Wednesday, June 30, 2010

Monogram BCC: Impressive new video production system

I missed this one at NAB, but a company called Monogram Multimedia has developed a very impressive live video production system called BCC that competes with NewTek's TriCaster TCXD300, the recently-released HD version of the TriCaster. There are a couple of things that make the BCC unique: First, it fits all of its components, including a touch-screen display, into a single Pelican case weighing 35 to 53 lb., depending on configuration. Second, it doesn't require any external monitors, keyboards, T-bars or switches in order to work. The touch-screen display doubles as a control surface and multi-source monitor. I'm always a little bit suspicious of packing too much into a single device, since a failure in a single component can render the entire system inoperable. However, it makes sense in a portable production system where it's essential to get a lot of power into a small package.

The BCC can be configured with up to eight HD-SDI inputs, as well as a 3D model with four dual HD-SDI channels. It also has a built in encoder and audio mixer. As you might expect, the BCC doesn't come cheap--prices range from $14,995 for a four-channel SD version to $34,995 for the four-channel 3DHD version. The four-channel HD version that's most comparable to the TCXD300 lists for $19,995 and the eight-channel version for $23,995.

According to the ProVideo Coalition's Allen Tepper, the touch-screen interface takes some time to adapt to vs. the conventional T-bar interface, but once you do, it's a very powerful interface. (In my opinion, any innovation in switcher user interfaces is a good thing.) Portable, all-in-one video production systems are taking off, and the BCC is impressive.
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Hulu Plus begins testing, and it's an OMG experience

You may remember when the company that became Hulu was first announced by NBC Universal and News Corporation. Critics derided the company and said that two non-tech media firms could never build a compelling online video service. Google called it "ClownCo." But when Hulu actually began beta testing, virtually all of the critics changed their tune overnight. It was head and shoulders above any online video service available at the time.

Rumors have been flying for months that Hulu would introduce a paid subscription service, and yesterday, they did just that, announcing Hulu Plus. The new service will be priced at $9.99 per month, and it provides full access to all the current year's episodes of shows from ABC, Fox and NBC, as well as complete libraries of episodes of some series. One of the biggest complaints that users have had about Hulu has been spotty availability of episodes--some series would only have three or four episodes from the current season available, others would only have a single episode available for a limited time, and so on. By and large, Hulu Plus appears to eliminate these problems.

I've had a chance to try out the free preview of Hulu Plus on both an iPad and iPhone 4 (it's available from the iTunes App Store,) and like the original Hulu, it's an OMG experience. I tested it on a WiFi network, so I can't speak to its quality when viewed using AT&T's 3G network, but the video quality is superb and the user interface is well-designed.

Some reviewers are already calling it a cable or TV Everywhere killer, but Jason Killar, Hulu's CEO, is trying to nip those ideas in the bud. TV Everywhere has a big advantage in that it carries content not only from the broadcast networks but from the major cable networks as well. Hulu may well extend its array of content providers, but the company has to be careful not to over-expand and dilute the revenue shares that it has promised to its investors and primary content providers. Similarly, Hulu Plus is strictly an on-demand service; if you want to watch a live sports event, or see a series episode on the day and date that it's originally broadcast, you'll need a cable, satellite or IPTV service provider.

In any event, I wasn't particularly excited about Hulu Plus until I had a chance to try it out. I'm very likely to be parting with $9.99/month once the service becomes available.
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Tuesday, June 29, 2010

Rolling Stone and the true nature of the U.S. Press

Every once in a while, something happens that gives "ordinary people" insight into the thinking and decision-making of the powerful. That happened last week, when Rolling Stone magazine published a profile of General Stanley McChrystal and his senior staff in Afghanistan and France. The article, written by Michael Hastings, was a first-rate piece of journalism that showed that McChrystal and his staff didn't have much respect for the President or any member of his foreign relations team except for Hillary Clinton. It also delved into McChrystal's implementation of strategy and the resentment that many enlisted soldiers felt against him. In short, it was a devastating but well-reported article that served (at least in part) to bring McChrystal's career in the military to an end.

As illuminating as Hastings's article was, the reaction of the press was at least as illuminating. In short, it could be summarized as "How dare they?" How dare Rolling Stone scoop The New York Times, Washington Post, Time and all the other bastions of American media? There were two lines of thought. The first was that Rolling Stone isn't a "legitimate" news source, so they had no "right" to own the story. When the story first started to leak out, Time Magazine and Politico got advance copies of the article in PDF form. Without Rolling Stone's knowledge or approval, they posted the entire article on their websites before Rolling Stone posted it.

Time and Politico would have been within Fair Use limits if they had quoted from the article, but they instead reprinted the entire article. Both publications took the article down when Rolling Stone sent them complaints, but one wonders if they would have been as callous about copyrights and ownership had the source of the article been The New York Times or Washington Post. Thus, the first line of thought was "You're not a legitimate news source, so you're not entitled to the same treatment as legitimate news sources."

The second line of thought came from CBS's chief foreign correspondent, Lara Logan. On Sunday, June 27th, Howard Kurtz of the Washington Post interviewed Michael Hastings and Logan on his CNN program, "Reliable Sources". CNN has put a complete transcript of the interviews online. First, Kurtz interviewed Hastings, and then he turned to Logan for her reaction.

Let's look at some of the things that Logan said to Kurtz, and then deconstuct them:
KURTZ: If you had been traveling with General McChrystal and heard these comments about Barack Obama, Joe Biden, Jim Jones, Richard Holbrooke, would you have reported them?

LARA LOGAN, CBS CHIEF FOREIGN CORRESPONDENT: Well, it really depends on the circumstances. It's hard to know -- Michael Hastings, if you believe him, says that there were no ground rules laid out. And, I mean, that just doesn't really make a lot of sense to me, because if you look at the people around General McChrystal, if you look at his history, he was the Joint Special Operations commander. He has a history of not interacting with the media at all.

And his chief of intelligence, Mike Flynn, is the same. I mean, I know these people. They never let their guard down like that.

To me, something doesn't add up here. I just -- I don't believe it.

KURTZ: When you are out with the troops and you're living together and sleeping together, is there an unspoken agreement --

LOGAN: Absolutely.

KURTZ: -- that you're not going to embarrass them by reporting insults and banter?


KURTZ: Tell me about that.

LOGAN: Yes, absolutely. There is an element of trust. 
Logan suggests that Hastings somehow lied to or misled General McChrystal and his staff to talk off the record and then printed their comments, but other than a vague feeling, she provides no evidence whatsoever that he did that. Then, she goes further and implies that it's a reporter's obligation to protect their subject's reputation, as if Hastings should have warned everyone to be extra careful when they spoke because he's a reporter. The last time I checked, General McChrystal and his staff are all adults and should know that when you say something around a reporter, it's likely to end up in print. That's what reporters do, or are supposed to do. Report the truth.

KURTZ: He (Hastings) says that all of the things that have been written about Stanley McChrystal have been these glowing profiles. He's suggesting that he did a job that the regular beat journalists have not done.

LOGAN: I think that's insulting and arrogant, myself. I really do, because there are very good beat reporters who have been covering these wars for years, year after year.

Michael Hastings appeared in Baghdad fairly late on the scene, and he was there for a significant period of time. He has his credentials, but he's not the only one.

There are a lot of very good reporters out there. And to be fair to the military, if they believe that a piece is balanced, they will let you back. They may not have loved it. They didn't love the piece I did about hand grenades being thrown in Iraq that were killing troops. They didn't love that piece, it made a lot of people very angry. They didn't block me from coming back.

The operative phrase here is "...if they (the military) believe that a piece is balanced, they will let you back." In Logan's view, a reporter has an obligation to report stories that the military will judge to be "balanced," so that they can continue to get access.

KURTZ: "The Washington Post" quoted an unnamed senior military official as saying that Michael Hastings broke the off-the-record ground rules. But the person who said this was on background and wouldn't allow his name to be used.

Is that fair?

LOGAN: Well, it's Kryptonite right now. I mean, do you blame him?

The commanding general in Afghanistan just lost his job. Who else is going to lose his job?

Believe me, all the senior leadership in Afghanistan are waiting for the ax to fall. I've been speaking to some of them. They don't know who is going to stay and who is going to go.

I mean, the question is, really, is what General McChrystal and his aides are doing so egregious, that they deserved to end a career like McChrystal's? I mean, Michael Hastings has never served his country the way McChrystal has. 

I'd argue that, in fact, Hastings served his country extremely well, because he reported the truth. Logan has warped the journalist's role from reporting actual events to becoming a censor and arbiter of what the public has a right to know.

Lara Logan has fallen into exactly the trap that the Pentagon hoped to create when it began embedding press with military units and controlling access. She's more loyal to the people who are giving her access to the field of battle than to the audience that's depending on her to learn the truth. Who knows what stories she's suppressed or ignored over the years in order to maintain her standing with the military?

Even if Logan were to eventually apologize for or "clarify" her comments, she can't undo the view into her thinking that she's given to the American public. She will never again be seen as an effective reporter. She's damaged the reputations of CBS News and her colleagues. The question now is whether CBS will keep Logan on, and in what capacity. Those decisions rest with Sean McManus and Les Moonves. In Logan, CBS News has its very own Judith Miller. What they do with her will in large part determine the future credibility of the network's news operation.
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Freehold InJersey experiments with a coffeehouse newsroom

From PoynterOnline's Jim Romenesko comes a story about Freehold InJersey, a blog run by the Asbury Park Press and Gannett, launching a public newsroom in a coffee house in Freehold, NJ. According to the press release announcing the newsroom, "At a computer workstation surrounded by diners and patrons, the staff of Freehold InJersey will conduct interviews, work on stories, and produce multimedia content for this groundbreaking website. Passers-by can stop to ask the latest news, share a tip, or learn how to post their own stories to the open-source news site. 
 Patrons can step into the newsroom and become reporters of their own community, using the provided desktop computer to post their own scoops."

It's a great idea for increasing community engagement and participation, but why stop with text? Put a camcorder or two, a reporter and a live streaming system into a coffee shop, and you've got an instant studio for interviews. It's been done before, from KRON in San Francisco doing morning interviews in coffee shops to Fox Business doing interviews in Wall Street bars at the end of the business day. The cost would be much lower than building out a studio and much faster to set up. News networks and local television stations spend millions of dollars building on-street studios; the "coffee shop studio" would get the same level of community exposure and engagement.

Speed is an important benefit, not just cost. Consider the following scenario: The local school district announces that it's going to close a neighborhood school. The typical approach for television stations is to send a reporter out to local rallies or to get "man on the street" interviews. With a coffee house studio, they could invite members of the community and the school district to come in and talk about the issues. The likely result would be a more informed, more in-depth discussion of the issues. When the issue is resolved, they could move on to another coffee house in another neighborhood. It's a great idea for blogs, newspapers and television stations.
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TechCrunch hits the mark on Bezos's interview with Fortune

TechCrunch's Robin Wauters has deconstructed an interview that Amazon's Jeff Bezos gave to Fortune Magazine. In the interview, Bezos claims that the iPad had no influence on the company's recent Kindle price drop, and he says that tablets like the iPad are "really a different product category. The Kindle is for readers."

The fact is that Amazon's own advertising belies Bezos's remarks. Last night, I saw a TV ad for the Kindle that was based on one, and only one, feature: The ability of the Kindle to be read in sunlight. That doesn't differentiate the Kindle from the nook, Sony Reader, Kobo, etc. The only device that Amazon's ad was targeted against was the iPad. Amazon isn't spending money on national television advertising to position itself against a product that it doesn't compete with.

My opinion is that Amazon shouldn't be in the hardware business. The industry is moving too fast, and the prices are dropping too quickly, for Amazon to maintain the margins that it's looking for. At the time that Amazon got into the hardware eBook reader market, good hardware was essential to get consumers to adopt eBooks. Now, however, there are good hardware solutions available from many companies, and the pace of technology is getting away from Amazon. The company's not going to be successful in making the Kindle an application delivery platform to compete with the iPad or with Android-based products. On the other hand, Amazon has good eBook reader software for every major platform, so it no longer needs its own hardware.
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Monday, June 28, 2010

$9.99/Month Hulu Plus service being promoted on Samsung TVs

A Bloomberg reporter who purchased a Samsung Internet-enabled HDTV last Friday got a special bonus: A promotion for Hulu Plus, a new HD subscription service for $9.99/month that will have “More episodes, more seasons, more shows,” according to an on-screen offer. A trial offer of 21 free video clips couldn't be accessed, and the offer was erased when firmware in the HDTV was updated on June 26th. Hulu refused to comment. Whoops!
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Could Project Canvas become the template for "TV Everywhere" outside the U.S.?

According to Wired UK, The BBC Trust has approved plans for "Project Canvas," an Internet-based on-demand video service co-sponsored by Britain's terrestrial broadcasters (the BBC, ITV, Channel 4 and Five), plus communications companies Arqiva, TalkTalk and BT. The partners are targeting launch for April 2011. There are two fundamental differences between Project Canvas and TV Everywhere, the video initiative sponsored by cable operators in the U.S.: First, access to Project Canvas will be free and will not require a subscription to a cable or satellite system (although value-added content and services can be charged for,) and second, Project Canvas will be open to the entire industry.

The specifications for Project Canvas must be published within 20 days, so there will be a short wait until a point-by-point comparison can be made between it and TV Everywhere. However, it looks like Project Canvas will be a very promising alternative to TV Everywhere outside the U.S, especially if it's truly open to any content provider who wants to participate.
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Friday, June 25, 2010

Is Plastic Logic the next eReader vendor to "circle the drain"?

According to Engadget, Plastic Logic has sent an email to customers who pre-ordered its QUE proReader to expect additional delays. Plastic Logic contacted customers in April to tell them that the device wouldn't ship until June 24th. Now, they've sent out a new email announcing a further slip in the ship date (without disclosing a new ship date), and more disturbingly, they've canceled all pre-orders.

Plastic Logic may be completely redesigning its reader to be price-competitive in the new regime of under-$200 eBook readers, or it may be reconsidering whether to be in the eBook reader business at all. If the company expected to ship a new model in a reasonable amount of time, there would have been no reason to cancel all the pre-orders. This doesn't look good for Plastic Logic.
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Thursday, June 24, 2010

Adobe: Who's in charge here?

Sorry for making this "dump on Adobe" day, but the news that the company is porting its "zombie" audio editing application Audition, which was long ago given up for dead by most users, to Mac OSX has got me scratching my head. On Wednesday, Adobe announced much stronger revenues--up 34% from the year before, primarily from the launch of Creative Suite 5--but earnings were flat, leading investors to be concerned about future prospects for the company.

Microsoft probably has twice as many products as Adobe, but it has almost 20 times the revenues. Microsoft's profit margin is more than twice as high as Adobe's, 29.03% vs. 11.84%. (Statistics courtesy of And yet, Microsoft and Steve Ballmer are coming under almost constant attack for poor management. It's true that Microsoft is milking Windows and Office, and that accounts for a good deal of its superior profit margins, but one has to look at Adobe's management as part of the problem.

There are over 90 products listed on Adobe's Product web page, and only six of them are suites (five of which are variations of Creative Suite 5.) The rest are individual software products, components, development tools, servers, and "toy apps" like Adobe Kuler. Adobe's Labs website lists 30 technologies under development, some of which are new versions or features for existing products, and some of which are entirely new products or experiments. That's a lot of products for a company with $3 billion in revenues.

Adobe could probably prune and consolidate its products, lowering the number of products offered by at least a third, while having little or no impact on revenues. The company would likely increase its profitability and dramatically improve management's ability to focus. It could start by creating two piles--one for the products in Creative Suite 5 and one for everything else, and do a bottom-up review of every product in the "everything else" pile. Then, it could look at the CS5 components themselves and determine which products can be consolidated and which add little or no value to CS5 and can be sold off or discontinued.

Right now, Adobe is like the cowboy who gets on his horse and rides off in all directions. Its inability to release a viable mobile version of Flash after years of trying, its bungling of Acrobat tools that cost the company some of its biggest eBook customers including Amazon, and now, the decision to port Audition, an all-but-dead audio editing product, to OSX, all demonstrate that there are serious problems with Adobe's management that one good quarter of CS5 sales aren't going to fix.
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Adobe plans to release Audition for Mac. Why?

According to DV Magazine, Adobe plans to start beta testing a version of Audition for Mac OSX in Winter 2010. Audition is a multichannel audio editing application that has only been available for Microsoft Windows since Adobe acquired Syntrillium and Cool Edit Pro (the previous name of Audition) in 2003. The last major version of Audition, 3.0, was released in 2007.

I've used Cool Edit Pro and Audition since the late 1990s, primarily for radio production, and it's a very good package, but most Audition users have long since given up on Adobe and have moved to other software, such as Avid's Pro Tools. Audition was never part of Creative Suite (Soundbooth, sound editing software optimized for video post-production, was derived from Audition and is part of Creative Suite) and has been seen as an "orphan" product for years. At one time, Audition was priced at around $250 when the cheapest version of Pro Tools was close to $1,000 and required Digidesign hardware. Now, you can buy the M-Powered version of Pro Tools that works with any audio hardware for $250, while Audition 3 sells for $329 at Amazon.

So, why is Adobe bothering to port Audition to the Mac? It makes no sense. Perhaps they want to remain a thorn in Apple's side--Apple sells Logic Studio, a far more powerful audio editing application, for $499. Perhaps they've got some developers sitting around with time on their hands. But, the smartest thing they could do is kill Audition once and for all.
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Wednesday, June 23, 2010

Google wins summary judgment against Viacom in YouTube case

(Disclaimer: I'm not a lawyer, this isn't legal advice and your mileage may vary.) Google and Viacom have been embroiled in a copyright suit for several years over YouTube. Viacom charged that Google and YouTube knowingly violated copyrights for its video content, and asked for damages of $1 billion. However, earlier today, Judge Louis Stanton of the U.S. District Court in New York ruled that Google is entitled to protection under the "Safe Harbor" provisions of the Digital Millenium Copyright Act (DMCA) and is not liable to Viacom for any copyright infringement.

The court ruled that Google/YouTube abided by all the requirements of the DMCA, and Viacom was, and is, required to state with specificity which content it believes to infringe its copyrights. The court said that Google/YouTube went beyond legal requirements by implementing a system for automatically scanning uploaded content and comparing it with a database of known copyrighted works in order to identify and take down infringing content without having to receive a DMCA notice.

The court also ruled that it's not enough for Google/YouTube to have known that there was some infringing content in its system--it's up to Viacom (or any other copyright holder) to specify the content that infringes its copyrights. When Viacom did provide specific information to Google/YouTube, the company took the content down within 24 hours in virtually every case. In short, Google has won, and Viacom is not entitled to any compensation. Viacom will undoubtedly appeal.
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Monday, June 21, 2010

That was fast: Amazon cuts the price of the Kindle to $189

Earlier today, Barnes & Noble cut the price of the 3G nook from $259 to $199 and introduced a WiFi-only model for $149. Now, Amazon has responded by cutting the price of the Kindle from $259 to $189, $10 less than the nook. This is for Amazon's global model, which uses AT&T's network for its Whispernet service. The U.S. domestic-only model has apparently been discontinued.

Amazon is widely rumored to have an updated, thinner and lighter Kindle model in development for release later this year. If that's true, the price of the current Kindle 2 may be cut even further, to compete with the $149 WiFi-only nook. In any event, you may want to wait a week or two (at least) to see how these price cuts shake out; Barnes & Noble may well drop prices further in response to Amazon.
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Barnes & Noble drops the price of the nook to $199

CNET has reported that Barnes & Noble has dropped the price of the existing 3G-compatible nook to $199 from its previous price of $259, and has introduced a new WiFi-only model for $149. The new pricing is sure to put pressure on Amazon to drop the price of the Kindle 2 below its current $259. More importantly, it shows that Barnes & Noble recognizes that the nook and similar E-Ink-based eBook readers simply aren't competitive with the iPad.

According to the article, B&N has also made several improvements to the nook's software, and has made arrangements with AT&T to allow it to be used for free at any AT&T WiFi hotspot. This will make the absence of 3G connectivity on the $149 nook less of an issue. One could argue that the true price of the nook has been dropped not to $199 but to $149.

It'll be very interesting to see how Amazon responds, and if $149 is a low enough price to keep monochrome readers viable once Android tablets start hitting the market for $199 or less.
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The problem with PDFs

In my last post, I took KFNB Reading Technology to task for developing its own proprietary format for eBooks, and stated that PDFs can provide the same "page fidelity" experience as KFNB's Blio eBook reader. There's a good reason to create a new format, however, and it lies at the heart of PDF itself.

There are lots of ways to create a PDF file that looks good when viewed in a PDF reader, but the internal structure of a PDF file can vary widely, depending on the tool used to create it and even the order in which it was created. For publishers, Adobe's InDesign and Quark's QuarkXPress are the two most popular tools for laying out books. These tools can then generate PDF and ePUB files, and it's those files that are used to create eBooks. However, there are many other tools that can create PDFs, and Adobe's own print drivers can create PDFs from almost any document. Some publishers have written their own page layout and conversion software, and there are dozens of format conversion services around the world that can accept files in a variety of formats and output PDFs.

The internal structure of a PDF is very important if you want to create notes or highlights, select text or perform text-to-speech. Adobe has what's generally considered to be the best PDF rendering technology in the industry, and they handle the variety of ways that a PDF can be constructed very well. However, if you need to write your own converter or renderer, you have to handle all the myriad PDF variations.

That's one reason why a company like KFNB would decide to create its own format and require publishers to convert their titles into its format rather than PDFs. By enforcing a more consistent internal structure, KFNB could bypass many of the problems faced by PDF renderers. However, it still results in compatibility issues--eBooks in KFNB's format can only be read with KFNB's readers. If KFNB goes out of business, no new readers will be available, and if there's DRM on the KFNB eBooks, it may be impossible to use them in the future.

That's why I would have preferred to see KFNB "bite the bullet" and do the hard work of parsing PDF files in its reader, instead of creating its own format and insisting that publishers use that rather than PDF.
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Sunday, June 20, 2010

Disappearing DRM and other thoughts

Note: The opinions expressed in the following posting are mine, and not those of any of my former, current or future clients or employers.

I've long believed that Digital Rights Management (DRM) is a hopeless battle. DRM penalizes the legal, honest customers who purchase content and want to do the right thing. If a hacker is committed, he or she can break any DRM, given enough time and resources. Even if cracking a DRM system is illegal in one country (as the DMCA makes it in the U.S.,) it can usually be cracked legally (or illegally) in another country, and then the cracking software, content that's been unlocked, or both, can get freely distributed around the world. Companies almost never get a positive return on investment from DRM: Distributors are forced to implement it by their content suppliers, and they bear the costs. Content producers can dictate what kinds of DRM are acceptable but rarely bear the costs.

Nevertheless, many content producers and distributors demand that DRM be used. My opinion is that there are ways to make DRM less onerous and less risky for consumers while giving content adequate protection. Consider one problem: Company A sells content to producers that is protected with its own DRM system. Then, a couple of years down the road, Company A goes out of business, is acquired by another company that's no longer interested in the DRM system, or decides to stop distributing content. When customers have problems with the DRM system (for example, they want to move their content library to another machine, or they've had a system problem and need to reauthorize their existing library,) there's no one there to help them. The library of content that they might have spent hundreds or even thousands of dollars on is now worthless.

Or, consider a slight modification to the first case: Company A licenses a DRM system from Company B, and Company B goes out of business. Yes, Company A most likely required Company B to put a copy of its DRM software in an escrow account to cover just such an situation, but that doesn't mean that Company A will be able to support and maintain the DRM system by itself. Company A may still be in business but be unable to fix problems in the DRM for its customers.

One way to address these problems would be to create what I call "disappearing DRM." This would be a DRM system for downloaded content that is automatically disabled after a given period of time, perhaps 24 to 36 months. The greatest risk for piracy is when an eBook, music recording or movie is current. Most popular books and music have gone to the backlist or catalog by the time 24 to 36 months elapses. With disappearing DRM, content could be freely archived, copied and moved from device to device once the time limit expires. That way, if the content or DRM vendor goes out of business, is acquired or loses interest, purchased content would still be usable.

DRM is a necessary evil for encouraging distribution of digital media by major publishers, but there are many ways that it could be made more transparent, more convenient and less dangerous for consumers. A disappearing DRM system would be one of them.
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Blio finally coming to market; Ray K babbles about distribution deals

According to The New York Times, the Blio software eBook reader is finally going to start shipping. Blio, from KFNB Reading Technology, maintains page fidelity (eBooks look like, and are paginated like, their print equivalents.) Ray Kurzweil, the founder of KFNB, said that a variety of distribution deals are coming soon, including one with Wal-Mart, which Wal-Mart refused to comment on and was probably unhappy about.

Kurzweil points out that Blio's ability to maintain page fidelity is great for "cookbooks, how-to guides, schoolbooks, travel guides and children’s books" He also is quoted saying “The publishers will not give things with complex formats to these e-reader makers. They destroy the format.” What he doesn't say is that Adobe's PDF also maintains page fidelity, there are PDF readers from Adobe and many other vendors, and by and large, they're also free. He also doesn't mention that Blio uses a proprietary format that only his reader supports. So if you buy eBooks in the Blio format, you can only use them with Blio readers. Using a proprietary format may not be a big problem if your name is, but it's a bigger problem when you effectively have no distribution and are completely dependent on other companies to adopt and sell your product.

He also misspeaks about the reason that publishers haven't made graphically rich titles available in eBook formats. It's not that they don't like the available readers, it's that in many cases, they're simply not yet marketing their children's or specialty titles as eBooks.

I've played with the Blio reader, and it has a lot to recommend it. Its text-to-speech and translation capabilities are particularly good--what you'd expect given Kurzweil's experience with readers for the visually disabled. However, introducing a new, proprietary format is a retrograde move. KFNB could have done everything it wanted to do with PDF, but decided to invent its own format. That's bad for customers, bad for publishers and bad for the eBook industry in general. The eBook industry needs fewer formats, not more.
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Are apps the future of media?

For more than 15 years, we've been trying to get people to pay for content via the Internet. Companies have tried to sell subscriptions to newspapers, magazines, music and video, pay-per-view services and the like, and with a few exceptions, they've failed. Consumers equate the Internet with "free"; they pay once a month for Internet access, but everything else is included. If someone does try to charge for media, consumers will almost always find an alternate source that's free.

Cable television in the U.S. is in a similar situation. Cable operators have figured out how to get consumers to pay (grudgingly)  for tiers of service that contain multiple channels. The premium channels that are sold on a monthly basis, like HBO, Showtime and Starz, have themselves evolved over time into packages of channels to keep viewer interest (for example, HBO East/West, HBO2, Signature, Family, Comedy, Zone and Latino.) Service providers have to offer discounted packages in order to obtain subscribers, and cancellations rise when the discounts expire.

Video service providers outside the U.S. have experimented with a la carte pricing for individual channels, but the results have usually been disappointing; the operators find that they can make more money by offering pre-packaged tiers of programming, and consumers rarely protest the lack of choice.

Perhaps apps, rather than the Internet, are the future of media. Consumers have shown a great willingness to buy apps, if they're inexpensive. The micropayment schemes that failed so miserably on the Internet work beautifully for Apple's App Store, which takes all the friction out of transactions.

Consumers will pay for eBooks, magazines and newspapers in the form of apps. They've made the Apple iTunes store the world's largest retailer of music. They're willing to pay for content, if it's an app, works on a mobile device and is cheap. In this model, the Internet is (sometimes) the channel of distribution and the app is the medium.

As much as many of us have been railing against "old media" companies for bringing their business models to the app world, it seems to be working a lot better than anything they've tried on the Internet. I don't think that we're ever going to be able to erase the perception that "everything's free on the Internet." By comparison, consumers aren't just willing to buy apps, they eagerly buy. If we want to sell content, the most likely way to do it is as apps.
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Friday, June 18, 2010

You go back, Jack, do it again

A few weeks ago, I had a conversation with a manager with one of the biggest eBook companies in the business. (I'm not using names to protect the innocent.) This manager asked me what I thought the company should offer in the way of self-publishing services for authors. I told the manager that one way to add value would be to offer promotional services to authors. When I was writing computer books, I got virtually no promotional support from my publishers, so I and a friend had to arrange media bookings, book signings and speaking opportunities ourselves.

The manager told me that the company's self-publishing division already provides promotional services. I checked their website while we spoke, and I found nothing about promotional services on their homepage. As I dug into the site, however, I did find some promotional services. So, I asked the obvious question: Since the company already has its own self-publishing division, surely the eBook operation would take advantage of its services, wouldn't it? The manager replied that yes, they own a very successful self-publishing operation for print books and other media, but they've decided to build their own self-publishing operation for eBooks.

I didn't pursue the point because I was so shocked by the manager's response. Why reinvent the wheel when you've already got a self-publishing operation in-house? If that division isn't doing something that you think you need, why not get them to do it rather than build your own self-publishing operation? It makes absolutely no sense for authors to work with one group if they want to self-publish books that get printed on paper and another group for eBooks.

There may be a good reason why this company has decided to "do it again," but overall, it smacks of both bureaucracy in action and a strong case of "Not Invented Here" syndrome. This is a company that's highly praised for the quality of its management. I have my doubts.

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Thursday, June 17, 2010

Big set-top box changes underway at Comcast

ESPN 3D, the cable network carrying 3D coverage of the World Cup in the U.S., is available to cable operators via both MPEG-2 and MPEG-4 compression. MPEG-4 is significantly more bandwidth-efficient than MPEG-2. and according to Cable360, Comcast customers who want 3D programming will have to use MPEG-4 compatible set-top boxes starting in August. Comcast has approximately 10 million MPEG-4 set-top boxes in the field, and 25 million set-top boxes that only support MPEG-2.

Most of Comcast's MPEG-4 set-top boxes are from Motorola, but the company is said to have chosen Pace to supply its next-generation set-top boxes. The Pace STBs will support MPEG-4 H.264 compression and Tru2Way applications, and they may be compatible with Switched Digital Video (SDV) services. Comcast's choice of Pace will have a major impact on both Motorola and Cisco in the U.S. market. Pace has been very strong everywhere but the U.S., but supplying the largest video service provider in the U.S. will dramatically increase its presence and shake up the market.
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It may require a new generation of game consoles to do true 3D

The first reviews of Sony's 3D games for the PlayStation 3 are coming in from E3. Keep in mind that the games being shown are alpha or even pre-alpha, so the experiences that reviewers are having could improve by the time the games are released. Nevertheless, reviewers are complaining that the resolution of 3D games is significantly lower than that of the same games in 2D mode. In addition, the requirement to use 3D glasses both decreases contrast and makes everything look darker; this is especially a problem with adventure and first-person shooter games that already fairly dark to begin with. The combination of these two problems makes some games much less enjoyable in 3D.

The reason that the resolution of 3D games is significantly lower than the same games in 2D is that the game console has to render images twice as fast in 3D than in 2D. Even the vaunted Cell processor in the PlayStation 3 doesn't have the horsepower to double its rendering speed for complex images, so game designers have to render lower-resolution images for 3D and hope that the 3D effect compensates.

It may take a new generation of game consoles to provide 3D games that look as good as today's 2D games. Nintendo is hinting that the successor to the Wii will be built for 3D from the ground up, and Sony's likely to find that it will take a PlayStation 4 to truly do 3D justice. Dual GPUs are likely to be needed in order to render graphics equal to the best of today's 2D games for 3D.
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Wednesday, June 16, 2010

Is rapid proliferation of Android handsets doing more harm than good?

As you may have heard, Verizon and Motorola are planning to launch the Android-based Droid X on June 23rd, the day before the iPhone 4 goes on sale in retail stores. Last month, Sprint and HTC released the EVO 4G, and Verizon and HTC released the Droid Incredible not long before that. Android handset manufacturers are rapidly pushing the "state of the art", but are they pushing it too fast?

Consider the buying decision from a consumer's point of view, comparing the Android and iPhone situations:
  • iPhone: Apple releases a new iPhone once a year, so depending on when I buy my iPhone, I can avoid "buyer's remorse" for as long as a year. Also, Apple updates the operating system, so I can take advantage of the new features in the latest version of iOS as soon as Apple releases it.
  • Android: Should I buy an Android phone now or wait for the better model that's coming next month? Since my service provider controls Android upgrades, will I get the new version of Android, and if so, when?
For risk-averse buyers, both the iPhone and BlackBerry present safer alternatives to Android. How can Google and its Android partners get around this problem?
  • Move to once-a-year major Android updates. Google's Andy Rubin has already said that the company plans to do this.
  • Time new handset releases to coincide with new Android releases. That way, consumers will see all the new handset options at one time.
  • Get service providers to push new Android releases out day-and-date with Google's official release, so that there's no question as to when, and whether, an Android phone will get a new release. (If an existing phone isn't compatible with the new release, both Google and the service provider should publicize that fact in plenty of time for phone owners to upgrade to a new model if they choose.)
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3D won't help Sony escape its competitors

Sony introduced a slew of 3D games at E3. Existing PlayStation 3 consoles are already 3D-compatible, but to play 3D games, you need a 3D-compatible HDTV. Sony's logic is that 3D games will drive the sales of its 3D HDTVs, thus increasing overall corporate revenues. The only problem is that Sony isn't the only player in 3D HDTVs. Next week, Vizio, one of the leaders in low-priced HDTVs, will demonstrate two 3D HDTVs at the CES line show in New York City. One model will have a 55" active 3D display with Bluetooth-enabled 3D glasses and a 480Hz refresh rate; the other model will have a 65" passive display and use simple polarized lenses for the 3D effect.

Sony's goals with its 3D initiative are to spur a new wave of consumer electronics sales, and to insulate itself from competition. It may accomplish the first goal, but it's not going to escape the competitors who are plaguing it in the HDTV and Blu-Ray markets.
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Tuesday, June 15, 2010

E3: Thoughts on Microsoft, Nintendo and Sony

Microsoft, Nintendo and Sony have now all had their press events at E3. Let me preface this by saying that I'm at best a casual gamer, and I track the game console market only where it intersects with online video or other areas of interest. Therefore, I'm going to focus mainly on technology, not titles.

In my opinion, perhaps the most important product shown by the three companies was Nintendo's 3DS, both because it's a new platform and it displays 3D without requiring separate glasses. Nintendo dominates the handheld game console market, and the 3DS will help to maintain Nintendo's lead. What was disappointing, however, was that Nintendo announced neither a ship date nor a price for the 3DS.

Microsoft's Kinect (the new name for Project Natal) will serve as a strong mid-life "kicker" for the Xbox 360 platform. Kinect has a price ($150 in the U.S.), a release date (November 4th) and a collection of 14 games that will take advantage of the Kinect technology. Kinect and similar products could lead to controller-free remote controls and user interfaces for a variety of devices in the living room.

Sony announced pricing and availability for PlayStation Move, Sony's take on the Wiimote. The Move will be available in the U.S. on September 19th for $49.99, or as part of a bundle with one Move, a PlayStation Eye (one Eye is needed per PlayStation 3 in order to use Move controllers) and a copy of the PlayStation Move Sports Champions game, for $99.99.

This generation of game consoles is beginning to look a bit old, and both Microsoft and Sony are trying to inject life into their platforms with new controllers. Nintendo apparently feels that Microsoft and Sony are only now beginning to catch up with the Wii, and is focusing its attention on the 3DS and more Wii games. In any event, there weren't any overwhelming announcements from any of the three console makers.
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AT&T Lunacy

"There's this new iPhone 4 coming, and we're going to start getting pre-orders on June 15th, and lots of people are going to want one, so be sure to have everything working on the website in time, okay?" Apparently, that message never got to AT&T's website team, because it's been all but impossible to upgrade existing iPhone accounts to the iPhone 4 all day. It can't be done through AT&T's site, Apple's site, or the new Apple Store app that the company just released for the iPhone. It's gotten so bad that the title for Apple's own ordering page is "iPhone 4 Goes on Pre-Sale, Purportedly."

Could THIS finally be the straw that breaks the camel's back, the event that causes Apple to say "We need a second carrier in the U.S."? Probably not. I don't know what it would take for Apple to say "Enough's enough," but I wouldn't want to be part of AT&T's website team right now.

Update: I just managed to place an upgrade order through AT&T. It's a miracle!
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Monday, June 14, 2010

Microsoft's Applied Sciences Group demonstrates glasses-free 3D system

At last month's SID conference in Seattle, Microsoft's Applied Sciences Group demonstrated a 3D display technology that doesn't require glasses. It uses a "wedge lens" which modifies the critical angle of light coming from the lens/backlight to determine the direction and location of light coming through the LCD. The system also requires a camera to determine the location of viewers in order to provide a convincing 3D effect, but Microsoft's new Kinect (formerly Project Natal) should do the job.

There are some limitations to the system: A minimum 240Hz refresh rate is needed for two people to be able to simultaneously view 3D video, and the viewing angle is currently only 20 degrees, although Microsoft hopes to increase it to 40 degrees. Microsoft is also encouraging LCD manufacturers to go beyond 240Hz in order to increase the number of simultaneous viewers.

My belief is that 3D in the home won't really take off until glasses-free systems become practical, both technically and economically. We may still be five years away from that happening, but once it does, demand for 3D will explode.
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A crack in the wall: Xbox Live gets

Earlier today, Microsoft made a number of Xbox-related announcements, including that ESPN will be making available as part of annual Xbox Live Gold subscriptions, which cost $50/year. When I first heard the announcement, I thought that it referred to on-demand sports events that had already taken place, but provides more than 3,500 live sporting events each year in the U.S.

There's a fairly large community of cable subscribers who subscribe mainly to get ESPN. If they can get, plus Netflix and other services, through their Xbox 360s, they may drop their cable subscriptions (they'll still need cable or DSL for high-speed internet) and use a combination of Xbox Gold and over-the-air broadcasts. Though small, this is a crack in the cable operators' ability to keep control of programming.
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News Corp buys Skiff from Hearst, invests in Journalism Online

Earlier today, News Corporation announced that it acquired Skiff from Hearst, and made an investment in Journalism Online. Skiff is developing a large-form-factor eBook reader designed for magazines and newspapers, and Journalism Online is a venture led by Steve Brill that's developing ways to monetize online content.

News Corporation's investment in Journalism Online makes perfect sense, but its acquisition of Skiff opens up some questions. Rupert Murdoch has made it clear that he believes that the era of free content on the Internet is over, and Journalism Online may give him the tools that he needs for monetization. However, News Corp doesn't need its own tablet platform...unless it's planning to make its sites "walled gardens" and close off access to the open Internet.

Here's a potential scenario: News Corp's newspapers would maintain a token presence on the web, but to access to their full contents, you'd need to buy a Skiff reader. News Corp will discount the price of the Skiff when it's purchased with an annual subscription to one of its newspapers. It may still support dedicated apps for the iPhone and iPad, but you'll no longer be able to get to the "meat" of its sites with a web browser.

News Corp would make its platform available to other publishers (for a price,) just as Hearst had planned to do, so it wouldn't necessarily be a News Corp-only reader. It's likely that News Corp will also make its eBooks available on the Skiff reader.

This strategy would undoubtedly sacrifice advertising revenues for subscriptions in the short term, but Murdoch may be willing to make that trade-off. Over time, he may believe that he can build a big enough subscription audience to generate substantial advertising revenues along with subscriptions. Also, by owning the hardware platform, News Corp can control the pace of development and insure that it gets eBook readers at the lowest possible price. News Corp would also not be at the mercy of Apple or Amazon; if those companies change pricing or distribution models in their favor, News Corp can move subscribers over to the Skiff.

There are a number of questions, however: If the Skiff is perceived as a closed platform, would News Corp sell enough to get a profitable subscriber base? (One could argue that the Kindle is a closed platform and it hasn't hurt Amazon.) Can News Corp keep the Skiff platform competitive over time with tablets and eBook readers from competitors? Are customers going to be willing to add a Skiff reader to the other devices that they already carry? It'll be interesting to see how News Corp integrates Skiff into its plans over the next 12 months.

Update: According to PaidContent, News Corp acquired Skiff's intellectual property and software from Hearst, not the Skiff reader hardware, for which Hearst is still trying to find a buyer. It appears that News Corp will try to license the Skiff software to other manufacturers.
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Friday, June 11, 2010

50Mbps 1080p MJPEG from Panasonic GH1

A developer who goes by the name of Hacker13 has managed to increase the encoding bit rate on the Panasonic GH1 from the base rate of 17Mbps using AVCHD to 50Mbps using MJPEG. In turn, has come up with optimum settings for the GH1, and shot some spectacular footage, which I've embedded below. The 50Mbps bit rate is higher than that of the Canon 5DMkII, and because the GH1 doesn't do line skipping, it's easier for the camera to scale and encode the incoming images.

This firmware hack, and a similar one for Canon's DSLRs called Magic Lantern, illustrate that there's a lot of potential untapped capabilities in today's DSLRs. Less expensive cameras with hacked firmware can exceed the capabilities of more expensive cameras with factory firmware. Here's the footage:

Longshan's People Part II - 50Mbit GH1 MJPEG from Andrew Reid on Vimeo.
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Thursday, June 10, 2010

The eBook reader bloodbath has begun

SlashGear is reporting that iRex Technologies, a Dutch eBook reader manufacturer, has filed for bankruptcy in the Netherlands. iRex had a distribution deal with Best Buy, but it wasn't enough to save the company.

In the eBook business, it's the eBook distributors and retailers who have the power, not the reader manufacturers. Amazon, Barnes & Noble, Apple and Kobo will continue to do well, since they've got content, readers and established distribution channels. Distributors like Ingram and Baker & Taylor have an opportunity to serve as "arms merchants" for those reader vendors without a strong in-house source of content, but in general, the non-integrated reader vendors are going to have a very difficult time of it. The readers themselves have largely become commodity products; factories in China and Taiwan can crank out just about any variation you want, so product differentiation is almost impossible. iRex is likely to be only the first of a string of failed eBook reader vendors.
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Is Apple backing itself into a corner?

On Monday, when Apple made the release candidate of iOS 4 available to developers, it released yet another variation on its iPhone Developers Agreement. This time, it barred developers from sharing analytic data with advertising services owned by companies that either make mobile devices or offer mobile operating systems. That means that Google, Microsoft, Nokia and any other company that competes with the iPhone, iPad or iOS can't get analytic data, which will make it impossible for them to track viewership or clickthroughs. (Keep in mind that this applies to apps; developers can use any advertising service they want for web content.)

Once again, questions are arising about antitrust violations on the part of Apple, and once again, the simple answer is that Apple doesn't have enough market share in smartphones, mobile phones or tablets to warrant action. The simple answer may no longer necessarily be true, however. Apple has been engaging in a series of actions to close down access to its platform, from controlling which apps get into the App Store to banning cross-platform development tools and cross-compilers, to dictating which programming languages can be used on the platform, to now banning advertising from services run by Apple's competitors. Any one of these actions, taken on their own, would probably get a pass, but put them all together and it spells trouble.

At this point, I wouldn't be surprised if the U.S. Federal Trade Commission and/or Justice Department formally open an investigation of Apple. Either agency would have to demonstrate that Apple's actions are causing harm to consumers. The argument could be made that the overall effect of Apple's decisions limits consumer choice, in that applications and features that they could otherwise get are being kept from them by Apple. Consumers have a high switching cost if they want to move to another platform, especially for mobile phones. They could be locked into the Apple iOS platform and be subject to Apple's restrictions for as long as two years.

This argument might not prevail in court, but Apple's reputation could be severely damaged if it's charged with monopoly actions. That might be enough to get Apple to backpedal on some of its recent decisions.
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Consolidation in the market research business

According to PaidContent UK, iSuppli, a well-known U.S.-based technology research company, has acquired Screen Digest, a UK-based market research company that tracks media markets. Three years ago, Screen Digest acquired Adams Media Research, one of the top researchers following the home video market in the U.S. Now, all three companies will be under one roof. The acquisition is intended to raise iSuppli into the ranks of companies like Forrester, which acquired Jupiter Research two years ago.

The multiyear recession has taken its toll on market research and industry analysis companies. Budget cuts by large clients have made them much more selective as to which research they buy. Some clients have gone out of business, and others have gone away through mergers and acquisitions. For example, the market research firm I worked for a few years ago had Nortel, Tandberg and Ericsson as clients, among others. Nortel has since gone bankrupt, and Ericsson acquired Tandberg. This same scenario is playing out for research firms in a variety of industries. It's hard to replace customers of that size, especially in a recession.

Small market research and market analysis firms are in a particularly bad spot, in that their values lie in the heads of their researchers and analysts. Unless they're highly specialized, their customer accounts are usually of little value to an acquirer that often serves the same customers and has superior sales capabilities.

The acquisition trend is likely to continue, with the following outcomes:
  • Individual researchers and analysts (one-person firms) will hold on, because they tend to be more cost-effective and more flexible than the big firms.
  • The small (2 to 10-person) research firms will have the biggest problems, because they're too small to be of interest to the big acquirers and most likely to be cut when customers whittle down their market research contracts.
  • The medium- and large-size research firms will merge to get into new areas of practice and penetrate new customer bases. These mergers will result in consolidation of back office operations, with resulting layoffs.
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Wednesday, June 09, 2010

Doin' the Dump on Apple

I've noticed a fairly abrupt editorial shift at Silicon Alley Insider. They're strongly featuring anti-Apple articles. I was just over at their homepage, where there were eight articles that could be read as negative to Apple, one positive, one neutral and eight that didn't have anything to do with the company. More than half of the total articles were about Apple, and most were strongly negative. They even dredged up a year-old post by Jason Calacanis.

I can understand the interest in Apple, given the iPhone 4 announcement and the other news from the Worldwide Developers Conference this week, but eight negative articles on one page seems like overkill. Years ago, when I worked at Netscape, Fortune's Editor-in-Chief at the time decided that he was going to put Bill Gates on the cover of at least every other issue, so the editorial policy of the magazine became taking a hatchet to Netscape. They reported every negative piece of news they could find, ran negative editorials dismissing the company's ability to compete with Microsoft, and even made stuff up when they couldn't find enough negative facts to fill an issue.

Editors do this because controversy sells papers. Netscape was the "golden haired boy" of the period, but Microsoft spent tons of money on advertising, so Fortune could win two ways: They could generate newsstand sales with controversial articles and at the same time attract more advertising from Microsoft. Silicon Alley Insider is no different; controversy gets visits and page views, which it can sell advertising against.

I too pay attention to what visitors to this blog read. Other than the front page, the most popular recent article was a piece that I wrote about Yahoo buying a large tract of land in Santa Clara, CA to build a new campus. I wondered if that was the best use of Yahoo's capital, given the company's problems and the huge number of empty and under-occupied buildings in Silicon Valley that they could get a great deal on. Since that story got so much interest, I could have written multiple variations on it, returning to the theme again and again, but I haven't. I made my arguments in that post, and I see no reason to belabor the point.

Controversy sells newspapers, magazines, cable news channels, websites and blogs. That's fine with me, but eight negative articles on the front page in one day is piling on. It's not just Apple--I'd feel the same way if the articles were about Google, Microsoft, Yahoo or someone else. If all you can do is kick sand in the face of the same company over and over, perhaps you need to give your reporters a little broader range of assignments.

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Making 3D TV Practical

You'd have to be living under the proverbial rock to not be aware of the explosion in 3D technology, first in theaters and, more recently, at home. However, a lot of work needs to be done in order to make consumer 3D more practical. Here are three examples:
  • 3D sets are far more expensive than their 2D equivalents. For example, the cheapest 3D set that Best Buy current has in the U.S. is a 40" Samsung model that sells for $1,800. A roughly equivalent 2D Samsung model can be had for $1,080.00, and if you're willing to settle for a 42" 2D Vizio from Walmart that's even better equipped than the Samsung, you can get it for $900. Best Buy's prices run as high as $6,300 for a Samsung 55" 3D model.
  • Viewers need to use 3D glasses in order to see the 3D effect, and every receiver manufacturer has its own format for 3D glasses. Glasses for a Samsung set won't work on a Sony, and vice versa.
  • A small but far from insignificant percentage of 3D viewers get headaches or have other problems when they watch it, due to the refresh/flicker rate. 
There are solutions in the pipeline for all of these problems, but they're going to take some time to implement:
  • Prices for 3D sets will go down as manufacturing quantities go up, but it's unlikely that the price difference between comparable 3D and 2D sets will ever go below $250 or so.
  • The Consumer Electronics Association and a company called XpanD are both working on 3D glasses that will work with any 3D television set.
  • Last week, Toshiba demonstrated a technology that enables viewing 3D video without the use of glasses. (That was far from the first time that 3D without glasses has been demonstrated.) The new technology has a number of shortcomings: It requires three LCD panels to be sandwiched together, which dramatically decreases the brightness of the display, it cuts the resolution of the 3D image by almost 90% compared to the 2D image, and it has nine fixed viewpoints from which a 3D image can be seen. So, it's likely to be years before a 3D technology that doesn't use glasses and is both practical and cost-efficient will be available.
  • The flicker rate issue is going to remain controversial for some time. Most 3D sets currently use a 240Hz refresh rate, and that may be enough to solve the problem for most people.
3D's content production problems are getting solved faster than the problems of viewing 3D in homes, so we may find ourselves with with a lot more content than viewers for quite a while.
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The Kindle conundrum

According to Amazon, the Kindle 2 is its single most popular product, and according to the Book Industry Study Group, the Kindle is the second most popular way for consumers to read eBooks, just behind PCs. So, why is Amazon worried about the future of the Kindle? (They won't say that they are, but their actions demonstrate something different.)

The current-generation Kindle has fallen into a "no man's land": It's not as attractive to users as Apple's iPad, but it's still too expensive to be an impulse buy. The iPad is making up ground in the eBook reader business very quickly, and even if one discounts Apple's statistics about the percentage of eBooks sold for the iPad, it's likely to exceed the Kindle's installed base by the end of this year.

Amazon is trying to encourage application development on the Kindle, but the limitations of the current-generation reader make it unappealing as an application delivery platform. There are rumors of Kindles with color displays and touch screens under development, but Amazon is always going to be playing catch-up, not only with Apple but with developers of Android tablets. And then, there's Amazon's penchant for control--the only DRM that works on the Kindle is Amazon's proprietary system, which Amazon refuses to license to any competitors. So, when you buy a Kindle, you're locked into Amazon's bookstore for everything except free (non-DRMed) content.

The iPad, on the other hand, is open to the extent that other companies can write eBook reader applications for it, and both Amazon and Barnes & Noble have. So, iPad owners can purchase and use DRMed eBooks from Apple, Amazon, B&N and, over time, many other vendors.

Amazon's eBook business is in no danger, since its eBooks can be used on Kindles, PCs, iPhones and iPads, so does it even need to stay in the hardware eBook reader business long-term? Probably not, but the company is unlikely to abandon the business. If that's the case, what does Amazon need to do in order to keep the Kindle viable in the long run? Here are a few suggestions:
  • Launch an entry-level reader priced under $100. Turn it into an impulse buy. It doesn't need to be as fully-feaured as today's Kindles.
  • If the company wants to keep a product in the $200-$300 SRP range, add color and open it up to competitors. License the Kindle DRM; even better, make it open source on a fairly permissive license. 
  • Rather than spin its wheels with a general application developer program that's likely to go nowhere, it should focus on a few key applications that it believes to be essential for adding value. For example, dramatically improve the web browser and feed reader. Add applications that will enhance the text reading experience. Don't try to be an "iPad light".
The Kindle is still going strong, but it's what will happen in the next 12 to 24 months that's the concern. There will still be a niche for an inexpensive, small, easy-to-use eBook reader will full access to Amazon's collection of eBooks, but if Amazon tries to move the Kindle into direct competition with full-featured tablets like the iPad, it's likely to lose. 

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