Megan McArdle, prompted by the concocted Apple controversy, addresses the corporate tax system:

To sum up, the best way to react to the fact that Apple shelters income abroad is to get rid of the corporate income tax and, at the same time, get rid of the special tax rates for dividends and capital gains. That would not only remove the incentive for these sorts of shenanigans, but also give other companies incentives to headquarter here. And as a bonus, it would collect more taxes from individuals, progressively, so that Warren Buffett doesn’t pay the same tax rate as the widow with a few utility shares.

The people at FiftyThree have a terrific look at designing Paper’s new zoom feature:

In this case, however, it was one of those ideas that our co-founder Andrew Allen had stored in the back of his mind, and we knew it was right the first time we looked at it in design. And yet, the road to release is long, and paved with a thousand thorny details. Your attention to those details is what sculpts the experience of the product, and we pride ourselves on being careful sculptors.

Paper’s zoom is a case study in good design. They didn’t toss in an under-conceived feature after someone requested it. Instead, they thought through its purpose and implemented it for that. And the end result is a very natural, useful feature that’s better than most implementations because they considered its context.

I wanted to say, too, that the excerpt quoted above captures something I think all people who work on software and really care about the end result end up feeling: the real work is in those tiny little details that, if you do your job right, most people won’t ever notice, but will add up to an experience that’s absolutely discernible to users and makes your product functionally and viscerally superior to others.

Brian Levin on the concocted Apple tax controversy:

I’m angry because Apple not only engages in the questionable practice of stashing its cash in offshore tax havens, it has become the greatest offender, avoiding US taxes on $74 billion over the past four years. There’s something fundamentally wrong when the wealthiest company in America pays 12.6% in taxes, while my father’s small business, my grandfather’s store and the Korean Deli across the street pay a rate nearly three times higher. And it’s not just savvy accounting or a strategic maneuver—Apple’s tax avoidance has a profoundly damaging effect on our whole country.

(Via Marcelo Somers, who makes a nice response to this as well.)

There’s nothing “questionable” about Apple’s practices. U.S. corporations pay taxes on foreign income (income they earn for sales outside the U.S.) when that income is repatriated, or brought back into the U.S. If it stays outside the U.S., it isn’t taxed. That isn’t “questionable” or “abuse”—that’s how the system is designed. Is it any surprise that Apple, and nearly all companies, keep much of their foreign income outside the U.S. when repatriating it would mean facing a very large tax rate on it?

Minimizing the taxes you pay is neither morally nor legally wrong, or even “questionable.” It’s something we all do, because most people would like to pay only the amount of taxes they’re required to by law, and because it’s morally wrong to expect people to pay more than the law as designed demands. (And for anyone who feels bad for only paying what the tax code demands, feel free to give the Treasury donations. They accept them.)

Moreover, Apple doesn’t keep cash outside the U.S. simply to avoid taxes¹; Apple requires capital to fund operations outside the U.S., such as building and operating new retail stores and purchasing capital equipment for manufacturing their products. But, of course, they do keep more cash outside the U.S. to avoid paying taxes on it, which means there is a distortion occurring due to our tax system’s structure—Apple, and most other multinational U.S. companies, avoid repatriating income to the U.S. due to a very high tax rate. This not only creates a more convoluted structure for corporations, but also limits potential investment in the U.S. by U.S. companies. This effect could be reduced by lowering the corporate tax rate or eliminating it altogether.

One other note: some have said that Apple’s done nothing wrong, and it’s the tax system that’s broken. That’s true, but what they seem to imply is that the federal government should simply force U.S. companies to pay corporate tax on all income, whether domestic or foreign, and be done with it. That isn’t precisely a desirable solution, however, since that would (1) encourage companies facing the full brunt of the top tax rate to move outside the U.S., since they have a responsibility to their shareholders; (2) encourage companies to take advantage of the rules to avoid such a high rate, and create more distorted operations and corporate structures as a result; and (3) if the tax system is effective across the entire economy, would then encourage Congress to do precisely what they’ve done all along, which is carve out breaks here and there for certain industries, and create an uneven mess of a tax system all over again.

1. Although they certainly could. Following the tax code’s rules to minimize your tax liability is not wrong, and it’s slightly disturbing to suggest otherwise. [↩]

Marco Arment argues that free trials with higher-priced applications in the App Store would undermine people’s tendency to try out a number of applications even if they don’t use them long-term because they’re so affordable:

If the App Store mostly moved to higher purchase prices with trials, rather than today’s low purchase prices and no trials, this pattern would almost completely disappear. Instead, we’d get the free trials for almost everything, and then we’d only end up paying for the one that we liked best, or the cheapest one that solved the need, or maybe none of them if we didn’t need them for very long or decided that none were worth their prices.

In this type of market, the winners can make a lot more, because you can indeed charge more money. But the “middle class” — all of those apps that get tried but not bought — all make much less.

I think Marco’s right. (Please do read his entire piece. It’s very good.)

Since releasing Basil last year, I’ve been thinking a lot about this, and paid upgrades, which is a related topic. Trials seem like they would be a positive thing for developers; users could try out our applications, see how good they are, and then, theoretically, they would be willing to pay a higher price, and would do so at such a volume that our current sales would increase or, at minimum, wouldn’t suffer. Charging $10 for an application sounds a hell of a lot better than charging $2.99 or $3.99.

Marco is right that this would fundamentally change the nature of the App Store. Rather than spend a couple bucks here and there to try out new applications, users would more likely try out a large number of applications and end up paying for the one that best fits their needs. Of course, that may be more fair; users only pay for the application they need, and only the developer who provided it is paid. But as Marco points out, that erodes the entertainment aspect of the App Store.

As a result, since that market would resemble the PC or Mac software market, he argues the outcome probably would, too. A relatively small number of developers and companies will do especially well, and most others will make very little. That’s convincing.

I don’t think there’s a net benefit here for introducing trials. That market may support deeper, more full-featured applications, but it could also throw out one of the App Store’s greatest attributes: the ability for a single developer or small team to take a single good idea, turn it into an application, and make it accessible to a huge audience—all while possibly making a decent income and having the chance to make it a huge success.

Rather than hope for trials or even paid upgrades, I think developers need to utilize the tools we have: in-app purchase and subscriptions. IAP can allow developers to reach a wide audience with a low initial price (or free, even), and make more from those customers who are willing to pay for more. Paper for iPad is an excellent example of how to do this. The application comes with a “pen” drawing tool for free, but pencil, marker, paintbrush and color mixing tools are available through IAP. There’s nothing predatory or abusive about Paper; it’s a beautiful, useful application, and the tools available for purchase make it even more useful.

Those are the kinds of things we should be thinking about. Not only is hoping/waiting for trials unproductive, but it limits what your application is capable of. IAP is an incredible tool that allows for unique, powerful applications for users, all while making it available to a very large audience. That capability shouldn’t be shunned; instead, we should think about how to use it to make businesses that are sustainable for us and useful for customers.

Ken Segall on Apple’s camera iPhone ad:

What this commercial does so well is capture the human side of technology. It’s a reflection of daily life, and it’s easy to see ourselves in it. The ad shows us how essential our phones have become, enabling us to capture the people, places and images we don’t want to forget.

What’s powerful about this ad to me is that it’s just people living, experiencing and enjoying little moments and big moments, and the iPhone is just there to capture some of it. Not to be front-and-center, not to be the focus of attention—just to snap a little part of it and continue on. It’s not that the iPhone is incidental to these moments; in fact, in many of them, it’s integral (kids videotaping their friends skating, snapping random photos of puddles). But none of these little vignettes have someone with their head buried in an app, ignoring everything around them—the iPhone is there to capture or make certain moments better.

Of course, the iPhone certainly does allow people to bury their heads and disappear from what’s going on around them, and people (we) certainly do that. I think, though, that’s counter to the iPhone’s spirit, and I love that this ad embodies that the iPhone is meant to make day-to-day life better, rather than to capture our lives altogether.

The ad doesn’t provide a ready-made tagline for why you should purchase the iPhone. There’s no explicit or implicit comparison to competing devices (except for the ending “Every day, more photos are taken with an iPhone than any other camera,” but that says more to what the iPhone is than to what the competition isn’t). It’s simply an affirmation of what Apple believes the iPhone to be, what its intent is, and that intent is much larger than the feature set.

And it’s a powerful ad because of that. I think this is Apple’s best ad since the “Think Different” campaign, and it very much the same kind of ad: it’s about what Apple is, not what their products do.

Jim Dalrymple just announced the Loop magazine for iPhone and iPad.

Long-form articles will be a great complement to the Loop.

Andrew Ng is helping lead a group at Google dedicated to making giant advances with neural networks:

It was a shift that would change much more than Ng’s career. Ng now leads a new field of computer science research known as Deep Learning, which seeks to build machines that can process data in much the same way the brain does, and this movement has extended well beyond academia, into big-name corporations like Google and Apple. In tandem with other researchers at Google, Ng is building one of the most ambitious artificial-intelligence systems to date, the so-called Google Brain.

Pretty good piece about the increasing overlap of neuroscience and neural network research for technological purposes, but what I want to emphasize is how much Google has invested in neural networks (or “artificial intelligence” generally, if you’d rather, but that term is pretty misleading). Both Apple’s and Google’s futures depend heavily on using user data and other data sources to provide value for users, and Google has a huge advantage here because they’ve been investing heavily in it for a very long time. It’s just as important to Apple, but Apple had to acquire the Siri team to gain the capability. That’s a huge disadvantage.

This isn’t just about speeding up voice recognition or making it more accurate, although that is an advantage Google Now has over Siri—using voice recognition in Google’s iOS search app feels much faster than Siri because it shows you what it thinks you’re saying as you say it. It’s much more than that; since this has been something very important to Google for a long time, and something of an intrinsic organizational competence, Google can move much quicker to develop the capability in Google Now than Apple can. Apple must move even quicker to make it a skill for Apple, too, and to take advantage of their own unique resources that Google doesn’t have.

Paper for iPad now has pinch-to-zoom support.

As usual with Paper, it’s a bit different than normal pinch-to-zoom. Rather than zoom the entire canvas, pinching places a loupe-like circle around the area you’re zooming on so you can make your changes while still retaining the entire canvas’s context. Smart.

One slightly related note, though: I still can’t get Paper’s two-finger undo gesture to work reliably for me. Gestures can make applications much better, but they can also make it maddening.

Peter Cohen:

On any given day, a quick check of the top-selling paid apps list in the Mac App Store will reveal Apple’s Keynote, Pages and Numbers in the top ten. It’s surprising, given that each of those apps was originally bundled as Apple’s iWork ’09 productivity suite, released in, you guessed it, January, 2009. It makes me wonder when or if we’ll ever see an update to them.

Thinglist is an iPhone app for remembering things you want to try. Movies, books, restaurants, music, places. Great idea, and the app looks beautiful.

Adobe has been working on a pen and ruler for tablets, and the combination looks awesome.

The pen is pressure-sensitive, but the coolest part is the “ruler,” which allows you to draw straight lines or precise arcs. Really, really cool.

The demonstration, though, shows a very large lag between drawing and the line actually appearing on screen. It’s strange because it’s much, much worse than I’ve experienced with any drawing or sketching app on iOS.

In any case, it’s heartening to see Adobe working on meaningful projects like this.

If you’re looking for a new RSS feed service, David Smith’s Feed Wrangler looks like a great one.

As always, Federico Viticci (the man, the machine) has a very good look at the service and iOS apps.

Jay Haynes claims Ron Johnson failed at JC Penny because he misunderstood Steve Jobs’s statement that “You can’t just ask customers what they want”:

Ron Johnson took away the wrong message from Apple and decided not to analyze the jobs-to-be-done for JC Penney customers. Like almost every innovation effort that fails to analyze the customer’s job-to-be-done first, Johnson’s effort was a failure. But his biggest failure may be learning the wrong lesson from Apple and his former boss.

Jobs’s point was that you have to understand the needs customers have, rather than their expressed wants. Haynes presumes that because Johnson said that JC Penny shouldn’t test their changes since customers don’t know what they want, he meant customers don’t know what needs they have. That’s a huge leap that isn’t at all justified by the (second-hand) quote Haynes references nor by Johnson’s decision not to test changes. And one of Jobs’s other famous sayings is they do no market research for their products, and that they didn’t do any for the iPad because it isn’t the consumer’s job to know what they want.

I’m willing to bet that Johnson understands Apple quite a bit better than Haynes does, based upon this rather lazy attempt to connect a valid point—that there’s a difference between ignoring what people say they want and ignoring their needs—to Johnson’s failure at JC Penny. If you want to read a much more plausible take on why Johnson failed, Ken Segall’s is the one.

Jean-Louis Gassée:

Some read the decision to return gobs of cash to shareholders as an admission of defeat. Apple has given up making big moves, as in one or more big acquisitions.
I don’t agree: We ought to be glad that the Apple execs (and their wise advisers) didn’t allow themselves to succumb to transaction fever, to a mirage of ego aggrandizement held out by a potential “game changing” acquisition.

Yep. Large acquisitions are very, very hard. Apple’s discipline with its cash is one of its finer qualities.

Facebook has agreed to acquire Parse:

These steps come in all sizes. Most are small and incremental. Some are larger.  Today we’re excited to announce a pretty big one.

Parse has agreed to be acquired by Facebook. We expect the transaction to close shortly. Rest assured, Parse is not going away. It’s going to get better.

Wow.

You know, if you’d like to build a mobile platform but don’t want to build an operating system, owning the best backend service for mobile developers is probably a good way to do it.