Sunday, February 22, 2009

Sony's latest piece of s#!t

From the Onion News Network, here's news about Sony's latest product:

Hulu--get successful, shoot self in foot

It's a common story--start-up that initially isn't taken seriously by either its competitors or the industry in general, delivers a great product and turns the industry's perception around. In order to get distribution, the start-up cuts deals with some competitors, and makes it easy for others to redistribute its products. Once the start-up gets successful, however, those partners start to look more like competitors, and it starts pulling back on deals.

That's exactly what's happening with Hulu, the web video start-up that was derisively labeled "ClownCo" by executives at Google, only to become, in some ways at least, a more profitable and popular destination than Google's YouTube. Last week, however, Hulu started pulling the plug on distribution. The first was to take Hulu's content off of, a site that CBS purchased when it acquired CNET last year. The second was to take Hulu off of Boxee, an increasingly popular web video browser for Linux, OS X, AppleTV and Windows that turns PCs into set-top boxes. Hulu's distribution deal with was contractual, while there was no formal business arrangement between Hulu and Boxee.

In the case, Hulu merely stated that it had the contractual right to remove its videos, and was doing so. In Boxee's case, Hulu seemed to be more apologetic, stating that it withdrew its content at the request of its content partners. It's important to note that Hulu's largest owners, with equal control, are NBC Universal and News Corporation (Fox), and to my understanding, it would only take one partner to get Hulu to yank its content. I'm not going to speculate on which partner I think pulled the plug (NBC Universal), because they're both extremely well-run companies with top-notch management teams (and pigs can fly.)

What is happening is that Hulu's actions are getting people to reconsider The Pirate Bay and other sources for the content that's distributed by Hulu. These are unlicensed sources, and not a penny of revenue goes back to Hulu, its parent companies or other affiliated content providers. At precisely the time that Hulu is engaging in a promotional program involving commercials on NBC, Fox and both companies' cable outlets, it's taking actions that curtail Hulu's distribution and encourage piracy.

In Boxee's case. it's entirely possible that it was cable operators that forced Hulu's partners to take the action they did. To these operators, I say that taking Hulu off of Boxee and any other service will not in any way slow down the trend for consumers to drop their cable services. The only thing that will do that is an industry-wide switch to a reasonable a la carte pricing scheme, which will happen fairly close to the heat death of the universe.

In short, Hulu's actions are only going to hurt Hulu. They won't accomplish what either the content providers or the cable operators want--in fact, they'll accomplish the reverse. Joint ventures almost always suck massively--they're impossible to manage, because the participating partners almost always have divergent strategic goals and objectives. I chalk Hulu's behavior up to that.

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Sunday, February 15, 2009

The Kindle 2? Meh.

Last week, introduced the Kindle 2, the latest version of its eBook reader. I won't bore you with product details--you can get them by Googling "Kindle 2." Suffice it to say that the Kindle 2 is great for reading simple books with text, but not a lot more. Graphics? They're okay if they work with 16 shades of gray. Color? Forget about it. Animation? Double forget about it. Video? What is this strange thing called "video," Mr. Sarnoff?

If the Kindle 2 cost $199 or less, I could argue that it's a decent bargain for a dedicated eBook reader, but it's $359. For less than that, I can buy a netbook from Acer, ASUS, Dell, HP, Lenovo and others that can display eBooks, plus browse the Internet, get and send email, play videos and run applications such as Microsoft Office and OpenOffice, in a package under 3 pounds in weight. In other words, it can do the job of an eBook reader plus an entry-level notebook. So, why would I buy a Kindle 2?

If that doesn't convince you, consider the iPhone. You can buy it for $199, it has multiple eBook readers available for free or at a very low price, plus it allows to you make phone calls, get and send email, browse the Internet, and run thousands of other applications. It displays color, handles video and animation just fine, and fits in your pocket. So, why would I buy a Kindle 2?

Amazon and its defenders argue that the performance of the Kindle 2's display in bright sunlight and its battery life are both critical factors. They are, but they don't outweigh all of the other deficits of the Kindle 2 and similar eBook readers. If I'm not sitting on the beach, a backlit display will work better than the Kindle 2's reflective electrophoretic display. If I can charge the device at least once a day, the Kindle 2's multi-day battery life isn't necessary.

For these reasons, I think that the Kindle 2 will, like other hardware eBook readers, be bracketed between smartphones and netbooks--not functional enough to compete with either of them, and without sufficient unique features to justify carrying both a smartphone and Kindle 2, or both a Kindle 2 and a netbook.
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Saturday, February 07, 2009

The Search for Value Creates New Leaders

Earlier today, I was sitting in a local Dunkin' Donuts, drinking coffee and watching CNN on a Samsung television. It wasn't that long ago that Samsung was all but unknown in the U.S.; now they're one of the market leaders in flat-panel TVs, DVD players, cellphones and other products. Samsung got where they are by offering high-quality products that could rival Sony, Panasonic, Sharp, Nokia, Motorola and others, at highly competitive prices.

Earlier this week, U.S. auto sales for January were reported, and only three companies reported improved year-to-year sales: Subaru, Kia and Hyundai. Hyundai grew more than 14%, not by offering ever-larger cash-back deals and financing discounts, but by simply agreeing to take back cars in the first year after purchase from buyers who lose their jobs.

Through a combination of good value and innovative marketing, these Korean companies are coming out is Dunkin' Donuts, which is kicking Starbucks' butt with good coffee at a lower price. It seems that people are willing to trade off comfy chairs and cachet to save some money. And, Wal-Mart is just about the only retailer that's continuing to grow; it's taking even more market share away from competitors with its low-price strategy.

It's impossible to say whether these trends will hold once the economy recovers, but it seems unlikely that we'll go back to "business as usual". Consumers will continue to demand more value for their money, and the companies that can't, or won't, provide it won't be around much longer.
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