What? I'm Retirement Age?
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.
Google Flattens the World
Let me take a stab at explaining Google's grand strategy.
My friends at ZDNet call this the Google PC, or a network computer.
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.
If that were all there were to it, why would Google be planning on building out WiFi, or build out an optical network?
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:
- Universally-accessible applications, based on search.
- Universally-acessible networks, at broadband speeds.
- Universally-competitive systems, worldwide.
Google is flattening the world. More on what this means after the flip.
Welcome to the Third World
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?
Why eBay-Skype Could Be AOL-Time Warner
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.
eBay Changes its Business
"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."
"What was eBay's purchase of Skype."
"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."
Angel (Investors) in America
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?
Murdoch's Internet Strategy
After $2 billion, Rupert Murdoch's Internet strategy has become clear.
Capture kids.
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 Talal’s 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?
Upgrade-itis
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.
Sacrifice to Get 'R Done
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.
AMD's Big Chance
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.
Google-ology
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.
The launch of Google Talk (in beta) and the official launch of Google Mail (out of beta) sent this into overdrive.
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:
Artificial Scarcity
David Berlind, one of my bosses over at ZDNet, came up with an incredible statistic recently that deserves a lot more play than it got.
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.
Dating the Next Recession
The next U.S. recession will start in earnest on October 17. (If it hasn't already.)
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:
- Borrowers must begain paying back credit card loans based on a 10-year payback, doubling many minimum balances, and
- New rules force borrowers to repay those debts, even after filing bankruptcy.
How can this be bad for banks, who after all pushed for the legislation?
Google's Choice
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's Futuristic "Vision"
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.
Dave Burstein wrote in to say this is a Westell device. Westell has a long history of making things on-demand for phone companies, so Verizon gets all the "credit" for this piece of nonsense.
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 Real Estate Bubble Pops Here
A post card came in the mail, from a Keller-Williams agent. (Is it just my imagination or have they taken over the market lately?) It was about the Gary house, down the street from me.
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.
A Better Move for Cisco
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.
Buy Broadcom.
Broadcom is worth over $14 billion, but that's barely 10% of what Cisco is worth today. Institutions hold two-thirds of Broadcom's shares.
But what's in it for Cisco? Plenty.
Time of Confusion
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 Fights the Power
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.
Outgrowing the Grownup
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 of Overstock.Com
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.)
Dumb Predictions
Two really stupid predications crossed my desk this morning. (The image is by Katie Guenther. From the University of Vermont.)
- Laptops are about to be replaced by mobile phones.
- Mobile phones are going to take the music download market from the iPod.
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.
My Bad (H-P's Too)
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.)
Payday Loans, Now Online
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.
Cheap Shot in a Good Cause
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.
The Coming Crash?
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.
As I've written in my novel, the name of this big trouble is little China.
The process of China's inevitable Yuan revaluation has begun.
In a series of blog entries Rutledge ticks off what's happening.
Marc Canter's Clue
I'm a big fan of both Marc Canter (right) and Joi Ito . (NOTE: The picture, by Dan Farber of News.Com (and ZDNet fame), was taken off Marc's blog.)
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).
Marc calls GoingOn an Identity Hub, something to which other identity systems can connect. (It's interoperable with Sxip Networks, for instance.)
But Marc also understands that his stuff can't be the be-all and end-all. Let him explain it:
Lazy Reporter Calls Reporter Lazy
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.
The usually-reliable Rafat Ali (right) did just that this week in his PaidContent, calling out The Guardian's Emily Bell for her skeptical take on Rupert Murdoch's $580 purchase of Intermix.
Just how lazy is that? Click below and find out.
Bank of Wal-Mart
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.)
First Shoe Drops on The Chinese Century
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.
Corporate Death Penalty
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.
So say goodbye to CardSystems International, the small (90 employee) Atlanta processor which revealed in May that a computer worm had exposed 40 million customer accounts to possible identity theft.
What I found most fascinating, however, was what was below the headline.
Is Chris DeWolfe Worth $580 million?
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.
Technorati Should Be For Sale
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:
Ballmer's Microsoft
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 used to be about software partners. Now it's mainly about hardware partners, like tablet PC makers. This is an important change.
- Microsoft continues to eat its young, entering profitable small business niches, aimed at engulfing and devouring them.
- Ballmer told his software developers to "stick it to IBM" even while Microsoft sticks it to them.
- Microsoft is telling its partners to "push Office ugrades," more evidence that the idea of Windows as a "software ecosystem" are ending.
This is just one corner of the news Microsoft made last week.
This Week's Clue: Mr. Pulitzer, Tear Down This Wall!
The search for online business models is a continuing fascination of mine at A-Clue.Com.
This week I returned to the theme, and readers of A-Clue.com got an earful. (You can get one too -- always free.)
Most online stores fail their editorial mission. (That's Joseph Pulitzer to the right, from his eponymous journalism school at Columbia University in New York.)
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.
Continue reading "This Week's Clue: Mr. Pulitzer, Tear Down This Wall!"
Orwell's FCC Chair
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.
No Such Thing As Free WiFi
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.
Moore's Law is Everywhere
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.
Who You Want Working for You
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.
Gretchen Ledgard of Microsoft recently told this truth, and God bless her for it.
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.
Dana's Law of Bellheads
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.
Bubbles
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.
Intel's Bad Trade
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's Clue: Deep Commerce
My free weekly e-mail newsletter, A-Clue.com was launched in 1997 as a discussion of e-commerce.
This week I returned to the topic.
Enjoy.
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.
Death of the Business Press
Here's something you probably already knew.
National business magazines are deader than Mr. Pinstripe Suit.
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.
The Right Blogging Business Model
I have been criticized soundly here by the early leaders of the blogging business community,(Pictured is one of these leaders, Jason Calacanis. From Vertikal.Dk.)
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's Clue: Jerimoth Hill
In last week's issue of my free weekly e-mail newsletter, A-Clue.com, I took a look at business models , following a weekend at beautiful Belmont University in Nashville (left).
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.
Enjoy.
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.
Gateway to Nowhere
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.
Google's New Strategy Serves Shareholders
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.
Continue reading "Google's New Strategy Serves Shareholders"
Blogging Business Models
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.
Enjoy.
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:
Last Friend Gone
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 wan