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10 Questions for Tesla's New (& Apple's Former) Retail Chief
Electric car maker Tesla Motors has long likened its retail approach to Apple’s stores — after all, what company wouldn’t rather be grouped with posh, fanboi-attracting beacons of Mac love than the struggling dealerships on auto rows around the country? Well on Thursday Tesla, fresh off its IPO and years away from profitability, said it has gone and hired Apple's former real estate chief George Blankenship to head up development of its retail strategy and network.

Blankenship, who spent much of his career at Gap, joined Apple in 2000 — the year before Apple opened its first store. As TheAppleBlog has explained, Blankenship was responsible for “shaping the way Apple chose to place its inaugural retail locations, along high traffic routes in places with extremely high property values.” Microsoft has also turned to Blankenship for part of its retail strategy.

The retail road ahead may be a bumpy one for Tesla. In its S-1 Tesla states that laws in many states may block the company from selling its vehicles directly to consumers at stores (rather than through franchised dealerships) and over the Internet in certain markets.

But Blankenship thinks Tesla will be as much of a game-changer as Apple has been and told us in an interview today, “I think Apple changed the world in numerous ways. I think Tesla’s going to do the same.” Here’s lightly edited excerpts from our Q&A with Blankenship about his strategy for making that happen.

Q. How are you getting started on your first Tesla projects, the stores in Tokyo, Toronto and Washington, D.C.?

I’m actually going to be in Japan next week, working on the design of the store, finalizing that. I’m working on some locations in Toronto and Washington, D.C. as we speak.

Q. What will you be looking for in future locations for Tesla stores? What’s ideal, what are some potential deal breakers?

The ability to create a very interesting customer experience and tell the Tesla story in an environment that may not be like a traditional car dealership that’s out on auto row somewhere. I’m looking for opportunities to do that in a more intimate way than a traditional car dealer.

For the future, I think you’re going to see a lot of locations like Boulder, where people are already there doing activities that they enjoy doing: shopping, having dinner. I want to be in locations like that and invite them to come and learn the Tesla story.

Q. One similarity I see between what Apple and Tesla both want to accomplish with these stores is the idea of converting customers — in Apple’s case, converting them from PC to Mac, and in Tesla’s case from gas to electric. What other similarities do you see?

Anytime someone has a game changing technology or invention, people need to learn about it, get comfortable with it. The iPod was different. Most music players at that time were basically 10 songs. Well, out came the iPod — a thousand songs in your pocket. When you have Apple stores that have natural traffic through them on a day in, day out basis, and you show them this thing called an iPod and a thousand songs in your pocket, people got interested. If there wasn’t someone there who could show what it could do, and that it wasn’t just another music player that was two to four times more expensive, it might not have become a game changer.

Q. What lessons do you expect to apply at Tesla from your experiences working on Apple and Microsoft stores?

When I started at Apple, we wanted to become the best place to buy a computer. After a couple years, we learned from our customers that there was another element: Apple was the best place to own a computer. If you treat a customer as a one-time sale, will you really take care of them? If you entice them with new things and treat them in a very special way, they become evangelists. I want to approach this as the best place to own a car.

Q. How will your approach be different this time around?

At Apple the mission was to get in front of as many capable, inclined customers as possible, and treat them royally. I don’t know that I’ll do much different than that here.

Q. So far Tesla’s stores have been showing the Roadster. Will you be working on a unique strategy for the Model S and any future models?

What I am focused on is a strategic plan around the world that will roll out just slightly ahead of need so that we can give customers a little taste of what’s coming and intrigue them so that by the time it gets there it’s the only thing they’re going to want. I’m already having meetings about 2015 and 2016.

Q. When Apple opened its first store back in 2001, part of the goal was to eventually put an Apple store within driving distance of 85 percent of consumers in the U.S. What’s your goal for Tesla stores — is there something similar?

I haven’t identified at this point what the metric is that will give us the visibility that we want to have to be able to tell the incredible story that we want to tell.

Q. What are some of the factors you’re considering?

I’m looking at everything from population to what magazines they read to where they like to shop to what is available to them currently in terms of technology and how much they’re embracing it. A lot of companies will just do demographics and say, “there’s this number of people with this income in a ring around this location — that makes them customers.” I think it’s much bigger than that. It’s not only about the black and white data that somebody can pull out of a computer. It’s how you put it together and look at it that makes a difference.

Q. What’s your timeline for crafting this strategy?

I’m working on it now, going to Japan next week, and I’ll probably be in Europe sometime in August or September. I’ll be putting this together each place I go, so as far as a final strategy probably not until fall, but on a regional basis it will be developing in pieces.

Q. What unique challenges are you anticipating for different regional markets?

When you get to some countries, they are accustomed to paying a lot more than we are for gasoline than we are. The thought process is a little bit different when you start talking about, here’s a car that doesn’t even use gasoline. There’s an invitation to tell them more right away because they want a piece of it now.

Image credits: Tesla store courtesy of Flickr user mil8; Apple store courtesy of Flickr user S_Baker; George Blankenship photo courtesy of Tesla Motors.

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Why Macs Will Never Get Blu-ray
Ever since 2008 when Blu-ray and HD-DVD were battling for consumer mind share, Mac users have been speculating about Apple’s next optical drive technology. Since 2001, SuperDrive has been Apple’s name for DVD and CD burning optical drives built into or available in every Mac sold, and now SuperDrive is standard but Apple doesn’t mention it anymore because it’s not that big of a deal to include in Macs. Almost every PC manufactured today has this.

The MacBook Air was released in 2008 with no optical drive, which started a flurry of rumors about Apple’s thoughts on where we were going as Apple mentioned the irrelevance of optical drives since content was available via iTunes and the web and you only needed one for installing software since even backups could be done over the air with Time Capsule. Apple still sells a $99 USB SuperDrive for the MacBook Air for people who need one. As a Macbook Air owner, I have never needed one since all of my software was installed via the web and all consumable content (movies, music and podcasts) are all available in iTunes.

The two most notable technology visionaries of our time, Bill Gates and Steve Jobs, have both weighed in on Blu-ray since it became the standard physical media for high-definition content so I thought it would be beneficial to provide their quotes here before I give a bit of my thoughts.

Bill Gates gave two very powerful quotes on the subject. The first:

“Well, the key issue here is that the protection scheme under Blu-ray is very anti-consumer and there’s not much visibility of that. The inconvenience is that the [movie] studios got too much protection at the expense consumers [sic] and it won’t work well on PCs. You won’t be able to play movies and do software in a flexible way.”

and:

“For us it’s not the physical format. Understand that this is the last physical format there will ever be. Everything’s going to be streamed directly or on a hard disk. So, in this way, it’s even unclear how much this one counts.”

The note of it being anti-consumer is frankly a matter for any digital content these days. Movie studios will have their DRM on any future media that they control whether you get that content from Microsoft, Apple or built into a disk that you put into a dedicated player. DRM is the current reality unless you pirate it, but Gates’ comment about Blu-ray being the last physical media is very important. Gates actually said this in 2005. Yes, five years ago. Gates said this long before YouTube was a house hold name and at a time when the iPod with video was a brand new product and before the Apple TV. Of course, Microsoft had its home theater software built into Windows XP, but if you look at how we consume media today, it’s apparent that he was on to something.

Then, in October 2008, Steve Jobs gave his thoughts on Blu-ray with one line:

“Blu-ray is just a bag of hurt. It’s great to watch the movies, but the licensing of the tech is so complex, we’re waiting till things settle down and Blu-ray takes off in the marketplace.”

Of course, Blu-ray has taken off in the marketplace but Steve hasn’t changed his tone very much in the last year and a half. An email response from Steve Jobs last week mirrors Bill Gates’ comment in 2005 and reiterates Apple’s stance on Blu-ray and pretty much sums up why we’ll never see the technology included in future Macs:

“Blu-ray is looking more and more like one of the high end audio formats that appeared as the successor to the CD — like it will be beaten by Internet downloadable formats.”

After the customer sends an email response to him again stating Blu-ray has a purpose for use of system backups and high-density storage or the distribution of home movies Steve adds:

“No, free, instant gratification and convenience (likely in that order) is what made the downloadable formats take off. And the downloadable movie business is rapidly moving to free (Hulu) or rentals (iTunes) so storing purchased movies or TV shows is not an issue.

“I think you may be wrong — we may see a fast broad move to streamed free and rental content at sufficient quality (at least 720p) to win almost everyone over.”

The rise in broadband speeds paired with the fact that you can download a movie anywhere in the world (with a cell phone connection) to your mobile device and it’s clear that Steve simply doesn’t see a point in Blu-ray being included given the complications of licensing it and echoing sentiment into Bill Gates’ opinions of DRM via the new format.

Steve thinks that with a Time Capsule or an online backup system (like SugarSync and Mozy) paired with YouTube for sharing video and iTunes at the center of it all with media consumption, the industry has made Blu-ray obsolete before it even makes it to Mac machines and I agree.

I once thought Blu-ray was a key addition to have on my Mac and now that I have a Mac without an optical drive, I don’t miss it. Everything I own is synced to my iMac and MacBook Air over the web in real-time, my iPhone and iPad can purchase movies and they download over the air and I can share a movie with my family that I shot and edited on iPhone 4 and uploaded to YouTube within one hour compared to burning and shipping a Blu-ray disk to them. Blu-ray is something a lot of pros want but it’s out of desire and not true need.

I’m not a professional filmmaker and I’m not working for a movie studio, but DVD Studio Pro and products like Toast from Roxio support Blu-ray if you buy a drive separately and plug it into your Mac. Apple just won’t be shipping support for the technology anytime soon and it may never include it in its machines and I bet that most consumers are okay with that.

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Apple's Enterprise Inroads
2009 was the worst year in IT spending. Ever.

I’ll let that sink in for a minute.

Now, 2009 was a bad year for many aspects of business — sales, capital management, making a profit — but IT departments had it especially bad. Because IT is a support organization, everyone wants to use it but no one wants to pay for it, which means that IT almost always gets the budget leftovers. It’s hardly a surprise that IT got the seriously short end of the stick in 2009. According to a report by Gartner, spending on IT declined 5.2 percent overall last year among all verticals, and the fall was even worse in enterprise businesses, where spending fell 6.9 percent.

Naturally, that kind of drop in funding completely changes how IT departments prioritize their spending. For one thing, in the face of such spending cuts, standard hardware upgrades go right out the window. According to the same Gartner report, hardware spending dropped 16.9 percent in 2009. To make matters worse, IT departments also reduce headcount to save money — in 2009, fully 62 percent of companies cut IT headcount — which makes matters worse because there are now fewer people to support more work on the same hardware.

This is not a recipe for success.

Fortunately, now that it’s July 2010 and most companies are fully embracing the second half of this new fiscal year, IT budgets are slowly improving. IT budgets across the board are expected to gain 3.3 percent by year’s end. This leaves IT departments in the interesting position of having a reason to change their operations, and a little bit of money to make it happen. This is unusual.

As a service organization, IT’s performance is measured on things like uptime, cost and so on. As a result, IT departments tend to be very risk-averse and resistant to change. Whereas IT organizations typically resist change to avoid breaking things — if it ain’t broke, don’t fix it — now there are some interesting pressures in play that make the way things are look broken already. Because IT headcount is depressed, IT corporations need to be focusing on reducing the need for support because there are fewer people around to do it. And, because of the clog in the hardware upgrade pipeline, there are more upgrades vying for the same dollars, which means that CIOs will be looking for upgrades that are either cheaper or serve multiple purposes. In short, IT departments are in the uncommon position of reevaluating their long-term direction in earnest.

Apple, being the savvy company that it is, has positioned itself well to capitalize on IT departments looking to make a change. Some of the largest organizations in the world are taking another look at Apple products, and with good reason. There’s good data indicating that Apple computers cost significantly less to support than Windows PCs, both in terms of TCO and simple ease of support. And this is no theoretical result. According to another report from Gartner, Apple is gaining market share in laptops and desktops faster than anyone else, beating out competitors like Hewlett-Packard, Lenovo and Dell. And companies are adopting Apple’s devices, especially the iPad, for positions like sales because they have the flash and panache to seal a deal, but are simple enough that workers can use them with minimal training and robust enough that fairly little technical support is required. And if an iPad does break, it’s simple and straightforward to fix: just send a replacement. All of these factors are making Apple products look more and more attractive to struggling IT departments.

That’s why large enterprises like Wells Fargo and SAP are adopting the iPad for jobs ranging from sales to simple paper replacement. Mercedes-Benz is so pleased with the results of using iPads in 40 of its U.S. dealerships to handle credit applications that it’s considering using iPads in all 350 of them.

However, Apple’s latest foray into corporate America is ostensibly only the inroad of a much grander scheme. Gartner makes the excellent point that, as virtualization and cloud technology matures and companies gain experience with them, such services will gain adoption very quickly because of the dramatic cost savings they offer organizations. Among the technology providers in this space, it will be the companies that develop these technologies into the most robust and easiest-to-use products that will win the day, and Apple’s track record combined with its new $1 billion data center show that Apple is positioning itself well to accept the mantle of leader in this burgeoning new field.

There has been much speculation about Apple’s new toy, but it’s fair to say that it’s building server capacity for something. Popular theories include a music streaming service because of Apple’s acquisition of Lala, and theories that the facility is for video hosting seem a lot more credible with the introduction of FaceTime and the iPad’s apparently impending camera. Data heads see a different picture, though: one that has Apple positioning itself for a strong enterprise presence. And ultimately, with Apple gaining such traction in the enterprise market, it would be foolish not to build cloud offerings for those customers, like simple file hosting or a virtual hosted Mac, to be delivered via its devices, like the iPad. And Apple’s no fool.

So, with Apple making solid gains in the corporate and enterprise markets, what’s next for technology’s golden child? You should expect to see more big-name customers adopting the iPad, and more iPad development shops springing up to fill the resulting need for corporate applications. However, ultimately, the real surprise will come when Apple reveals the purpose of its new data center.

For now, I like to think it holds the ghost of Newton.

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Apple's Loose Ends
While Apple has been releasing fancy new products recently, like the iPad and the iPhone 4, this last week something brought my thoughts back sharply to some products that have been languishing for some time without an update. There are a number of products that Apple has let sit for too long and badly need some attention.

The top of this list would probably be the Apple TV, but recent rumors of an imminent refresh of the device, perhaps built on iOS, has bumped the “hobby” project in favor of some other devices and features that are waiting for a little love from Apple.

Airport Express

The Airport Express was last updated in March 2008 when Apple added 802.11n capabilities. The Airport Express was the first device to sport AirTunes remote speakers so you could play iTunes audio in another room, but it is the last device to still have 100baseT ethernet. When 802.11n can hit transfer speeds of 150-300 megabits, it seems silly to be bottlenecked at 100 megabits on the ethernet side. The Airport Express would also benefit from AirDisk support in addition to the printer facilities it currently provides through the USB port. Simultaneous dual-band Wi-Fi as found in the Airport Extreme would also be a nice update.

30″ Cinema Display

A lot has already been said about the lack of updates to the 30″ Cinema Display, introduced in June 2004. The 30-incher is still a great display, but the newer 24″ LED Cinema Display sports a lot of upgraded technology that needs to make its way into the 30″ model too. The 30″ is crying out to be updated with LED backlighting and Mini DisplayPort inputs. I know it is a bit un-Apple-like, but I would really like to see multiple HDMI and Mini DisplayPort inputs so that the next 30″ display could be connected to a MacBook Pro, Mac mini, and/or a Blu-ray player, game console, etc. While we’re at it, both displays could use an upgrade to a higher resolution iSight sensor and Firewire 800 connectors.

Front Row

Front Row is not exactly a product, but this feature of Mac OS X provides a 10 foot interface for your iTunes content. Unfortunately, it has not been updated since Mac OS X 10.5 in November 2007. Front Row does not even understand newer content like iTunes U or iTunes Extras. The new interface on the Apple TV introduced with version 3 would be a good place to start, but frankly the whole thing could be redone. Adam Jackson pointed out to me that a new Front Row would be great for the Mac mini because the new HDMI output makes it the perfect Mac to connect to an HDTV — where you actually need an interface that you can use from across the room with a remote.

Apple Remote Desktop

Speaking of remotes, Apple Remote Desktop is supremely useful for managing large numbers of Macs in a school or enterprise setting. But the last major update was April 2006 and has only seen three minor updates since then, the most recent coming out last summer which consisted of bug fixes and sending function keys to the remote machine.

Apple TV

OK, I know I said I was going to leave this alone since the Apple TV update is rumored to be coming soon. Still, I love my Apple TV and I have to point out a few things that need updating in the next release. Gigabit Ethernet, 802.11n at 5GHz, 1080p video, HDMI bitstreaming of advanced audio codecs, and support for iTunes U are a few of the features that I really want to see in the next Apple TV.

Other Thoughts
- I know the Finder has been a frequent contestant on these lists of things to be updated but I am never sure if anyone really knows what needs to be done. Most of the Finder wishlists I have seen look like notes from the Norton Commander fan club, but there might be something here.
- iTunes Home Sharing should evolve into a more general iTunes content server.
- It is great that iBooks 1.1 lets you read ePUB and PDF files on your iPad and iPhone, but iBooks for Mac is still missing and publishers cannot submit PDF books to the iBookstore.
- Geoffrey Goetz wants to know why you can control presentations on your Mac with Keynote Remote, but not presentations on your iPad.
- Andy Boothe wants key rebindings for every feature in Mac OS X.
- Chris Ryan wants consistent features across the iPod lineup — cameras from the nano, voice over and speech from the shuffle.
What Else?

I have probably only touched the surface of Apple products and features that have been languishing. What products or features do you want to see Apple update this year?

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