CSIRO: Losing while winning

Image via WikipediaAs you may know, Australia's Commonwealth and Scientific Industrial Research Organisation, or CSIRO, has been suing Buffalo Technology over Buffalo's claimed infringement of a patent related to Wi-Fi, and CSIRO managed to get a permanent injunction against the sale of Buffalo's Wi-Fi products in the U.S. from a Federal District Court. Last week, the Court of Appeals for the Federal Circuit (the Federal Circuit generally handles patent-related cases) upheld the District Court's decision, but it punched a huge hole in CSIRO's ability to sue anyone else for infringement. According to the Appellate Court's decision (PDF link), there was more than sufficient prior art to demonstrate that CSIRO's patent should be invalidated, but Buffalo's counsel made mistakes in the original trial that, in essence, forced the Appellate Court to rule in CSIRO's favor. In its decision, the Court of Appeals walked through the arguments that need to be made in order to invalidate CSIRO's patent.

CSIRO once claimed that 100 companies are infringing its patent. According to Wi-Fi Planet, Apple, Dell and Intel, among others, are suing to invalidate CSIRO's patent. With this decision as a guideline, it's only a matter of time before they do so. (Disclaimer: I'm not a lawyer, and most certainly not a patent attorney, so this is only my opinion.)

Vapor, in a shade of Scarlet

Well, so much for the Red Scarlet, the $3,000 3K video camera scheduled for release next Spring. Here's a quote from Jim Jannard, the founder of Red: "We have changed everything about Scarlet because the market has changed and we have discovered a lot of things in the process. We have a new vision. Wipe you (sic) minds of the past announced Scarlet. Forget the design and forget the price. It is all different now. We think you will be surprised. Glad we didn't take any deposits... :-) ."

Red has recently been talking about introducing its own digital SLR (DSLR) still camera. With the recent introduction of digital SLRs from Nikon and Canon that can shoot HD video, the functions of still and video cameras are blurring, especially for press photographers who are increasingly called upon to shoot video for websites. There's a real opportunity to release a DSLR that does stills and video equally well, so Red had the choice of building two cameras (the Scarlet and a DSLR), or building one. They've apparently chosen to build one, which will be the redesigned Scarlet.

This only reinforces what I've said in the past: Don't believe anything about a product until you can buy it. The milled aluminum mockup that they showed at NAB is probably being melted down as I write this.

Something's coming from Adobe and Google

I'll be following two big announcements tomorrow. First, Adobe will launch Creative Suite 4 at events around the world. In this column, I normally write about Flash Video, but the applications in Creative Suite, including Photoshop, Dreamweaver and Acrobat, are Adobe's true bread and butter. I've been using betas of Dreamweaver and Fireworks CS4 for some time; both products, which came from Macromedia in the Adobe-Macromedia merger, now look and feel more like Adobe applications. Whether that's better or worse depends on whether you prefer the old or new user interfaces. To my eye, the functionality of the CS4 applications has been modestly upgraded, at best. We'll know more tomorrow.

(Update 10:14 p.m. Pacific Time, September 22, 2008) Adobe has posted details of the new CS4 bundles on its website, prior to the announcement events tomorrow. As with CS3, there are seven bundles: Standard and Premium versions of the Web, Design and (Video) Production bundles, plus a Master Collection that includes everything. There are no bargains, either: Unless you were one of the few people who purchased 3.3 versions of the bundles, upgrades start at $499 for the Standard bundle versions, $599 for the Premium versions, and $899 for the Master Collection. If you're starting from scratch, the Standard bundles are $1,399, the Premium bundles are $1,699, and the Master Collection is $2,499. (All prices are in US dollars).

Image via CrunchBase
The bigger announcement, at least in terms of press interest, will be the T-Mobile/Google annoumcement of the first Android phone, the HTC Dream, and of the imminent completion of T-Mobile's 3G mobile service rollout throughout the U.S. Android phones will compete with iPhones and Windows Mobile-based smartphones at the top of the mobile phone food chain, and the Dream is rumored to sell for the same $199 price (on a two-year plan) as the base 3G iPhone. The Dream will have a slide-out QWERTY keyboard, which promises to make it easier to use for power emailers than the iPhone (yet most likely still at a disadvantage vis-a-vis the BlackBerry.) All of the applications in Google's Android store will be free, at least initially, and anyone can post applications (the countdown to the first Android malware has already begun.)

I've been playing with the Android development system on my PC for some time, but I'm reserving judgment on how the Dream performs until I get a chance to try it. I used to be a T-Mobile customer, and if the Dream lives up to the hype, I may well switch back. Again, more tomorrow.

Off Topic: Fallout from the Bailout

Bits and pieces of the proposed U.S. financial bailout are trickling out. It appears that the U.S. Treasury will spend $700 billion ($2,000 for every man, woman and child in the U.S.) to buy Collateralized Debt Obligations, or CDOs. CDOs were created when banks and other lenders mixed together lots of subprime mortgages and other debt, and magically created AAA-rated investment vehicles. Well, now you're going to own $2,000 worth of them.

I'm not complaining that the government is moving to shore up the economic system, but I am very concerned about the process. Can we forget the Patriot Act, an abomination with bipartisan support that was proposed after 9/11 by the same Bush Administration that's proposing this emergency action? Or, how about the secret Bush Administration briefings to Congress that warned of dire consequences if we didn't go to war with Iraq, the briefings that were later found to be almost entirely false? When these particular boys "cry wolf," I'm inclined to apply a pretty thorough smell test. In rushing to try to get a law passed this week, I hope that we don't end up with something that we're very sorry about in the future.

Whatever the eventual bailout plan looks like, will it help the man on the street, the man on the 80th floor, or (I hope) both of them to some degree? In my opinion, the plan has to do everything it can to keep people in their homes. Whether through cutting interest rates, extending payments or even forgiving a portion of some homeowners' debts, it's far better for people to stay in their homes rather than either abandon them or be forced out by foreclosure. Lived-in homes are maintained, and they help to preserve the property values of surrounding homes. It only takes a trip to a city such as Stockton, California's foreclosure capital, to see the carnage wrought on neighborhoods by foreclosures. There, you'll see block after block of abandoned homes that have been raided for their copper plumbing and wiring, with overgrown yards being used as dumping grounds. Many of these homes, still fairly new, are so badly damaged that it would be cheaper to tear them down and build something new than to repair them.

The investors who purchased the CDOs had no interest in preventing foreclosures; in many cases, they didn't (and still don't) even know which mortgages they held. If the government consolidates these mortgages in one place, with the goal of getting the mortgages to reliably pay something, and with getting already abandoned homes rehabilitated and generating income again, everyone will benefit, and this bailout will be worthwhile. If, however, the government shows the same lack of concern that the investors currently holding the CDOs have shown, the citizens of the U.S. are going to end up paying, and paying very dearly, for the hubris of Wall Street.

Taking the competition to the next level

A few posts ago, I wrote about the difficulty that IPTV operators are having with differentiating their services from cable, satellite, and (in some markets) over-the-air broadcasters. Triple-play packages (landline telephone, high-speed Internet and video) are old news in most markets, and cable operators are using VoIP to compete head-to-head with the telcos. Quadruple-play packages, adding mobile service, are less common, and are more difficult for non-telcos to compete with. In order to get access to mobile services, cable and satellite operators usually have to resell services from a telco, which puts them at a pricing disadvantage.

In most places, even when you buy a triple- or quadruple-play package, you get a bundle of services that don't talk to each other. Consumers purchase on the basis of price and features; brand loyalty doesn't exist. In this situation, you can get a runaway "race to the bottom", as is happening in several countries in Western Europe, with France being the best example. There, operators are piling on more and more features while maintaining the price at 30 Euros a month. Packages that would sell in the U.S. for $99 a month or more are going for the equivalent of under $45 at current exchange rates.

The real opportunity is in what I call silo-busting--tearing down the walls between services in order to unlock consumer value and provide the opportunity to increase prices (or at least maintain prices in the face of competition.) Telcos are just now starting to let consumers get Caller ID on their television when the phone rings. Instead of running to the phone when it rings, your television can tell you who's calling, so that you can make the decision of whether or not to take the call. If that service has value to you, and the competition doesn't offer it, you're more likely to stay with your service provider. Let's take it to the next step: Add a speakerphone to the set-top box's remote control, and you can take the call without picking up the phone. Now the television and the phone service are tightly linked. That adds value and increases differentiation.

Let's take a quad-play example: PCCW in Hong Kong enables consumers to look up movie showtimes and buy tickets, right from their televisions. The tickets are sent to their mobile phones in the form of a barcode. At the theater, the barcode is scanned for admission. PCCW can do this because they control all the elements. They're now the biggest seller of movie tickets in Hong Kong. They not only generate transaction fees every time they sell a movie ticket, they offer a desirable service that their competitors can't match.

Or consider a location-based service that ties the television and mobile phones together: A parent can see where her children are by plotting the position of their GPS-enabled mobile phones on a map on her television. It's a service that non-telco competitors can't match, and it's of considerable value to a section of the market.

The last point has to do with paying for these new services. In highly price-competitive markets, there's a fear that telcos won't be able to increase their prices, and these new services will simply get sucked into consumer expectations. Most video providers, whether IPTV, cable or satellite, package their services into tiers: For the basic price, you get a basic tier. If you want more channels, you have to buy another tier at a higher price. If you want premium channels, you pay even more. Consumers are familar and comfortable with this model. The integrated (or converged) services that I'm proposing can be priced into service tiers, just like video programming. Service providers can offer a basic service at a low price to retain subscribers, and offer unique services on tiers to bring in more revenue.

In short, I believe that the real key to unlocking value is to integrate services through applications. As consumers see the power of tying these services together, they'll migrate to the service providers that let them do the most, not just to the providers that are the cheapest.

Watching the dominoes fall

Last night, I was watching the Wall Street bloodbath in real-time: Lehman Brothers racing toward bankruptcy, Bank of America buying Merrill Lynch for a wildly inflated price compared to the market, and AIG playing "chicken" with the Federal Reserve and U.S. Treasury to try to raise $40 billion before the rating agencies lowered its ratings and effectively made it impossible for AIG to borrow any more money. Today, the Dow fell more than 500 points, but given everything that happened over the weekend, that wasn't the worst possible outcome.

So what happens next? Market traders expect Washington Mutual and Wachovia Bank to be the next to go, based on their exposure to subprime mortgages, thus leaving JPMorgan Chase and Bank of America as the two "superbanks"...or so it appears. What the market seems to be discounting is exposure to credit card debt. The same consumers who can neither refinance their home loans nor get new home loans are drawing ever more heavily on high-interest, high-fee credit card debt. Both Bank of America (through its acquisition of MBNA) and JPMorgan Chase are deeply exposed to credit card debt, as are Citicorp, Capital One and others.

It's far too early to call any financial institution or executive "smart"...there are way too many dominoes left on the table in precarious positions.

How fast is fast?

At the International Broadcasting Conference (IBC) in Amsterdam this week, Texas Instruments announced a chip for cable operators that allows eight downstream and four upstream DOCSIS 3.0 channels to be bonded together for a maximum of 320Mbps down and 160Mbps up. Compare that to today's situation, where most cable subscribers get less than 10Mbps down, and most cable operators are contemplating providing no more than 50 to 100Mbps down maximum.

I don't seriously believe that we'll see 320Mbps in the foreseeable future, but this capability will become a weapon in the arsenal of cable operators. The fundamental advantage that Verizon's FiOS service has over cable offerings is the inherent bandwidth of fiber-to-the-home (FTTH); DOCSIS 3.0 bonding is keeping cable operators in the contest. Switched digital video (SDV) and Cable IPTV will enable cable operators to utilize their available bandwidth even more efficiently. The result is that cable operators and telcos may end up competing on a level playing field, so far as bandwidth is concerned.

What business are you in, part two

I've spent the last 20 months writing and talking about telecommunications companies using Internet technology to deliver video programming to consumers (IPTV). In the U.S., AT&T and a host of smaller companies offer IPTV, as do France Telecom, Telefonica, Deutsche Telekom and many other service providers in Europe. They compete with cable operators, satellite providers and over-the-air broadcasters.

A few posts ago, I mentioned Ted Levitt and his famous "What business are you in?" question. If you talk to representatives of these companies, they're likely to tell you that they're in the telecommunications, or cable, or satellite, or broadcasting business, but they're really all in the entertainment business. That's what consumers are buying. Consumers couldn't care less whether the signal comes in over a twisted pair or a coaxial cable, using a satellite antenna or rabbit ears. To consumers, these services are interchangeable; economists call them fungible. Consumers are making their decision based on price, channels, picture quality and customer service. To date, for all the talk about interactive applications, there's no evidence that they actually drive consumer choice one way or the other.

That's why there's so much "sturm und drang" about HD programming, at least in the U.S. DirecTV got an early lead in HD channels, and everyone else has been fighting back ever since, either by adding more HD channels or trying to convince consumers that they're not all that important. The fact that only a minority of U.S. households has the ability to watch HD television hasn't put a lid on the war of words.

There is a way for these companies to differentiate themselves for real, which I'll write about in a future post.

Microsoft's Idea of Cool

The second Seinfeld-Gates commercial (more like a mini-movie) is out on the Microsoft website. Earlier this week, I listened to the This Week In Tech crew spend a half-hour deconstructing the first commercial in the series, as if it were a Supreme Court decision. Folks, you're reading way too much into these ads. Apple's "Mac vs. PC" ads purport to show how superior the Mac (and Mac users) are vs. Windows and Windows users, but these new Microsoft ads are designed to show that Windows is for "real people". In the second ad, Gates and Seinfeld struggle to fit into a "real family", but the point is that they're trying to fit in, while Apple, by implication, is only for the elite.

Let's not forget that the advertising agency that created these ads currently has the Burger King being hit by a cab and Volkswagen Beetles talking with a German accent. Sophisticated comedy is not their thing.

Is Jobs's "Reality Distortion Field" fading away?

Today's "big" announcement by Apple just ended--new versions of the iPod Nano and Touch, and a new version of iTunes, plus some new headphones and a lot of chest beating about the App Store. Almost everything had been leaked weeks ahead of the presentation, and even if Apple had kept a lid on it all, there would have been nothing all that exciting.

The new pricing for the iPod touch isn't going to drive sales (if you're even mildly interested in the 3G iPhone, you're crazy not to buy one of those rather than an iPod Touch.) The revisions of the iPod Nano are nice, but no one is going to be lining up to buy one; at best, it'll be a good replacement for previous-generation Nanos. Apple seems to think that the new "Genius" feature in iTunes (a ripoff of Pandora) is going to generate more sales, but I disagree.

The net of all of this is somewhere between "feh" and "so?". Any other company would have made these announcements with a press release, and perhaps, a press conference. With an announcement like this one, the very fact that Jobs was involved actually increases the disappointment level.

The last really important announcement that Apple did was the original iPhone; compared to that one, today's announcement doesn't even merit a footnote.

Going, going...

If you're a newspaper publisher, the Newspaper Association of America issued some pretty horrifying news today. Total newspaper advertising revenues dropped $3 billion year-to-year in the first six months of 2008, to $18.8 billion dollars, and online newspaper ad revenues dropped for the first time. Alan Mutter, who writes the Reflections of a Newsosaur blog, plotted the decline for his readers:

 

In non-adjusted dollars. these are the worst results in 16 years, but Tim Windsor restated the results in constant 2008 dollars, and determined that these were the worst results since 1982. Here's Tim chart:

Using inflation-adjusted numbers, ad revenues are actually lower than they were in 1982. In addition, according to the NAA, national daily circulation has been falling steadily since 1988, and Sunday circulation has been falling since 1990.

We're in a recession, so that's magnifying the revenue fall-off, but it's very clear that a lot of newspapers are either reaching or have passed the tipping point at which they don't have the resources to attract and keep readers. With less advertising, the news hole either gets bigger or the newspaper gets smaller. If you can't afford to pay enough writers and editors to fill the news hole, the only option is to make the newspaper smaller. At some point, the newspaper goes away.

Broadcasters should take no solace from these numbers. The audience for news shows has been dropping for years, and the average age of the audience watching the national nightly news is over 60. CNN, Fox and MSNBC aren't enlarging the news audience, they're simply trading it among themselves.

Years ago, Ted Levitt, a marketing professor at the Harvard School of Business, asked the rhetorical question "What business are you in?" Newspaper publishers aren't in the newspaper business, they're in the information business. They've got to figure out profitable ways to get their information to customers. For a lot of publishers, that's not going to involve a printing press for much longer.

Off Topic: Back to the real world...

Last night, we learned that Sarah Palin can walk and chew gum at the same time. Bully for her. Today's job loss statistics, which triggered a 300 point loss in the Dow, say one thing to me: The Democrats have to go through their boxes and find those "It's the Economy, Stupid" signs they had in 1992. The U.S. has already had two recessions under George W. Bush, and there's nothing in John McCain's economic plan that deviates substantially from the strategies of the Bush II administration. If the Democrats focus on the economy, they will win. If they get trapped in "social issues" such as abortion, sex education and gun control, they'll lose.

I think that Palin will self-destruct before the end of the campaign: "You can't hit me because I'm a woman and wear glasses" won't wash when she's acting as McCain's attack dog. All of the opposition research that the McCain campaign should have done before appointing her their VP candidate is being done by the press and assembled in easy-to-find chunks at places like the Huffington Post.

If we've learned anything over the last eight years, it's that it's not the strength of the candidate, but rather, the strength of the campaign that determines who gets into the White House. George W. Bush was a lame speaker and a weak debater, but he beat two Democrats who should have mopped the floor with him, at least on paper. However, Al Gore and John Kerry both ran singularly lame campaigns. So far, the Democrats seem to have been caught flat-footed by the Palin announcement. If they can get back on message, it won't matter who the Republican VP candidate is.

Microsoft Goes for Price Leadership with Xbox 360

As of Friday, Microsoft is dropping the U.S. prices of all three Xbox 360 models. The entry-level Arcade model with no hard drive drops from $279 to $199--the cheapest current-generation game console on the market. The basic model with a 60GB hard drive falls to $299 from $349, and the Elite, with a 120GB hard drive, drops to $399 from its previous $449 price. The Arcade and base model prices now bracket the Nintendo Wii, which is priced at $249. The entry-level Sony Playstation 3 is $399.

I'm not sure that the price drops will make a huge different in sales for Microsoft, but it will certainly keep the product price-competitive with Nintendo. However, I think that it's long past time that Microsoft introduce a version that's a media extender first and a game console second. The Elite has everything it needs to be a HD PVR, except for digital or analog video inputs. Even the Arcade can be a usable SD media extender in streaming mode. Microsoft is positioning the Xbox 360 as a set-top box for Mediaroom IPTV systems, but with digital or analog inputs, it could do a lot more.

TiVo and DirecTV: Back Together Again

When News Corporation took operational control of DirecTV a few years ago, it began an agonizing split between DirecTV and TiVo, its supplier of DVR technology. Prior to the split, DirecTV was by far TiVo's biggest market. After News Corp. took over, it demanded a much bigger split of subscription revenues, which TiVo wouldn't agree to. News Corp. called on NDS, a corporate subsidiary, to port DVR software that had already been developed for BSkyB and other services to the DirecTV platform, cutting out TiVo. Last March, DirecTV announced that subscribers wanting HD DVR service had to switch to NDS's set-top box, a decision that's been roundly criticized by many DirecTV users.

However, within days of DirecTV's announcement, John Malone's Liberty Media acquired News Corporation's controlling interest in DirecTV. Liberty Media almost immediately began talks with TiVo to reestablish the relationship between the two companies, and today, both companies announced that TiVo will develop a DirecTV-compatible HD DVR for delivery in the second half of 2009.

The loss of DirecTV as a major customer made TiVo a much stronger company: It completed a distribution deal with Comcast that's in the process of rollout, and it shifted a good deal of its revenues from selling boxes and subscriptions to selling viewing and marketing information to advertisers. Winning DirecTV back can only help the company's bottom line.

Obligatory Google Chrome Post

Yes, I've installed Google Chrome, and no, it's not an Internet Explorer killer, at least not yet. My browser of choice is Firefox 3, and I see nothing in Chrome at this point that will get me to switch. The biggest advanage that I see so far is that Chrome seems to be considerably faster in loading pages than either IE or Firefox. Chrome uses the same WebKit rendering engine that Safari uses, and Safari has been roundly praised for its speed, so it's no surprise that Chrome is fast. Google benchmarks show that Chrome's V8 JavaScript compiler is much faster than the interpreters in IE, Firefox and Opera, but the forthcoming Firefox 3.1 will have its own JavaScript compiler, so Chrome's performance advantage may be short-lived.

It's going to take a long time for Chrome to get the same kind of third-party developer support that Firefox already has, but I don't think that's Google's objective: I think that they're targeting users who want simple, fast browsing, and couldn't care less whether the browser supports add-ons. Click one button and it's installed. Every visitor to Google Search is a potential user. That's got to scare Microsoft, even if Chrome is less sophisticated in many ways than IE.

I've visited some sites that don't recognize the Chrome user agent, and thus either limit access or won't give access to Chrome users at all. Therefore, the onus is now on Google to get site developers to support Chrome. That's not going to be easy, because other than the Google name, I haven't seen anything compelling enough to get most people to switch from their existing browser to Chrome.

Comcast limits bandwidth

Comcast announced today that starting October 1st, it will limit bandwidth usage for its high-speed Internet customers to 250GB/month. The first time that a subscriber exceeds the limit, they'll get a warning; if they do it again within six months, their high-speed Internet service could be turned off for a year. That's right, a year.

It's no surprise that Comcast is implementing bandwidth caps. The company was penalized by the FCC for interfering with BitTorrent traffic, so it's looking for alternative ways of limiting its network load. However, its decision raises two issues: First, is 250GB/month an appropriate limit, and second, how will consumers measure their bandwidth use to make sure that they don't use more than the maximum?

Comcast's press release gives examples of what can fit into 250GB: 50 million emails or 124 standard-definition movies. The problem, of course, is that people don't use their Internet connections for only one purpose, such as email--they use them for many different things. Someone who uses an online backup and restore service for their hard disk could use up most of their monthly limit in one session. If you use Vonage, Skype or some other VoIP service, that's going to count against your monthly limit. (One assumes that you'll be able to use Comcast's own VoIP service as much as you want, however.) And, if you've got something like a Slingbox or AppleTV, you could use as much as 15MB per minute of video. So, 250GB could get used up very quickly.

That brings us to the second issue: Comcast is providing no way whatsoever for subscribers to see how much bandwidth they've used. They recommend that customers install bandwidth monitoring software on their computers. That's all well and good for PC applications, but it won't track usage by a TiVo, Squeezebox, Slingbox, Vonage VoIP adapter, or similar devices. Mobile phone companies can tell subscribers their phone usage down to the second--why can't Comcast provide a webpage that tracks subscribers' bandwidth usage? After all, they have to be measuring it in order to enforce their 250GB limit.

Perhaps Comcast thinks that so many people will complain about this limit that they'll get the FCC to agree to content-based throttling. I think that it's more likely that the reverse will happen--Comcast will tick so many people off that the FCC will once again intervene and force the company to adopt a much higher limit. When subscribers who are using their Internet connections for perfectly legitimate purposes start to see their service cut off, the feces will hit the fan.

It does everything except wash your dishes

According to Gizmodo, Blaupunkt just introduced a new PND (Personal Navigation Device, or in-car GPS) for the European market, the Travel Pilot N700. This device has an amazing array of capabilities, centered around a camera built into the device that displays the road ahead. The N700 overlays driving instructions on the display, so you actually see them on the road's surface. It also reads traffic signs and overlays that information onto the display (the design of traffic signs is much more uniform in Europe than it is in the U.S., which makes recognition of European signs easier; this is one reason why this model is Europe-only for now.) It's also got voice recognition, live traffic information, Wi-Fi, Bluetooth connectivity for hands-free calling and even a built-in DVB receiver for watching television when the car is stopped. The N700 will sell for around $740. Considering that built-in navigation systems typically cost $1,500 to $2,000, Blaupunkt's new model has to be considered a bargain. Here's a video of the unit in action.

Are DVD "special features" doomed?

Once upon a time, there were VHS videocassettes, which could hold a movie, a few trailers, and nothing else. When DVDs hit the market in 1997, they could hold not only a movie and trailers, but subtitles in multiple languages, multiple soundtracks and menus for navigation. However, DVDs were initially much more expensive than videocassettes, and their usability features weren't always enough to justify the price difference. So, home video distributors hit on a strategy of adding value with commentaries and "the making of" documentaries. Before long, they learned that they could release the same movie title two or three times, each time adding more special features. A small but determined group of fans would buy every version, just to be sure that they got all the special features.

Today, we've become accustomed to getting a commentary and some documentaries on every DVD. In fact, many people won't buy a DVD if it doesn't have a sufficient number of special features; they'll either rent it or watch it on a Pay-per-View service. I used to be one of those people, but I recently took a look at a wall full of DVDs and realized that 1) I had never watched them more than once, and 2) I rarely watched any of the documentaries or listened to the commentaries.

And so we come to Blu-Ray and digital downloads. Early Blu-Ray discs had far fewer special features than their DVD counterparts, although that gap is narrowing every day. Digital downloads generally don't have special features (except for subtitles in some cases). Is the presence or absence of special features going to drive user acceptance, as it did with DVD?

I don't think so. While Blu-Ray has been far from a big success, it's clear that consumers are buying it for image quality, not special features. Digital downloads are being rented and bought for convenience; the absence of special features is actually a benefit, because it keeps file sizes smaller and shortens download times.

The implication of all this is that commentaries and documentaries are on their way out. As a former DVD producer, I can tell you that special features cost a lot of money. As they're increasingly seen as "nice-to-haves" rather than "must-haves," producers will cut back. By and large, I don't think that viewers will miss them.

Good News, Bad News

The good news is that you get to meet Jamie Lee Curtis! The bad news is that you have to talk to her about your irregularity.

Apples and Oranges, Comcast-Style

Okay, I admit it--I've been watching the Olympics on NBC in a Comcast market. Comcast is running a game-show style ad that purports to show that Comcast has more HD than DirecTV all the time, at any time. The problem is that Comcast is comparing apples and oranges: DirectTV has far more HD channels than Comcast does, but Comcast has several hundred hours of HD content in its Video-on-Demand systems. Thus, at any one time, you can watch approximately 100 hours of live HD content on DirecTV, or perhaps half that much on Comcast, with several hundred additional hours of recorded VOD content available. Further, a lot of Comcast's HD content is in the form of pay-per-view movies. So, who really has the most HD? If you're counting channels, DirecTV wins hands-down. If you're counting the number of hours of HD content available at any one time, Comcast wins. Personally, I'd be a lot happier if both companies spent less money tossing grenades at each other and more money improving their customer service.

Apple: Human, After All

Ever since the launch of the 3G iPhone, Apple has been showered with decidedly mixed news. One the one hand, iPhone sales took off much faster than sales of the original iPhone, but who can forget the lines, delays and frustration of buyers when Apple's iTunes-based authorization system failed? In the U.S., the 3G iPhone is still subject to inventory shortages and a long purchase and approval process.

Now, 3G iPhone users from around the world are complaining of poor 3G reception and speeds little better than the EDGE 2G service of the original iPhone. In the U.S., AT&T and Apple maintained a stony silence about the problems, but in other countries, service providers laid the problem at the feet of Apple. An industry analyst conjectured that the Infineon chipset that Apple used for the 3G iPhone was to blame, a Swedish engineering magazine confirmed the problem (though not necessarily the source), and a Business Week article appears to substantiate that conclusion.  While Richard Windsor, the Nomura Securities analyst who wrote the original report, believes that the problem is in hardware, the BusinessWeek article indicates that the parties involved think that the problem can be fixed in firmware. None of this matters to customers, who just want a phone that works as advertised.

The iTunes Application Store has been a grand success, generating a million dollars in sales a day for Apple and still growing. On the other hand, developers are complaining about Apple's slow (and seemingly capricious) approval process for adding their software to the Store--an approval process that nonetheless let through a program called "I Am Rich," which cost $999 and did nothing except flash a red icon on the iPhone's screen. According to reports, eight people actually bought the package before Apple took it down.

mobileMe, Apple's replacement for .mac, was launched well before it was ready, which caused millions of .mac users who were forced to switch over to mobileMe to lose access to their email and be unable to synchronize their devices for long stretches of time. The problems caused The Wall Street Journal's Walt Mossberg, who's usually an Apple champion, to warn users to stay away from mobileMe until the service matures.

Let's not forget AppleTV, which even in its second version has failed to gain market traction. Roku's Netflix Player sold out quickly, and the company has had a hard time catching up with demand, but AppleTVs gather dust on store shelves around the U.S.

These glitches indicate that there are some serious problems in Apple's product review and release process, as well as its online infrastructure. How Apple responds to these problems, and how long they persist, will indicate whether or not the company has gotten too big for its own good. In any event, Apple is human, after all.

Should You Get a DTV Converter Anyway?

It's impossible to watch television in the U.S. lately without seeing ads reminding viewers that analog transmissions will end on February 17, 2009 (except for low-power stations.) Like most viewers, I've ignored these messages, because I'm a cable subscriber, and over-the-air service is lousy in my area. However, there's potentially a good reason to get a coupon and buy a converter, if you have one or more sets with analog tuners: Over-the-air broadcasters will be able to multicast--send multiple subchannels of programming within a single digital channel. In my market, there are three stations that are already multicasting, and I receive their multicast channels on Comcast cable. However, there is no FCC rule that requires cable or satellite operators to multicast every channel put on the air by broadcasters.

In my market (San Francisco/San Jose), the subchannels of commercial broadcasters are being used for weather services and news rebroadcasts--nothing astounding. Nevertheless, broadcasters are being offered a plethora of programming to fill these new subchannels, and some of it might be interesting. In any event, if you've got some analog sets and you're not planning to toss them out anytime soon, you might consider getting some of them digital converter coupons, and then purchasing a converter box.

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A Seismic Change

Whether we like it or not, the U.S. is going through the biggest period of change--economically, socially and technologically--since the end of the Second World War. At the end of WWII, hundreds of thousands of servicemen returned from overseas, got married and started families. These families needed homes, cars, appliances, furniture, and so on, bringing the true end of the Great Depression and the launch of the greatest economic growth ever seen. Demand for housing led to the birth and growth of the suburbs, and the Interstate Highway system, originally launched by President Eisenhower, enabled Americans to move into every nook and cranny of the country by car.

I just watched a story on a local television newscast, discussing the potential "slummification" of suburbs around Sacramento, CA, as residents abandon them to be closer to their jobs and public transit. The story quoted one forecast of more than 22 million excess homes in suburbia nationwide by 2025. These "McMansions" are generally woefully energy inefficient and well away from major public transit corridors, so their owners get hit by energy costs when they're at home, as well as when they're driving to and from work. The pendulum is swinging back to high-density, in-city housing.

I've often believed that we would eventually rue the day that we gutted our passenger rail and street car systems, and that day has come. Now, cities around the country are trying to build or extend their public transportation systems, at enormous cost.

This radical relocation of people is just one element of the change. Automobile preferences have changed almost overnight from trucks and SUVs to high-mileage passenger cars. Some SUVs coming off of three-year leases can't be sold, for almost any price. The future of the American car companies lies in their European and Asian operations; the salvation of GM is likely to say Opel, Vauxhall, Holden or GM Shanghai somewhere on it.

These are only a taste of the changes underway. The U.S. that we're becoming will increasingly look like a 21st Century version of the country in the early 20th century.

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A Huge Win for Cablevision (and for consumers)

Earlier today, the U.S. Court of Appeals for the Second District reversed a previous ruling that Cablevision's network PVR service infringed the rights of content owners. In 2006, Cablevision announced its network PVR service, called RS-DVR, which was based on technology from Arroyo Video Solutions, a company that was subsequently acquired by Cisco. The big advantage of a centralized PVR system is that conventional set-top boxes can provide video recording capabilities; in-home PVRs, with their cost and complexity, aren't needed. Network PVRs are the standard in China, India and other countries where subscriber income precludes the cost of in-home PVRs.

Almost immediately after Cablevision's announcement, a flock of content companies, including CBS, Viacom, News Corp., Time Warner, Disney and NBC Universal, filed suit to stop deployment of RS-DVR. In the initial court case, the media companies prevailed and won an injunction that precluded Cablevision from offering RS-DVR. Today's decision by a three-judge panel overturned the lower court's ruling and lifted the injunction. These articles provide more details about the ruling itself.

This is not the last word in the case, of course. The media companies can request that the entire U.S. Court of Appeals for the Second District rehear the case. No matter how that turns out, the losing side can appeal the case to the U.S. Supreme Court, which can (but isn't obligated to) hear the appeal. However, we're a giant step closer to legal network PVR service in the United States, which will likely mean lower costs for consumers.

Sirius and XM Merger Approved, Finally

According to the Washington Post and other sources, by a 3-2 vote at the FCC, the Sirius-XM satellite radio merger has finally been approved. There were a few additional conditions agreed to by the two companies, including a "slap on the wrist" $19.7 million fine primarily attributable to XM, because some of the FM transmitters built into XM receivers were too powerful and interfered with conventional broadcasts. Also, some of their terrestrial repeaters used to provide better coverage in urban areas were both located in the wrong places and were too powerful, and thus they also interfered with conventional broadcasts.

Another condition was that both companies agreed to expedite the development of receivers that will work with both Sirius and XM, a promise that the two companies actually made prior to the launch of either company's satellite radio service, but that has never been carried out. The companies also agreed to freeze prices for three years (which they had, again, previously agreed to,) and to offer subscribers the option of picking and choosing channels from the two company's services (a la carte pricing), a capability that won't be available until dual Sirius-XM receivers hit the market.

In short, it looks as though the two companies made minimal concessions. Given that the U.S. Justice Department previously approved the merger even without these concessions, it's extremely unlikely that any other legal obstacles are likely to arise. Given currernt economic conditions, however, it's essential for the merged company to start cutting costs immediately, so I wouldn't be at all surprised if the merged company starts to drop duplicate staff and put much the same programming on both services as soon as possible. (Howard Stern on both Sirius and XM, perhaps?)

Are we not annoying? We are TiVo!

A couple of days ago, TiVo and Amazon.com announced that TiVo users will be able to purchase physical products from Amazon.com that they see on television. Let's say that Jay Leno is pushing a nose hair shaver on The Tonight Show; lucky TiVo users will be able to pause the show and buy the shaver, using only their remote control.

I don't know if one of those obnoxious icons, like the ones that TiVo uses to try to get users to record a particular show, will flash on the screen ("Click Here to Buy that Nose Hair Shaver"). Frankly, I'm already getting sick of TiVo interupting my late-night television viewing so that it can change the channel to record content that I have absolutely no interest in. They're selling my viewing information, my eyeballs, and now they're trying to sell me merchandise from Amazon.com.

It's getting to the point where the basic utility of the TiVo service, time-shifting, is becoming outweighed by the annoyance of putting up with a salesperson sitting in my living room, 24 hours a day. If the company offered some kind of trade-off--accept the plugs and ads, or sign up for Amazon Prime, and the basic TiVo service is free--I could justify what's going on, but they're doing nothing except making the service less, rather than more, valuable.

Therefore, I've decided to relegate my TiVo to the dustbin. I've enjoyed it, but I won't go back until they tip the value scale back in favor of subscribers rather than advertisers and merchants.

Big News: tvstrategies

For the last 18 months, I've been working with Steve Hawley at Multimedia Research Group (MRG). Steve is one of the world's leading experts on IPTV, and we teamed on a number of projects for MRG's clients. As you may know, I left MRG in June, but Steve and I have been looking for a way to continue working together. As of today, we've found it.

This morning, Steve and I announced tvstrategies, a market analysis firm focusing on IPTV. (You can find our press release here.) We're going to be launching with two series of reports: The first is called RadarScreen(TM) Reports, and they compare products and services head-to-head in seven key IPTV categories. The second series is Best Practices Reports, and they're case studies from IPTV Service Providers on how to increase revenues, improve efficiency and decrease costs.

As you can tell, we're focusing on Service Providers, which is quite a bit different than what Steve and I did at MRG, where our primary focus was on hardware and software vendors. We believe that the focus in the IPTV industry is shifting from Operators making their initial product acquisition decisions, to Operators working to maximize the revenues and profitability of their IPTV services. Our RadarScreen and Best Practices Reports will focus on helping Service Providers do what we consider their Big Three: Increase Revenues, Decrease Costs and Improve Efficiency.

I'll have a lot more to say about tvstrategies in the next days and weeks.

More Satellite Silliness

According to this article from Radio Ink, Ed Markey, Chairman of the House Telecommunications Subcommittee, wants the FCC to force Sirius and XM to freeze their rates for six years as a condition of their merger. National Public Radio has also chimed in--they want the firms to set aside 25% of their spectrum for noncommercial, emergency and minority-controlled programming. Both Markey and NPR want the combined companies to add HD Radio capability to their satellite receivers, an idea that was first proposed last year by iBiquity, the company that developed and licenses HD Radio.

Let's go down the list: Freeze their rates for six years. How can anyone agree to freeze their prices for six years? (Sirius and XM have already agreed to freeze their prices for three years.) If prices get too high, consumers will drop the service and the company will have to respond. Let the market decide.

Next, NPR's 25% programming set-aside (this from a network that claims to serve the entire population but that broadcasts, to my knowledge, exactly one weekly Hispanic-related and one daily African-American-related program.) If a music channel is commercial-free, as many already are on XM and Sirius, does that count? If that's the case, they may already be at the 25% mark. And, I guarantee you that XM already programs at least ten times as much minority-oriented programming a day as NPR, if not far more than that.

Finally, let's touch on the requirement to add HD Radio to satellite receivers. As I've written about previously, that's like requiring Comcast to put DirecTV receivers into their set-top boxes, or vice-versa. Now, however, we learn that it's iBiquity that originally floated the proposal. Of course iBiquity wants HD Radio in every satellite receiver: They'd get licensing fees for every satellite receiver sold, sell more equipment to broadcasters and, in turn, spur more sales of conventional HD Radio receivers, which means even more licensing revenue for iBiquity.

It's broadcasters who have the burden of making HD Radio successful, by giving consumers a reason to buy a receiver and by convincing automobile manufacturers to include HD Radio receivers in their cars, just as Sirius and XM did years ago. Making Sirius and XM subsidize HD Radio is ridiculous.

Here's what I really think is happening: Broadcasters are putting pressure on legislators to float all kinds of different restrictions on the Sirius-XM merger, which will delay the decision. Assuming that a deal is struck and the merger goes through, the civil lawsuits will begin in order to keep the companies from unifying their operations. The hope is that, eventually, either Sirius or XM will wave a white flag, the merger will be dropped, and one or both companies will go under. Consumers will lose an incredibly valuable choice (regardless of whether it's one or two companies).

Laughing on the Outside, Crying on the Inside

This isn't a financial blog, but it's no secret that both the NYSE and NASDAQ markets are in bear territory, banks are failing, tens if not hundreds of thousands of people are losing their homes, unemployment is up, and the economy is a mess. So when I turned on CNBC this afternoon, why did I see a bunch of nimrods at both markets smiling and clapping, when they both closed down yet again? Can't they put the "clap & smile" at the market close on hold for a while? It makes it look like Nero is in charge of our financial markets.

Measuring Traffic

I'm experimenting with multiple ways of measuring this blog's traffic (although that could be compared to hooking an EKG up to a dead body.) I've used Google Analytics for some time, as well as FeedBurner's stats. They're both Google services, but they measure different things: Google Analytics measures traffic to the site, while FeedBurner measures subscribers to my RSS feeds. Both are important in figuring out who's using the site and what articles get the most interest.

I've recently added IZEARanks.com and Quantcast. Both services gather usage statistics directly from the sites themselves, rather than from a sampling of Internet users. I've placed a bit of JavaScript into the right-hand column of my site for each service (if you're reading this as a webpage, just scroll down and you'll see them.) IZEARanks focuses exclusively on blogs, while Quantcast covers websites, blogs and other services.

IZEARanks.com currently offers three metrics: RealRank, Page Views and Unique Visitors. According to IZEARanks.com, RealRank is calculated by comparing all blogs in their system 70% on daily unique visitors, 20% by daily active inbound links and 10% by daily page views. Quantcast tracks number of monthly unique visitors and frequency of visits, but it also attempts to identify the demographics of visitors. Quantcast also has an interesting media planner feature that enables advertising media buyers to select sites based on their demographics, reach and other characteristics, and to compare sites on those same elements.

For now IZEARanks.com seems to be better for "bragging rights" for blogs, while Quantcast is setting itself up to be a real challenger to Nielsen//NetRatings and comScore. Bloggers don't have to pay a dime to use any of these services, so it's worth experimenting with them to find out which ones get you the best information and sales tools.

Evernote: My New Cool Tool

For years, when I've found an article on the web that I wanted to keep, I've printed the page. That wastes paper, and I usually end up throwing out the stacks of printouts. Recently, I've adopted Evernote, which allows me to save the articles both on- and offline. It supports Windows and Mac, most browsers, as well as Windows Mobile smartphones and now, iPhones as well. I was a very early beta user and ended up uninstalling the software because of problems it caused with my PC, but the glitches have mostly been worked out and it's now available to everyone in open beta.

If you run the desktop version, you can store documents locally; otherwise, your documents will be kept on their remote server. (You can also sync local and remote documents so that all your devices have access to your complete library.) You can organize documents into multiple notebooks, or repositories. Documents are searchable, tags can be added, links remain live, and you can always get back to the original webpage, even if you only clipped a portion of it.

The basic version of Evernote is free (that's what I'm using), but if you find yourself using it much more heavily than I do, you can upgrade to a paid subscription with more storage space. It's worth a try.

Obligatory iPhone 3G Post

If you were standing in line outside an Apple store this morning to get your iPhone 3G, once you got inside, you couldn't get your phone activated...AARGH! Things got so bad that Apple employees started unbricking phones so that customers could at least leave the store and activate at home using iTunes. Apple pointed its finger at AT&T's activation servers, while AT&T pointed back at Apple's iTunes servers. According to this real-time blog from CNET, it's pretty clear that the problem was with Apple--AT&T's problem wasn't with activation, it was with running out of phones.

On the other hand, if you wanted to upgrade your first-generation iPhone or iPod Touch with 2.0 firmware, according to yet another CNET article, you often ended up with a bricked phone. Blammo!!!

For all of you who had the patience to wait a while to buy an iPhone 3G, or who simply couldn't care less, have a nice day.

Apparently, I'm a Spammer...

Ever since I started this blog a few years ago, I've been asked to complete a CAPTCHA (that distorted graphic you sometimes see that's supposed to differentiate between a computer and a real person) when creating new posts. I didn't think anything of it until the most recent revisions in Blogger's draft.blogger.com site, which consistently hides the Captcha word verification box and buttons and makes it impossible for me to post entries (I've tried both Firefox 3 and IE 7, with no success.) So, I switched back to the old-style Blogger, and then clicked on the little "Why do I have this?" link, which explained that Google's massive computer arrays think that this is a spam blog. (I suppose that whether or not my writing constitutes spam is in the eyes of the beholder, but in this case, the beholder is a server with a dual-core processor.) They think that my blog is spam, but it's perfectly good to sell AdWords on. Hmm...

On July 3rd, I asked Google to review my blog and turn off word verification. They apparently forgot to look at it, because I just had to ask again. I'm getting close to moving the blog to my own website--no great loss of traffic for Google, of course, but a good example of how relying on algorithms rather than human reviews and common sense can sometimes result in unintended consequences.

CNN Can't Count

I just tried to play a video on the CNN website, and got this message:

This CNN.com feature is optimized for Adobe Flash Player version 8 or higher.

You are currently using Flash Player 10

Hmm, 10 is higher than 8, isn't it?