurd and another indication of really bad management. When you are paid hundreds of millions of dollars like Tim Cook you are supposed to be a leader. To be a situation where you have blundered away a five year lead in software and hardware is not acceptable. It is only a matter of time before the wolves start howling and Cook has to take a co-CEO who is in charge of product design and innovation or just simply step down. It is clear his expertise in bringing the goods to market is not enough in the competitive post pc world. He has proved he does not know and does not have lieutenants in place who are willing to tell him what the market wants.

    Another flaw in Steve's vision for the iPad was his distain of the stylus. True with Palm's limited screen size and arcane alphabet that you had to learn, the stylus entry of data was inefficient and not fun. But people have been using pens, pencils, brushes, and stylus's to write and draw for thousands of years. Drawing with a pen or painting with a brush is fun. This is something people like to do. Writing short notes with a pen is also very efficient and pleasant. Sticky notes are a huge success because they tapped into that vibration. It is a lot easier to write "bread" and "milk" on your list with a pen or stylus than by using the virtual keyboard especially if you have large hands or fingers.

    Jobs completely ignored this and focused on the limited utility of Palm's stylus. Rather he could have incorporated Apple's handwriting technology which he stated was the best in the business from the beginning of the iPhone and iPad. Drawing programs and painting programs would have rapidly followed. People like to do that. Strangely the art

    of calligraphy requires a stylus. A class in calligraphy that Jobs audited is credited with shaping his amazing aesthetic taste and why he produced beautiful fonts for the Mac. The success of Adobe is owed to the fact that Jobs was acutely aware of calligraphy, fonts, and the beauty of script. Curiously that was completely ignored when the iOS was created and no one bothered to suggest to Steve that drawing on such a device was likely to be done with a pen and painting with a digital "brush". Artists are not likely to want to finger paint all the time. Hence the success of Wacom tablets that let artists draw and paint digitally with a pen or brush on their monitors. The use of Apple products by artists both musical and visual is a large part of the cool reputation of Apple Products. So how could this be overlooked?

    The answer is a story waiting to be told. But it is clear Tim Cook is the one responsible and that the failure to have products to compete with the S3 and Note years after their introduction is his responsibility. Never mind superior products should have been in the stores years before the Note and S3 were introduced. Apple has not changed the size or basic utility of the iPhone since 2007. That is unbelievable and unacceptable. Apple was forced into marketing an iPod Mini after the huge success of the Kindle and Nook.

    So this begs the question who should be running the product development side of Apple? Clearly no on there has the power, vision or authority to lead the markets. Apple is now behind Samsung and not even trying to catch them which is incomprehensible.

    The three hundred billion chopped off the stock won't return until either Tim Cook steps down or a co-CEO is named. The most likely candidate is SAP's Bill McDermott. He understands the enterprise market which Apple still has a chance to dominate and has charisma. He speaks with more enthusiasm about how SAP's products look on the iPad that the current crew at Apple speak about their new products. He would be a good candidate for those reasons. As far as misunderstanding the market, Apple has to really look at who made the decisions that cost them over 100 million in iPhone sales and an absence in the All In One market. It is not to hard to see a future in which there is only one device, the phone, pad and laptop all merge to create a digital device which is capable of meeting the needs of 90 percent of the world's population. The device could easily power a larger monitor at home and be portable enough to be taken everywhere. While the rationale for the size of the iPhone is the rule of thumb and the "I like to put it in my front pocket", geek tradition, clearly that is just temporary. Women want a larger device and can carry it in their purses, men in their brief cases, back packs, and man purses which are the rage in the orient. Apple's "The Emperor has No Clothes" moment has cost the stock holders 300 billion dollars. It has prevented the company from completely dominating the post pc era. In fact the failed litigation with Samsung like the suit agains Microsoft's Windows before this may have distracted Apple from focusing on what their customers want. Samsung took a shot gun approach and made a bunch of phones to which ones sold. Not a bad concept, and now Apple may be forced to license its OS to Samsung so Apple's customers can get the phones they want.

    Another logical step would to buy Wacom and integrate their stylus technology into Apples pads and phones so artists would have the perfect instrument. Making sure Painter and Photoshop run on the pads, all in ones and phones should be a priority to. And Apple should be willing to take whatever steps are necessary with Adobe and Painter to make this happen, even if they have to buy the company. If you want to lead you need to lead on all fronts.

    The iPad should be available in many sizes. Currently there is the iPod touch which is basically a small iPad, the iPad Mini which is mid size and the iPad. Clearly there is room for an eight and one half by eleven clip board sized iPad, a super large 3 or 4 foot artists canvas size iPad that artists could paint on, send the completed work to a gallery and have a print made in real time. Now that would bring the awe factor back to Apple. Imagine an artist in Hawaii on the beach painting and sending the finished product to Tim Cook while he was on stage making the presentation. Good showmanship. Barnes and Noble watched while Border's went out of business. Try using the bathroom at Amazon a sign read on the window of our local Border's. Apple blundered here as well. Amazon is their competition along with Google. Apple should have partnered with Border's and Barnes and Nobles to create an iNook with the black ink technology that is easy to read. People like to read outside on the beach, near the pool, in the sun in their yards and under trees at the park. The Nook is much easier to read in those conditions and there is no reason why it should not have iOS. Such a device would have helped B&N compete with Amazon. Apple should have bought Borders and merged them with Barnes and Noble for a percentage of book and other sales on the Nook. Selling hardcover and paperbacks with the digital version included for free seems like a no brainer. Millions would have then bought a Nook or Barnes and Nobles could have given them away with a 500 dollar purchase. Anything to get the customers into their ecosystems and Apple's and away from Amazon's. But Apple missed this obvious opportunity as well as many others. The Nook is a great size, using it is like holding a paperback, familiar and comfortable.

    The All in Ones like the Note don't have to have independent sizes. Any iPad should be available with phone. Another area where Apple blundered was the clever magnetic cover that turns the iPad on and off. The problem here is that people grab the cover and the iPad falls to the floor and breaks. How many times has this happened? Samsung got it right by attaching the cover to the device with the note. Again this seems obvious. Why have a detachable cover? There is no reason not to have several sizes of All in Ones and Phones available. The golden rectangle has been pleasing to the eye for thousands of years. All Apple has to do is approximate the Golden Rectangle and release two or three sizes of phones and once again 99 percent of the market will want one of their phones. Now they are faced with the reality that a huge portion of the market is very disappointed with the size of the iPhone 5 and is going to leave next upgrade cycle. Apple is about elegance, ease of use and design. The iPhone 5 is not elegant. People who wanted a bigger phone want a wider phone not a longer phone, the iPhone 5 looks weird and feels out of balance. The original iPhone which was not changed for 6 years had a great form. If you want a small phone it is perfect. Apple's elegance is present in that phone. But why self impose limitations?

    Elegance and beauty of design are qualities that can apply to inexpensive products too. There is no law saying that it is not artful or insanely great to produce a phone that people in third world countries can use and enjoy. Why the obsession with the best and most expensive phone, why not turn out the best affordable phone? The question is how far down will Apple's stock have to go and how much will growth have to slow before the major stock holders start pressuring the board to appoint a new CEO? Time will tell. A lot has been written about why the stock of Apple fell so much in so short of time after the iPhone 5 was presented. I wondered that myself until I walked into a Verizon store and looked at the competition. Now I wonder how Apple employees and executives could stand around and applaud the naked CEO on the throne. Steve Jobs had a reason for missing the use of the stylus and the inevitability of the all in one. He was extremely ill and not at the top of his game. But now some one must be held accountable for the bad decisions that Apple has made up and down their product lines, from dumping the 30 inch Cinema Display matte monitor that was loved by those in the visual arts and those who are near sighted to ignoring the need for consumers to have a choice in the size of their phone, missing the All in One market altogether and ignoring hand writing recognition and the needs of the painters and photographers that for years have used Apple products because they loved them and they were the best. In the legal arena Apple has gained little to nothing. The suit should have been directed at Google and the hand set makers. By dividing the suits and delaying the inevitable suit against Google Apple has let Google put Android on hundreds of millions of phones. The wine can't be put back in the bottle. Even if Apple wins suits the damage has already been done. The reality is this is a bad time for Apple investors and customers. As long as the emperor struts around naked and talks about his two hundred million dollars in stock bonuses, his gown of green and gold, the company is in trouble if no one dares to state the obvious: Apple has blundered seriously and needs major changes to get back on track and back on top. The S3 and Note are products people want. The iPhone 5 is not. If the 5 had been the same size as the 4s probably the same amount of phones would have been sold. The next upgrade cycle will be a disaster if large phones are not available from Apple. The entire Apple ecosystem will be abandoned by people wanting a better experience on the phone or a larger phone or a cheaper phone. The All in Ones are the future. The tinkering with products that produces no substantial changes, like one millimeter thinner or a more narrow scroll bar is just crazy. No one buys products for these reasons. The lesson for Apple is simply sell products people want and find out what they want. The visionary is gone. There is no one there who knows what people will want five years from now. So stop pretending that you understand the markets with ridiculous ads that ridicule your customers and coming up with arcane rationales for your failed products. Sell people what they want and need. It is that simple. From the ads to the products Apple has for better or worse become Tim Cook's company and he must be held accountable for its failures.

    The Three Hundred Billion Dollar Thumb or How Apple Wasted a

    Five Year Lead in the Post PC Era

    Tim Cook's astrological chart indicates that he will be a very poor CEO. He was a terrific foot soldier in Steve Job's Visionary army. He could help bring the products to the market in time in the right number. Astrology does not really count for much, we know that. Just because Bob Dylan has a plethora of stuff in Gemini, the sign of writing and communication, does not mean that he will be good with words. On stage in 2007 Steve Jobs announced a revolution in the mobile phone/computing industry by introducing three new products. First a wide screen iPod, then a revolutionary phone with a touch screen interface and finally internet communicator/access device. All three devices were one-the iPhone. The god Phone as it was called. No more did we have to suffer through Verizon's or ATT's interfaces the use of which must be one of the Circles of Hell in Dante's Inferno. This day marked Apple's rapid rise to the top of the corporate world, the return of Apple to the top of the tech world and the end of the Steve Jobs or Bill Gates debate. Gates was a clever guy who figured out that IBM would pay dearly for an OS to operate its PCs, he figured IBM was careless enough to let him license the OS to others and then he went out and bought DOS from someone who was a very good programmer. Gates simply maneuvered his way to becoming the richest man in the world and one of the most respected man in tech along with Jobs. Jobs now leap frogged Gates to become a man equated with Edison, Ford, Franklin and the other great visionary American leaders and inventors of the business world. Jobs was now the preeminent tech man of his generation. He was the Bob Dylan of silicon. His legacy was secure and he was the most loved and admired man in the world of business, maybe in the world period. The later introduction of the iPad just added icing to the cake. The iPhone was the beginning of the end to beige desktop PCs and the birth of an entire new phase of the internet era. Steve Jobs like Mohammad Ali came back off the canvas to become champion of the World a second time. He was the Greatest again now once and for all.

    In 2007 Research in Motion (RIMM now BBRY) had a smart phone called the Blackberry. Palm, Motorola, and Nokia also had a smart phones. No one else was in the game. The regular cell phones were an abomination. They were hard to use, ugly and annoying. No one actually wanted one. They were merely tolerated because cell phones were useful and there was little choice. Apple's smart phone "competition" had tiny screens because half of the phone was dedicated to a "25 cent plastic keyboard" and software that was five years of development behind Apple's iPhone. The larger screen of the iPhone suddenly made accessing the internet useful, easy and enjoyable rather than costly, slow and aggravating. Soon Safari familiar to Mac users would be running on every iPhone. Now the mobile phone was like a good friend not a prison guard having a bad day.

    Surprisingly the competition was not stunned as you would have expected (with the only exception being Google who at that time was not making a smart phone and appeared to no one to be the competition). Mostly RIMM and the others took the phone without even an after thought. Blackberry users were tied to their corporations or governments and were never going to give up their tiny keyboards so Research in Motion was not worried. Apple devices would never be used in the enterprise or by governments who were obsessed with security. BBRY was invincible, just ask the Mouth of the Street, Jim Cramer. BBRY was one of the Four Horseman of tech and would be there until shortly after the horns blew in the red sky and the Apocalypse started. The BBRY stock peaked at 148 in June of 2008-more than one year after its downfall was a certainty. Curiously the same month the first Android phone was announced. Palm had a loyal following and was making their devices for pennies in China and selling them for hundreds of dollars a piece in America. I remember my last Palm Treo. I went through seven on warranty. Yes that is right seven of the devices broke and had to be replaced under their limited one year warranty. Each replacement necessitated a drive to the nearest Sprint store, an hour wait on line to register my complaint, turning in the phone for 3 days so it could be evaluated, waiting for a week or so to hear the results of the evaluation, waiting in line again to agree to the replacement of the phone and then finally waiting in line again days later when the new phone arrived (the new phone was merely a reconditioned model designed to last until I got out the door-not a new phone). Calling the Treo junk was an insult to junk. Nokia had Europe and Motorola filled in the spaces.

    The forward looking Apple fans and Mac addicts saw the future immediately. Soon everyone would have an iPhone. Everyone in the entire world who could afford one would have one. Kids in China who could not afford to access the internet with a computer would be able to eventually get a phone from the Black Market or their older cousin to get online. This was the future of tech. iPhones like iPods would be available in a variety of sizes, models, colors and price points. The future was total domination of the mobile phone industry and the post PC world. The Wintel global domination was over. And thank God. No industry other than cable was despised as much as the mobile phone industry and the Wintel duopoly. For Apple to eliminate dependence on both with one mighty stroke was wonderful, a dream come true for the long suffering Mac lovers who were tired of playing second fiddle in an orchestra where they should have had the solos. The iPhone, just as the iPod totally dominated the portable music business, was ready to rule. No more Nokia torture chambers and no more carrying a boom box on your shoulder while walking down Broadway or wearing Sony headphones and listening to your cassettes. An iPod would be in every phone. Game over Sony, Verizon, AT&T, MSFT, BBRY, PALM, NOKIA and Intel.

    Accessing the internet was the key, not running Office or Photoshop. The PC era just put a foot in the grave. And kids all over the world could network with just a phone. It was becoming a small world after all.

    It took Apple at least two and a half years of dedicated work to develop the iPhone. But before that they were working on the iPad and before that on the Newton. The touchscreen interface was initially designed for an iPad. A tablet computer not a phone or personal data device like the original Palm Pilot had been planned prior to the iPhone. But when Steve saw the touch screen in operation for the coming iPad he realized the scrolling by fingers and other touch features would be perfect for a phone. So he ordered the troops to switch their focus to a phone. Then two and one half of years of intense, steady work on the hardware and software produced arguably the most innovative product in computer technology ever. No one outside Apple knows the total amount of hours it took to develop the software and hardware that went into the "god phone" but Steve's statement that Apple was 5 years ahead of anyone else might just be true. It might have taken really good programmers and hardware designers five years to build an iPhone from scratch or without cheating. Maybe that is why BBRY, Palm, Nokia, and Motorola did not even bother to copy the phone. They new it would be very expensive and by the time they got there they would still be 5 years behind, if Apple kept the peddle to the metal. Instead they choose to say it was a typical Apple product that was a fad and would not last. They thought their markets were secure and were ready to ride their ponies to their graves. They choose to just suspend belief rather than confront reality. The millionaires in their boardrooms could not stand up and say: We are five years behind Apple and if we are to survive we have to work day and night to make phones people want. It was a lot easier to say Apple got it wrong, who cares about them.

    All except Google. At Google from the moment Steve Jobs raised the possibility of a phone with a touch screen interface to the Apple Board of Directors, Goggle began to worry. You see Eric Emerson Schmidt was on the Apple board of Directors. So they were Apple's competition from the start even though Apple had no clue that Google was competing with them.

    Google suddenly saw a future with search being done from handheld devices, not PCs. This meant goodbye Google. Google could be replaced by any company who perfected or worked on mobile search. At best Google would share search with some other company, possibly Apple if Apple decided to go that route. Google was a one trick pony whose pony was looking more and more like glue. Google would also fall in the coming crusade that would mark the end of the Wintel duopoly. But of course Schmidt did not leak a word of Apple's ground breaking technological innovation to the software engineers at Google. He took the entire idea hook, line and sinker. Al Capone would have blushed. Don Corleone would have shaken has head and said that man has no honor.

    As Eric Emerson Schmidt, the CEO of Google, sat on Apple's board and heard Steve Job's plans to once again change the world he took it all in. But he also took it all out. He immediately began gearing up Android to compete with Apple's iPhone OS before it even existed. He was privy to every idea, every ground breaking technological breakthrough and every hurdle that took an immense amount of work to get through. He knew where the roadblocks were and what features were hard to get exactly right. Google was right there to take Steve's ideas and run with them. The same tech company that went bananas because China did not respect the integrity of its search information just stole the most valued product in the history of technology with no remorse, no payments to Apple, no royalties and no contrition.

    No one outside of a small circle of Android insiders knows what Android actually was prior to Schmidt's inside scoop on the iPhone. Prior to the iPhone Android did nothing, it operated no computers, no phones, no Palm like devices, and no pads. It was another linux idea that a few software engineers played around with. Android was just a linux idea of limited value and no practical use. It was nothing special. Google probably bought it for pennies. There were hundreds of linux ideas always floating around.

    Google was probably worried that Microsoft might just eliminate it the way it did with so many other companies. All the Wintel machine had to do was build their own search and make it integral part of the operating system. If you wanted to Google you would have to load it on as a program and figure out how to make it work. Like Netscape before it, Google could just fall off the table and be only a memory. So more likely Android was being birthed as an OS for a netbook device. They were popular at the time and the idea of running a browser and a few other free linux programs on an ultra cheap device just might take off. And it would protect Google from being eliminated by Microsoft.

    On January 9th of 2007 Jobs announced that iPhone was something that he had been waiting two and a half years to tell the world about. It was released June 29th of that year. So more than three years of intense work on the software and hardware been done since Steve brainchild the phone. But this work was built on years of research done as far back as the 90's on the Newton. Summarizing, Jobs said that Apple had a five year lead on all the smart phone competitors.

    But not on Android which at that time did not even exist as a real operating system for anything. It was still under intense and evidently secret development at Google. Nonetheless merely one year after the iPhone shocked the world, Android phones started to appear like mushrooms. The first came out in June of 2008 - the same month RIMM stock peaked at over 140. The linux geek community embraced the openness of the system and while the linux geeks had completely struck out in the PC era they saw a chance to go after iPhone and to have a voice in the post pc era.

    Android hardware makers and especially Samsung made sure their phones were the visual equals of Apple's iPhone. Basically you could not tell which was which from a few yards away. Samsung and Google were targeting consumers who did not want elegant state of the art phones. They just wanted a better experience than the one they were having on their Nokias. Samsung copied everything about the iPhone and have admitted such in court. Samsung stated they made a list of all properties that iPhone had and their phones did not. Then proceeded to update their phones. That saved years of research, testing and design. Meanwhile Google was developing Android to look like the iPhone interface with much less security so programs could be added quickly and developers thus were encouraged to develop programs for Android called Apps.. In addition Cell phone companies could make there OS ride on top of Android and force their customers to interact with their advertisers and try to sell them more features. The App store of course was another Apple idea which soon was an Android or Google feature as well.

    In a few years the interface of Android was, while not as elegant as iPhone, a thousand times better than the cell phones of Nokia and others who were upgrading to their first smart phone. To them the Android interface must have been a godsend.

    Android like Windows was good enough. This is the threat to the dominance of Apple in both the tablet and phone markets that are the computers of the post pc era. Consumers don't need the best phone or tablet. They need one that is just good enough. Such phones are still significantly better than regular cell phones (called feature phones). The same is true with tablets. The experience has to be good, not insanely great. And price matters. To some it is the only thing that matters. Think of all the landfills full of cheap PCs. They made someone rich. And everyone who used them never had the delightful experience of using the Mac OS.

    People also want and need different computers for different reasons, there was and is a market for desktops, laptops and so called net books. The same is true for price. There is a market for the cheapest PC possible and the best MAC you can afford. In the post PC world, there replacements then would seem to benefit from the same sizing and pricing differentials. There should be a market for really cheap but good enough smart phones, elegant wonderful smart phones, better looking but not too expensive smart phone, small smart phones, mid-size smart phones and large smart phones, iPads of various prices and sizes and most obviously a market for a hybrid that functions as a phone, eReader and tablet. Really every tablet can do this for people who want to use an ear piece. The point is there will not be a reason to have two devices for many, many people. For many people the coming together of the smart phone and tablet mirrors the merging of the iPod, phone, Palm Pilot, and "internet communication device." The original iPhone was a product that included three devices in one. Now the next step is to include a phone in a device big enough to replace your laptop.

    That is what Apple missed on the corporate level and the question is why? The theft of the OS by Google and resulting law suits unfortunately remind one of the suit against Microsoft for the theft of the MAC OS. Relying on the courts to even the playing field was a huge mistake then and now. The legal plan of going after the hardware makers instead of Google was also a huge mistake also. Apple could have sued Google for tens of billions of dollars and the hardware makers as well. But first the case against Google should have been laid out and Eric Emerson Schmidt should have been forced to testify exactly how much Android borrowed from iPhone and how much information was disclosed to the hardware manufacturers if any. His violation of his duties as a board member that might have resulted from information disclosed could have helped Apple share holders as well. Law suits would have followed if he disclosed information to Google's software engineers. And it is hard to believe that he did not. But with a law suit his version of the truth could be heard under oath. If Apple does not sue Google we will never have the opportunity to find out how much was stolen from the iOS and how much of Apple's hardware design was disclosed to the hardware makers.

    Apple though had the market for smart phones as a replacement for PCs in 2007 and 2008 more or less to themselves. RIMM was clearly not even trying to compete with the iPhone. RIMM was relying on its IT salesman to keep governments and corporations from using anything else. The other smart phones at the time were just better feature phones. They were like hybrid Palm Pilots (before the name was changed to PALM) and cell phones. But they had nothing like the magic of the iPod built right into the device. For many iPhone users there first experience with an MP3 player was the iPhone.

    The first iPhone hit the sweet spot. The screen was much bigger than screens on the Nokia, Blackberry and Palm smartphones. The annoying buttons were gone. The 25 cent keyboard was replaced by screen space. At that time the iPhone was a phone with a large screen. That in addition to the ease of use of most if not all of the features was something that mattered.

    But fast forward a few years and then a few years more, and the iPhone is the same size. It is still easy to use, a little faster, a little this and a little that. No major changes until Siri. Siri was strangely loved by the public but panned by the geek press. The 4s sold well. But it also happened to be released when Steve Jobs died. The resulting publicity helped sales undoubtedly. What percentage of the sales were due to the deluge of stories about the greatness of Apple is unknown. It would be speculation to guess, but reason says the publicity and sentiment helped sales.

    All seemed well with Apple after Jobs died until July of 2012. For the first time in a while Apple missed Wall Street's expectations on growth and earnings. The pace of growth slowed but the much anticipated iPhone 5 was thought to breathe new life into Apple's growth. The iPhone 5 was rumored to be larger, faster, lighter, and just better. This caused the stock to rise emphatically despite the missed earnings through August and into September.

    Meanwhile Google had been busy. The Android OS was mysteriously very similar to Apple's OS for the iPad and iPhone. The Samsung phones looked like clones of the iPhone. The big difference was neither company sought to create the perfect phone. Google just wanted an OS that was good enough to run any phones produces by Samsung or other hardware makers. They use a linux system that had the appeal of "being open" so developers, phone companies, geeks, and manufacturers could create more or less what they wanted. Google wanted to make sure they made money from the search features and other methods of advertising now and in the future on the phone. Mostly they wanted to make sure Apple did not have a monopoly on smart phones and tablets. Their goals were clear and simple. Most importantly they had nothing to do with making the best phone possible. Their goal was to make phones that had Android on them period.

    Samsung quickly realized the market for smart phones was diverse. Most people did not use all the features on any phone. Most people were looking for something special that suited their needs. Most of the hardware manufacturers using Android split the market for less expensive mobile phones. Samsung though decided to more or less duplicate the iPhone experience and offer a variety of sizes and prices. And they did not stop with the phones. When the iPad came out, Samsung saw the potential there as well and most importantly they saw the potential of all in one hybrid. Many people would be asking themselves why carry two devices when one would do the trick?

    Apple on the other had rejected the all in one out of hand. Of course the reasons are only known to a handful of insiders at Apple who made the decision. But what is known to everyone is that someone in Apple became obsessed with the thumb. As sales of the Galaxy S3 sky rocketed and sales of the hybrid Note reached 10 million, it became clear to the most devoted Apple fan that the market wanted a larger phone and an all in one hybrid. In fact there was and is no reason to offer any touch screen device of any size that can't do both. Even an eight by eleven and half inch iPad that would be a perfect clipboard sized device for retailers to interact with customers on the floor would need a phone. That way the salesperson equipped with the iPad and a bluetooth ear piece could communicate easily with upper management and the customer. Questions and concerns could be dealt with immediately without having to close the iPad, take out a phone and then call management. It seems like a no brainer.

    But then comes the thumb. In the most unusual product presentation in Apple's history, the post PC era waited eagerly while the new gurus of Apple took the stage for the iPhone 5 presentation. The expectations for a large iPhone to compete with the S3 and an all in one to compete with the Note were very high. Why Apple had kept the phone at one size since 2007 was also a mystery. Ipods and computers are available in different sizes and price points so why shouldn't phones be given the same treatment?

    It seems self evident that the market for various sizes of phones is there-and at various price points.

    Shareholders and customers wanted a larger phone. People who had an eye to the future expected an All in One. Instead Apple introduced iPhone 5 which was 4.8 inches long and the same width as the 4s. In fact the same width as all the other iPhones more or less. The 4s is 4.5 inches long. So to compete with the S3 and the Galaxy Note, Apple added less than one half inch in length and nothing in width to the phone. And the beauty of the S3 was that it was wider not just longer. The S3 looks nice. The iPhone 5 looks out of balance. What was the rationale for this mysterious disappointment to consumers and investors?

    The iPhone 5 was greeted with the usual hoopla that surrounds a new Apple product but then disappointment and wonder began. Mapplegate was a side show that Tim Cook completely mishandled and fueled the Apple is done headlines. All he had to say was Google has refused to update its map program on the iPhone and iPad. Therefore we have been forced into the map business and we have cobbled together a few programs we purchased. The program is not a finished product but does have features that are missing from Google's map program. With your help and feedback we can get the program going and make into the best map program out there. We need our customers to tell us where the program is wrong and how to correct it. The program redraws faster than Google Maps and refreshes much faster than the Google version, however it is an unfinished product and will need to improved over time. That statement would have ended mapplegate and made it a positive instead of a negative. Instead Tim Cook fired Scott Forester in what appears to have been a power struggle.

    But there was an overwhelming sense of disappointment with the iPhone 5. Apple was slammed from every corner and the stock dove.

    It turns out that someone in Apple's hierarchy had the idea a phone should be only wide enough so that it can be held in the hand and operated with the thumb. Therefore the length of the human thumb determined the width of the phone. Whoever came up with this odd rationale for the size of phone must be very powerful, in fact an emperor of Apple. And that emperor wears no clothes. Not only did Apple make a big show of the rule of thumb at the presentation they followed up with an advertisement that stated a phone should only be as wide as the thumb. Never mind the obvious problems with that logic is that people have different size thumbs. Second most people who really need to use the phone one handed are driving and it is illegal to do so in many states. Sit in a cafe for a bit and notice all the people turning the S3's on there sides to use them. They don't use them vertically which totally negates the odd rationale of the rule of thumb. Finally shouldn't consumers decide what size phone they want? It is understandable that in 2007 Apple would have a phone in one size when that screen was bigger by far than what people were used to. It seemed large. But time passes and taste changes. People began to use the internet, text and read emails on the phone extensively. To do so with more screen space and on the side so you can see more text is comfortable. Looking at text that is long and narrow is just not the way people read. People want to read across not down.

    Amazingly at the earnings conference in January of 2013, after another miss according to Wall Street, Apple executives doubled down on the rule of thumb. Clearly the sales of the Samsung S3, Note, and plethora of other larger phones now appealing were to misguided customers. These customers were wrong in their choice of phones. Apple made it clear that the iPhone was the right size and phones did not need to be any bigger. This despite the facts that tens of millions of their potential customers were buying bigger phones from Samsung for three primary reasons, first they were bigger, second they had simple things people liked like Swype to text with and an updating home screen, finally they were priced right. Mysteriously Apple did not get a product like the Note to the market years ahead of everyone else and now we know why. The phone part could not be operated with the thumb. How this urban myth could come to dominate the thinking of the world's most innovative company must be an interesting story. Who inside Apple's boardroom and executive suites made this decision and why did everyone follow along like sheep? Regardless of who made the decisions Tim Cook bears the responsibility for them. He is responsible for the decline in Apple's growth, the abominable iPhone 5, and the troubling lack of innovation we have seen in Apple's OS both on the computer and the iDevices. The MAC OS has been beset by bizarre changes that don't improve the user experience, rather they appeal to some arcane need of a group of designers. For example: the shrinking of the scroll bar on the Mac OS and its subsequent disappearance is really annoying. You have to be more precise now when you scroll and that wastes time and lead to errors. The separation of the search and website bars in Safari was brilliant and made search easy to use. Combining them together appealed to someone's idea of simplicity but in reality is just confusing and harder to use. Change for the sake of change. Apple is clearly becoming Microsoft. Since Office 98 on the Mac have there really been any changes to Office worth the price of the upgrade? No. The cash cow keeps being milked and now with online word processing just over the horizon, it looks like it may be retired soon. Innovation and choice are what customers want to pay for and are willing to pay for. Customers don't respect companies that make changes for the sake of making changes or charge for upgrades that are not worth it. Apple is now alienating the most loyal customer base the world has ever seen. Customers don't want to be told what size of phone to buy. Just as they don't want to pay for a worthless upgrade to Office every time the OS of their computer changes. And they want to draw with a pen or pencil.

    Apple is going to be in for a rude awakening if they don't come out with a larger phone the size of the S3 and an all in one to compete with the Note. The next upgrade cycle will see a mass desertion as many people see the iPhone now as a small phone and they don't want small phones. The Android OS is not as good as Apple's. But it does not have to be. It just has to be much better than the cell phones most people have used for years. Much more time now is spent reading and surfing the web on the phones. Size matters, it is that simple. Developing some James Bond wrist watch while the market is simply demanding a choice in size and price is absurd and another indication of really bad management. When you are paid hundreds of millions of dollars like Tim Cook you are supposed to be a leader. To be a situation where you have blundered away a five year lead in software and hardware is not acceptable. It is only a matter of time before the wolves start howling and Cook has to take a co-CEO who is in charge of product design and innovation or just simply step down. It is clear his expertise in bringing the goods to market is not enough in the competitive post pc world. He has proved he does not know and does not have lieutenants in place who are willing to tell him what the market wants.

    Another flaw in Steve's vision for the iPad was his distain of the stylus. True with Palm's limited screen size and arcane alphabet that you had to learn, the stylus entry of data was inefficient and not fun. But people have been using pens, pencils, brushes, and stylus's to write and draw for thousands of years. Drawing with a pen or painting with a brush is fun. This is something people like to do. Writing short notes with a pen is also very efficient and pleasant. Sticky notes are a huge success because they tapped into that vibration. It is a lot easier to write "bread" and "milk" on your list with a pen or stylus than by using the virtual keyboard especially if you have large hands or fingers.

    Jobs completely ignored this and focused on the limited utility of Palm's stylus. Rather he could have incorporated Apple's handwriting technology which he stated was the best in the business from the beginning of the iPhone and iPad. Drawing programs and painting programs would have rapidly followed. People like to do that. Strangely the art of calligraphy requires a stylus. A class in calligraphy that Jobs audited is credited with shaping his amazing aesthetic taste and why he produced beautiful fonts for the Mac. The success of Adobe is owed to the fact that Jobs was acutely aware of calligraphy, fonts, and the beauty of script. Curiously that was completely ignored when the iOS was created and no one bothered to suggest to Steve that drawing on such a device was likely to be done with a pen and painting with a digital "brush". Artists are not likely to want to finger paint all the time. Hence the success of Wacom tablets that let artists draw and paint digitally with a pen or brush on their monitors. The use of Apple products by artists both musical and visual is a large part of the cool reputation of Apple Products. So how could this be overlooked?

    The answer is a story waiting to be told. But it is clear Tim Cook is the one responsible and that the failure to have products to compete with the S3 and Note years after their introduction is his responsibility. Never mind superior products should have been in the stores years before the Note and S3 were introduced. Apple has not changed the size or basic utility of the iPhone since 2007. That is unbelievable and unacceptable. Apple was forced into marketing an iPod Mini after the huge success of the Kindle and Nook.

    So this begs the question who should be running the product development side of Apple? Clearly no on there has the power, vision or authority to lead the markets. Apple is now behind Samsung and not even trying to catch them which is incomprehensible.

    The three hundred billion chopped off the stock won't return until either Tim Cook steps down or a co-CEO is named. The most likely candidate is SAP's Bill McDermott. He understands the enterprise market which Apple still has a chance to dominate and has charisma. He speaks with more enthusiasm about how SAP's products look on the iPad that the current crew at Apple speak about their new products. He would be a good candidate for those reasons. As far as misunderstanding the market, Apple has to really look at who made the decisions that cost them over 100 million in iPhone sales and an absence in the All In One market. It is not to hard to see a future in which there is only one device, the phone, pad and laptop all merge to create a digital device which is capable of meeting the needs of 90 percent of the world's population. The device could easily power a larger monitor at home and be portable enough to be taken everywhere. While the rationale for the size of the iPhone is the rule of thumb and the "I like to put it in my front pocket", geek tradition, clearly that is just temporary. Women want a larger device and can carry it in their purses, men in their brief cases, back packs, and man purses which are the rage in the orient. Apple's "The Emperor has No Clothes" moment has cost the stock holders 300 billion dollars. It has prevented the company from completely dominating the post pc era. In fact the failed litigation with Samsung like the suit agains Microsoft's Windows before this may have distracted Apple from focusing on what their customers want. Samsung took a shot gun approach and made a bunch of phones to which ones sold. Not a bad concept, and now Apple may be forced to license its OS to Samsung so Apple's customers can get the phones they want.

    Another logical step would to buy Wacom and integrate their stylus technology into Apples pads and phones so artists would have the perfect instrument. Making sure Painter and Photoshop run on the pads, all in ones and phones should be a priority to. And Apple should be willing to take whatever steps are necessary with Adobe and Painter to make this happen, even if they have to buy the company. If you want to lead you need to lead on all fronts.

    The iPad should be available in many sizes. Currently there is the iPod touch which is basically a small iPad, the iPad Mini which is mid size and the iPad. Clearly there is room for an eight and one half by eleven clip board sized iPad, a super large 3 or 4 foot artists canvas size iPad that artists could paint on, send the completed work to a gallery and have a print made in real time. Now that would bring the awe factor back to Apple. Imagine an artist in Hawaii on the beach painting and sending the finished product to Tim Cook while he was on stage making the presentation. Good showmanship. Barnes and Noble watched while Border's went out of business. Try using the bathroom at Amazon a sign read on the window of our local Border's. Apple blundered here as well. Amazon is their competition along with Google. Apple should have partnered with Border's and Barnes and Nobles to create an iNook with the black ink technology that is easy to read. People like to read outside on the beach, near the pool, in the sun in their yards and under trees at the park. The Nook is much easier to read in those conditions and there is no reason why it should not have iOS. Such a device would have helped B&N compete with Amazon. Apple should have bought Borders and merged them with Barnes and Noble for a percentage of book and other sales on the Nook. Selling hardcover and paperbacks with the digital version included for free seems like a no brainer. Millions would have then bought a Nook or Barnes and Nobles could have given them away with a 500 dollar purchase. Anything to get the customers into their ecosystems and Apple's and away from Amazon's. But Apple missed this obvious opportunity as well as many others. The Nook is a great size, using it is like holding a paperback, familiar and comfortable.

    The All in Ones like the Note don't have to have independent sizes. Any iPad should be available with phone. Another area where Apple blundered was the clever magnetic cover that turns the iPad on and off. The problem here is that people grab the cover and the iPad falls to the floor and breaks. How many times has this happened? Samsung got it right by attaching the cover to the device with the note. Again this seems obvious. Why have a detachable cover? There is no reason not to have several sizes of All in Ones and Phones available. The golden rectangle has been pleasing to the eye for thousands of years. All Apple has to do is approximate the Golden Rectangle and release two or three sizes of phones and once again 99 percent of the market will want one of their phones. Now they are faced with the reality that a huge portion of the market is very disappointed with the size of the iPhone 5 and is going to leave next upgrade cycle. Apple is about elegance, ease of use and design. The iPhone 5 is not elegant. People who wanted a bigger phone want a wider phone not a longer phone, the iPhone 5 looks weird and feels out of balance. The original iPhone which was not changed for 6 years had a great form. If you want a small phone it is perfect. Apple's elegance is present in that phone. But why self impose limitations?

    Elegance and beauty of design are qualities that can apply to inexpensive products too. There is no law saying that it is not artful or insanely great to produce a phone that people in third world countries can use and enjoy. Why the obsession with the best and most expensive phone, why not turn out the best affordable phone? The question is how far down will Apple's stock have to go and how much will growth have to slow before the major stock holders start pressuring the board to appoint a new CEO? Time will tell. A lot has been written about why the stock of Apple fell so much in so short of time after the iPhone 5 was presented. I wondered that myself until I walked into a Verizon store and looked at the competition. Now I wonder how Apple employees and executives could stand around and applaud the naked CEO on the throne. Steve Jobs had a reason for missing the use of the stylus and the inevitability of the all in one. He was extremely ill and not at the top of his game. But now some one must be held accountable for the bad decisions that Apple has made up and down their product lines, from dumping the 30 inch Cinema Display matte monitor that was loved by those in the visual arts and those who are near sighted to ignoring the need for consumers to have a choice in the size of their phone, missing the All in One market altogether, and ignoring hand writing recognition and the needs of the painters and photographers that for years have used Apple products because they loved them and they were the best. In the legal arena Apple has gained little to nothing. The suit should have been directed at Google and the hand set makers. By dividing the suits and delaying the inevitable suit against Google Apple has let Google put Android on hundreds of millions of phones. The wine can't be put back in the bottle. Even if Apple wins suits the damage has already been done. The reality is this is a bad time for Apple investors and customers. As long as the emperor struts around naked and talks about his two hundred million dollars in stock bonuses, his gown of green and gold, the company is in trouble if no one dares to state the obvious: Apple has blundered seriously and needs major changes to get back on track and back on top. The S3 and Note are products people want. The iPhone 5 is not. If the 5 had been the same size as the 4s probably the same amount of phones would have been sold. The next upgrade cycle will be a disaster if large phones are not available from Apple. Would anyone really wait on line for another IP5? The entire Apple ecosystem will be abandoned by people wanting a better experience on the phone or a larger phone or a cheaper phone. The All in Ones are the future. What is wrong with replacing the laptop, phone and tablet with one insanely great device? That would be a feat worthy of Apple and Steve Job's legacy. The tinkering with products that produces no substantial changes, like one millimeter thinner or a more narrow scroll bar is just crazy. No one buys products for these reasons. The lesson for Apple is simply sell products people want but find out what they want. The visionary is gone. There is no one there who knows what people will want five years from now. So stop pretending that you understand the markets with ridiculous ads that ridicule your customers and coming up with arcane rationales for your failed products. Sell people what they want and need. It is that simple. From the ads to the products Apple has for better or worse become Tim Cook's company and he must be held accountable for its failures because he has been richly rewarded for Apple's past success. Apple had a chance to completely dominate the pad, phone and all in one or phablet market. They froze instead. No change in the phone for 6 years allowed competitors to take bites out of their market share on every front. Apple has time to regain its footing, but if the emperor parades around naked they will in for a rude awakening and soon. Eventually someone will say a 700 dollar phone that is 6 years old, are you crazy?

    Disclosure: I am long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Themes: earnings
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