Help those in need....

If you can, go over to Amazon and donate to the American Red Cross to help those in need from the catastrophe in South Asia.

The link is on the home page, they have raised $5 Million dollars already.

Browser Share On The Move...

Overall Browser MS
Originally uploaded by mwillmsn.

A month and a half ago I blogged that Firefox was up to 28% of my browser market share... well now that figure is all the way up to 45%. While I get a lot of traffic due to firefox related searches, it is hard for me to imagine that FireFox isn't continuing its gain on IE.

Consumer Technology Adoption... and other ramblings

While I love trying out new technologies, I am FAR more likely to try out a technology if the "trial cost" is low. For example, the cost to try out a new HD-DVD player is high both from a monetary and time perspective. At the same time, the cost for me to try out new software is very low... it is often just the time to download / install since most software has free trials and can be downloaded off the net.

In order for me to try new tech products that carry an up-front cost they must have a crystal clear value proposition which is differentiated from what I am currently using. Well, VOIP has finally hit this point for me... my last bill from Qwest was $77, and that is FAR too high for local and long distance telephony over a landline. Vonage at $25 bucks a month will end up saving me a great deal of cash but also provide cool services like being able to listen to voicemail over the net and take my phone number with me when I travel.

I find many companies simply don't focus on the correct factors when it comes to driving consumer adoption. For example, if you are selling hardware technology products you should focus on different factors of technology adoption than software makers. Let me list out some factors of consumer technology adoption:

Relative Advantage - How do consumers perceive your product compared to the competition?

Ease of Testing - How hard is it for consumers to test your product?

East of Evaluation - How difficult is it for consumers to evaluate your product in comparison to the alternatives?

Compatibility - Is your product compatible with other products within the same ecosystem (example to follow)

Complexity - How complex is the product for consumers?

As you can easily imagine almost all of the factors listed above are easier to overcome if you are a software company compared to a hardware company. Imagine you are TiVo... You have to worry about:

Relative advantage - Do consumers really see a NEED for TV "time shifting"

Ease of testing & evaluation - TiVo's were expensive in the past so it made it difficult to test, but once someone used the product evaluation was simple.

compatibility - The funny thing about adoption of products "in the CE stack" is that most consumers expect that new products ARE NOT compatible with their current CE products. A study last year showed that only 52% of consumers felt that a DVR was compatible with their current TV set.

Ok... think about this for a second, if you are a TiVo exec, which factor of consumer technology adoption should you be focusing on... and how should you address it?

Hotmail finally responds

Well it looks like hotmail finaly got around to increasing their storage capacity. I only noticed because my MSN messenger popup told me I had 100+ emails, which I knew was way more than my old 2MB capacity could handle.

Work has gotten really crazy, but I hope that in the next few weeks I can get back to posting on a more frequent basis.

The "Lock in realization"

Disclosure: I am a product manager for RealNetworks... but the below story simply represents facts.

A good friend of mine is working on Wall Street and he shot me an email yesterday with a question I have gotten from numerous people. Here was the question:

"What if I have 4GB worth of songs on a laptop and want to get them to a new laptop... how can I easily do that?"

Easy question to answer, but while answering the question I learned that the 4GB of songs were purchased from iTunes and that this person was scared to move them from PC to PC because he heard about the limitations put on the number of PCs a song can be on.

Now for the "lock in realization"... I told my friend not to worry much about the PC issue, but that songs purchased from iTunes can't be put on other MP3 players and his response was "I didn't realize that". Ok... here is someone who has made a $1,000 investment in music and now is locked-in to the iPod.

If he wants to play these songs on a different device he is screwed. He will have to go through the hassle of burning hundreds of CDs and then ripping them. I of course went on to tell him that songs purchased from Real are portable to the most number of devices, including the iPod....

The reason I am raising this issue is that this is something thousands of consumers across the country are dealing with, and they won't be happy to learn they bought songs that lock them in to a platform.

FireFox ... not a flash in the pan.

A story over at News.com details the continued acceptance of FireFox in the market. Mozilla based browsers (of which FireFox is one) now represent 6 percent of the market up from just 3.5% in June. I expect that the trend will continue given the lack of innovation from Microsoft on this front and the impending media hype around FireFox hitting 1.0 status.

It was reported about a month ago that tech sites like News.com had seen Mozilla based browsers representing around 20% of their traffic. At that time I saw essentially the same trend,... now my Mozilla based browser share is up to 28%.... with MSFT taking the other 72%.

At a little less technical site, MarketingPlayBook.com Microsoft has a 75% share with 7% safari and the remaining 18% mozilla based. Two different blogs, each on the technical marketing side, but not targeted toward the developer community seeing huge non-IE based traffic.

Get out the vote!

Not that anyone reading this doesn't know it, but make sure to vote today! I ran into a bar tender the other night who said he wasn't going to vote b/c he didn't think it would matter, well the last election was decided by a few hundred votes in FL... so get out there and make your voice heard.

Where have I heard this before?

According to News.com, Microsoft has stated that by the end of the year they will launch a desktop search tool to compete with Google's Desktop search (and their own junkie windows search).

Hmmm, I think I have heard of this one before. This past summer Microsoft announced that by the end of the summer they would increase the storage capacity for Hotmail in response to Gmail... well we are now deep into Fall and hotmail still has not upped their capacity.

Microsoft has lost all credibility around hitting ship dates, so I wouldn't hold your breath on this one.

Google Desktop Search - Changing Mass Market Behavior

A lot has been written about Google's desktop search, but many writters focused on the obvious short term implications and not on what Google is trying to accomplish in the LONG RUN and how this application fits into that strategy. So, let me take a stab at articulating what Google is trying to accomplish.

As I have written about in the past (See my posting on how Google could topple Windows)Google wants to create a massive network computer that is the platform... essentially completing the vision of McNealy and Ellison, making the network the computer. Given this long term goal, how does Desktop search fit in? The critical aspect of Google's desktop search is that the only way to access the search app is through the Google WEB interface. The company could have simply created a desktop app to present the results, but they made the decision to put the desktop search results within the browser. They did this because it helps to train computer users that if they want to find personal content just go to Google.

It is very hard to change the behavior of consumers. In talking with TiVo execs they told me that they were surprised how hard it was to get people to change their TV viewing habits. They called this the inertia in the market... that consumers would just go on doing what they were doing, even if there was a better approach. By creating a desktop search application that works through the Google interface, the company is investing early (before their huge network computer is ready for the masses) to change market inertia.

Just think about it, if you are always connected to the net do you care where your files are stored (assuming privacy/security is addressed)? Heck, in using the desktop search application I am already ready to unload some data onto the Google network just to make it accessible in other places.

Is MSN asleep at the hotmail wheel?

It has been over 180 days since Google announced Gmail. That means any company in the web based email business has had 180 days to react. It didn't take long for most... Yahoo! responded quickly and raised the capacity of Yahoo! mail accounts from 4 MB to 100 MB. Microsoft also announced that by the end of the summer they would raise the hotmail storage limit... well it is now October, clearly in the middle of Fall, and my hotmail storage is still a lowly 2 MB. I hate my hotmail account, with all the junk mail I get to that account it is constantly filling up, and I have to check it all the time just to make sure something that is important doesn't bounce.

So what are the boys in Redmond up to? Are they asleep at the hotmail wheel? I will tell you this much, I am ready to shut down my hotmail account because it is just too much of a pain to deal with compared to Yahoo! and Gmail. Why can't a company that dumps Billions into R&D with little to show for it pour some resources into being competitive in the web-based email market.

How to get your Gmail Atom Feed

So I noticed that icon for my Gmail ATOM feed went missing yesterday, but yet the feed was still active. I assume this means that all of you who never saw the feed can probably get yours anyway by adding the following feed to your news reader.

https://gmail.google.com/gmail/feed/atom

I am currently using FireFox's "Live Bookmark" functionality for this. Let me know in the comments if this works for you in other aplications.

New Gmail functionality signals a Google Browser

The Gmail team over at Google has been busy lately. Today they have added two pieces of functionality: (There might be more additions but I haven't seen them yet)

1) Improved contact management
2) Atom feed for your email

The Atom feed is what has me VERY intrigued. While many will look at this little feed as just a feature for ubber geeks, I view it as a major signal of Google products to come. Follow my logic for a second:

Gmail is a great application but it has a major drawback... you can only access it if you are online. This means that you can't make Google your primary mail application because if you find yourself without an internet connection, you can't email... Well inserting an Atom feed is a first step in fixing the connection problem. Using this feed Gmail users can now pull down their Gmail to a local client application. The feed today contains only summary information, (like subject, who the message is from, etc.) but there is no reason this can't be expanded to contain the full text of a message.

So, now that we know you can pull down part of your Gmail messages into a client application should we assume that Google will stop there and let random applications handle the user experience or do we believe that Google will want to have an application that controls that user experience? They will want to control the user experience, that is for certain.

So now I believe that Google will want a client application to help manage email that can be brought to that client in the form of an Atom Feed. Well, lets see... recently there was a high profile application that launched with the ability to pull such a feed... it is called FireFox.

Therefore I believe it is just a matter of days or weeks before Google announces their own browser based on FireFox that has built in support for Gmail. I am sure that any Google Browser will have additional functionality than just Gmail integration, but this is a big first step.

Cell phone saturation

Anyone in the tech industry thinks a lot about consumer adoption. Growth is often powered by consumers accepting new technology to make their lives easier. When there aren't any new customers to aquire, a market is considered "saturated", which causes a problem since firms then simply fight to steal customers from other firms.

This weekend I saw something that shocked me, and led me to believe that the cell phone market has reached a critical saturation point. While my wife and I were walking to dinner this past weekend we walked by a homeless person in downtown Seattle talking on his cell phone. If this isn't market saturation, I am not sure what is.

A9 - Innovating in the right way

When it became obvious that Google was going to hit is rich hundreds of search companies formed to try and become "the next Google". Many lumped A9, the search subsidiary from Amazon into that group, but in reality A9 approached the market in a MUCH smarter way than others.

Rather than focusing on creating the best algorithms for searching the web, A9 left that task to Google and decided to innovate on the user experience, and I must say I am very impressed. The site is simple and fast like Google, but much more powerful at the same time. I can conduct my simple searches and get Google quality results, but for searches that require it I can easily layer on top of the search results page additional information like images, reference info, etc. As a side benefit of having signed in with an A9 account (which is just my Amazon account) I get 1.57% off all my Amazon purchases.

Bottom line: Amazon approached their A9 venture in a very smart way, let Google handle the plumbing, and let A9 innovate on the experience.

Another reason blogs shouldn't be ignored

I have often heard blogs characterized as "online diaries" for geeks. While this might have been the case a few years ago, blogs today have become a powerful force in journalism and business. There have been some recent examples, but here is one I experienced first hand.

Late last Friday Engadget (the best gadget blog out there) reported that Yahoo! was launching a line of branded CE products. Today Engadget confirmed this story as the real deal, and CBS Marketwatch is also covering the news.

As more and more companies understand the power of blogging, expect more news to be "released" this way... I say "released" because I am sure that Yahoo! leaked the news. No matter how the news was obtained this event just goes to show every company should be scanning blogs for information.

Time to kill some competition

I normally don't comment on non-tech industries, but this one has been bugging me for a while.

I am a big believer that competition is great for consumers. Free markets promote competition and when competition gets too competitive, markets have a solution, companies get put out of business. Well it is time for the government to stop interfering with the free markets within the airline industry. For the second time in two years US Airways has declared bankruptcy.

Since coming out of regulation, the airline industry has proven inept at maintaining a healthy market dynamic. Airline after airline has entered into bankruptcy, and far to many have been allowed to clear their balance sheet and renter the market. US Airways should simply be put out of business and not allowed to emerge from bankruptcy. If they can clean the debt off their balance sheet and come out of bankruptcy they will simply be capable of entering into more price wars and force someone else into bankruptcy... and the cycle will continue.

TiVo & Netflix: What took so long?

So I have publicly stated when I screwed up, (see my missed calls about Microsoft's dividends), but this time I finally got one right... really right.

Netflix & TiVo are about to enter a partnership... read about it here from Newsweek

Back in April I wrote a piece called "Netflix & TiVo - a partnership waiting to happen". I outlined how the two companies clearly should partner up since they have complimentary assets (TiVo has boxes in the home, Netflix needs to deliver content to a box in the home) and have close executive ties.

This all is in the context of the posting I wrote about TiVo's marketing strategy, which I characterized as "Becoming a platform". The real question that everyone should be asking themselves is does this partnership really help TiVo's real problem... which is that approx. 75% of all their subscribers are from DirectTV which doesn't allow them to offer the digital media option which is the key component of becoming a platform to offer services like Netflix on demand.

Given these circumstances, I have been calling for TiVo to literally give away their product and take a loss in order to get a real user base to become a platform.

So TiVo, if you are listening, start giving away those simple 40 hour boxes... get a user base, become a platform, then launch services like Netflix. That should be your strategy... don't put the cart before the horse.

Cuban has it wrong on Outsourcing

Mark Cuban, the owner of the Dallas Mavericks and one of the founders of Broadcast.com which was sold to Yahoo! for Billions, maintains a GREAT blog over at Blog Maverick. Mark writes on everything from sports to the future of digital entertainment. This week he wrote a piece that centered around outsourcing, expensing stock options, prescription drugs, and social security. While this list of topics sounds more appropriate for a campaign stop than for commentary by a basketball owner, Mark is really an incredibly bright guy whose opinion on any topic is often thought provoking and important.

Having said that, Mark is flat out wrong in his comments about outsourcing. The premise of Mark's argument, which can be found here, is that he doesn't have a problem with outsourcing in general, he has a problem with how the money saved by companies is distributed. He says that the majority of cost savings associated with outsourcing are then kicked back to executives in forms of bonuses, stock options, etc. His solution is that insiders should not be able to sell stock or get corporate bonuses in any year they outsource jobs.

Let me break down his argument component by component. First, yes, executives that outsource are often paid more in bonuses and rewarded with stock options. This compensation is based on the fact that the companies which outsource are more likely hitting their corporate goals which execs are measured on, and therefore they get rewarded appropriately. The notion that there is a conspiracy to send jobs overseas to line execs pockets is crazy... execs are motivated by hitting the goals they are measured on and therefore will do what it takes to raise revenue and lower costs. If they do this they should rewarded as long as it is in the best interest of the company over the long term.

His solution to this "problem" is that execs shouldn't sell stock or get bonuses in years they outsource. This is a terrible idea. The solution Mark proposes will directly create a conflict between corporate goals and personal goals for execs. An exec might be able to save $1 Million a year by outsourcing some component of work, but he will think twice if his child is headed to college and needs to cash out some stock to pay the bills. Now the exec needs to decide between what is right for the company and what is right for him personally. We need to do more to align the incentives of execs and the firms they run, not create obvious misalignments.

MSN Launches Search

Microsoft has quietly launched their new search engine. The company description can be found here: MSN Search Description

This is a smart move to launch late on the Friday of Labor day weekend b/c it allows the company to fine tune the application out of the media spot light and they can do a big push when people get back to work on Tuesday.

Free Gmail Accounts

I have 5 free accounts to give away... so just click on one of the five links below and sign up. I will modify this posting when all the accounts are taken.

All 5 accounts have been taken... I will be giving more away as they become available.

Research made easy

I spent half a day digging around the Net for some market data information the other day, and I came across the Google Answers site. I had forgotten about Google Answers... but I won't make this mistake again. For all the grief I give Google around their IPO and Gmail, they deserve major credit for Google Answers. The site allows you to ask a question and post a dollar amount you are willing to pay for the answer. But the best thing about the site is that the answers are there for EVERYONE to read. This site really is cool and you can learn a lot browsing through it. Next time you are in a bind looking for some information make sure to check the site out.

Gmail thinks Adsense is Spam

I recently added the Adsense program to this blog. I really wanted to get a better understanding of how content owners generate revenue through ads and how difficult it is for them to manage the ad process.

So far the ads are doing fine... and I will write more about this entire experience later, but today something interesting happened. I was in my Gmail account and Gmail automatically filtered an email from the Adsens team to my spam... thought that was interesting.

Radio Silence

So I have been really quiet over the past few days. It is because I have been really busy at work these days and because I am still trying to find the right balance of what I should comment on and what I shouldn't comment on.

As you all know Microsoft launched 3 major products this week... their music store, the new media player 10, and the portable media center devices. I would love to hear your thoughts on all three of these products via email or the comments below.

Google Browser

There has been a lot of talk about a "Google Browswer" which I am in favor of. But before launching their own branded browswer (most likely based on Mozilla's FireFox) I would like to see Google get their site working with FireFox. Today I couldn't finish my Adsense forms with Firefox, it consistently had problems but worked with IE. Additionally the blogger tools don't work well with Mozilla... there are numerous bugs in the spell checking tool inside FireFox.

So before you launch your browser, which I hop you do, PLEASE get your in house sites to work first!

My apologies

I am sorry if anyone had trouble with the site today... I modified my site to add the Google AdSense program that you see to the left, and didn't properly test it. I will report what I find from these ads.

Mark

HP's iPod - A distribution deal by any other name

There has been a huge amount of news around the launch of HP's iPod. While this product launch was not a surprise (HP announced this a long time ago) what was a surprise to me is that the product is essentially nothing more than Apple's design with no meaningful HP branding.

With their launch of numerous CE devices (Plasma TVs, media adapters, etc.) what does HP's inability to negotiate any real branding on the "hPod" mean? It means that Apple has a lot of market power right now in the portable device arena, which is obvious. What isn't obvious is that it also signifies HP's willingness to be almost nothing more than a distributor if they don't think they can win in a market.

Lets be clear here, this is NOTHING more than a distribution deal. HP clearly doesn't have control over the products design or features. I am also certain that HP doesn't have too much control over pricing, branding, or any other marketing function. No, HP has control over a single aspect of the hPod... and that is distribution.

Should I continue?

When I started blogging I was a business school student just letting my opinion on certain topics be known. I really enjoyed being able to write on any topic at any time. I could call out Sony for various mistakes in the market without worrying about anything... I could praise Google one week for creating Gmail then bash them later for what I would consider poor execution of a good strategy. I simply didn't have to worry about anything since even though I was interviewing with many of the companies I would bash I felt comfortable standing behind my point of view in any interview.

Now that I have started work at RealNetworks I have found that I can't really talk about the topics I love... consumer electronics, digital media, etc. I am simply concerned that my views will either be viewed as RealNetworks point of view or that I will give away how I view a certain industry. For example, I have strong views about certain things in digital media and how it will interact with CE devices, but I can't express those thoughts because they are the same concepts I will fight for here at Real.

So I have been thinking about a few options... One option would be to just stop writing on the topics that I have conflicts with. The problem with this option is that these are the very topics I am most passionate about. A second option would be to kill this blog and then start up a new blog where I would write under a different name. A third option is to just stop writing all together.

If you have some advice please email me or post in the comments for this posting.

Thanks!

Browser campaign slams IE

There is a great campaign being run over at Browse Happy that is pushing people to try alternatives to Internet Explorer. I learned of this site through a News.com article that is linked below... but one of the quotes stood out so much I had to call it out here:

"'We believe that customers will choose the browser that best meets their needs,' a Microsoft representative said. 'We believe that most will continue to choose IE when they evaluate all of the factors: end-user functionality, site and application compatibility, developer extensibility, enterprise manageability, and security backed by the processes and engineering discipline employed by Microsoft.'"

This is a joke right? Since Netscape died how many people really have taken the time "evaluate" alternative browsers? How many people even know there are alternative browsers out there? What percentage of those people are probably scared to try something new in fear that it won't work the way they need it?

This campaign will help to remedy some of those issues. But one of the issues I would like to see fixed is that I have to have internet explorer installed if I want to go to the Windows Update site. The site doesn't support FireFox... How is this not a blatant abuse of their Windows monopoly? Microsoft is forcing me to keep IE on my computer if I want to browse over to the Windows Update site. Shame on them.

Microsoft in the TV value chain

Microsoft has been trying to get in the TV value chain for some time now. Think about all their TV plays... WebTV, UltimateTV, investments in Comcast and other MSOs, codec development for next generation DVD players, etc. Well it looks like they have made some inroads with their IPTV initiative. Now you can look forward to that blue screen of death on your TV as well!

Instant Messenging still growing

The diffusion of technology through the mass market is always an interesting phenomenon to watch. IM was "cool" to me in the mid 1990's. My generation has been using IM for close to a decade, but as we all know it takes time for the masses to pick up new technologies, and this past year has apparently been a boom time for instant messaging.

Some of the technologies I expect to see boom in the next 2 - 5 years are Syndication (RSS / ATOM) and BitTorrent (or another "smart" P2P technology). Each of these technologies is pretty mainstream to those always looking for what's next, but to the masses they are still way to hard to use to really have a great impact.

VOIP - feature, product, or company?

Eight months ago I was at a talk given by Marc Andreesen and he was asked about all these anti-spam companies that were getting started. Marc's reply was that people often confuse some basics of business... a stable company should be made up of multiple products and these products are made up of multiple features... all adding value to a customer. He claimed that spam filtering wasn't something to base a company on, since it wasn't even a product, it was a feature that belonged in another product.

With the announcement thatLinksys and Vonage have teamed up to integrate the linksys routers more closely with the vonage service I have started to wonder if telephony services have moved from being a "product" to being a "feature". In the coming year we will see VOIP functionality being deployed in various products including home routers and set-top boxes... with numerous companies pushing to get their VOIP offerings integrated into these access points I wonder when a company like Cisco (which owns linksys) doesn't jump into the fray and just build this "feature" into their product set (assuming no IP issues).

Company, product, feature... there was not doubt in the past that home telephony was a single product that minted money for huge companies, but I really question if in the near future home telephony isn't just a feature that needs to be offered within the context of other products just to be competitive.

The most powerful company in CE

A while back I wrote a piece about Walt Mossberg calling him the most powerful man in Consumer Electronics. Well today it is time to talk about the most powerful company in CE... no I am not talking about Sony (which would have been the easy winner years ago), I am talking about Best Buy.

With the infusion of Korean & Chinese CE manufacturers the CE market has gone from a brand game to a distribution game. While names like Sony still command a price premium, that premium is slowly eroding... becoming less important... what every company needs to survive these days is distribution. The key to distribution in CE is Best Buy. Best Buy is the countries largest CE retailer and their lead is growing... they are doing so well they are pulling away from Wal-Mart... a great feat.

Every company from Gateway which is getting back to focusing on computers to AT&T, which is trying to transform itself to a VOIP company is now selling through Best Buy.

The guys at Best Buy know they are kings today, but they aren't resting on their butts sipping champaign... they know that Wal-Mart is a big threat... but they also know that Cable companies represent a threat. With the purchase of Geek Squad last year Best Buy signaled their intention to really fully own any given customer... Geek Squad will come and consult you on what you should buy and install if for you... Don't hold your breath for Wal-Mart to make the same move. This move was in defense of the Cable companies and RBOCs which will want to do the same thing.

Convergence is creating odd competition, and sometimes the key to success is simply recognizing that your competitors today won't be competitors tomorrow.... I think Best Buy understands this, and therefore I think they have a good chance of retaining their power in the CE industry.

Response to Harmony...

After posting about the importance of choice brought forth through RealNetworks new Harmony technology, Aaron Raphel, a friend of mine from MIT sent me the following points which he wanted to put in the comments. I think he raises good points so I wanted to address them here. Each section below is his comment followed by my response:

Aaron
1) I agree that choice is good for consumers, but what's wrong with consumers *choosing* Apple's model of iPod/iTunes integration? You assume that someday, I will want to move my music from my iPod onto a different MP3 player, and I question that assumption. I don't feel locked in at all--I had full choice of MP3 players, music stores, streaming services, etc. and I chose Apple. Just because other companies have less attractive offerings doesn't mean that Apple is doing anything wrong.

My response:
There is NOTHING wrong with consumers *choosing* Apple's model of integration... but I wonder how many iPod owners know that if they want to choose another MP3 player later on they will have to go through a difficult process to get their songs onto those devices. My guess is that consumers don't know they are locked in. This is all about choice, and we want to make sure consumers make an EDUCATED choice... and if they choose Apple's integrated closed approach, great... if they choose Real's interoperable open approach great... but atleast they have a choice.


Aaron:
2) If the courts decide that Harmony violates a law, then customers who purchased music *thinking* they could play it anywhere will lose. I'm not saying that Real did anything wrong, but there are numerous scenarios where the Real songs I purchase today won't play on my iPod in three months. Harmony may be legal, but it's also legal for Apple to change their firmware to prevent Real music from playing. Ethical issues aside, consumers may still lose out.

My repsonse:
For songs purchased from the Real Music Store to not work on an iPod will require that Apple either 1) Sues RealNetworks or 2) Purposefully breaks our Harmony implementation. While I am not a lawyer, I have talked to lawyers who believe that our implemention is perfectly legal and in the spirit of interoperability. If Apple decides to do a firmware update we will work hard to implement a fix that ensures your songs get on your player. Either action by Apple will be without question anti-consumer. Think about it, if they do this they are trying to eliminate consumer's ability to choose, and I doubt they will do it. My best guess is that the likelyhood of a consumer switching MP3 players in the future to a player where their music bought through iTunes is no longer supported is much greater than the odds of either one of the above happening.


Aaron
3) Can someone please explain to me how the music that Real offers is different
from the music Apple offers? I could see the argument about consumer benefit
making sense if Real offered a completely different music library, but as far
as I can tell, they don't.

My Response:
For the most part each music service has the same library of songs... this is because the major labels aren't playing favorites and giving similar deals across services. While the content offered is similar, the Real Music Store has all of their music encoded at 192Kbs while the iTunes Music Store is encoded at only 128Kbs.. while you won't notice the difference on crappy headphones, you would hear a difference on a home stereo.

Aaron:
4) As a shareholder in Real, I wouldn't be so excited about a loss leading
strategy that's designed to grow market share. That seems like a risky
strategy, because I see no reason for consumers to stay loyal (see point 3
above). Yes, I can get my music cheaper, but if it stops working (point 2),
then I lose. Unlike Microsoft's dominance of the OS market, I think Apple's
large market share is because of a superior product and service, not any
strongarm tactics. If that's the case, then I can't see this music sale
helping Real.

My Response:
Any marketing promotion/campaign is designed to have a positive ROI... we believe that this promotion will in the long run have a high payoff. Hopefully we will gain more users of our music services while at the same time educating users around the advantages of choice and better quality music.

Now the choice is yours!

Choice is good... No wait, choice is GREAT! Last week I blogged about how when I set up my broadband connection in the home I got a better deal because there was competition (read choice) in the market.

Today RealNetworks (whom I work for... but all postings represent my thoughts and not the companies) has created a choice for consumers. With our new RealPlayer 10.5 with Harmony consumers can buy songs from the Real Music Store and put that song on roughly 90% of all secured digital playback devices. Why does this matter you may be asking... here is why. Imagine you have an iPod today and you have bought 500 songs from iTunes. In a couple years if you want to switch over to a different "MP3 Player" you won't be able to simply load your songs onto the device and go. Yes you paid for the songs, but since Apple has decided that they want to make money through their iPod product, they want to lock you into their products. To get your songs onto your new devices you will have to spend hours burning CDs and then re-ripping the songs. So while you "own" your songs from iTunes, Apple owns you... how is that right?

Rather than worry about lock in you can buy songs from the Real Store and not worry about lock-in, because with RealPlayer 10.5 you can take those songs and load them on an iPod today, a Rio device tomorrow, a Samsung Yepp the next day and so on...

While I am obviously biased because of my affiliation with Real, anyone who reads this blog knows I favor free markets and competition. This is a big step in the right direction for consumers.

Now for the objective news... even if you think I am full of it and just pumping my company, you can check out the service for CHEAP!!! Only $0.49 for a track and $4.99 for most albums... that is around a 67% cheaper than most CDs at the store... how is that for consumers winning!

Google... promising revolutions, producing evolution

Why is it that I have the exact same feeling about everything Google announces... and that feeling is this:

WOW... what a great concept, that is awesome! Why hasn't someone else done that yet!

This feeling of excitement is then always followed up by disappointment. The company is so visionary at times, and then so poor at executing on that vision. I have rambled about the poor execution of Gmail, but tonight it is time to ramble about the poor execution of the IPO.

The Google IPO process was supposed to represent a major break from the standard IPO process. In the past shares were distributed to the underwriting firms to dole out as they saw fit. The underwriters then gave shares to their best clients, or even execs whose companies they want to do business with. The shares are then priced at a less than fair value price to ensure everyone in on the ground floor makes out. Essentially it was a scheme that promised only that the rich would get richer. Not only were the underwriting firms lining the pockets of their best clients (or people they wanted to have as clients), they typically took somewhere around 10% of the total IPO price... so they got 10% of the cash, lined the pockets of their friends, just for acting like a clearing house.

Along comes Google, and properly they approach a situation where they have market power and decide they don't like the current process... They decide that their IPO should be available to everyone. They also think that 10% is far too much to give up to just a group of suits who do no work except put together some slick powerpoint and excel (Sorry to all my investment banking friends out there). And lastly, they also decide that they will determine the price that the IPO will go out....

The above is the GREAT CONCEPT... AWESOME! part for any Google concept.

Now for the poor execution. The first mistake is that the company waited until August (when most of Wall Street is on vacation) to IPO. Secondly, the per price share of $108 - 135 will appear far from attainable to the average investor that Google was trying to open the market to. Here is my biggest pet peeve, while the company states that the IPO auction is available to anyone, the firms running the process of accepting bids have NOT made this auction available to the general public. Check out this quote from my fidelity website:

"Participation in the Google IPO through Fidelity is reserved for brokerage customers with a minimum of $100,000 in certain assets held at Fidelity, members of Premium Services, or customers who have placed 36 or more stock, fixed income, or option trades in a rolling 12-month period."

Can you tell me how many "average investors" can meet these requirements? How many school teachers have $100k sitting in their brokerage accounts? How many construction works have traded more than 36 times this year?

Like everything about Google, they offer a glimpse of what a revolution could be, but ultimately they fall short and produce evolutionary results.

Google & Playboy - The Irony

Looks like tomorrow (or today depending on where you are in the world right now) is the day bidders will be able to place their bid for shares in Google. This despite breaking news today that Google may have violated their "quiet period".

I find it ironic that many view the the stereotypical geek as a male who relies on Playboy for happiness... and now it appears that playboy is giving geeks across the world a headache with their timely publishing of an interview with the founders.

The execution of this IPO process reminds me a lot of the execution Google has shown in launching Gmail... TERRIBLE!

Playing the Cable company off the Telco

As some of you know I recently moved to Seattle, which meant that I had to set up cable service and phone service (no DirectTV option for me in my high-rise). This gave me a perfect opportunity to test exactly what is happening in the broadband internet market. If you have read this blog before you know that I believe consumers are the big winners in the DSL vs. Cable Modem race, and when fixed wireless broadband comes around, consumers will win even more... so today was market test time.

I called Qwest, my local phone company here in Seattle, and they offered me DSL for $26 bucks a month if I took phone service (I need the phone service for my old ReplayTV or I would be all about Vonage). So I took the phone service and said I would call back around the DSL. Next call was to Comcast, where they told me that my cable modem would run me $45 a month if I took digital cable. So I told them thanks but no thanks, DSL would only run me $26 a month... it was like I said the magic word "DSL", because the rep on the phone quickly offered me the cable modem for $29 a month... which I then took since it will be about 3x faster than the DSL line.

This is why the federal gov't needs to do more to stimulate competition, in this case I saved $16 a month... that is $16 bucks that could have gone to a local monopoly, but instead will probably end up going to another local business.

Get ahead of the curve... "Seeing What's Next"

Clayton Christensen's latest book, "Seeing What's Next" is finally out. Innovator's Dilemma took the concept of disruptive technologies from academia to the main stream and helped to change the way all executives look at techology. This book reportedly will try and layout a framework on how to predict what technolgies will become the next big thing. I just ordered mine, and would recommend anyone in the tech industry to check it out.

p2p could save Microsoft lots of money

With service pack two (SP2) for Windows XP being around 80 MB for most, you can imagine the bandwidth costs for Microsoft in distributing the code world wide. Well this is the perfect medium for p2p networks to show their legal use by helping Microsoft save costs by distributing the software over their networks. News.com has a good story on the topic... check it out here.

Example of how consumers win with competition

I am always shouting about how great competition is. I love competition because it spurs innovation, drives down prices and results in better, cheaper products. Here is a great example from the DVD market. DVD manufacturers are now making only $1 per unit in China. These low margins show that no single firm has pricing power and that prices in the marketplace are being driven down close to marginal cost.

So what does this mean to you, it means that you pay less for a DVD player and therefore you have more to spend on other things, like DVDs.

Roxio ditches software to focus on music.

In news that affects my life, Roxio has announced they are selling their CD burning software unit to focus on the digital music market. The company's marketing strategy is clearly to penetrate the market by getting college students to use the service that is "free" to them in the sense that the university is paying for it. Time will tell if this model will work... sounds similar to the Apple model in the PC industry, and we all know how that turned out.

TiVo's Marketing Strategy - Becoming a platform

For months I have been calling for TiVo to lower prices and broaden their distribution if they want to survive. Today the company announced that they have lowered prices and extended distribution. The company will now offer a rebate of $100 on each unit sold, making the 40 hour series 2 unit only $99. The company will also start selling Humax branded recorders at Sam's Club... an important step in getting broader distribution.

As I have stated before, the company has a finite window to build a user base from which they will launch future services. While not exactly possible due to channel conflict, but optimally, I believe the company should be giving away their 40 hour unit for free to really get a user base out. Soon I expect for them to announce a video on demand alliance with Netflix, who needs a way to reach TVs in the home.

Good Recap of Google IPO Issues

BusinessWeek has a good recap of all the recent issues facing the Google IPO.

Technology Vs. Hollywood Series Cont.

I have written about these battles so many times I have lost count. Dan Gilmor (whose blog you should read everyday) has done some great work in reporting that Disney has asked the FCC to control all digital music This would be a MAJOR loss for consumers. The FCC should NOT be interfering with the design of hardware... they made this mistake once with the digital broadcast flag and I am scared they will do it again with music.

Windows SP2 finally out...

The associated press is reporting that Microsoft has finally released Service Pack 2 for Windows XP. This patch for Windows has been eagerly anticipated since it is expect to fix numerous security issues. SP2 was expected months ago and it has been reported that Microsoft had to pull resources off other products like Longhorn to get this update out. For those of you on dial-up you will probably want to order the update on a CD since the download could be around 80 MBs!

Sony makes the right move for a change

I have a small fascination with standards battles. The winner of these battles often can walk away with millions, if not billions, from having won, while the loser often has to put their head between their legs and adopt the very standard they fought against. What also makes these battles so interesting is that they are played out over relatively long period of time, with each company responding to another companies move... it is like watching a chess match.

Today Sony launched their version of a "check mate" move, by announcing that their Playstation 3 console will utilize Blu-ray disc technology. The implications are huge... since millions of games will be sold on the Blu-ray discs, these disks will ride down the cost curve potentially quicker than the competition.... giving this technology a clear cut cost advantage.

This of course is all until Microsoft announces that the next version of X-Box will only work with high-definition DVDs... I have said it before, and I will say it again, this is the BetaMax vs. VHS battle of my generation.

From wall street darling to potential flop???

Things aren't looking perfect for Google anymore. Back in April and May nobody could say a bad word about them... now today everyone is questioning the valuation the company has put on itself, the ability of the company to launch products, and now apparently the company has screwed up issuing shares and options to employees.

Looks like "timing is everything" for this IPO. Three months ago, Google could do no wrong, today they can do no right.

Good News or Bad News for iPod buyers?

Toshiba has announced that they will delay shipping their 30 and 60GB 1.8-inch hard drives. One can only hope that they have put off these larger drives due to their inability to meet demand for the drives they currently have on the market. Or maybe this is actually bad because now you shouldn't expect that huge iPod anytime soon.... maybe the glass is half full.

Now get OneNote for $100

While I raz on Microsoft often in this blog, I have openly praised their new OneNote application. I think it is the best thing to come out of Redmond in years. Well now you can buy the application for $100, about half of its previous price.

I swear this application is probably worth the $100. I don't have it on my work laptop yet, but I will probably buy it because it will save me TONS of time. Give it a shot, it could just save you hours a week.

P.S. - After gushing over a Microsoft product I feel the need to remind all of you to go out and try FireFox, it is MUCH better than Internet Explorer... ok, now I feel normal again.

Hollywood vs. Technology... Part V (I think)

I have written a few times about our friends in hollywood who are against consumers utilizing technology to consumer their content in new ways. Well today it looks like the tech industry has scored a victory as TiVo has won an FCC ruling allowing them to enable "sharing" of content across TiVo set-top boxes. TiVo has been a very good citizen when it comes to trying to play well with content owners, and I am surprised that the MPAA would try and shoot them down in the midst of all the trouble they are already facing. Hollywood should learn to work with companies that respect their rights and not try and shut them down at every turn. Look what happened when they refused to work with Napster, they killed the company only to be challeneged by a more difficult foe in Kazzaa.

$500 bucks per bug

Looks like the Mozilla Foundation is going to pay $500 to people who find serious bugs in their applications. While this type of bug killing approach might work for an open source community, I wonder what would happen if Microsoft would have done the same thing years ago... oh, wait, I know what would have happened, the company would have gone broke and made millionaires out of security experts.

That one was just too easy!

It is good to own the pipes...today that is

It seems like I can't go a day without reading about the cable companies impending plunge into the world of telephony. A recent study even states that while Vonage and others have the early lead, the cable companies will win in the end. I honestly wonder how long before fixed wireless access starts to poke holes in the armor of the cable companies. I wonder if 10 years from now we will look at cable companies the same way we look at dial up internet service providers... cool in their time, but so out of date.

No doubt companies like Intel, AT&T, and Verizion Wireless are working hard to make this day a reality. And around the same these wireless alternatives come to market, companies like Verizon and Bell South will be launching their "Fiber to the home" offering... which will offer REALLY FAST data transfer rates... think of downloading in a movie in seconds, not minutes or hours.

Who knows which way the market will tip, but one thing is for sure, billions of dollars are being bet on each side every year.

The Doom 3 effect

Remember that posting I made about Back-to-School and Doom 3 driving sales for PCs during the month of August? Well News.com just wrote a similar piece talking about the gaming industries role in driving new PC upgrades.

I can foresee a time 3 - 5 years from now where the ONLY thing driving new PC upgrade cycles will be gaming. While I am not an expert on the PC upgrade cycle, I would be willing to bet that most PC upgrades today are based on the need to manage and manipulate large media files like pictures from digital cameras, home movies, etc. People have long since stopped upgrading simply to get the next version of Windows or the latest processor. Heck, most people simply browse the web and do email, they don't need 3 GHz for that. Today they need monster hard drives, like 80 - 100 GB for their digital media.... just wait until you can have a terabyte of data, and the need to upgrade will simply be for high end applications like gaming... that is unless Intel and Microsoft have a killer application up their sleeves we don't know about.

Safe in Seattle

The move is just about done. We arrived in Seattle today and I will get back to work tomorrow. I have absolutly love my job so far and can't wait to talk about it more online someday. As you could probably guess, I am a big proponent of blogging and hope to utilize this medium to communicate with customers.

The move is on...

Tommorrow morning the movers show up, and then on Tuesday morning the family and I are off to Seattle for good. Boston/Cambridge was fun, but we are excited about Seattle. Due to all the moving and flying I am not sure I will post much Monday / Tuesday, but I will be back in full force later in the week.

Best wishes to Steve Jobs

According to the Wall Street Journal Steve Jobs had surgery to remove a cancerous tumor from his pancreas. Steve will take the month of August off to recover.

I wish Steve a speedy recovery and best wishes. I pray he and his family come out of this stronger than ever.

Google IPO site online

The Google IPO site is now up and running. While I have no intention of buying shares through the auction, I went through the process of getting a bidder ID number... and it was very easy. Maybe I should put it up on eBay... just kidding!

Is Microsoft the GE of the tech world?

General Electric is a large diversified conglomerate that focuses on various industrial markets. For a while now I have felt like Microsoft has become the GE of the technology industry. Microsoft is very much like a large diversified conglomerate, but it focuses on technology. While it isn't as diversified as IBM, Microsoft seems to have its hand in every major market in both the consumer and business space. With Microsoft's move to distribute cash through dividends, it is becoming harder not to think of them like GE.

Samsung is the next Sony

Often when you work for a company the natural instinct is to believe that your company is great and will ultimately succeed in the marketplace. I felt that way while I was at Samsung last year and wondered if I was incapable of being objective. Now that I have been away from the company for a year I believe I can be more objective:

I am utterly convinced that Samsung will surpass Sony in the next couple of years in both brand equity and CE market share in the US. The only thing holding Samsung back is that the company is still heavily managed from Korea, and they don't allow US executives that understand the US market run the show. If they fix that issue, this company will dominate for years.

Rough day for Intel

It seems like Intel has been having a rough year. First the whole AMD kicking their butt thing, and now today they have released two other pieces of bad news. Their top end 3.6GHz chips are in short supply, and they have officially announced that they will delay their 4 GHz chips until next year because they want to make sure they have enough supply during launch. These operational mistakes by Intel are uncharacteristic, but more importantly they have once again opened the door for AMD to take market share. This year could be AMD's opportunity to really turn this market from a Monopoly controlled market to a duopoly. For consumers sakes I hope they can pull it off.

Trusting Microsoft with your finances?

Apparently some customers of Microsoft's Money product have been locked out of their finances stored online since Monday. Could you imagine if you were a small business and couldn't keep track of your company finances for 4 days?? Even worse, if you use the service to pay bills online and you can't do so because of this bug. Simply put when it comes to online banking service providers need 99.999% uptime.

How hard is counting?

Two market research firms can't seem to count... well actually that isn't the problem, the problem is that they can't agree on how to define the handheld market. While this is kind of fun to joke about, it highlights an increasing trend in the consumer technology field of convergence. Your competitors today will not necessarily be your competitors tomorrow. It is increasingly important for firms to think about the long term direction of their products and how the dynamics of the industry will change as new competition emerges from convergence.

Dirty Trick by Yahoo!

I finally got around to customizing my new laptop from work. I am now in the middle of installing Yahoo! Messenger, and I have found that Yahoo! is playing dirty.

There are two options when installing Messenger, one is the "Typical Install" which includes installing Messenger, the Yahoo! toolbar as well as Yahoo! services like search, Maps, Bookmarks, Games, etc. If you decide you don't want all those "features" installed you can choose the "Custom Install" option. When you choose the custom install option the install FORCES THE USER TO SET YAHOO! AS THE DEFAULT SEARCH ENGINE. In essence, when you decide to install Yahoo! Messenger you better be ready for Yahoo to take over your search expereince, because they won't let you get away with leaving your system as is!

Shame on you Yahoo! There is no need to act like this... you have traditionally be very consumer friendly and this is the type of tactic I would expect from Microsoft.... shame, shame, shame!

Since when has choice been a bad thing for consumers?

First things first... I recently started working for RealNetworks and all my posts represent my personal thoughts, and don't represent the company. Ok, with that out of the way....

I was recently baffled when I read Peter Burrows' article on how RealNetworks' new Harmony technology is bad for consumers. For those of you that don't know, Harmony is technology developed by Real that allows users of the new Beta RealPlayer to load hundreds of devices, like the iPod, with music purchased at the Real Music store. What this means is that the thousands of iPod owners out there now can buy music from a company other than Apple itself.

Mr. Burrows argues that this additional choice is bad for consumers because Apple's control over the music service and hardware allowed for the creation of a great customer service that resulted in the explosion of the digital music market. I will concede the point that this closed architecture created a great consumer experience, but does that mean that every tech architecture should always stay closed? Should IBM have never opened up the PC? Should BestBuy start selling their own DVD players that will only play DVDs bought at BestBuy?

History has shown us that it is typically a closed architecture that helps to bring a new technology/product to the masses, because closed architectures are good at creating strong consumer experiences. History has also show that market forces over time break these systems open because as the market and technology mature, a closed system is no longer necessary to create a compelling user experience. In addition closed systems are typically more expensive than an open system because a single company is typically not able to sustain an advantage at every component in the architecture. Therefore it is inevitable that over time the closed systems that helped to establish a market must open up to help really grow and mature the market. Should the company that controls the closed system be able to dictate the pace of an entire industry? Should that company be able to lock their customers into their products as long as they would like?

Fundamentally Real is simply trying to offer consumers more choices when it comes to purchasing their digital content. Before Harmony, if spent $300 on an iPod, the only legal music service I could use to fill my iPod was iTunes. So lets say I spend $1,000 on filling up my iPod with music and in 3 years I want to buy an portable music player from iRiver... all of a sudden I realize I can't take the AAC files I bought from Apple to my iRiver... does that sound right? Now with Harmony, when you buy your music from Real you can load that music on ANY of the hundreds of portable devices that the RealPlayer will support. No more lock in! At the same time, no company is forcing you to buy music from Real or use the Harmony service (like you were forced by Apple to use iTunes).

So I ask you... how is this bad for consumers? This is clearly good for consumers. This is choice. This is free markets at work. This simply good for everyone who believes that consumers shouldn't be locked in.

Online ad spending - $16 billion by 2009

While I have seen lots of surveys around the growth of online advertising, this one doesn't seem to be aggressive enough. I recently heard that males in the roughly 17 - 24 demographic spend around 16 percent of their time online. I would expect this time to increase across all demographics and for the dollars to follow proportionally. Now I am sure the people that conducted the survey followed the same logic, but only 9% of ad money going online seems really low to me in 2009.

Bugs in CE devices vs. Computing Bugs

I have personally found a lot of evidence that consumers have different expectations when it comes to computers and CE devices. According to the prevailing mental model, CE devices just flat out work and they don't become obsolete for 5 or more years. Meanwhile, computers are buggy systems that crash every now and then and become obsolete in around 2 or 3 years.

With the convergence of CE and computing consumers will have to learn to tolerate a bug or two here or there. Unfortunately, for TiVo a bug in their software has become news worthy. Imagine if every Microsoft bug got this much attention... there wouldn't be enough ink to print out all the stories.

Gateway enters retail partnership with....

In a shocker (I hope you can feel the sarcasm in my writing) Gateway has announced that they will sell product through BestBuy. Given the CEOs former employment at Best Buy, this strategy was as hard to predict as the predicting the sun will come up tomorrow.

And I thought 5 mbps was fast!

When I was living in Boston I had RCN as my broadband provider. RCN offered 5 mbps download speeds which was blazing fast. Time Warner Cable is now planning on offering 6 mbps through its Road Runner service. At 6 mbps consumers will easily be able to enjoy online services like high quality video streams (think live sports, movies streamed to the pc, etc.)

Work & Blogging

So far this week I haven't had much time to blog... my first week of work has kept me busy. Well hopefully tonight I will unleash a torrent of posts to catch up on the last few days.

Gateway CEO speaks out

Gateways new CEO, Wayne Inouye, has not talked to the press much since taking over the company a few months ago. In an interview with news.com Wayne outlines his plan to resurrect Gateway. The most interesting quote of the article in my opinion is as follows:

"We provide highly configured, very inexpensive products that provide an exceptional after-purchase service. I really look at eMachines as being like Toyota, and I look at Gateway as Lexus."

This dual brand approach in an interesting strategy since these brands used to represent entire companies, not just product lines within a company. It will be interesting to see how the company tries to align consumers around the brands through distribution and branding.

Why Google isn't worth anywhere close to $30 Billion

On the same day that Google announced they expect to IPO with a valuation most likely exceeding $30 Billion, Microsoft quietly reminds all those paying attention why you shouldn't bet the farm on Google.

Today Microsoft released a beta version of their MSNBC Newsbot. The site is very similar to Google's News site, but has one major difference, the ability for the software to adapt to show you the news you want to see. After reading a few stories I found the site was able to quickly find and recommend news stories I was interested in. The service isn't perfect, first off the site annoyingly shows a history of all the stories you have clicked on at the bottom of the page which I find somewhat invasive, and also the page isn't easily customized like your My Yahoo! page. Yet given these drawbacks it is easy to see the potential behind an "adaptive news service". Toss in the potential ability to have blogs recommended based on your reading habits and I think you have a winner.

So, given this new reminder of the brutal competition that will exist in the market, do you think Google deserves the type of premium they are seeking? I think the only way to say yes to that is to believe my "perfect storm" scenario for the company.

Brother and Sister play nice after 3 years.

When AOL bought Time Warner (yes I know it was a "merger", but get real, AOL bought TW) the acquisition was based on the premise that content and distribution would play well together. Almost 3 years later AOL and TW are finally starting to fulfill that promise. Exclusive content on the net is a great way to retain customers and drive revenue... if any company has both the content and the distribution channel to make it happen, it is Time Warner.

Interesting day to start at RealNetworks

Tomorrow is my first day of work at RealNetworks. After arriving in Seattle I did my usual tech news reading and came across this report from News.com that details RealNetworks' plan to open up the iPod by allowing songs bought through the RealNetworks music store to be played on the iPod.

My only comment on this matter is that this move by Real represents a huge step forward for consumers. A few weeks ago I wrote how many companies selling digital music have decided to compete by locking in consumers. This move by Real shows that the company is not interested in locking in consumers through DRM, Codecs, Players, etc, but instead interested in providing consumers the best digital music experience possible, with the freedom to buy music and be sure you can play it anywhere on any device.

When the ability to download the beta software goes live I will post a link to it.

Huge innovation in music

I could make a big argument that the world of audio hasn't had many major innovations other than distribution formats over the last few decades. Well I am honestly excited by this innovation in music.It appears that the people behind MP3s have developed what is best described as "3D sound". Imagine sitting in a movie theater and having is sound like the car on screen is driving through the middle of theater. How cool is that... make sure to check this out.

iTunes: an insurance policy against piracy?

Remember when artists refused to allow their music to be sold online? Well now bands like U2 are using the online channel as an insurance policy against piracy. The band has promised that if songs which were recently stolen showed up online they would release the album on iTunes right away. Now if we can only convince the world to ditch CD releases all together...

Expensing stock options

There has been a huge debate in corporate America around how companies should account for the stock options issued to employees. Huge names like Warren Buffet have stated that it is time for corporations to expense charges associated with stock options, while the entire tech industry has fought against it. While I am no Warren Buffet (he actually has more hair than I do... oh and more cash too), I feel like weighing in on this issue.

In my opinion it is impossible to overstate the importance of this issue. At stake here is the very entrepreneurial soul of America. While Buffet is correct when he states that there are real costs associated with stock options his assessment that it is better to be approximately right than precisely wrong is incorrect in this instance. While today's method of simply ignoring the cost is poor, forcing companies to expense options would do incredible damage to the entrepreneurial energy of America.

Expensing options would force many companies to stop issuing options all together, and thus they will have a harder time attracting employees. To thousands of Americans stock options remain the catalyst behind their willingness to take a risk in a high tech venture. Every day that goes by countries like India are producing high tech college graduates that are starting companies that are eating away at the low end of the technology marketplace. To thrive America needs to continue to innovate and create new high tech markets like Nanotech... but without options how many people will be willing to take a huge risk in starting this industries if they won't get a proportional return for the risk they took?

Given my opinion I was glad to see that the house of representatives shot down a bill to force companies to expense options. Until the finance gurus figure out a better way to calculate the true costs of options we should continue to be precisely wrong, because to be approximately right in this matter is far more dangerous.

From the "If you can't buy them..." category

Comcast might have failed in buying Disney earlier this year, but that hasn't stopped the companies from creating an offering the joint company would have been proud of. It appears that Comcast has struck a deal with Disney to provide Disney and ABC content to Comcast broadband subscribers. The content will include some of the ABC news content along with some Disney children's content.

This deal makes me wonder what companies like Time Warner, who own both content and distribution, are waiting for... they need to get on the Video over the net train before it leaves the station.

Sound familiar?

Over a month ago I called the LG Philips initial public offering "a suckers IPO".   Looks like the market is agreeing with that assessment.  News.com has an article around the cool reception the market is giving to the impending offering. 

After getting burned on a few predictions I felt like I had to show that even a blind squirrel does find a nut every now and then.

HP gets it right

While Sony trotted out their dual layer DVD recorder months ago, they forgot to make the DVDs that users record compatible with most existing players. Fortunately, HP actually looked at this issue before releasing their dual layer DVD burner... Finally a company that looked at the CONSUMER experience!

"For users who want to create video DVDs on their PCs and play them back in the living room, excellent compatibility is a must," Steve Johnson, HP DVD product manager, said in a statement. "We identified and investigated the potential issues and waited until we got it right."

Gates gets it right

I bash Microsoft all the time, but Bill Gates is doing a great thing by donating all the cash he will receive from Microsoft's $3 per share special dividend to the Bill & Melinda Gates Foundation. That means that the foundation will pick up an additional $3 Billion dollars from Gates! While I may detest his business practices, I admire the mans philanthropic endeavors and I hope other do as well. Good job Bill!

Microsoft Finally Announces Plan for Cash

Yesterday Microsoft finally announced that they will be returning cash to the owners of the company... the shareholders. For the first time in recent memory, the company has surprised me in a positive way with the amount of cash being returned. First the company will double its yearly dividend from 16 cents a share to 32 cents a share. While this isn't exactly a huge number when looked at from a dividend yield perspective, the company has been agressivly raising the dividend recently and I am hopeful that will continue over the next few years. In addition to raising the yearly dividend, the company will have a special one time dividend of $3 per share. The last part of the program calls for the company to buy back around $30 billion in stock, which will reduce the number of shares outstanding, therefore raise the EPS and raise the stock price over time.

All of these programs combined will result in around $75 billion being "returned" to shareholders. Now that the company has committed to keeping less cash at hand I wonder if we can expect better corporate repsonsibility when it comes to entering the right businesses (see all of Microsoft's failed hardware plays) and mergers (see the proposed SAP merger).

University spending on consumer tech

When I was an undergrad at the University of Illinois all I got was an email account and file space to create websites and store files. Back then the school was really promoting the creation of websites since Marc Andreesen had just finished creating Mosaic (the browser he created while still at school). Today Engadet is reporting that Duke University will buy each new incoming Freshman an i-Pod. This is on the heels of Universities like Penn State giving students access to online music services like Napster. So what exactly is the role of Universities when it comes to giving students technology?

When it comes to the Penn State deal with Napster, I think it is a good thing because it is a "Win-Win-Win-Win" situation for all the groups involved. The school is probably saving money on bandwidth costs by reducing p2p file sharing, while also limiting their liability with the music studios. Students are getting a music service for a very low price (reportedly only around $3 per student) and they now less tempted to pirate songs. Napster is getting thousands of students using their service and they will have a great advantage in turning these students into full paying customers when they graduate. And the last win is for the music companies. These type of agreements get students used to using legitimate services and not Kazaa.

As much as I like the Napster deals, I loathe the Duke / Apple deal. Engadget has it right when they call the school out for wasting money. The schools is spending $500K on this deal that could be used to help hundreds of financially disadvantaged students pay for school. Additionally, giving students iPods probably will only induce students to steal music... how many kids do you know can afford to spend $7,000 filling up their iPod with songs?

DVD copying on next generation DVDs

It looks like a groups of tech companies and hollywood have come to an agreement around fair use for next generation DVDs. While the details are not yet out, as I have said before it is good to see these groups working together. Now if only there was a group at the table that represented CONSUMERS... too bad the EFF wasn't invited!

Gateway getting out of CE products?

Ever since Gateway bought eMachines, the company has been in flux. While Gateway bought eMachines, it was the eMachines management that took over the combined company. One of the first moves the company made was to close down the Gateway country stores. Now it appears that the company is reconsidering its entry into the Consumer Electronics space. This really is a shame in my opinion since I am a believer that in the near term companies that can offer packages of products that all work together will be at an advantage. I had high hopes for Gateway, but now it appears that company will stop trying to lead the CE / Computing convergence.... leaving that job to companies like Sony who like to use proprietary technologies and closed architectures in their technology.

AT&T to launch 3G services soon

Almost every major outlet has been reporting that on Tuesday AT&T will announce the launch of 3G services in 4 markets in the US. I have been an AT&T subscriber for 5 years now and I have been sooooo excited to ditch AT&T for another provider since my contract is now up. That is until I learned that one of the cities they will launch the 3G service in will be Seattle.... where I am moving to. I will now have to seriously consider if I should give AT&T another shot and try their 3G offering or ditch them and wait for Verizon or someone else to offer 3G in my market.

Microsoft consolidates media & entertainment groups

Looks like Microsoft has decided to consolidate all their media & entertainment groups into one unit. While I don't have the details of the consolidation, I know in the past that almost every business unit at Microsoft had some type of media / entertainment group in it, and that these groups didn't always play nice together. For example, X-Box was in one unit of the company while Windows Media Center was in another, forcing many to wonder which would be the center of Microsoft's attack into the home. Also of interest is that it appears Bill was able to recruit a big name exec, Blair Westlake, the former chairmen of Universal Television & Networks Group to run the unit.

Some drawbacks of VOIP

Voice over IP has been gaining momentum all year as consumers look for a cheaper telephony solution. Yet all is not perfect with VOIP services, as this News.com article points out. Problems with dialing 911 and using services like TiVo can be problematic... but in my opinion shouldn't keep consumers from taking VOIP seriously. The FCC will mandate a fix to the 911 issue, and issues with services like TiVo shouldn't be too hard to work out within a year.

Microsoft & Lookout - What does this mean?

Microsoft announced today that they are acquiring Lookout, a small Silicon Valley software company that makes software to search through emails within Outlook. Am I the only one that really wonders what is going on over at Redmond? Isn't Outlook part of the Office suite that generates billions in revenue and profits? Isn't the company dumping millions into R&D around search? My final question is why would Microsoft need to go out and buy lookout given the resources they have and the fact that they should have more knowledge around Outlook than any other company in the world. Granted they might have bought the company on the cheap, but I just wonder if this is another case of the company wasting more shareholder money.

Orkut: Its all about data and "influencers"

There are a number of reasons a company like Google would launch a social networking site like Orkut.
You could imagine the company selling advertising within communities;for example there is a thriving community around the Simpsons, with thousands of members... it would make sense for there to be ads selling Simpsons DVDs, t-shirts, etc. With membership approaching the 1 million mark, this could help drive a little revenue for the company.

I believe that Google is getting something far more valuable from orkut, and that is data. A while back I commented about how the combination of Gmail, Blogger, Search, and Orkut was helping Google create a perfect profile of people.

What I failed to think about at the time is that Google could be collecting something much more valuable, information on who the "influencers" are in various countries. I define "Influencers" as the set of people that help to drive popular culture and define what is "cool". Apparently Orkut is VERY COOL in the country of Brazil. Over the past month hundreds of thousands of Brazilians have joined orkut. When Orkut was around 500,000 users (just a couple of weeks ago) Brazilians represented something like 25% of the user base. Today with Orkut having 883,000 member, Brazilians account for 43% of the users. That means the number of Brazilians has exploded from 125,000 to 380,000 in just a few weeks. When I do a search to see the number of users, I can seriously have a hard time finding new users that aren't from Brazil.

You may be asking "Ok, cool stats Mark, but why does this matter?". This matters because Google through the Orkut database can track back through the relationships in Orkut and determine what users where the "influencers". While there won't be a single "influencer" that made Orkut popular in Brazil, there will be a relatively small number. Now imagine the ability to buy advertising on an "influencers" home page... WOW! You want your product to become hip in a given country, buy advertising from Google and target those "influencers".

LCD supply trying to catch up to demand

Walking through Best Buy these days you are likely to be dazzled by a wall full of LCD and Plasma TVs. After tearing your eyes off the TVs, you are likely to have a heart attack when you see the price tag... normally over $4,000 bucks. But don't be afraid, help is on the way.

The Joint Venture between Sony and Samsung to product LCD TVs has just finished building their new LCD Plant. Plants just like this one are popping up all over Asia with production ramping up over the next year. So what should you expect in terms of prices... check out this quote:

"The new S-LCD plant is optimized for big panels that can fit into televisions, said iSuppli analyst Riddhi Patel. 'It's going to make the large-size LCDs available at a more reasonable rate,' she said. Partly because of the new factory, the average price for LCD televisions that are 40 inches or larger should fall from about $8,000 to $1,500 by 2008, Patel said."

AT&T - your "powerline" broadband provider?

I wonder how many times a day the CEO of the AT&T pounds his head on his desk and curses Mike Armstrong. As you know, a few years ago AT&T owned a cellular network, a long distance business, and most importantly a huge cable tv business. After splitting up the company, AT&T is now trying to get back into the businesses it just left. After the acquisition of AT&T wireless by Cingular, AT&T will start selling wireless service under their name again borrowing from the Sprint Network. To recover the broadband piece of the puzzle, it appears that AT&T is going after selling broadband over powerlines.

Tech & Hollywood working together

Looks like some of the biggest names in Hollywood and technology are working together to create content protection for next generation DVDs. Hopefully the people in these negotiations will remember that the vast majority of consumers are not evil and they should not create a system that prohibits the majority from using the content in a fair way because of a few rotten apples.

Doom + Back to School

The month of August is usually a strong month for PC sales due to the back to school buying that occurs every year. Well this August we should see another force helping to drive PC sales,
the release of Doom 3.

I am not a huge gamer, but I do know that Doom 3 is expected to be one of the largest PC game releases ever. Reportedly the complex graphics will require gamers who want to play to have the most up to date video cards and processors. Normally you wouldn't expect a single game to have an impact on PC sales, but this one might be just that big.

Time to grow up... Seattle here we come

New degree, new baby, now it is time for a new city and a new job. I will be out in Seattle looking for an apartment this week and I will start my new job in about 2 weeks. I will be a product manager for RealNetworks and I am looking forward to getting started. I will write a little more about my job after I get started, and I can promise that I will try and utilize blogging to communicate with the users of my product. It is important to realize that everything I write here are my thoughts and opinions and don't represent any organization I am affiliated with.

Ok... enough of that, feel free to give me Seattle tips in the comments section. I need to find that perfect place on the cheap!

The rise of FireFox

For a couple of months now I have been watching momentum build behind the Mozilla based browser FireFox. A few weeks ago I made the switch myself and recommended that anyone reading this blog give FireFox a try. When even greater security problems were discovered in IE I have been wondering what is happening with market share in the browser space... well today News.com has a great article detailing exactly what is going on.

According to WebSideStory, Mozilla based browsers like FireFox have gone from 3.5% market share on June 4th to 4.6% on July 9th. Microsoft's IE has lost 1.3% of the market over the same time, down to 94.1%. While I am not saying that IE is in any real trouble... they still have 94% of the market, there are anecdotal signs that consumers are looking for something better. The first sign for me is that my father (who I will admit is more tech savvy than the average consumer) asked me today about switching from IE to Mozilla. The second sign is that almost everyone I have talked to says that once they have tried FireFox, they will never go back to IE.

Everyone knows how fond I am of competition... competition spurs innovation. Therefore I am openly rooting for Mozilla to continue to gain market share. I hope every FireFox / Mozilla user helps to market the browser to their friends and that the browsers wars get restarted.

Exactly how happy do you think all the Picasa employees are today?

Every small company in the valley that remotely works in the same space as Google must dream of being bought by the firm pre IPO. Well today Picasa is living that dream. Picasa has developed software that allows users to manage and share their digital photos. Back in May Google announced that Blogger would support Picasa so users of the service could post photos to their blog.

More proof that competition rules...

Just 6 months ago there was no more boring market that the free web based email market. The two dominant players, Microsoft (Hotmail) and Yahoo, had no incentive to innovate or invest in their product offering. That all changed on April 1st when Google announced their entry into the market with Gmail. Since that announcement Microsoft has announced they will relaunch Hotmail with 250 MB of storage, and Yahoo has already relaunched their mail service with a new interface and 100 MB of storage.

In more signs that this market matters, Yahoo! announced they will acquire Oddpost. Oddpost provides web based email, photo, and news aggregation services. Does anyone think any of this would have happened if Google hadn't announced Gmail?

Continental Airlines offers free Wi-Fi

Continental Airlines offers free Wi-Fi service no... not on their flights, but in their Presidents Clubs. This news got me thinking... how long will it take after Wi-Fi is offered on flights before the airlines start to give it away? I can imagine all "Platinum" frequent flyers getting free wi-fi, or something along those lines. In essence, I think the airlines will just throw away another revenue opportunity because all they ever compete on is price.

Does Microsoft have any credibility left with release dates?

"Service Pack 2 for Windows XP will be released in June... wait, make that July.... did we say July, what we meant was August, and we mean it this time."

It now appears that Microsoft's service pack 2 for Windows XP (the service pack that should help plug some of the giant security holes in Windows) won't be released until August. Not only has Microsoft had to pull developers off of Longhorn to work on SP2, but they are going to deliver it way late. I am starting to wonder when we will hear about Longhorn slipping another year to 2007.

Idiots in action

I don't like judgmental people. Yet in writing this blog I know that I am sharing my opinions about companies and people, and those opinions may appear judgmental. This is one situation where I don't mind appearing judgmental!

News.com has an interesting article about CD copy protection and the problems it is causing consumers. The article is great because it epitomizes exactly what is wrong with the music industry: they don't care about their consumers!

A recently released CD with copy protection hit #1 on the charts, and due to the copy protection on the CD consumers are having a hard time ripping and transferring the songs to their iPods. These companies are so concerned about piracy that they are willing to make the consumers WHO ARE STILL BUYING CDs (all 10 of them), jump through hoops to get their music on their iPod. These consumers who are obviously somewhat savvy about technology (they own iPods) now have an incentive to either download the songs they want from the album from iTunes or to steal the album outright to get the music on their iPods.

Watching the record industry over the past 5 - 7 years has been like watching someone try to put out a fire with gasoline.

100 Million served and counting

Apple has announced they have sold over 100 Million iTunes. While I believe that numbers like this represent the willingness of consumers to pay for digital music, I don't believe that this validates the Apple model of selling songs for 99 cents each. I continue to wonder how consumers are loading their iPods with music... is it really from iTunes or is it from Kazza? I can't imagine a new consumer in the digital music market paying $3000 and taking the time to fill up their iPod with legal music. I really believe that over time the music subscription model will prevail for those serious music lovers.

P.S. - This really reminds me of when McDonalds used to have "5 Billion Served" on all their signs

Michael Powell of the FCC starts blogging

The power of bogs can be amazing. Last week Michael Powell, Chairman of the FCC, started a blog. While most in Washington would probably want to use a blog for a one way conversation, Mr. Powell understands that blogs are meant to start conversations. He openly calls for people to send him their thoughts, and I would recommend that you do just that, I know I will!

The coming attack of portable media centers

Amazon is now taking pre-orders for portable media centers like this Creative Labs 20 GB Zen. Don't expect these devices to take off anytime soon for the following reasons:

Price - at $499 this device isn't priced for the mass market. Additionally, the value proposition for this product (aka - why someone would buy it) is currently really hard for the average consumer to understand. The concept of taking audio along with someone has been around since the Walkman, but taking video is completely different and spending $499 on a product you don't understand is a tough sell (see the early days of TiVo)

Ease of Use - No matter what the manufactures and Microsoft will tell you, getting content onto one of these devices simply won't be easy for most people. Consumers don't understand all the issues around codecs, various ways to connect the device, etc. And just wait until someone tries and load one of these devices with a DVD they already own and they find out they are breaking the law (The DMCA prohibits breaking the encryption of digital content even for obvious fair use situations as this).