Technofile Europe

Reporting from MWC: the fight is on

I didn't stay long at this year's MWC conference (fka 3GSM) in Barcelona.  Just long enough to tap the screens of the latest iPhone copycat devices, to absorb a lot of techie promo about LTE and WiMAX, and to wonder aloud whether CBoss's legendary booth babes are old enough to be here and what on earth they have to do with IT crisis management. 

Two things struck me:

First, the number of subscale technology companies trying to sell similar software or hardware products to mobile operators -- mobile browsers, content delivery platforms, billing solutions, device management platforms, subscriber management, and so on.

It is clear that in mobile -- as in enterprise technologies -- only a fraction of the innovations of recent years have been integrated into mainstream services.  There is a huge overhang of well-designed, scalable products, but too little appetite from operators to buy them.  Many vendors stay alive by selling into operators in developing countries, while trying to find an angle into one of the majors. 

There will be a lot of fall-out in the coming years, as many of the private vendors disappear or consolidate.  Operators will largely focus on making the technologies they already bought deliver their ARPU-increasing promise. 

My gross generalisation of the day: it's not a good time to be a mobile infrastructure or application startup.

Second, the battle of the giants for the mobile value chain is really heating up.

Microsoft, Nokia, RIM, Orange and O2 all announced new application store initiatives, trying to recapture lost ground against Apple's fabulously popular iTunes-based App Store.  Operators are taking advantage to re-brand and re-launch their expensive, failed content portals.  The competition among Ovi, Windows Marketplace, Application Center, and O2 Litmus should be a boon to app developers, and may well be the nail in the coffin for independent aggregators of apps and content.

Then Nokia really pulled took of the gloves, announcing that it would embed Skype's VoiP client in upcoming Nokia phones.  That's a slap in the face of its operator partners, whose precious voice revenues are under attack from all sides.  At the Jefferies cocktail, VCs were talking about peer-to-peer WiFi networking that would enable phones to connect while bypassing the operator altogether. Ouch.

Globally, mobile voice and data revenues are a bright spot in an otherwise bleak outlook for tech markets.  But within those headline figures are some brutal shifts.  Handset sales will be down this year, so phone makers have to find new sources of revenue.  The mobile operating systems are being pushed into commoditisation by Google Android and a soon-to-be-open-source Symbian.  And operators are under pressure to open their walled gardens so that consumers can have the mobile web access they so desperately want.  The solution for all three is a subscription or transaction relationship with the consumer. 

It's going to be a dirty fight, and consumers stand to benefit. 

But surely the most exciting development of all was the GSMA's announcement that it had finally  wrested agreement from handset vendors to standardise their chargers!  Yippee!

Amazing factoid: disposed chargers generate 51,000 metric tons (!) of waste globally each year.  I suspect that number will get a short-term boost as millions of people bin the 3 chargers they've been saving 'just in case' they return to Motorola...  What I'd really like to know is how much revenue the handset vendors are giving up by doing away with proprietary, expensive-to-replace chargers.  If they really go through with this during the recession, I will have a newfound respect for corporate social responsibility.

My tech market predictions for 2009

For some reason I’m always closing deals in December/January, so my blog runs dry for a while.  But here they are, late again – my tech market predictions for the interesting times we call 2009:

1. SaaS vendors who are not already at the inflection point of positive cash-flow and controlled churn will go bust, unless their investors have very deep pockets indeed.  It will be hard to sell your way out of this slump. The economic environment plays to SaaS, but most of the business models ain't there yet.
2. On the other hand, outsourcing will come back into favour once the market settles a bit.  And it will be cheaper & better than ever, thanks to SaaS-style delivery of business apps built on VoiP communications platforms like Intelepeer. 
3. Ad-supported digital media sites will see a massive shake-out -– few generic newsletters or blogs will survive on their own.
4. Social networks as a category will see their values collapse, and many will disappear.  Even the Facebook gorilla will never grow back into its $15bn valuation, no matter how many whoppers.
5. Microsoft will continue to lose share in the browser market.  By integrating more apps into Gmail, Google is creating a platform that threatens Outlook/Exchange.  For this reason Microsoft will use its massive cash pile and low valuations to make defensive acquisitions, like Xobni.
6. CPA and creative rich media ads (games, viral video) will outperform other types of online advertising.  Expect consolidation as the few online ad networks with cash try to acquire growth.  Targets will include disruptive networks like Specific Media and online lead gen specialists.
7. Consumer appetite for innovation will slow, compounding Apple’s challenge in dealing with a sick Steve Jobs.  Since we’re still absorbing last year’s fabulous gadgets, the company has some time to develop a new roadmap.  But don’t be a shareholder while they figure it out.
8. A lot of local newspapers and offline magazines will disappear in 2009, which is kind of sad.
9. Project management tools like Daptiv, and construction industry SaaS vendors like BiW and others may well thrive, as governments pump gazillions into ‘stimulating’ infrastructure projects everywhere.
10. The shake-out among European VCs will continue at its glacial pace.  Timing can be a real bitch, but this downturn is all about the moolah.  Those with  cash have a shot at a winning strategy (tricky though it may be to find).  Those who don’t, won’t get to play.

As always, one item for the wishlist (I didn't get my dumbed-down cellphone last year...):

• Somebody fix videoconferencing, puh-lease!  There must be a better way between Skype video and a $150k TelePresence implementation from Cisco.  This would be a great time to go to market with a Polycom killer!

Finally, I still see this is a great time for European entrepreneurs.  In fact, many will fare better in this market than their US peers, having always been more frugal and used to operating with fewer financing options.  The maturation of serial entrepeneurship in Europe will continue.

Stay tuned for news from the Mobile World Congress (fka 3GSM) next week...

The beginning of the end for Microsoft?

This summer has seen a number of little erosions of Microsoft's power in the market which -- when taken together -- show the tide turning in a serious way against the evil empire.  And the decline may come quicker than people expect.  Redmond is definitely on the defensive.

It started with the failed launch of the new operating system Vista.  With strong resistance from business buyers and lackluster interest from consumers, Microsoft knew in late 2007 that it had a dud on its hands.  But the news has gone from bad to worse. 

Instead of accelerating new PC shipments (as previous new versions of the OS had done), Vista is slowing them down, upsetting PC makers who are already reeling from brutal price competition and a slowing economy.  So Microsoft took a hard line: from 30 June this year no one is allowed to ship a PC with XP installed.  That pushed PC makers too far, so they are getting creative:

• It is widely known that resellers are offering to downgrade customers to XP at little or no cost.  According to InfoWorld, some 35% of business users are ripping out Vista from their new PCs.  As a result, Vista is on less than 15% of desktops, and even that number is likely to be overstated as it is based on shipments.
• For months now HP has been shipping PCs with a Vista Business Licence (as it has to), but with XP pre-loaded so that customers can downgrade themselves. 
• The Wall Street Journal published a lengthy report yesterday [sorry, registration may be required] about how PC makers are adding proprietary software to PCs that mask Vista's more annoying features and make it faster and easier to use. Dell added a 'Dock' that looks suspiciously like the Mac Dock we know and love.  HP has developed its own interface that sits on top of Vista for managing digital media on its new line of touch-screen PCs.  Sony is doing the same, giving consumers a choice of three types of 'desktop' (business, home, etc) which remove much of Vista's clutter.
• New Linux-based desktop PCs are gaining ground beyond the geek market, though still a tiny 2% of the overall market, or less. But look at the $350 EeePC from Asutek, with others to follow.

Microsoft's share of browsers is slipping, down to 58% (off 7 points) from last year.  In general, Microsoft appears to be getting very defensive about its Internet presence: the failed talks with Yahoo, the acquisition of Greenfield Online announced today (which will give it access to a wealth of consumer data and research panels).  The beta version of Explorer 8, its latest browser incarnation, is said to include a Private Browsing setting which will block ads being served by arch-enemy Google, among others.

Microsoft is suffering the indignity of people buying powerful Windows Mobile devices and then using software from vendors like Kinoma to 'improve on' the user interface.  For $30 any consumer can enable Kinoma to take over the multimedia functions of a phone or PDA running Windows Mobile and make the entire menu structure disappear, to be replaced by intuitive touch-based navigation very similar to an iPhone.  Ouch!

Slow death by a thousand cuts?

Whither Garmin?

So the battle of GPS giants ended with a bit of a whimper.  Garmin withdrew from the bidding for TeleAtlas and simultaneously announced an extended deal with Navteq, who will continue providing maps to Garmin until 2015.  It makes you wonder how much say Nokia, who is in the process of buying Navteq, had in the negotiation of the Garmin contract extension.

In spite of Garmin's denials, rumour continues to swirl that the company is considering building out its own map-making network.  That would be a heavy, multi-year investment and one Garmin's shareholders ought to be interested to hear about.   But it may also be the only way to to de-risk a business whose main offering now depends on a large potential rival that wants to own the navigation and location-based services (LBS) market.

For now, the markets appear relieved that Garmin did not overpay for TeleAtlas, sending Garmin's share price up 14%. The kind view is that Garmin's bid was anyway just a gambit to force TomTom into paying an outlandish price (38 x 2007 EBITDA) for its own mapmaker.  But Garmin's future now contains a big hairy unknown, which has yet to be priced into the stock...

What HD TV??

Guest report from Evan Frank from the IFA consumer electronics show in Berlin:

Last week I attended the IFA (consumer electronics) conference in Berlin. What struck me walking through the exhibition was just how far LCD and plasma technology has come in the past few years. The manufacturers continue to push the boat out beyond what seems possible, as demonstrated by the truly mind-blowing Samsung 102-inch plasma on display, below:

Televisions are becoming wider, thinner, sleeker and cheaper than ever before. And they are all ready for High-Definition (HD) television signals. In fact, as a consumer you’d be hard-pressed to find a non-HD-ready plasma TV (and who would want that, anyway?). Yet despite this favourable trend, are the television networks holding up their end of the bargain?

I come from New York City, home of Time Warner Cable (and really good pizza and Chinese food), so I’m a bit spoiled. Time Warner, the main broadcast network in the city, offers some 25 HD channels, with content ranging from premium stations (like HBO), to sports, nature and so on. The service costs between £30 and £45 per month, with no up front charge. Generally speaking, good HD content is commonplace in your typical NYC household (and has been for the past 18-24 months).

Back here in London, after two years I finally succumbed to buying a cable subscription -– mainly because I bit the bullet and bought myself a plasma. So, what is the HD experience like on this side of the pond?

Sky’s HD offering looks like this: first you have to pay £299 just to get the box. Then you assemble your channel package, say standard sports + movies. This will set you back around £40/month (similar to New York). Want HD programming?  Add another £10/month. What do you get?  Ten dedicated HD channels, which apparently include frequent non-HD programming.

Wow. Even for someone who’s been seen once or twice paying $25 for a cheeseburger and fries at Automat, this seems a little excessive.

But I digress. Back at the IFA, over a bratwurst I chatted with an entrepreneur whose company sells content management platforms to traditional broadcasters and new IPTV operators. He reinforced what seems obvious, that:

in the era of user-generated content and incredibly rich PC and console games, the traditional networks are terrified that their bread and butter –- from Fox Kids to Desperate Housewives -- is losing our interest. To be sure, some broadcasters such as BskyB are announcing subscriber growth (although much of this is attributable to the price and marketing war with Virgin Media), but can they actually recover?

If networks want to do something about subscriber retention and growth in the age of the ubiquitous consumer Internet -– here’s an idea: invest in making quality content affordable and available for the current generation of HD-ready plasmas. These amazing screens are proliferating in households and are woefully underexploited. Perhaps if the end-user experience reflects the capabilities of the technology, the networks might reverse the flow of user interest back to the TV.

iPhone DOA?

At last, here is something truly functional for those of us who steadfastly refuse to believe in full device convergence!  I've sorta kinda hankered after an iPhone since they came out in the States, but I really didn't want the phone bit.  I like my phones tiny (so they fit in a jean pocket), and robust (so they can survive a fall on the floor).  Converged devices, including the Blackberry, tend to be neither, and have crappy phones too.

Now comes the iPod Touch, an iPhone without the phone!  Brilliant -- now I can do emails, surf the web, listen to music and watch videos from the best connected and sexiest multimedia device on the market.  With iTunes integration and WiFi connectivity, the Touch nearly has it all.  Including that fabulous finger-flicking interface...

I think this is such a risky move for Apple it makes you wonder whether the iPod and iPhone divisions are having a little mis-coordinated stand-off.  I wouldn't be surprised if more people than Steve Jobs expects feel the way I do -- that they'd just as soon have two specialised devices instead of one fat converged one.  If so, the Touch could inflict significant damage to the iPhone before it ever reaches the 2m sales barrier.  Never mind the European launch...

Perhaps that's why Steve pre-emptively cut the iPhone retail price by $200?

Free the speakers!

One of the surprising side effects of the digital music revolution and the accompanying proliferation of iPods has been our willingness to trade off sound quality for mobile convenience.  Most people I know are moving their CD collections onto a hard drive, media center or music player.  Even if you're a die-hard vinyl fan and part-time DJ, there is no longer an excuse to lug around those heavy silver boxes when you can digitise your collection with a $149 device like this.

But so far the speakers and headphones attached to all this music seem downright backward in comparison to the advances made in turning songs into bits and bytes.  We're putting our money on helping the speaker side of the equation catch up.

Ten days ago we announced an investment in wireless audio chipset vendor STS.  (Well done Michael and Eileen). I'm particularly excited about this investment because:

1. it actually makes something I could end up buying in a store (unlike the enterprise software vendors I typically invest in); and,
2. STS is firmly positioned at the birth of a second revolution in audio -- the wireless revolution.

Digital music is going totally mainstream, helped along by the continuing iPod rollercoaster, the iPhone and now Nokia's own digital music service.  Now people will want to stream that music anywhere and everywhere.  We want to be able to reconfigure our home audio set up without opening walls or snaking wires everywhere.  We want to consolidate music sources (the PC, stereo, satellite radio, HD TV, a guest's iPod) onto a single system, and listen to it anywhere in the house.

There have been some early wireless music streaming systems on the market, but most are cumbersome to deploy or expensive, like the Sonos system.  As it turns out, streaming music over wireless LAN (WiFi) is hard -- you may interfere with neighboring networks, and it's tricky to keep several sets of speakers in sync over the air.  STS has cracked these problems, and its chips are powering a new generation of wireless audio systems, like the Klipsch RoomGroove wireless speaker, X-Fi's wireless docking stations for iPods, and Philips' high-end home automation system.

STS solves both the WiFi factor (network interference) and the WiFe factor (in my case, girlwithoutawatch won't tolerate any more cables snaking along the walls...).  And the rollout of STS-enabled products should lead to a quick drop in prices, making wireless speakers available to the masses.  It's about time.

I'll have another shot of design please

A new release of the iMac is here.  I just love the relentless focus on design.  Nice.

First mention of iPhone on this blog...

... well, except for mentions in passing here, here, here and here. 

Judging by the pace at which iPods increased in features and dropped in value, I think I can wait another year or two to get my better, cheaper iPhone.  Meanwhile, what do you get when you pulverise an iPhone?  A surprising amount of black muck, apparently, see willitblend.com.

More annoying future technologies

For some light relief from the usual technology market predictions, check out Valleywag's list of Annoying Future Technologies.  Good idea. My favourites:

4. Camera-wearing freaks: fulltime vloggers like Justin.tv and bloggers who video-interview everyone at conferences (very annoying). Think about it: the chance of anything stupid you do ending up on YouTube is increasing exponentially alongside camera-equipped mobile phone shipments.... scary.

3. Agressive in-car GPS: (or worse: GPS on your phone) those annoying voices will multiply, telling you where to go. The proliferation of instructions will particularly annoy girlwithoutawatch, who hates being told what to do by me, much less by a gadget.

7. Energy-saving wonks: those people who convince you that you can save the planet by turning off your new Intel-Mac at night but still drive a Porsche Cayenne by day.  Hmmm.

I would add a few annoying future technologies of my own:

8. Fugitive avatars: surely it's just a matter of time before IBM or Toyota's digital spokespeople from Second Life cross over into the Web or onto our TV screens to plug their products.  Do we all have to become cartoons to interact in future? (The picture on the left is IBM CEO Sam Palmisano's avatar at an IBM 'townhall' meeting with his virtual employees.... really.)

9. Voice-activated devices: is it just me who prays that voice activation will not become ubiquitous, as everyone seems to predict?  It's bad enough that people walk down the street talking into their earpiece wires.  How annoying will it be when your neighbor in the subway shouts into his phone "Oven: preheat to 200 degrees!"?

10. Intrusive car safety features: this is more of a current technology gripe if you drive a BMW 7 Series, but for the rest of us it's a future problem: lane departure warnings, blind spot detection, parallel parking assistants, what next?  You had me plenty annoyed at those bing-bing-bing seatbelt reminders!

11. Ubiquitous RFID tags: each year that passes without the RFID adoption predictions coming true is a relief.  Who likes the idea of RIFD tags in our clothes which may or may not have been de-activated at checkout?  I've got enough paranoia with Ken Livingstone watching (and taxing) my every move, I don't really need Austin Reed to know where I dryclean.

12. More inane communication methods: Email, SMS, MMS, IM, chat, blog, Twitter... I'm sure there are some tiny fragments of our time that have not yet been exploited for communications.  What do I do between my last Twitter and my next blog note?  Surely I need to let my social network know what I'm up to? 

Any others?

Apple's $4bn accident or stock scam?

Here's a squirm-inducing testament to the power of blogs.  Valleywag reports on yesterday's downward 'blip' in Apple's stock price caused by a blog reporting delays to the iPhone release.  The blog note, published on Engadget, was based on a fake internal email that appeared to be leaked from Apple.  The incident momentary wiped $4bn off Apple's market cap.  Om reports on the impact:

In the volatile 23 minutes of turmoil between the minute the disinformation hit the stock market at 8:55 PST and Apple’s announcement that the initial email “is fake and did not come from Apple,” nearly 15 million shares changed hands. That’s 60% of Apple’s normal volume in well under a half hour. That’s also an awful lot money lost for some investors - and gained for others - all of it because of a lie.

Information velocity does have its downside.  I'd like to believe that no one purposely benefited from this event, but that is probably naive.  It does not stretch the imagination to see that unscrupulous traders will get the idea that these blips can be replicated and exploited.  Two factors conspire to create a real structural problem for the public markets here:

1. Rumour moves much faster than anyone's ability to verify or deny (in fact, I'm pretty impressed with Apple's 23-minute reaction)
2. Near real-time trading capability is in the hands of millions of people, and -- more importantly -- billions of hedge-fund controlled dollars

I'm a big believer in unfettered markets and perfect stock pricing that reflects all available information, but today's laws and regulations are not really made to cope with this type of situation.  What will the SEC make of it?

[Credit: Realtimestockquote.com for the chart]

Great unmarketable technologies

I'd like to start an occasional series of posts about great technologies that can't be commercialised.  You know the ones -- great simplifying ideas that disrupt so many players in the value chain that they prevent it from seeing the light of day.  This problem usually occurs at the dividing line between proprietary and open standards.  I'll describe one today, but let me know if you think of others (current or historical).

I was reminded of th commercialisation dilemma recently in reference to a Cambridge-based company called Splashpower.  This company makes a universal charging pad, on which you can charge the batteries of all your electronic devices through electromagnetic induction.  No plugs, no wires -- just a pad on which you drop your phones and Palms and Blackberries and let them soak up the juice.  Who wouldn't want one of those??

Sadly, the company has spent over 4 years (and several million bucks courtesy of Benchmark and other investors) trying to get this product to market without success.  I don't have any inside knowledge, but I do have a view (isn't blogging great?), so please correct me if there is more to the story.

For Splashpower's pad to work, every device needs to have a little Splashpower module in it.  That's what makes it so damn difficult to bring to market.  In one fell swoop the pad would do away with one my biggest pet peeves -- the proliferation and incompatibility of chargers.  Phone makers obviously like the status quo because (a) they make good money selling additional chargers (sometimes they cost £30 or more!) and (b) it's yet another way to lock consumers in to their brand.  The latter is particularly galling, because it increases resistance to switching even if you're not happy with the features of the device.  Sometimes Ithink there ought to be a law to force all phone chargers to have ineroperable connectors.

For the same reason that our chargers remain proprietary, Splashpower will never get wide adoption if it has to get its chip inside the actual devices.  There are in my view only two ways around this:

• find a technical approach to remote charging without putting a chip inside the device; or,
• find a partner in the consumer electronics industry that (a) has clout, and (b) is willing to be disruptive to themselves and the rest of the industry.

Hmmm... who might be willing to do that?

Of course!  This is just the sort of thing Steve Jobs could do to upset the industry.  And it could provide a nice differentiator for next-gen iPods and the upcoming iPhone.  But in order for it to be long-term disruptive, Steve would have to be willing to licence the technology on a non-exclusive basis.  And so far, for all its attractions, the iPhone does not appear to be a very open platform; it's only extensible by Apple and it's unclear which 3rd-party applications will be supported.

If not Steve Jobs then someone else ought to take the plunge and suggest this radical idea to the industry: devices should compete on their functions, eg their hardware and software design.  Let's make all the external interfaces (networking, power) open and extensible.  That would increase consumer choice, improve devices and, surely, lift sales for the industry as a whole?

I want my Web tee-vee!

One of my biggest gripes at the moment is how hard it is to find and grab television shows on the Internet.   

First, it often happens that we see an interesting documentary or show which we didn't record but would like to share with someone.  Usually we would even be happy to pay (yes PAY!) for a copy we can send home.  But have you ever tried to buy a one-off doc from the BBC or Channel 4?  Virtually impossible.  Their online shops only carry a tiny fraction of their TV output in DVD format. Usually you can Google your way to the original production company and, if you're lucky, you might be able to send them an email and request to buy the show.  Talk about leaving money on the table -- the channels could stock every original, one-off programme for sale immediately after it has aired and make a good incremental buck for little effort.

Second, we are fed up with relying on the incomprehensible scheduling strategies for imported US TV series.  You manage to record & watch all of Season 5 of the Sopranos and then it disappears for 7 months.  Suddenly it's back on but -- no, wait! -- it's a re-run of season 4!  By the time you've realised that Season 6 is on E4 at 2am, you've missed the all-important opener.  Does anyone know when Six Feet Under is coming back and on which channel?  Preferably without the little sign language person in the corner?  Didn't think so....

Aargh...there must be a better way!

Recently someone told me about one of those great web ideas which I wish I'd had first so I could quit my dayjob and risk it all for dot-com glory: TIOTI - Tape It Off The Internet.  TIOTI is a directory of television shows available on the Internet, whether it's through a legal distributor like iTunes or Amazon unBox as well as illegal BitTorrent streams.  TIOTI does not provide the video stream themselves, they only keep track of where you can find it, how good it is and how you can get your hands on it.  It's like your Tivo programming guide, but with the whole world's television behind, not just the next 7 days. 

The service is currently in private beta so you'll have to beg for an invitation to try it out.  I think the basic idea is pretty good, and the founders are adding some nice web two-dot-oh features like tagging and sharing.  Once the industry figures out its charging model, these guys can take a cut for delivering leads to the legal distributors and content sites like IMDB.  I wish them the best of luck.

Diatribe on DRM and Steve Jobs

Steve Jobs recently made a headline-grabbing public plea to the entertainment industry to abandon copy protection for multimedia content.  He is urging the industry to give up the search for a workable Digital Rights Management (DRM) solution by making a case that:

• DRM doesn't work and is criminalising millions of people who are ripping CDs they bought legitimately, or downloading content from both legit and dubious sources on the Internet.
• DRM retards the growth of the entertainment industry, as proven by the fact that iTunes music sales are the only growth engine of the music business today.
• 90% of music is sold unprotected anyway in the form of CDs, so what's the difference?

Abolishing DRM sounds like a simple (albeit radical) solution, which appeals to our inner hippie and also casts Jobs in his favourite role: taking the side of "the people" vs the big bad corporations.  But this is quite disingenuous coming from the man who perfected the art of technology lock-in with a string of innovations over the years (iMac + OS X + Life Apps; iPod + iTunes; iPhone closed to third-party apps). [Disclosure: I have an iMac at home and I love it.]

[open sidebar] Jobs' argument reminds me of the debate regarding pharmaceutical patents.  The tempting case is made that developing countries should be allowed to flout existing patents and produce cheap generics for the world's poor.  The ultimate objective is non-controversial.  But this approach kills the profit motive and ultimately the incentive to develop new drugs.  The same objective can be achieved by using direct government (or private -- see the Gates Foundation's efforts) subsidies to buy drugs at market and subsidise them for the poor.  And this approach retains -- even increases -- the incentive for pharmaceutical companies to develop the drugs the poor most need. [close sidebar]

Similarly, quality multimedia content costs money to produce. In the case of music, for example, it costs a lot of money, most of which is spent on artists whose records never recoup their investment.  That is the risk taken by record companies.  Quality content will only be produced if it can make money for its producers.  The more efficient the commercialisation, the higher the economic returns, the more producers will enter the market -- all this is good news for consumers, who get more choice and lower prices.

Free content will quickly become garbage content.  This is already evident in the 95%+ garbage soaking up gigabytes on Google's YouTube server farms. Achieving interoperability of DRM systems is not a technical problem; it is primarily a political one.  The industry has made progress in this regard and it can complete the process. 

If the result is an accepted set of DRM standards and a competitive market for DRM technologies, then most of Steve Jobs' stated goals for the benefit of consumers will be met.  But not perhaps in the time frame he would like: Jobs is in a hurry to boost the music/video market, maybe because he needs to prop up iPod sales in 2008, when analysts predict slowing sales growth.

Consumers value what they pay for and are usually happy to pay for what they value.  $0.99 per song makes a compelling marketing slogan, but it is undoubtedly more efficient (and fair) if I can choose to spend $0.09 to listen to a song once, $0.49 to get it on my iPod, or $1.29 to transfer it to any one of my devices.  Especially if in each case the level of quality is assured.

A functioning DRM system can create huge distribution efficiencies and help grow the premium content market by a factor of ten.  The best way to reach more consumers is to enable device interoperability, microchunking of content and micro-billing.  All these require a set of DRM standards and technologies.  Steve Jobs has a great genius for blending technology, design and useability -- as such he can be a positive driver for interoperable DRM. 

Steve, why don't you call a summit with Steve Ballmer and Bob Iger and Howard Stringer and Sumner Redstone, et al, and make this happen?  This is the way you can free content.

3GSM -- Another Day, Another Phone

David Carratt on his second day working the phono-philes at 3GSM:

Spent a long working day scouring the show for investment opportunities. My colleague Eileen and I hunted separately most of the time to cover the huge grounds. The day started with the search for the perfect UI -- think 2.5D animation effects running on an ARM core. Got a tip that the LG Prada phone is the coolest new phone at the show. For fashionista Eileen, a new Prada anything is a "must have" and so we trekked over to the LG booth to see it close up -- sleek and black with few visible controls and touch screen driven softkeys. As luck would have it, at that very moment Eileen's nearly new Nokia "L'Amour Collection" phone falls to the floor and explodes into many pieces -- "Oh, I need a new phone!" -- time to review the Kennet phone policy I guess! That evening we're off to the Lehman Brothers drinks party. Much discussion about how WiMAX might come to Europe. European operators know that WiMAX offers the best bandwidth per unit spectrum at the lowest capex but nobody want to be a first mover to replace and/or cannibalise their existing network. What may be needed is a bold bid by China Mobile or NTT DoCoMo to win a European license -- that would cause the incumbents to build out new WiMAX networks. Watch this space.

Live from 3GSM...David Carratt reports

I’m delighted to have my colleague David Carratt as guest columnist for a few days, reporting live from the 3GSM congress in Barcelona (lucky sod!):

First impressions from 3GSM are rather blurry having got off a plane, been hit by massive Samsung billboards at the airport advertising RAZR lookalikes, spent half an hour blagging my way into the show –- persuaded the cashier that Tuesday after 4pm is not a full day so I should get in free today –- and then spending 3 hours at a corporate drinks party.

Spectacular walk at dusk up from the show site at Fira Barcelona to the Fundación Miró in Montjuïc Park overlooking the whole of Barcelona.

This year’s main preoccupation is "what next for your phone?" Is it a TV? Is it a personal navigator? Is it a video iPod? Or is it a mobile webcam? Nokia's new phones cover all these possibilities in a way that makes you wonder whether anyone knows the answers or just wants to cover the bases.

I am convinced that consumers don't want to watch broadcast live TV simultaneously with everyone else. After all, this is the media-fragmented, post-Tivo, "audience of one"-world, right? Apparently this isn't the only view. A mobile phone at 6" is as good as a plasma at 10ft, and the Nokia N77 packs stereo speakers. In this view of the world you end up with Bluetooth rear speakers in both your ears and a subwoofer in your shoes! …for a superior personal TV experience.

Maybe these two views aren't so different – video is here to stay but my bet is on time-shifted, downloaded multicasting rather than live simulcasting. Consumers want the flexibility to watch video in a non-linear format. Operators want to carry the packets to the phone (and they don't care whether you watch them or not).

The argument will be swayed by whether Apple's iPhone and other smart video phones are more attractive to consumers at a price greater than the free terminals (dumb phone + TV) provided by your operator. Would you rather use a video iPod with a built in smartphone or a TV with a plain old voice phone? My choice is device first, operator second!

Thanks David. Your consumer dilemma is a mirror image of the increasing tension between handset manufacturers and the operators. Steve Jobs would like nothing more than to sell the iPhone directly to consumers, bypassing the operator channel. So would Nokia. The operators meanwhile want to stop subsidising high-margin smartphones, and to increase ARPU on mass market phones. This epic struggle between Nokia/Motorola and Vodafone/Verizon is likely to consume the mobile phone industry for the next few years.

Getting video out of a PVR

Here is my latest gadget gripe.  Back in the growing Bleyleben nest we've done our best to increase our efficiency of TV viewing by installing a Tivo clone.  Since Tivo is not supported in the UK, and the next best thing -- the Sky+ box -- is a bit pricey and comes with loads of channels we don't want, the only alternative was a no-name PVR + Freeview connection.  In our case, that's the Humax 9200T.

First of all, we love this box. For £160 or so you get the full PVR functionality, a 160GB hard drive, and a Freeview tuner.  It's a cinch to set up & configure (eg, plug in and it does the rest), and the Electronic Programme Guide (EPG) is (nearly) idiot-proof.  I can't remember the last time we watched something when it actually aired.  Time-shifting rocks.

Great, so three months later we have a hard drive full of great documentaries (Planet Earth!), investigative reports (Panorama), comedy shows (Extras) and even reality TV worth saving (Ramsay's Kitchen Nightmares).  Some of these we'd like to give to relatives as (easy) Christmas gifts. But how the devil do we get them out of the Humax?!?

In fact, the Humax is quite progressive in that it comes with a USB 2.0 port, through which you can transfer digital images from your PC to the box, and (notionally) MPEG video files from the box to the PC.  There is no support for the Mac, but I've found some hardy techies who have managed to work around this here, but were stymied again here.  (For Tivo owners, here is How to View Tivo Recordings on your iPod. Thanks to Jeff Nolan for referencing this in a recent post.)

Now, I like to tinker with my gadgets as much as the next guy, but I can't see Mrs B letting me spend a whole weekend on this particular project...

I'm sure there is plenty of pressure on the PVR vendors not to make it too easy for consumers to move recorded video onto their PC, video iPod or DVDs.  But this feels like desperate swimming against the tide.  If home media convergence is to become a reality and products like Windows Media Centre PCs to sell, this needs to become seamless.  I hope it doesn't take too long, because my Humax hard drive is filling up!