The China Vortex

I am a fan of Apple’s products. I believe that the hardware is well-designed, and so is the software. In particular, I believe that the design philosophy behind Objective-C and Cocoa frameworks are the best thought-out and implemented tools for any developer looking for a strong and robust environment for object-oriented programming.

Like other Apple fans, I get excited at the new hardware the company puts out on a regular basis. I have reconciled myself to the fact that the top-of-the-line Macbook Pro I now use will shortly be replaced by a newly refreshed iteration of this line, and I will soon torment myself when I see others with their newer computers. The sames goes for my iPod touch.

I am also a fan of Steve Jobs; he shows what can be done by a very smart guy who has fallen down a few times in life who now has a good plan, and who just focuses on implementing his plan. The guy knows exactly what he wants, and doesn’t let anyone or anything get in the way of his plans. He is the poster boy for a smart authoritarian and autocratic management in an organization. I’m convinced that without a firm grasp of the challenges the company faced in 1997, Apple would have quickly gone into bankruptcy.

Steve Jobs saved Apple.

This is why I get upset with the company’s policies towards China. I mean, for Apple to criticize the Chinese government for not being open and nice to minorities is just completely wide of the mark.

With this in mind, let me show you how the Chinese government, in comparison to Apple’s management, is in fact much more open and democratic:

• China now has a group leadership on the national level. Who is in the group leadership at Apple? And how much do you see others besides Steve Jobs talking about “different directions” at Apple?
• Who is going to be the successor to President Hu Jintao. I can name several candidates including Xi Jinping, Bo Xilai, Zhou Yongkang, just to name a few. Who is going to succeed Steve Jobs? I can’t name any.
• Leaking any information about any new products which have not yet been announced at Apple are grounds for immediate dismissal. Same goes for China.
• Apple employees are not allowed to publish unofficial blogs without company permission. Doing so may be grounds for dismissal. China has 100 million blogs; all of them are unofficial.
• In private meetings with Steve Jobs and Apple senior and executive management, the senior and executive management turn and look to Steve Jobs for permission to speak before speaking, even when they are addressed directly. The Chinese national government leadership is more relaxed than Steve about other senior officials speaking about national affairs.
• For many Apple employees, the most dreaded moment is sharing the same elevator ride with Steve. If he talks to them and he asks what they do, and they go not give a good response, he just might terminate them.

Basically, Apple (the company) is an extension and implementation of one man’s (Steve Jobs) vision of what the consumer electronics and computing industry should look like. And ironically, laws in the US permit Steve Jobs to run his company in a very autocratic fashion. I have not yet heard of people being “dismissed” from China because they were not productive according to one ruler’s definition. On the contrary, the Chinese government goes out of its way to keep the Chinese economy on a growth track, creating more jobs. (I must admit that I think many of these jobs are of questionable value, but that’s another discussion.)

And yet, Apple doesn’t like things the Chinese government does because they are less than democratic and are autocratic? How many current Apple employees do you see protesting at the way the company is run? I’ll tell you how many there are.

Zero, nada, zilch.

Sure, Steve Jobs is running a company and the Chinese government is running a country, but is there anything to suggest that Steve would act any differently and suddenly become open and democratic if he were running a country?

Come on Steve, look in the mirror. When it comes to autocracy, the Chinese government can’t hold a candle to you.

I’m really trying to wrap my mind around this and am trying very very hard to understand Apple’s criticisms of China. If anyone can explain this to me, I’m all ears.

Several months ago I wrote about how Apple’s opening of the iPhone SDK and its App Store would create a whole new business ecosystem for application developers for that platform. Apple offers globally accessible hosting and payment clearance in return for a 30% cut of the app’s sales price.

Now, there are early signs that the strategy is paying off for some early application developers who have developed popular apps for the iPhone and iPod touch (which uses the same SDK as the iPhone) users. Eliza Block, who developed 2 Across, a word game for the iPhone platform, has reportedly cleared in the area of $2,000 a day according to this article.

The App Store is a new updated version of the shareware movement which took hold in the early 80s with the launch of the Apple Macintosh 128K. In those days, homebrew developers would develop games, apps and productivity tools which were distributed on floppy disks. (Remember those? If you do, you’re showing your age.) More often than not, these came with a message which went something like “If you liked this app, please show your appreciation by sending a contribution to this address.” More often than not, people just used the apps without sending money, although there were a few kind and generous souls who did.

Now, Apple has become the doorkeeper for these independent developers. There is no more reliance on the kindness of strangers; Apple takes care of global distribution and payment for new apps in return for 30% of the app’s sales price. For devs, the App Store is the perfect barometer for what’s hot and what’s not.

In contrast, Facebook and others have not been able to find the magic balance point between independent developers and their own corporate needs for revenue. When Facebook opened its platform to developers, it ended up enabling app developers to spam the FB audience, driving many away from Facebook. Now, with Facebook Connect, FB is trying to find that balance point.

Chinese social media companies are no better at finding the right balance between independent devs and their own need for revenue. While there has been talk about open systems in China, all of the competing business models in fact, are not open. Apple’s system is certainly not open. it’s just that Apple is willing to share in order to grow the pie.

Apple and Steve Jobs have successfully put themselves at the juncture of technology, business and hardware, and are willing to share a larger cut in order to drive up sales of a very attractive new hardware platform. With growing earnings from hardware sales, Apple can afford to be generous with devs, and is effectively subsidizing a new business ecosystem. By making some independent developers financially successful with App Store and getting that word out, they do something none of their competition have been able to do yet.

The question for Chinese companies such as Tencent is whether they are willing to use their high corporate earnings to subsidize their own independent developers’ business ecosystem as Apple has, and share some of the revenue in order to grow the pie for everyone? Or do they still think that they can own the whole pie? Tangos Chan says that they still believe that they can own the whole pie.

But Tangos believes that this will change in the future. In the meantime, more independent devs will gravitate to developing for the iPhone platform. It’s better to open up sooner while there is still interest in their platform because opening up later means that they will have to be that much more generous in order to attract developers away from Apple’s platform.

After all, that’s where the money is. And I’m sure that Steve loves how his competitors’ moves help his platform.

What more could he ask for?

I have been spending a lot of time recently with game developers in China. Didn’t plan it this way, but it has been interesting.

I have a few thoughts about the industry based on my observations. Most of them apply to both gaming and animation. So far, the biggest takeaway I have had so far is that the vast majority of companies, and certainly the Chinese government, have no understanding of human talent and the creative process. If they find it, they destroy it through sheer ignorance and bad policies. Why would a talented person want to work with any government anywhere? There is surprisingly little imagination for such a big country. And when someone does hit on a successful idea, it gets rehashed over and over and over again. Many Americans complain about how bad Hollywood is at coming out with new original ideas; it’s still better than China.

Give you an example. The Chinese government wants to create an animation industry, so what do they do? They ask American, Japanese and European companies to set up schools to train animators in huge numbers. They limit the hours of foreign-made animation which can be broadcast on Chinese TV.

There’s just one problem.

There aren’t any good Chinese story writers and artists. Or at least any that I know of.

So you have all these armies of animators who have nothing to do, so what do you do? Get them to do outsourcing for foreign animation companies who are looking for relatively cheap labor.

But then they want to build a Chinese animation industry, so what do they do? They try to partner with non-Chinese producers and writers to create stories. But then the stories aren’t Chinese, right? No, because they partner with a Chinese animation company, they can then get their production to be considered Chinese and maybe broadcast on Chinese television, where if they are smart, they can get a good deal.

It just underlines one thing. There is _no_ understanding of the creative process in China. It is all very top-down, and screwed-up.

To be creative, all you need is one person who is good at conceptualizing plausible worlds. They can use words or they can use illustrations. That is my definition of fantasy.

One of my pet peeves of the Chinese gaming industry is that everyone rehashes the same old genres for their titles. It is all Sanguo, the Monkey King or some other derivative from Chinese folk history. There is nothing new, nothing original. Once one title in a genre succeeds, everybody jumps on the bandwagon and works it to death, turning out a lot of garbage in the “me too” development process.

I find this very interesting. Why? Because all the talk is about China’s peaceful rise, its bright future, etc. etc. But when it comes to stories, it looks to the past. This doesn’t make sense to me. If a country and people are optimistic about the future, they look to the future and try to visualize it. If Chinese are indeed optimistic about the future, then why aren’t they writing and developing game titles which are about some future/near future China which captures all their hopes, aspirations and fears and is plausible to those of us living in the present?

OK, you’ve got a peaceful rise, tell me how it’s going to look.

The whole world wants to know. Sell me China’s version of the future. And don’t talk to me about the 2008 Beijing Olympics; that is only a sporting event.

What would that world be like? What would the technologies be? How would people interact with each other? What challenges would they face? Would the world be at peace or at war? Would people continue to fight with each other, or would they face challenges together? How would they resolve their differences? What international institutions would there be and how would they work? Would people interact with other intelligent civilizations? How would they do it? How would nations and ethnic groups interact with each other and solve their problems? How would they treat each other and would they overcome racism? How would they handle ideologies?

And could a Chinese writer and artist team create a plausible world which answers these questions? If it was TV, they could make a program out of it, and if it was a game, how would players interact in it? What would the rules be?

In a recent conversation with a production company owner, I asked him what differentiated his company. His answer: technology. Technology cannot sell a good story; a bad story is a bad story, even if you tie a red ribbon (technology) on it. On the other hand, a good story can hold people in captivation for a long time; technology is largely irrelevant.

Why is it that the Chinese government seems so intent on developing the part of the value chain which has the least value added, the junior animators, while the concept and idea people, artists like Ang Lee have to go the US to make it big on a global stage?

If China doesn’t answer these questions and answer them soon, it will be a big market but only a second-tier player.

The future is not entirely dark. There are movies like Crazy Stone which show the sparks of some original thought. But it’s entertainment, not fantasy, and it doesn’t show me a new plausibl world. I hope to see more. As far as I’m concerned, it can’t come soon enough. I am looking for new, creative products in the fields of animation, gaming and movies.

If you know of something interesting which has a fresh different angle and fits into the fields I have described, please post about it in comments.

I’ll follow up, and if it plays out, I’ll write about it in a following article.

And please, no Chinese penguins.

What do you call it when people pay nearly double current sales price to buy a product which is basically crippled of its most important function, and the maker has spent zero marketing dollars to sell the product?

I’d call that pretty powerful buzz marketing.

According to this USA Today story, some Chinese are willing to part with 8800 yuan to own an iPhone which doesn’t have working phone capabilities in China, because Apple has not yet signed a partnership agreement with a carrier. (Presumably, Apple would part with China’s leading mobile service provider, China Mobile, to launch iPhone service in China.)

Any way you look at it, Apple’s iPhone has had a successful launch in the US. Apple has taken its legendary experience in hardware/software design and integration and applied it to a whole new product, the mobile phone, bringing good design sense and functionality to a product which has confounded most users for years. On the marketing side, Steve Jobs has put the reality distortion field into overdrive, convincing many Americans who have never used smartphones before to part with their money. A few analysts have gone so far as to predict that Apple will replace Microsoft in the mobile space, becoming the leading player for a new category combining hardware and software design and integration in mobile computing. A report which came out on Sept. 4 has claimed that iPhone sales in the US in July have already beaten smartphone sales.

In China, mobile phones are very popular and are more than just communications devices. Often, with the Chinese concern for social rank, they are indicators of social status. On the business side, this translates into frequent replacements of handsets among China’s rising urban middle class as users want to have the latest devices. Mainly for this reason, handset makers have placed most of their research and development in China, to lower costs and to be close to trends for their single largest market.

But could Nokia, Motorola, Samsung and LG have missed something Steve Jobs and Apple saw, an opportunity which Jobs’ gang could not pass up? And could the high rate of handset sales belie not only a desire to have the latest mobile device, but be an indicator that Chinese users were not satisfied with any of the handsets made by any of the major hardware makers?

Moreover, could this represent an opportunity for Apple, which has never had major market presence in China for its computer business, but has made limited inroads with its iPod business? And is this a major opportunity for iPhone in a major emerging market?

First of all, let’s take a look at what Apple has done differently. In typical Steve Jobs style, Apple has played God, giving buyers a complete final sealed package and solution, including software (a version of OS X) by Apple, and a hardware design by Jonathan Ive, Apple’s superdesigner who has been largely responsible for the elegance factor in Apple’s products. To the consternation of a new generation of software developers, Apple has provided only very limited support and documentation for designers of third-party applications for the iPhone. But even with this very limited support, something interesting has happened: the developers have organized themselves to develop new apps for the iPhone.

When was the last time you heard of a large group of developers organizing themselves to develop and extend apps for new Nokia, Motorola, Samsung and LG phones? And for nothing?

While Apple and Steve Jobs try to create consumer reverence somewhere along the lines of Moses coming down from Mount Sinai with the Ten Commandments, the fact is that the first iteration of Apple’s products still are far from perfect. But the products always gets better. This reveals something about Steve Jobs which he strives to keep from the market: he listens and acts on intelligent customer input.

Uniquely among major hardware/software companies, Apple does not use focus groups. Designers design for Steve Jobs: designs and features Steve Jobs likes are kept; designs and features he dislikes are tossed away. There are no focus groups by marketing groups for senior management to use as crutches for their decisions.

If you look at it closely, what is happening with all the buzz for the iPhone is a mirror copy of what happened when the iPhone was announced on Jan. 7 at Macworld in San Francisco. The six month waiting period created a huge amount of pent-up demand and free buzz for the iPhone in the US, which translated into record sales for the product when it was launched on June 29.

Now, it’s happening even in China.

Genius. Pure genius.

Beijing will play host to BarCamp Beijing on Sept. 2. This is an unconference event which has suddenly become popular over the last two years as open-source software developers have come together almost spontaneously to share and learn together about Web 2.0.

The structure is open and unstructured, and everyone is encouraged to share and contribute. BarCamp has its own wiki and you can find out more about the movement at its Wikipedia entry. There also is a Facebook group for BarCamp Beijing.

The event will start at 9AM and last until 6PM. The address is:

France Telecom R&D Beijing - Innovation Gardens

Address: 10F, South Twr, Taycom InfoTech? Park C, 2 Science Institute South Rd, Haidian District,Beijing, 100080, China

北京市海淀区科学院南路2号融科资讯中心C座南楼10层

There are 10 confirmed sponsors for the event. They include:

Tudou
Raincity Studios
bryght
ThoughtWorks
iloho
Orange
Tian-ang
Mister Wong
PowerE2E
InfoQ
City Storage
Medium Cool

This will be a great chance to meet some cool people who have come together to share ideas. I will be there; if you see me, drop by for a chat!