I’m not inclined to issue complicated year-end reviews or to predict the future, especially with the predicted arrival of a new Apple product that may be called iSlate. I will only point out that, first, Apple is not about hardware. Instead, it’s about the experience created by a combination of hardware, software and interconnections. Everything Apple is interested in doing now is defined by the user’s creative, social and enjoyment potential. Think about the iMac, iPod and iPhone, and then ponder what the device itself is worth—virtually nothing without the accompanying software and interconnections (usually Internet, but maybe something else). Second, the effect of Apple’s products travels way beyond the device itself. They have redefined entire other companies, products and even entire genres. The way people listen to music has been redefined forever. Many other people and companies deserve some credit (Napster?), but Apple was the company that finally (after years of urging by Steve Jobs) convinced music companies that digital downloads were the future. The iPhone set the standard for what a cellular phone should be—take a look at how other companies now package their phones for superior unboxing, the screen size and resolution, the software, the app stores. Apple’s ability to reach out, and to redefine an industry is really one of its everlasting hallmarks. Now…2010? I will only say that Apple enters a niche only when it can make a substantial change across the entire niche. The iSlate will not simply be a hardware device. It will be a game-changer, at least for the publishing industry (books, newspapers, comic books, etc.), but maybe also for TV and movies. All of these industries are on the verge of change, just like music. The iSlate—and Steve Jobs—may be just the thing to push these industries forward in 2010.

Just when I thought I had a handle on the term “Netbook,” along comes the “Smartbook.” Tell me that companies aren’t manipulating the terminology of technology, desperately trying to create new niche. Of course, it’s been done lots of times before, but aren’t they really squeezing it out for this one? Of course, their success is entirely enabled by consumers who are struggling through the early stages of the new age of information—where do we read news stories? How do we watch movies? On what device do we watch what we call “television?” It’s all in flux, and the odds that it settles down soon are very small. In the meantime, tech companies get to speculate on what we should be using for all our computing and information tasks, and manufacturing devices to generate revenue. Seems like the process should originate from the other end—with consumers—and then companies would manufacture what we need and want. If it worked that way, we consumers wouldn’t be engaging in this ridiculous naming game—smartbooks?

Just before I headed off to Paris and New York City for the latest grand openings, I retired my 8 year-old Titanium laptop and invested in a 13″ MacBook Pro. I also had a new Canon T1i digital camera (replacing a D60) and HF-S10 camcorder (replacing a Optura 30). I was happy to learn that the upgrade in technology greatly simplified posting stories and photos, and compiling a video record of the events. First, despite having a smaller screen (15″ vs. 13″), the MacBook Pro looks better and operates faster. It connects more reliably to Wi-Fi networks, including to my MobileMe account, where I was posting photos. The T1i camera takes photos that are so perfect, they rarely required any exposure or white balance tweaking. I simply imported the photos into iPhoto, made the selections for the gallery, cropped a few (for most shots, I wanted the entire image to give a wider view of the store features), and press the upload button. For the D60 I would have been taking minutes-per-photo to balance, adjust exposure and sharpen the images. Next, like the T1i, the S10 camcorder records great HD onto SD cards (as well as 32 Gb of internal memory)…which my new MacBook graciously accepts directly—what could be better? It was trival to shoot video, back it up to SD card, then copy the card to the MacBook for a second back-up. Lastly, for both journalistic and security reasons, I had to carry around all this gear with me constantly (as well, 2 more T1i lenses, batteries, MBP charger, Gorillapod, etc.). The compact size and rugged nature of this gear made it all possible, with minimal effort and no troubles. P.S. — I also used an iPhone 3GS with Mophie Juice Pak extensively at both events.

The CEO of AT&T just talked at an investor conference, and said that 3% of the companies iPhone users are using up to 40% of the network’s traffic on a typical day—and that they plan to take some type of action. Ralph de la Vega said they would first use “incentives,” which means something positive to encourage a change in behavior. He followed that up by suggesting that if the hogs don’t change their ways, they would “have to face other things.” Presumably, that means disincentives, which he described as a “pricing scheme that addresses usage.” Those words scare the heck out of anyone who uses the Internet, but in this case it seems pretty reasonable. To me, the curious part is why these bandwidth hogs are streaming music or video 24 hours-a-day. Apparently they’re either sending that video or music data out somewhere else, collecting it or—well, what? I average around 40 Mb of data a month, and I know people who use up to 60 Mb a month. I’d love to know how much data one of those 3% are using. Theoretically, the maximum is about 474 Gb a month for a 1.5 Mbps network. So the hogs are pushing about 10 times the data that I am. What should the cut-off be? Should users be able to use half the theoretical maximum, 25%? It’s a thorny question. My approach would still be on the “why,” rather than “how much?” Who is using their iPhone like an always-on modem?

According to the TimeCapsuleDead Web site, the average lifespan of the Wi-Fi and backup device is 17 months and four days. Well, I got 20 months and 24 days out of my 1 Tb model before it died. Here’s the chronology: My Pacific Bell (now AT&T) DSL service was installed in Feb. 2000, connecting to an Alcatel modem, and then directly to my Mac IIci. Yes, the Internet was (barely) running on a Mac IIci. Pretty crazy back then. Over the years the Mac models have changed (7600, Power Mac G5, iMac, etc.), but the Alcatel modem remained, connected to a Linksys switch at one point, and most recently the Time Capsule. About six weeks ago the Internet became more unreliable. The Time Capsule would lose its connection perhaps twice a day, sometimes 20 times a day, not for long, but enough to be a pain. An AT&T tech arrived to investigate, but said I was within 750 feet of a central office and had a strong DSL signal. So attention turned to the 9 year-old modem. I searched on the Web and found a D-Link replacement, but couldn’t get it to work. Thanks to Ben for rewiring my phone jack and setting up the new modem—I was back on-line! But two days later—pow!—the Time Capsule just dies, probably related to the power supply. So I register with the TimeCapsuleDead site and forge ahead by buying a new 1 Tb Time Capsule. The new model seems to run cooler and, of course, the Internet connection is constant. It took me two days to rebuild the back-ups for three computers, but it was pretty trivial. So after 9-1/2 years, DSL lives on.

I had occasion to witness first-hand the operation of the new iPod touch point-of-sale (POS) system. I had to buy a new Time Capsule—yes, my original 1 Tb model died after exactly 17 months, just like everyone else has experienced. After about two months of erratic Internet behavior, the status light (usually yellow or green) was completely dark. It pretty clearly suffered a power supply problem. But, back to the POS…the Specialist quickly scanned the Time Capsule’s UPC barcode, and then quickly slid my credit card through the reader. A couple of keystrokes and she handed me the iPod touch to write my signature. I had a little trouble figuring out which end of the stylus to use, and then was surprised to feel that the tip was soft and rubbery. It didn’t easily slid across the screen as a metallic stylus would. Instead, it was like a phony finger, which I had to push across the screen. After that, she entered my e-mail address for a receipt and…poof, I was finished. Overall, the iPod touch worked more smoothly and reliably than the previous handheld computers. The Specialist also needed vastly fewer keystrokes to complete the transaction. Definitely a A+ for buying.

I’ve returned from a nearly two-week road trip for the Louvre and Upper West Side store grand openings, although I hadn’t really intended to be gone that long. It wasn’t until I arrived in Paris that I learned of the New York City opening, and so I then switched airline reservations and made a hotel reservation. Thanks to everyone in both cities who provided friendship and hospitality for overnight vigils in the waiting lines. It was interesting to experience a grand opening in two countries within a week. Not surprisingly, the level of enthusiasm by the waiting line for and knowledge of Apple products was high, and the courage to stay overnight in the rain was just as high. The stores themselves were amazing, staffed with a smart and friendly group of employees. The combination of visitors and staff made the grand openings very successful. And now people in two major cities have an amazing resource for Apple products, training and service. Thanks to everyone from Apple and to all the new enthusiasts I met in just eight days!

A while back there were some pretty nasty comments posted on IFO about a former Apple employee who ended up working for Microsoft’s retail stores. He was, of course, present at the recent Mission Viejo Microsoft store opening. At one point he spotted a fellow wearing a T-shirt that had been a Fashion Island grand opening giveaway. However, the man had used a felt-tip pen to add, “Just Say No to CrApple,” and listing on the back all the problems he had experienced with Apple gear. The Microsoft employee went over smiling and asked the man if he could take photos of the T-shirt. The man agreed and the former Apple staffer snapped away, obviously delighted. When he finished, he leaned over and told the man, “I used to work for Apple.” Yea, that about sums it up. Check the photos— the shirt / the photog

When it comes to the Microsoft customer experience, no one knows more than Michael Forrest, Sr. Director of Customer Experience. Actually, that may not be entirely true, since much of what Forrest has to say about first Microsoft retail store in Scottsdale sounds a lot like Apple, and a lot like Apple Sr. VP Retail Ron Johnson. Here’s what Forrest said during a video tour of the store, along with my sarcasm…er, comments in brackets:

Our Answer Desk is somewhere to come and speak to and get answers, and get technical assistance and help for free. And we also do have fee-based services, when and if you have a hardware issue. [This is so obviously Genius Bar, I'm speechless.]

Back in our Workshop area (with 103″ display)…this is where we’ll have our—we want our store to be about more than just purchasing product, but a place where you can learn, to get the most use out of your technology. [Virtually a direct quote from Johnson about Apple's stores.]

With every single computer purchase we have a 15-minute ownership ritual, where we’ll go through and we’ll set up your computer, we will set up your e-mail, your accounts, your desktop. We’ll personalize it to you and your personal tastes. And we do this for free with every single computer purchase. [Identical to Apple.]

We feel very fortunate now to have a direct connection to our customers. [Yes, although it took the company from 1975 to do that, and over 8 years after Apple made the retail move. Apparently they weren't that interested in making a direct connection.]

We have over a billion and a half people interact with Microsoft technology on a daily basis, and we’ve never really had a direct connection with our customers before. [I guess if you count operating system re-installs and virus scans, that could be a billion.]

This is really the first opportunity we’ve had to be pro-active and engaged with our customers and to showcase our technology in different and unique ways. [Different and unique, eh? Different from what, and unique in what way?]

And it’s truly our people and the skillset of our people that can align our customers’ needs with our technology. [Pretty funny, considering that managers and employees came from selling Apple gear.]

It’s about getting feedback from our customers, and also being able to represent our own brand and having that direct relationship. [Apparently they're "taking it to the streets," trying to bypass the press and bloggers who have criticized them.]

And our goal, through our stores, is to listen to our customers, determine what their needs are, and then make professional recommendations based upon those needs. [OK, fair enough.]

It was interesting to see the mainstream news reporting on the agreement that the Chicago Transit Authority (CTA) made with Apple. The Chicago press focused solely on “Apple obtains naming rights for subway station.” On the other hand, my story had a different slant—”Apple agrees to pay $4 million to fix up crappy transit station so it won’t detract from the wonder of the Apple store.” As it turns out, the agreement specifically notes that Apple will have station naming and in-station advertising rights, but only if and when the CTA decides to offer those rights. That is, for the moment, the CTA isn’t giving any company station naming rights. But the CTA is $137 million in the hole, and is exploring every opportunity. So actually, Apple didn’t pay $4 million for naming rights. They spent it on hard construction costs, and the naming rights came along with that payment. Therefore, that $4 million won’t go towards paying down the CTA’s deficit, but will only serve to make Apple’s store look much brighter. So exactly…what’s the story now?

Well, we all should have known that new Apple TV commercials would come out on the day Windows 7 debuted. Good one. I particularly like how pointed Apple’s “Trust me” line is. In the world of advertising, it’s an unwritten rule that you talk about yourself and don’t take direct, by-name pokes at your competition. Of course, Microsoft has released its own series of TV commercials and print ads. They’re using the tag line, “I’m a PC, and Windows 7 was my idea.” If you watch the TV ads, you’ll notice that ordinary people say, “Now, with Windows 7…” you can connect wirelessly or perform some other task. That is, previously you couldn’t do that, but now you can. Of course, you could do all this previously with a Mac, too. But more than that, Microsoft is taking the angle that they accepted a billion suggestions, and then used them to design Windows 7. In one ad a guy says it came to him in the shower–make Windows simpler. Someone else says, make Windows faster. Well, aren’t those lightning bolts! Seems like the ad campaign is really saying, “We couldn’t think of ‘faster’ and ’simpler’ on our own. We had to ask people.” And, of course, as I mentioned, you could do all this stuff with a Mac a long time ago.

The curtain has come down to reveal the first Microsoft retail store—actually, the first of the second round of stores (remember the one at Metreon in SF?). Where do I start to explain it? The store itself looks a little too glitzy and made-of-plastic, despite the wood floor and tables. Even a junior architect at BCJ would have avoided the support pillars creating a barrier down the length of the store. The “Answer” bar doesn’t sound optimistic at all, as in, “I have an answer for you, but no solution.” As for the opening, the fear was obvious. To insure a crowd would even appear, they staged a pop singer concert—1,000 free tickets and 100 free autographs. They gave out $25 gift certificates, free Zunes to the first five in line. And then their execs had the audacity to hold up an oversized bank check showing they were giving the region’s YMCA $1,050,000. Embarrassingly, the memo space on the check revealed the truth—$1 million of that was in software. Only $50,000 of it was in cash (photo below). Now, the YMCA has 16 branches. With $1 million in software, they could upgrade 100 computers at each location with Windows 7 and install Office Standard 2007. But, the YMCA probably doesn’t even have 1,600 computers on which to run $1 million worth of software. I suppose the “Y” could use the $50,000 in cash to buy 1,600 computers—at $31.25 each? COO Kevin Turner said Microsoft gave out $498 million worth of free software last year. But they take the full value of the tax deduction, and it only cost them about 20% of that to manufacture and deliver? How’s that for philanthropy? Microsoft made over $14 billion in profits last year…and came up with a $50,000 cash donation? Yikes! The “Y” gives out about $9 million in services each year, so I’m sure they could have used $1 million in cash. And lastly, many are raising the question of the “rip-off” design. I suppose there are only a few ways to design a storefront, only a few table or counter designs, and probably just a few store lay-outs that make any sense. But even assuming Microsoft had a limited design palette, you’d have to be in complete denial not to believe it is a complete rip-off of Apple’s work. But then, it’s occurred before with Microsoft. Mr. Turner, don’t stand out in front of your store wearing a business suit, and tell me all this is to get “closer to the customer,” and claim you’re an innovator. As Judge Judy would say, you’re just embarrassing yourself.

Cheryl Hibbard (l.), Kevin Turner and a grateful YMCA official with a big check.