Dad, What’s a Download?

SON: Dad, what’s a download?

FATHER: Where do I begin? Well… you know your PS5 and your iPhone 6G? There was a time where they both had something called a hard drive embedded inside them. These drives were a kind of localized storage that computers and all sorts of consumer electronics devices needed to access songs, movies, games, and files of all kinds. When you wanted a new song, movie, or game you had to “download” it or save it to your local drive. And often you had to buy each one of those items you wanted to download.

You see, years ago, not all of these devices had access to the internet.  For those that did, it was often slow and unreliable– certainly not like the 1Gbps your iPhone gets today. For those reasons and an outmoded desire for “ownership” of such media products, people built up vast collections of files on these hard drives.  But with faster, more reliable bandwidth, an increasing number of internet-enabled devices, increased demand for anytime/anywhere access, and the new economics ushered in by the Second Great Depression, people came to realize that limited ownership was not quite as valuable as unlimited access.  Slowly, those media products transformed into media services and all of a sudden every song, movie, TV show, and game was available on-demand, streaming to you anytime, anywhere.  Believe it or not, there was a time when you couldn’t just subscribe to iTunes or Sony Online like you do today. In fact, they used to charge 99 cents for every song you downloaded!

There were a few early visionaries in the 1990s like Scott McNealy who said “the network is the computer” but most people didn’t fully appreciate the meaning. In 1999, telecommunication companies like Qwest tried to better articulate the coming future– broadband and on-demand services so ubiquitous that even in a cheap motel in the middle of nowhere, you could still get “every movie, ever made, in every language, anytime.”

These services even started to reshape computers themselves.  If you had unlimited, on-demand access, you not only no longer needed to download, you no longer needed a hard drive. It wasn’t until 2010, when the first computers running Google’s Chrome OS appeared, that we first started to truly appreciate the impact. The future was in the cloud, and the days of downloads, desktops, and even hard drives were numbered. Computers and connected devices of all kinds became cheaper, thinner, lighter, and more flexible.  And slowly but surely, all these files you had to “download” to your computer, store and sync were now always available all the time from anywhere.

SON: Dad, what’s a computer?

iPhone 4G: You Ain’t Seen Nothing Yet

While recent Apple rumors have mostly fixated on Apple’s chance to remake print media with the mythical tablet/e-reader, the real story may come summer 2010 with the next iteration of the iPhone.  And the iPhone 4G could have the biggest impact yet.

Verizon & LTE

The blogosphere is rife with rumors that Apple’s been flirting with Verizon and T-Mobile, as AT&T’s exclusive contract for the iPhone expires in 2010.  Sure, bringing the iPhone to Verizon’s 89M wireless subscribers would more than double its addressable market in the US. It would also allow Apple to address what’s been commonly viewed as the iPhone’s biggest weakness– AT&T’s poor service. But an Apple/Verizon tie-up would also let them both showcase LTE, and its blazing fast bandwidth of 100Mbps down and 50Mbps up, as rollout begins in the first half of 2010.  With speeds roughly double some of today’s fastest fixed line broadband connections, you’d see real mobile video conferencing and then some.

Your Phone As Your Wallet

The mobile wallet concept has been live in Japan since 2005; but, with word that Apple may be testing iPhones with integrated RFID and apps like Starbucks Card Mobile, the concept may finally be ready for an American debut.  Of course Apple’s iTunes has quickly become the dominate payment method for digital products of all kinds, from music to movies to games to books.  But with its 100M account holders, it may not just unseat PayPal and Amazon Payments online, Apple may be positioning the iPhone itself to become a dominant payment method in the real world.

TV Everywhere

While there’s been a lot of chatter this year about the transformation of television as we know it, Apple may be the first to give the consumer what they want in the form of a $30 a month service.  No doubt, such a service would deliver on the promise of anytime, anywhere with a significant iPhone tie-in. Of course mobile TV is old hat for much of the globe; but, like so many products and services, once Apple puts its own spin on it, it’s reinvented all over again.

Really Fast Processing

Finally, as I previously noted, “…as smartphones become computers in our pockets, consumers will come to expect their interactions to be as fast as real computers.  Even the latest and greatest still have a ways to go in meeting those expectations.  Apple has already signaled their intentions to invest heavily in this endeavor with last year’s acquisition of P.A. Semi, and rumors already abound that next year’s iPhone could see the first multi-core processor…“

This smartphone is still getting smarter. You ain’t seen nothing yet.

UPDATE:

Two more items to keep an eye on… Maps and Music Subscription:

“Apple to Take iPhone’s Maps App to ‘the Next Level.’” MacRumors.com, 29 November 2009.

“Apple in ‘advanced’ acquisition talks with Lala.’” CNET, 4 December 2009.

How Sony Could Stage a Major Comeback and Surprise Us All

Turning 30 ain’t easy.  It’s a time for reflection that leads one to ask the inevitable, are the best days behind you or yet to come?  This Wednesday marks the 30th anniversary of the Walkman and it seems only fitting to ask that question of Sony.

The company certainly has its work cut out for it after reporting a $1B loss for the year.  And the challenges for Sir Howard appear nothing short of staggering.

But I still believe Sony could stage a major comeback and surprise us all.

Not by way of the massive cost reductions underway (i.e. plant closings, layoffs, slashing of suppliers, selling off of non-core assets).  Not by lowering the price of the PS3.  And not with the next Spiderman release.  Those are all critical items to be certain, but what the ailing king of consumer electronics really needs to do is inspire.

To that end, there is news that Sony may finally be adding a phone to its PSP gaming system.  A truly inspired combination would not simply play catch-up with the iPhone.  Without a doubt, the iPhone has shown us what’s possible when you combine today’s computing capabilities with easy-to-use hard and soft interfaces and deliver it in a pocket-sized form factor.  But the future for smartphones lies not just in bringing today’s capabilities to the pocket, but in going well beyond existing models and expectations.  Tomorrow’s smartphones will…

• Transform location-based services from novelty to necessity,

• Commercialize near field communication,

• Bring augmented reality to life, and

• Usher in the age of the Semantic Web and smart agents

This is where Sony should be setting its sights.  And given the company’s success in commercializing other forward-looking mobile technologies (e.g. FeliCa), it’s not without precedent.

In the meantime, there’s plenty of pedestrian issues for Sony’s new team to consider when it comes to the shortcomings of today’s smartphones including:  poor voice quality/coverage (Sony could extend its partnership with Skype and incorporate a femtocell solution such as Verizon’s Wireless Network Extender as a PSP accessory), poor battery life (Sony doesn’t have the greatest reputation when it comes to batteries to say the least and the PSP Go’s battery life doesn’t look great either.  time to outsource?), small screens (adding one of Sony’s an “awe-inspiring” OLEDs is a no-brainer), low-quality cameras (Sony’s Cyber-shot line is highly competitive), and slow mobile broadband (partnering with Verizon could allow Sony to take advantage of their plans to launch LTE in 2010), to name a few.

Further, as smartphones become computers in our pockets, consumers will come to expect their interactions to be as fast as real computers.  Even the latest and greatest still have a ways to go in meeting those expectations.  Apple has already signaled their intentions to invest heavily in this endeavor with last year’s acquisition of P.A. Semi, and rumors already abound that next year’s iPhone could see the first multi-core processor.  Sony is no slouch in this department and could easily repurpose investments in their advanced Cell processor, originally created for the PS3, to do the same for the PSP.

Developer fatigue is yet another issue Sony must examine.  Launching a mobile app store and SDK has been a kind of field of dreams (build it and they will come) for many handset manufactures and carriers alike.  Can Sony rally developers to help them build their own 50,000 app store?  The company certainly has extraordinary reach and distribution to offer.  The PSP has sold over 51M units (the PS3 over 22M units).

Lastly the issue of pricing.  Plain and simple, Apple changed everything with the $99 price point and some see a free iPhone within a year.  Any new entrant will have to come to terms with this new reality.

Of course even the iPhone has issues:  lack of multitasking (something Palm has been highly praised for addressing), the hassle of syncing (again, see Palm), lack of Flash support (the “real Web” is one that supports de facto standards), no visible message notification (what exactly is Apple’s aversion to a LED indicator?), and difficulty in discovering new apps in a large and growing catalog (anyone heard of personalization?).

There are plenty of things Sony can do to not only address the shortcomings of competing mobile devices but to inspire once again.

The best may be yet to come.

Give Them What They Want Before Apple and Google do

Dear Rupert, Bob, Jeff Z., Jeff B., Sumner and Les,

There’s been a flurry of discussion recently about what’s ailing television and seemingly no shortage of ideas on how to improve it.  So here’s one more… give viewers exactly what they want.

In the simplest terms, viewers want all their favorite shows on-demand, anytime, anywhere.  Sure it’s obvious; but today’s “television” is a completely disjointed experience and could hardly be described as “anytime, anywhere” and that’s bad for everyone.  Viewers are already way ahead of the curve, but they’re forced to cobble together shows stored on their DVRs, downloaded over P2P networks, rented from Netflix and Amazon, shared on YouTube and Facebook, synced to their iPhones, and streamed from your own show web sites.

Rumors abound that Apple is well on its way to delivering a more coherent solution– a subscription-based, on-demand, anytime, anywhere service dubbed iTunes Replay and an actual Apple TV with DVR-like capabilities.  Coupled with the extraordinary popularity of the iPhone, Apple may once again shake up and “reinvent” an entire industry.  That would be the third time in less than a decade (see the disintermediated fragments of the music and mobile industries).

This is, of course, exactly the kind of solution your viewers are demanding, so it’s certainly within your interests to partner closely with Apple.  But it’s also clearly within your interests to ensure no one player amasses too much control over this new ecosystem.  You’ve got to equally embrace and empower other competing services to play a counterbalancing role.  In terms of paid offerings, Netflix and Amazon are in a great position to turn their limited rental services into anytime, anywhere subscription services.  If you can ensure they have more timely access to more content (next day? same day?), and if they can keep forging strong consumer electronic partnerships, you’ll have yourselves real counterweights to Apple.

But, as is the case today, not everyone is going to pay for television, and that’s why you’ve got to take a shotgun approach.  Broadly license your content to as many viable, ad-supported services as possible.  Here, YouTube, Hulu, and your own show web sites come to mind.  But just as it’s necessary to counterbalance Apple in the paid subscription space, you’ve got to counterbalance Google in the ad-supported space.  After all, when it comes to finding content, Google already controls 70% of the market and their stated ambitions regarding television are clear.  Hulu may be your best bet.  But as evidenced by the Boxee flap, the lack of ABC programming, and complications with CBS, Hulu’s obviously been encumbered by their ownership structure– perhaps a spinoff or sale [to a cable or consumer electronics company] would go furthest in strengthening their long-term viability and competitiveness.

While Apple and Google are best positioned to win in this new ecosystem, the cable companies and consumer electronics companies would appear to have the most to risk… but that’s the wrong way to look at it.  The Sonys and Samsungs of the world can easily broaden and deepen their partnerships with Netflix, Amazon, YouTube, Hulu, and others.  While far from rolling over, cable companies’ role as [content] service provider will erode; but they should be more focused on improving data services, access, and reliability as they face increased competition from mobile carriers with the coming intersection of fixed-line and wireless data [by way of LTE and other 4G technologies].  They will find plenty of revenue in upselling customers to premium broadband subscriptions to support these new television services.

Lastly, while you’ve been primarily fixated on the risk of jeopardizing existing cable programming fees and steady, but decreasing, ad revenue, the digital transformation will soon be nearing a tipping point.  The great thing is that you’re already thinking along those lines; but be careful not to cling too much to old models and ecosystems and not to underestimate the appeal and sway of today’s consumer services. It’s imperative for you to get ahead of the curve and help guide the change by giving viewers exactly what they want, embracing and empowering new competing and sufficiently counterbalanced services, and discovering a wide array of new sources of revenue that will flourish in a digital age.

Looking forward to the brave new world of television, streaming to viewers everywhere.

Warmest Regards,
Scott Barrow

Will the Kindle Save Newspapers?

The PC and by extension the Web have evolved to become paid content killers.  But a promising new generation of consumer devices with integrated software and services offers new hope– one of which just might save the newspaper business.

Amazon recently launched the Kindle 2, the follow-up to their e-book reader.  It retails for $359, and in addition to offering over 240,000 books, the integrated Kindle Store also offers newspapers, magazines, and blogs.  Newspaper subscriptions range from $5.99 to $14.99 per month and are delivered “automatically and wirelessly to your Kindle, so it’s waiting for you to read first thing in the morning.”

Newspapers continue to lose value in their paper form and the consumer has come to expect free content [of all kinds] on the Web.  Now, the Kindle offers a new opportunity for the industry to reinvent itself.  If the Kindle becomes the iPod of print, will consumers pay for the convenience of automatic, wireless delivery on their favorite e-book reader?  At least one publisher seems to think so.

Newspapers shouldn’t just embrace the Kindle, they should promote it as if their lives depended on it.  They could model themselves after mobile carriers.  Like a free phone with a service plan, imagine the New York Times offering readers a free Kindle with a commitment of a 2-year subscription.

Ebay, Craigslist, and the Web itself may have nearly destroyed the newspaper business, but Amazon can save it.

Sadly it’s too late for the Rocky Mountain News.  Colorado’s oldest newspaper published its final edition today, just two months shy of its 150 year anniversary.

UPDATE:

“Looking to Big-Screen E-Readers to Help Save the Daily Press.”  New York Times, 3 May 2009.

“Amazon’s Kindle has a big job: saving the newspaper industry.”  Los Angeles Times, 7 May 2009.

“Murdoch Warns That Without eTablets, “Newspapers Will Go Out Of Business.” TechCrunch, 17 November 2009.