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Well, nearly, judging from the latest re-org news coming out of Microsoft.
The retiree in this case is Jim Allchin (right), who has been the Windows guru there for years. What struck me was his age, 53.
I'm going to be 51 in January. And I'm launching a start-up.
Seriously, Microsoft is going through the middle-aged crazies, and the solution is in many ways typical. That is, push decision-making down the stack, toward younger managers. Let a hundred flowers bloom and all that.
The other big headline in here is that Ray Ozzie, the former Lotus executive who joined Microsoft last year as a chief technical officer, is being given line responsibilities for what's called the "software-based services" strategy.
Unfortunately, Microsoft's middle-aged trouble goes a little deeper than that.
Let me take a stab at explaining Google's grand strategy.
Well, sort of. You may, instead of buying Microsoft Office, suscribe to Google's GMail and have a rudimentary office system with a gigabyte or two of storage.
But to say Google is going after Microsoft, the way we said Microsoft was going after IBM, is really to damn with faint praise.
Google isn't aiming at Microsoft, or at IBM. It's aiming at the entire computing-telecommunications complex, building out what I'll call the Google TeleComputing Environment.
The idea is to take advantage of not only the Internet's ability to disintermediate clients, but its ability to disintermediate the phone network at the same time, and to do this in an entirely open source way.
What do I mean? Here are the ingredients:
Google is flattening the world. More on what this means after the flip.
I know people are going to read this as good news.
Intel announced it is putting $340 million into expanding plants in Colorado and Massachusetts.
What could be wrong with that?
Skype, like most VOIP companies, is a tax arbitrage play.
The idea is that you avoid the tax costs of telephony by running your voice calls over an Internet connection. As everyone gets broadband, telephone service dies a natural death.
But neither the Bells, nor the governments they feed, are willing to go away quietly. I've written often about how it's done here. But it's done everywhere.
The same day eBay announced it would buy Skype, China started cracking down harder on Skype, and its Internet-Phone version SkypeOut. Unlike the situation with, say, Falun Gong, this is an effort where telephone firms are, not reluctant, but eager co-conspirators.
"I'll take Bubble for $100, Alex." (That's 2004 Jeopardy mega-winner Ken Jennings, whose 15 minutes of fame are now up.)
And the answer is, "The final proof of the second Internet bubble, in 2005."
"Correct. eBay paid $2.6 million in cash and stock for a company that had few revenues, no profits, and hardly any business model, and whose operations were completely incompatible with eBay's own."
"I could understand the stock, and even understand the press claims the deal was worth $4.1 billion. It's the cash that gets me."
Richard Wingard has figured out a way to fund cutting-edge technology with angel investors, and hold them in their investments for nearly 7 years. (The picture is courtesy the University of New Hampshire alumni association.)
Wingard runs Euclid Discoveries, which is working on an object-based video compression technology he says will deliver 10 times the performance of MPEG-4, enough to "turn your iPod into a DVD player."
And he's done it all with angel investors, who are best-known for backing only early-stage customers. Wingard has rejected the entreaties of venture capital firms, saying their time frames for pay-outs are too short. Yet he has succeeded in getting angels who will wait as much as 7 years for a private auction of his technology, and a distribution.
Want to know how he did it?
After $2 billion, Rupert Murdoch's Internet strategy has become clear.
Murdoch finished off his buying spree by putting $680 million into IGN, which runs Web sites devoted to video games. This followed his earlier purchases of Scout Media, which runs sports sites for various sports teams, and the company that owned Myspace.com, the music fan site.
Murdoch has called a special "summit" of his top corporate chiefs for this weekend at his California ranch. Prince Alwaleed bin Talals Kingdom Holding Company of Saudi Arabia has apparently endorsed his strategy. (Didn't know the Saudis had their hooks into Murdoch quite that deeply, did you?)
So, is this going to be a gusher or a dry hole?
Over at ZDNet, Steve Gillmor (left) has a wonderful commentary that got me thinking about a financial disease, one to which corporations like Microsoft are addicted and by which users like us are burdened.
I call it Upgrade-itis.
I think nearly all Americans can now agree that the biggest mistake made after 9-11 was avoiding a call to sacrifice.
(Picture from the BBC.)
My generation has never been "in" to sacrifice. It was our parents' thing. They went hungry during the Depression, they risked their lives during World War II, and then they stayed together, working hard, so that their kids (us) would have "everything."
Which we do. Our lives are very comfortable. Most Americans have cars, and TVs, and air conditioning, and healthy food in our refrigerators whenever we want it. We can take vacations. We can get fat. Then we can pay to have the fat stripped away and get fat again.
Maybe that's the real Vietnam syndrome. Those of my generation who felt the call to sacrifice as young people died in rice paddies, or had their dreams shot away. Frankly it doesn't matter why anymore. No matter what side you took in that war, get over it. We're in a different era.
These days sacrifice must be forced on us. And for many this week it has been.
Thanks to Moore's Second Law (complexity causes costs to scale exponentially) competition in the semiconductor business is held in an ever-thickening mud, which represents the cost of building new capacity.
The number of company-owned fabrication plants, or fabs, must decline over time, as their cost rises above even corporate affordability. The decision to build one must be taken with increasing care, with an eye toward a far-off future. It's the opposite of what happens in the product cycle, at the other end of the factory floor, where things are constantly accelerating.
While Intel has played its hand in Asia, AMD has chosen Europe, specifically the former East Germany. More specifically Dresden, firebombed during World War II, left for dead during the Cold War.
In 2003 AMD broke ground for its second Dresden Fab, AMD 36. The plant goes into volume production next year, at a point where AMD's designs seem to be excelling those of Intel.
Market share, in other words, could make a big swing next year.
At the very same time, AMD is advancing in court, forcing Intel to defend an already-fading monopoly. A few years ago Intel had knocked AMD practically out of the ballpark. With the Dresden Fab 36 that won't be true, but AMD figures Intel must still have a case to answer for, because its hyper-competitive marketing department never changed tactics.
Evidence will likely show that Intel did have a near-monopoly under Craig Barrett, and that it did abuse its position in its dealing with big customers. But a court finding for AMD would still be a mistake.
One sad headline from this year is how Google has become so opaque and observers so suspicious that its moves are now studied the way Microsoft once was.
CEO Eric Schmidt did neither himself nor his company any favors when he cut-off News.Com reporters, after one of them questioned the privacy implications of the service by Googling him.
I contributed with a positive comment on Google Talk, helped by a Pakistani friend. Other observers noted how Google Mail is now open to cellphones.
But not all the commentary was positive, either to myself or to Google. In fact, ZDNet colleague (and longtime friend) Russell Shaw gave me a right padding:
His source on this is Bob Frankston, co-founder of Visicalc and one of those great online friends I've never met personally. (As you can see by this picture, he's also well on his way to being a Truly Handsome Man (that is to say bald)).
Here's the key bit, as Berlind saw it:
By Frankston's calculations, for example, Verizon is reserving 99 percent of its government-ordained right of way (in the form of bandwidth that should be available to us as well as its competitors) for itself so that it may compete in the IPTV market.
Frankston's got the whole story, in hiw own words, here.
More on the flip.
That's the day the new bankruptcy law kicks-in, and credit card banks get hit by a double-whammy of their own creation. (Illustration is from Howstuffworks.) Be careful of what you ask for, because you just might get it:
How can this be bad for banks, who after all pushed for the legislation?
When people are throwing money at you, then you're really foolish not to take some of it.
At nearly $280/share, Google is Bubble-Priced. So it makes sense for Google to take some of this money. Over 14 million shares means more than $4 billion in cash, a Microsoft-like horde (especially as earnings continue to accelerate).
How can they do better with this cash than Microsoft has?
Analysts are already speculating on what Google will do with the money. It's burning a hole in the M&A pocket. Will they buy China's Baidu? Will they take out American start-ups, like Technorati? Who will they hire next? How plush can the offices be made? (If spokesman David Krane were given enough money to buy me a beer and a nice dinner, I wouldn't object.)
Verizon has begun selling one of the dumbest machines I've ever seen, a "DSL modem," (their term), wireless router and cordless phone combination dubbed Verizon One.
Essentially this ties together the obsolete telephone network with the Internet Verizon is actually selling and tells customers it's the same thing. It pushes fancy PBX capabilities on residential customers who don't need them. (Just to make things a little better, it locks them into its cellular service, too.)
The FUD (Fear, Uncertainty and Doubt) can be easily seen in the phrase "DSL modem." DSL is a digital service. It doesn't need modulation or demodulation to trick an analog line into taking a digital connection, which is what a modem does. It is an oxymoron.
What's ironic is I happen to know Verizon was talking to Netopia two years ago about a massive contract for DSL gateways that would have been far superior to this piece of nonsense. (Here's a 2001 press release, delivered in the early days of the relationship.) I have one of these gateways in my house now, a review unit. What would have made them powerful was a promised co-branded service providing full security to home users, saving them as much as $200/year on "security suites" from various software vendors. (There are currently no Netopia press releases, going back to 2002, referencing Verizon.)
More on what a truly clued-in person feels after the break.
The asking price is $334,900.
I remember the Garys, from back in the day. Nice people. Salt of the earth. He was a deacon at the church. She loved him desperately. The mantle was already filled with pictures of grandchildren when I met them, in the early 1980s. I went there regularly for block meetings. They said we were crazy to pay $49,000 for our house.
Mr. Gary passed away in the late 1990s. (God rest his soul.) She finally moved out with some of those grandchildren, a few years later.
They had gotten an unbelievable offer.
I was giving more thought to yesterday's rumors of Cisco buying Nokia (or part of it).
The more I thought about it, the more I realized there is a very smart M&A move Cisco could make on today's technology board, something that would give it an infusion of both technology and backbone, plus get it into the mobile markets it seems so hot for.
But what's in it for Cisco? Plenty.
When old business patterns die, those who lived by them become confused. They often start throwing money in a variety of different directions, many of which they probably know are Clueless, in hope of picking up the scent of profit. (This picture, from Pravda, came up in Google Images when I entered the keyword mystery.)
It's unusual for many industry leaders find themselves in this position without a full-on economic panic ensuing. In fact, the economy is in pretty good shape right now.
But the tech portion of the U.S. economy is in full-on crisis mode, as you can easily see by looking at a few headlines:
Intel holds the telecommunications balance of power in its hand.
Here's how The Register puts it, with its usual hyperbole:
Intel is throwing its financial, technical and lobbying weight behind the rising tide of municipally run broadband wireless networks, seeing these as a way to stimulate uptake of Wi-Fi and WiMAX and so sell more of its chips and increase its influence over the communications world.
And Intel is not going to back down. As ZDNet notes today, there's money to be made.
Back in the 1980s, Wall Street played a game on Microsoft's duo of Gates and Ballmer, demanding "grown-up supervision" for the then 20-something computer software duo.
Fortunately, Bill and Steve did not take the hint (get lost). They kept their stock, kept control, isolated a succession of adults, and finally came out the other side, billionaires and still in control to this day.
Well, I think Google has now outgrown its grownup.
Larry Page and Sergey Brin not only founded Google, but set many of its most important standards. They understand Google's corporate direction in their bones. But, like Gates and Ballmer back in the day, they were forced by Wall Street to get "adult supervision" in the form of Dr. Eric Schmidt.
Schmidt is, at heart, a computer scientist, and a good one. He is known as the "Father of Java," for his work on that language while at Sun. Then he went to Novell, and nearly rode the thing into the ground. (This should have been a hint, boys.)
The mystery is, how are these people still in the game?
Overstock is a money-losing Amazon clone which seems to spend its entire marketing budget on cable television.
Maybe it's the salt water. Overstock is based in Utah, former home of Novell, current home of SCO, the place where me-too tech ideas get a family-friendly makeover, then die.
The TV ads are mostly image pieces, a spokesmodel in her 30s oohing about the various departments -- clothes, office supplies, video, jewelry. (Her name is Sabine Ehrenfeld, and she's actually 42. She's done some other work, but she's best known for these ads.)
Two really stupid predications crossed my desk this morning. (The image is by Katie Guenther. From the University of Vermont.)
While a straight look at technology and the desires of consumers could lead you to these conclusions, they're dumber than dirt.
Let's start with the first one.
Even if people start leaving their laptops at home, laptop sales are not threatened by mobile phones, because laptops are replacing desktops. It's basic ergonomics. Where does your lap go when you stand up? If you're standing, or walking, you can't use a laptop, you have to use some sort of handheld device. As PDA functionality moves into phones, as the two markets merge, then, yes, phones become the handheld of choice. But that doesn't mean they replace laptops. It means they replace PDAs.
Now for the second prediction.
Hewlett-Packard is apparently ending its relationship with Apple.
When I last wrote about the company I called this relationship a key to new CEO Mark Hurd's future. Apparently this was just a re-sale agreement, and H-P's channels were pushing out only 5% of the iPods being sold. (My mistake.)
So they're dropping it. And they're blaming Carly Fiorina. (Of course.)
But I believe Apple remains the key to any possible H-P comeback. (Here's why.)
I believe that one of the cruelest businesses of our time are the so-called "payday loan" folks.
You see these shops in every ghetto. Victims write checks that are due to be made good when they get paid. The interest rates on these things can be as high as 100%.
Banks think that, at this rate, it's good business.
Now the business has come online through a San Diego outfit called Spotya.
Rebecca McKimmon (left, from her blog) took a shot at Cisco's China policy recently, confirming through a spokesman that the company does indeed cooperate with the government.
This is not news. So does nearly every other U.S. tech company.
The U.S. policy is, and has been, full engagement with China. This has already hurt Cisco. Back in the 1990s one of the prices for getting into the market was to share technology. Cisco did so, and a few years later Huawei, a Chinese company, had routers and bridges very similar to Cisco's old stuff, along with most of the Asian market (thanks to lower prices).
McKimmon's point now is that
China Cisco is cooperating with the worst excesses of the China government, which is seeking to have both the world's best Internet technology and full control over what people do with it.
That is a good point, but I don't think you
don't go after Cisco to make it.
I should not be a fan of Dr. John Rutledge (left).
His economic prescriptions are unrelentingly right-wing. He's a social Darwinist, a raging bull.
But he's not an idiot. He understands money. He knows trouble when he sees it. And, on his blog this week, he sees it.
The process of China's inevitable Yuan revaluation has begun.
In a series of blog entries Rutledge ticks off what's happening.
They're both brilliant. They're both A-list bloggers. They're both rich. I've known both for about two decades.
But I think Marc has a vital Clue Joi has missed, about one of the most important trends of our time, the rise of the open source business process.
Here's why I think that.
Joi has put a lot of money into SixApart, which runs Movable Type, which powers this blog. It's good stuff. But it's being left behind because it is, at heart, proprietary. It doesn't interconnect with other software. It isn't modular, scalable, and it can only be improved by the SixApart team.
In other words, it doesn't take advantage of the open source business process, and thus there are whole new worlds it hasn't been able to scale into. It's not a Community Network Service (like Drupal), and it's not a social networking system (like MySpace).
Marc, on the other hand, has just released GoingOn. It's a new engine for digital communities, like MySpace. He launched with Tony Perkins, who will use the system as the new heart of his AlwaysOn network (no relation to my wireless network application idea of the same title).
But Marc also understands that his stuff can't be the be-all and end-all. Let him explain it:
That headline could have been written about me. (But let's see if I can't make it up to you right now.)
It's the oldest dodge in the blogging world. You call another reporter lazy in order to cover up the fact you haven't looked at a story.
Just how lazy is that? Click below and find out.
Amid the hullaballoo over CardSystems International, here's a little story that you missed.
Not just any bank. A special kind of bank. An industrial bank, in Utah.
No offices, no direct deposit. Mainly, they exist to handle credit cards and other consumer loans. I'm sure the terms are very favorable, because big corporations are hotter for these than Donald Trump is for endorsement dea.s GE, Merrill Lynch, American Express and Target all have them. Berkshire Hathaway is setting one up to make loans for its R.C. Willey Home Furnishings stores. (Betcha didn't even know Buffett sold furniture.)
Readers of The Chinese Century know it begins with China allowing the Yuan to float against the Dollar, and then pushing the Yuan up in the market.
The first step toward that reality was taken today. (The image is from the China Daily article.)
Instead of having a fixed rate against the dollar, China will let the Dollar rate float against a "basket of currencies." So if the Dollar falls against, say, the Yen (and it did in response to this news) or the Pound (ditto) or the Euro (mega dittoes) further moves might be made.
The Optimist Club, otherwise known as Wall Street bulls, suggested this will make our exports more competitive. That would be great if we had exports. In fact, it makes imports more expensive. It imports inflation.
It also reduces China's own production costs, because oil (for now) is priced in Dollars. With fewer Yuan needed to buy Dollars, the price of oil to China goes down.
Let us now praise a famous brand, Visa.
One of the differences between card processing and many other businesses is that you're totally dependent on a few big players for survival.
Of the three big guns -- Visa, Master Card and American Express -- the first is most important. The bank association's changing requirements are generally a road map for other processors, defining necessary changes under enforced deadlines.
When Visa pulls its business from a processor, even for a little while, it's terribly destructive. When they do it permanently, and publicly, it's time to get out the resumes. When they do it alongside American Express, it's a corporate death penalty.
UPDATE: My saintly wife (that's the original St. Jennifer there to the left) notes the AmEx decision is effective at the end of August. Visa's decision becomes effective at the end of October, so you might call them the "good cop" in all this.
What I found most fascinating, however, was what was below the headline.
That's what Rupert Murdoch has paid for him, buying his Intermix Media and its prime asset, MySpace.
Fox has never had an Internet strategy. This was partly because Murdoch wouldn't pay top dollar for Internet assets. But it was also because he has kept his Internet operations on a short leash.
By spending big to get MySpace, which has taken over the business of social networking around music in the last year, Murdoch is changing his tune.
But it doesn't matter unless DeWolfe, who launched MySpace just two years ago with Tom Anderson, has a second strategic act in him.
I'm not trying to start a rumor here. I have no insight into whether Dave Sifry (left, from Marc Cantor's blog) has considered any offers for his Technorati site, nor how he would react if one came in.
But since Barry Diller bought Bloglines (via AskJeeves) Technorati's performance has been falling behind that of its rival.
Robert Scoble (who works for a possible acquirer, Microsoft) offers the numbers, three times as many links to Sifry's own blog from Bloglines as from his own engine.
There is a vital lesson here about the technology space:
A reporter can make a good living just covering Microsoft.
This is not a good thing.
One fact that attracted me to technology journalism in the first place was its social mobility. I often write about companies I call "Clueless" and find they have disappeared practically before I can get the piece into digital print. Those that are "Clued-in" can also fall quickly, corporate management in this space being much like tightrope walking.
Intense competition makes for rapid evolution. Call this Dana's First Law of Competition. Markets in India and China are intensely competitive. You can't let your guard down for an instant. This is a very good thing.
It's not what human nature wants, of course. As people we want to relax, to enjoy our lives, to set the competition aside sometimes so we can, say, raise our families, get more education, or retire with dignity.
Both Microsoft and the government had opportunities to prevent this, to re-ignite competition. They chose not to take these opportunities.
Bill Gates had one vision for Microsoft, but the company has gone beyond it. He was wise to pass the baton to his majordomo, Steve Ballmer. Ballmer is all sales, all the time, a whirling picture of aggression. (He's also, admittedly, what we call on this blog a Truly Handsome Man (grass don't grow on a busy street) but looks ain't everything.)
Ballmer's vision isn't really about technology. It's about exploiting advantages and making money.
So at Microsoft's recent Worldwide Partner Conference in Minneapolis (Minneapolis?) we got headlines like these:
This is just one corner of the news Microsoft made last week.
The search for online business models is a continuing fascination of mine at A-Clue.Com.
You may have great merchandise, you may have great service, you may have a nifty shopping cart. But if you can't bring the values of your shop floor to your Web site, you won't succeed online. Over time you may not succeed offline either.
An editorial mission replicates the value of your store online. What is your Unique Selling Proposition (USP)? For Amazon it's a database, a huge variety of merchandise. Works for Amazon, works for Wal-Mart, but it won't work for you.
In fact, Wal-Mart's failures online can be attributed to this editorial mission failure. They were unable to replicate the values of a real Wal-Mart in their online efforts. While the store looks a jumble, regular shoppers know you can actually get what you want there fairly quickly. What they should have enabled was a form of "shopping lists" that people could print-and-use at home, adapting to their own needs, then input regularly on the site, along with a delivery service.
The difference between editorial values and commercial values is that the one defines what you are, and the other puts your name in mind. If branding is to be worthwhile you must deliver the values the brand promises. That is exactly how editors think, too. What you call your reputation they call credibility.
Americans pay more for less broadband service than citizens of any other industrial country, and our take-up rate for fast Internet service is approaching Third World levels.
The reason? Lack of competition. Phone and cable networks, created under government control, have been made the private monopolies of corporate interests whose lobbyists dominate all capitals against the public interest.
Does new FCC chairman Kevin Martin see any of this? No. Just the opposite, in fact.
The Supreme Court affirmed the FCC's decision to refrain from regulating cable companies' provision of broadband services. This was an important victory for broadband providers and consumers. Cable companies will continue to have incentives to invest in broadband networks without fear of having to provide their rivals access at unfair discounts. The decision also paves the way for the FCC to place telephone companies on equal footing with cable providers. We can now move forward and remove the legacy regulation that reduces telephone companies' incentives to provide broadband.
This is Orwell's FCC. Monopoly is called competition. Martin claims there is intense competition from Wireless ISPs and satellite providers, when in fact those companies are being driven out of the market. The vast majority of consumers and businesses today have just two choices for broadband -- their local phone monopoly and local cable monopoly, who together enjoy a duopoly and monopoly profits that lets them write-down their 30-year property in a world best served by three-year write-offs.
There's more spin after the break.
I spent last week in Texas, dependent on free WiFi hotspots, and I learned a powerful lesson.
There is no such thing as free WiFi.
When "free" WiFi is provided by a bar, coffee shop or restaurant, there is a quid pro quo. You're going to eat. You're going to drink. And when you're no longer eating and/or drinking (and ordering) you're going to get nasty looks until you leave.
There is a cost to a shop's WiFi that goes beyond the cost of the set-up. That is the cost of the real estate, the cost of the table, and the cost to a shop's ambience when a bunch of hosers come in and spend all day staring at laptops.
Now here's an even-more controversial point.
A note came in today from a friend I've known even longer than my saintly wife. "How does this fit into Moore's Law?" he asked.
The link was to a story about a holographic storage system being marketed by Optware of Japan. It's called a Holographic Virtual Card (HVC) and claims to store 30 Gigabytes on $1 worth of media. (That's the Optware reader to the right, from a 2004 GearBits article promising commercialization in 2005.)
The kicker is that readers will cost $2.000 and read-write devices may cost five times more. Optware has promised standard kit by the end of next year.
All this related to what my book calls Moore's Law of Optical Storage. Instead of storing data on a fairly flat substrate, the Optware design uses all three dimensions. Think of the storage medium as a cube rather than a circle.
There's a long way to go before this threatens the CDs we're used to. Right now, however, the high price of the readers may be an advantage, making this perfect for applications like physical security.
Imagine the depth of personal knowledge that could be input on a 30 GByte substrate for an entry badge. Connect that to a variety of biometric readers so the bad guys can't hide their identities behind, say, phony fingerprints or contact lenses. Add a human guard to the mix and your entry portal could be pretty darned secure (for a time).
But the best news here may be this, the fact that there's competition in this space from Inphase Technologies, a spin-off of Bell Labs. They're looking at issues like the speed of data transfer, issues that could make holograms an alternative for the archiving of Web data.
The people you want working for you are not necessarily the people who want to work for you.
This is one of those hard truths that everyone knows and no one talks about.
Because it's not just a truth at Microsoft.
Ledgard's post, which she later felt duty-bound to soften, told a real truth, and the fact she felt compelled to soften her tone speaks loudly to just how bad the problem is -- across corporate America.
The people doing the hiring, and the people seeking those positions, both think working at Microsoft (or wherever) is the greatest thing since pasteurized milk. In some ways it is. Look at the medicine cabinet you get to use at Microsoft (at the top of this item). Look at the salaries, the benefits, the family-friendly attitude. It's paradise.
When evolution accelerates size becomes a disadvantage.
It's true in nature, and it's true in technology as well.
The Bells (and Comcast) are the big bottlenecks in our technology universe. With Moore's Law sweeping through the telecomm landscape they are competitive liabilities in our economic ecosystem.
There is no malice in saying this. The Bells can't help being pointy-headed bosses. They are bureaucrats. Their loyalty is to the inside of their system, not to the customer. In a stable environment the ability to retain such people is a boon. In an unstable one it's disaster.
More proof comes today from Techdirt. It's a so-called BellSouthWiMax trial. But it isn't WiMax. It isn't new technology. It's an excuse to keep charging $110/month for DSL ($60 for the phone line) when the phone component is (with VOIP) unnecessary.
When something is overpriced there are always excuses.
I had a friend tell me the other day, with a straight face, that housing is still a great buy because the population will keep growing. Maybe so, but prices are a function of the amount of capital available to buy the goods, not the size of the population. Just because there are a lot of people in Soweto doesn't mean you should plunk down 100 million rand for a shanty.
The housing bubble, in other words, is based on unrealistic expectations. People are taking out interest-only loans, adjustable rate loans, and loans of over 100% of the purchase price, because they expect prices to go up faster than interest rates, indefinitely. True the length of a bubble economy is indefinite, but it definitely bursts in time.
Here's another bubble. Google. Sorry, it's not worth $80 billion. It's worth some multiple of its earnings, and with earnings growing quickly it's worth a premium on that. But it's not worth 25 times its sales of $3.2 billion. No company is. Some part of that valuation, maybe a large part of it, is pure speculation.
Assuming Apple does switch to Intel chips tomorrow, as News.Com reports, the value of Intel stock will likely rise.
That would be a mistake.
Intel is making a big investment here to gain a very small amount of market share. Meanwhile it's losing far more market share to AMD in what used to be called the Windows world.
WinTel has been broken. That should be the real headline here.
Microsoft is perfectly happy to have AMD supply chips for Windows machines. People are very happy to buy them. And right now AMD has a price-performance advantage there.
This move toward Apple will, if anything, accelerate that shift. Intel should be spending all its time addressing its loss of share in the Windows world, and in the Linux world, instead of wasting energy with a tetchy, demanding Apple, an outfit that even IBM couldn't please.
One more point.
This week I returned to the topic.
The reason why publishers have no editorial budgets with the move to the Web is simple. (Image from Websitecenter.)
None engage in Deep Commerce. Instead, they still just sell ads.
Here's something you probably already knew.
Actually I added the word "national" to the sentence above. The New York Times failed to. Because local business newspapers are doing just fine thank you very much. The Times, as usual, has about half the story.
National magazines are out of favor because (ironically) they never created a real business proposition for the advertiser. Look at the ads. They're all corporate self-congratulation. Where's the business in that? It doesn't exist.
Beyond that Forbes, Fortune and Business Week mainly existed to tout stocks and stock touters. The collapse of the dot-bomb meant bad news for both, and in fact the Dow Jones has yet to match its pre-bust high. (The NASDAQ remains at about 40% of that high.) Fast Company, Red Herring and their ilk had an even weaker business case -- they pre-touted what vulture capitalists pushed.
But like I said, this is just half the story.
And why should these people listen? They have what they consider success. I'm a "low traffic blog." If I'm so clever I should be doing it, not talking about it, right? (Right.)
But the plain fact is, most of today's top blogs are using the wrong business model.
Their model is a media model. I tell you, you listen, and maybe I advertise to you on the side. This is what newspapers do, what magazines do, what radio does, what TV does.
But is the Internet a newspaper? Is it radio or a magazine or TV? No, it is not. The IN in the word Internet is short for Intimate. So why then should a business model imported from one of these other industries be appropriate? Only because, like TV entrepreneurs in the late 1940s, you can't think of a more appropriate one. You don't have the right vocabulary. You weren't born to this medium.
What would work better?
The community business model would work better. This is driven, not so much by what bloggers want to say as what their readers want to say. There are many high-traffic sites now using the community model -- Slashdot, Plastic, Groklaw, DailyKos. What they have in common is true community software -- Scoop, Slash, even Drupal.
The problem (and this is the nut of the issue) is that most of these community sites have deliberately shied away from having a business model. The only site I mentioned above that has a true business model is Slashdot, and Slashdot is so unusual people with an editorial background can't get their arms around what that business model is.
This week I continued the discussion, asking why so many responded to that piece denying they had any such thing as A Clue, let alone A-Clue.Com.
There was an interesting reaction to my piece last week, denial.
Many of the leaders in the blogging business read it, and all of them denied its inherent truth, namely that they had A Clue.
I'm not a business, insisted Jason Calacanis. Never mind that he has 65 blogs, a uniform look-and-feel, that his writers don't even get their pictures on their blogs and, when they leave, they leave with nothing. No, it's all about passion, he insists. We do this for love, he says. Business? We're not building one of those.
So it went.
I'm not a success, insisted Rafat Ali of Paidcontent. I'm not powerful, insisted Markos Moulitsas of DailyKos. I'm a dilletante, said Glenn Reynolds. I'm only here for the beer, said Dave Winer. I'm no one at all, said Pamela Jones of Groklaw.
Despite his ponytail and his sometimes counter-cultural language, despite being what I like to call a Truly Handsome Man (it's a brighter term for bald, people) Ted Waitt was always a follower, not a leader. (The picture is from a 2002 profile in the Sioux Falls, South Dakota Argus-Leader.)
Waitt was Gimbel's to Michael Dell's Macy's. He wanted to be Pepsi to Dell's Coke.
But computing lacks the stability of the retailing or the soda business. So when Waitt announced his resignation today (at 42 it wouldn't sound right to call it a retirement) it wasn't big news.
Waitt and Gateway did well in the 1990s, following Dell into mass customization. He made his big mistake when he tried to out-think Dell, opening a chain of retail stores that caused $2.4 billion in losses, according to The New York Times.
But I personally think the mistake was more basic than that.
I was planning on writing this afternoon about Broadcom's new patent suit against Qualcomm. Regardless of the merits, it looks like a good corporate strategy, creating uncertainty about a market opponent just as you're entering their space.
But in researching the story I learned something new about Google that may distress you. And that's a better blog item than the one I started with.
B.L. Ochman (the picture is from her Whatsnextblog) has already broken this, but this week's a-clue.com newsletter features a piece on blogging business models, written following the Blognashville conference.
I spent the weekend at Blognashville, a gab-and-egofest for about 100 (mostly male, mostly middle-aged) bloggers at Belmont University in Nashville (a pricey pimple on the bottom of Vanderbilt) to fuss over Glenn Reynolds (much nicer in person than online) and to search for meaning.
The big question: how will we make money off this?
People are investing a ton of time and effort in blogging. Volunteers get burned out if they can't find money. All institutions are built on money. At Nashville we all felt we were in the gold fields and no one seemed to have made a strike.
There's a Clue there. Nearly all those 49'ers (and Alaska 98'ers) who went in with pick and shovel failed. It was those who went in with a business model, professional mining companies or merchants such as Levi Strauss, who succeeded.
Some 99% of blogs (including mine) go about the publishing question backwards. That is, we look at the process from the writer's point of view, not the reader's. This is forgivable in that bloggers are writers, but this is one of the key differences between writers and publishers. Publishers create for the market.
That is, publishers define the readers they want, the content those readers need, and the advertisers they will hit-up to pay the bills. They then order the production of the product, and keep an eye out to make sure it meets the readers' requirements.
In other words, the difference between blogging and journalism lies entirely on the business side of the shop. Publishers are just as likely to pay for lies as bloggers are to make stuff up. The difference is the publishers create lies that appeal to their audiences, while bloggers write lies that appeal to themselves.
This is easy to understand when you look at the professional blogs that are run by publishers - Weblogsinc, Gawker Media, and Paid Content. Jason Calacanis, Nick Denton and Rafat Ali defined the readers they wanted, created a business model, then hired writers to fulfill the mission.
In contrast I found, at blognashville, that even the most-popular bloggers are mere dilletantes. This is a term Glenn Reynolds applied to himself. Dave Winer, with whom I spent pleasant hours, is also doing his blog on-the-side - his business is RSS. I was surprised to find myself the most knowledgeable businessperson in the room, and I'm a complete failure.
When you're led by amateurs you can't expect professional standards to be upheld. Yet, on the editorial side, blogs often do just that. It's on the business side where they all fall down.
Still, I saw several potential business models at the conference:
The U.S. is in the process of losing its last friends, the Brits.
I'm not just talking here of recent elections, where Labour lost much of its majority specifically due to its support of the Iraq war.
No, I'm talking about Malcolm Glazer.
Malcolm who, you ask? Glazer owns the Tampa Bay Bucs. You may remember his eldest son Avram from the dot-boom, as the head of some nonsense called Zap.com, which tried to roll-up a bunch of disparate Internet assets into some super-duper-something. They got less than nowhere. (The parent outfit, Zapata Corp., had as its co-founder one George H.W. Bush. We'll just let that one sink into the heads of Manchester's tinfoil hat crowd.) Zap.Com also gives us an excuse for discussing this sports story in this here tech blog.
Anyway, yesterday daddykins bought England's true crown jewel, the Manchester United football club. And he seems to have bought it the way LBO artists did it in the 80s, aiming to "unlock value" by dumping his debt onto the books. Needless to say you don't want to be wearing a Bucs' hat in Greater Manchester this afternoon.
Many think the secret of Fox' dominance of news is political. A generation brought up on the myth that an objective press is biased to the left, then given a right-wing Pravda, sees the latter as "fair and balanced."
That's a small part of the story. Identifying a niche and serving it is as old as the magazine business. Older. It's as old as Poor Richard's Almanack.
The real secret is much simpler. The "network" is actually a studio. Few bureaus, no big investigation team, no bench, little support. Who needs writers when most hosts can wing it. It's talking heads. It's radio economics.
No, it's blog economics, or Blogonomics.
The secret's out.
Intel is re-interpreting Moore's Law. Not repealing it. Not rejecting it.
They're reinterpreting it. That's the significance of the change incoming CEO Paul Otellini (right) is making.
Before Moore's Law was like Samuel Gomper's famous quote about what labor wanted. More. More circuits, more speed, more cycles, more bits. More.
As of today Intel's new direction is better. Better doesn't always mean more. In the case of microprocessors it can mean putting more computers on each chip (multi-core) or running with lower power. In terms of communications it can mean a host of attributes, from security to coverage to throughput.
Why is it that politicians have done a better job on the Internet than publishers?
It has to do with a concept I call Pitch Credibility.
Journalists understand the concept of credibility. It's the trust readers place in us. If there is a journalism profession, it's based on this idea of credibility. I took a huge hit to my own credibility when I screwed-up an item on Ev Williams. I went through hell on that not to regain my credibility, but to minimize the losses, and in hope the damage would not spread to innocent Corante authors.
But just as editorial work must have credibility, so must advertising. That is the innovation the Internet makes necessary.
Moveon.org understood this right away. It knew that if it suggested you give to Candidate X, then Candidate X better fit the desires of the Moveon audience, or the endorsement would damage Moveon. Because it had pitch credibility with its audience, Moveon was able to gain honest information (a mailing list) from its members, and even financial support, based solely on its promise to deliver.
While Moveon failed in these last two cycles as a political force (ask Presidents Gore, Dean and Kerry) it has succeeded in creating a business model that everyone else on the Internet needs to pay attention to.
So if Roger Simon, for instance, is to succeed in his efforts to unite the right-wing blogosphere and extract money from its members, he must retain pitch credibility. He better not let anyone like me in because I'd damage it. And he better use that credibility only to solicit for products, services and people the audience will surely endorse.
Perhaps you can see now why this idea is easier for a politician to understand than a businessman. Politicians are attached to what they're selling in ways businessmen aren't.
Belief is at the heart of pitch credibility.
How can we take advantage of this in the business realm?
Click to find out.
The bidding war between Verizon and Qwest for MCI is based on a myth of scarcity. That is, both think they can make the deal pay by squeezing customers for the scarce resources represented by the MCI network.
Moores Law of Fiber rendered that inoperative many years ago. There is no shortage of fiber backbone capacity. And there are ample replacements for Plain Old Telephone Service -- not just cable but wireless.
The myth on which this deal is based is, simply, untrue.
Yet the myth persists, and not just in the telecommunications business.
Market research companies specialize in the third kind of lie, namely statistics. While these companies were originally created to help clients deal coherently with the market, that's no longer the sole source of income.
The process of market research has been corrupted by paid research done on behalf of:
Yes, the categories do overlap. More, and what to do about all this, after the break.
Personally I dont think this is necessarily the case. Newspaper companies will be able to use computers and on-demand pagination to mass produce paper products that are relevant to future audiences. Just as radio and TV only forced the industry to change, not disappear, so it will be in this case.
But lets assume Murdoch is right. How can incumbent newspaper companies achieve anything on the new medium? His speech read like someone anxious to learn. I'll take him at his word.
Following are some ideas.
In The Lost Point, I wrote that Google risked being outmanuevered because it didn't pay proper attention to Blogger.
Today Duncan Riley of The Blog Herald goes further. He says the game is already over, that Microsoft won, that the field is consolidating into the three big portal players so Movable Type needs to sell out to Yahoo, quick.
Riley is right as far as he goes.
But if you click below, we'll go a bit further.
The point lost by my stupid mistake is that Google, despite its enormous short-term success, is showing cracks in the armor.
The success of Google has been based on the fact that technology drives its train. Technical success is the most-sought value.
This is becoming a problem.
In many of the new businesses Google has launched, technical values (while important) are not going to be the sole drivers of success. In blogging, in RSS, in Google News, in Google Desktop, in Google Local, and in other areas, other skills are required.
Business skills. Marketing schools. Journalism skills. Political skills. Artistic skills.
Leonardo DaVinci (celebrated above) could not get a job at Google today. In a well-rounded company, his genius would find a place.
The need for these various skills will only increase with time. Google must find a way to recruit these skills, and to reward these skills, without giving the people with these skills control of the company.
This will not be easy.
There was a gratifying reaction to my calling out Verizon CEO Ivan Seidenberg the other day.
But here's a question no one asks, and getting in tune with Seidenberg's arrogance actually keeps us from asking this.
What's he buying in MCI? For $6.7 billion it's not much.
Then again, maybe it's everything.
I'm not just talking about RSS items that are in fact links to ad pages, but RSS items that, while containing links to stories, have additional ads inserted into them.
Now there's another, far more dangerous abuse of the RSS system, phony links.
Phony Links are RSS items from registration-only sites. Most U.S. newspapers are now requiring registration. RSS feeds from these sites now go to sign-in pages, not to the stories themselves. In other words the link is a bait-and-switch. It doesn't go to content, but to a sales pitch.
The AP is abetting that requirement by demanding royalties for online content.
It's already starting to bite.
I often feel it in reaction to items I write here or on ZDNet. Excuses. Reasons not to try. That will never work.
Young people new to a field don't think like that. Back in the 1970s and early 1980s, we didn't think like that. Whether or not our politics become more conservative as we age, our lifestyles do. A 50-year old programmer worries more about what they're making and fears the future, while a 20-year old thinks about what they might make and embraces the future.
It's a cliche, but that doesn't make it less true. Young Americans are shunning technology for business, for real estate, for law, for things that redistribute wealth rather than create it.
Leaving the future to be made by others.
Because technology changes so rapidly, we feel the impact of change here very, very quickly, and this is like a cold wind in November.
Want some good news?
The hole is the whole U.S.
Intel plans on mass producing WiMax chips and going into rapid deployment, offering end-user speeds far in excess of what U.S. phone outfits provide with DSL.
The problem is that's the speed limit for most backhauls. Go to most WiFi hotspots, or most home networks, and DSL is the backhaul platform. We're talking 1.5 Mbps, max.
The key benefit of open source is transparency. (That's a transparent Mozambique garnet, from CLDJewelry in Tucson, Arizona. Transparency doesn't have to be perfect to be beautiful.)
The key benefit is not that the software is free. It's not that you can edit it. It has nothing to do with the obligations of the General Public License. It's inherent in every open source license out there.
The key advantage of open source is you can see the code. You can see how it works. You can take it apart. You can fix it. You can improve it. Most people do none of these things, but all benefit from this transparency.
The benefit became clear when I got responses to a ZDNet post called Is Linux Becoming Windows? The news hook was a Peter Galli story about how some folks were getting upset over the feature bloat now taking place in the Linux 2.6 kernel.
Those who responded said simply that the complainents, and I, had lost our minds. Kernel features aren't mandatory. Just because something is supported doesn't mean you have to do it. You can pick and choose among features, because you can see the whole code base -- it's transparent. You can look at the various builds out there and, if there's something you don't like, something you can do better, you can fork it, and maintain your own enhanced code base.
When Microsoft changes its software it makes things incompatible. When Linux software changes this doesn't happen, because the change is transparent. New builds are transparent, and if you come to a fork in your operating system road you can take it.
Transparency is the key term. And it doesn't just apply to software:
But is this just another Marty Rimm study?
Rimm, you may or may not remember, wrote a paper at Georgetown Law in 1995 claiming 85% of Web traffic was dirty pictures. This was later disproved, but the damage was done and Congress passed the ill-fated Communications Decency Act.
Mike Godwin, the former EFF counsel who fought the Rimm study and is now senior counsel at Public Knowledge, remains skeptical, noting that the Cachelogic study hasn't gone through peer review. He also notes that, since Cachelogic sells systems to control P2P traffic, it has a natural bias.
The Cachelogic claims may have logic behind them, however. Many ISPs do report that over half their traffic is on ports commonly used by P2P applications. Brett Glass of Lariat.Net, near the University of Wyoming, says the claim seems accurate, noting that unless ISPs cut-back capacity to those ports (a process called P2P Mitigation), the applications quickly discover the fat pipe and divert everyone's traffic to it, filling it at the cost of thousands per month.
And that is at the heart of the problem.
A friend introduced me to a blog I'm adding to the blog roll, one that is only marginally about technology.
Seth Goldstein runs Majestic Research, a New York outfit that produces very high-end (and I hope very expensive) reports on trends for hedge fund managers. Before that he ran Site Specific. He advises Del.Icio.Us. He's smart.
His blog consists of long essays, published at long (for me) intervals, on a wide range of subjects. Recent pieces include one relating client Del.icio.us to German essayist Walter Benjamin, whose Frankfurt School was overwhelmed by the horrors of the Hitler era, another calling APIs "the new HTML," and a third seeking a system of PeopleRanking, very similar to my own piece Finding the Good Stuff.
I'm a big James Surowiecki fan. (Not a Truly Handsome Man yet, like I am, but don't you think his barber is starting to get creative?)
When I got into journalism, nearly three decades ago, I harbored a secret dream of writing for The New Yorker. I never got a sniff. But I harbor no grudges because Surowiecki did. And he's run with it.
The headline his editors give the piece is "In Yuan We Trust." His point is that our debts to Japan and China are so massive neither can afford to end their support for us. Thus the air will go out of our financial balloon slowly. We won't know the dollar's a peso until it's reached par. He concludes, "So be afraid. Just dont be very afraid."
That's the part I take issue with.
Glenn Fleischman and I disagree so seldom, we both get confused when it happens.
Long story short I thought it would help if I described what might be a better plan for citywide WiFi. Apologies to those of you who have read this before.
The short answer is WiMax. The long version follows the break.
I am a big supporter of free WiFi. But Philadelphia's project will go down in history as a failure.
Those are the obvious problems. But wait, there's more:
An IEEE study shows the excesses of venture capital in the late 1990s actually stifled innovation.
The image, taken from the IEEE Spectrum story, shows what a venture capitalist should be doing, looking for ideas. In fact, as the study indicated, most 1990s' VCs replaced that light bulb with a dollar sign.
It's something I strongly suspected at the time. It's one reason I called my newsletter a-clue.com, because I saw so many Clueless people drawing such fat checks and directing such big funds toward the cliff.
But it is nice to get some confirmation.
In the study by Bart Stuck & Michael Weingarten, over 1300 public offerings over 10 years were analyzed, and scored 1-5 for innovation, with 1 being very innovative and 5 being me-too.
The study's conclusion is poignant. "Based on our experience, we believe that VCs really aren't the risk takers they're often made out to be."
Here's what I think really happened.
The cost of making something good is directly proportional to the complexity of the tools needed to create it. (The picture is from Freeadvice.com.)
This blog item is quite good. The tools needed to create words are very cheap. Even if the tools were more expensive, as they were when I began writing, my cost to create this text would not go up much. And the likelihood of its being of high quality would be just as high.
If I read this on the radio it would not be as good. The tools needed to create a Podcast require knowledge of radio or music production values. Even if Podcasts were as cheap to make as blog items, the proportion of good ones would be smaller than they are for blog items.
Now that youve read my latest dismissive screed against the government, the question may have occurred to you.
What might a proper telecommunications policy consist of? (Very pretty flower, I know. Here's where I got it. The picture is called Simplicity.)
Its really quite simple.
Click below and I'll tell you.
That game is predicated on the assumption that there can only be a few big "winners" and everyone else is a loser.
Wall Street also believes that tleecommunications is fearfully expensive to provide, that it is a "capital-intensive" business.
In this analysis, Moore's Law is ignored. Forget how fiber becomes more efficient with each passing year. Forget how we use bandwidth more efficiently, or how the cost of processing goes down.
To Wall Street, telecommunications is capital intensive and there can only be a few winners. Period. The end.
I have made few comments about the so-called conspiracy against the Apple iPhone.
The story was that Motorola was ready to release a cellular phone that was also an iPod device, but it couldn't find any carriers for it.
What's more interesting to me is the tug of war now taking place among entrepreneurs between these two technologies.
And, surprisingly, cellular is losing.
The reason has to do with business models and open standards. (Thus the picture above of standard pawns, available from the good people at Rolcogames.)
It's one of the great laws of politics. As soon as people decide you have power, and you can be moved, everyone and his auntie is going to try and move you.
I hinted that something might be happening more than a month ago, but it was probably the controversy over Google News that tipped it over.
With Google News, from the very beginning, Google did something it claimed it wasnt doing. That is, it exercised editorial judgement. As SearchEngine Journal noted, While an algorithm based on publishing popularity chooses which articles are found under which keyword phrases, the news-authority sources themselves are supposed to be pre-screened by a human. And some immediately started writing programs to see what those humans might be doing.
But just as I was objecting, wanting to get in, others were objecting wanting to stay out. Agence France-Presse has won an agreement from Google that News wont even spider stories sent to its affiliates, while Jeff Jarvis is crowing that Google News no longer spiders hate sites.
And now the atmosphere of controversy has spilled into the main site. French law demands that ads for competitors not be placed against trademarks. Google complies, on its French site, but continues to employ them on its U.S. site, where the standard is different. So the French sue.
This weekend Slate offers a feature of Philip Anschutz, a conservative businessman (and big soccer fan) who has launched printed papers under the name the Examiner in Washington and San Francisco.
Jack Shafer syggests Anschutz needs to invest more in editorial and consider the Web in order to be taken seriously.
Correct and double correct.
I wrote about this several weeks ago, and what follows is that original copy. You can get it free
I have a love-hate relationship with newspapers. (This newsboy is advertising news of the Titanic's sinking.)
The business has been at the heart of my "profession" for a century. The whole idea of a journalist as a professional is also a product of this business. I took my graduate degree from the Medill School of Journalism. Joseph Medill was the old reprobate who built the Chicago Tribune empire.
But as I've said many times here this whole idea of a "journalism profession" is a fraud. Professionals can make it on their own. Journalists can't. If you don't have a job you are not part of the fraternity. Even if you build a journalism company based on your vision of what the profession should be, you are always nothing more than a businessman.
The New York Times recently quoted a newspaper consultant as saying "For some publishers, it really sticks in the craw that they are giving away their content for free."
Here in one sentence we have the utter cluelessness of the industry. Here is an opportunity waiting for someone to exploit it.
You may have caught the nasty 509 error which hit this site yesterday.
Here it was no big deal. It was a technical problem. It was fixed.
But it did occur to me that, finally, the market for core bandwidth is starting to turn around and Web hosts are finding themselves in the position of restauranteurs. (Thus, we're repeating our picture of Italian restauranteur Mario Batali.)
You may now think about Parmesan Reggiano, some nice Balsamico, the cool breezes of Tuscany, an artisanal bread and a fine bottle of red. I'll explain.
Throughout the dot-boom Barry Diller stood aloof. He promised he would never overpay for "Internet real estate," that he would grow his business by finding bargains. (The picture is from this Wired article where he displays far more wisdom about Internet valuations than displayed today.)
For several years he stayed true to that. You can justify the prices paid for Home Shopping Network, Expedia.Com, Hotels.Com, and Ticketmaster based on revenues and earnings. They sold stuff -- toasters, travel packages, concert tickets -- and earned real money.
Sorry, Barry, you finally drank the Kool-Aid.
Whatever idiot at Agence France-Presse is pushing to keep its stories from being linked widely might want to do a re-think after reading this.
AOL is far more powerful than Agence France-Presse. At one time its walled garden was the most powerful force online. Its shareholders took 45% of Time Warner's equity in 2000, and while that's now worth a fraction of what it was (thanks to the fact they weren't really worth the price), it's still a lovely parting gift (and thanks for playing our game).
Well, after spending billions of dollars and five years fighting the inevitable, AOL has succumbed.
When a currency becomes overvalued it gets tossed like confetti. This is what happened in the late 1990s, and it's happening again. (The allusion, of course, is to the hit song 1999 by the man at left, known again by his given name, Prince Rogers Nelson.)
It doesn't matter whether acquisitions are made with cash or stock. Cash acquisitions, after all, can easily be handled by the company selling stock. Yahoo has been especially active in this area.
Companies of all sorts want this currency, and thus we have both Yahoo and Google on an acquisition binge.
The war against 802.11 hotspots, which I predicted last week, has already begun.
I don't expect free access to survive it.
The fact is that a hotspot without registration allows hackers to insert viruses undetected, allows criminals to hack into databases undetected, and allows spammers to spam undetected.
The New York Times had a feature this weekend , picked up by the Financial Express, alleging half the crooks caught in a recent sweep dubbed Operation Firewall were using public hotspots.
A recent piece from the Medill News Service (my j-school alma mater), picked up by PC Advisor, suggested that people should never conduct personal business through a hotspot, for fear it is actually an "evil twin" set up by a hacker to grab passwords from the unwary. An IBM spokesman also detailed this scam for Newsfactor.
Here are the facts:
The great financial Curse is to have money coming out of the ground.
I didn't believe this when I started in journalism. I started in Houston, whose economy was based entirely on the concept of money coming out of the ground - Black Gold, Texas Tea.
For most of history, money has mainly come out of the ground. Assets were what you could drill for, what you could mine, or what you could grow. The exceptions to this rule were those of trade. If you sat astride a trade route, if you had a deep water port, if the railroads decided that your location would work for a station, then your land had value.
Moore's Law has changed all that. The Internet has changed that for all time.
Back in the 1990s (not that there's anything wrong with that) a lot of companies drew a lot of venture capital promising to target ads based on who you were rather than what you were looking at.
The ploy failed. It turned out the cost of targeting exceeded the premium advertisers could charge for the space.
On the other hand context-based ads, targetting based on the content of a page or a search, continued to draw premium prices. It still works.
So Microsoft actually took a step backward this week when it launched adCenter, which targets based on users' use of Microsoft resources, plus Experian credit scores.
They also, once again, didn't do a complete trademark search. Finding this particular example, which I don't believe has any affiliation with Microsoft, took me all of 10 seconds. (On Google.)
Video clips, sold like ringtones. The mobile Web is TV, just as last year's mobile Web was radio. (The picture is from the story linked-to in this paragraph, at PocketPCMag.com.)
I think this is wrong-headed thinking.
That's not to say video won't have a place. It will, especially where desktop Internet penetration is low. Within a few years, I suspect, we'll see a "mobile BitTorrent", because the kind of video that will be in highest demand will be that which is most likely to be suppressed, and not shown on TV.
But video still isn't the Killer App for the next wave. Video is going to remain a niche.
What is the Next Big Thing? Glad you asked.
African leaders are pushing a "Tech Tax" that would go into a UN-sponsored fund and build the technology infrastructure of developing countries.
NOTE: Please visit the page where I got this illustration, by Los Cybrids. The words here express my overall view of the matter better than this blog item can.
On the surface, a "tech tax" sounds like a very good thing. It has a laudable goal. I'm very much in favor of telecommunications development everywhere. It brings markets together. It raises people up, brings them education, gets them into the mainstream. It's great.
But in practice, this proposal sucks. It sucks big time. Here's why.
Where's the money going?
Cynthia Webb (left) is sporting a collection of recent U.S. media reports claiming a "renaissance" in America's consumer electronic market share.
There are more American labels around. Apple. Motorola. Microsoft. The U.S. companies are good at seeing the opportunity and writing software that works.
Our balance of payments is not helped by it.
As Cynthia notes (deep in the article), these boxes are being made in China. (Actually most of them are being made in Taiwan.) Some of the software conceptualizing is being done here, as is the marketing (although I suspect some of that software work was off-loaded to India).
Those failing, flailing Japanese outfits she mentions, meanwhile, are still doing everything in Japan. Or they're doing "too much" in Japan. Except for Sony and Nintendo Japanese companies were never good at anticipating demand. Mitsubishi, Canon, C. Itoh, Ricoh, et al -- they were manufacturing houses. They were China before China was cool.
But the Japanese are getting wise. American Howard Stringer is Sony's new CEO. He knows the game. Expect most Sony stuff soon to come with a "Made in China" label.
What's the real story?
The cellular technology called EDGE doesn't make sense for the U.S.
It's not that fast. It costs real money. By the time a carrier installs EDGE his competitor may have true 3G available, and now you've spent your budget but lost the market.
As it prepares for its developer forum this week, Intel faces an audience of bankers who have not lost faith in it, but who don't understand what it means by "platform."
Credit Suisse First Boston, for instance, looks at the word "platform" and sees only desktop or server. It figures Intel is waiting for Microsoft's Longhorn to demand more processing power of computers and bail it out.
If that's the strategy Intel describes, then it is Clueless. But that's not the strategy Intel is pursuing under new CEO Paul Otellini (right).
That's right, gang. The old joke from The Graduate is here again, aiming to drive silicon into the ground.
Nanomarkets, a market research outfit with a beat that looks like tons of fun from here (call me) has a $2,000 report out with a hockey stick chart for plastic semiconductors, estimating the market at $5.8 billion in 2009 and $23.5 billion three years after that.
Plastic electronics -- chips built on conductive polymers and flexible substrates, will be cheaper, take less power, and (obviously) be more flexible than silicon circuits. This makes them perfect for, say, mobile phones.
It will also bring a bunch of new suppliers to the electronics market, names like Dow Chemical, DuPont, Kodak, and Xerox, along with the usual suspects.
What does this mean?
The Bushies may be sorry they made this change, because a very big class action is likely to head their way very soon.
The action will be against ChoicePoint, which managed to sell 145,000 credit dossiers to criminal gangs.
That's a big class. Every single victim may have had their identity stolen, either now or sometime later. At minimum, each victim faces a daunting task to re-establish their identity, and the impact of this theft is likely to follow them for years.
That's what lawyers call an actionable tort.
So far only one lawsuit has been filed, an individual suit in California. Expect many more.
The press coverage of this scandal has, so far, been horrendous. Most stories, like CNN's, act like the victims here somehow did something wrong.
They didn't. This was a deliberate act by a company too greedy to take proper care. They deserve whatever the legal system can dish out -- which right now is a lot less than it was a few weeks ago.
And that's the problem.
After writing (briefly) about Google's Keyhole I decided to try the free review.
The software licenses for $30/year, $600/year for professionals, but anyone can download it for a two-week free trial. So I tried it. There should be a screenshot over there to the left, but the e-mail system on the software doesn't work with Outlook Express...I guess you'll have to get your own.
Perhaps the most vital asset to any technology company today is its reputation.
It's not money. It's not assets. It's certainly not patents.
It's what people think of you, your reputation.
Paul Robichaux recently wrote that he thinks Google is pulling a fast one, with a Toolbar feature called AutoLink that turns unlinked items on a page into linked ones, automatically.
When Microsoft tried extending its Smart Tags feature, which sounded awfully similar, into Internet Explorer, Robichaux wrote in Exchange Security, "the furor was incredible. Walt Mossberg, Dave Winer, Dan Gillmor, and a host of other influencers immediately started screaming that Microsoft was taking control over web content and generally acting like an 800-lb gorilla. The EFF even opined that the MS smart tag implementation might be illegal."
He's right. But does it matter?
Microsoft has used its power for a decade to extend its monopoly across desktop applications and into the Internet itself. As a result it has a very poor reputation.
Google, on the other hand, has offered optional services, in software, on top of its search service. It has a stellar reputation.
The 3GSM Conference in Cannes featured a lot of flash, a lot of optimism, even some good writing.
But Cannes is a place of fantasy, a willing suspension of disbelief. It even has Las Vegas beat in this regard. Hey, the French thought the Maginot Line would hold. Some of them no doubt think smoking is good for you. When a diet of red wine and goose fat leaves you without heart disease you'll believe anything.
What drives the optimism is what is happening in the developing world. Beyond the desktops of the Internet, mobile phones represent everything positive about the future. They're telephony and computing in one hand-held package. They have driven technological change in Africa as nothing before has, and they're just getting warmed up.
Still, if mobility wants to succeed in the developed world -- and the 3G explosion is all about Western markets -- it does have to compete. And most carriers are not yet willing to.
Obstinacy, over-expansion, and hubris killed the National Hockey League, killed it deader than Maurice Richard. They can kill 3G too.
The Cato Institute claims to be an advocate of free enterprise, by which we are meant to think free and open competition. (That's the logo from one of their standard online products.)
They are, in fact, huge supporters of untrammeled business power, of oligopoly. Hey, where do you think their funding comes from, rabbits?
Here's a great example. It's a blog they call Tech Liberation. It takes a few clicks to learn this is a Cato shop, but they're not really hiding it.
The piece is by Adam Thierer (left), who works full-time at Cato as "director of telecommunication studies.". Its theme is the latest round of telecom mergers. Its message is don't worry, be happy.
"We can safely conclude that the communications / broadband networking business can be very competitive with 2 or 3 or even 4 major backbone providers in each region providing some mix of voice, video and data services."
Evidence for this? A Wall Street Journal piece noting that SBC wants to get into cable television. Other than that, a lot of chirping crickets. And some very nasty lies.
Want a taste?
A few years ago I speculated publicly about Sony buying Apple. (That's Sony chairman Nobuyuki Idei at right, from his biography on the Sony.Com site.)
It was a popular thought back then.
Sony blazed new trails among Japanese manufacturers, preferring proprietary control of its technologies, emphasizing design and its brand name, acquiring American firms and integrating them. In the 1990s, on the other hand, Apple was a troubled PC maker with a small market share.
This was before two things happened. Apple's genius returned to his throne, and Sony's faded from the scene.
Sony Founder Akio Morita, who passed away in 1999, was a legendary entrepreneur, a visionary, a genius. In Tokyo, Elvis has indeed left the building.
Still, in the first year after Morita's death, Sony could have done the deal easily. And the spirit of a man equal to Morita in vision, Steve Jobs, would be working for Japan Inc.
Microsoft may have as little as a year to take command of the mobile phone platform, or the opportunity will be lost. (Image from Petrified Truth.)
At the 3GSM conference in Cannes, France, they gave it their best shot.
The mobile broadband business is at what Gandalf called "the pause before the plunge." Enough equipment has been deployed so broadband can be advertised. The time has come to define the experience and see if any money can be made from it.
What's the Clue from SBC's purchase of AT&T and Verizon's coming purchase of MCI? (That's a 1949 Southern Bell logo, from the Knox County, Tennessee historical collection. Beautiful, isn't it?)
The Bells know they are irrelevant to the future. They hope to become too big to fail.
Regulators in most of the world understand that phone monopolies need to be broken up, not just for the sake of competition but for the sake of technology. The EU is spurring the development of VOIP and regularly slapping the hands of "incumbent carriers." The developing world, meanwhile, is able to create multiple wireless competitors, by fiat, and watch competition drive innovation to a degree we can only dream of.
Why are the U.S. Bells the only phone companies in the world that could truly become "too big to fail?"
They lost the Super Bowl, but Philly remains as feisty as ever (and God love 'em for that).
In a well-written article on News.Com today, Philly CIO Dianah Neff defends her city against a Verizon attack that caused state legislators to try and stop her city from installing a Wi-Fi network.
"For all the money they've spent lobbying against municipal participation, they could have built the network themselves," she writes. "The truth, of course, is that the incumbent local exchange carriers want unregulated monopolies over all telecommunications."
Neff then quotes Dr. Mark N. Cooper, research director at the Consumer Federation of America, which to a Bell is a bit like waving a red flag in front of a bull.
More after the break.
I'm fascinated with how Western technology filters into the developing world and changes lives.
For instance. Back in the mid-1990s we had the idea of the "Internet Cafe." It would be flash, it would have broadband, it would have great food. We were crazy.
In the developing world, however, the Internet Cafe idea lives on (and on and on and on). There, though, it's a little shop with some PCs and basic connectivity. It's a lifeline to families, to markets. After the tsunami one was set-up quickly in the disaster area. It was a lifesaver.
Now we have cellular, or mobile service. (Whichever you prefer.) In the West, it means everyone has a phone, and they're on it all the time. Young girls drive like little old ladies. Guys look crazy seemingly talking to themselves, but then you see the little bud in their ear -- oh.
Then it filters down. Read how it filters down in Cameroon, from the Cameroon Tribune in Yaounde. (Then get the scene at the top of this item as desktop wallpaper, free, from Dane Jacob Crawfurd.)
Mobile carriers are trying to make an impossible transition.
They want to move from a data world where every bit is precious, and where every file is controlled, into a broadband world where phones have PC functions. And they want to do it without changing their business models.
It can't happen. The industry's dirty little secret prevents it.
That secret is that most cellular minutes today are wasted. Perhaps as many as 80% of the minutes customers are allocated in their contracts each month aren't used. And this has been the source of immense profits. (The illustration, in time for Valentine's Day weekend, is a Korean product for women that also enables the creation of twin secrets.)
Modern cellular marketing is all built around contracts, with a fixed monthly charge for a fixed number of minutes over a fixed term. To get contracts incentives are offered, including free phones.
But look at what happens. Marketing convinces people to pay high prices for plans with high limits. Cingular's "rollover" plan costs a mininum of $40/month, which comes out to about $45 with taxes and other fees. Advertising convinces people they need high limits to deal with "ugly over-age charges." But it's difficult to measure your usage in the middle of the month, and the vast majority of customers don't come close to their limits.
When the contract term expires, usually in a year, customers can theoretically leave that carrier for another one, taking their phone number with them, and even get a new set of incentives, like a new, more advanced phone. But most are as ignorant of their contract expirations as they are of the status of their minute bucket. (Quick: what's your contract expiration date?)
Carrier profitability thus depends on ignorance, customers with old phones who don't take out new contracts and don't use their gear. And in that environment, who needs broadband? Where is the market for PC functionality?
Exactly. It doesn't exist.
Middleware was a very big buzzword a few years ago. (Image from the Southern Regional Development Center.)
By middleware, vendors meant software that let people below take advantage of resources above. Queries that delivered reports to managers on how stores were doing, or that placed real corporate data into neat little graphs.
But every organization of any size is based on human middleware. School principals are human middleware. Store managers are human middleware. Party committeemen are human middleware.
These people sit between the decision-makers at the top and those who carry out orders on the bottom. When we like them we call them "sir" or "ma'am." When we want to disparage them we call them bureaucrats.
America has the greatest bureaucracies in the world. We have done more for our human middleware than people in other societies. (Try getting your driver's license renewed in Mumbai if you don't believe me.)
But we can do much, much better.
Software can be part of that solution, but it's only a part.
Everyone sees events through the prism of their own knowledge and expertise.
The H-P brand is about teamwork, Frankel writes, but Carly transformed it into executive fiat. The brand became Carly, not the team spirit that built the company.
For me this is the money quote:
Carly Fiorina's reign at Hewlett-Packard was defined by her acquisition of Compaq.
The merger didn't work.
She was fired today. The press release doesn't say "fired," of course. (It never does.) Various stories say the board "dismissed" her, that she "suddenly quit," that she's "stepping down, effective immediately."
She's out because her strategy was doomed from the start. She tried to treat computing as a traditional industry, where the pattern is that once growth slows to a modest level you get consolidation, companies merging together until just a few are left and profits are regular.
This doesn't work because Moore's Law prevents it. Moore's Law means the nature of systems are always changing. Companies rise because they know something about the market, and fall when they lose touch. No amount of consolidation can change that. The merger that created Unisys didn't save Univac and Burroughs, merger didn't save Digital Equipment and Compaq, and it didn't save Hewlett-Packard.
Fiorina's key ad campaign, "Invent," implying the company was going tback to its roots in the garage, turned out to be just that -- an ad campaign. What has H-P invented under Fiorina, except financial manipulation. Anything?
So she's out, for the same reason that, say, Tony Samuel (left) is no longer coach at New Mexico State. (Go Aggies.) His color had nothing to do with his firing, and her gender had nothing to do with hers.
Some big news went unnoticed last week .
This is fascinating because Sprint, alone among U.S. telcos, has a unique business model, at least in cellular.
Lots of companies, from Virgin to Earthlink to Disney, have gotten into the cellular game by re-selling Sprint's capacity. They all have their reasons. They all have their own branding, their own marketing, and their own niches.
The point is Sprint is profiting from wholesaling capacity to these companies. Profiting big time.
Why hasn't this been pointed out?
The digirati are in a fury today over claims by an outfit called i-mature which claims to have solved the problem of age verification with a $25 device that checks a finger's bone density to determine just how old you are.
The image, by the way, is from Vanderbilt University, which has no affiliation with either Corante, i-Mature, or this blog. It describes x-rays of a finger taken at different power settings. Go Commodores.
RSA announced "a joint research collaboration" with the company. But there is skepticism over exactly how precisely a bone scan can measure age, and the more people investigate, the more questions they raise.
We have read for the last year about the death of the PDA, and it's true the stand-alone version (one without a phone) is fast disappearing.
As Tom's Hardware notes, PDA sales have fallen to a five-year low. I have one, but it was free.
As David Linsalata, the IDC analyst who delivered the report noted, ""Consumers don't see the need to invest $600 in a handheld device if a smart phone can do the same basic tasks."
But isn't this "death of the PDA" business simply a matter of semantics? Isn't this merely the creation of analysts who put technology in boxes, when everyone knows the first thing people do when they get technology is take it out of the box?
Maybe. Here's the headline on a recent story published in Ireland on the subject. "Smartphone and PDA sales go skyward."
Erin go wha?
Think of it as a LAN on a chip. Not just the network itself, but the computers on the network and, to some extent, the people behind the computers as well. (The illustration is from the first section of Blatchford's report.)
Software programs on the chip, called apulets, portion work out among the computing sections, then recompile the results, the way an editor does at a newspaper desk. (Only without the coffee and the yelling and the pressure or the beer after work for a job well done.)
The result is true multi-tasking. As good as some teenagers, who will listen to music, watch TV, and gab on the phone while allegedly doing their homework, and still get As. (You know who you are.)
The best thing, though, is that this thing scales. You have 8 cells on the chip now. You can have more.
I'm no electrical engineer. I just went to school with some fine ones and picked up some of the lingo by osmosis. But it does seem to me that the "dual core" ideas Intel has committed to are merely extended here, in a way very consistent with Moore's Law.
The key point Moore missed (because it wasn't relevant to the paper, hadn't been discovered, and don't you dare criticize Mr. Moore for this) is that the exponential improvements he saw in silicon fabrication apply elsewhere. As I've written many times here, they apply to fiber, they apply to storage, to optical storage, to radios.
And now, for the first time, they may apply to chip design.
A few more points:
Perhaps no technology today splits analysts to the degree that WiMax does.
Which is it?
Maybe both. Maybe neither.
This is because WiMax is still vapor. The delivery of a final standard has been delayed until summer, which means products won't come out until late this year.
There's also Intel's move to make WiMax mobile to consider. Making the 802.16 standard mobile will take more time, mobile operators are building 3G networks as fast as possible, and purchases of the coming standard may be delayed by people waiting for the better one.
Unlike the situation with 802.11 we have no guarantee that 802.16 implementations will be fully backward-compatible. The gear out there now isn't even guaranteed to be compatible with itself.
So what will WiMax become?
Now that Star Trek is officially dead (no new shows or movies, even in production) the time has come for a new idea.
It's an anthology series, built around various scientific "principles" that define the Star Trek franchise.
Think of it as Science made into Drama.
Yes, it's an excuse to make science exciting. (Just think of the educational spin-offs we can produce!) And the production costs are low enough to put this on the SciFi channel (where Enterprise should have been all along). Or might I suggest a pitch to Discovery Networks, which has got proven talent in making science fun with shows like Mythbusters?
For host, might I recommend Stephen Hawking? Playing the role Alistair Cooke made famous, he opens each show by describing the science (and the Star Trek technology) on which the show will be based. (I might recommend getting several scientists for this role, perhaps one for each specialty. But Hawking is a name. He'll do great for starters.) Or, with confidence this show will last for decades, Lance Armstrong, who's already under contract to Discovery, who knows how to read a cue card, and who owes his life to science?
More after the break.
An ink-jet printer that makes gourmet food?
The printer is in Moto, a Chicago restaurant, and it's programmed by executive chef Homaro Cantu. The paper is the same stuff you see on some birthday cakes, made of soybeans and cornstarch. The ink is edible, and the flavors are powders placed on the paper after it's printed. This means he can create a 10-course "tasting menu" that won't leave you bloated -- just well-read and out several Benjamins.
Cantu is making paper sushi and menus that can be crunched into his gazpacho for "alphabet soup."
Now that we have proof of concept, what next?
Many companies re-sell cellular capacity. It's a simple branding exercise.
Earthlink is the first to enter this business with a vision. The vision comes from founder Sky Dayton, who kept the chairman title for years after leaving for Boingo, but has now relinquished it to run this new joint venture, SK-Earthlink. (Glenn Fleishman interviewed Dayton and has a great story on him.)
Dayton's vision, since the beginning, has been based on the idea that spectrum is plentiful, that WiFi can be connected, and that a telecom firm doesn't consist of wires and switches but software and marketing.
Earthlink itself is based on the idea of re-sale. Its dial-up service rides on top of the existing phone network. Its DSL offerings are based on the same networks. It's not a stretch.
So, what's the vision? Jump over there with me and I'll tell you.
Version 1.0 of Microsoft's new MSN Search is up. No thumbs up, more like a hand palm down, waggling a bit. (This is the closest I could come to that, from Gerhard Schaber's thesis on computer hand gesture recognition.)
MSN Search is not bad, for a Google clone. That's cruel and wrong. It's not a clone, because there is just a ton of stuff missing. Newsgroups are missing, shopping is missing, a directory is missing (although Google itself now hides that behind a "more" button.) Yes, Yahoo is better.
What you get are Web, images, and news. The main news page (previously seen at their MSNBC site) only lists one story, then adds the word "similar" which leads to a limited search of official and licensed media. They're using Moreover to get behind some registration firewalls.
But let's talk about the search itself.
If the last several months proves anything, it is that there are many ways to grow in the cellular business. (Birthdaycraftsandsupplies.com offers a fine selection of Pinatas. Ask them to bring back the dollar sign one to the right. Don't you agree it looks cool?)
The Elliott Wave people ask, "Is the Greater Fool Era Ending?"
Here is proof. Strategy Analytics has recently published another of those truly loony market studies, this one claiming that mobile phone operators will lose $12 billion from broadband wireless over the next several years.
It's nonsense because its premise is false, namely that those profits are out there to lose.
Yes, it's possible that if WiFi and WiMax didn't exist that all broadband revenues would go to cellular. It's also true that if freeways didn't exist all inter-city traffic would be by railroad. But that does not mean I impute a loss of billions to the railroads.
Gary Wolf has a piece at Wired which had me shaking my head for some time.
Several folks have pointed me to it. It's an imagined memo, dated three years into the future, after Linus Torvalds has supposedly gone to work for Mr. Bill Gates.
The idea behind the imagined memo, something I've written about extensively recently over at ZDNet's Open Source, is based upon building a Linux desktop suite. Wolf's point, apparently, is that Microsoft moving to Windows isn't that far-fetched, that Steve Ballmer doesn't get it, and that Gates has the imagination to listen to the market rather than the yes-men in Redmond.
Well, yeah. But so what? Ain't gonna happen.
Does your cell phone help you pick up attractive women? (Or men?)
Well, it might if you subscribed to Dodgeball, a social service for mobiles whose founders, Dennis Crowley and Alex Rainert, talked to our own Russell Shaw (right) recently.
The idea is that you and your friends subscribe to Dodgeball, then text your location to one another at night, so you can get together. (And if they have friends with them, and those friends are attractive, voila!)
Absolut Vodka sponsored a "nightlife channel" on the service last year, like a traditional media buy, so Dodgeball members could associate the brand as a "friend." (Beats having an AA sponsor, I guess.) Now they're looking to make more money from things like Premium SMS and applications.
One of the dumbest things a company can do is pay big bucks for a domain name. (That's CSpan's flower, by the way.)
What does eBay mean? What does Amazon mean? For that matter, what does Google mean? They mean what they have become. There was no intrinsic value to the name when it was purchased.
So why should picturephone.com be worth $1 million? There's no good reason. The fact that the company which owned the name changed its name so as to sell-on the old name is proof of this.
Declan's point is that it's available. Critics point out that it's slow, expensive, and more people have it in other countries than here.
The question they're all asking is, how can the situation be improved.
The correct answer is one word.
Motorola has launched a very Clued-in strategy to push Always-On applications.
The idea is that you sync the phone to your home using a verison of the old Palm cradle, then control home automation applications remotely using the phone.
This is clever in many different ways:
A few years ago Jackson, Mississippi was the center of the telecom universe.
That's because it was the home of Canadian-born Bernard Ebbers . He married a Mississippi girl, Linda Pigott. On such chances does history turn.
Ebbers launched a long distance outfit called LDDS in the early 1980s and turned it into a classic "roll-up," buying other companies (usually for stock) and managing to the numbers.
Eventually he named his monstrosity Worldcom.
The result was the MCI scandal.
Roll-ups usually end this way.
In a great little piece about Kodak's coming WiFi camera, the EasyShare One, Glenn Fleischman delivers a Clue about T-Mobile's coming strategy.
For some time interest in Buckminsterfullerene, the unique form of carbon created at my alma mater, has focused on Buckytubes, not Buckyballs.
A Buckyball is a single carbon-60 molecule, shaped like a tiny soccer ball. If you don't cut off the ends, and instead extend the shape into a tube, you have a molecule of almost limitless size, and with enormous strength. A space elevator, as I conceive it, is basically a circled Buckytube that reaches from a point at the Equator to geosynchronous orbit, so that a cab coming up one way is matched by one going down.
But in the short run that's science fiction. There is a lot of proof-of-concept work to do before you can really go after the money, and there we're talking of billions-and-billions.
What Buckminsterfullerene needs, more than anything, is a profitable market that will spur further development.
And now it has found one.
When my lovely wife took her present job, many years ago, she said she was happy to be working with programs that actually did something.
She works in transaction processing. Back then each time her program ran her company made a nickel. It's a service business.
The point today is she was way ahead of her time. Still is. Let me explain.
Charles Leadbetter, a freelance analyst who works with Demos of the UK and others (sort of like me but with better management), offered some great insights into the need for regulation recently that have been making the rounds of the blogosphere. (That's one of his books over there.)
How to Profit from Ignorance posits that regulation is needed to regulate ignorance. As life gets more complicated, we become more dependent on experts. Regulation becomes the experts' stamp of approval.
But there's another way of putting the same point -- transparency.
There is a lot of wailing-and-gnashing-of-teeth going on about ESPN entering the mobile phone business, through an agreement with Sprint.
It's not that big a deal. Sprint made these co-branding deals, called MVNO in the biz, a big part of its strategy. Virgin, Carphone Warehouse and 7-Eleven are signed-up, and Wal-Mart is reportedly taking a look.
What do you need to become a Big Time Mobile Phone Brand?
One of many "truths" of the past that must be re-examined in the light of 2004 should be the whole idea of rational markets.
How else to you explain this? Apple stock is up to $68, which works out to a price-earnings ratio of....93? (Yep, carry the 1, zero...93.)
Now I think the iPod and iTunes are nifty, too. But as economic events they are no grand slam, set against the size of the underlying company. These are singles and doubles, not home runs.
Besides that, there's risk. There's growing competition. Apple has gone from being a computer company, compared to HP, Dell, and Gateway, to being a consumer electronics company, compared to Sony, Matsushita, and Philips.
It's a step up in class, maybe. But can Jobs hit the pitching in this league?
This, I should add, is just one example of a market that's beginning to look a bit like the one we saw in 1999.
Philadelphians are celebrating an agreement with Verizon which, they say, allows them to offer a citywide Wi-Fi network despite a law, signed (shamefully) by Governor Ed Rendell yesterday, aimed at stopping the municipal WiFi movement.
But they need to read the fine print.
Wetmachine has the story:
HB 30 prohibits the state or any municipality (or any municipally owned or operated entity) from providing any sort of telecom or broadband service for any kind of remuneration. The bill grandfathers any existing systems, tho, so no one will get cut off.
Sound good? Read on:
One of my problems with most business journalism is we tend to write about companies the way we do sports teams, and it's not that simple.
But mid-way through John Markoff's latest torching of Intel I got a Clue that the company has finally figured things out and is going to turn around.
It was one word, from incoming CEO Paul Otellini.
For those not enjoying our online novel, The Chinese Century, here's a piece of non-fiction that may leave you even more upset. (That's a 1963 Time Magazine cover, by the way, of which prints are available for purchase.)
It's an interview with Ronald Chweng, chairman of Acer Technology Ventures. Acer is based in Taiwan which China calls a renegade province, and the U.S. once called the Republic of China. Chweng's charge is to find U.S. investments. He says there are plenty, but that the focus may be changing.
It may be moving East.
The BBC has a wonderful series of articles on its Web site about the failed state of Somalia. (The picture, of downtown Mogadishu, is from the BBC Online series.)
Since American troops abandoned the country to its warlords a decade ago the place has been a study of anarchy and Hobbesian choices. There is no government to educate the people, or to protect them. Private checkpoints that extort money from everyone and line the pockets of those manning the checkpoints are everywhere.
Many people live in makeshift structures "made from branches, orange plastic sheets and old pieces of metal" on what were the lawns of schools and hospitals. Even aid agencies have left, citing the danger.
Yet there is a success story to be told here, mobile technology.
The story is that the regional Bell and the Web portal are expanding their alliance, putting the Yahoo brand on SBC's mobile offerings as well as expanding the effort in DSL.
But could this just be the prelude to a marriage?
Has "the fat lady sung" for Opera, the Norwegian Web browser?
Opera's parent company reported a wide loss for its last quarter. Internet Explorer is losing share, but the share is being lost to Firefox, not Opera.
The question is no longer, do we need an alternative browser? The question is, do we need another browser company?
Warren Buffett (left, from Slate) was probably the first big-time executive to really "get" blogging. That's really what his annual letter to shareholders is Read them in turn, going backward in time, and see if I'm right. It's a pre-blog blog.
Jonathan Schwartz, COO of Sun, understands this. His blog entries are longer than most, often being fairly-detailed position statements on Sun's view of issues, but his is a true blog, which aims to participate in and prod ongoing discussion.
Russell Beattie (pictured) thinks he's figured out what mobility needs.
Syncing. That is, we need to be able to synchronize what's on our mobile devices with what's on our home PC, our PDA, and the network as a whole.
He calls this the "killer app" for mobility.
Russell's article is long and recommended, but let me tell you what I think.
The stock market is like a soda. There are always bubbles. What made the late 1990s so remarkable was simply that there were so many of them. (Image is from California Food & Wine magazine -- subscribe today!)
But there are always bubbles, sometimes just tiny bubbles. And there's one going on right now, in the stock of Travelzoo.
The reason is that Travelzoo has a tiny float (1.9 million shares), real profits (gross profit of $17.5 million on sales of $23.6 million), and dedicated fans. When the company was launched, in 1998, it gave away shares to anyone who signed up for its e-mails. These people haven't sold. (Some may have bought to get to an even 100 shares.)
So this is a going concern with real plans that only got onto the main NASDAQ pages a month ago . The result was a bunch of "shorts," who sold the stock when it wasn't theirs'n, and must now buy it back or go to pris'n. As they're squeezed, they surrender at higher-and-higher prices. And insiders sell out like air coming from a tire, slowly but steadily.
Despite a regulatory regime that is impossible to obey (isolating data traffic that's to be turned into voice on a network with trillions of transactions going through it each second) hardware makers are going ahead with the production of Voice Over IP (VOIP) hardware.
Linksys and Netgear are the latest to say that voice support will become part of their residential gateways Real Soon Now. (For more on VOIP, buy O'Reilly's VOIP book, right.)
In this case, however, the Feds will be glad to know there's actually less here than meets the eye.
Every day, it seems, I see more and more people trying to use the blogging metaphor to make money. (The image, naturally, comes from business-blog.com.)
The question remains whether blogging will become subsumed into other media (lots of high-tech publishers, like Business 2.0, now have things they call blogs), whether new journalism businesses can be built on blogging, and whether blogging will be an individual or community endeavor.
Following are some Clues to this future:
If H-P Chairman Carl Fiorina had to report a bad quarter, which he could blame on one group, and if he then sacked the heads of that group, we'd call Carl one tough hombre.
But the H-P Chair's name is Carly, not Carl. (Actually, it's Carleton.) So guess what you were thinking when you read the news? (Picture from PBS.)
Yes, indeed, sexism is alive and well, even after you break through the glass ceiling.
The Google IPO is officially a fiasco.
People were "accidentally" given options that weren't accounted for. The company suddenly gave a big hunk of itself to its chief rival. People who've used the automated system for accessing the IPO find themselves shut out, and they're not told why.
And now, Google's founders have accidentally "broken" their quiet period, with a Playboy interview (given months ago) that was published just as the public stock is ready for release.
The paranoid might ask questions.
Michael Eisner would you please go now?
Disney has announced it is entering the PC market. (The illustration is from the Times' story.)
There are so many things wrong with this, on so many levels. I hardly know where to begin.
What began as an attempt to de-fang the wolves of Wall Street has descended into a Silicon Valley farce.
The problem with Google's IPO delay does not lie in the technical glitches of the system. And it doesn't lie in the really silly price being quoted -- $110 per share.
It lies in the great scandal of the 1990s -- stock options.
You almost never hear from IBM anymore, except once a quarter when they announce record earnings.
It's time they got some proper respect. It's time they got their props. (Image from the BBC.)
This year IBM will bring in $4.66 in profit for each share of common stock, currently worth about $85. It has sales of almost $93 BILLION per year now, and brings $8 billion of that to the bottom line. (By contrast Microsoft, which claims it has run out of ideas, has one-third the sales, albeit nearly the same level of profit.)
Ah, yes, you say, but what has IBM done for me lately?
You ever leave a pot of coffee on the counter too long? I have. After several days it starts tasting really funky, and these nasty white organisms start partying on the top of it. (BREW logo from Vayusphere.)
Well, that's what seems to be happening to Qualcomm's BREW development environment, in which Verizon is demanding all applications on its cellular network be written. There's no circulation in a proprietary environment . If the creator doesn't apply regular heat (and risk that nasty, metallic taste) things are going to get funky fast.
Andy Oram has a long story at O'Reilly today detailing the problems with universal service and public policy.
It's a great historical overview.
But it's missing one key ingredient. And it's a surprising ingredient for Andy to miss.
That ingredient is Moore's Law.
The Times has an article on how pathetic Silicon Valley feels.
I can't decide which is more pathetic, the mood or the article. (The image, however, is from the Cullen sculpture garden at Houston's Museum of Fine Arts.)
First, the mood. It is like Houston was in 1984, although conditions are very different. In the oil bust, whole neighborhoods were abandoned, the keys just left in mailboxes. Anyone with a job was just waiting to lose it, and in any case their salary was falling behind their bills. Billboards that weren't empty were filled with ads for preachers. The filth, the fear, and the despair were palpable. Everyone I know who lived through that time, in that place, was scarred by it.
Silicon Valley isn't that bad. Traffic is lighter, and hangers-on have moved on.
But in some ways, the situation is much worse.
I'm a big fan of my alma mater, Rice University. Under outgoing President Malcolm Gillis the school has been on a building boom, and has taken the lead in the development of carbon nanotubes -- they've even found a way to store them, in sulphuric acid. (Image from FootballFanatics.Com.)
I'm afraid athletic victory has led it to take a wrong turn.
A recent McKinsey audit of the athletics program saw it losing $10 million per year. The audit showed that a sizable portion of the undergraduate body (which totals about 2,600) is on athletic scholarship and that the largest number of them, the football team, consists of many people who would not otherwise be acceptable as students.
First, it's true. My dear wife is a programmer and morale is down at her place. There's real fear out there. There's fear of India, but more than that, fear of being replaced by someone younger and cheaper.
"Do you know they don't even call themselves programmres?" she asked me one night. "Now they're developers."
I took the kids to see Shrek 2 today.
Good movie. Thumbs up and all that. Fun for the whole family. (The image is from Cinepop in Brazil.)
The Dreamworks picture is breaking all sorts of box office records. And the use of technology is astounding. I actually recognized Jennifer Saunders (as the Fairy Godmother) before she spoke -- computer animation has gotten that good.
But the theater where we saw it was practically empty. Now, this was a matinee, and the movie was playing on six of the theater's 18 screens. But the place was empty.
This got my spidey-sense tingling. (Sorry, wrong movie.) Let's just say it made me think.
But in the end it will do them no good.
SBC is taking this strike to reduce its labor costs. It thinks that will save it.
But the problem at SBC isn't labor costs. It's that the value of its installed plant, its capital, is depreciating in line with Moore's Law, while much of it was bought on 30-year assumptions.
The impact of Moore's Law accelerates with time. It doesn't decelerate.
Labor costs can only decline arithmetically, in other words, while the impact of what's happening is growing geometrically -- downward.
What happens when one of your favorite companies is bought by one of your least-favorite companies? (The image of a Symantec balloon is from a Brazilian blog.)
Well, you hope they overpaid, for starters. And in the case of Symantec's purchase of Brightmail, it's mission accomplished.
The TV financial news today is filled with ads for outfits that, to my way of thinking, should not be sucking financial oxygen.
There's MCI and Putnam Investments. There are Citigroup and Janus Funds. Tyco is still around (it's making money I hear). Even Enron has yet to be totally liquidated.
What happens when you or I commit a crime is we are tried and convicted. This is very hard to do when the crime is done with a pen, behind the corporate shield. The states' batting average is low. What usually happens, instead, is that the company pays a fine -- sometimes a massive fine -- but usually without admitting wrongdoing. The cover-up, in other words, winds up being sanctioned by the court.
Add to that the complete failure of corporate governance in catching these crooks before the vaults are looted, and you have what I call Dracula Inc., corporate immortality, and immortal immorality. (Somehow, Bela Lugosi will always be Dracula to me, and obviously, to the folks at Shillpages too.)
I think it's time to stick a stake through some corporate hearts.
John Doerr left the Rice University campus about three months before I arrived there, in 1973. So to see him written up by The New York Times as "the old prospector" is a bit painful. (That's Doerr, second from left next to Robin Williams, with Google founders Brin and Page to his right, from the Times article.)
The Times used the headline because Doerr's firm, Kleiner Perkins, stands to make a tidy fortune from the Google IPO. The article also makes clear that Doerr has backed some losers over the years. It doesn't detail how bad he was hurting during the Internet bust. But such is the nature of venture capital.