Ad Blockers and the Future of Internet Publishing

There is a debate about ad blocking on the Internet every so often, and the release of iOS 9 with its support for content blockers has reignited it.

I am sympathetic to both sides. I don't block ads, but I do block both Flash and ad trackers. I block Flash because it slows down browsers, and I block the tracking because I don't think it's appropriate for any single entity to know by default what I do when interacting with completely separate entities. It's fine for Google to know what I do on YouTube since it owns YouTube. It's not fine for it to know what I do with every site I visit that runs Google Analytics.

That said, I also make a small amount of money from writing on the Internet, and that money ultimately comes from advertisers. I don't get paid anything close to a living wage for how much time I spend on it, but I'm blessed to be in a position where that doesn't have to matter if I don't want it to. Many people are not.

Right now, proponents of ad blocking list all the abuses of online ad technologies and say, "adapt or die". They might also point to focused (and non-abusive) ad networks like the Deck or point out that advertisers barely know anything about the effectiveness of their spots on TV or spreads in magazines. Those media can't track ad targets like online advertising can, and it was fine. Maybe just take that attitude online.

Those arguments are fine for a certain set of people who have audiences that skew affluent, but it's bad for everyone else in the short to medium term. If you tell advertisers that they will have less targeting, they'll pay lower rates. They already pay next to nothing, so it'd be a financial bloodbath.

It's tough for publishers. The hard fact of the matter is that the supply of content creators far outstrips demand. Internet technology makes publishing content of all kinds easier than it's ever been. A laptop is far cheaper than a printing press. A webcam is far cheaper than a TV studio. The upshot of that fact is that more people want to make a living by writing or making videos or whatever on the Internet than the market can possibly support. Take away the easy avenue of super intrusive ads and some publishers will go away because every other option is really hard.

I know this. I've been writing consistently, year-round on the Internet since mid-2007. By now, I think I've gotten pretty good at it, but "pretty good" isn't good enough to justify me doing it full time. The market has spoken by now. It says I'm not special enough to warrant a full-time gig. I am far from alone.

This is where it gets tough on the publishing side. A lot of new people appear on the Internet every year trying to make it by creating content. Sturgeon's Law says that most of them won't.

But everyone produces a lot of crap when they first start. Everyone who writes a lot says they look back on their early work and cringe because it's so awful compared to where they are in the present. A ruthless world where only the largest publications make it and it's mostly impossible to make any money without being a part of one of them means that only the people who can afford to write a lot for no money to prove themselves to those publications will make it. Only people who are decently well off will be able to break into the business, and that's not an appealing future. I realize it's kind of like that now in a lot of ways, but it has room to get worse.

I don't know what the answer is. Maybe it's micropayments, although I'm not bullish on them. Maybe it's some kind of scheme to essentially pay people to read sites and look at ads, although I'm not bullish on that either. If I did know, I'd be going and doing that instead of writing this essay. The long term good news for Internet content creators is that the future will have no TV or radio or magazines and only data flowing on the Internet. The ad dollars that go to old media now will go to online media in the future because they'll have to. That'll mean more ad money to go around. Its just that no one knows when that future will arrive, and many creators won't survive financially until then.

I hope there is something between the near privacy-less Internet we have today and the dystopian future without journalism. If it's out there to be found, iOS 9 and content blockers are giving the people searching for it a new sense of urgency.

Apple’s New Taste

That we know of on the outside, Apple has had four people highly influential in setting the company's taste during its golden era: Steve Jobs, Jony Ive, Ron Johnson, and Scott Forestall. Singling out these folks alone is an oversimplification, but they certainly have had outsized influence.

Ive is now the design chief for both hardware and software, but Jobs, Johnson, and Forestall are gone. Ive certainly will continue on setting trends and direction, but he alone can’t do it for the whole company.  Tim Cook is generally known to be a numbers guy and not really a replacement for the taste making roles that Jobs and Forestall had.

The hire of Angela Ahrendts along with the Beats acquisition might be Cook’s way of injecting some new talent in that whole area. It feels odd to think about Apple turning over its chief taste makers all at once, but the old guys were around forever. Ive became an Apple employee in 1992, and Jobs and Forestall came in the NeXT deal in 1997. Johnson was the newbie, only coming on in 2000. The positions haven’t been open for a while (except Johnson’s retail head position, of course).

Jimmy Iovine and Dr. Dre joining Ive and Ahrendts as the company’s top taste executives makes as much sense as anything for the Beats acquisition. Cook’s internal letter talks as much about those two as it does Beats itself, and Beats as a brand is held in much higher regard than any of its products are.

Part of Apple’s corporate DNA is having a distinct sense of taste and style. With some of the most important people responsible for its past placement there gone, others have to step in. Iovine and Dre are just the latest two to do so.

Monument Valley Is a New Super Mario Galaxy

Monument Valley is a pretty great iOS game that came out not too long ago. If you like impossible objects and M.C. Esher, this is the game for you.

Gameplay-wise, it’s pretty simple. It’s like a point-and-click adventure game, in that you simply tap on where you want Ida to go. If she can get there, she goes; if not, she won’t. You have to step on switches to alter the level architecture, avoid crows that block your path, and use a movable block tower to help you at times.

It reminds me a lot of Super Mario Galaxy in a couple of ways. The obvious one is that Ida can walk on walls and ceilings, just like Mario can in some levels. Some levels in Monument Valley require rotating the stage all 360°, again, like some Galaxy levels.

The other way it reminds me of SMG is that it’s not terribly difficult. With few exceptions, Galaxy is not that hard of a game for anyone who’s not a complete beginner to 3D platform games. It itches your brain in some novel ways, but once you learn its conventions, it’s not overly challenging.

Monument Valley is also fairly easy. The only time I felt stuck to any degree was in an early level where I didn’t realize I could tap and drag a piece of the building to open up a new path. Once I learned to recognize what is movable, it really flowed easily from there. Some parts felt more like a “click to continue cutscene” experience more than playing through a game.

It’s also pretty short. It only has ten levels, some with multiple screens. Combine that with the low difficulty level, and you’ve got a pretty short game. The reviewer at Polygon needed three hours to complete it; I didn't time it, but it took me about one hour, if that. I don’t feel bad about the $4 I spent on it because it’s beautifully designed and forges an interesting path. It leaves me wanting more, but fortunately, more is on the way.

Super Mario Galaxy left me wanting more too. With that one, it had nothing to do with length. It has 120 level variations to complete, and I did it as both Mario and Luigi (their controls are different, so it’s a somewhat different experience). It almost never upped the difficulty though, and I wanted a challenge. Super Mario Galaxy 2 fulfilled that wish, thankfully.

I don’t know if future installments of Monument Valley will be significantly harder. It seems like the game is more about the design and atmosphere than really being a challenge. And that’s fine! It’s OK for some games to be like that. I just hope the difficulty curve ramps up at some point in the future, even if it’s not the next release.

Apple Is One Rule Away From Ruling Console Gaming

Apple is very, very close to being able to just about kill off Ninendo and Sony's gaming console businesses and perhaps Microsoft's too if the media features of the Xbox One don't work as well as advertised. Only one very Apple-y rule will keep it from doing so.

Let's start with something that leaked a while ago (I'm going off the leak so I don't break the Apple Developer NDA). iOS 7 will support game controllers. Some legit images leaked out a while back, so you can see what they're planning. There are going to be three kinds of controllers. One cradles phone-sized iOS devices and has a limited button set: ABXY, two shoulders, a D-pad, and pause. The next cradles a phone-sized device and adds two analog sticks and two more shoulder buttons. The third kind is standalone (the diagram of which appears to have been inspired by the Wii Classic Controller), and it has the same, larger button set as the second one. The standalone controller image shows that up to four controllers can be used at once.

The implications for single-use handheld gaming devices are dire. The Nintendo DS and PlayStation Vita can provide a much wider variety of gaming options than touchscreen phones and tablets can thanks to having buttons. With these cradle controllers, now iOS devices can provide those experiences too on top of everything else they do. Well, they would if not for that rule I mentioned. But that's not all.

Thanks to AirPlay, you will be able to play a traditional controller-based game on iOS while sitting on your couch with the video on the TV. In fact, this setup is like the Wii U, only reversed. The Wii U has a smart box hooked up to the TV with a dumb tablet you hold in your hand:

Whereas Apple's setup has a smart tablet in your hand that connects to a dumb box hooked up to the TV:

The killer aspect for Apple is pricing. The Wii U, even after its upcoming discount, will go for $299, and it's the least expensive console of the new generation. A lot of people will already have iOS devices, or at least they can justify getting one because they can use it for far more than just games. A person who has an iPhone, iPod Touch, or iPad can buy into Apple's living room gaming setup for a $99 AppleTV and whatever one controller costs. Even if it's $35 or $40 like a traditional console controller, the combined price still less than half of the Wii U.

There is an immense advantage to buying into this kind of gaming setup. The hardware on iOS devices gets revised about every year. You won't have to wait six to eight years for the Nintendo, Sony, or Microsoft to provide updated specs. Plus, the App Store model makes it far easier for games to get to you and opens up the door for a wealth of third party developers who might never get something on a Wii U, Xbox, or PlayStation due to their barriers. And, again, the console part of it would be "free" to someone already committed to buying iDevices every couple of years anyway for their multitude of non-gaming functions.

Now, the red flag. The fact that there are two different button sets is a bit worrisome for fragmentation reasons, but that's not it. It's that Apple has made a rule that says controllers must be optional. An iOS game must be designed for touch and motion first with the controller only being a bonus add-on.

I know why Apple did this. It's to maintain simplicity for the store. It's also to remove a potential support headache. Apple doesn't want people calling them up asking for refunds when they buy a game and they find out they have to buy a controller in order to play it. Having a game in the App Store that requires a controller just wouldn't do at all.

It also means that Apple won't kill off the other game console makers as quickly as it could have. Think about some traditional handheld or living room console titles, anywhere from Zelda to Smash Bros. to Madden to Halo. They require a boatload of buttons for a reason. Making a game that functions well both with the limitations of touch input and the freedom of buttons is going to be tough, and the categories of games that require controllers will still not be feasible to provide for iOS.

Apple should know this. It knows well the difference between touch input and bucket-o-buttons input. It's why it keeps iOS and OS X separate. Any gamer can tell you that this rule is a bad idea, and people inside Apple should be able to tell you that too.

As far as the living room goes, this strategy makes total sense for Apple. It can make a limited play for living room gaming while not disrupting its plans for the AppleTV. It doesn't have to turn the AppleTV into a full fledged gaming console on top of everything else; an iDevice, a controller, and AirPlay will cover that use case just fine. It can keep selling $99 hockey pucks to people who have no interest in gaming, which makes far more sense as a living room strategy than Microsoft's apparent gambit of wanting to sell $500 Xbox Ones to people who don't play games.

Between controller support and Sprite Kit in iOS 7 and Mavericks, Apple is making a real effort at competing in games this fall. This one rule that controllers must be optional keeps it from being able to take over everything. Between apps that run on either iPhones or iPads but not both and iBooks Author creations that only work on iPads, Apple already has things in its stores that don't work everywhere. I would have thought that a simple modal dialog box saying something like "This game requires a separate controller. Do you want to buy?" might be enough to allow them to have apps that require controllers, but the powers that be chose not to go that route.

As long as that rule exists, there still is room for dedicated gaming hardware. We'll see how long that rule lasts.

Apple Wants iCloud to Be the World's DVR

The Wall Street Journal has been revealing some details about Apple's plans in the television space. Steve Jobs famously said he thought he had "cracked" the problem of television shortly before he passed away last year, and everyone has been trying to figure out what he meant ever since.

The latest report from the WSJ, if true and I'm interpreting it correctly, likely reveals what Jobs thought was the breakthrough:

The Cupertino, Calif.-based company proposes giving viewers the ability to start any show at any time through a digital-video recorder that would store TV shows on the Internet. Viewers even could start a show minutes after it has begun.

The vision here is pure Apple. The company identified an area of complexity, in this case managing TV recordings, and plans to offer a simple solution where it simply does it for you. Here, iCloud becomes the world's DVR. There won't be boxes in every individual home making millions of individual recordings of the same programs; there will be one place that "records" the programs (Apple's datacenter) and all of the boxes will stream that copy.

You won't miss a show because you forgot to set up a recording; Apple is recording it for you. You won't miss a show because the DVR filled up; Apple is recording it for you. You won't miss a recording because you're out of free tuners, or because the cable went out, or because a cloud went between you and the satellite. Don't worry. Apple's recording it for you.

Obvious road blocks have to be overcome before this vision of the future can come to pass. For one, the WSJ reports that Apple doesn't have a single deal worked out yet with any content providers or cable providers to make this happen legally. For another, this setup requires a completely reliable Internet connection. If the Internet goes out, you not only have no TV anymore (not a guaranteed problem today) but you can't watch your recordings in the meantime either.

Plus, ISPs aren't going to be happy about a system like this because it would put an enormous strain on their networks. They are already playing around with bandwidth caps, and that's without most people getting their TV through the Internet. Perhaps the new H.265 standard will solve this particular issue, but it's not going to be available for anything until "as soon as 2013" (which probably means later than that, given the choice of weasel words here).

This sounds like a really cool way forward. I have my doubts that we'll see anything like it any time soon because content owners, cable providers, and ISPs are some of the worst companies in the world. Of course, Apple worked things out with cell operators, who are just as bad if not worse, so there is some hope out there.

Google's Android Revenue is Still Difficult to Determine

Google develops the Android operating system and gives it away for free as an open source project. Manufacturers have to meet certain standards in order to get the official Google apps like GMail and the Google Play store (formerly Android Marketplace), but those standards don't involve fees.

Google makes money via taking a cut of paid apps and running an advertising platform that developers can use. According to documents that have come out thanks to Oracle's lawsuit against Google, from 2009-11 Android made $543 million for the company that develops it. The Guardian estimates based on the rough numbers of activations Google has released that it comes out to a little over $10 per device. By comparison, Microsoft makes at least $5 per device on 70% over Androids out there thanks to patent royalties.

So is Android a business failure? It's still difficult to say even when you compare that $543 million over three years to the $38 billion of revenue the company brought in during 2011 alone (and consider that it's probably not the full amount of direct revenue anyway).

Google is not like most companies. It doesn't make most of its money by producing products and services and then selling them for more than they cost to make. It is perfectly content to pour money into products that it doesn't charge for so long as it can collect information about users and their habits and sometimes serve ads on them. It then uses that information to tune its advertising algorithms, the real core of the company. Serving up the most relevant ads possible to its users increases the likelihood of people clicking on them, which then maximizes revenue on the ads.

Android is a both an offensive and defensive play for the company. It's offensive in that Google can get information about users to use in its ad algorithms on top of the app and ad income. It's also a defensive play because Google wants to make sure there's a major mobile OS out there that won't shut out its services.

Google bought Android in 2005, well before the iPhone in a time when Windows Mobile was rapidly growing in the smartphone space. Google probably could envision a future where Windows Mobile dominated smartphones like regular Windows did on PCs, and the default search setting on there would be Microsoft's competing search engine. With mobile the future of computing, such a future would hurt Google's growth prospects drastically.

Windows Mobile obviously tanked and Windows Phone 7 is out there to replace it, but Apple is the big rival on mobile now. Apple does use Google Maps in iOS, but that may not last for too much longer. It also uses Google as the default search engine in Mobile Safari, but there's no guarantee that will last. It was even rumored heavily a couple years ago that Bing would replace Google as the search default.

I really wonder how long a play Android is for Google. I really think the company has already shown us what it wants the future of computing to be with Chrome OS: everything is on the web where Google can track users and serve up ads. If everything does become a web page or app, it doesn't matter which hardware or OS you use because Google could still track and serve ads to everyone. That vision can't come to fruition yet because web technologies can't match the functionality or speed of native code yet, so the company must develop Android in the meantime.

In any event, Android may have indirectly provided the company more revenue than was reported in the court documents thanks to information from tracked Android users helping to hone the ad algorithms. It might also have kept the company from losing revenue. RIM's Blackberry would probably be No. 2 behind iOS absent Android and, for instance, the Blackberry Bold I have for work has Bing as the default search provider.

Google is probably content not to include such considerations when it comes to how much it might have to pay to Oracle in royalties for Java patents, but it does go into the consideration for the value proposition of Android to the company. Because Android provides some sense of security for the company's core business in the fast-changing and uncertain mobile computing market, its value to Google cannot be distilled down to a single number.

A Sign of the Times

I was reading an article on PCMag.com this morning about a comparison of iPad and Android tablets. I noticed something interesting at the bottom of the page:

Let's see, we've got a MacBook Air, the Office for Mac icons, iPhone app recommendations, and the Editor's Choice iPad. I notice a pattern here.

Perhaps these were simply the recommendations because it was an article partially about the iPad, so I went to some others. No matter which articles I went to, from Windows Phone to Google Play to MegaUpload, these were the same article recommendations.

You'll also notice that, at the very top of the page, among standard, black-colored links like "REVIEWS" and "DOWNLOADS" is an attention-grabbing red link that says "APPLE IPAD". Time have really changed for PC Magazine, huh?

Two Reasons a 4.6-Inch iPhone is Unlikely

Reuters has picked up a story about how there supposedly will be a 4.6-inch iPhone coming out this year. It attributes the rumor to a South Korean publication called the Maeli Business Newspaper, which itself heard this from an "unnamed industry source". Nothing like third-hand information to get everyone going on a Thursday.

The kernel of truth to this that makes it worth considering is that the South Korea-based Samsung is the supplier for the third-gen iPad Retina displays. It's a major supplier of components to Apple, so there are, in fact, some people in South Korea who are familiar with Apple's future roadmap.

There are two big reasons why I am very skeptical of this rumor. One is complicated, while the other is simple.

Let's start with the complicated one. The iPhone screen has always used a 3:2 aspect ratio, first at 480x320 and then at 960x640. The reason why Apple used the same ratio when going to a Retina display is that it wouldn't require developers to re-code their apps. Everything would just scale up 2X, and that would do nicely until developers double the size of all of their raster image resources.

Using a different aspect ratio for the screen would have added a lot of headaches for developers as the layout would have to be tweaked. That is part of the fragmentation problem with Android; it's not just about a wide range of OS versions in the wild but also different screen sizes. The screen dimensions matter greatly when all apps are full-screen apps. Apple took the same tack with the third-gen iPad's Retina display, as it is double the resolution of the first two iPads' displays.

When Apple introduced the "Retina display" term for the iPhone 4, it claimed that for the distance that phones are typically held from the eye, the screen must have 300ppi to qualify for the "Retina" title. A 4.6-inch screen at 960x640 computes to about 251ppi. In order for this mythical, monstrous iPhone to keep the Retina designation and maintain the same aspect ratio as previous models, the resolution would have to be doubled again to 1920x1280. That comes out to a ridiculous 502ppi, clearing the "retina" bar with ease.

While the A5X is certainly capable of driving that many pixels, as the third-gen iPad has more than that, I don't know if it could do it in a phone form factor without draining the battery too quickly. Let's imagine that it could though, granting that the larger frame of the phone would give more room for a sufficiently large battery.

App developers would have to put three different sizes of their images in their packages, one for the iPhone 3GS's 480x320 screen, one for the iPhone 4/4S's 960x640 resolution, and yet another for the new 1920x1280 screen. Not only would that be a pain for developers, but each app would take up a lot more room (especially photo-heavy apps). The 3GS and 4 models still on sale only have 8 GB of flash memory on them, and the 4S starts at 16 GB. Storage space is a significant constraint, and forcing apps to have three different sizes of images would be untenable.

So that's the complicated reason. The simple one is that a 4.6-inch phone is simply too big for most people.

The iPhone's 3.5-inch screen wasn't chosen at random. It's roughly the biggest screen you can have where everything can be operated by a single, normal-sized adult hand. It's unlikely that anything will be out of your thumb's reach while holding an iPhone. On 4-inch and larger phones, it becomes difficult to impossible to operate one-handed, in particular being able to access both toolbars at the bottom of apps and the notification drawer at the top of the screen. That is the kind of detail that Apple considers when building these things.

I'll never say never about a larger iPhone in the future, but jumping to a 4.6-inch display this year isn't likely. At the very least, such a jump would probably require that most of the non-Retina display and 8GB iPhone models be cycled out of use, and that won't happen for at least two years following 2012's new iPhone announcement.

For what it's worth, the largest a 960x640 screen can go while still being above 300dpi is 3.8 inches. That might still be small enough to operate in one hand, but it would feel like change for change's sake. Change for change's sake is not the sort of business Apple is in.

The new iPad vs. Android Tablets

There was a time not too long ago when I could give decent reasons as to why someone might want to get an Android tablet over an iPad 2. Many Android tablets have high definition screens, HD cameras, voice recognition software, and 4G cellular networking. I suppose all of that is still valid in a comparison with the iPad 2.

But the new iPad? It has all of those things and more. I can only think of two reasons why someone might buy an Android tablet over the third gen iPad: if having a widescreen display is absolutely, positively, unequivocally your top priority and nothing else is close, and if you have some kind of problem with Apple stylistically, philosophically, or what have you.

The gap in the software ecosystems is gigantic. I've heard good things about Ice Cream Sandwich, but it is nigh impossible to find in the wild. With as scattershot as Android updates are, there's no way of knowing when devices will get the upgrade to it as well. Honeycomb just isn't that good, and the third party software support for Android tablets is worse. Go into the Android Market (Google Play Store?) and hit the category of staff picks for tablets. It's impossible to determine which apps are actually tablet apps and which are just phone apps that happen to scale nicely. Dont worry about it though; any given app is more than likely to be a phone app.

The new iPhoto only increases the gap between the platforms. It's a tough case to be made that a single app is a big point of differentiation, but bear with me on this one. You can get a browser, email, and Angry Birds on anything these days. The iWork apps are nice to have, but I don't think an office suite is a make or break thing on tablets just yet. iMovie and Garage Band are impressive, but I don't know how many people do heavy video editing, and even fewer do much with audio recordings.

But photos? Everyone does photos. The new iPhoto is incredible, and people's iPhone pictures will be coming into it automatically via Photo Steam. If, as rumored, Microsoft Office ends up on iOS, then you might as well turn out the lights in the Android tablet development department.

Look, I think it's very generous for Verizon to have loaned me this Droid Xyboard 8.2 as a part of its ambassadors program. That it came with unlimited 4G and tethering only makes it more so. I like the hardware (except the button placement) and the network is incredibly fast. I want to like this thing. I even wrote this post using Google's Blogger app on it with only a little cleanup done later on my laptop.

The problem is that Android and its ecosystem let the hardware and network down. The process of writing this illustrated the problem perfectly. Blogger is one of Google's A+ properties, but the app for it is a phone app that only has extremely basic post composition and editing features. You can't use it to look at stats, manage comments, or adjust the blog layout. If the developer for Android itself is going to have a shabby app for one of its top services, then what does that say about the platform as a whole?

I cannot in good conscience recommend this device to anyone now. I was on the fence about it before this iPad announcement, but when this tablet is only $30 less than the new iPad off contract, forget it. I can recommend Verizon's 4G network for the new iPad if you go with a model with cellular connectivity, though.  That is one part of the Droid Xyboard experience that has been anything but a disappointment.

The iPad is Already in Its Final Form

In the run up to any Apple product announcement, rumors and linkbait abound like in few other situations. A number of articles and videos heading into Wesnesday's iPad 3 announcement are about what the thing will look like.

The answer is quite simple: a lot like what the iPad 2 looked like. The iPad 2 itself largely looked like the original iPad, with only the only drastic change being the introduction of a white face plate option. Unless more colors come down the pipeline, all future iPads will look roughly alike.

Think about it: the external iPad hardware is just a touchscreen with a home button and a couple of cameras. The models with cellular connectivity have an extra black stripe at the top of the back for the antennas. That's it, and that's all it's really ever going to be.

The iPhone has changed form several times, but it has far more constraints than the iPad does because of its smaller size. It will probably keep evolving over time as the company comes up with new ways to deal with those constraints. The iPad doesn't have those same constraints. Everything crucial can fit inside with plenty of room to spare for an enormous battery.

Other Apple products have hit the design wall, so to speak, in this same way. The iPod Classic hasn't changed since 2007. The fourth and fifth generation iPod Nanos were basically the same thing, and the seventh generation introduced in 2010 wasn't updated for 2011. The Mac Pro's external design basically hasn't changed since it was introduced as the Power Mac G5 in 2003.

The iMac was once the company's big showpiece for design. The original iMac G3 had a bulbous and translucent case. The iMac G4 was the famous sunflower design, a radical change from the G3. The iMac G5 was yet another big change, packing the whole computer behind the screen. The basic form hasn't changed since the G5's introduction 2004, except that it now is made of aluminum and glass instead of plastic and comes in different screen sizes.

While the iPods and Macs took time to hit their end-of-design phase, the iPad basically launched that way. When the product design is "just a big ol' screen", where do you go from there? Until and unless the aluminum backing gets replaced by another material (carbon fiber? liquidmetal?), it basically is what it is.

The iPad will continue to grow and evolve over time, but it won't be the external look and feel doing that changing.

Windows 8 Consumer Preview: The Non-Tablet Review

Almost every Windows 8 preview focuses entirely on the Metro interface and touch-centric tablet features. That makes good sense, considering that's the big new change.

However, reviews that start and end there are vastly incomplete. Why? Most computers that will run Windows 8 will not be tablets. Windows 8 will put Windows 7 into retirement, and soon every non-Mac PC will ship with it. Touch may be the future, but the mouse and keyboard aren't going away anytime soon. How this new OS works with a mouse and keyboard is as important as any other aspect of it.

In short, it's not a great experience. I can say that, missing Start menu aside, the desktop is almost identical to the one in Windows 7. It doesn't progress, but it doesn't regress either. There's not much to say about it.

With the Metro environment, on the other hand, it's painfully obvious that it wasn't designed for the mouse. Microsoft put up a sunny video showing that you can "rediscover your mouse and keyboard", but that's not what you're doing. You're discovering how to make this new thing work with input controls it wasn't really intended to have.

Take the Metro version of IE10:

This is what it looks like when you bring up the address bar/tab bar. How do you do that? By right clicking somewhere on the web page. Don't click on a page element, because you'll get a context menu for that element. You have to find an empty spot and then click. This is annoying.

Once the control bars appear, you see that they're far bigger than they need to be for a mouse. They have to be large, though, in order to function as touch targets. Being large enough to be a touch target is one of the biggest design considerations for Metro and rightfully so. But, it's unnecessary with a mouse.

The address bar at the bottom is particularly annoying. It comes and goes quite often and takes up a large amount of space when it shows up. People need to see the address bar any time they navigate to a new page to make sure they're not going to a scam site, so it's frequent appearances are justified. I'd much rather it work like any mobile device browser, though, where it appears at the top and scrolls away when you scroll down and reappears when you scroll up. The current behavior is too much movement.

The file browser, full control panel, and desktop IE10 are about all you can do on the desktop with a fresh install. Yes, even venerable Solitaire has been Metro-ized, and it hooks into Xbox Live too!

Every single time you launch it, you have to sit through a Solitaire splash screen and an ESRB notice (presumably a requirement for all Xbox Live-enabled games) before getting to play it. Once you get past that stuff, you find a game that doesn't perform well and cannot keep up with quick mouse motions. It's probably an issue with my five-year-old laptop having old graphics hardware, but this machine does meet the recommended requirements. It's also probably an issue with this being pre-release software, but either they need to do a lot more performance optimization or raise the bar the hardware requirements.

Solitaire being a dog performance-wise isn't the only rough edge I have found on this thing. For one thing, Firefox feels faster and snappier than either version of IE10. I'm even using the Aurora channel to make it pre-release apples versus pre-release apples, but Firefox leaves the IE10s in the dust.

I also decided to try out some apps from the Store. Cut the Rope is a popular game on a number of platforms and it's featured right there at the front of the store. I click install and... error. It can't be installed. I try again, and once again, no luck. I have to close and reopen the Store app to get it to install.

OK, fine. I go to the Top Free category and notice a podcast app called SlapDash. I listen to a lot of podcasts, so I download that one. Pull out the sad trombone, because it can't find any feeds the first couple of times I run it. A while later I try it again, and this time it works. I have no idea why or what the difference was. In addition, the built in Metro apps appear in the store and give you the option to install them. Even though they're already installed. Yeah.

The built in Metro apps are OK, but they're very under-featured. I realize that simplicity is a goal, but for instance, the Mail app can't even search a mailbox. The only one that stands out to me is Weather. It too had an issue with downloading things, in its case the conditions for the default location of Seattle. I was able to add my location no problem, but it still had issues getting the Seattle data. It's also not clear how to get rid of Seattle, which would be nice as I don't care about the weather there.

Still though, the layout is gorgeous and it has all the information you could want. The main screen shows the weekly forecast, followed by the hourly forecast, followed by a dozen different maps, finally followed by the historical information for your area. I can say this is the Metro app that works best with the mouse among those I've tried, principally because no clicking is involved. You just scroll from one view to the next.

Other annoyances:

• I keep expecting the Start menu/Metro home screen to appear on my Alt+Tab list. It feels like any other window in the system, so why not? Alas, it does not appear there and probably never will.
• In the Metro environment, you can't see a clock unless you mouse over to the top or bottom right corner of the screen and then move the mouse towards the middle to activate the charms. It should not be that difficult to check the freaking time. Why there isn't a clock on the Start menu, I have no idea. There's plenty of unused screen real estate to fit one in.
• Weather aside, there's nothing about many of Metro apps that's better than using their browser-based counterparts. Maps is not as good as Google or Bing Maps online. Mail is not better than any web-based email. The SkyDrive app isn't better than the SkyDrive web interface, and so on. Well, in some ways they're probably better if you've got a Windows 8 tablet as they're touch-optimized, but that's not what kind of review this is.

Windows 8, by virtue of being Windows, will reach near-ubiquity at some point. However, it makes a very loud and very clear statement: the mouse and keyboard are second-class input methods in the Metro world. That's fine in a vacuum, as touch is likewise inferior in the Desktop world.

The problem is that there is no way to live in just the Desktop world on a traditional PC unless you cover the desktop and taskbar in application shortcuts. At the very least, you'll have to go into the Metro Start menu to launch anything that's not pinned to the taskbar or doesn't have a desktop shortcut.

Windows 8 was designed to combat the iPad, clearly, but it might be the best thing to happen to the Mac since the Windows Vista train wreck. OS X, even in the upcoming Mountain Lion update, is completely mouse-optimized. Only Launchpad feels like something touch-optimized, but it's completely optional. All of the touch enhancements to OS X have been in the way of trackpad gestures. It's getting to the point where it favors the trackpad over the mouse, but you can still get around just fine with a mouse for sure.

The Metro stuff is going to frustrate people who just want to use a mouse and keyboard, and there are plenty of those people. The 100% mouse-centric Mac will beckon from afar, and I'll bet a lot of people make the jump for just that reason.

Apple Being Singled Out Over Foxconn Isn't Fair, but That's Fine

The Nightline special on Foxconn and Apple was an interesting look inside the world of electronics manufacturing in China. It's interesting to me to see how the issue has exploded of late, as it seems to come and go as various issues crop up. I'm not sure what the catalyst was this time, but here we all are looking at it.

It's a weird thing for most Americans, I expect. Despite the very real issues with things like too much overtime and underage workers, most reports say that Foxconn's factories really are among the best in China. I've likened factories with dormitories to the phenomenon of company towns in America. It's not a perfect analogy, but having company towns is a phase that this country went through during its industrial development. They weren't great for workers, but they're better than subsistence farming. The same goes for Foxconn in China.

It's not that dissimilar from the sweatshop scandals that plagued Nike in the '90s. The Nightline piece had someone bring that up, though the reference was about a different point. A number of economists have argued that sweatshops are a good thing in comparison to subsistence farming, which does make them a net positive. That's certainly not to say that industrial development should get to the sweatshop stage and stop. The existence of sweatshops and cramped factories could overall be a good thing for a country, provided things continue to progress from there.

The point about Nike from the show was that the industry leader will take the most heat for industry-wide problems. I'm sure that's a factor in Apple getting most of the negative publicity for Foxconn's abuses when plenty of electronics firms use its factories for assembling devices. Apple is also fantastically profitable, far more than the rest of the companies that have contracts with Foxconn. It has the best capacity to do something good for the workers there.

At one point, a Foxconn executive says he'd gladly double the pay of the workers on the lines assembling Apple products if the company asked for it. Using Horace Dediu's numbers, the iPhone has a 55% profit margin on an average selling price of $650. He estimates that the labor cost for each phone is somewhere between $12.50 to $30. If labor costs doubled (corresponding to a doubling of worker pay), the profit margin on each device would fall to somewhere in the 50% to 53% range. That's still an incredible margin, even for a company with typically high margins on all its products as Apple tends to have.

So while it's not completely fair for Apple to catch a lot of the heat for the issue of labor in Asia, I'm OK with it. Apple responded to getting singled out by Greenpeace by taking real actions to make its products better (or less bad, really) for the environment. Now, few companies talk about their green initiatives as much as Apple does. It's been a good thing.

Apple now seems to be doing something about the labor issue. It has publicly released factory audit results in the past couple of years and now has released a report detailing all of its suppliers. Last month, it became the first tech company to join the Fair Labor Association, and it has funded the biggest audit ever of Foxconn (currently underway).

If Apple is able to get real change for the better in Foxconn, it's even better than its green initiatives in one way. The latter only affect Apple products, but if Foxconn gets better, that affects people who make many other firms' products too. I'd like to see those other firms step up in the way Apple has, but we'll see if they do in the coming months. Pressure from multinationals that make things in China is the only way things are going to keep progressing there, as no real organized labor movement is allowed by law there.

It's not ideal if the only forward progress is due to American companies pushing the Chinese companies while themselves being pushed by media scrutiny and popular outcry, but it's at least some forward progress.

OS X Mountain Lion Might Have More Surprises

Apple announced a big shift in its Mac OS X strategy today. It's dropping the "Mac" from the name, releasing new versions of it on an annual basis, and it's making it closer to iOS than ever. It also announced Mountain Lion, OS X version 10.8 to ship this summer. John Gruber already cataloged the other big changes going on, so read about them on Daring Fireball.

It's obvious to everyone that Apple is now trying to get OS X and iOS in relative sync feature-wise with iCloud being the glue between them. What doesn't seem to be obvious is that what we see from Mountain Lion today is incomplete, quite possibly very incomplete.

A lot of the "operating system" changes announced today, Notification Center aside, are just application changes. There's a new notes app. iChat is now Messages. A lot of things now hook into iCloud APIs that belong to, well, iCloud and not OS X proper. There are a lot of major changes that deeply change parts of the experience, but none of them go that deep technologically that I can see.

I suspect that there will be more to this thing, possibly quite a bit more. The reason is because iOS 6 hasn't been announced yet. New versions of iOS have typically been shown off in the early spring*, and it's still February yet. Apple is not going to tip its hand months early as to what's in iOS 6 with this Mountain Lion reveal that didn't get its own big press event.

If I was a betting man, I'd put money on the idea that last year was a template for things going forward. The new iPad comes in March and the new iPhone comes six months later in September. The new iOS reveal will be at WWDC, with it and a new OS X version releasing soon thereafter.

That means there easily could be more goodies in Mountain Lion with iOS 6 analogues that we won't know about until the summer. Apple is trying to show that it does care deeply about the Mac, but the iOS ecosystem is clearly the company's top priority. Getting a look at Mountain Lion now is cool, but the real big reveal, which could include more features for OS X, isn't coming for months.

*The Apple Keynotes podcast provides and handy record of product announcements. iPhoneOS 2 was first shown off March 6, 2008. iPhoneOS 3 was first revealed 3/17/09. iOS 4 was first demoed April 8, 2010. In 2011 there was an early spring iOS announcement, but it was the iPhone-and-iPad-unifying version 4.3 along with the iPad 2 on March 2. Our first peek at iOS 5 came at WWDC on June 6, but the later date probably came from a combination of Lion getting ready to ship and the fact that the iPhone 4S launch was going to be later in the year than normal. And also to set up the new cycle, natch.

Facebook IPO Stock Is Basically a Gambling Bet

There are only three reasons to buy a company's stock. One is to get an income in the form of dividends. The next is if you plan to have a say in the company's governance as a part owner. The third is if you believe the stock will go up in value, allowing you to make a profit on the sale of the stock.

Facebook's IPO is coming up, meaning people will have to weigh those options when deciding if they want to buy it or not. However, one of those three reasons is entirely negated by the way the stock ownership has been structured:

The shares of Facebook will be divided into two classes. The Class A shares you will get if you buy shares in the market have one vote per share. The Class B Shares, which are almost all of the shares that have previously been issued and all of the shares owned by [founder and CEO Mark] Zuckerberg, get 10 votes per share.


Zuckerberg only owns about 28% of those super-voting Class B shares, so where does his control come from? He has voting agreements with many of his fellow shareholders that give him a proxy to vote enough additional shares to give him voting rights to a total of around 57% of the super-voting stock, the S1 shows. More than enough to give him control over the company.

Mark Zuckerberg has complete control of the company. Read the article to find out all the ways that he can stay in power if people try to change that fact. He personally can do whatever he wants because he holds over half of the stock voting power. He can even hire and fire the board of directors, who are supposed to be his bosses. You literally will have no power to change anything as a part-owner of the business unless Zuckerberg also goes along with it.

Of course, the first reason is likely to be moot as well. Growth companies don't tend to pay dividends, and that's what Facebook is. Apple is another tech growth company that famously doesn't pay a dividend, but it at least isn't controlled by a single person having the majority of the voting power.

For the foreseeable future, Facebook stock will be good for only one thing: trying to buy low and sell high. You're gambling on Zuckerberg's ability to guide the company and the hope that the collective hive mind of all stock investors will drive the stock price higher.

You're placing a bet, basically. Good luck with that.

Why Don't Carriers Push Unsubsidized Phones?

Once upon a time it was possible to find a cheaper data plan if you brought your own phone to a carrier in the United States, but those days are over. Whether you buy your phone subsidized or not, you pay the same rate for data.

That fact got me thinking: why don't carriers push unsubsidized phones more?

Costs of an Unsubsidized Phone

Of course, it is a considerable expense for the customer to purchase an unsubsidized phone, especially for smartphones in particular. Verizon is the one carrier that makes it easy to see what it costs to purchase a no-contract phone on its website, so for all of the examples here, I'm going to use Big Red.

According to VZW's website right now, the unsubsidized price for the Galaxy Nexus is $649.99. That's also what a 16GB iPhone 4S costs, and the price goes up in $100 increments as you add storage to 32GB and 64GB. An unsubsidized Droid RAZR goes for that same $649.99, a Droid Bionic sets you back $589.99, and the new Blackberry Torch 9850 goes for $459.99.

Subsidized smartphones all require data plans, so it follows that the carriers probably make up for the subsidies with those data plans. When you subtract the subsidized price from the unsubsidized price, you find out how much each phone is subsidized. Divide that subsidy by 24, and you find out how much each month the carrier charges you per month to make up for the lower up-front price. Here are the subsidies for those phones:

• iPhone (all varieties): $450 subsidy; $18.75 per month
• Droid Bionic: $390 subsidy; $16.25 per month
• Galaxy Nexus, Droid RAZR: $350 subsidy; 14.58 per month
• Blackberry Torch: $280 subsidy; $11.67 per month

In all of these cases, the amount of revenue Verizon effectively brings in for the data plan falls by more than $10 per month thanks to the subsidies. The two lowest (and therefore likely the most popular) data plans Verizon offers are $20 per month for 300MB and $30 per month for either 2GB or 4GB of data (depending on its promotions). That means Verizon is collecting at most $8.33/month purely for data at the lower level and $18.33/month for data at the higher level on the subsidized Torch. It is collecting at the lowest $1.25/month for the lower level and $11.25 for the higher level with the iPhones.

Verizon's Profitable Zones

Verizon's early termination fee (ETF) for smartphones is $350 minus $10 per month of paid service. So, if you cancel after one complete month, your fee is $340. If you cancel after one complete year, your fee is $230.

ETFs basically exist to recoup the subsidies on phones. This must be the case because they are comically small compared to the lifetime value of the contract.

The least expensive smartphone plan on Verizon for an individual is $40 for voice and $20 for data for a total of $60 per month. That works out to $1,440 over the lifetime of the contract. The only point at which Verizon's ETF entirely covers the lost money of the plan is in the final three months, but that doesn't include any subsidy that is still being paid off. Include that factor, and it's likely to only completely cover the losses in the final one or two months.

Therefore, it's safe to say that lost value from the monthly payments on service is not a factor in the ETF. The question then becomes: when are subsidized phones more profitable than unsubsidized phones for Verizon?

The ETF plays heavily in here because someone without a two-year contract can walk without paying that fee. For the unsubsidized phone to be more profitable, the extra amount the company would have made on data versus a subsidized phone at the time must be greater than the ETF at the time minus the amount of the subsidy the customer wouldn't have paid back at the time they terminate. In formula form:

Extra data money to date > ETF - (subsidy - subsidy payments to date)

Here is a chart showing the amount by which Verizon benefits from having an unsubsidized phone at the various subsidy levels I described above. The values charted are for if a customer leaves after the number of months on the x-axis.

As it turns out, it's a very simple relationship. The amount of extra money Verizon makes per month in data with an unsubsidized phone is exactly the same as the amount of the subsidy that gets paid down every month. Therefore for any given month, it's just a matter of taking the value of the initial subsidy and subtracting the ETF for that month.

The only time Verizon doesn't come out ahead when a customer with an unsubsidized phone leaves is for the first few months with a model that normally has a subsidy less than the initial $350 ETF like with the Blackberry Torch. On all the rest of the phones, Verizon would have made more money with an unsubsidized phone no matter when the customer decides to leave.

And of course if the customer with an unsubsidized phone stays through the entire two-year contract, the amount Verizon ends up ahead on the deal is the value of the subsidy it would have offered on that model.

The Customer's Perspective

Before talking more about the carrier, let's talk about the customer.

Buying an unsubsidized phone is much more expensive than buying a subsidized one. The primary value proposition for the customer in foregoing the initial discount is the ability to take that phone to another carrier without having to pay a penalty. Well, sort of.

Thanks to the dueling GSM and CDMA standards, you can only take a standard 3G phone to one other major carrier in the US. Even world phones with both GSM and CDMA capabilities might not be transferable from one to the other thanks to carrier and device restrictions. For instance, the unlocked and unsubsidized iPhone 4S cannot be used on Verizon or Sprint.

In any event, if you buy an unsubsidized phone, you're going to want to know how big a discount you'll need to get at each month over the next 24 months to come out ahead versus a subsidized phone. You need to know when the ETF plus the amount you would have paid back towards the subsidy is greater than the extra money you put up by not getting a subsidy plus any savings per month. In formula form:

ETF + amt. of subsidy paid back > subsidy + savings from new plan

Here are a few charts of the change in the total amount you pay over the course of 24 months by choosing an unsubsidized phone over a subsidized phone and by switching to a lower cost plan in a particular month. If a number for a month is negative, that means you save money by buying having bought an unsubsidized phone and switching that month. If a number for a month is positive, that means you save money by having bought a subsidized phone and switching that month.

This is the chart for switching to a plan that costs $10 less per month:

If you and your unsubsidized phone switch to a plan that costs $10 less per month, you must do it no later than 14 months after buying that phone to make it worth it if the subsidy would have been $280. As the subsidy goes up, you have more time to wait and still come out ahead. Of course if your new carrier charges an activation fee (or more accurately, doesn't waive it), you will have to switch a month or two sooner depending on the phone.

This is the chart for switching to a plan that costs $20 less per month:

You have much longer to wait if you can swing a $20 discount, which makes sense.

The trick is that you won't be able to pull this kind of money saving switch too many times. The other way you can come out ahead with an unsubsidized phone is if you use it on a carrier that doesn't require a data plan for all smartphones regardless like Verizon does. It will take you anywhere from going 14 months without data (for an otherwise $280 subsidized phone like the Torch) up to 23 months without data (for an otherwise $450 subsidized phone like the iPhone).

Why Don't Carriers Push Unsubsidized Phones?

Subsidies are tremendously useful for the carriers. Many people who are unable or unwilling to pay the higher up front price of an unsubsidized smartphone will go for the reduced initial cost of a subsidized one. That then puts them in data plans that more than make up for that initial subsidy. Plus, advertising fancy phones for low prices, or even "free", gets people's attention.

There's no reason why carriers should get rid of subsidies. However, they can have material effect on a carrier's margins if a big selling new phone has a large subsidy. Unsubsidized phones are more profitable for them, so why doesn't every carrier do as Verizon does and make it easy to browse them as options?

Primarily, it's probably because the main advantage for the customer of getting an unsubsidized phone is being able to walk away from the carrier without paying a fee. "If you buy this, you can leave whenever you want with no penalty!" is an awkward pitch for an industry that has been built around the two-year contract. Early termination fees probably also create a mental block in people's minds that prevents them from thinking about leaving even if they can come out ahead after paying it. Plus, a customer leaving early is most often costlier than the subsidy is.

The example of a plan that costs $60 per month is possible but probably not common. Let's imagine a smartphone user who opts for a plan of $90 per month with Verizon. Let's also imagine this person bought an unsubsidized Android phone (that normally has a $350 subsidy) that can be taken to Sprint to take advantage of one of its $80 per month plans.

Let's say this person is considering switching after 12 months. Based on the math from the previous section, this will allow the person to save either $30 total or $65 if Sprint waives the activation fee. It would be worth it financially to switch.

Verizon will have collected $1,080 total from this customer at the time of this decision. If the person stays for another 12 months, Verizon will have collected $2,160 in total. If the person had bought a subsidized phone and stayed the entirety of the two-year contract, Verizon would have collected $1,810 in total (net of the subsidy). In this particular scenario, by giving the option of the unsubsidized phone the carrier is looking at an upside of $350 and a downside of $730. It had better hope its network is much better in the customer's region than Sprint's is.

As the numbers and considerations change, the upsides and downsides do too. However for almost all of the subsidies I looked at here, the carrier takes in more revenue from a full term contract than it does from an unsubsidized, no-contract customer at the points where it makes financial sense for that customer to switch carriers. Only with the iPhone's $450 subsidy versus an unsubsidized customer who switches after 19 months does the carrier no longer care (it brings in $1,710 either way).

Verizon must worry less about bleeding customers than the others because it makes it the easiest of all to shop for unsubsidized phones. I find that interesting because Verizon itself is not the low cost carrier. Big Red should be more vulnerable to being undercut on price and therefore to seeing unsubsidized customers walk away early, but it must feel confident that its network quality, amenities, and packaging deals will insulate it from mere price sensitivity.

Sprint and T-Mobile, as the low cost carriers, would seem to benefit from a proliferation of unsubsidized phones. However, they are having issues with customer loss. Pushing options that let customers leave without having to think about a termination fee might be a bad idea.

As for AT&T, your guess is as good as mine.

Apple's Smash Hit Quarter Is a Sign of the Times

It's important to remember that Apple's big quarter was a holiday quarter and that it's the company's annual spike.

That said:

All I can say is wow. The smart guys like Horace Dediu had the numbers in the right ball park, but still, it's astonishing to see them spelled out in the cold light of reality.

The company sold a shade about 69.37 million computers in that quarter alone. Only 5.3 million of them carry the Macintosh branding, but iPhones (every smartphone, really), iPod Touches, and iPads are all computing devices. Apple sold a shade under 70 million of them in three months. The company sold more iPads than HP sold laptops and desktops, for crying out loud.

Another wow moment was when Tim Cook announced that tablets overtook desktop PCs in the US. I know desktops have been in decline for a while, but tablets basically weren't a thing before January 2010. In less than two years, this new form factor overtook the trusty old desktop computer for a quarter. That's crazy! I'm sure that desktops will overtake tablets again for a couple of quarters without all the extra holiday purchases, but it will be a temporary shift.

Apple has reason to trumpet the fact that tablets passed up desktops, as the iPad is far and away the market leader there. The Kindle Fire will probably make a decent dent if the next revision is better, and Windows 8 tablets probably will too depending on how the counting is done. For now though, "iPad" is synonymous with "tablet computing" in the same way that "iPod" was for digital music players.

Big changes are afoot. Yes, this was just a holiday quarter where iDevices made for popular gifts. However, look at the company's cash trend line. It's right where you expect it to be for exponential growth. Each year, Apple sells more iPhones than all the previous years of iPhone sales combined. The iPad is selling better now than the iPhone did at the same point of its life cycle.

This wasn't a fluke. The company's growth over the past few years was not a fluke. Apple is disrupting lots of technologies right now, and vertically integrated firms have an advantage when it comes to innovation. As long as the company remains unafraid to disrupt itself, the streak can continue.

The overarching trend in consumer computing right now is towards light, mobile, and user friendly devices. The world can pry the keyboard and mouse out of my cold, dead fingers, but the number of people who are with me on that is shrinking.

What Will Disrupt Chinese Manufacturing

The New York Times' big article on why the iPhone is not made in America is a great example of why US manufacturing is losing its lead on manufacturing in Asia. The line that stuck out to me the most was:

“[Foxconn] could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

A US firm can't find 3,000 people overnight because the US population is so much lower than China's is. But beyond that, Rigoni sounds like she's saying with a straight face that factory workers living in dorms is a reasonable norm. That sounds unbelievable to my American ears.

Everything described about Foxconn's setup sounds like a company town, a concept this country did away with decades ago. The US has been there and done that, and it's not likely ever to go back. I would be shocked if that concept remains viable indefinitely in China. Rising wages are already making China less of a low-cost production center, and as things improve for workers there, the company towns will go away.

That's the slow way that China's manufacturing will get disrupted though. It will almost certainly out-produce the US at some point thanks to it having nearly four times the population and therefore more capacity. It won't always be what it is today though, especially if/when the government quits keeping the currency artificially low.

However, there is a way that its manufacturing edge could get disrupted a lot more quickly, and that's with 3D printing. Primarily the technology is right now associated with rapid prototyping, but eventually it will get cost effective enough to use it to make many products on industrial scales. Injection molding is probably the first thing that would die off in that scenario.

As this TED Talk goes over, 3D printing can be used for anything from cheap, plastic pens up to high precision engine parts and medical implants. Imagine a situation where a company sets up 3D printing labs throughout the country, all pumping out different companies' products as demand rises and falls for them. A company that designs low sales volume products might never have to have inventory again, as its wares could be 3D printed nearby as customers ask.

We're a long way from that utopia, but we don't have to get to that utopia to cause serious disruption in global manufacturing. The rise of cheap Asian manufacturing came up quickly over the last 20 years, but it could drastically decline almost as quickly when 3D printing rises to its potential.