Amazon and Apple's dramatically different strategies

Today's announcement of three new black & white Kindle models, plus the Kindle Fire tablet, have shaken up both Amazon's competitors and a number of industry observers. The Kindle 4 models (the Touch, Touch 3G and just plain Kindle) each set new low price points for eReaders with their functionality. The Kindle, at $79, will be a stocking-stuffer for the coming Holiday season. The Kindle Touch Wi-Fi, at $99, provides comparable functionality to Barnes & Noble's Nook for $40 less, and the Kindle Touch 3G adds always-on wireless connectivity. for $149. (All these prices are for Kindles with Special Offers, or in other words, advertising. Add $30 to the Kindle and $40 to the Kindle Touch models if you don't want ads.)

The Kindle Fire tablet, at $199, is cheaper than any brand name Android tablet except Lenovo's forthcoming A1, which comes with front and back cameras and GPS, all of which Amazon leaves off. However, Amazon has built its own user interface on top of Android that's designed to make the Kindle Fire much easier to use than Google's standard Android. Amazon has also built its own browser, called Silk, that uses Amazon's cloud services to pre-render web content for better performance.

Everything about the Kindle Fire demonstrates how radically Amazon's and Apple's strategies differ. Apple uses software to sell hardware; the iTunes Store and App Store are there to increase demand for Apple's hardware. Apple makes money from software and content, but it's a drop in the bucket compared to its hardware revenues. Amazon, on the other hand, uses hardware in order to sell its goods and services. It's likely that the new Kindles, including the Kindle Fire, are all being sold at close to break-even or possibly even at a small loss, in order to generate more sales of other goods and services. Amazon sees the Kindle Fire as potentially being as stimulative for music, movie and television show sales, as well as Amazon Prime subscriptions, as the black & white Kindles have been for eBook sales.

There's not a lot of daylight between Amazon and Apple for competitors to exploit. Amazon is setting price expectations at the low end and is trying to dominate the content market; Apple dominates the developer community, and the iPad will continue to have a much bigger selection of apps than any of its competitors. Can competitors sell more expensive tablets than Amazon with a mediocre selection of content, or less expensive tablets than Apple with a mediocre selection of apps? I doubt it.

This would have been a great opportunity for a radically different tablet, like Microsoft's Courier, that could compete in a completely different market segment, but Microsoft killed the Courier, and there's nothing on the horizon from first-tier competitors that can forge its own path. In hindsight, HP was probably right to kill the TouchPad, and I wouldn't be at all surprised to see other companies rethink their entire approach to the tablet market. Cloning Apple or Amazon won't work; competitors need radically different products.

Who buys Hulu? Most likely, no one

Silicon Alley Insider is reporting that, now that Hulu's auction is completed, the company's owners have some hard decisions to make. Comcast, News Corporation, Disney and Providence Equity Partners were looking for well north of $2 billion for Hulu, but they didn't get it. More accurately, they got it, but not in the way they wanted.

(Update, October 13, 2011: AllThingsD has reported that Hulu's owners have called off the company's sale and will continue to manage it themselves.)

The top bidder for Hulu was Dish Network, which bid around $1.9 billion dollars, more than either Yahoo or Amazon. Google apparently offered far more--around $4 billion--but the company wanted guaranteed access to Hulu's owners' content for much longer than the two to three years that had been offered. Without that kind of concession, the Hulu deal is really a two to three-year non-exclusive license to its content, not an "acquisition" in any real sense.

That's why Dish, Yahoo and Amazon weren't willing to spend even $2 billion for the company. Hulu's partners could more than double Dish's bid overnight by accepting Google's terms, but I don't think they will. They believe that their content, and the investment they've made in the Hulu platform, is worth more than $1.9 billion, and they're not willing to extend longer terms, given the rate of change in the online content market. Therefore, it's most likely that they'll cancel the auction and keep Hulu themselves.

Poof! Your set-top box has turned into a brick

Yesterday, Sezmi, a Silicon Valley-based video service provider, announced that it is discontinuing its services in the U.S. in order to focus on selling its platform to international service providers. Sezmi used a combination of an Internet connection and digital broadcast signals to provide a subscription package of broadcast, cable and Internet-only channels. While the service was eventually offered in 36 U.S. markets, the cable channels were never made available outside Los Angeles (even though customers in other markets were told they would get them), and the cable channels in Los Angeles were discontinued last December. Subscribers purchased a $150 package including a set-top box with a 1TB hard drive, and a digital antenna for picking up over-the-air broadcasts; the monthly price was $5 for basic service, and another $20 for the cable channels.

Sezmi's unique selling proposition was that it was a low-cost replacement for cable service, but once the cable channels went away, Sezmi lost its primary selling point. In addition, if subscribers lived too far away from local television transmitters to get a good digital picture, they couldn't use Sezmi, either. Sophisticated industry observers could see that Sezmi was doomed, but consumers didn't necessarily have that insight.

Consumers who bought into Sezmi are stuck with bricks that will be useless for anything except watching YouTube by November 1st. Sezmi isn't offering any refunds for hardware, no matter when it was purchased. Subscription video services fail all the time--for example, Cablevision's VOOM was the first HD satellite TV service, and lasted for approximately two years. The VOOM set-top boxes could also be used as ATSC digital receivers, so a few of them are probably still in use, but most of them ended up in the scrap pile.

The lesson is that consumers should beware when being asked to purchase a set-top box, especially an expensive one. If the company offering the service goes out of business, changes strategic direction or is acquired, its set-top box is likely to become a paperweight. Apple and Roku have the right idea--none of their set-top boxes are priced over $100. It's clear that no one feels any particular responsibility to their customers if they discontinue their services, so caveat emptor.

Adobe pins Flash's future on 3D

Adobe Flash's clock is ticking, and not in a good way. Apple wants it dead, Microsoft is about to make life for it much less comfortable with Windows 8, and Google supports it, but only to get under Apple's skin. The better that browsers and authoring tools that support HTML5 get, the smaller the remaining market space for Flash becomes.

For Flash to remain viable, Adobe has to position it for applications that can't be done well, or at all, with HTML5. It appears that Adobe has decided to focus on 3D applications with Version 11 of Adobe's Flash Player and Version 3 of Adobe AIR, both of which are scheduled for release in early October. Flash 11 has a new GPU-accelerated 3D API called Stage 3D, which should dramatically improve 2D and 3D rendering rates on devices with compatible hardware. Adobe claims that, compared with the current Flash Player's capability to render thousands of non z-buffered triangles at 30 Hz, Flash 11 will be able to render hundreds of thousands of z-buffered triangles at 60 Hz.

Flash is currently very popular for browser-based casual games, but Adobe wants Flash 11 to be used for far more graphically-intensive games, and has signed up EA Interactive, Ubisoft and Zygna to support the new capabilities in their games. The problem, as Wired's Webmonkey site points out, is that WebGL can provide at least the same level of 3D performance in browsers without plug-ins, and WebGL is an industry standard. However, Internet Explorer currently doesn't support WebGL at all, and other browsers have widely varying WebGL performance.

So, Adobe may be able to carve out a niche with Flash for 3D applications, but it's hard to see it as anything more than temporary. Browser developers will be improving their WebGL performance in parallel with increasing their HTML5 compliance. The real test will be how many developers successfully market games written with Stage 3D.

Nikon unveils Nikon 1 EVIL cameras

Nikon finally entered the small-form-factor interchangeable lens camera (sometimes called EVIL) market with a new system, called Nikon 1. The first two members of the Nikon 1 family are the J1 and V1. Both models use a new 1" 10MP CX sensor developed by Nikon (hence the "Nikon 1" name). Both the size and the resolution of the sensor are substantially smaller than the sensors used by Panasonic and Olympus in their Micro Four-Thirds cameras, or by Sony in its NEX-series cameras. The smaller sensor gives the Nikon cameras a larger crop factor (2.7x) than its competition (for example, a 100mm lens on a Nikon 1 camera would be comparable to 270mm.)

The J1 is the entry-level model in the Nikon 1 line. It has an electronic shutter that limits sync speed to 1/60th of a second, but that operates at up to 1/16,000th of a second. It's got a 73-point autofocus system that switches between phase- and contrast-detection to get the best focus under current lighting conditions, and a 3", 460,000 pixel resolution LCD. Its burst rate with adaptive autofocus is 10 fps, and a blazing 60 fps when focus is locked. In video mode, it can record at 1080i60 and 1080p30. It's got lower-resolution slo-mo modes at 400 and 1,200 fps, as well as a somewhat confusing Motion Snapshot mode that records brief clips at 1080p60 but plays them back at 1080p24 for a slow-motion effect. The J1 will ship in the U.S. on October 20th with a 10-30mm lens for $649.95.

The V1 is the "enthusiast" Nikon 1 model. It's positioned by Nikon as the world's smallest camera with both an .47', 1.44MP resolution electronic viewfinder and interchangeable lenses. It has both an electronic and mechanical shutter; the electronic shutter is the same as in the J1, and the mechanical shutter supports sync speeds of up to 1/250th of a second and can operate up to 1/4000th of a second. The V1 also has connections for stereo microphones and a "multi-accessory" port for attaching a speedlight or GPS module. Other than these features, the V1 is functionally identical to the J1. The V1 will also ship in the U.S. on October 20th with a 10-30mm lens for $899.95.

Nikon also announced a range of lenses for the Nikon 1 cameras: The 10-30mm zoom included with the two new cameras, a 30-110mm f3.5/5.6 zoom lens, a 10-100mm f4.5/5.6 power zoom for movies, and a 10mm f2.8 pancake lens. Nikon will also offer the FT-1 F-mount adapter for using conventional Nikkor lenses with Nikon 1 cameras. Prices and availability have not yet been announced.

I have to admit that I'm underwhelmed by the Nikon 1 cameras and lenses, based at least on their specifications. The 1" CX sensor is both substantially smaller and lower-resolution than either the Micro Four-Thirds or APS-C sensors. Nikon compensates to a degree with the camera's hybrid autofocus system and very fast burst rate (up to 60 fps with focus locked), but I doubt that's going to be enough to save these cameras. Nikon says that it's pursuing consumers who want better cameras than point & shoot models, and who want interchangeable lenses without the complexity of DSLRs. The problem is that the new Nikon models don't appear to be significantly smaller, cheaper or easier to use than competitive cameras that take better pictures and are more flexible (although the new hybrid autofocus system is a significant advance). In addition, the big plus of the Nikon 1s, their fast burst rate, is of most use in applications such as sports photography, where image quality is a paramount consideration.

Nikon's new lenses are also fairly slow, especially the power zoom, which negates some of the cameras' depth-of-field advantages. On paper, at least, there's not much about the Nikons that would cause anyone other than a devoted Nikon customer to buy them, rather than buying a Sony, Panasonic or Olympus model.

Windows 8: Destination unknown

Earlier this week, Microsoft formally introduced Windows 8 to its developer community at its Build conference. The new operating system was well received--so much so that Microsoft CEO Steve Ballmer had to caution people who downloaded the developer preview version that it's very early software and should in no way be used for production environments. Windows 8 is, in a way, Microsoft's answer to both iOS and OSX from Apple: It will run on PCs, notebooks and netbooks, like Windows 7, but it will also run on tablets, like iOS. It'll run on Intel processors like Windows 7, but it will also run on ARM processors like iOS. It runs all the Win32 desktop-style applications that Windows 7 does, but it also has a touch-oriented user interface and supports touch-based applications like iOS.

Windows 8's "secret sauce" is a new touch-oriented user interface called Metro. Metro is based on the Windows Mobile 7 operating system's user interface for smartphones, which is in turn based on the now-defunct Zune user interface. It does the sliding, zooming and selecting kinds of things that you'd expect from iOS and Android, but it does it on top of Windows. That represents both an opportunity and a problem.

The opportunity is that one operating system, Windows 8, could service both the legacy PC market and the new tablet market. Most observers believe that Apple will eventually unify iOS and OSX; Microsoft has done it with Windows 8. It's much easier for developers to build and support applications for one operating system instead of two.

Windows 8 supports two different kinds of applications: Win32 and Metro-style. Win32 applications are the programs and user interface elements that we've seen on Windows since Windows 3.1. They've been refined and updated over the years, but a Windows XP user shouldn't have any difficulty using a Win32-style program on Windows 8. Win32 apps are designed for a keyboard and mouse, and will work poorly, or not at all, with a touch interface. Metro-style applications, on the other hand, are all full-screen, use a radically different user interface, and are optimized for touch. You can use a mouse and a keyboard with Metro-style apps, but you probably won't want to do so.

Windows 8 systems will open into the Metro user interface, using a touchscreen. If you want to run a Win32 app, you'll switch back to the old user interface, using a keyboard and mouse. You'll then go back and forth between user interfaces as you switch from program to program. You can configure Windows 8 to always use a Win32-style GUI, but then you'll lose access to the Metro-style apps. That's the problem with running both Win32 and Metro-style applications on the same device.

Apple knew that tablets were going to be used very differently from desktop computers, so it optimized iOS for touch on smartphones and tablets. iOS doesn't try to run OSX-style keyboard-and-mouse applications; it offers similar functionality, but the user interfaces are very different. Windows 8, on the other hand, wants to be equally good at desktop and tablet applications, even though the use cases are very different.

For existing Windows users who want to continue using Win32-style apps, from what Microsoft showed this week, there's not much value in upgrading to Windows 8,  other than cutting down on boot times. Customers who are primarily interested in Metro-style tablet apps will find that app developers are starting from scratch, and it may take years for Microsoft to reach parity with the selection in Apple's iOS App Store. Customers who want to use both types of apps, and switch back and forth, are likely to get frustrated very quickly with dealing with two dramatically different user interfaces.

My suspicion, sitting a year or more away from when Windows 8 formally launches, is that Metro-style apps will be used almost exclusively on tablets, and that desktops, notebooks and netbooks will almost exclusively be used for Win32-style apps, despite Microsoft's goal of getting touch-enabled displays on every kind of computing device. This approach will allow customers to avoid switching between user interfaces, but it won't do much for Microsoft's growth prospects. Windows 8 on conventional PCs and Windows 8 on tablets will represent two different markets, and on the tablet side, Microsoft won't be able to leverage its huge PC installed base. It'll be starting from zero. Given that Apple will probably be on the iPad 4 and Google will be on Android 5 by the time that Windows 8 ships, that's not a good place for Microsoft to be.

Atomos' little solution to a big problem

From the standpoint of getting high-quality video and audio out of a camcorder, either HDMI or HD-SDI will work, but HDMI is a consumer connection--the connector doesn't lock, and it's designed for casual use. SDI, on the other hand, is a professional connection--the connectors lock, and it's designed for much heavier usage than HDMI. There have been converters that input HDMI and output HD-SDI and vice versa, but they've tended to be big and line-powered--not something that you'd want to carry with you wherever you go.

At IBC, Atomos, the Australian video recorder folks, introduced a new product, Connect, that solves the problems with existing converters. The Connect is available in two versions: HDMI to HD-SDI, and HD-SDI to HDMI. Each one is priced at 249 Euros/$349 (U.S.), and is only 42.5mm W x 29 mm H by 72.5mm L. They're powered by a Sony battery and fit on Sony, Canon and Panasonic battery plates, so they can be mounted easily on almost any device. They can also be ganged together, so that multiple converters can share a single external battery.

Atomos' Connect converters can add a HD-SDI interface to any camcorder, make DSLRs work with professional video recorders and switchers, and enable lower-cost HDMI monitors to be used with HD-SDI devices. The company expects to begin shipping the devices worldwide by the end of 2011.

Sony: Getting its act together (at least with cameras and camcorders)

I've pointed out over the last several years the many times that Panasonic has eaten Sony's lunch in the camcorder and camera businesses:

• Panasonic's P2 and SD memory cards were the start of the solid-state, file-based camcorder revolution, while Sony's XDCAM optical disc has largely been a dead-end format.
• Panasonic and Olympus pioneered the big-sensor, small-camera interchangeable lens format with Micro Four-Thirds, while it took Sony several years to get on board with its NEX series of cameras.
• Panasonic and Canon introduced professional-level video to their DSLRs several years ago, while Sony's A77, just released a few weeks ago, is the company's first DSLR with professional-level video.
• It took Sony more than a year to respond to Panasonic's AF100 Micro Four-Thirds-based camcorder, with the F3 and FS100.

Finally, Sony is back in the game in a big way, in three different product lines:

• The new A77 DSLR is a first-rate still camera that can compete with Canon and Panasonic on video as well. It has a 24 megapixel sensor, a 2.4 megapixel OLED electronic viewfinder that's actually much higher resolution than its 920,000 pixel pull-out LCD display, and a 12 fps burst rate. It can record video at 1080p60 (1080p50 in Europe) using AVCHD 2.0 (Panasonic refers to it as AVCHD Progressive), which supports a maximum bit rate of 28mbps, versus 24mbps for previous AVCHD implementations. It also supports live autofocus in video mode. U.S. body-only pruce is $1,399.
• The NEX-7 is Sony's new top-of-the-line EVIL (electronic viewfinder, interchangeable lens) camera that competes with Micro Four-Thirds models. It has the same sensor and OLED electronic viewfinder as the A77, in a pocket-sized package. It also records video at 1080p60 using AVCHD 2.0, with the same live autofocus as the A77. Expected U.S. body-only price will be $1,199.
• The NEX-5n replaces the former top-of-the-line NEX-5 EVIL camera. It uses a 16.1 megapixel sensor and doesn't come with an electronic viewfinder; the optional FDA-EV1S viewfinder, which is connected to the top of the camera, has the same OLED display as the NEX-7 and A77. It records video at 1080p60/50 using AVCHD 2.0, and has live autofocus. U.S. body-only price is $699.
• The LA-EA2 adapter allows Alpha-mount lenses to be used with the NEX-series E mount. The adapter supports autofocus on the Alpha lenses. The LA-EA2 is almost as big as the NEX cameras themselves, and it costs $399, but it could be valuable for those NEX-family camera users who want to use Alpha lenses without losing autofocus capabilities.
• The F3 is Sony's lowest-cost digital cinematography camcorder. It uses a Super 35 Exmor CMOS sensor and PL mount for supporting film lenses. It records in 4:2:2 1080p59.94/50, and optionally in 4:4:4 1080p59.94/50, on SxS media. Its U.S. list price is $16,800 without lens.
• Sony's NEX-FS100 is Sony's answer to Panasonic's AF100, with a unique, squared-off form factor and top-mounted electronic viewfinder. It uses the same E-mount lenses as Sony's NEX-family of still cameras, and comes with an 18-200mm zoom lens. The FS100 uses the same Super 35 Exmor sensor as the F3. Like the new NEX cameras, it records video at 1080p60/50 using AVCHD 2.0. The FS100 records on SDHC/SDXC and Sony Memory stick cards, and the optional HXR-FM128 records onto 128GB of flash memory. U.S. list price with lens is $6,550.

For all of Sony's new competitiveness, the company still sometimes makes questionable decisions about product features. For example, the FS100 has dual XLR audio inputs, but only outputs video via HDMI rather than HD-SDI. HDMI connections, which don't lock, are notorious for becoming disconnected at the worst possible time. By comparison, the less-expensive Panasonic AF100 has both HDMI and HD-SDI outputs. Also, the AF100 has built-in neutral density filters, but the FS100 doesn't.

Also, Sony believes that, as a matter of principle, its products are worth more than the competition, even if they're objectively no better. Going back to the FS100-AF100 comparison, Sony's FS100 is about $1,000 more than Panasonic's AF100, even though the AF100 arguably has more professional features than the FS100.

Even given those caveats, however, Sony has clearly gotten back into the game with both still cameras and camcorders. It's good to see the company competing for business instead of resting on its laurels.

Speculation: The game any number can play

Late last week, TechCrunch's MG Siegler reported that he had not only gotten his eyes on a prototype of a new Amazon tablet, but his hands as well. He reported many details about the hardware and software, the price, when it will be announced, and even what kinds of promotions Amazon plans for it. Siegler's story triggered a flood of speculative articles, all primarily based on his description. For example:

• From Forbes:  Amazon Can Become Tablet King With E-Commerce Underwriting
• From The Wall Street Journal: Amazon.com Says It Is Testing Website Redesign (Changes, Which Will Roll Out Gradually, Were Made With Tablet Computers In Mind)
• From Wireless World: Amazon's $249 tablet could shake up pay TV business

I take Siegler at his word that he saw and used a prototype of an Amazon tablet, and that he spoke with a source with inside information about Amazon's plans. However, we have no independent verification that the tablet he used is representative of the final product, or that the pricing, availability and promotional details that he got are correct and won't change by the time the product finally ships. Nor do we have any independent verification of what he wrote about a second tablet, or about Amazon's plans for other black & white Kindles.

It's easy (and fun for the whole family) to base articles on a single, unconfirmed story, but they take as fact what is only rumor and hearsay. The problem with piling speculation on top of hearsay is obvious: If the hearsay is incorrect, the speculation based on it is even more incorrect, and the whole pile tumbles down like a badly-constucted Jenga tower.

We know what TechCrunch published. Let's get some independent confirmation of the facts before we start drawing conclusions or determining what the impact will be on the industry. If Siegler is correct, we don't have long to wait before we get confirmation from Amazon itself. There's plenty of time to determine the implications of Amazon's actions once we know the "true facts".

Advertising is dead. Deal with it.

Have you ever had the feeling that you were a fly buzzing against a window, not knowing that you could escape if you just moved a few inches to one side? That's how I've felt recently, thinking about how to build an advertising-supported Internet site. I've come to the conclusion that, for all but a handful of sites, it's impossible to build a successful business by depending on advertising.

The classical advertising model was based on an economy with few media outlets and many media consumers. In the U.S., for decades there were three broadcast television networks and three commercial television stations in most markets. In most cities, there were one, or at most two, newspapers. The scarcity of media outlets meant that each outlet had a large audience, and that audience attracted advertisers, who were willing to pay enough to turn the outlets into viable businesses.

The Internet turned the classical model on its head: Instead of having a small number of media outlets, each with large audiences, we have a huge number of outlets, each with small audiences. Only a handful of sites and services on the Internet have been able to attract the audiences necessary to make an advertising-based revenue model work. The cost of setting up an Internet site is tending toward zero, especially if you can convince people to create content for you for free. Operators of these kinds of sites can run them profitably, or at least not at a large loss, right up to the point where they have to pay people for their content and services. That's why The Huffington Post has pushed back so hard against bloggers who want to be paid for the content that they provide to the site. If the HuffPo had to pay for all its content at market rates, it would go bust.

The problem goes beyond the Internet--cable television networks, in the aggregate, have a bigger audience than the broadcast networks, but few cable networks attract a big enough audience on their own to be viable without fees paid by cable, satellite and IPTV services. That's why cable networks and service providers fight so hard against "a la carte" pricing that would allow subscribers to pick and choose channels.

So, what should you do? If you're thinking about starting a business, pick a business and a business model that allows you to charge users. If you're running a business that is advertising-supported, or that you hope to run on advertising revenues in the future, pivot to a business and business model that can be profitable on user fees. If you're an investor and someone comes to you with a business plan that depends on advertising revenues, walk away. In short, if you can't get your users to pay for your service, you're in the wrong business.

How to make money with trade shows

I attended a local trade show not long ago, and from what I saw, at least half of the exhibitors made mistakes that caused them to waste part or all of the money they spent on the show. With that in mind, here are some suggestions for how to get the most value out of exhibiting at trade shows:

Ask yourself "Is this show really necessary?".

Considering the cost of renting booth space, booth design and building, travel, labor costs, shipping, advertising and lost productivity, trade shows are some of the most expensive sales and marketing activities that your company can do. You're constantly getting emails, flyers and sales calls asking you to participate in trade shows, but some shows are much better than others at generating qualified sales leads. Could you get the same benefit (or more) by doing a series of webcasts instead of exhibiting at a trade show? Could you run an online promotion to generate leads for your salesforce? In other words, are there other sales and marketing investments that you could make that would be more cost-effective or pay off with more revenues?

The purpose of exhibiting isn't to get as many people as possible into your booth, it's getting as many qualified sales leads as possible.

This is a critical point: Companies spend enormous amounts of money to draw bodies into their booths, but how much of that money is well-spent? Burying your sales team in hundreds of unqualified leads is just as bad as not sending them enough leads. If they work the leads and come up empty-handed, they'll ignore future trade show leads that you send them. When it comes to sales leads, quality is much more important than quantity. Here are a few techniques for driving traffic, and some suggestions on whether and how to use them:

• Tchotchkes: These are cheap giveaways, everything from pens to candy to T-shirts. Tchotchkes primarily bring people to your booth who are looking for free junk, not qualified buyers. If you really want to use them, I'd suggest good literature bags, with your company's logo and booth number on both sides, or coffee mugs, which will be used again and again by the visitor. Anything that's likely to be thrown away, used up or lost before people get home is a waste of money. (T-shirts tend to attract T-shirt collectors, who won't end up wearing them and are more interested in scoring free swag.)
• Contests/Drawings: Contests and drawings with valuable prizes tend to draw visitors who are more interested in the prize than in the exhibitor's products or services. I once worked for a company where we gave away a notebook computer at a trade show. Based on the number of entries we received, almost everyone who attended the show entered the contest, but only a tiny fraction of the entrants were qualified potential buyers of our product.
• Models: Many companies use professional models to gather leads. Attractive women draw men into the booth, but many of the visitors are more interested in the women than the company's products and services. A bigger downside is that models are usually unable to answer any questions, so if a qualified buyer does come into the booth, they have to go on a hunting expedition to find someone who can help them. It's better to staff your booth with full-time employees who know your offerings, and if they can't answer a question, know the person (or people) who can answer it. (By the way, some exhibitors award models extra pay based on the number of leads that they generate. All it does is create a flood of unqualified leads.)
• Entertainers: It's one thing if you want to hire professional presenters to demonstrate your products, but something else if you hire a magician or other performer whose sole purpose is to drive traffic into your booth. Don't waste your money.

When it comes to booths, it's "location, location, location".

Where your booth is located on the show floor is extremely important. The booths that get the most traffic are the ones nearest the entrances to the show floor. The further to the back and side you are, the lower the traffic you'll get. This isn't a problem at small trade shows, where most attendees can easily walk the entire floor, but it's a big problem at major shows--especially shows in more than one exhibit hall. It doesn't matter how valuable a show is if your potential customers can't find or reach your booth.

You can never have enough signs.

At the trade show I visited recently, and at other shows I've been to over the years, there were many exhibitors whose signs gave the company name--nothing more. Don't assume that everyone who attends a trade show knows who you are, or has the time and inclination to come over to your booth and ask what you do. Your signs should say what you do and what products and services you're exhibiting in simple language. Pay particular attention to signs for new products and services that you're exhibiting for the first time: "New" is one of the most powerful words in the English language, and many people come to trade shows specifically to learn about new offerings.

Staff your booth at all times.

You would think that it would be common sense to have your booth fully staffed at all times while the show is open, but you'd be surprised how many companies leave part or all of their booths unstaffed during the show. Unstaffed booths look amateurish, no matter how big or well-known the company. To go back to the sign issue for a second, there was a major exhibitor at the show that I recently attended that had a sign on one part of its booth that said "XYZ". (The company and product names are being disguised to protect the exhibitor.) I had no idea what XYZ was; there was no other description. In addition, there was no one manning that portion of the exhibit, so I had no one to ask. As a result, I still don't know what XYZ means, or if I'm in the market for it.


Start driving traffic to your booth before the show.

Companies have incredible tools for reaching out to current and potential customers to let them know what and where they're exhibiting. Social media and email can be used to very precisely target attendees. Many shows allow exhibitors to give out a number of free exhibit passes; these can be used to encourage existing and potential customers to attend. Your sales team also knows many customers that they'd love to talk to face-to-face at a conference. Tap your internal customer lists and leads first, and then move to broader social media outlets such as Twitter, Facebook and LinkedIn.

Process your leads immediately after the show.

True story: Years ago, I was helping to set up booths at a trade show, and I opened the information kiosk where we processed sales leads. There, in a locked wooden box, were all the sales leads from the last time that the booth had been used, some six months earlier. The leads were, of course, useless by that time. Your number one priority after the show ends should be reviewing and qualifying the leads, and assigning them to salespeople. Every person who gives you a lead at a show should receive some kind of acknowledgement, whether it be an email, letter or flyer, within two weeks after the show closes. Leads go stale very quickly, so process and assign them as quickly as you can. If you don't do it, your competition will.

Doing all these things won't guarantee that you'll have successful trade shows, but they'll make success much more likely and put you ahead of at least 50% of the exhibitors at any show.

If at first you don't succeed, quit

PC World has a great article about wby Windows PCs are having so much difficulty competing with Apple's MacBook Air. When the Air was first released, it was an overpriced, underpowered novelty that sold well to Apple fanatics, but poorly to everyone else. Jason Cross, the author of the PC World article, points out that Sony had a notebook computer, the X505, that was about as thin and light as the Air, in 2003. Dell had the Adamo, and then the Adamo XPS, starting in 2009. None of them sold well, because they were all very expensive, and the Dell models had the additional drawback of poor battery life.

Both Sony and Dell abandoned the ultralight segment, but Apple continued to press on with the Air, despite poor sales. The fourth-generation Air, released not long ago, is widely acknowledged to be the "must-have" laptop of the year, combining extremely small size and weight with a fully-usable keyboard, excellent performance and a competitive price.

I bring this up in large part because of HP's announcements last week that it would discontinue its webOS-based hardware and maybe, sometime, get rid of its PC business. HP could have decided that it needed to be in the mobile business for the long run, and with webOS, it already had the best tablet operating system next to iOS. Instead, it abandoned the mobile business, and has signaled that it has no commitment to the PC business, either. Sony and Dell took the same approach with their ultralight notebook businesses, and Dell is moving in the same direction with tablets. Sony has two tablets ready to launch, but I wouldn't be surprised to see the company pull back if they don't sell well, either.

Apple demonstrates that success requires long-term commitment, but it's not just Apple that has that attitude. Microsoft is legendary for working on products until it gets them right; the saying for years has been that Microsoft doesn't get it right until Version 3. If Microsoft had quit after Versions 1 or 2, there wouldn't be Windows or the Office suite--in fact, there probably wouldn't be a Microsoft.

HP's own top management acknowledges that mobile computing is the future, but it gave up on mobile because its first tablet didn't make a big splash in its first 60 days. That's incredibly short-sighted thinking. Does HP seriously believe that there's no place for mobile computing in the enterprise market? Instead of having some control over its destiny in mobile, HP will be forced to partner with other companies and adapt its systems to their offerings.

Success requires time, effort, and the willingness to fail in order to learn. If you don't have a long-term commitment to be willing to fail on the way to success, you shouldn't even start. Do something simpler, like building clones of other people's PCs, or clones of other Internet companies. You'll still probably fail, but it won't require any creativity or risk.

Cold, dead fish

I started my career 30 years ago at Hewlett-Packard. Back then, HP was almost completely engineering-driven--so much so that the saying at the time was that "HP would market sushi as cold, dead fish." HP's marketing may have been lacking, but its product development capabilities were undeniable. Turn the clock forward to 2011, however, and the HP of today is a company with only one real strength--its printer division--and a management team that's almost completely lost the trust of the company's investors.

Yesterday, in addition to releasing its financial results, HP announced that it was killing its webOS-based tablet, the TouchPad, which had been shipped less than two months earlier, and its line of smartphones. Not only did the company announce that it was killing the products, but it was also immediately ending support, leaving customers who had purchased the products as late as yesterday in the lurch. HP then said that it was considering what to do in order to "maximize the value" of the webOS software. HP also announced that it had made an offer for Autonomy, the U.K.'s second-largest software company, and that it was looking at "strategic options" for its PC business.

These may very well be the right decisions; rumors have been floating that the company has considered getting out of the PC business for years, and those rumors picked up over the last six months. HP's acquisition of Palm was questionable to begin with, and the company bungled the launch of its new webOS products, along with the management of the webOS Developers Program. The acquisition of Autonomy will push HP further into the software business, with an emphasis on "big data" analysis applications. The problem isn't with what HP announced, but how it announced it.

The decision to kill the webOS products came just two weeks after the company launched a major promotional campaign dropping the price of the TouchPad tablet by $100, and while HP was running a national television advertising campaign to promote the device. I saw two HP TouchPad ads on national television last night, after HP had announced the decision to kill the product. HP announced that it was reserving $100 million for returns of TouchPads, but it said nothing about what it was going to do for recent purchasers of the HP devices. Should they return them to where they purchased them for a refund? Should they send them to HP? Should they keep them but send proof of purchase to HP? Would HP do anything at all to make them whole?

Update, August 20, 2011: Late yesterday, HP reduced the retail price of the 16GB TouchPad to $99 (US), and $149 for the 32GB model. Some resellers, most notably Best Buy in the U.S., have chosen to return the tablets to HP rather than sell them at the lower price. Best Buy has also extended its return period from 30 to 60 days in order to cover all sales of the TouchPad from when it first shipped.

Yer another update, August 21, 2011: Best Buy, which had initially decided to return the TouchPads in its U.S. stores, has instead decided to sell them at the prices suggested by HP. Purchases will be limited to one per customer, with no returns or refunds allowed. Customers who purchased TouchPads from Best Buy at higher prices will still be allowed to return them for a full refund.

As for keeping webOS viable, I would have expected HP to have a definitive announcement: It's selling it to another company. It's open-sourcing it and making it available for anyone who wants to use it. It's setting up a Mozilla-like foundation to take it over. But instead, HP said that it didn't know what it was going to do.

The PC announcement had at least the same level of uncertainty. Leo Apotheker, HP's CEO, said that the company was considering spinning out, selling or keeping the PC business, but that no decision would be made for as long as a year. Again, you would have expected HP to say "The PC business is being sold to X", or "We're spinning the PC business off to our investors", or nothing at all. The indecisiveness of HP's statements make the decision look like it was taken at the spur of the moment, without a lot of thought.

Even the acquisition of Autonomy was couched more as "Yeah, we're considering buying them", then as "We've made a definitive offer to acquire Autonomy for $10 billion", as has been reported. The entire set of announcements feels as though it was designed more to deflect attention from a mediocre earnings report than as a well thought out strategy for turning the company around. The investment community responded by driving HP's stock price down to its lowest level in years, dropping almost 21% in a single day near today's market close.

Making the announcements that it did, while leaving so many questions unanswered, did nothing but increase doubts about the competency of HP's management team. This is the wrong time, and the wrong stock market,  for HP to make its future plans so uncertain.

HP's WebOS opportunity

Update, August 18, 2011: HP just announced that it is discontinuing all its webOS-based hardware devices, including the TouchPad tablet and smartphones. According the The Wall Street Journal, it will hold on to the webOS operating system and will pursue licensing it to other companies.

Google's decision to acquire Motorola Mobility has thrown the Android ecosystem into chaos: Will Google really treat Motorola no differently than any other Android licensee, or will it give Motorola priority for new features and new versions of Android? Will Google be able to stay focused on releasing new versions of Android that are competitive with iOS while dealing with the Motorola acquisition?

Google's acquisition opens the door for Microsoft to become an alternative operating system vendor for some of Android's licensees, but Microsoft's partnership with Nokia has spawned its own concerns: Nokia clearly has "favored nation" status in the Windows Phone ecosystem. As a result, Microsoft may be less able to capitalize on Google's decision than it would first appear.

The company that might have the best opportunity to capitalize on Google's acquisition is HP, if it can execute quickly and decisively (always a big if when talking about HP). WebOS is an excellent operating system, but it's been crippled by HP's indecision in launching new products, and its inability to run an effective developer program. AllThingsD reported yesterday that Best Buy has taken delivery of 270,000 HP TouchPads but has only sold 25,000 of them. Best Buy is reportedly demanding that HP take back its inventory of tablets. Now, HP is launching a new line of webOS-based smartphones in Europe, but the company's chances of success aren't much better in the smartphone market than they are right now in tablets.

A number of observers have suggested that HP should license webOS, but for this plan to be successful, HP has to follow a more radical course. Here's the approach that I believe HP should take:

1. Set up a Mozilla-like organization to run future webOS development, and in particular, run the developer program. This organization would insure that all licensees have a common code base to work from, and that webOS apps work on the widest possible range of devices. One goal would be to avoid the proliferation of versions that frustrates Android developers.
2. Give licensees partial ownership of webOS and the development organization. That would give the licensees a say in the future direction of the operating system.
3. Licensees would invest in the development organization rather than pay royalties. (There could be two classes of licensees: One that owns a stake in the development organization, and another that pays royalties in lieu of investing in the development organization.)
4. Once the development organization is launched and licensees sign on, HP would drop its smartphone line. HP would remain in the tablet business, and could use webOS throughout its product line. The company would have the option to reenter the smartphone business after a number of years.

I have to believe that a joint venture development company, with talent contributed by companies such as Samsung and HTC, as well as HP, could do a much better job managing and promoting the webOS platform than HP alone. You may say, "Isn't this what Nokia tried to do with Symbian?". Yes, Nokia established the Symbian Foundation and open-sourced the operating system, then brought it back in-house and made the license proprietary. The problem was that Nokia wanted it both ways--the company wanted to control the development of Symbian but also wanted its competitors to license it. If HP is to succeed in licensing webOS, it has to truly cede control to a joint venture with its licensees, and it has to (at least temporarily) get out of the smartphone business.

In the long run, if HP establishes webOS as an industry standard for mobile devices, its acquisition of Palm will have been worth it, even if the company gives up a minor revenue stream from smartphones

Google buys Motorola Mobility: More questions than answers?

This morning opened with a bang, when Google announced that it had made a friendly offer to acquire Motorola Mobility for $12.5 billion. The offer caught a lot of people in the industry flat-footed (although not Ben Bajarin, who wrote an amazingly prescient post last week on why Google should buy Motorola Mobility.)

$12.5 billion is a 63% premium over the price that Motorola Mobility's stock closed at last Friday, so why would Google pay so much to purchase the company? The one thing that everyone agrees upon is that Google wanted Motorola's patents, a pool nearly four times larger than the one that the company bid on from Nortel. The question is how valuable those patents will be in protecting Google's Android licensees from patent challenges by Microsoft, Apple and others. Microsoft was suing Motorola Mobility for patent infringement before today's announcement, so the Motorola patent library might not provide all the protection that Google needs. In addition, acquiring Motorola Mobility for $12.5 billion to get the patents prompts the question, in hindsight, whether Google would have been better off staying in the Nortel bidding and perhaps winning exclusive ownership of the patents for $5 or $6 billion. It also begs the question as to why Google didn't simply buy Motorola's patents, not the entire company; the consensus opinion is that Motorola's management refused to sell the patents by themselves.

Google got most of its top hardware partners to sign onto a press release endorsing the acquisition, but you have to wonder what the leaders of companies such as HTC, Samsung and LG Electronics are really thinking. In one move, Google went from being a supplier of perhaps their most critical smartphone technology to one of their biggest competitors. As Henry Blodget points out, hardware is a low-margin, semi-commodity business (for everyone except Apple). It's radically different from the software business, and the Motorola acquisition will increase Google's headcount by 60% overnight.

Google has declared that it will run Motorola Mobility as a separate business, and won't change the way that it runs its Android business. That's what Motorola's hardware partners (and possibly regulators) want to hear, but it creates a dilemma for Google. If the company wants to maximize the value of Motorola, it has to much more tightly integrate Android and Motorola, enabling Motorola to get new features and new versions of Android before other licensees. That, however, would violate its pledge to run the two businesses independently. The second option is to run Motorola so that it doesn't compete with other licensees, but that would cause the company to lose all its good developers, designers and hardware engineers. No one wants to work for a crippled company. The third option is that Google could sell off Motorola's hardware businesses, but to whom? The fate of Motorola's hardware businesses will be up in the air until the acquisition is completed, if not substantially after that.

In addition, despite some analysts' opinions that antitrust regulators won't stop the acquisition, there's substantial reason to doubt that the acquisition will occur without significant concessions by Google. There are so many antitrust investigations of Google underway, from the U.S. Federal Trade Commission to U.S. State investigations, to European Union investigations, that this acquisition can't help but be looked at in the context of Google's overall behavior. At the very least, Google will have to make its "hands-off" approach to running Motorola Mobility a guarantee, and will have to agree to make Android and related products available to all licensees on an equal, non-discriminatory basis. Regulatory agencies may also use approval of this acquisition as a lever to get Google to agree to restrictions on how it runs its search engine, how it integrates its products, and how its services work on mobile platforms.

One final note: Most reports have noted only in passing that, in addition to mobile phones and patents, Google is also getting Motorola's set-top box business. In fact, depending on who's doing the measurement, Motorola is either the world's #1 or #2 vendor of set-top boxes. Historically, customers such as cable and IPTV operators have had enormous control over the design of the set-top boxes they buy, so Google can't arbitrarily add Google TV or the Google search engine to all of its devices. However, this acquisition gets Google's foot in the door with established multichannel video providers in a very big way. At the very least, we're likely to see the next generation of Motorola's set-top boxes and home gateways run Android, even if Google's customers hide the Android layer from end users.

Google's proposed acquisition of Motorola Mobility poses more questions than it answers. We may be waiting for the answers for quite some time.

Startups are not a game

Earlier this week, I attended an event in Chicago where startups gave brief presentations about their businesses and answered a few questions from the audience. On the whole, the event was very disappointing, for a variety of reasons. Of the eight startups that presented, one (or perhaps two) identified viable market opportunities that aren't 1) Irrelevant, 2) Already being served, 3) Impossible to scale, or 4) Vulnerable to immediately being taken over by a bigger company. In addition, many of the presentations were amateurish. You expect demos to crash--that's a given--but most of the presenters hadn't thought through what might happen if they couldn't access WiFi. (And, if they didn't think through a simple problem like not having access to a network, how likely are they to think through much more difficult problems like building a sustainable business?)

What's disconcerting to me is how many people see startups as a game. It's incredibly easy to start a company; the software and services necessary are available for free or at very low cost, at least while the business is in the development phase. Incubators, startup weekends and shared workspaces are popping up everywhere. Yet, the real process of starting and running a business is hard work. There's no glamour and very little fun involved with spending 12 to 14 hours a day raising money, staffing up, talking with customers, writing and testing code, and selling. However, creating a startup is far too often seen as a game that's won when the business raises funding.

Eric Ries has written an excellent post about the "startup winter" that will inevitably come. There's too much volatility in financial markets for venture funding to continue at its current pace. Today alone, five IPOs were delayed or withdrawn. Ries believes that "a shocking number of the current crop of incubators, accelerators, and other startup-support programs will suddenly disappear," especially second- and third-tier programs. Think about how few of the startups spawned from these programs actually mature into successful businesses, and how many of them pivot just in the few months that they're in incubators and accelerators.

Given the low success rate of most of these programs, they look a lot less like incubators for successful businesses and a lot more like post-graduate entrepreneurial education programs. They do have one big difference from conventional educational programs: Instead of charging tuition, these programs pay a stipend to participants. It's not a bad way to learn (depending on who's teaching), but it's not necessarily a good way to launch a business. Don't get me wrong--incubators like Y Combinator and TechStars have had a lot of success; it's the second- and third-tier programs that are much harder to justify based on their track records.

If the flood of capital that's been chasing startups dries up, running a startup will no longer seem like a game and will become what it always has been--hard, risky work. At that point, I expect many of today's startup entrepreneurs to go back to looking for full-time jobs.

Consumer electronics' U.S. renaissance

There was a time, before World War II, when the U.S. was the undisputed world leader in consumer electronics. U.S. manufacturers, led by RCA, dominated world markets. However, U.S. manufacturers' operations in Japan and most of Europe were nationalized at the start of WWII. More importantly, RCA discounted the value of transistors in consumer electronic design after the war. Japanese manufacturers licensed transistor technology from Bell Labs and used it to build smaller, less expensive and more reliable products. That spelled the beginning of the end for the U.S. consumer electronics business.

At one time, companies like RCA, Westinghouse, Zenith, Philco, Magnavox, Sylvania and Motorola were household names. Now, only Motorola is still in consumer electronics, with its mobile phones. RCA, Westinghouse and Sylvania are nothing more than trademarks licensed to other companies, Zenith was acquired by South Korea's LG Electronics, and Philco & Magnavox were acquired by Philips. Until the late 1990s, the U.S. consumer electronics business was effectively dead. Today, however, there's a resurgence in U.S. consumer electronics.

The leader of this renaissance is Apple, which has dominated the personal media player market for almost a decade with its iPods. Foreign manufacturers have tried to wrestle market share away from Apple's iPods, without success. As of last quarter, Apple became the world's largest seller of smartphones, and it's been the leader in tablets since the launch of the iPad. Apple also dominates music sales through iTunes. Apple TV is Apple's only consumer electronics product that's struggling in the marketplace (although no one in the over-the-top set-top box market has yet found a winning formula.)

Apple doesn't manufacture any of its hardware products; it designs the products and farms out manufacture to Chinese and Taiwanese manufacturers. Vizio has applied the same formula to HDTVs, and either leads the market for LCD HDTVs or is close to the top every quarter. Vizio's aggressive pricing strategy has helped to force Sony out of the TV manufacturing business, and is pushing other Japanese and South Korean manufacturers to rethink their HDTV market strategies.

Sonos came from nowhere to become the leader in wireless networked home audio systems. Sonos applies an Apple-like design philosophy to its products, and has steadily expanded its product line both up and down to cover a variety of price points. Roku licensed a streaming media player originally developed in-house at Netflix and has become the leader in the market for those devices, at very aggressive price points: When Logitech launched its Google TV-based Revue set-top box at $299, the least expensive Roku player was $59.99. Now, the price of the Revue has been cut to $99 (the same price as Roku's top-of-the-line model) in order to clear out an apparently massive inventory of the devices.

It's true that U.S. companies are nowhere near recapturing the share of the consumer electronics market that they had before the 1970s, but if anyone had predicted any resurgence of U.S. consumer electronics companies even ten years ago, they'd have been laughed out of the room. The ability to anticipate (and drive) consumer desires, together with leveraging Chinese and Taiwanese manufacturing resources, is allowing U.S. companies to compete on equal footing with companies that could have crushed them only a few years ago.

Two new HTML5 authoring tools

More than a year ago, I wrote a blog post bemoaning the lack of HTML5 authoring tools. Then as now, you could create sophisticated content using HTML5, CSS3 and JavaScript, but you had to hand-code everything. Now, we have beta versions of two different HTML5 authoring tools that promise to make the process a lot easier.

First, there's Sencha Animator, which focuses on CSS3 effects (transitions, animations, transforms, and anything else you can define in CSS3). It provides an interactive timeline for creating animations with keyframes. Next, Adobe announced the first preview version of Edge, its authoring tool for HTML5, CSS3 and JavaScript. Like Animator, Edge uses a timeline, but it's considerably more sophisticated: The user interface is designed to look and work similar to those of Flash Professional and After Effects, its animation framework is based on jQuery, it natively imports and exports HTML, CSS3 and JavaScript, and it stores all its animations in a separate JavaScript file rather than modifying the CSS3 file(s).

With Adobe jumping into HTML5, the obvious question is whether Edge is a replacement for Flash Professional? Not yet. Both Sencha Animator and Adobe Edge remind me of Swish Max4, an Australian authoring product that outputs Flash but is considerably simpler and easier to use than Flash Professional. Edge is still early in its development; when Adobe releases a new tool like this, it's typically a year away from commercial release. In addition, different browsers implement different portions of HTML5, and it will take time for the most popular browsers to fully implement the specification (which isn't even scheduled for ratification by the W3C until 2014). However, we're getting closer to the point where HTML5 becomes a viable replacement for Flash for a variety of applications.

Given that Adobe is cannibalizing itself with Edge, there's an obvious concern that the company might cripple Edge in order to keep Flash viable. If Adobe was the only company creating HTML5 tools, that would be a legitimate concern, but other companies are competing in the authoring tool space. If Edge creates inferior content, developers and artists will use a competing product. My belief is that Adobe would like nothing more than for Edge to make up for all the revenues that it's losing as Flash is abandoned, and that means that it can't create a second-rate authoring tool.

Adobe and Sencha are working to make HTML5 look and work more like Flash, and additional companies and organizations are inevitably going to release their own authoring tools. We may only be a few years away from witnessing Flash become a legacy application.

A better way to do startup weekends

The TechWeek conference that I wrote about earlier this week included a startup weekend event. At a startup weekend, a group of aspiring entrepreneurs propose ideas to turn into businesses over a weekend (typically, 50 hours). The first step is to whittle the list of ideas down to 10 or so, and then the participants whose ideas weren't chosen join the teams whose ideas will be pursued. For the remaining time, the teams flesh out the ideas, talk to customers and write code. At the end of the weekend, the teams present their startups to a group of judges (typically, angel investors, venture capitalists and other entrepreneurs).

Startup weekends have a lot of problems, but the biggest one is that they turn startup creation into a game played over two days that can be won. That's not how startups work, and startup weekends trivialize the process while focusing on things that the team members already know how to do.

I sat in on the presentations at TechWeek's startup weekend. The demonstrations of working code were very basic, when there was any working code at all, and by and large, the "customer interviews" turned out to be nothing more than a collection of market size statistics gathered through Google. Jason Cohen, in his "A Smart Bear" blog, wrote some advice for startup weekend participants, and he pointed out that the goal should be figuring out whether or not you've identified a viable business opportunity, not demonstrating your ability to code:

You and I know you can code an app and produce a simple clean home page. Everyone here can. So the quality or quantity of that creation will not be why your company succeeds.

Cohen makes some excellent suggestions about what startup weekend participants should try to accomplish, but his key recommendation is to get out of your comfort zone. Developers are excellent at writing code, but they tend not to be as comfortable with talking to customers or identifying business models.

With that in mind, here are two suggestions for alternate startup weekends that could be more valuable in the long run for their participants:

• Customer Development Weekend: As with current startup weekends, participants propose product and service ideas and whittle them down to 10 or so. Each team then figures out how to present its concept, writes a questionnaire and starts interviewing potential customers. The team must interview at least five potential customers face-to-face. It then takes the customer feedback from the interviews and uses it to either modify the original concept, or discard it in favor of a new concept, which then has to be retested. Once the concept is solidified, the team considers and selects one or more business models, and develops arguments for why the model (or models) will work. Finally, the teams present their concepts, along with the interview research to substantiate them, and their business models.
• Building Strengths Weekend: It starts with the same process of coming up with a list of 10 or so product and service ideas, but then the team members work on the areas where they need the most help. The developers are responsible for getting out and talking with customers. The businesspeople with no programming experience learn how to program enough to build a skeleton of the concept. Everyone learns by doing. The final presentations show what the teams accomplished, and what they need to work on in the future.

The goal of starup weekends should be to learn what you don't know, rather than do the same thing on the weekend that you do during the week. If the objective is learning rather than winning a prize, the competitive aspect does more harm than good.

TechWeek: A big step forward for Chicago's startup community

TechWeek, a week-long group of conferences, meetups and social events for the Midwestern startup community, is going on in Chicago. midVentures, a consulting firm and conference organizer based in Chicago and San Francisco, organized TechWeek. The actual TechWeek Conference began last Friday and ends tonight, but additional partner events will take place through Thursday, July 28th.

The first-day crowd was far beyond midVentures' expectations--more than 1,500 paid attendees, with five times as many people registering at the door as the organizers expected. The demand was so great that they ran out of badges on Friday and had to rush to print more in time for Saturday morning. The event was held at Chicago's landmark Merchandise Mart, the biggest building in the world when it opened in 1930, and still a very impressive structure. The Merchandise Mart has its own El (elevated train) station, food court and retail shops, as well as the hundreds of private merchandise showrooms for which it's known. It also has three floors of meeting and event space, and TechWeek took over one of the three floors.

The speakers that midVentures lined up were first-rate, and in the sessions I attended, there were very few sales pitches--the emphasis was on practical knowledge for developers and businesspeople. Here's a list of some of the better-known speakers:

• Aneesh Chopra, Chief Technical Officer of the United States
• Jason Fried, Co-Founder and President, 37Signals
• Gian Fulgoni, CEO, Comscore
• Jeff Lawson, Co-Founder & CEO, Twilio
• Dave McClure, Founding Partner, 500Startups
• Craig Newmark, Founder, Craigslist.org
• Dominique Raccah, CEO/Publisher, Sourcebooks
• Hiten Shaw, Founder and CEO, KISSmetrics

There were a number of local investors making keynote speeches and on panels; perhaps the best-known, at least locally, was J.B. Pritzker, Managing Partner of the Pritzker Group, founder of New World Ventures and a member of the family that owns Hyatt Hotels and TransUnion.  However, with the exception of Dave McClure, there wasn't much participation from the Silicon Valley angel and VC community, nor was there much interest from the New York or Boston investment communities. That has to change in a big way for Chicago to become a first-tier startup community.

One of the things that I noticed in the sessions I attended was that there were far more businesspeople than developers at the event, and most of the businesspeople had little or no idea how to find technical talent or a technical co-founder. An event to help match business and technical co-founders would have made a lot of sense, but it didn't make it onto this year's schedule.

There was clearly enough interest in this year's event to make a 2012 version a certainty, and there are a few things that I'd suggest to the organizers for next year:

• The Merchandise Mart is a great location, but the sight lines in the two largest meeting spaces were awful. The stages were blocked by pillars from many places in the rooms. It would be better to have the presentations in better spaces within the Merchandise Mart, or if that's not possible, in conventional hotel conference rooms.
• Rather than scheduling the midVenturesLAUNCH event in parallel with the final day of the TechWeek Conference, LAUNCH should be held on its own day, with no other events going on. The TechWeek events that I watched on Monday via streaming video were very poorly attended, due to LAUNCH going on at the same time.
• There needs to be more presence from Silicon Valley, New York and Boston investors.

TechWeek was a very encouraging event for Chicago- and Midwest-based entrepreneurs, and I hope that it's a sign of much more to come.