Category Archives: Business

Light reading September 29, 2013

Articles of interests to techs, geeks, and capitalists.

It appears Android has overtaken iOS in unit numbers of, but declarations of the iOS demise would be premature. If Apple spun out its iPhone business it alone would be ranked 10th based on revenue in the S&P 500. Bloomberg has compiled a slew of other iPhone fun facts.

This would be humorous if it wasn’t so creepy. The NSA can scan our social network, phone, email, and travel itineraries, but a federal judge allows a class action suit against Google to proceed because Gmail’s ad serving technology might violate federal wiretapping laws.

As baseball’s regular season winds down, Jonathan Mahler of the New York Times asks why such a wildly successful enterprise like Major League Baseball feels so irrelevant. Could it be that TV killed baseball? Is the Game Over?

And finally, the obligatory Breaking Bad reference. This Economist column favorably compares the lessons learned from Walter White to a Harvard B-school MBA.

Some Oscar Night Reading

This week’s Economist features a brief article on the state of Hollywood. Though not a lot will be revelatory to those of us in the space, it does remind us of some interesting trends that many of could hardly imagine just a few years ago.

One example, rumors of television’s demise were premature.

TV is relatively stable and currently lucrative. TV networks earn money from advertising and from the fees that cable and satellite operators pay to carry their programmes. These fees amount to some $32 billion a year in America, and are growing by about 7% annually. People love watching TV, and, per hour, it is one of the cheapest forms of entertainment.

In contrast, film revenues are volatile. Attendance swings like the moods of Claire Danes’s bipolar character, Carrie Mathison, in the TV show “Homeland”. In 2011 American cinemas sold 1.28 billion tickets, the smallest number since 1995.

As studios continue to experiment with new distribution models, and companies like Netflix are getting into the content creation business, both the motion picture and television industries might be in for a period of growth.

 

Random 365 #7 and the politics of deregulation

Electric Fence

Originally uploaded by fcapria

With a rare October nor’easter bearing down on us, and threatening widespread power outages, I thought this image appropriate for tonight’s Random 365. The lights have been flickering and parts of town are already without power.

While utilities blame freakish weather patterns for the deterioration of service the past few years, it’s not likely. The culprit is deregulation. Utilities are cutting back on maintenance to improve short term margins and regulators no longer have the necessary tools to force more responsible behavior. Perhaps it’s time the regulatory pendulum swings the other way. We deregulated airlines, and flying is just a miserable experience. We deregulated banks, and we have the mother of all recessions to show for it. Does anyone really think deregulating core infrastructure is a good idea? What pennies we might eventually save each month comes at the cost of Soviet-level quality of service.

The exobrain

stylized brainBack in 2009 Scott Adams of Dilbert fame described his concept of the exobrain in a blog post. He argued that his smartphone was an extension of his brain used for offloading data and outsourcing simple mental tasks. When Dilbert speaks the world listens, and the post is often cited. In later posts he expanded the concept into organizational learning – the organization’s culture is a data store. Pairing organizational culture with data storage and retrieval is nothing new. It’s called knowledge management.

As technology advances and culture evolves the idea of the exobrain as a physical device becomes outdated. Though my laptop, tablet, and smartphone have some specialized capabilities that give them individual exobrain duties, their duties converge more often than diverge. I can communication via text, voice, and video with all three. All three can search the Internet. And all three can store text and rich media. Most interestingly, and most importantly in the case of a scatterbrain like me, no one of those devices represents a single point of failure. I can get through most days without any one of those, and many days without any two.

The same cannot be said of the services these devices access. Going a day without Gmail, Skype, or Dropbox is not so simple. The crucial data I’ve either uploaded to these service or chosen only to download as needed must be available 24/7. I can’t get anywhere without GPS. I wouldn’t even know where to go without access to my calendar. The implications of this shift from dependence on device to dependence on service are pretty astounding. Big players get this. Google is building a network of services that devices must access to be viable.

He who owns the platform wins. As device dependent as Apple’s business model is, it has invested heavily to make sure the necessary services for their devices, such as iTunes and MobileMe, are available to make those devices useful.

The ideal services are those like Gmail and Dropbox that are device agnostic. They become indispensable to the user very quickly. All data is available on all devices and is always current. The second tier of services are those like Evernote. It’s a great piece of note taking software with web tools and local apps for all the major device OSes, but the functionality of the apps varies from device to device. I can take notes on my PC, formatting them to be easily read, but should I access that note from my iPad I have to sacrifice rich text formatting – forever. Livescribe is a more distant second. It uses different data models on the Mac and PC, so simply syncing your notebooks on the cloud only works if you stay within a the same OS family. The utility of an application or service diminishes exponentially as the number of data files the user must manage increases. Thus, Livescribe is flirting with irrelevance if it’s unable to solve this problem.

The Holy Grail, which the top tier services are approaching, is to become a Rosetta Stone. The user needs this service as a bridge between workflows and devices. For example, I can read a Microsoft Word document on a Blackberry without any additional software purchases as long I store it on Google Documents.

As software and services evolve in the media and entertainment space, those tools that act as a platform – accepting all formats from all devices, and make their data available for viewing on the widest variety of devices will win. The standalone editor seat will become a museum piece. Frictionless collaboration is where we are heading.

The Web isn’t dead, browsers just suck

I spent a good part of the weekend reading up on Chris “Long Tail” Anderson‘s obituary for openness, Wired Magazine’s  The Web is Dead. The article and its sidebars are a pretty dense read, but well worth it. Once again Anderson has done what he does best. He’s garnered a lot of attention making an apparently shocking claim that’s really not that shocking at all. “The Web is Dead” is a far better attention grabber than his actual thesis that Web browsers just plain suck on mobile devices.

Specialized devices, with hardware limits (screen size, lack of mouse/keyboard, etc) require specialized apps. They also tend to come with billing relationships built-in, so this is an opportunity to reset assumptions about what consumers will or will not pay for. No surprise that content producers are flocking to apps, a greenfield opportunity to find a more sustainable model for digital content.

The above is an Anderson quote from what I found to be the most interesting part of the multi-article feature, the robust debate among Anderson, Tim O’Reilly and John Battelle. It sums up the two key issues quite nicely. The browser-based Internet is challenged by the poor usability of the browser interface on mobile devices, and large content providers have failed to develop a sustainable business model for delivering high quality content over the Web.

Anderson believes the open Web is in peril because media giants like his magazine’s publisher have been losing money on it. Citing the railroads, telcos, and electric utilities of the 19th and 20th centuries as examples, standardization and lower barriers to entry eventually lead to massive consolidation because no one makes money in hyper-competitive environments. These markets (like most) evolve towards oligopoly. Anderson also points out that apps on mobile phones solve a lot of business problems — the networks are closed and provide gatekeepers, customers are used to paying for content on closed networks, and the billing mechanisms are in place to make small payments feasible.

Though touched on at times, the Wired articles fail to pay enough attention to Google’s role in this world. For the most part, Anderson and his colleagues relegate Google to Web company status. And that is a significant flaw in their hypotheses. Google is a mobile player. It might not own the networks, but it controls the fastest growing mobile platform in Android. Google’s more laissez faire approach to app developers promises a more open mobile world. Customers will demand Android remains open. (The various authors also pay scant attention to HTML 5′s potential.)

Whatever flaws exist in Anderson’s argument do not detract from the value of his main point. The threat to the open Web is less about net neutrality than big media consolidation. Furthermore, Steve Lohr carried the banner of evolution over revolution quite well yesterday’s New York Times piece, Now Playing: Night of the Living Tech.

Yet evolution — not extinction — has always been the primary rule of media ecology. New media predators rise up, but other media species typically adapt rather than perish. That is the message of both history and leading media theorists, like Marshall McLuhan and Neil Postman. Television, for example, was seen as a threat to radio and movies, though both evolved and survived.

The open Web will survive. Advertising will survive. Apps might just be the fad – if an HTML 5 site on an Android device can deliver the app experience without the middleman, meet the new Web, same as the old Web.