The insanity of buying a Gmail account

Like any good second year MBA student right now I spent the day on the golf course trying to get my game to a respectable level. Upon returning home I have been wading through email, blogs and the like... well I finally got around to checking out eBay to see what is going on with the selling of gmail accounts and all I can say is "WOW"

As of now there are about 130 invitations being sold and this auction is up to $168 Dollars right now!!!! My favorite part about some of these listings is that they highlight "LIMITED TIME" and "FREE SHIPPING". Let us think about this for a second: (Note the following should be read in the most sarcastic tone possible)

"LIMITED TIME": I think what the seller is trying to say here is "There is a LIMITED TIME window that I can sucker you idiots into paying over $150 for what will be free shortly". Or maybe what the seller means is "The flood of other people that will offer gmail accounts means that I will only be able to take advantage of you for a LIMITED TIME"

"FREE SHIPPING": Ok, this is my favorite one of them all. If you are savvy enough to know what Gmail is and that accounts are being sold on eBay then you know there is NO SUCH THING as "shipping" a gmail account! Given that you know there is no such thing as shipping, then you should realize that someone advertising "FREE SHIPPING" for an email account knows they are selling to suckers!!!!

My final thought on this topic for today is more of a question than a thought: Who do you think will make more money off of Gmail in the next 2 weeks, eBay or Google?

Buying Gmail

So exactly how bad do people want Gmail? Apparently people want it bad enough to pay for it. Some time last night Gmail gave the ability to current testers to invite others to the service. It didn't take long for people to begin selling Gmail invitations on eBay. People are paying over $40 just to get an invite. I find this whole thing a little crazy. Don't people realize that this service will be FREE soon?

I had 2 invitations, and one went to my wife and the other went to a friend of mine at school who is as into tech as I am, but he is like 100 times smarter. I will sell my next invitation for $1,000,000 dollars, so if you are interested, shoot me an email.

For cheaper accounts check out this eBay link: Gmail accounts on eBay

Google IPO

Unless you have been living under a rock or in a cave you have heard about Google's impending IPO. Well, today it became official that Google will go public with the filing of its S1 with the SEC. There will certainly be hundreds of blog postings and news articles about the impending offering, so I won't bore you with the basics. I will only try and highlight some of the facts that can probably won't be mentioned in most articles. I will also read through the S1 and post about the interesting statements I find there.

Interesting tidbits:
- The founders, Larry & Sergey combine for close to 31% ownership in the company
- CEO Eric Schmidt has a 6% ownership
- The VC firms Kleiner Perkins Caufield & Byers and Sequoia Capital each have a 10% ownership
- There are two classes of shares, and a vote with a class B share counts as 10 votes while a class A share vote counts as only a single vote. This according the reports is intended to help fend off any unwanted takeover requests (hmmmm... I can't think of a single company with over $50 billion in cash that would want to buy Google, other than that small firm in Redmond)
- I can't wait to read the S-1, but here is a quick quote that makes me think it will be a fun read: "A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half hour," ... this is what Page wrote in the S-1 in reference to why Google won't give quarterly profit advice.

Pepsi's & iTunes

So it turns out that the huge "100 Million Song Giveaway" turned into the redemption of only 5 million songs. Given the amount of press that covered this promotion, I would guess that both firms are happy with the outcome... even if it didn't drive huge additional purchases of Pepsi or tons of new customers to iTunes.

Given the 5% redemption rate, lets all wait for the Coke 1 Billion song giveaway... yes, I am only half kidding.

The Open-Source Response to Longhorn

Microsoft's next version of Windows, code named Longhorn, is scheduled to come out in 2006. Despite being almost 2 years away, the open-source community is planning its response. One of the key features of Longhorn will be the blending of the browser and the OS... so to retaliate, the open source group Mozilla (open source browser) and Gnome (the open source UI) have begun talks about how they can work together and compete.

Microsoft is clearly making a giant bet with Longhorn, and it has bet that they will be able to out innovate the open-source community. This type of cross collaboration within the open-source community has the potential to define the success of open-source in the future. If the collaboration between Gnome and Mozilla works well, the executive team in Redmond will have an even bigger problem on their hands than they currently think they do.

Gmail: First Impressions

I have had Gmail for about 24 hours now and here are some of my first impressions:

The good news:
- This is the best web-based email system by a large margin (Compared to the systems I have used)
- The "conversation" approach to grouping emails together is great. I hate it when I get a reply email from someone and they didn't include the original message with that email... well this solves that problem
- The concept of "labeling" emails is really not that different than "folders"... it is just semantics to me
- As expected the search functionality simply rocks... there are a ton of great searching options that I am sure will become more valuable as I load more content into this account
- Shortcut keys are potentially great, but they will take some getting used to
- There are a TON of cool features that I learned about from other users. For example, if you sign up for gmail using the following approach for a username: FirstName.LastName@gmail.com you won't need to worry about people forgetting the . in the name. So messages intended for John.Doe@gmail.com will get there even if they are sent to JohnDoe@gmail.com Also, the system supports "Plusing"... So when I signup for a site and I don't want to give them a real name, I can give them John.Doe+SPAM@gmail.com, and then set up a filter to trash any messages sent to that account.
- Find all the best tricks of the trade at: Gmail Gems

The bad news:
- There is no support for RSS/Atom feeds... this would be AWESOME
- Gmail has the 90%+ solution in place but to really take the world by storm the Gmail team needs to make switching to gmail easier.
- Gmail should build a tool to extract messages from hotmail, yahoo! and other email systems to make the switching process easier
- Gmail should be able to pull all my contacts from my other accounts automatically and then email all of these contacts at once letting them know I have switched to Gmail... again lowering switching costs
- Currently there is no support for forwarding or POP3
- There is no client for gmail. I know the point of Gmail is that it is web-based, but if Google came out with a client to use when I am offline (on flights, etc.) then I would seriously consider dropping outlook. (Of course I would then need to be able to sync all this data)

Now onto the whole thing about having ads and links next to your messages. Currently there are both sponsored links (ads) and related webpage links next to your email. I have found related links on all my email messages (This may be because all my email is from MIT and there appears to be a ton of related links to MIT) but I don't have ads on all my email.

For the times I have gotten ads they haven't bothered me at all... and actually one time I found them useful. A group of my friends and I are headed out on a graduation trip in May and we have been trading emails about golfing down in the area... and the ad for the message actually caught my eye as relevant.

As I continue to learn about the application I will keep you posted.

Comcast shuns TiVo and will test Motorola/Moxi set-top-box

This is starting to feel like DVR week to me. For TiVo, this could be one of the longer weeks in the firms history. Yesterday Comcast announced that they will trial a "Motorola Broadband Media Center With Moxi." This device is packed with features including:

• DVR functionality


• Dual tuners


• Some of the test units will be HDTV compatible


• Some of the test units will be networking capabilities to pull photos, music and videos off of a home computer


• And apparently, this device may have a cable modem

So what does this all mean for TiVo, the darling of the DVR industry, which currently has about a 39% share of the DVR market. It means that the odds that they will reach a deal with a large cable company are now very slim, and that they are more reliant than ever on DirecTV for near term subscriber growth. The bad news on the DirecTV front is that today NDS (Which is owned by News Corp. the same parent company as DirecTV) has come out and stated they want to fight it out with TiVo for the DirecTV business. So assuming that TiVo can't get a deal with the cable firms where should they head?

With a law suit under way against EchoStar and a deal already in place with DirecTV, there aren't many other domestic deals to be done with service providers. So one option would be to sit back, relax and be happy as a niche player in a market that will grow incredibly in the next few years. They could become the "Apple of the DVR market" and just allow their loyal customers to keep them profitable and afloat as a niche player. The other option is to fight back.

To fight back TiVo needs to find other ways into the home other than the set-top-box route it has taken to date. Having seen the possibility of not getting a major service provider deal, TiVo began partnering with the makers of DVD recorder boxes. Additionally, the firm bought a home networking startup called Strangberry in the hopes of adding better home networking functionality to the service. So I believe the firm now needs to transform itself from a "DVR" company to a true home entertainment company by striking out and making some of their own interesting alliances. I posted yesterday about the potential of a partnership between TiVo and Netflix. Maybe they should also consider partnering with RealNetworks for a music subscription offering. The transition to the digital home is well underway, and I believe the next 4 - 6 months will help define what role TiVo will play in this market.

I've Got Gmail

Since April 1st I have been wondering what the Gmail service would be like to use. Well tonight, through my Blogger account, I received an invitation to use the service. I will be playing with the service over the next few days and I will certainly let you all know what I think.

Netflix & TiVo - a partnership waiting to happen

Netflix has com out and announced that they intend to deliver movies to the home via the Web by next year. The CEO of Netflix, which has around 2 million subscribers, expects his service will have around 5 million members by 2006 all paying $22 per month. While he didn't break out what percentage of subscribers will be watching movies via their download service, Netflix clearly has been betting on the download business for a long time now... just look at the name, it isn't "DVD by mail".

The real questions to ask around this service are the following: Will the 5 major studios, who all own CinemaNow, license their content to Netflix to deliver via the net? Whose DRM software will Netflix choose? Will companies like Comcast and Time Warner kill netflix via VOD? What distribution deals (if any) will Netflix need to pull off to make this successful?

Let me propose an interesting partnership. What if Netflix and TiVo partnered together to deliver Netflix videos on the TiVo service? The two companies could bundle their service fees together, and for maybe $25 per month consumers could get both the TiVo service and the Netflix service on a single bill? Both companies have loyal user bases who adore their services. Each offers the same value proposition, "Get the entertainment you want to watch conveniently, and watch it when you want to." I would also be willing to bet there is a decent size overlap in the user base. Even better will be opportunities to cross promote each others products to users who don't subscribe to both services.

TiVo's recent acquisition of Strangeberry signaled their intention to get into the home networking space that will allow users to pull content off of various sources and watch it on the TV. This is exactly the functionality that Netflix will need until all TVs have direct internet access. Additionally, it doesn't appear that TiVo is going to pull off a distribution deal with any of the major cable companies, so this partnership will give TiVo some VOD features that cable companies will promote via their DVR enabled boxes.

And now for the kicker: TiVo's CEO Mike Ramsey is on the board of Netflix and we can be certain they are talking about this opportunity frequently.

GREAT WSJ Article on DVRs

I don't work for the WSJ (as if my poor writing skills didn't give that away already), but if you are interested in the consumer electronics industry, cable industry, entertainment industry, or the DVR market you must run out and get a copy of the Monday WSJ. It has a great article on the inherent risk that cable companies face when they roll out DVRs.

In summary the article runs through all of the conflicts that exist in companies like Time Warner and Comcast who are both cable operators and owners of cable channels (Time Warner owns TNT, TBS, etc. & Comcast owns E!, etc.). While the cable operations portion of these firms want to roll out DVRs to raise their average revenue per subscriber (ARPU), the content side of the house is still scared about what DVRs will do to their advertising revenue. The article also outlines great statistics around DVR adoption, consumer TV viewing habits, and the basic economics of the market.

Now that we got the basics out of the way here are some of my thoughts on the issue:

Satellite companies like EchoStar and DirecTV rolled out DVRs well in advance of the cable companies since at the time they didn't have the programming conflict of interest. This service helped EchoStar & DirecTV gain thousands of converts from the cable companies. Recognizing that the DVR was a feature they couldn't afford to ignore all the cable companies have jumped into the market to offer their own solution. This doesn't mean that the content side of these firms is happy about the change. I believe that DVRs will fundamentally change the economics of the TV industry, but the question is what form will it take. Some in the cable industry will want consumers to pony up more cash for a "commercial free" TV service. Some TV shows will try and make money by doing more product placement deals (think Coke and American Idol). I think both of these models are flawed.

Paying for "commercial free TV": I don't believe the majority of consumers are willing to pay hundreds of dollars a year to just not see commercials. I honestly believe that consumers are interested in commercials that either entertain them or are targets specifically to their current needs. (More on this in a second)

More product placement: When I talk with marketing executives they say the following: "I shell out millions a year on commercials, and I don't know if anyone is watching, I don't know the demographic very well, I have no ability to follow up with interested consumers, etc." I don't see how product placement really changes all these problems.

So here is the model I support: DVRs represent a platform for changing the advertising market in a positive way for everyone. As I mentioned before, I believe consumers are interested in ads that target their current needs. There is no reason a DVR couldn't know what your needs are. For example, I am in the market for a new car, I really wouldn't mind watching 2 minutes of car commercials targeted specifically at me. I am also about to move to a new city, so I wouldn't mind ads for moving services or places to live in my new city. (I am assuming this can all be done without revealing all this personal information to the world) Additionally, DVRs represent a much better platform to understand the demographics of viewers at a much deeper level. Advertisers could then target their ads at a much more receptive demographic.

BOTTOM LINE: It is easy to say that DVRs represent a threat to the TV value chain, but the industry should look at DVRs more as an opportunity. Advertisers today have the ability to spend money with Google and perfectly understand the return on that spending and the demographics they are reaching. The TV industry now has the opportunity to provide greater demographic information to a more interested audience, and they should take advantage of this opportunity. Ultimately, the industry will have no choice, just ask a current user of TiVo what they think of their device and they are likely to tell you that it has changed their life. DVRs really do deliver on the unfulfilled promise of VCRs (that promise was the easy ability to record shows), and consumers will continue to snap up these devices quickly so the industry better adjust as quickly.

Former NFL player Pat Tillman dies in action

This is my first non-tech related posting but when I saw this story I felt the need to post on it:

Back in 2001 Pat Tillman was a professional football player for Arizona Cardinals was living what most people would consider the "American Dream." After 9/11 Pat turned down a $3.6 Million dollar contract with the Cardinals in order to join the military. Pat joined the Army Rangers and headed off for war in Afghanistan and Iraq. Today the Pentagon released news that Pat died during a mission in Southeast Afghanistan.

Every life lost in military action deserves the type of public recognition that Pat will get over the next few days. Having said that, when Pat gave up his $3.6 Million to stand up and fight for our country he became an American hero to me. May his soul rest in peace and may his family have strength in their time of need.

The CNN story about Pat Tillman can be found here:
SI.com - NFL - Former Cardinals safety Tillman killed in combat - Friday April 23, 2004 1:16PM

Sony Launches their Luxury CE Brand - Qualia

Twice - The consumer electronics industry magazine has detailed the following information about Sony's new luxury brand, Qualia.

"What do a $3,900 two-mega pixel digital camera, a $2,600 pair of headphones, a $1,900 handheld MiniDisc player and a $30,000 HDTV projector have in common? They are all part of Sony's ultra-high end Qualia line that was introduced by Sony here, on April 21. ":

The industry has long known about the launch of Qualia, but this still represents an interesting move for a firm that is in the midst of some turmoil. I previously wrote about "the Sony Shock", which was Sony's terrible earnings announcement that lead to the company announcing an entire new strategy. Part of this strategy was to lay off 20,000 people world wide, and move all the marketing and engineering functions within Sony Electronics from NJ to California. As part of this move the company has lost some top execs and is generally considered a little shaky at the moment.

Why does all this matter? While products in a luxury brand will carry better margins, this line of products will require a large investment in new complimentary assets. Sony will need to build out new distribution channels, new retail outlets, a new sales force, and a specialized customer care group. Launching all of these at such a time of turmoil will require flawless execution by those still at Sony. I hope the gamble pays off, but don't expect to find me paying $1,900 for a mini-disc player.

Comment Board Added

I have added a "Tag-Board" to the site. A "tag-board" is simply a place for visitors of the site to leave general comments and feedback. Please let me know what you think of the functionality, but lets give it a try and see if we can't get a lively discussion going.

Apple officially tells RealNetworks to get lost

Apple has said it won't open up the iPod to other music services and Jobs stated that: "To be honest, it's just not worth it.."

I just don't understand this... Jobs has an opportunity to unite with a partner in RealNetworks whose interests are perfectly in line with Apple's. Apple just wants to sell iPods, Real just wants to sell songs, and both just want to keep Microsoft from dominating this market. Apple isn't making any money on their iTunes service and Jobs has claimed it can be a loss leader for selling iPods, so what is the problem with having more music stores selling music that will work with iPods???

Does this whole scenario feel familiar? Apple creates a breakthrough product that creates an entire industry. Apple refuses to open up its product architecture. Apple becomes a text book example for poor technology strategy. I just hope for all of Apple's shareholders that I am wrong on this one, because I think Jobs is just being foolish.

I eat Crow

Two or three times on this site I predicted that today Microsoft would announce a plan to disburse their piles of cash. This prediction was based on the rapid rate at which the legal department in Redmond was taking care of anti-trust cases.

For dinner tonight I had a giant plate of crow. I was wrong. I will stop making predications about this matter and simply state that during the press conference execs said they will talk about a larger dividend or stock buyback on or before their analyst meeting in July.

For a full recount of the earnings announcement check out the CBS Marketwatch article here:
Microsoft beats Q3 earnings target; profit falls 38%

Name a company not getting into the TV business...

Remember 5 years ago when buying a TV involved looking at maybe 3 or 4 brands... you had your usual suspect such as: Sony, JVC, Panasonic, etc. Well in the very near future a better question appears to be "What consumer technology company isn't in the TV business?" All of the following companies have announced their intentions to enter, or are already in, the digital TV business: Gateway, Dell, HP, Motorola, and now Cannon. Why is there a rush into the television market? It is simple economics... think of it in the following way: (Note, most of the data below is just an educated guess on my part)

There are approximately 100 Million homes in the US. Let us assume that on average there are 2 TVs per home. That gives us around 200 Million television sets in the US. Most (as in like 99%) of these tv sets are not HDTV compatible. In a normal year around 10 Million TV sets are sold. Think of people buying a new TV set every 10 years and moving the old set down to the basement. So in the past, the US television market was about a 10 million unit business with companies like Sony having great brand recognition, distribution, manufacturing capabilities, etc. Not exactly an attractive market. So what has changed? HDTV.

The move from today's NTSC format to HDTV is expected to greatly accelerate the replacement cycle of TVs. Broadcasters are supposed to give up their analog frequencies at the end of 2006 or when 85% of consumers are capable of receiving digital broadcasts, which ever comes first. So now the entire consumer buying cycle for televisions is thrown off. As early adopters buy HDTV sets and the amount of HDTV content grows, a virtuous cycle is created because more people are exposed to HDTV consumers see the value proposition of the better picture and word of mouth starts to grow. I am certain that analysts across the country have done this analysis already, but lets assume that the replacement rate for TVs double over the next 5 - 7 years. That means that the market is now double in size! 20 Million units per year, and since these products are considered high end, the margins will be attractive to players like Gateway, Dell, and HP who are used to PC style margins. Also, given the projected dominance of LCD in the marketplace moving forward and that these traditional computer companies have an understanding of LCDs due to the 15 - 17" screens they have been selling with desktop units the opportunity is too large to pass up.

Summary: The switch to HDTV will greatly increase the unit market size in the short term (next 5 - 7 years). This increased market size, high margins, and familiar technologies are very attractive to companies like Dell. Additionally, the switch to HDTV will open up what I call the "entire entertainment stack" to new producers. (entertainment stack = DVD / DVD-R, DVR, VCR, Home theater, etc.) With all these new entrants expect there to be a shake out period and expect a small number of these new entrants to be long term players in the TV market.

For that price it should do the laundry too!

Numerous firms have started to sell consumer electronics gear at astonishing prices. Nokia has been selling a premium cell phone that goes for thousands, Sony is about to launch an entire line of CE products so expensive you will need to mortgage your house just to get a TV. Well now a German firm has introduced a set of headphones that sell for $3,000.

Yes you read that correctly, three thousand dollars for a set of headphones. Apparently the sound quality is out of this world, but I can't imagine paying more than $20 for a pair of headphones, no matter how good they are. Fortunately, the firm seems to know that the market for a product priced this high is small because they have apparently only produced 999 units.

The eBay economy

I love earnings season. Every 3 months we get a sense for which companies are thriving in the market (Motorola) and which are hurting in the market (Nokia). After the closing bell today, eBay announced their financial results for the last 3 months, and they were absolutely stellar.

With earnings of $200 Million on sales of $756 Million, eBay has shown a great ability to grow in any economic condition. Most importantly, eBay is seeing growth in the sector necessary to justify the lofty valuation wall street has given it.... their international business.

International revenue grew 87 percent to $257 Million... representing a healthy 34 percent of revenue. The U.S. business grew at a healthy 39 percent.

So what does this mean for eBay going forward? Well the company expects sales for the year to hit $3.15 billion which will result in earnings of around $1.06 per share. Strategically, expect the firm to really continue focusing on the international part of their business... especially China.

Nokia's pain is Motorola's gain

Nokia recently announced a disappointing quarter, but apparently Nokia's loss is Motorola's gain. Motorola announced a great quarter yesterday and beat revenue estimates by almost 2 Billion dollars! This isn't Walmart, where $2B isn't a big deal, analysts were expecting around $6.8B and Motorola came in at $8.6B.

As one would expect, Motorola's stock is surging on this news.

The Microsoft Way: If you can't beat them, buy them.

So what is the quickest way to land a job with Microsoft? Apparently all you have to do is become a successful seller or Linux. Karl Aigner, who used to work for SuSE (The former German Linux distribution company which was recently purchased by Novell), was the person responsible for the huge sale to the city of Munich.... well Karl is now gainfully employed by our friends out in Redmond.

Full story can be found here:Microsoft hires key rival from SuSE Linux