Well, the one on the right was on the left, and the one in the middle was on the right, and the one on the left was in the middle, and the guy in the rear used to work for IBM

Lots of job changes yesterday:

• Tony Fadell left Apple. Fadell was the first member of the iPod engineering team and most recently ran the iPod product line.
• According to CNET, Fadell is to be replaced by Mark Papermaster from IBM, but IBM is enforcing a non-competition clause in its employment contract with Papermaster, and is suing Apple to keep it from getting trade secrets related to IBM's Power chips and server products. What Power chips and servers have to do with portable media players is anyone's guess.
• George Kliavkoff, who's been NBC Universal's Chief Digital Officer for the last two years and oversaw NBC's participation in Hulu, the company's online Olympics activities and the growth of NBC.com and the company's other digital properties, is leaving the company to go do something else.
  

Blu-Ray's BD+ security has been broken

According to Slashdot, BD+, one of the security schemes protecting Blu-Ray content, has been broken and can be removed to make Blu-Ray content freely copyable. Longtime observers of the HD DVD/Blu-Ray battle may recall that BD+ was an additional protection mechanism championed by 20th Century Fox in the event that the Advanced Access Content System (AACS), the baseline security system for both HD DVD and Blu-Ray, was ever cracked. The whole issue probably added a year to the HD DVD/Blu-Ray battle. AACS was broken last year, and now, BD+ is gone.

The consumer electronics companies and movie studios anticipated that both AACS and BD+ would eventually be broken, but they expected it to occur in years, rather than months. Now, the industry has to decide if and when to push out firmware updates for the Blu-Ray players already installed (as well as to slipstream new firmware into production). They also have to agree to the changes that have to be made to AACS and BD+ in order to make them secure again, yet keep them compatible with existing discs that have already been shipped. And, they have to face the fact that they'll probably both be broken again within a year.

My belief is that the industry knew that both methods would be broken, but hoped that they'd stay viable for at least five years, long enough for an orderly transition to downloaded and streamed video. The fact that they've now both been broken, and that the means of both breaks are publicly known and understood, makes them little more than window dressing, no matter how many times the industry updates firmware.

Don't cry for me, innovation

Today's New York Times website has an article on the importance of maintaining investments in innovation, even with an economic downturn. My question is, what innovation? I track a variety of technology-related industries, and I've been hard-pressed to find anything recently that qualifies as a real innovation. One of Google's most exciting recent innovations is the ability to read and index text in images of pages, such as in PDF documents. I worked for Palantir, the company that invented most of that technology, 23 years ago. Or how about Google Chrome, which was all the rage a few weeks ago? It's largely based on open-source Webkit technology and a JavaScript compiler that Google acquired, rather than developed in-house. And, it's a browser. I was in the browser business near the beginning as well, at Netscape, 13 years ago.

The problem isn't encouraging innovation in an economic downturn, it's producing true innovation, period. Economic downturns often help, rather than hurt, innovation. Just as forest fires burn away the underbrush that stifles forest growth, so companies are forced to focus on products and services that really matter. The survivors in each product segment become clear, and the people who work for the losers either take their ideas to the winners or go start their own companies. A new wave of start-ups is born, and some of them do really interesting things, rather than merely cloning what someone else is doing with a minor twist.

I say let the big companies batten down the hatches, and let the start-ups without business models die off. The big guys will do what they've been doing for a long time, which is buying their best ideas from others. So long as there's venture capital and engineers & scientists driven to build the next big thing, innovation will take care of itself.

Goodbye, Moto?

IDC's numbers for the largest mobile phone global suppliers by volume for the third quarter of 2008 are out, and Motorola has slipped to fourth place, down almost 32% from the same quarter last year. Nokia remains #1, Samsung is #2, and Sony Ericsson, which was once all but given up for dead, has passed Motorola to be #3. LG Electronics is #5 and could pass Motorola soon, and Apple is #6 in shipments and #3 in revenues.

At the same time, Motorola announced that it lost $397 million on $7.5 billion in revenue in the third quarter, and has postponed its plans to spin off its mobile phone business until some time after 2009. They're undoubtedly facing the reality that they won't be able to get any reasonable price for their mobile phone division until the current recession lifts. The only question is whether or not they'll have a viable business to spin off by that time.

Brightcove positioning itself as a survivor?

Not too long ago, I wrote about which Web 2.0 startups would survive this recession, and one of the danger areas I pointed out was video services. The fallout is already happening, but one of the companies that's likely to survive is Brightcove. In the last few days, both The New York Times and AOL have shifted their video services to Brightcove. Like most video ventures, Brightcove started with a consumer focus, but it shut down its consumer services fairly quickly to focus on being a supplier of services to larger media companies, including Discovery Communications, 20th Century Fox, Showtime and The Wall Street Journal. It recently launched its third-generation platform. While YouTube dominates consumer video, Brightcove has become the arms dealer of choice for video infrastructure. There are other major players out there that are also doing fine, such as Comcast's thePlatform, but the outlook is bleak for consumer-oriented video sites that hope to switch to a business focus in order to ride out the recession.

Netflix "Watch Anytime" to be available on TiVo

According to the New York Times, Netflix's "Watch Anywhere" service will be available on TiVo's HD-capable PVRs starting in December. To use the service, consumers will have to have a TiVo HD ($299.99) and subscribe both to TiVo's service ($12.99/month, less per month with an annual or lifetime plan) and one of Netflix's unlimited subscription plans, which start at $8.99/month. The cost of the two services together, almost $22/month, is as much or more than basic cable in many parts of the country, so this isn't the solution for cost-sensitive consumers. However, it helps TiVo to improve its value proposition against cable set-top boxes that include PVRs.

It's a shame that TiVo couldn't offer Netflix on its Series 2 SD PVRs as well; there are millions more Series 2 boxes in the fields than HD models. It's unlikely that this announcement will spur sales of many TiVo HDs, but it will certainly add utility for people who already have a TiVo HD or are considering purchasing one for other reasons.

Wal-Mart to discount T-Mobile G1--is the target Apple?

Thomson Reuters reported today that Wal-Mart is going to discount the T-Mobile G1, the first commercially-available Android phone, for $148.88 on a two-year plan, a $30 discount from the $179 price in T-Mobile stores. The top-line news is simple: If you want a G1, go buy it at Wal-Mart, but the real target of this price cut may be Apple. Apple and Wal-Mart are direct competitors in music and video sales, and the iPhone has become Apple's revenue growth engine. If Wal-Mart can impact iPhone sales, it can put Apple in a world of hurt. Also, Apple's and Wal-Mart's stores address very different markets, so the G1 in Wal-Mart could become the iPhone for the rest of us. I'd certainly expect to see the Wal-Mart music store on the G1, and possibly a Wal-Mart shopping application.

Don't underestimate the impact of getting the world's biggest retailer behind Android. Yes, it could be completely opportunistic on Wal-Mart's part, but I think that there's some serious strategic thought behind this move.

Circuit City and Tweeter nearing the deadpool?

A cover article in this week's TWICE (This Week in Consumer Electronics) Magazine examines the impact of possible store closings or even bankruptcy by Circuit City and Tweeter. Together, the two companies represented around $11 billion of consumer electronics sales in the U.S. in 2007. Circuit City is by far the bigger of the two, and is by far the bigger issue. The TWICE article quotes a Wall Street Journal article that speculated that "Circuit City might be forced to close more than 20 percent of its stores and liquidate $350 million in inventory to keep the company afloat through Christmas...".

For consumers, the two companies' problems could be a holiday bonanza, with competitive retailers such as Best Buy and Wal-Mart forced to match Circuit City's and Tweeter's prices in order to sell their own inventories. For competitors, however, a massive restructuring or bankruptcy of either company could turn what's already likely to be a bad Christmas season into a disastrous one. Consumer Electronics manufacturers and distributors are also suffering, since many retailers are cutting back on inventories and even dropping entire product lines. Seasonal employment will also suffer--Circuit City and Tweeter are unlikely to do much seasonal hiring if they're on the brink of bankruptcy.

So, if you're looking for a big-screen TV, iPod or PC, stand by to stock up on bargains that are likely to continue throughout the entire Christmas buying season. If you're in the Consumer Electronics business, stand by to stock up on Maalox.

The Christian Science Monitor to cease daily publication

In what's likely to be the first of a wave of fundamental restructurings in the newspaper industry, The Christian Science Monitor announced today that it will cease publication of its daily newspaper by April of next year. According to Online Media Daily, the newspaper will shift to a weekly print edition, along with a continuously updated version of its website, CSMonitor.com, and a daily electronic subscription product. There's been an ongoing debate within the Christian Science church over whether or not to keep the newspaper alive, and this strategy appears to be a compromise that will keep the Christian Science Monitor in business by shifting daily coverage to the web and dramatically decreasing costs.

Weekly newspapers are about the only bright spot in the newspaper industry, and moving from a daily to a weekly will help the Christian Science Monitor capitalize on this trend. I think that this is likely the model that many newspapers will follow--daily coverage on the web and a weekly print version. Whether that will save enough money to keep hundreds of newspapers from failing is anyone's guess, however, especially with advertisers pulling back across the board, including online.

It seems likely to me that in many markets, the job of providing daily local coverage will fall to the websites of television stations, not newspapers. The local newspapers in those markets will either have to survive as weekly lifestyle-oriented publications, or not survive at all. The strategy pursued by The Christian Science Monitor will work best for the national or quasi-national newspapers, such as The Wall Street Journal, New York Times or Washington Post.

In any case, we're witnessing the start of the final transition of print newspapers to electronic distribution, or to history.

Update: According to Advertising Age, only two of the top 25 U.S. newspapers gained circulation in statistics from the Audit Bureau of Circulation for a year-to-year six month period ending September 30th. Those two are USA Today and The Wall Street Journal, and the gains were 0.01% in both cases. Some of the other changes were The New York Times down 3.6%, the Los Angeles Times down 5.2%, The New York Post down 6.3%, the New York Daily News down 7.2%, the Chicago Tribune down 7.8% and the Houston Chronicle down 11.7%. Overall, daily circulation declined 4.64%, and Sunday circulation dropped 4.85%. In both cases, the overall rate of decline increased from the year-ago rate, which was 2.6% for dailies and 3.5% for Sunday. Not an encouraging trend.

A big win for Silverlight--from the last place you'd expect

Microsoft's Silverlight has played a poor runner-up to Adobe's Flash in terms of player installation and usage ever since it was introduced, even with Silverlight powering NBC's Olympics video last summer. Today, however, Silverlight got another big win, and it's not something that will last for only two weeks. According to Engadget, Netflix just announced that it will finally bring its "Watch Instantly" streaming video service to the Mac, using Silverlight. One reason that Netflix went for Silverlight over Flash is Microsoft's Digital Rights Management platform, called Play Ready. I suspect that another reason is that Microsoft doesn't charge for players or servers, while Adobe still charges quite a bit of money for servers. Having Microsoft software as the preferred streaming platform for Macs is a bit of a shocker, but it apparently makes both business and technical sense for Netflix.

Vibratory conveying experience required

As I've mentioned previously, I'm looking for a new job. Like many jobseekers, I've created profiles on just about every job search site (Monster, CareerBuilder, LinkedIn, HotJobs, etc., etc.,) and those profiles generate daily lists of jobs that might fit what I'm looking for. I found an opening for a Product Marketing Manager that looked great, until I came to the following line: "Vibratory conveying experience required." Statistics show that one out of every three people have some vibratory conveying experience, but I'm not one of them. Then there were the next three lines: "This position is in Walla Walla, Washington. Key Technology will cover all relocation expenses and provide a handsome relocation allowance. Are you willing to relocate to Walla Walla, Washington?" I would be, if they didn't require vibratory conveying experience.

Is Sun finally setting?

According to the New York Times, Southeastern Asset Management, a private equity firm, now owns 21 percent of Sun Microsystems, up from 16.5 percent in August. Southeastern is putting pressure on Sun's management to, as they say, "maximize the value of the company." Sun's been losing revenues and market share for a long time, but it's still profitable. At the time of this writing, the amount of cash that Sun has on hand (nearly $3.5 billion) exceeds its market capitalization ($3.26 billion.) Some of that cash could be used for a stock buyback, which would raise the stock price, or for acquisitions that would have the potential of reigniting Sun's growth. It's clear that Sun, as currently constituted, is a cash cow whose best days are well behind it. Sun's management can't remain in a holding pattern; its investors won't let them.

First X-ray vision, now X-ray tape

According to R&D Magazine, researchers at UCLA have discovered that peeling Scotch Tape generates X-rays. Apparently, quite a lot of X-rays, if you're doing the peeling in a vacuum. The scientists built a device that peels Scotch tape from a roll in a vacuum chamber at the rate of 1.2 inches per second, which generates short bursts of X-rays (about a billionth of a second long each) from where the tape is being peeled. Electrons jump from the roll to the sticky underside of the tape that's been peeled away; when they hit the sticky side they slow down and generate X-rays. UCLA has filed for a patent on this technique, which could be used by paramedics to generate X-rays in the field.

Using your office tape dispenser is safe, according to these researchers, but I wouldn't stand too close if I were you.

Camera Category Confusion Continued

A few posts ago, I wrote about how digital SLRs are taking over from prosumer camcorders, camera phones are replacing point-and-shoot cameras, and under-$200 video cameras are crushing the competition. Now Casio brings us extreme slo-mo video capabilities that cost thousands of dollars just a few months ago, in a--get this--still camera, the EX-FH20. According to Engadget, the EX-FH20 is an awfully good digital still camera that just happens to do slow motion video up to 1000 frames per second, all for $600. It's just one more example of category confusion--still cameras that do video, video cameras that are cheaper than still cameras, and phones that are good replacements for still cameras. It's getting harder for consumers to decide what to buy, but the choices, and the price/performance, are getting better all the time.

Red flags in the distance for Apple?

Apple beat analysts' estimates for revenues and profits in the company's fourth quarter, but there are some red flags on the horizon. Sales of Macs fell below analysts' expectations, only by 100 to 150 thousand units, but enough to question whether the recent MacBook and MacBook Pro refreshes will be enough to get the company's momentum back. Of more concern is good news that could turn out to be bad news. Sales of 3G iPhones smashed analysts' expectations, with 6.89 million sold vs. 5 million forecast by analysts. The potential problem is that Apple records the sales when the phones are shipped to its service provider customers, not when those operators sell them to subscribers. The original iPhone was rolled out slowly to service providers worldwide, but the 3G iPhone went out to mobile phone operators in almost 50 countries at the same time. Operators could have "stuffed" their warehouses with iPhones in anticipation of heavy demand that may not have materialized.

The proof will be in the next quarter, where Apple is already projecting sales considerably lower than analysts' estimates. It may be that Apple's simply managing expectations, or it may be a sign of real problems ahead.

Oh Lord, we're in trouble

Fresh from Gizmodo, here's what we have to look forward to at digital conversion time next February. Multiply by a million.

Blu-Ray can't get a break

First it was the Blu-Ray/HD DVD war, then it was overpriced players and software that didn't support all of Blu-Ray's interactive feature. Now, the economy is tanking. Blu-Ray player Christmas sales probably won't hit even the conservative estimates from a few months back, and the Playstation 3, which has been the primary driver of Blu-Ray adoption, remains locked in third place. Last month, despite still having constrained supplies, the Nintendo Wii sold almost three times as many units as the Playstation 3 in the U.S.

More than ever, I believe that Blu-Ray will be a transitional technology, the last physical consumer medium before VOD and downloads take over. Blu-Ray won't knock out DVDs, even with dropping player and software prices. The party is just about over. If you want a Playstation 3 or need to replace your DVD player and can get a good Blu-Ray deal, then by all means buy one, but otherwise, save your money.

Update, October 20, 2008: According to Punchjump, over the weekend, Best Buy cut the price of its least-expensive store-brand Blu-Ray player to $199.99. Target's cheapest Blu-Ray player is $229.99. Neither of these players are Profile 2.0, which means that they don't have all the interactive and Internet features of more recent models, but I'm coming to believe that those features don't really matter. If you want an Internet connection, buy a Playstation 3. However, Blu-Ray player prices have further to drop, especially given the recession. It's not out of the question to see a Blu-Ray player priced at under $100 before the end of the Christmas season; that's the time to buy.

Nvidia accelerates Adobe CS4 applications

There's been a lot of talk about using the GPUs (Graphics Processing Units) on graphics cards to accelerate applications, not just display, and Nvidia has finally done it. According to InformationWeek, the new Quadro CX not only supports dual displays up to 2560 x 1600 resolution, it can dramatically accelerate Photoshop, Premiere Pro and After Effects CS4 rendering. It can also cut H.264 video encoding time in Premiere Pro by half. Nvidia supplies plug-ins for the applications that execute the processor-intensive code on the GPU rather than the host CPU.

The Quadro CX lists for $1,999, so it's not something that casual users are likely to be interested in, but for serious CS4 users, the productivity gains could pay for the card in a fairly short amount of time. Given that AMD/ATI is now back in the thick of the graphics performance battle, Nvidia's rendering and encoding acceleration could tip the balance in its favor.

Sirius XM: Load gun, shoot self in foot

Word got out over the last few days that Sirius XM has begun layoffs in XM's Washington, D.C. facilities, covering both off-air and on-air staff. Sirius has long had better talk channels than XM, and XM has had the better music channels. The thinking, when the merger between Sirius and XM was first announced, was that Sirius' talk and XM's music channels would be combined, by and large, into the new service. That's not what appears to be happening. It now looks like the plan is to shut down XM's Washington facility and keep most of Sirius's program structure in place.

That's fine if you're already a Sirius subscriber, but not so great if you prefer XM's music. That in itself should cause a significant drop-off in subscribers once the carnage at XM is complete. Add in the dramatic fall-off in new car sales, combined with hesitancy on the part of informed buyers to install any new satellite radio receiver until models that can support the combined services are available, and you've set the stage for significant net subscriber losses.

Everyone knew that the merged companies had to eliminate duplication and decrease operating costs, but it's beginning to look like the merger of Sirius and XM is going to result in Sirius. There were a lot of reasons why people chose to subscribe to XM rather than Sirius; it was much more than which satellite receiver came with their new cars. Many of those subscribers are going to have to look elsewhere for audio entertainment.

Ballmer still has Yahoo! envy

At today's Gartner ITExpo in Orlando, Microsoft's Steve Ballmer said "I still think it [an acquisition of Yahoo! by Microsoft] would make sense economically for their shareholders and ours." He also stated that Microsoft wasn't pursuing a deal, and that he thought that Yahoo's shareholders probably still believed that the company was worth $33 a share. Nevertheless, Yahoo's share price spiked on the non-news, closing up 10.55% and another 3.7% in after-hours trading, to $13.47 as of when I'm writing this entry.

It's clear that Ballmer still wants Yahoo!, and could probably get it for $20 a share. The question is whether he'll actually do something, or as Bill Griffith put it on CNBC today, "keep pining for it like an old high school sweetheart." Steve, please put up or shut up, once and for all. Otherwise, people will keep believing that you've got a crush on Yahoo! that just won't give up.