Disrupt Berlin 2018 heavy on machine learning, picks sperm freezer Legacy as Startup Battlefield winner

A panel of tech industry judges narrowed down a dozen contestants picked from over a thousand applicants to pick up the Disrupt Cup award at Disrupt Berlin 2018. The panel ultimately bypassed other startups putting machine learning directly into consumers’ hands, and ultimately decided on a single winner that wiggled its way past the others to win $50,000 —a Swiss startup named Legacy that freezes men’s sperm when they are healthy and young to archive reproductive ability until the time is right.

Startup Battlefield

Shweta Gupta of ImagoAI presents her company’s case in the Startup Battlefield

Runner Up: Imago AI

Disrupt picked a runner-up winner also connected to seed, this time of the plant variety. Phenox, an app by Imago AI, uses computer vision and machine learning to automate the measurement of crop output and quality for farmers, greatly accelerating the time-consuming process of quantifying desirable plant traits with the goal of developing higher-yielding, more disease-resistant crop varieties.

The startup, based in Gurgaon, India near New Delhi, has developed technology that claims to reduce the time required to measure crop traits by three-quarters, providing a potential alternative to developing new crop varieties using genetic engineering. By accelerating the process of breeding and phenotyping plants, new varieties could be developed that are optimized to thrive in a particular location or climate.

Additionally, its computer vision and machine learning can be used to identify crop diseases and measure in great precision how extensively a particular specimen is affected. The system can take advantage of the cameras on mobile devices to review data literally in the field. The system is also non-destructive, as plants aren’t required to be dug up and tested in a lab.

Winner: Legacy

Legacy works like a sperm bank but enables men who want to preserve their fertility for later to make a deposit from home, using a special container that is picked up by a courier and delivered to a clinic. Once received, the goods are tested and can be stored cryogenically and indefinitely for a one-time payment.

The Geneva, Switzerland, based Legacy offers plans ranging from basic fertility testing to long-term, parallel storage kept redundantly at six secure locations to avoid any loss. Users pay between $1,000 and $10,000 for the storage plans, enabling them to delay having children without any risk of degraded fertility or genetic mutation.

Legacy’s founder Khaled Kteily said he was inspired to develop the “Swiss Bank of sperm storage” after a friend facing cancer treatment complained that existing options for banking his seed seemed less than trustworthy. Beyond potential damage from medical treatments, a man’s ability to produce healthy sperm also degrades over time.

“Every eight months,” Kteily stated, “men produce a new genetic mutation that gets passed on to their children. Birth rates around the world are plummeting and men are responsible for infertility in 30-50 percent of couples. Meanwhile, you can freeze sperm indefinitely with no loss in quality, through Legacy, without having to leave your home and at a tenth of the cost of egg freezing.”

Other Battlefield survivors

Other finalists in the Disrupt Berlin Startup Battlefield included Spike, an app created by Ziad Alame, a diabetic himself, to simplify the work of monitoring and responding to changing blood glucose levels. Beyond simply recording data, the service is designed to proactively help users to coach their behavior, suggesting foods with specific carb counts or recommending specific behavioral changes in response to learning their health patterns over time.

The firm also launched its new Spike Guardian app designed to link people managing their diabetes with friends and family, creating a social network of support that helps others assist them in maintaining their ongoing requirements for carb-counting and insulin injections.

Ziad Alame presents Spike, a tool for helping diabetics manage their condition

The Berlin-based Polyteia is a startup working to help city governments take advantage of the data they have available in various databases. The platform aspires to centralize data and derive meaningful insights that can be used to chart out performance indicators from financial and operational data, optimizing city services based on utilization, and even forecasting future needs.

The final round also included Kalepso, a startup from Montreal, Canada that claims to have a solution to securely encrypting database information with higher performance using differential privacy to enable database analysis without leaking any individual’s private data.


Apple pitched a standardized version of iMessage to wireless carriers, but they didn’t bite

In an editorial bemoaning the lack of interoperability between Apple’s iMessage and common SMS texting systems, former head of iOS development Scott Forstall reveals the company once tried to push wireless carriers toward its version of messaging.

According to Forstall, Apple created iMessage because it wanted “messaging to feel more like a conversation,” reports The Wall Street Journal.

Apple included a number of enhancements to traditional text messaging in its first-party solution. Read receipts, dynamic typing indicators, rich photo and video support and other niceties came standard. More recently, the company built on the foundation by adding a dedicated App Store and, importantly, peer-to-peer Apple Pay payments.

The problem, as explained by reporter Joanna Stern, is that iMessage’s major benefits are incompatible with traditional SMS and MMS technology in use by Android and other smartphone operating systems. Further, attempting to switch away from Apple’s walled garden can cause a host of problems, from lost messages to broken group text threads.

Users of Apple’s iOS products are likely familiar with SMS conversations — the “green bubble” text threads in Messages — and their inherent limitations.

Since its inception, iMessage has been viewed as yet another value-added feature designed to keep iOS users within the confines of Apple’s walled garden, and to an extent that appears to be true. However, in researching today’s editorial, Stern discovered Apple once attempted to push the wider industry toward a texting standard that shared features with its in-house platform.

“We approached the carriers to pursue adding features to the existing texting systems and removing the additional customer costs,” Forstall said. “For various reasons, from the difficulty of extending the existing standards, to challenges with interoperability between texting systems and carriers, to the desire of carriers to protect a significant revenue stream, these explorations didn’t pan out.”

It is unclear when Apple proposed the enhancements, but carriers were reportedly surprised to see iMessage introduced as part of iOS 5 in 2011.

Indeed, telcos have been using the same SMS and MMS services for years. As Stern notes, hardware manufacturers are moving toward Rich Communications Services, or RCS, in an attempt to cross-platform features like read receipts and typing indicators, but the technology is not end-to-end encrypted. As such, Apple is unlikely to jump on board, which means iOS users will continue to see green bubbles when they chat with friends using non-iOS or Mac devices.

Though a number of alternative cross-platform, internet-based messaging options exist — Facebook’s WhatsApp or WeChat — Stern says “the dream” is an Android version of iMessage. Apple was on multiple occasions rumored to release such a solution, bridging the gap between the world’s mobile OS duopoly. The company supposedly went so far as to create mockups of a potential Android iteration using Google’s Material Design.

For now, however, Apple seems content to build out its own platform and let others fend for themselves.


Medisafe integration with Apple’s Health Records brings easy medication management to iOS


Medication management app Medisafe this week finalized integration with Apple’s Health Records API, granting nearly five million users in 200 countries quick and easy iOS access to drug-to-drug interaction notifications, pill reminders and more.

Announced on Tuesday, Medisafe’s Health Records support will allow iPhone owners to automatically import and manage prescriptions from participating health systems in the iOS Health app.

Apple threw a spotlight on Medisafe when it revealed the Health Records API in June. At the time, Apple touted the app and platform’s potentially life-saving medication tracking capabilities.

“Medisafe will be able to warn patients of problematic drug-drug interactions because they have the comprehensive view of the patient’s exact medication list from several hospitals and clinics,” Apple said in a press release.

Medisafe expanded on the system in its own statement on Tuesday, saying Health Records’ framework facilitates immediate cross-referencing of prescriptions uploaded by physicians. Notifications occur when a user is prescribed two or more medications, vitamins or supplements that negatively interact with each other, the company says.

According to Medisafe, the app has alerted users to more than 93,171 DDIs, about half of which were severe or life-threatening. That figure will likely rise with support for Apple’s health platform.

“As the only Health Records app featured in Apple’s launch to developers last June, Medisafe has used the Health Records API to bring consumers a private, easy-to-use solution that both helps them stay on track with their meds and safeguards them against harmful drug interactions,” said Medisafe co-founder and CEO Omri Shor.

Health Records debuted alongside iOS 11.3 with initial support from 39 health groups. That number grew to stood at 75 backers in August.

The feature, built into the iOS Health app, makes user health history information portable. Health Records aggregates and stores encrypted patient data, meaning users can review medical records with doctors and caregivers directly from their iPhone or iPad.


Publishers laud Apple News’ human touch, wary about monetization prospects


As Apple attempts to woo major publishers to its Apple News platform, the outlets — many anonymously — chimed in on the effort, saying human-driven article curation and a massive iOS device install base is winning over some converts. At least for now.

Apple News

Speaking with Digiday, publishing executives gave points to Apple for its approach to content curation. Like Apple Music, Apple News relies on human curation in the form of an editorial team tasked with policing content quality.

“They’re attentive, and you have the sense they’re human beings that are trying to nurture a relationship of some kind,” said a publishing executive who is in regular contact with Apple.

Apple News is in many ways the antithesis of Facebook, which is experiencing a media exodus of sorts due to recent troubles over the 2016 elections and a rejiggering of user news feeds designed to quell criticism over conspiracy theories run rampant.

According to the report, certain top-tier news organizations are in constant conversation with Apple’s editorial team. One such outlet, CNN Digital, is in touch with Apple on a daily basis. S. Mitra Kalita, SVP of news, opinion and programming at CNN Digital, says the availability enables the channel to reach a diverse audience.

“This is very much a human interaction,” Kalita said.

She pointed out, however, that monetization options lag behind the competition. Other publishers seemingly agree. New York Post chief digital officer Remy Stern at the Digiday Publishing Summit last week said his publication makes “hundreds” in revenue despite catering to an audience that numbers in the “millions.”

Advertising is typically the main source of revenue for online publications, and Apple’s cloistered platform only recently began allowing publishers to serve Google DoubleClick ads. One anonymous publication is looking to make “a few hundred thousand” dollars this year through Apple News, while the New York Post estimates it brought in only $600 in six months.

Apple is supposedly pushing for publishers to adopt subscription models, a tactic the company is also applying to apps sold in the App Store. How Apple intends to set its strategy apart from the crowd is unclear, and the company has shared little on the matter with publishing partners.

“They’re very condescending in their approach,” one anonymous source said. “It’s, ‘We’re doing this and we’ll tell you when we figure it out.'”

Further, Apple currently takes its customary 30-percent cut of all subscription sales, a larger chunk than Facebook and Google.

That could all change if and when the tech giant rolls out a widely rumored paid service for news and magazines — and potentially video and music content — next year. For now, however, most publishers appear willing to tough it out in hopes that Apple News becomes a key facet in Apple’s booming services business.


Complex iOS passcode bypasses grant access to iPhone Contacts and Photos

A pair of extremely involved passcode bypasses discovered in Apple’s latest iOS 12 can grant attackers access to Contacts and Photo data on a user’s iPhone, including models protected by Face ID.

Unearthed by Jose Rodriguez, the exploits are rather complicated, each containing multiple steps involving Siri, Apple’s VoiceOver screen reader feature and, in one case, the Notes app. Both methods work on iPhones running the latest version of iOS, including models with Face ID or Touch ID biometric security.

The first of the the two videos posted to Rodriguez’s Spanish language YouTube channel explains a vulnerability that allows a potential attacker to bypass both Face ID and Touch ID security protocols.

Demonstrating the process, Rodriguez activates VoiceOver through a Siri request. From there, he calls the target iPhone with a separate device and, with the call dialogue displayed, taps the “Message” button to create a custom text message. Once in Messages, Rodriguez moves the text selector to the “+” symbol, denoting the addition of another contact, then uses the secondary device to text the target iPhone, triggering a notification to appear. Double tapping the screen on the target iPhone while the notification is displayed appears to cause a conflict in the iOS user interface.

Rodriguez confirmed to AppleInsider that the second device is required to perform the bypass.

With the screen now blank, Siri is once again activated and quickly deactivated. The screen remains blank, but VoiceOver’s text selection box is seemingly able to access and navigate Messages’ user menu. Swiping back through the available options and selecting “Cancel” retrieves the original Messages screen, where a nefarious user can add a new recipient. Selecting a numeral from the soft keyboard brings up recently dialed or received phone numbers and contacts that contain metadata associated to that number.

Going further, the entire address book can be accessed if a displayed contact or number presents an “i,” or info, button next to its respective entry. Disabling VoiceOver, again via Siri, and tapping on the “i” icon displays a contact’s information. Performing a 3D Touch gesture on the contact avatar brings up options to “Call,” “Message,” “Add to Existing Contact” or “Create New Contact.” Selecting the latter displays a full list of contacts.

Finally, Photos are retrievable by once again enabling VoiceOver and swiping down to “Camera Roll” on an unseen user menu. Navigating through recent photos, screenshots and other folders via gestures and audio cues allows an attacker to assign individual pictures to a contact’s user icon.

[embedded content]

A second video details a lock screen bypass that, while limited in scope, demonstrates yet another bug exists in Apple’s mobile operating system.

Rodriguez again invokes Siri, but this time creates a new note. After adding a picture to the note, he locks the phone and repeats the process. Tapping on the inserted image in the second note presents a media sharing icon that, when selected, brings up a blank share sheets UI. Asking Siri to enable VoiceOver provides access to an unseen menu containing a user’s default sharing options.

[embedded content]

Apple has yet to address the vulnerabilities in the latest iOS 12.1 beta.

Concerned users can minimize exposure to the apparent bugs by disabling Siri lock screen access in Settings > Face ID & Passcode or Settings > Touch ID & Passcode under the “Allow access when locked” heading. The second attack can be thwarted by enabling password protection for Notes by navigating to Settings > Notes > Password.

Rodriguez discovered a number of lock screen bypasses in past versions of iOS, including an obscure SIM card-related flaw in iOS 6.1.3.


Prices and user experience drive smartphone OS switching, poll suggests


There are countless reasons users may opt to jump from one mobile operating system to another, but the results of a recent poll suggest hardware pricing and user experience are key factors in making such decisions.

PCMag recently conducted a survey of 2,500 U.S. consumers to shed light on the mobile switcher phenomenon as it pertains to iOS and Android, the segment’s two dominant platforms.

Only 29 percent of respondents actually admitted to swapping sides, while the rest remained steadfast with their platform of choice. Interestingly, more traded in Android for iOS (18 percent) over those that went from iOS to Android (11 percent). Of those polled, 54 percent had an iPhone, while 27 percent had a Samsung handset running some flavor of Android.

According to the poll, 47 percent of those who moved to iOS (which comes to around 202 people) said they moved to iOS for a better user experience, while 30 percent of those switching to Android said the same thing. Android’s biggest benefit over iOS was cost, where 29 percent of those who went to Android cited the lower prices, presumably attached to hardware.


Other features were less compelling, including better features, better apps, better customer service, and faster software updates.

The survey included a few other bits of information, including the fact that 56 percent of those polled don’t care about the release of new smartphones, while 34 percent buy a new phone when their contract expires. Over half said they only replace their phone when it breaks.


Facebook pulls Onavo Protect from App Store after Apple finds it violates privacy policy [u]


Facebook on Wednesday pulled its VPN service Onavo Protect from the iOS App Store after Apple found the app in violation of newly implemented privacy policies.

Citing sources familiar with the matter, The Wall Street Journal reports Apple earlier this month informed Facebook that Onavo Protect was in violation of App Store policies implemented in June.

Specifically, the software ran afoul of data collection restrictions and parts of the iPhone maker’s developer agreement covering customer data usage. Referring to the latter, Apple said Onavo Protect used data for purposes not directly related to app functionality or for serving up advertising to users.

Available as a free download, Onavo’s app allowed users to create a virtual private network that routes internet browser traffic to Facebook servers for filtering out malicious content. The app is advertised as a consumer protection tool that blocks “potentially harmful websites” and secures personal information when utilizing web browsers like Safari.

Onavo Protect’s FAQ webpage notes, “Onavo Protect blocks online threats when browsing the web using your iPhone or iPad. To function properly, you need to successfully install a profile during the first launch of the app, which in turns sets up a VPN on the device.”

More importantly for Facebook, Onavo granted free access to its users’ internet activity, invaluable information for firms keen on sniffing out consumer sentiment. According to The Journal, data from Onavo was used to bolster Facebook’s product and acquisition strategy, and helped inform industry moves including the purchase of WhatsApp and a venture into live video.

Representatives from Apple and Facebook discussed the privacy issue in a series of meetings last week, at least one of which was held at Apple Park, the report said. Upon Apple’s suggestion, Facebook agreed to pull Onavo Protect from the App Store.

“We work hard to protect user privacy and data security throughout the Apple ecosystem,” Apple said in a statement to TechCrunch. “With the latest update to our guidelines, we made it explicitly clear that apps should not collect information about which other apps are installed on a user’s device for the purposes of analytics or advertising/marketing and must make it clear what user data will be collected and how it will be used.”

The takedown does not affect users who already downloaded the app, which will continue to function normally. Due to the takedown, however, Facebook will be unable to push out updates for the title on iOS.

Onavo Protect remains available for Android via the Google Play Store.

Updated with statement from Apple.


Apple pulls iOS 12 beta 7 OTA update amid performance woes


The latest iOS 12 beta 7 over-the-air update has been made temporarily unavailable as Apple investigates reports of unexpected performance issues associated with the release.

iOS 12 beta

The company pulled access to OTA beta 7 downloads about three hours after the update went live on Monday.

While Apple has not issued a statement on the matter, developers testing the seventh iOS 12 beta have reported seemingly widespread bugs and system degradations. Common complaints include longer than normal app launch times, sluggish lock screen animations, non-functioning lock screen and Notification Center assets, and more.

Apple has apparently taken notice, pulling the OTA update from its servers. Developers still have access to the IPSW file, which is available for download and manual installation via Apple’s Developer website.

The cause of the performance issues is unknown at this time, and it is unclear when Apple intends to release a patched version of the software. The bug or bugs likely impact the release timeline of an expected public beta build.

Apple seeded iOS 12 beta 7 earlier today with minor improvements and bug fixes.

As part of its release notes, Apple announced Group FaceTime, a marquee iOS 12 and macOS Mojave feature that will allow up to 32 participants to take part in a FaceTime call, will not be ready in time for launch. The feature “has been removed from the initial release of iOS 12 and will ship in a future software update later this fall,” Apple said.


Apple Services and the ecosystem of value capture

Apple’s remarkable success in iTunes and its App Stores bears striking similarity to another example of a platform developer investing in its own ecosystem: transit Value Capture. App Store Value Capture has changed the game for Apple, and is now fueling a faster rate of revenue growth for the company than all of its hardware segments combined.

App Store

The App Store grew significantly in 2017, thanks in part to better merchandizing.

Apple gets trained to leave the station

The term Value Capture applies to rail and transit operators that are given the rights to develop the land around their stations. America’s intercontinental train routes were developed by railroads that were deeded land along their planned rail lines. These plots were then sold off or developed, capturing some of the value added by the fact that that land was adjacent to the transportation service the railroad had built and was operating.

Today, while most of America’s current transit systems (from Amtrak to BART) are now on the brink of failure and are often in worse shape than what you find in third world countries—despite the high tax subsidies paid to sustain them—there are many examples around the world of public and private transit operators performing extremely well simply because they were given the rights to develop the land around their stations, leading to extremely lucrative revenue sources that sustain their operations and growth while they provide efficient transportation services to the public.

With iTunes, the App Store, iCloud and Apple Music, Apple has similarly effectively captured some of the value its hardware platforms have created. This ecosystem of content is about to get a lot larger as Apple ventures beyond third party music and movies and begins creating its own digital content.

We know this because we’ve already seen what happens when Apple moves from selling other people’s content (iTunes music, movies and Audible books) to creating a new native form of content that it can sell exclusively: software.

Selling or reselling apps has been fantastically more lucrative for Apple than reselling licensed content that already exists and can be bought in many other forms. It’s not hard to see why Apple is now aggressively engaging in TV and film content production to sell new content exclusively to its platforms spanning more than a billion premium device users.

Blinded by Windows

As the world began to notice the success Apple was seeing with iTunes and iPod in the early 2000s, established players all scrambled to get into (or regain control) of both hardware devices and media content stores. Fifteen years ago, tech media writers almost unanimously agreed that then-giants Sony and Microsoft (and even minor players including iRiver, Creative, Napster and Microsoft’s PlaysForSure licensees) would trample Apple out of the music business. Why? Because Windows had beaten the Mac a decade earlier.

Those writers were as wrong then as they are today, largely because most of what passes as “journalism” in the tech world is really just rival companies’ press releases paraphrased by people who can’t get real jobs and have no actual experience working in the industry—or apparently even observing what’s happening and what has recently occurred.

Once a columnist or pundit is indoctrinated into an ideological corner by some firm’s PR department, they will believe in their personal Stockholm kidnappers no matter what nonsensical, contradictory gibberish they are told. One example: at the height of Apple’s iPod, Microsoft told the media that it was launching Zune in such a way that it would somehow not compete with its own PlaysForSure partners’ device sales (only Apple’s iPods!) and the press gobbled it up and dutifully syndicated it out to their audiences, essentially without criticism.

Despite being plagued by a series of real problems, the tech media largely believed that Zune could successfully compete with iPod without hurting Microsoft’s parallel PlaysForSure business.

When Apple began replicating its iTunes success in the iPhone App Store, the same set of writers all again assumed that Microsoft, Palm, Google, Nokia, Sony, Samsung and everyone else that was selling phones and phone software prior to Apple would regain their positions and push Apple out of business because “look back at the 1990s and see how the Mac was sidelined by Microsoft’s Windows PCs.”

The Schtick

When Google told its sycophant media partners that it was building its own Google-branded devices that would somehow (just like the Zune) compete with Apple’s iPhone while having no negative impact on its Android partners, the press again gobbled it down like a dog eating up the toxic vomit that had just caused it to throw up a minute ago.

Even more remarkably, the various teams of media writers carrying water for Google have repeated the idea that every Google-branded phone was somehow “the first real Google Phone” over and over across the last decade, from the HTC G1 to the Nexus One to the Moto X 1 to the Pixel 1 and every model in-between.

Fool me once, shame on me. Fool me literally every time you release a phone between 2008 and 2018, and it’s obvious that I’m willfully playing along in this game of fooling people.

Google Motorola

When Google slashed the prices of its poorly selling Moto phones, tech media luminaries pretended this was a genius strategy to hurt Apple’s profitability rather than a clear sign of inept failure by buffoons

When it became clear that a decade of Nexus, Moto and Pixel introductions had zero impact on Apple’s iPhone and iPad sales, the tech media again turned to hear Google explain that despite its fantastical billions in hardware investments, it wasn’t really trying to do anything anyway, so it had succeeded in failure and the whole exercise had really been such a fun adventure—an insane idea that was met with the kind of worshipful applause usually only heard by a naked emperor in a land of morons.

The same people also construct illogical loops that insist that Google’s massive multi-billions of dollars plowed into boondoggle acquisitions like Motorola and in building and maintaining teams of engineers who create everything from custom silicon to advanced software and cloud services—all specifically to support Google-branded devices that end up as total failures in the market—are a good use of resources because Google has so much extra money laying around it can afford to burn $5 billion here and $12 billion there and then pay a $5 billion EU fine without blinking—the same way that it was no big deal that Samsung had vaporized at least $5 billion in its Galaxy Note 7 battery supernova imbroglio.

They then turn around and audibly gasp that some nobody constructed an estimate that assumed Apple may have spent as much as $5 billion across the last decade building its permanent Apple Park facilities, and wonder how long the company can possibly hope to stay in business when it arrogantly spends piles of money on itself like that.

And then they wagged their fingers at Apple’s +$200 billion cash hoard, and explained that investors don’t like the idea of a public company sitting on that much money without gaining a significant return on that capital. And then (it never stops) they point at the $3 billion acquisition of Beats and complain that Apple has no business expanding its audio hardware offerings and pushing into music streaming because good-god that’s a lot of money to spend on a profitable brand with popular products that sell far better than any Google-branded phone ever has.

Half of the puzzle misses the big picture

Many of these ideas are based on classic tenets of conspiracy theory: “doubt the facts you know, and worry about possibilities that are unlikely, because what if they are true?” The notion that Apple is dangerously close to failure stems from “its entire business is predicated on doing what it has successfully, consistently done for years, but what if it can’t do it forever?”

There are two problems with the supposedly irrefutable logic of “commodity always wins.” One was the idea that hardware is easy, and the other was that software is easy. In reality, both are extremely hard to do well, but also hard to sell—and often can be difficult to even give away. Perhaps hardest is the effort to integrate hardware and software seamlessly.

Despite its stature in PC licensing and its Xbox franchise, Microsoft couldn’t build a commercially successful media player despite plowing billions into its Zune brand. Despite a storied history of creating the state of the art in home audio, boomboxes and portable players, even Sony was unable to rival Apple’s iPod or introduce a great media store experience. Other first movers in media player hardware couldn’t keep up, and most every effort in media stores couldn’t stay in business.

In part, these failures were often the result of companies trying to copy part of Apple’s business: either music player hardware without a useable store, or a media store without consistently great hardware integration. Apple’s teams were doing two difficult things—and then integrating them to work well together.

As iPhone emerged, Apple continued its integration model while virtually everyone else in the industry lined up to be licensees of Windows Mobile or Android, referencing the precedent of Windows in 1995 while ignoring the current state of Windows PCs being clobbered by Macs in profitability—and what had just occurred within the world of iPod and iTunes.

App Store

Apple’s App Store has excelled in achieving Value Capture

While the most apparently obvious problem was the lack of smooth integration occurring between licensees and their platform vendors, a similarly huge issue was that in a world of disjointed hardware and software development, there was no ability for anyone to cash in on Value Capture in the way Apple could.

Value Capture versus the appeasement of software partners

One obvious difference between Macs in the 1990s and iOS in the 2000’s (at least with the 20/20 vision of retrospect) is that Apple had very limited Value Capture in place for the Macintosh. While Apple did all the work of building and maintaining its Mac platform, the real beneficiaries were Microsoft, Adobe and other third party developers that effectively did nothing in return but “support” the Mac OS with their software.

Apple was so desperate for this third party “support” that it often actively held back from building and bundling its own first party software with Macs, to avoid any conflict with the developers it was courting to support its platforms. While Macs remained marginally successful despite being marginalized by Windows, Apple’s other platform from the 90s, the Newton MessagePad, was unable to woo major development at all.

Part of this was the result of Apple being so careful not to compete with its third party developers. This behavior seemed sensible back in the 1980s and 1990s, when hardware makers relied on third parties to “support” their platform, knowing that without such support they would become as irrelevant as Atari or Amiga or OS/2. Apple’s extreme efforts to avoid conflicts with its software partners resulted in the company spinning off most of its internal software into the Claris subsidiary back in 1987.

But without getting into software itself and creating titles that sold its own hardware, Apple’s Macs, the 1994 Newton and even its 1996-acquired, NeXT-based macOS X seemed doomed, as all existed at the whim of third parties that might at any time simply abandon Apple’s platforms. That’s exactly what Microsoft did when it got Windows to the point of standing on its own in the mid 90s, and Adobe and others subsequently followed suit, taking their Mac software to the larger market of Windows PC users.

Apple learns a lesson – from Microsoft

While Microsoft didn’t worry about Apple’s feelings when it worked to crush its former partner by freezing development of Office apps on the Mac, it also turned around and screwed over its own PC developers. Unlike Apple’s careful efforts to avoid stepping on its third party developers’ toes, Microsoft actively attacked its primary DOS PC developers (including dBase, Word Perfect and Lotus) by launching Windows 95 with its own bundled Office 95 apps.

And when companies like Netscape unveiled entirely new apps (like the web browser), Microsoft quickly worked to kill them off with its own first party, bundled copies (Internet Explorer). Microsoft’s relentless drive to own Windows and capture as much value as possible from its platform was completely different than Apple’s timid efforts to help its third party developers and avoid competing with them at all cost.

Apple appears to have accidentally figured out the importance of owning its own software. As Adobe began cold-shouldering the Mac in the late 90s and throwing its support behind Windows, Apple identified KeyGrip, a QuickTime-based video editor project at Macromedia—slated for cancelation—as something it should step in and save in 1998.

When it couldn’t find a third party software partner to take over the development of the software, it released it on its own as Final Cut Pro. That title turned out to be essential in helping Apple sell its PowerMac hardware in new markets.

Apple put its logo on Final Cut Pro, kicking off a new era of first party software

Because the rest of the world was effectively abandoning the Mac, Apple finally realized that pandering to third parties wasn’t a sustainable way to maintain its ecosystem. It subsequently acquired what would become iTunes in 2001, and used the app to sell iPod. Apple then got into music production with Logic in 2002.

Apple’s acquired Pro Apps spawned the consumer titles iMovie and GarageBand, and helped launch two new suites of Apple-branded apps: iLife creative tools and iWork productivity software.

Apple also actively began building and maintaining its own Mac development tools with Xcode starting in 2003, rather than delegating this task to third party development tool vendors as it had in the past. And as Microsoft and Netscape became unreliable web browser vendors on the Mac, Apple launched its own Safari browser, also in 2003.

By expanding its ownership of an increasing amount of “land” around its “stations,” Apple was not only gaining independence from the whims of its software partners, but also setting itself up to make bold changes that didn’t require the approval of its ecosystem. That was a huge shift from the era of 1997-2003, when Apple sought to transition from the classic Mac OS to the new macOS X Yellow Box, but was rebuffed by major developers who insisted that Apple slow down and do far more work to support their own existing legacy code.

Once Apple gained ownership of its core platform technologies (from the OS to its development tools to the web browser and core bundled apps ranging from Mail and Calendar to iPhotos), it gained the ability to rapidly make major shifts like the jump from PowerPC to Intel processors (literally overnight, compared to the many years eaten up in the previous, incremental transition from 68K to PowerPC), and then (the next year!) to ARM processors supporting iOS as an entirely new mobile platform.

In 2010, when Jobs introduced iPad, he could show it off with a suite of Apple’s own iWork productivity apps, along with the Safari browser, Mail and other essential apps, without waiting endlessly for third parties to decide whether or not to invest in the entirely new table platform the way Apple had with the Newton in the 1990s.

Having its own software enabled Apple to quickly launch new platforms like iPad

Rather than scaring off third party development, as Apple had feared doing in the 80s and 90s, the attention Apple created for its platforms among consumers stoked developers to join in building custom apps for iPhone and iPad. And the App Store model Apple created helped the company to benefit from the value of the platform it had created.

Apple had gained Microsoft’s flexible “Value Capture” market power but had a better sense of how to use that power to effectively achieve valuable goals. Note that at the same time, Microsoft had greater leverage over PCs but failed to effectively transition to new processors or to competently bridge its desktop model into the mobile world of phones or tablets. Microsoft even struggled to get its own Office working on its own mobile platform.

Sherlocked Holmes and the case for Value Capture

Apple’s increasing efforts to gain control over its own platforms and exercise Value Capture have often been rebuked by the various people who didn’t benefit from this trend.

When Apple released its web search tool Sherlock 3 for the Mac back in 2002, it encroached upon similar features already supplied by a third party utility named Watson. Outcry over Apple “sherlocking” its third party developers continued when Apple added a web-based layer of desk accessory-style widgets to the Mac, similar in appearance to an existing product called Konfabulator.

Apple and its Mac platform were seen as a parent that owed its children (third party developers) everything, and must deny itself of every pleasure to keep its children alive, safe and well fed. Except that third party developers weren’t children, they were independent business people. Apple had every right to build its own software and create new markets capturing the value of it had created with its platforms. It didn’t owe its developers anything more than Microsoft owed its DOS PC partners—the very companies it chewed up and spit out to launch Windows.

Rather than being helpless children, some of Apple’s partners were ruthless and brutal agents that would take everything Apple gave them before stabbing their host platform in the back, the way Microsoft and Adobe (and so many others) did.

Microsoft really did have to lose

When Apple settled with Microsoft in a 1997 deal that forgave Microsoft for stealing Apple’s QuickTime code and infringing its patents, in exchange for a public show of investment and a five year commitment to create new Mac apps, the deal was portrayed as Microsoft mercifully saving Apple and Apple getting over its embittered fantasy of beating Microsoft. The reality was far removed from that.

Bill Gates

Bill Gates appeared relieved to announce an investment in Apple in 1997

At the time, Steve Jobs famously stated, “if we want to move forward and see Apple healthy and prospering again, we have to let go of this notion that for Apple to win, Microsoft has to lose. We have to embrace a notion that for Apple to win, Apple has to do a really good job. And if we screw up and we don’t do a good job, it’s not somebody else’s fault, it’s our fault.”

Most of the people who heard those words took away nothing more than the idea that Jobs was saying “Microsoft doesn’t have to lose.” But that’s not at all what he said. He said “Apple has to do a really good job,” an idea that suggested that Microsoft would indeed lose something. And it did.

In the 1997 agreement, Apple was stocking up provisions to reach a future where it could be successful without depending on or appeasing Microsoft. It was also working on doing “a really good job,” something that necessitated that Microsoft would lose its current status in several areas.

Apple got QuickTime codified as the storage standard behind MP4 in 1998, erasing the value of Microsoft’s rival work with Advanced Streaming Format. Apple then made moves in music to derail everything Microsoft had built—from audio codecs to media player OS licensing. It then moved into web browsers with Safari and created the world’s most popular mobile browser, denying Microsoft entry into mobile markets. And the App Store has cracked open Microsoft’s Office monopoly with new specialized app tools that disrupted the status quo in productivity suites.

There is no way Apple could have reached its current position without Microsoft losing in digital media, in music, in apps and in mobile and wearables. Jobs wasn’t saying ‘Apple had to win without Microsoft losing.’ He was saying Apple had to win on its own merits, rather than blaming Microsoft for its current predicament.

If Microsoft hadn’t lost out to Apple in achieving Value Capture of the software market surrounding the most valuable platform in computing, Apple wouldn’t today have a trillion dollar valuation.

App Store as an R&D facility

Apple has since appropriated a variety of third party concepts that originated among its developers (or on other platforms). In some cases, it has licensed, acquired, or acquihired the talent and code required to deliver its own product (such as with Siri). It other cases it hasn’t needed to, because good ideas that aren’t protected by copyright or patents are open for everyone to independently implement.The fact that Apple operates the world’s most commercially successful software store gives it unparalleled insight into what affluent consumers want and what they will pay for

The fact that Apple operates the world’s most commercially successful software store gives it unparalleled insight into what affluent consumers want and what they will pay for. The App Store is a fertile testing ground that gives Apple a steady stream of new innovative ideas to harvest. It is essentially a massive research and development lab funded by outside capital, providing Apple with mountains of valuable data.

This hidden value of the App Store appears to be ignored by analysts and the media, who often seem to prefer to believe that Google is “winning” because it is servicing higher volumes of downloads to a far less valuable market of users who don’t care to pay for software and trend toward cheap hardware, contributing analytics data that is virtually worthless for any purpose, particularly in guiding the development of premium hardware and valuable subscription services.

It’s no wonder Google’s Pixel phones, netbooks, and tablets aren’t capturing the interest of affluent users. Google lacks the data needed to design products that premium users want. Google has tons of data on low-end users who are content with ad-supported services with no protection of their privacy. That’s not earning the company any standing in premium hardware anymore than McDonalds has any chance of wooing in foodies who are seeking to avoid processed food.

Pixel C

Google boasted that its Pixel products were fully its own design. But it didn’t know how to design a premium product people actually wanted to buy.

Meanwhile, Apple’s Value Capture directly generated more than $9.5 billion in Services revenue in the last quarter, growth of 31 percent over the year ago quarter. In the same quarter, Facebook reported total revenues of $13.2 billion, and warned that “we expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4.”

Investors have priced Facebook as if its worth more than half of Apple’s entire business, despite the fact that Apple generates over four times the revenues and is growing across existing product categories, into new markets including wearables and Services, and globally in every major market. For Facebook, there’s little additional real value to capture from the advertising service it has created.

Apple is just getting started in Value Capture.


New Siri Shortcuts beta introduces limited HomeKit integration


Apple on Friday released a new beta version of its Shortcuts app to developers for testing, and while the update is light on big feature additions, some users who are concurrently running the latest build of iOS 12 beta have reported limited HomeKit integration.

In Shortcuts beta 2.0, HomeKit compatibility is seemingly restricted to contextual Siri Suggestions in iOS 12 beta 6, which saw release earlier this week.

Developers testing Shortcuts on devices running iOS 12 can find the new HomeKit actions under Siri Suggestions, a standalone workflow category, or by entering “Home” into the action search bar. It appears that Siri Suggestions, and not the Home app, is powering current HomeKit integration, as search results return Home app actions under “Siri Suggestions.”

For now, Siri Suggestions seems to be pulling in custom HomeKit scenes, or customizable macros that string together commands for multiple smart home appliances.

AppleInsider was able to confirm HomeKit integration in Shortcuts, though restrictions to Siri Suggestions makes the process of surfacing actions quite cumbersome. Instead of viewing a list of available HomeKit actions directly in Shortcuts, users must first trigger a desired scene in the Home app, return to Shortcuts and access the command via Siri Suggestions.

Along with HomeKit, the 2.0 release of Shortcuts builds on Apple’s initial beta release early last month with bug fixes and other minor system improvements.

Debuted at WWDC 2018, Shortcuts is a highlight iOS 12 feature that allows users to create and run app macros via custom Siri phrases. For example, an iPhone user can create a shortcut called “I lost my keys” that automatically pings a connected Bluetooth-enabled Tile tracker.

Apple product manager Kim Beverett demonstrated the system onstage, using the app’s drag-and-drop editor to add a series of actions to a customized Shortcut called “Heading Home.” When spoken, the phrase commanded Siri to query Maps for a navigation route, send a custom text via Messages, set a home thermostat and begin playback of KQED Radio.

Shortcuts ships with iOS 12 later this year.