Why Apple doesn’t do “Concept Products”

gm-firebird.jpg

Everyone has a favorite “concept car.” Whether it’s the ’54 Firebird, ’64 Stiletto, ’80 Epcot or ’88 Sunraycer, these “flights of imagination” all have one thing in common: they weren’t for real.

General Motors had no intention of selling these cars, or cars that were close in form or function. They were largely “concepts” detached from reality or economics. It’s even debatable if they have advanced the art and science of producing cars in ways measurable by subsequent sales. In fact, over the years, while GM was busy creating concept cars, its Asian counterparts were working overtime selling cars that real customers here and elsewhere actually preferred to purchase. After losing over $50 billion in the last three years alone and its debt closing on junk rating, analysts are now wondering if the once-mighty GM will be able to avoid bankruptcy at all.

The “conceptualizers”

Certainly, GM is not alone. Other technology giants like Microsoft and Nokia have also had a penchant for concocting concept products that never see the light of day in the marketplace. Bill Gates & Co, for example, have for years been showing off all-digital concept products from kitchens and mediarooms to bedrooms:

future-bedroom.jpg

One of the latest Microsoft concept products is Surface. Microsoft first announced this bathtub-size “product” in 2007 and promised to ship it by the end of that year for nearly $10,000. Hotels and casinos were cited as early adopters. The product never shipped in 2007. So far the only public sightings of Surface have been a unit at Harrah’s iBar and 12 AT&T cellphone stores. To confuse matters, Microsoft is also rumored to position Surface as an interface to its pricy, enterprise-oriented BizTalk Mapper modeling/rules engine platform and recently demonstrated the same touch interface wrapped around a 3D surface in Sphere.

ms-surface2.jpg

Another flashy concept product is the Nokia Morph, the self-cleaning, self-aware, self-preserving, self-charging, semi-opaque and semi-flexible mobile device that the company hopes to integrate into handheld devices in seven years. (This from a company that hasn’t even been able to answer the multi-touch iPhone challenge in nearly two years.)

nokia-morph.jpg

Why bother?

It’s quite easy and fun to dig up “concept products” that really have no hope of turning into real, shipping products. Why then do commercial entities bother to produce them often at great expense?

Although Nokia and Microsoft gave us an endless supply of concept products over the years, they haven’t produced, for example, anything like the TiVo, the iPod, the iPhone, OS X, the iTunes App Store, or created brand new user experience paradigms, transformed calcified markets, captured the imagination of people, and so on. They didn’t have the organizational and intellectual discipline to go from concept to product.

As a test, it’s hard to remember a single groundbreaking or even a moderately inspiring product that actually shipped during Nathan Myrvold’s long reign as the head of research at Microsoft. That hasn’t apparently dampened the adulation he gets as a billionaire genius jetting among the world’s glitterati today. But there does appear to be a weak correlation between a company’s ability to churn out concept products and its ability to design, manufacture and profitably sell products based on those. So why bother indeed?

Corporate image maintenance? Design experimentation? Employee morale boosting? Market-direction manipulation? Simple trial and error? Marketing ploy? Many such reasons are often cited. But are they sufficient and commensurate with real or imagined benefits?

As a contrast, let’s take the outfit that has been voted as the “most innovative” company by BusinessWeek and Fortune many times, Apple. Hasn’t Apple produced in the late ’80s perhaps the canonical concept vision in technology, the Knowledge Navigator?

knowledge-navigator.jpg

Yes. And that was the last such concept piece coming out of Cupertino, certainly since Steve Jobs returned to the company in 1997. Why hasn’t Apple, the most innovative and visionary company in computing, produced a single concept product or vision in over a decade? Because, to paraphrase Jobs, real artists ship.

What’s wrong with Apple?

Why would a commercial entity like Apple produce a concept product? Apple is likely generating more concept products and visions than any other technology company for internal use. When Apple wanted to get into retail stores, for example, Jobs had Ron Johson build a fully-functioning, real-size prototype and tore it down at the last minute to rebuild a new one. Why didn’t Apple release the “concept store” to the then-deeply-skeptical press in order to “demonstrate visionary leadership”? In a similar situation Microsoft likely would have.

Product design, above all, is a bet. Apple understands this better than any other company. In iPhone: The bet Steve Jobs didn’t decline, I explained just what a huge bet the iPhone project was to Apple in 2005. It was a bet-the-company kind of bet. One that Nokia, which has sold hundreds of millions of phones over many years, never took. Neither did Microsoft. They would just as well release annual concept products to the public in order not to go through the pain of taking a bet.

Apple bet the company to single handedly change the industrial design of mobile devices, how we interact with them, the balance between carriers and manufacturers, mobile application vending, etc. Indeed, it simply redefined what a mobile device is to become. Apple did this not with a concept product, but by betting its own billions on a shipping product. This, of course, is nothing new to the company that also gave us Apple II, Macintosh, iMac and iPod…all without concept products.

Doesn’t Apple get it? Aren’t concept products the ultimate sign of getting and shaping the future?

Real artists ship, dabblers create concept products

Pretenders don’t quite understand that design is born of constraints. Real-life constraints, be they tangible or cognitive: Battery-life impacts every other aspect of the iPhone design — hardware and software alike. Screen resolution affects font, icon and UI design. The thickness of a fingertip limits direct, gestural manipulation of on-screen objects. Lack of a physical keyboard and WIMP controls create an unfamiliar mental map of the device. The iPhone design is a bet that solutions to constraints like these can be seamlessly molded into a unified product that will sell. Not a concept. Not a vision. A product that sells.

It turns out that when capable designers are given real constraints for real products they can end up creating great results. In Apple’s case, groundbreaking products like the iMac, the iPod and the iPhone. Constraints have a wonderful way of focusing the mind on the fundamentals, whereas concept products can often have the opposite affect.

Concept products are like essays, musings in 3D. They are incomplete promises. Shipping products, by contrast, are brutally honest deliveries. You get what’s delivered. They live and die by their own design constraints. To the extent they are successful, they do advance the art and science of design and manufacturing by exposing the balance between fantasy and capability.

But, concept products never killed anybody

Perhaps. But they can sure lead designers astray. Concept products grant designers a break from constraints, economics and, ultimately, reality. The internets are full of concept phones, for example, that bend and morph, change functionalities and appearances, weigh nothing but defy breakage, project ethereal 3D images, seem to communicate at the speed of light and laugh at material science limitations of ‘ordinary’ phones:

conceptphones.jpg

How else are we going to advance product design, you might ask. Not by pretending that there’s free lunch for designers. Designers shouldn’t be encouraged to simply assume somehow constrains magically will disappear: mobile devices, for example, will somehow be powered by Herculean power sources that then make possible most of the other flights of imagination found in a typical concept phone.

At the end of the day, we have to confront the question of why companies like Nokia can sell hundreds of millions of phones and produce many concept products, but it takes Apple — a company that doesn’t do concept pieces — to shatter the market with a single product introduction.

Commercial entities have no advantage in releasing concept products the likes of which they hope to subsequently sell. If the conceptual piece truthfully captures their “best” it can only tell their competitors how advanced they are and where they fall short. If it camouflages their true capabilities in an effort to mislead their competitors, then what value is it to others? In fact, the intention to mislead competitors is really the only effective reason for a commercial entity to publicly release concept products.

Apple would gain nothing from telegraphing its intentions and capabilities by releasing public conceptual products. The company is being more than prudent by not displaying their unconstrained fantasies to competitors, media, investors or customers.

As counterintuitive as it may seem, this inexorably leads us to Kontra’s law:

A commercial company’s ability to innovate is inversely proportional to its proclivity to publicly release conceptual products.

189 thoughts on “Why Apple doesn’t do “Concept Products”

  1. Pingback: Spirit of Siri at Apple 25 years ago « counternotions

  2. Pingback: Apple’s hardware “dilemma” « counternotions

  3. Pingback: Why Apple doesn’t do “Concept Products” « Oh look! A shiny sparkly thingy!

  4. By basing your entire argument 100% on just ONE COMPANY which happens to be APPLE you are just pointing out the fact that your universe is as big as Apple. If you can’t fell the beauty, humanity, individuality, ridiculousness and abstractness of even the stupidest most outrageous public concept ideas/products which made individuals and companies crumble – you are a perfectly shaped consumer for the company you adore. Yes that makes your article and you bland, uninteresting and predictable but it is also completely normal, accepted and OK.

  5. Hey just wanted to give you a quick heads up. The words in your post seem to be running off the screen in Ie. I’m not sure if this is a formatting issue or something to do with internet browser compatibility but I figured I’d post to let you know. The style and design look great though! Hope you get the problem fixed soon. Cheers

  6. Pingback: Forget Your MBA: A Framework for Being a Manager in a Creator Culture — Behind Companies

  7. Pingback: Real artists ship « Interesting Tech

  8. Pingback: To concept or not to concept…… « lotech blog

  9. Such constructions would rarely be used in a journal article but may be used for quotations in reviews, letters, and other documents.In the first example, the word asthma is used incorrectly as an adjective and, because the increase in prevalence is the topic of the sentence, this phrase is better placed at the beginning.

  10. Pingback: The 25 Most Notable Quotes in Tech History

  11. Pingback: Top 25 Tech Quotes « Cenetric, Inc.

  12. Pingback: Apple’s 1987 Vision for the Future, It’s Here « Nils Geylen

  13. Hello from Germany! May i quote a post a translated part of your blog with a link to you? I’ve tried to contact you for the topic Why Apple doesn’t do “Concept Products” « counternotions, but i got no answer, please reply when you have a moment, thanks, Gedichte

  14. Pingback: Hymnos – In Wirklichkeit Gar Nicht Anwesend » Real artists ship.

  15. Pingback: Real artists ship!

  16. Kontra
    You seem to have tolerance and patience of heroic proportions!
    I could not bite my tongue resisting the urge to trample on the many many know-nothings who casually challenge your 95%++ carefully considered assertions.
    I cannot abide people who can look well enough, but who never seem to see.
    Kudos to you Sir!
    Consider me a regular in future.

    Chandra C

  17. Pingback: Concept Products—A Lie? | Neverland

  18. Pingback: Tablet innovation race II | precious forever

  19. I followed Microsoft through several iterations (3.0, 3.1, etc…) of “Windows”, as they were promising future products that never saw the light of day in the marketplace. Sure, they crashed a lot, but damn it they were NEW!!!

    At the time, we referred to this stream as VAPORWARE, each promising to fix the problems with the current P.O.S.

    And then I found the Mac and never went back.

    http://www.boskolives.wordpress.com

  20. Pingback: 2010: The Year of the Tablet « Beyond Moore

  21. Pingback: Top 25 Quotes in Tech - Windows 7 Center Forums

  22. Pingback: Random Walk down the Digital Valley » Product development and innovation

  23. Pingback: The 25 Most Notable Quotes in Tech History | Technologizer

  24. Pingback: new iMac + 'magic' mouse - Page 3 - DesignersTalk

  25. Pingback: Tom Conlon Fans » My Shared Items: Week of October 7th, 2009

  26. Pingback: HCI Blog » Real Designers Ship, Dabblers Create Concepts

  27. Pingback: The Weekender: April 24 : i tell stories

  28. Pingback: Design Sojourn | Strategic Industrial Design Blog » Are Concept Products a Lie?

  29. Pingback: Do concept PCs such as Lenovo’s Pocket Yoga help or hurt? - New Technology Online

  30. Pingback: Innovation made by Microsoft « bamaru.com

  31. Pingback: Noted: Your coffee maker. Running Windows. Again. « counternotions

  32. Looks like Kontra skipped 6th grade English class the day the “split infinitives” lesson was taught.

    Innovation = invention, not sales generation. There are certainly times when innovation occurs, but the public does not adopt it on a large scale. This happens often when innovation evolves a product beyond the least common denominator’s ability to comprehend it.

    What Kontra meant, perhaps, is:

    A commercial company’s ability to develop widely adopted products is inversely proportional to its proclivity to display its conceptual products publicly.

    And I still don’t agree. Microsoft has a more widely adopted, more profitable product than Apple (or anyone else) will likely ever have.

    There’s another rule in business that says the true innovators never reap the rewards of their innovation. It is the clever imitators who prosper. Microsoft’s entire history of products are largely imitations of other company’s products, companies who took a huge risk publishing a truly new product. Successful Asian companies have nearly perfected this approach to business.

    They watch for innovative products, analyze what works and doesn’t work about the product, then build an improved imitation.

    Our intellectual property system is flawed in this way, as it rewards the imitators instead of the inventors.

    Apple is not an innovator. They are a clever imitator. They were very late to the mobile game, studied what worked and didn’t work about existing products, then built an imitation with some improvements.

    If anyone deserves credit for invention or innovation in the smart-phone device segment, it is Jeff Hawkins, who spent years researching and considering the form factor which would best serve humans for information management.

    Everything after the PalmPilot has been evolution of the same product. The iPhone is just another evolutionary step on the road of converging mobile devices into one device. It’s been pretty well understood by anyone with any sense of vision, for at least a decade.

    Real artists follow their convictions and build works of art, which revolutionize the way people think, without regard or consideration of commercial success.

    Sell-outs ship. (and count beans).

    • As a *real* artist and also a real entrepreneur, I disagree. *Real* art isn’t created in a vacuum, it always stands on the shoulders of what came before. There’s a big difference between immitation and creative invention that synthesizes elements from the past.

      You can’t compare the Asians’ mastery of lean manufacturing techniques and JIT, low cost supply chain management, with inventors who use their creativity to improve upon old ideas or use them as a starting place to go in new directions.

      While it’s true that you can’t really measure the intrinsic value of art with commercial gain, that’s not what Jobs meant by *Real artists ship.* He meant that real artists create something of value that can be offered to people in the real world. I’m sure he also meant to include those inventors who brought their creations to market, but flopped — as well as those who succeeded. No one can know beforehand whether they have a hit or miss.

      How can an artist build works of art which revolutionize the way people think, without actually finishing it and offering it to the world?

  33. Pingback: Una farola que florece

  34. Pingback: ¿Por qué Apple no crea "productos conceptuales"? [eng]

  35. Intosh: “Here’s one Apple ‘concept’ recently canned”

    If you sell it it’s no longer “concept.”

    You and I have no factual knowledge as to why the Mini was introduced, what tactical or strategic purpose it might have served and whether it was successful for Apple in that role. We know one thing though, it was sold for a price, and I don’t think Apple lost any money on it.

  36. Regardless of whether the black box inspired the iPhone or not, the release of the concept spawned inspiration and concepts of what could be for those at the bottom of the pyramid in the developing world.

  37. Rob: “Microsoft has for its entire history no commercial interest in manufacturing HW.”

    Not any longer: XBox, Zune, Surface and soon ZunePhone. I have recently covered this schizophrenia in Clash of mobile platform strategies (1): Microsoft’s schizophrenia

    “All the companies you criticize know how to ’ship’ products and that involves understanding and designing successfully within constraints.”

    Well, if we learned anything from the iPhone, all those companies did not ship products that involved understanding, neither were their designs successful: people hated their cellphones.

    “Also wouldn’t you agree that the concept phone from BenQ-Siemens that you show in your article (codename Black Box) was clearly the ‘inspiration’ for the I-phone?.”

    No.

  38. Great article, good discussion.
    You ignore however that for the large part that Bill Gates, Comdex and WinHec visions were trying to influence the OEM partners – Microsoft has for its entire history no commercial interest in manufacturing HW. How many cool concepts PC’s or devices ever came out of Dell, HP, Gateway, IBM/Lenovo, Toshiba etc?, answer ‘NONE’. Microsoft for many years and still to this day is trying to help OEM’s and the whole PC industry get the kind of focused design execution that really only Apple has had the luxury to do, (as it does the HW and SW.)
    I’m afraid the “Design is born of constraints argument” you make is poor. All the companies you criticize know how to ‘ship’ products and that involves understanding and designing successfully within constraints. The I-phone was a Version 1.0, which essentially means you create the constraints through your appetite for project duration, performance, manpower, cost, engineering innovation, risk tolerance etc. Really the game is about picking the right set of constraints to bow to, and that requires incredible vision and lots of hard work. Lots of people have vision and it often feels like concept products, are often bits of vision leaking out of corporations that don’t have the convictions, organizational structure, or resources to execute them.
    Also wouldn’t you agree that the concept phone from BenQ-Siemens that you show in your article (codename Black Box) was clearly the ‘inspiration’ for the I-phone?. That concept design was released just after BenQ-Siemens Europe closed shop and they decided to share the concept with the community anyway.. (cool) Perhaps their inability to get corporate funding or whatever prevented them from executing was eventually the reason for their demise, they clearly had some vision.

  39. Pingback: The Gungle – Counternotions

  40. Pingback: Why Apple Keeps Secrets | *Jozzua

  41. They didn’t have the organizational and intellectual discipline to go from concept to product.

    That line that sums up the entire piece. Design, disconnected from an organization committed to the realization of design (as opposed to sales) will inevitably be comprimised in the path to product.

    GM provied the classic example in the 80′s, where design was really a matter of suggestion. Once the enginering & manufacturing folks go their hands on it, they’d do whatever they wanted, and that’s what would ship, with no further input or modification from the concept folks.

    Needless to say, they shipped some really ugly cars. And, ironically enough, their sales started to decline.

  42. Pingback: Why Apple doesn’t do ‘Conceptual Projects’ at Interaction Design Umeå

  43. Pingback: markhigginson.com/blog

  44. Pingback: Concept Products | Project Oriel

  45. Pingback: Apple’s 1987 Vision for the Future, It’s Here

  46. Pingback: Does Apple do Conceptual design? Sure, but we’ll never see it | Teknobilim

  47. Pingback: Why Apple doesn’t do “Concept Products” « The New Blog

  48. Pingback: 为什么苹果不做“概念设计”?---Jary's design,ALL about HCI,UX,GUI,information,Brand

  49. Pingback: Does Apple do Conceptual design? Sure, but we’ll never see it » Coolest Gadgets

  50. Interesting article. But while your premise is sound and informative, your example of GM approaching bankruptcy due to conceptual design is inaccurate and misleading.

    Concept design isn’t killing GMs profit margin. What is are the billions they are on the hook for in retirement, profit sharing, and other concessions made in union contracts.

    These alone will come to fruition in the next few years which has prompted many to say that GM isn’t in the car business anymore, they’re in the employment benefits business. And that’s a business model that’s unsustainable.

  51. Pingback: Concept vs Reality (or, working together?)

  52. @Kontra: Regarding your comment about iPhone sales in Japan:

    Here was my reply:

    “Intosh Says:
    Thu, Aug 14, 08 at 1:37 AM

    Kontra: New product release usually causes such surge; it’s notunheard of. This is especially true for an Apple product, which is generally much hyped and also due to a religious fanbase. If that trend is sustainable, then I’d be impressed.”

    This is the latest article in the WSJ:

    “Apple’s Latest iPhone Sees Slow Japan Sales”

    http://online.wsj.com/article/SB122143317323034023.html

    So much for that “advanced and revolutionary” phone.

    ENOUGH SAID.

  53. Pingback: Are Concept Products a good idea? « Ideas make the world go round

  54. Pingback: Heart of the Matter - Bytemobile Blog » Blog Archive » Design with Constraints

  55. Pingback: CrunchGear » Archive » Public concept products hurting the bottom line?

  56. Pingback: Remedy » Are Concept Products Worth It?

  57. Pingback: Apple 1987 Vision for the Future, It’s Here « NDNL

  58. Pingback: » The dangers of defining your products in relation to another’s | EverydayUX: Everyday User Experience by alex rainert

  59. Pingback: Links 2008-08-24 - Adam Crowe

  60. Pingback: Почему Apple не создает продуктов-концептов, ч.2 | alexmak.net

  61. Pingback: Почему Apple не создает продуктов-концептов, ч.1 | alexmak.net

  62. Pingback: Why : Let’s start by being open

  63. Pingback: Why Apple Doesn?t Do ?Concept Products? « Sundials

  64. Pingback: i-mode creator: iPhone “cannot be produced by Japanese manufacturers. Never.” « counternotions

  65. Good article, and discussion. I must be a little contrarian to Kontra however.

    The need and success of concept products depends on what type of business you are conducting, and the goals you are trying to achieve. I see concept products as a form of disclosure of progress along a technology roadmap. Confidentiality v Demand Stimulation balance very differently depending on the type of business.

    For example, in University and other Research Labs, virtually everything we see them produce is conceptual. Patent applications and publications in respected journals meet their objectives of drawing further investment, more research grants, and licensing income. Enough detail is released for someone else to replicate it. That is their business and goal, with a timeframe for return in decades.

    But the juiciest stuff nearer to market gets tied up in lucrative secret developments.

    A provider of intermediate products, such as an Intel, is somewhere in between. They don’t provide enough detail for their chips to be replicated, but certainly enough for the chips to be designed into the next 4-5 years of products.

    Also, while they can demonstrate their technology roadmap to their customers under NDA to stimulate some demand, they often go over their heads to market to their customers’ customers. This helps them be viewed as more than a commodity and is the lasting success of the “Intel Inside” campaign. Microsoft is trying that now with its automotive products.

    As a provider of consumer products, Apple needs to keep confidential its technology and products because a competitor could steal and copy them. With computers, Apple is attacking Microsoft’s dominance with innovative and better products. With iPods, Apple is trying to remain dominant with products a year or two ahead of the competition. With iPhone, Apple entered a new market with deep-pocketed competitors.

    I have no doubt that Apple shared concept products with partners in the year or two before releases of these new platforms, but kept them strictly under NDA.

    Still, Apple has been more forthcoming of its product developments, again to stimulate demand, but more to prevent losing the customers. So the early release of information about Leopard was to prevent customers from buying a Vista pc while Leopard was being developed, and the early release of information about iPhone Software 2.0 was to prevent customers from buying a competing smartphone until release. Even though the Apple product is better, if the customer spends their budget on the competition before Apple’s product is released.

    So Apple pulls back a little of its 1 to 2-year lead on products to show customers what is coming in the next 6 months to a year, because that is their buying cycle.

  66. I would expect Nokia to have marketshare over Apple, they have been selling smartphones for more than a year yes?

    Some people aren’t getting the whole concept thing. A conceptual product is one that doesn’t ship. No one is saying that Apple can’t and has never failed on a product it has produced. What Kontra is saying is that Apple doesn’t unveil test products to gauge reaction. It unveils real products.

  67. Pingback: Nissan Mori : 2strokebuzz

  68. Pingback: Why Apple Doesn?t Do ?Concept Products? « Hcherat’s Weblog

  69. Pingback: Why Apple Doesn?t Do ?Concept Products? « Song Lyrics

  70. Pingback: ProjectX Blog » Blog Archive » Xlinks - 20 / 08 / 2008

  71. Pingback:   Espen Herseth Halvorsen  

  72. Pingback: Castle104 Blog» ブログアーカイブ » アップルがなぜコンセプト製品を作らないか

  73. Pingback: Why Apple Doesn’t Do “Concept Products” | Urban Mainframe

  74. Pingback: アップルはなぜコンセプトモデルを造らないか « maclalala2

  75. The Myth of Market Share (Wharton marketing professor J. Scott Armstrong):

    We’re not saying companies shouldn’t pay attention to their competitors; they might be doing reasonable things that you may also want to do. What we’re saying is that the objective should not be to try to beat your competitor [MARKET SHARE]. The objective should be profitability [GP%, ROI,ETC]. In view of all the damage that occurs by focusing on market share, companies would be better off not measuring it [LOOK AT PROFIT MARGIN FOR MOTOROLA].

    NOW HAVE A LOOK AT THIS AGAIN

    “I don’t know when people will stop equating market share (whatever that is) with profitability. Motorola sells many more phones than Apple. Dell sells many more PCs than Apple. Yet when it comes to profitability, Motorola and Dell look like a joke:

    MOTOROLA
    market cap: $22.40 billion
    revenue: $33.99 billion
    gross margin: 29.18%
    profit margin: -0.09%
    employees: 66,000

    DELL
    market cap: $50.8 billion
    revenue: $62.49 billion
    gross margin: 18.83%
    profit margin: 4.76%
    employees: 82,700

    APPLE
    market cap: $158.8 billion
    revenue: $30.80 billion
    gross margin: 34.08%
    profit margin: 14.94%
    employees: 21,600

  76. Pingback: Top Posts « WordPress.com

  77. Paul: “of course Microsoft Surface is a product, not a concept”

    Perhaps I wasn’t clear about that above: I gave the example of Surface to underline how a “vision,” if you will, evolves into a concept product, beta as you call it, and then to an amorphous as-yet-undelivered business proposition all over the map from a very pricey enterprise showcase at $10K to a completely different form factor in Sphere (yet another concept product) to insinuations by the company of consumer-level derivations. Again, a year and a half later, you can still count the number of Surface “products” shipped with your own digits.

    If you really want to compare AAPL to NOK, revenue would be a dumb indicator:

    APPLE
    market cap: $158.8 billion
    revenue: $30.80 billion
    gross margin: 34.08%
    profit margin: 14.94%
    employees: 21,600

    NOKIA
    market cap: $94.5 billion
    revenue: $81.28 billion
    gross margin: 35.65%
    profit margin: 10.52%
    employees: 117,212

    In other words, Nokia’s revenue and employee count are 2.6X and 5.4X higher than Apple’s, but Apple’s market cap is 63% and its profit margin nearly 50% higher than Nokia’s. You can do the math and figure out which one’s a lean and mean profit machine.

    As to your contentions regarding who’s more “innovative,” I’d ask you to consider who’s imitating whom, starting with Nokia’s sudden (re)focus on ‘smartphones’, its attempts to get into the U.S. market, its iTunes wanna-be Ovi portal, the OS X wanna-be Symbian move, its belated discovery of multi-touch interfaces, etc.

    I’ll ask you again, lots of ‘innovation’ is taking place in the mobile device business, spearheaded by the introduction of an actually shipping product called the iPhone, but where has been Nokia, the company that has given the world hundreds of millions of little plastic toys over the last decade?

  78. Pingback: Random Stuff for Friday

  79. Deanston: “I assume you categorize every shipped product as non-concept”

    Yes, once you sell a vision, it’s no longer conceptual, it’s a product.

  80. Nelson: “the price for this always betting behaviour is the risk of failure. See Cube, Newton, …”

    Sure is. And that’s the price of success. That’s how winners learn what no to do. Unlike the risk-free nature of concept products, the fear of failure concentrates the mind on optimal/balanced solutions.

  81. Pingback: Links Will Eat Themselves | Programmer's Log

  82. Although your final conclusion is a bit too general, I assume you categorize every shipped product as non-concept, even ones that proved only experimental. There are a ton of niche failures in the market, some never seen again, and some, like the Cube, I supposed evolve into new forms.

    The clearest parallel I can draw (excuse the pun) is sketch book vs. finished painting or game character in the artistic design process. There may be a ton of great ideas in the sketches, but only the final rendering in the CG that made it onto the film matters. Or more esoterically to poetry. The greatest poems usually are not in free verse, because it is within the constraints of rhyme and meter and form that true beauty and creativity stand out.

    Perhaps this concept can also relate to Linux? The trouble with its image, I think, is that Linux always appears to be still a concept needing to prove something. The Linux developers are always creatively applying it to every gadget and field imaginable, but instead I think what average consumers really want is just a simple but elegant low cost computer that does not seem too foreign and works like they expect, which are requirements that on the surface appears boring to all but the most serious professional designers.

  83. You’re right, it is drifting too far. Just one more point…

    I’m curious as to how you could say these things. What could you possibly be basing your growth expectations on?

    Lets narrow this down to the smartphone market, then. The iPhone’s popularity spiked last year at about 27% against RIM, Palm, etc. 27% is pretty impressive… but between Q3 and Q4 of last year, it lost over 8%, to hit a low of about 19.2%.

    This is significant, because it clearly shows that people “get over” the iPhone quickly. There’s no numbers to suggest that the iPhone’s market share will continue to increase this year at all (right now it’s managed to get back up to around where it was at the the peak last year). As a matter of fact, the numbers I cited in the last paragraph suggest that once this new product “rush” is over (which it effectively is), Apple will dip back down below the 20% mark in North America. Unless they manage to release a version of the iPhone with cut-and-paste or something pretty soon (iPhone Nano, maybe?), it’s unlikely they’ll be able to sustain these numbers.

    And that’s based upon actual quarterly market trends, what is your growth assumption based on?

  84. Pingback: De l’idée au produit « Hot Chaud

  85. Pingback: From: Digg to: Apple to: Real Products vs. Concept Products « Grabriel Ayuso

  86. Shane: “The iPhone, though, will never get close to pretty much anyone else (in market share… or rather, percentage of devices sold).”

    I don’t know how you get to say these things. Apple has already far surpassed the incumbent Palm and Motorola in the smartphone market it competes in. It’s second only to RIM. I fully expect Apple to command 25-30% of that market in the current quarter.

    Anyway, this is drifting too far from the focus of this essay.

  87. I’d be interested to see where the figures for the Xbox come from.

    It should be noted, since you mention hardware failures, that Apple devices have a bad habit of that as well. I remember lines of people returning horribly scratched generation 1 iPods. They were plagued with horrible hardware issues, including (but not limited to) peeling of the outer coating, clouding of the digitizer, and separation of the display glass from the base.

    It seems that with the recent cracks that 3G iPhones are developing, we should be in for another round.

    Which is not to say I hate Apple. I use an Apple display, best damn screen I’ve ever owned. Simply beautiful.

    You’ll have to explain how the Zune would be an embarrassment to Microsoft. Because you say it is?

    They certainly don’t seem to think so.

    And neither would I. Microsoft plunged into a “calcified” market, that Apple holds a vast majority of, and came out above all of their other competitors. Microsoft may not come close to Apple’s longtime foothold on a market that they basically pioneered, but no one else is coming close to Microsoft.

    That’s pretty significant, especially if you think the iPhone’s tenuous hold in the phone market is a great success story.

    The Zune player will simply never get close to the iPod.

    The iPhone, though, will never get close to pretty much anyone else (in market share… or rather, percentage of devices sold).

    That’s what happens when you go into a market that you have no previous experience in. The Zune player is doing comparatively as well in the mp3 market as the iPhone is in the mobile market. Apple is just better at buzz marketing.

  88. Shane: “$500 million on the development and launch of the Xbox”

    The most conservative figures are $5-6 BILLION spent so far on XBox, I’m not even sure that includes the $1+ billion on the recent hardware-failure write off.

    “8% of the market is a failure for Microsoft”

    If you still think Zune is not a failure then I don’t know how we can even be on the same planet. Zune is an embarrassment even to Microsoft.

    “Apple is, at it’s core, a software company”

    Apple does software to sell hardware, where the vast majority of its profits has always come from, period.

  89. Again, the Xbox is not a failure. After some digging, I found numbers on CNET that suggest that the company spent about $500 million on the development and launch of the Xbox. I imagine if we were able to discern Apple’s numbers on the iPhone, they would be similar (considering the significant hardware and software hurdles that they faced)… if not higher, considering the lofty sales goals they set.

    Hypothetically, if we’re talking R & D costs, it could be argued that the iPhone probably hasn’t actually made much in the way of profit for Apple either… but since I don’t have any numbers to back it up, I won’t attempt to make such an argument.

    The Zune player holds an 8.7% market share (there I go throwing around that crazy term again), while Apple holds 70% in the mobile music market. So 8% of the market is a failure for Microsoft, but the same rules don’t apply for Apple (see my original comment)?

    And don’t forget, Apple is, at it’s core, a software company (Mac OSX, iTunes, Safari, etc. etc.). That’s direct Microsoft competition. iTunes music store, iPhone App store, these are all huge profit centers for Apple (I imagine larger than anything else, when you work it all out). Jobs is saying that the Apps store (a software product) could be a $1.2 billion business by 2009! Hardly a trifle in the grand scheme of their business.

    Not to mention the recent crash-and-burn of MobileMe, which was their direct competition with Exchange and Outlook. These don’t sound like the endeavors of a company that counts on making the bulk of it’s profit through hardware.

    Sounds to me like they are direct competition after all.

  90. Shane: “Microsoft, a direct competitor to Apple”

    Other than its peripherals (I’m a devotee of their IntelliMouse), Microsoft doesn’t really sell hardware, where Apple makes the bulk of its profits. When it does in competitive consumer markets, with XBox and Zune, the company has been pretty spectacularly failure prone.

  91. Kontra: New product release usually causes such surge; it’s notunheard of. This is especially true for an Apple product, which is generally much hyped and also due to a religious fanbase. If that trend is sustainable, then I’d be impressed.

  92. Ah… I assumed, based upon you’re authoritative economic tone, that you knew what market share was. My mistake, I’ll define it…

    Market share is the portion or percentage of sales of a particular product or service in a given region that are controlled by a company. If, for example, there are 100 widgets sold in a country and company A sells 43 of them, then company A has a 43% market share. You can also calculate market share using revenue instead of units sold. If company A sold widgets for a total cost of $860 and the people in the country spend a total of $2,000 on the same widgets, then the market share is $860/$2,000 or 43%. The two different methods of calculating market share won’t always provide the same answer, because different companies may charge slightly different prices for the same type of widget.

    Interestingly absent from your list was Microsoft, a direct competitor to Apple. Allow me to break down the numbers:

    MICROSOFT (MSFT)
    Market cap: $254.83 billion
    Revenue: $60.42 billion
    Gross Margin: 80.8%
    Profit Margin: 29.3%
    Employees: 60,000

    Now THAT’S embarrassingly profitable.

  93. Intosh: “people living in Europe and Asia laugh at you”

    Here’s what really happened according to AppleInsider quoting Japanese tech business journal Tech-On: The iPhone carrier in Japan, SoftBank secured 215,400, more than half of the 391,500 new activations in Japan during the month of July.

    “We believe our large net growth was an iPhone effect,” SoftBank representatives said.

    [SoftBank competitor KDDI] too credited the iPhone 3G launch with the unusual shift. “We are accepting the fact, considering that our handsets weren’t attractive enough,” KDDI’s PR group said. [emp. added]

    Apparently, in the most sophisticated mobile market in the world, people are smart enough to see that it’s not just a matter of piling up features.

  94. Shane: “A profit was posted for the 2008 fiscal year”

    That’s gaming division, including line items like Halo 3, etc. If you actually look at the billions sunk into XBox, it’ll take Microsoft 3-4 more years to just recoup that money, let alone make a profit.

    “You think Apple can sustain profits (if any) with less than a TENTH of the market they’re in?”

    I don’t know when people will stop equating market share (whatever that is) with profitability. Motorola sells many more phones than Apple. Dell sells many more PCs than Apple. Yet when it comes to profitability, Motorola and Dell look like a joke:

    MOTOROLA
    market cap: $22.40 billion
    revenue: $33.99 billion
    gross margin: 29.18%
    profit margin: -0.09%
    employees: 66,000

    DELL
    market cap: $50.8 billion
    revenue: $62.49 billion
    gross margin: 18.83%
    profit margin: 4.76%
    employees: 82,700

    APPLE
    market cap: $158.8 billion
    revenue: $30.80 billion
    gross margin: 34.08%
    profit margin: 14.94%
    employees: 21,600

    Apple is embarrassingly more profitable than any other PC company.

  95. Apple does concepts. The difference with other companies is that Apple actually releases those concepts and then they fell into obscurity.

    By the way, you USA people should try travelling outside your country a bit sometime. Acting as if the iPhone was cutting-edge device second to none just makes people living in Europe and Asia laugh at you.

    Nokia answered the iPhone “challenge” — it’s called market share. Nokia’s market share went from 38% to 40% in the last quarter.

  96. Microsoft has sunk billions into that money pit a.k.a XBox, which hasn’t made a dime of profit since its inception.

    That statement is false. A profit was posted for the 2008 fiscal year (admittedly, its first profit for the gaming division).

    The goal when creating the Xbox was long-term brand gains, not short-term profit, though. You think they won’t post larger and larger profits with a THIRD (almost 40%, actually) of the market they’re competing in? You think Apple can sustain profits (if any) with less than a TENTH of the market they’re in?

    That’s not even considering the fact that Halo 2 was the highest volume, fastest selling media of any kind when it was released, and Halo 3 was the highest volume console game of all time in pre-order.

    We don’t know whether or not Apple has made a profit on the iPhone though. One estimate shows a crazy margin like 50% per device, but since the cost associated with the proprietary display is not released, we have no idea of actually confirming that. Not to mention research and development. How many millions do you think Apple sunk into the iPhone? Apple set a goal of 10 million iPhones by the end of 2008, do you think that number is arbitrary? I doubt it. So far, by the way, they’re a little over halfway to that goal.

    Not to mention Microsoft has the business sector backing it up, a market Apple could only break into in their wildest dreams (and they’ve tried, those GS servers gained them I think .4% in 2004). It’s funny (to me, probably not to you) that Apple uses Motorola handhelds running Windows Mobile in their retail stores, to allow their sales people to roam around the store, helping people make purchases.

    That was a smart move on their part. If they tried to work with a company to develop the software needed on an iPhone to do that, the developer would give up in a week because of their NDA (this has happened, they tried to partner with Hewlett Packard once and HP gave up… not in a week though, to their credit)!

  97. Pingback: The Design/Engineering Balance - Michael Mistretta

  98. James: “Didn’t the HTC Touch have very similar industrial design and UI elements in the market before the iPhone?”

    In a word, no.

  99. Thibaut: “For the car industry, it’s a way to make people dream – a car company really sells dreams”

    Problem is you can’t continue to sell dreams and keep shipping crap, because…

    “Nokia is selling basic phones as much as Honda is selling commuting cars, they need to pump their brand a little so they are not automatically associated with the «default choice» of mobile phones.”

    …some other entity comes and blows up your made-up dreams with a real shipping products that delivers it: the iPhone.

    “but it doesn’t mean that because you ship you’re an artist aye.”

    Yes, you don’t get to be an artist if you can’t ship, but not everyone that ships is an artist. That is essential to understanding the centrality of constraint-based design.

  100. Didn’t the HTC Touch have very similar industrial design and UI elements in the market before the iPhone?

    Of course, it was built on a Windows Mobile platform, so sucked, but I think HTC certainly deserve credit for that bold design move.

  101. John: “[iPod Touch and iPhone] are nothing more than simple gimmicks that work.”

    Over five years after the iPod and nearly two years after the iPhone introductions nobody else has been able to come up with similar gimmicks to challenge Apple.

    “Now look at what Microsoft has done. Since Xbox and Xbox Live were introduced the gaming world has been sprinting just to try and keep up.”

    Microsoft has sunk billions into that money pit a.k.a XBox, which hasn’t made a dime of profit since its inception.

  102. Pingback: The Wren Forum » What a Concept!

  103. The work of Leonardo da Vinci largely consists of concepts, as in sketches and drawings of things never made during his time. Artists ship? Er … He spent decades on perfecting the Mona Lisa. Once finished, he didn’t bother to give it to the painting’s commissioner. Men-with-monetary-dreams ship. Artists create and conceptualise the future.

    That said, I wouldn’t say Apple doesn’t do concept. Apple is cool, but the pricing’s a real turn-off. A big fat humongous turn-off. Microsoft’s pretty cool too, and cheaper, so I’ll ride with them instead.

  104. I think (as a apple geek so don’t call me biased) that the things apple is coming out with are really up to par with concepts themselves. And I’m not just talking about the Iphone — the ipod video and touch are alone things that windows wouldn’t even dream of mass producing. I like your points.

    pacer521
    http://culturedecoded.wordpress.com/

  105. Pingback: hierzu gibts eigentlich doch nix zu diskutieren oder wenig « Heutenoch !

  106. Pingback: eclecticism » Blog Archive » Links for August 12th through August 13th

  107. Apple had a whole bunch of concept products in the past. The Pippen(with Bandai), the E-Mate, the Newton, OpenDoc, I’m sure there are nore too, thats just off the top of my head

  108. I can tell you exactly why Apple doesn’t produce concepts, fanboys. Unlike other companies, Apple is selling to a very specific group of people. All of their products look the same, act the same way, and are basically the same colors because they know their niche users are going to respond to that. Microsoft, Nokia, and auto companies have to market to a very broad group of people. The 20 y/o kid wants the car to be fast, soccer moms want them safe, and grandma wants it safe with a smooth ride. Trying to develop a product line that appeals to all these users is far more difficult than just marketing to artist and trendy people.

    Also, it’s been proven several times that Apple “borrows” rather than innovates. MacOS? Ya, Xerox had a OS with a windows GUI before them. iPod? Without iTunes it would be nothing more than a PMP with a touch-wheel interface. iPhone? Beyond multitouch there’s not much to it, in fact there are several other phones out currently that work far better as a phone, PDA, and camera at the same price point.

    Finally, Apple enjoys using their users to beta test their products. Release the iPhone without 3G, we’ll see how people respond, make fixes, then charge them again for the same device with a few new features a year later. This can also be seen in OSX, where point releases are treated as new OS releases along with a new OS price point.

    What I’m getting at is that concepts are great if you’re trying to gauge new market and general response, and until Apple realizes this and shows the non-faithful something that really innovates they will be nothing more than a niche hardware producer. Great for some, not for all.

  109. i love all the crazy mac people who comment. you can almost hear them crying in hysteria through their comments.

    apple was bailed out of bankruptcy by microsoft. they got into bankruptcy because they ran their business poorly; and there products did not compare to total package put forth by microsoft. microsoft is still on top and still leads the market.

    pricing, hardware interchangeability, and the BUSINESS sectors of the market have been there weakness. Name a prominent fortune 500 company dependent on apple products/services? okay, now do the same for Microsoft…(all 500).

    apple’s got good laptops, i like to surf the web on them and play with pictures. but don’t ask me to exchange virtual machines with it. A laundry list of professional/business oriented activities that apple products don’t work good in.

    hey, all the shiney white stuff coming out of apple sure does look cool though.

  110. Pingback: good ideas, poorly summed up | a crank’s progress

  111. Apple users are amazingly religious people.

    You talk about Apple in this article as though they are a behemoth in the computing industry that is more stable and innovative than Microsoft could ever HOPE to be. Like they step into a market and crush it, put all of their competition out of business, change the paradigm!

    This marketplace simply does not exist.

    Yes, Apple has an amazing market share in the mobile music market…

    …and that’s about it.

    Overall, they have around 8.5% of the PC market. This is due, partly, to their wildly disproportionate pricing. The high cost of their products is due to their huge margins. It stands to reason, then, that their huge margins are what keeps them afloat, because they have a less than 10% market share in every arena they compete in (again, with the exception of the iPod). They can’t compete on the traditional basis of cost per unit and making feature-rich products, so they make all of their products impractically pretty.

    Concept products are concept products because they are impractical. They make the pretty, cool thing, and then they scale it back to make it work in the real world. Apple doesn’t make concept products because the products they ship are impractical. They crack (see new iPhone), scratch (if you breath on them… see every generation of iPod), and are generally underpowered (based on price of comparable products).

    They didn’t change the relationship between phone manufacturers and carriers. They just made a special contract for them, that is (like everything else they make) overpriced. Everyone else still operates in the same way. It’s not a “paradigm shift” unless it’s a good business practice that other people follow. People want to emulate the look of the iPhone, not the contract and pricing structure. Apple has under 8% of the mobile market, which is just a little worse than their PC market share.

    Microsoft, on the other hand, decided to get into the gaming industry, a similarly “calcified” market. Everyone thought they were insane, but as of last year the Xbox has 36% of the market. And they didn’t do it by making an acrylic piece of artwork, they did it by making a superior system.

  112. I think concept products are like drawings/sketches that you never intend to finish. If you don’t intend to finish it, you get a sense of not having to do your best. Concept products (IMHO) are LAZIER than real products. While designers might want to make it as cool as possible, concept products have no risk, so why bother making it better than what’s already out there? Really, what good would a morphing phone do you anyway?

  113. Err… the iphone delivers so much balance that it’s battery life sucks, is that it?

    Frankly, iPhone sells to iPod users. People queue to buy iPhones because you can find a store selling Nokia every 100m.

    Gauge the market, not the queues.

    I was thinking of just skipping commenting this, because most of the stuff it considers “good” sucks, and the market thinks so too. It boils down to “if you, like me, thinks Apple products are great, here is the reason why”.

    All that’s left coming up with is the greatness. :-)

    Not to say Apple doesn’t have great products. Their decision to ditch MacOS, which powered all Macs for many, many years, and replace it with a Unix-based operating system was right on. Curiously, they did that at about the same time Microsoft launched their last great operating system.

    The iPod, as opposed to other products mentioned, is inarguably great.

    Most of the other stuff is great… for apple lovers.

    Get a grip.

  114. also apple’s innovation comes from making products accessible to the everyday person, take the first imac for example, it made computers fun. The ipod? the clickwheel is by far the best way to navigate your music library

    too often technology is considered the only face of innovation, when a huge part of innovation in the technology world is making that technology useable, something apple does by not focusing on conceptual designs.

    touchscreens, mobile internet, cell phones and mp3 players may be old technology

    but the iphones ability to “seamlessly” combine those are what make it such an innovative products

    awesome essay

  115. “How quickly we forget that the great Apple, a company able to “…to shatter (a US$150 billion) market” need Microsoft to save it from bankruptcy a bit over a decade ago.”

    What nonsense. That was effectively a loan that helped Apple at the time, but it did not “save them from bankruptcy.”

    Anyway, so what? MS didn’t have to do it. So they helped a competitor that went on to out-innovate them? More fool MicroSoft.

  116. U apple fans… Always dumb and will always be… From work to everything you work on… has something to do with Microsoft.. From ur Daily tissues to your hair gel.. Someone somewhere is using MS software to create these. And yeah! Almost forgot.., U guys love to pay ridicules prices for shity stuff cos u liked the Apple ad. Genius!

  117. Concepts are fun, concepts are R&D shown to the masses. A lot of times it can be waste of money but you can’t tell me nothing good has ever come from a concept. I’m feeling more of an Apple plug here than anything else.

  118. Apple Concept products exist, remember Apple TV? That’s more of a concept NOW than when it was being sold. Less so a concept I guess and more so just a memory.

  119. Pingback: Quote: Kontra « Mike Cane 2008

  120. Concept cars are not always about innovation. They are a fantastic way for designers to test the waters with new ideas. To show consumers what can be done with current and sometimes future technology.

    Many concept cars have been shown with millions of people slapping their heads in unison. But many have also been shown that has made the press and enthusiasts go wild. Two examples: The BMW XO (what was the silver car) failed miserably. It was a great presentation of what could be done, but it was never meant for the production line. The BMW 135Tii on the other hand gives a glimpse into the future of the 1 series lineup.

    Similarly, Microsoft Singularity gave those of us willing to actually learn about it a glimpse into a future far past what any competitor could do or was thinking about. It alone proves that Microsoft was thinking of a cloud computing and threaded environment well before the media caught on.

    Why did it never make it to consumers? Because the consumers (business world mostly) are not ready for such a change. Let’s face some cold hard facts: Apple didn’t have much of a consumer base to worry about when it ditched outdated software and developed OSX. The same cannot be said about Microsoft, as evident in Vista. What is the sole reason people don’t like Vista? It is different (it really isn’t, but this is about perceived difference, not actual difference). Business won’t adopt it nor will consumers because they do not want to relearn something.

    Why are the iPod Touch and iPhone so successful then? Because Apple rode a gigantic wave like they have before. They are nothing more than simple gimmicks that work. The technology isn’t groundbreaking or innovating. They simply got the right mixture of components to make a slightly above average product for a market saturated with crappy products. They dove into a market that had no competition. Why do I say no competition? Because why change the cell phone when you make so much money off the service?

    Now look at what Microsoft has done. Since Xbox and Xbox Live were introduced the gaming world has been sprinting just to try and keep up. Nintendo still has nothing close to the offering of Microsoft or Sony and the latter is only recently catching up. Microsoft did what Apple does so often. They infiltrated a market with an above average product where no products existed before (except Dreamcast online maybe). Hell even Steam has copied Xbox Live in more ways than one.

    So before you argue that concept products are worthless, remember that concept products do sometimes evolve into real products that sell (Office Gallery instead of Toolbars ftw) and the the market often dictates what sells, not the innovator/company.

  121. Pingback: nerdd.net | news and opinion

  122. I love the concept of the bendy moving cellphone. Ever since I saw a video of it a few years ago. I will totally buy one when it comes out.

  123. RR: “You are mistaken.”

    Thank you for the update. (The article above, however, was written a day earlier than this press release.)

  124. First, Surface is a shipping product. You can buy one if you have the money. I think Microsoft has said on several occassions that they’re looking into a more consumer version too.

    Also, Microsoft has some multi-touch whiteboard projects-slash-concept designs they’ve shown publicly too that are Surface-like but rather, of course, vertical.

    Now in terms of Apple, I have no idea what they do internally, but from multiple accounts I’ve heard that they’ve been experimenting with various Tablet concepts. And from what I understand it was from this group that several of the features you see in the iPhone came from.

    I can’t imagine a product company not exploring different concept designs.

  125. Pingback: brands and concept products « 1 + 1 = 11

  126. I agree with most of what you’ve said, but :

    1. You can’t apply Kontra’s law to every industries.

    Take the car example you used as in introduction : we’ve seen a lot of innovations in automobiles, yet they have a long tradition of showing concept cars. Sure, it could and should be more innovative, but I don’t think showing concepts is causing of their lack of momentum. GM is not going down because of concept cars. BMW, Mercedes and Nissan are pretty healthy and are big in concept cars.
    Concept products are displayed for one purpose only : communication opportunity. Affordable brand pumping. For the car industry, it’s a way to make people dream – a car company really sells dreams, not a vehicle that takes you from A to B (I’ll be happy to discuss about it with anybody who’s not convinced of this, elsewhere). You actually buy a vehicle, but if you are inclined to think there’s much more to this product than commuting, signing the check feels like a brain massage. Concept cars are a medium for this message : «we take care of your future, it may look like this, now while you’re on a cloud go buy our real cars», it’s not : «look at what you’ll be driving in ten years».
    Nokia is selling basic phones as much as Honda is selling commuting cars, they need to pump their brand a little so they are not automatically associated with the «default choice» of mobile phones.

    The Apple brand isn’t really weak these days, it doesn’t need this kind of medium to get out there. Probably because it has cojones and vision at the corporate level more than any other company right now. One day it might need it, who knows.

    If you’re interested with prospective design, check the work done at the Phillips Eindhoven design studio concerning future domestic life scenarios.

    2. I fear some readers would get a «concept products are bullshit » message.

    Concept products are essential to drive innovation, they are like torches you throw in the dark to lighten the path for your real products. Concept product are failed products by essence, they are developed with a totally different brief, you design them to discover what not to do for the products you’ll sell, and possibly one thing or two you could use. They help you create alternate realities where you could find undisclosed constraints that will drive your product development.

    As for the «Real artists ship» line. First : does Art has anything to do with computer industry design strategies ? Second : yeah, but it doesn’t mean that because you ship you’re an artist aye.

  127. Pingback: Passages: You're in a... » Blog Archive » Real Constraints

  128. As a software designer I take these words to heart:

    “…when capable designers are given real constraints for real products they can end up creating great results.”

    Well said! As someone that has to ship real products for a real company we live in a world filled w/real constraints. The best products are the ones that push back the constraint envelopes within the bounds of physical (and digital) realities.

  129. @Evegny – the Newton was a fantastic product, especially the 2K model. It worked really well. I only wish I could get a PDA half s good today (but the iPhone/Touch is getting close)

  130. Pingback: Por que Apple no hace productos conceptuales « Geek Mood

  131. And not a single word about the Newton? Not even in the comments?

    It would be appropriate to say that even real-products-that-are-concept don’t always work, and the Newton is a perfect example IMHO.

    So the bet on the iPhone could have been the ruin of Apple, and with high odds at that.

  132. Apple does concepts … only after they test it .. they burn them .. and burry all who worked on them .. IF they aren’t good for production. Until now there were no such things. Apple devs fear fire … and burying .

  133. ED: “bankruptcy a bit over a decade ago”

    Perhaps you could explain what the relevance of this is.

    I think most people, pro or con Apple, would agree that the resurgence of Apple after the 1997 comeback of Jobs is one of the most dramatic turnarounds in American corporate history.

  134. How quickly we forget that the great Apple, a company able to “…to shatter (a US$150 billion) market” need Microsoft to save it from bankruptcy a bit over a decade ago.

    I just love analysis based on myopic hindsight!

  135. Come to think of it I think Apple does concept products and the very smartly captures the problems and pain points associated with it give market exactly what it wants. Their ability to “execute” ideas as they are intended ate the main strength. eg. Apple TV, iPod shuffle.

  136. “Toyota’s Miata, which is going on 2 decades now, sprang from the forehead of a Toyota project manager who was given nearly free reign to design the British-style sportscar he always wanted to build. The Miata was and is a winner.”

    Toyota doesn’t make the Miata. Mazda does.

  137. @UKD

    Apple has never played the game of “features & options.” In fact, we might say the Apple way of designing is precisely the antithesis of that. Apple tries to eliminate options to focus on the essentials and their seamless integration. Apple sells balance, Nokia and other iPhone-killers yardage.

    Despite all you say, people line up to buy the iPhone, not Nokia phones. Pretty much every aspect of the smartphone market has been substantially altered by the introduction of the iPhone: multi-touch UI, screen size, virtual keyboards, WiFi, price, app store, mobile browser, sensors, carrier relations, multimedia playback, etc. Surely, Apple didn’t invent any of these, but no other company ever put together a mobile device that remotely has the balance of these components in a package that so many millions want to pay a premium to buy.

    The point of the essay above is that Apple didn’t do this by floating concept visions, like Nokia, they just went and did it. I think the results speak for themselves.

  138. There definitely is a US-centric strand running through this article (Apple shattering the mobile phone market – really?), especially with regards to Nokia not taking “bets”. As already highlighted, they took a huge gamble in the early 90’s by banking on shipping mobiles alone. The fact that 3G and unlimited data download plans were not readily available (combined with Nokia’s appalling marketing strategy in the US) meant that many of the features the iPhone has you drooling over have been available on several Nokia (and other) phones for 2 years to us Europeans/Asians. Yes a big screen and a touchscreen is nice, but one-handed texting is a big thing here – how long did it take the US to catch up with the rest of the world with regards to the txting bug? And what’s the point of having fancy finger gestures to zoom in on low-res pictures that due to a lack of flash require perfect lighting, with no focus to speak of? Once you’ve had a phone with an auto-focusing 5MP camera with flash that has become your actual camera, it’s a bit of a down-grade (and damaging to your pockets) to have to cart a digicam and a USB stick around as well as your iPhone.

    The 3G iPhone is *almost* on a par with the N95 Classic (still no video, no file manager, no proper bluetoothing, a piss-poor camera with no flash and no cut-and-paste, for starters), a phone which has been available for nearly 2 years now, so to say Apple have redefined the mobile phone smacks of Apple fanboyism. Of course the iPhone wins over the plaudits. Why? It’s simpler to use (although the lack of menu structure is a major failing once you start downloading lots of applications on the 3G model), better designed and far better marketed than its competitors at a time when the US is finally getting the 3G coverage it deserves.

    If anything, it’s Nokia who’ve taken the gamble, by betting that one-handed mobile phone operation is always superior to two-handed “walking around town looking like you’re playing with an expensive calculator” ergonomics. And it’s a daft gamble, as the leaks of their new touch-screen iPhone clone show – apart from Symbian Freaks the general public are always going to be more impressed with a simple touch-screen than a phone with a million options, most of which they have (thanks to Nokia’s poor marketing) no idea exist. A particularly fine example is the accelerometer – someone above wonders which other phone had this – well the N95 did, 2 years before people started queueing for iPhones. And they didn’t really bother letting even developers know about it. Stupid. (Nokia, not the commenter!)

    The comparison between Nokia’s bleeding edge (ie concept phones, Beta Labs) and Apple’s tried-and-tested approach is an interesting one. Apple has built up a reputation for reliable, simple to use devices which one bad concept device could ruin. The iPhone wasn’t really that big a gamble – all they needed was to get a touchscreen working with a basic but pretty phone (not a new concept, despite what is written above) and and the rest was marketing and branding (they managed to spin having GoogleMaps on a phone as their own innovation, FFS! And all that nonsense about “the whole internet” – got FlashLite working yet?). Let’s face it, for the conservative features it packed, there was never going to be much under the bonnet of the original iPhone that could fail. Holding back the release of the 3G model was standard Apple flame-proofing their backsides, checking they got all the tricky stuff (e.g. GPS) right. After all, GPS was something that took Nokia a year to sort out properly with firmware updates and Apple wouldn’t want a fiasco like that to tarnish their “reassuringly expensive” reputation.

    As something of an aside, here’s a great article on innovation in smartphones – snippet:

    If a new technology is invented, that’s an innovation. When innovative technology brings about large scale change in the world, only at that stage does it become a revolution. In the case of products aimed at individuals, revolutions normally only happen when the innovative technology becomes cheap enough that anyone can afford to buy it.

    Real technological revolutions in consumer products happen a million miles from the cutting edge, and products at the cutting edge are a million miles from any revolutions.

  139. Toyota’s Miata, which is going on 2 decades now, sprang from the forehead of a Toyota project manager who was given nearly free reign to design the British-style sportscar he always wanted to build. The Miata was and is a winner.

    ( I believe that it was Mazda not Toyota that designed the Miata )

  140. To say Apple “doesn’t do conceptual products” is a little misleading. Of course they do. What Apple doesn’t do is parade their half-assed designs in front of the general public and make outrageous claims about, say, Herculean power devices that will most certainly be invented some time in the next decade.

    Instead, Apple’s concepts are internal. Where other companies may waste time building a concept to stand up to the public’s scrutiny, Apple builds concepts to achieve their own goal: to release a publicly available product.

    In doing so, they save money, save face if things go awry, and keep great ideas out of the hands of competitors until the market’s already cornered.

  141. I’m a little O.T. because I’m not talking about concepts products but I would like to emphasize that it’s a mistake mix R&D with pure research and blame the latter for not building working products.

    There is a place for pure research organization (e.g. MS Research, Universities) and their goal is not to build products at all.

    Their goal should be to help us understand the world and to provide viable models for (part of) it.

    Sure, nowadays, their success is mostly measured by some secondary metrics like the money they bring or the number of papers they publish, which is less than ideal — but it would be much worse to measure them the products they generate.

  142. Pessimist,

    Featuritis is *not* how Apple innovates (mostly). Piling up features leads to what you have in other phones: features are there, but few uses them.

    Indeed, the iPhone is a breakthrough innovation, while not from its raw features

  143. Fascinating article, a great read.

    Robbie: Imagine if Microsoft ran NASA in the 60s. “Someday we’ll build a rocket ship!”

    This possibility could have given rise to the stark and literal new meaning to the blue screen of death.

  144. Pessimist Said: I have to disagree with the “innovative” iPhone. There’s nothing new about it. The only relativly new thing was the multi-touch, but the rest of the phone was behind the innovation curve. The functionality (except multi-touch) was found in other smart phones long before iPhone.

    Firstly, from multi-touch flows many innovative features, such as guestures to interact with the photo storage, scale the photos, manipulate easy to use UI elements, and so forth. It’s game changing. Your statement is like saying “There was nothing new about the airplane, the only relatively new thing about it was flight. The functionality is found in other transportation methods long before the airplane.”

    Secondly, what previous phone had visual voicemail, where you could choose which voice messages to hear? Do you think the launch of an application store built into iTunes is not innovative? I know, you can buy Palm applications online, but it isn’t nearly as powerfully integrated.

    Is the integration of a full-featured browser not innovative? What other phone had an accelerometer to sense its orientation? This is just as innovative as multi-touch and is used to great effect in the UI for applications and games.

    I suppose by “behind the innovation curve” you’re referring to superfluous features like the relatively modest camera resolution etc. Big whoop.

    “Innovation” isn’t just modestly increasing the number of megapixels in a camera, it’s changing the way one interacts with, or views a device. Yes, adding a camera to phones in the first place was innovative. And changing the way people interact with their phones is indeed innovation.

  145. I think you are being a little unfair historically to Nokia. They “bet-the-company” sort of back in 1992, when they decided to streamline only on mobile phones. A rather bold decision for a company that was originally founded on anything but mobile communications. Of note Nokia originally was established as a paper mill in 1865, and later was involved in the making of tires and footwear and a lot of other stuff.

    Apples “bet” on the iPhone is a rather small one compared to the decision Nokia made in 1992 to skip anything but mobile phones. The equivalent bet for Apple is the one they also did in the 90s, getting Jobs back, betting the company totally on the iMac. If the original iMac and iBook had been a failure – I’d say there’s a big chance there would be no Apple today. And those products were bold introductions at the time, and Apple had only one shot to get it right – nowadays they have the time to make the product perfect before launch, and they can afford a misstep or two.

  146. Eugueny: “Perhaps as Apple’s bank account grows”

    Already hovering around $20 billion, at this rate of growth Apple will have the largest ‘bank account’ in the technology industry in a year or two, surpassing that of Microsoft’s. Do you see Apple doing concept products?

    “[Nokia] don’t really see iPhone as a ‘challenge’ to respond to”

    Maybe they have decided to (re)enter the US market in a more serious way and did the Symbian buyout just to compete against Moto?

  147. There are plenty of companies out there who don’t build concepts. The most common reason, I suspect, is simply the lack of funds: yes, Japanese companies were busy developing their future hits in the 70s not wasting any resources on concepts, but you may visit any major auto show today and see plenty of concepts without future on Toyota/Honda/Nissan podiums. Perhaps as Apple’s bank account grows, they may start doing this as well.

    You also imply that companies that do concepts don’t innovate. That may be true, but you haven’t offered convincing examples. Microsoft may be boring lately, but they’ve been pretty aggressive innovators before, albeit without Apple’s charm. And Nokia’s story is even more exciting: it has been the most innovative cell phone maker in the world, perhaps they don’t really see iPhone as a “challenge” to respond to, why would they? After all, this Apple hysteria really does not exist outside of US: iPhone, OSX, iPod, Macbook Air – whatever, most Europeans and Asians don’t care for them. Even here in US, talk to an average teenager about the iPhone and the response will be “blah… not good for texting”.

  148. I have to disagree with the “innovative” iPhone. There’s nothing new about it. The only relativly new thing was the multi-touch, but the rest of the phone was behind the innovation curve. The functionality (except multi-touch) was found in other smart phones long before iPhone.

  149. I agree that Apple’s lack of ‘concept’ products is an important clue to its success, but for a different reason. Look at the initial versions of OS X, the iPod and the iMac– and compare them to the current versions. Huge differences between then and now. Apple follows the gospel of continuous improvement in both production and design. This is conceptually the opposite of the process that produces a ‘concept’ product; a concept product is already at the end of the design process, Apple’s products are always on the way to something better.

  150. Apple doesn’t need to waste time generating concept products.
    Apple’s loyal userbase, many of whom are professional designers, do it for them.
    I must have seen at least 100 iPhone concepts before Apple ever announced it.

  151. Lain, you prove the point. They are telegraphing future intent. Competitors can gain insight into possible future directions. Customers might like what they see, but what matters is what they can buy. A competitor could be there first. It likely doesn’t matter much though. Volvo and Audi are not threat or asset to the volume manufacturers. Unless it’s something revolutionarily innovative, they can be ignored. Those products don’t lead the auto industry. The iPhone does lead in the cell phone market.

  152. (Important caveat: I’m talking about real prototypes, not the utterly useless Photoshop specials like the silly Morph above – those are so utterly disconnected from real design constraints as to be utterly meaningless, and deserve all the scorn they’re receiving here)

  153. Great essay, but I strongly disagree with the conclusion. Auto companies release concepts (frequently, but not always) to gauge consumer reaction. They have a sense of a change or evolution of design and want to see what the public reaction is before the fully commit to building it. Happens all the time, dozens of times per year. And, yes, their competitors, to a certain extent, get to see what cards they’re holding. But they do it anyway.

    I happen to agree, by the way, that Apple (by which I mean Steve Jobs) is so good at its job that it doesn’t need to produce concepts. Not that all their products are winners, but overall they’re very, very good. Steve Jobs has that rare combination of a real consumer perspective, a profound sense of design, and the ability to run projects well. Toyota’s Miata, which is going on 2 decades now, sprang from the forehead of a Toyota project manager who was given nearly free reign to design the British-style sportscar he always wanted to build. The Miata was and is a winner.

    GM spent most of the last 3 decades focus-grouping its cars to death, and got the inevitable results. But resurgent Cadillac’s design theme – Art & Science – started out as a concept car designed explicity to test the public’s taste for its then-radical departure in design.

    There are valid reasons for showing off concepts…on the other hand, in consumer electronics, I think it’s more feasible to just build what you know is good…if you understand design. But nobody I’m aware of other than Apple seems to have the foggiest notion of what design is.

  154. Doesn’t exactly roll off the tongue (who actually says proclivity, other than moralists?): how about this?

    A company’s willingness to invest in concepts that not designed for a real market underscores its inability to lead.

  155. It depends on the company. Volvo’s ECC concept heralded a new design direction (initially resulting in the S80). Audi’s RSQ concept showed off the R8 and their new design direction. The Morgan AeroMax Coupe is another example of a successful concept to reality product.

  156. Awesome post, Kontra. You hit the bullseye, and I am so glad that you flag Myrvold, as I always thought that the MS Research folks were way too smug for so little actual results in the market.

    Concept products are the consummate masturbatory expression without commitment or the discipline of a real customer or real market. You rightfully distinguish between INTERNAL prototypes and EXTERNAL concept products.

    In the R&D scheme of things, it’s the proverbial ‘everyone likes the R part but the actual D part is REALLY hard.’

    Fairly complimentary to your post is a post I wrote called:

    Innovation, Inevitability and Why R&D is So Hard
    http://thenetworkgarden.com/weblog/2008/06/innovation-inev.html

    Check it out if interested.

    Cheers,

    Mark

  157. What about products shipped (monthly) by Microsoft Researchers, like Simon Peyton Jones (http://en.wikipedia.org/wiki/Simon_Peyton_Jones) who, for example, is paid to work on the GHC compiler for the programming language Haskell? He is currently working to solve some rather important problems in software engineering: allowing the developer to more easily utilize the power of multicore chips (see http://www.haskell.org/haskellwiki/GHC/Data_Parallel_Haskell )

    I guess what you’re saying is that Haskell Research is about as helpful to Microsoft as Xerox PARC’s groundbreaking GUI research was to Xerox: anyone (e.g. Apple) can benefit by just grabbing up this wonderful research and MAKING A SHIPPING PRODUCT like the Macintosh.

  158. Jan: “In my opinion, product development is about building knowledge – about a lot of things: technology, end-users, behaviour, processes, infrastructure, interoperability…”

    Exactly. The shipping product itself should embody and celebrate that knowledge, rather than promise disjointed bits and pieces of it in a non-committed, bet-free “concept product.”

  159. In my opinion, product development is about building knowledge – about a lot of things: technology, end-users, behaviour, processes, infrastructure, interoperability… Good companies, like Apple, has the ability to build this knowledge into their products. They also organise themselves to facilitate this kind of learning. Companies who think that software development is Henry Ford, where you can transfer knowledge between brains like it’s manufacturing, will ultimately fail. And you see this all the time. A CEO who creates a research division, puts them in a special house, even at a separate location, and expects the learning to find itself into regular projects in other parts of the company. Xerox Parc is the ultimate example of this failure (from Xerox’s perspective).

  160. Due to an unfortunate sequence of events several dozen comments were deleted. I’m reconstructing them manually. I apologize for avatar substitution.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s