Faculty & Leadership Blog / Faculty in the News

Update: Anderson On Mountain Lion

 Mountain Lion Launch Reveals Increasing Complexity in Apple’s Networked Interactions with Users and Ecosystem Suppliers;

This Complexity Works for American Style Media Markets – But May Not Fit Well With Largest Global Markets Whose Mobile Social Computing Is Very Different; 

And….the medium is the message….a blogosphere event that demonstrates the Mountain Lion potential to confuse private and public space for many users. 

On July 26, 2012 I wrote a conversational, informal note for a mostly-local blog that commented on potential, longer term, global risks to Apple’s current form of growth, as revealed behind the scenes of Mountain Lion’s launch.

My writing was not clear.  I did not make my points well at all. I made it seem like I was writing a review of Mountain Lion (I was not).  And I never made it clear when I was talking about:  required versus optional settings during installation; user settings for alerts and similar; user settings for automatic upgrades; the larger evolution of the OS to include many features not needed by all users; and the potential for user material to “leak” once in the hands of third party social media sites (which would not be caused by Apple).

I was writing for a local audience who knew my style, would laugh at my hyperbole, and generally understood my track record at sounding oblique but being pretty good at making accurate strategic calls on social and commercial trends.

I was talking to my friends over coffee.

This note was picked up by the blogosphere, re-headlined, selectively edited, tagged, and – I am told – pushed to large audience, without dialog.

Within hours, I had been given a completely new identity.  “Stupid” was one tag.  “Crazy” seemed to be another.  I was accused of not knowing the most basic details of Mountain Lion.

What a bad guy I became in a few short hours.

Because the media were flooded with Apple Mountain Lion hype that day – I ended up very high in Google search results for many hours.


Objective of This Note 

I’m writing this note for one purpose. 

I’m fine if my informal comments get misinterpreted by bloggers and tweeters who have never met me.

But I am a member of a wonderful community and institution.  And I don’t want my informal writing in a post to reflect on my institution, the thousands of students who have entrusted me with their time and money, and others who depend on Babson College.

Babson College is a very special – global – community.

This note may never make it farther than the local blog – but I owe it to my community to make my points in a more professional fashion.

The Medium is the Message

I learned a lot from this event.

After my initial surprise….I realized that this blogo-media event was a perfect demonstration of one of my concerns about “automatic social networking”  – a form of which is contained in Mountain Lion if a user sets it up in certain ways.

Many mobile apps record complex data about the mobile user.  My devices can geo-locate me from wifi networks around me.  Every posting on small websites is accessible to billions of people.  Our technologies now blur the boundaries between public and private space.

Few users realize how quickly our local information can be packaged and sent across the universe to people we don’t know and who don’t know us.

My hyperbolic language and fuzzy writing were my fault.  The massive distribution of this bad writing is the result of an electronic space that is so new that no one on Earth knows how to manage it….including companies like Apple, Nokia, Microsoft, and others.   All us humans are learning this together.

I learned a huge lesson that day.  So – thanks very much to the powerful bloggers out there for the free education.

What do I do?  Why Did I Comment on Mountain Lion?

I’m an explorer of “entrepreneurship of all kinds”.  My job is to watch new things humans do, intuit emerging patterns that threaten old beliefs, and then help people to think differently about the future.

I’ve worked with the human side of technology all over the world for 30 years.  My primary lesson is that while technology is important, it is what people do with it that really counts.

I am frequently humbled by what I see “uneducated” people doing with technology far beyond what designers intended. 

I have also worked with successful companies who quickly lost their way as the world around them changed.    Manufacturing companies tend to decline slowly.  Companies, like Nokia and RIM can face quick shocks, when they attempt to develop “social technology” in a world where 6 billion humans can shift communications preferences quickly.

I do my research on site. For the past decade I have been watching what people all over the world do with mobile technology.  Not what executives and analysts think users do; but what people really do, in real time with the tools they have. 

I test phones, PC’s, and, antennae at “the edge of electricity”, and watch how locals assemble amazing ad hoc networks from used stuff they buy from us.

I have watched Apple’s growth in India and Africa.  As usual, I saw end users do things Apple management cannot see from their offices.

More than half my students, and most people I work with, live in the growing areas of the world.  They represent the three billion citizens who are literally shaping the future of the world.  They do not always see or think like Americans and Western Europeans.

Their nations do not have the same legacy technology we Americans protect  (land lines, TV, etc), and they use our technology very differently than we do.

For example, we Americans are pushing centralized medical records.  Many areas of the world are evolving distributed records without the same focus on centralization.  Distribution of music, news, education, and other intellectual assets are also very different for the other 90% of the world.

I can say with great certainty: what market planners and analysts (including myself) think, and what users really do are very different things.

That is the perspective I applied to Mountain Lion.

I Am Not Predicting the Demise of Apple

I am not predicting the demise of Apple.  I am not saying that Mountain Lion is a bad operating system.

I am saying that Apple, and many of its peers, are now having to play a game outside their home cultures, and it when they move from making devices to attempting to influence the social behavior of users and ecosystem partners, they are playing a game that requires lightning fast reflexes, and does not treat legacy systems kindly.

I love Apple products.  And I think Mountain Lion is a nice upgrade. It is wonderfully adapted to a slice of the American culture. 

But it is also indicative of a company building technology on a home culture, when most of the growth in mobile and personal technology is among the formerly poorest regions of the world.

My comments on Apple are in this context.  I am not doing a technical assessment of OS features.

The Science of Networks Reveals The Tension That Surrounds Mountain Lion 

in the Larger Apple Ecosystem 

Humans organize behavior and technology in two co-existent network forms.

Formal (scalable) networks are the ones designers use to form components into computers, cell towers into regulated networks, and code into formal operating systems.  These are the networks most managers pay attention to because these are the things they control.  These networks generate the fixed costs of all companies.  (Notice last week analysts were worried about the rising fixed costs of Facebook.) 

Informal (scale free) networks are the real time behaviors of humans using technology, and they change literally every second.

Informal networks (Twitter traffic) are hundreds or thousands of times larger than formal networks (Twitter systems), and can shift very quickly with powerful consequences.

See the history of Myspace, Alta Vista, Friendster, and others for this effect.

Managers and analysts cannot predict the future of informal networks, and must give up control to users to be successful in “social networking”. 

If managers try to force formal structures into informal social networks, they can kill a business quickly.

Mountain Lion is a new attempt by Apple to bridge these formal and informal networks in the hands of users.  At the moment it is doing this very well in current markets.  The global path is less clear.

The Risk for Apple is Evident in the “Feature Creep” of Mountain Lion

Operating systems once made apps run on a single piece of hardware.

Mountain Lion performs a much larger role far beyond the device.  It is a complex, living mediator of the thousands of potential “supply side” ecosystem companies, the hundreds of different things a user can do with the device – and as I found out – the billions of humans who are only one blog post away from the device in the hands of the user.

Mountain Lion mixes formal “command” networks and informal “emergent” user tools in a wonderful – and risky – way for both Apple and Users. 

Mountain Lion’s connections between the formal Apple side and the informal user side are much more complex than in previous Apple links among users, devices, and networks

These Network Patterns Affect the Growth and Decline of Companies: Apple is Making Important Decisions that About its Global Future

Most companies begin as informal networks.  Jobs and Wozniak in computer club.  Compaq starts on napkin.  Facebook in dorm.  eBay.  Google.   At the start they have little formal structure and grow from “social pull”.

When they scale, they build formal systems.  Data centers.  Legal terms of service.  Massive IT systems.   Big debts from financial markets.

During this phase, it is crucial for management to balance their internal formal systems and their user-facing informal (social) systems.  

If they build their formal systems too fast, their fixed costs rise, and they start pushing things at their customers to “make their numbers”.   Lycos, Yahoo, Myspace, Bing, and others all experienced slowing traffic when they tried to “monetize every page view” by pushing ads.  Google has maintained a fine balance between push ads and pull ads.

If their informal user-facing “social” systems get too large compared to their formal systems, companies lose control over their value-creating processes and lose focus.  RIM and Nokia are experiencing this “device versus social network” problem right now.

Apple Has Been Trying to Balance Its Formal and Informal (Social) Networks As it Grows Rapidly

The post-Sculley Apple had a very simple strategy.  They were a hardware company, with very simple, and tightly controlled software user interfaces.  They wanted a small share of the overall market, and wanted to be “over demanded” by users.    

There is a very clear “network stack” in the social-technology markets Apple plays in.  These layers range from “formal industrial infrastructure” to “informal unpredictable social interaction with users”.   Big fiber networks are highly structured and run by industrial grade companies.  Twitter and Facebook follow users like ants follow each other to food.

For most of the past decade, Apple was a structured product company, with very simple “hooks” where non-technical users could connect to the technology.  The Mac desktop was simple, and welcoming to grandmothers and teenagers alike.

Now Apple is spanning more of the “stack” from industrial to user social communication.   

Starting with their movements into music, media and other social networks, Apple began a new balancing act of informal social networking and formal networks.    iTunes has been vacillating between open and closed digital rights.  Ringtones have their own separate rules.  Movies force users to specific locations and devices.  And so on.

This is evident in the features of Mountain Lion.

So what?

Apple’s Cost of Complexity Has Been Growing Steadily 

All the quantitative and subjective data show that the cost of complexity at Apple has been rising for about 7 years as the company works hard to add complex, volatile “social networking” to the front end – and still keep the hardware and OS simple enough for grandmothers and teenagers.

The social-networking side of the business model has rapidly increased the number of “variables” in the Apple technical-social system. 

When one had “songs” on iPod, – the number of possible user-assembled “music” combinations was very small.

Now that a “song” could be DRM/non-DRM on iPad, Macbook, non-Apple device, TV, etc –and then those devices could play and record video, and then Tweet them……and so on…the variables in to the Apple technical-social networks have increased dramatically.

Look at the tremendous increase in complexity of Terms of Service over the past 7 years as Apple has added media, portable devices, and new countries to its mix.  This is the most direct evidence you can see of the management and legal complexity that Apple now must handle with its expansion into social networks.

And, User Confusion Has Been Growing as Apple Got More Complex

Mountain Lion has to mediate many more supply and demand networks than the operating systems of 8 years ago. 

And for users, finding all the “switches” to control the complexity embodied in Mountain Lion is harder than managing the OS of 2004

Spend an hour on Google to search through the millions of user requests – around the world –  for help with Apple products and networks.  Look at both the Apple.com sites and the hundreds of non-Apple sites that are trying to help users make sense of the many Apple details not handled in Apple’s  “quick start” instructions. 

Apple is not alone here.  But it is important to note that as Apple moved from products to social networking and media, the amount of recorded user confusion has grown quite strongly.

These user questions are hard data that prove Apple’s cost of complexity for both the company and its users have been rising rapidly over several years. 

But Apple is an Amazingly Successful Company

Apple has been staggeringly successful financially by creating and working in its own “space”. 

Apple is essentially “stealing” customers from the big, slow moving, media and communications giants in America who are locked heavily into the formal industrial networks of the culture.  They are reinventing parts of TV and media delivery.

Apple has a small market share of the total market, and great design, and few competitors in this small social-market space, so it is “easy” for them to charge price premiums to happy users.

They have eliminated most of the physical drag in the supply chain.

Their products are still very focused, and they drop slow movers like servers.

Apple’s financial statements reveal huge gains in pricing and profits.  This is a spectacularly successful organization.

If Apple can repeat this success in the segments of world markets that resemble American computing style, the company can keep this profit machine running for a good while.

….so the Problem is?

When you look deeply inside Apple’s numbers you will find increasing fixed costs – the results of increasing complexity.  These increases have been very small compared to the gains in revenue, but they have been growing steadily.

Now look at Apple’s quarterly results.  You will see that there may be a trend of “user detachment”, or even “boredom” at work.  Too early to tell, but the recent quarterly gains are less magical, the demand between product introductions less robust.

When you add these marginal financial movements to the obvious complexity data above, the picture emerges of a company reaching an inflection point of some kind.

The data point to a company that is very successful as long as it is playing in an American style media-saturated market segment…with slow moving legacy competitors…

….where its costs of complexity are rising….

….and whose growth might depend on the 90% of the world’s population that does not organize like American media-based society.

The essential strategic question for Apple is, what happens if  (when?) other international players, who are already working with much larger volumes of mobile users in the new markets of Asia and Africa, devise fast-moving social technology that is better suited to the large growth markets of the world…than the American media style technology Apple is winning with with now?

…..enter Mountain Lion 

The Big Point:  Mountain Lion is not just an operating system.  It is a strategic step by Apple  – which has some recent success as a moderate sized American media distributor – to execute more direct influence over the complex social environment of users.  Unlike past operating systems, Mountain Lion spans:

  • Product architecture across very different social devices (PC and mobile)
  • The back end supply of media from publishers (music, ringtones, movies, TV, indies, etc)
  • User-assembled self-storage networks (iCloud, Time Machine)
  • The user’s personal social network  (your friends will become part of a central array of “help” you get in communicating).
  • User-assembled third-party social networking environments (alerts combine all messaging from Apple and non Apple sources like Facebook and Twitter)
  • Apps big and small (App store controls over “certification” and “location of purchase”)
  • The geographical location data of users, and their images and messages.
  • And several other variables in the user-company interface.

And – if you watch carefully during installation, you will see that Apple has a specific “wish” for you to load with “defaults” that can be more “public” than many users might know and understand.

And, if I am reading this correctly, the whole collection of user and industry side networks is designed to work best through a single Apple account.

Why Is this Strategically Risky for Apple?

This is where global ethnographic research comes in.   The specific design of Apple’s “social network facilitation tool”  – Mountain Lion – is distinctly American.  It is modeled fundamentally on an American “TV-watching culture” and the past 7-8 years of American messaging and media purchase channels.

Apple’s hardware-software array is a wonderful product line for American cultural communication patterns.

And it is proving successful in slices of Asian, African, and Latin markets whose members emulate American media patterns.

But it is a “social network architecture in a box” that does not match the very clearly different electronic social networking behavior of more than 5 Billion newly wired global citizens.

Fly to Asia or Africa.  Find a street vendor jailbreaking iPhones.  See what the users do with that.

Then take a second…non-American…look at Mountain Lion.

If Apple is targeting the largest growth markets in the world, then Mountain Lion is too complex, and makes too many American assumptions about user communication behaviors to be automatically successful in the mobile markets that are now 10-15 times larger than the entire American market.

Mountain Lion is overbuilt for most of the high-volume scale social computing in the new markets.

And while it is a great interface for American social networking audiences – its default design style does blend personal and public spaces in the device, and, as it interacts with the social media sites of the world, may create unintended consequences.

My language in last week’s post might have been hyperbolic, and my writing muddy.

And like all humans, I cannot predict the future.

But I do stand by my data-based conclusions on the wonderful, but risky future revealed by Mountain Lion.

Marty Anderson
Senior Lecturer in Management