Category Archives: mobile

Semiconductors economics

There is a really interesting article the IEEE Spectrum by Clayton M. Christensen, Steven King, Matt Verlinden, and Woodward Yang. It basically tells the story of them apply the TPS (Toyota Production System) to semiconductor manufacturing and results of doing this.  Pretty amazing results.  The most amazing change is that this methodology allows smaller runs of chips while still being profitable and producing the chips at competitive prices.  This is a game changer in silicon as it allows silicon to more closely match the trajectory of ever-shorter product life cycles in consumer electronics.

Who wants to guess the company that is the subject of the article (purposely withheld in the article)?


Content goes from king to the new loss leader

By now it’s fairly well-known that selling digital music downloads is a tough business with thin margins.  However, across both online as well as brick-and-mortar retailing, music and video is being used more universally as a loss leader and it’s not clear what this trends means for content in general.  For example:

  • for Apple, digital downloads are not something they make a lot of money on, however, it enables their hardware universe (iPhone, iPod, Apple TV).
  • for Amazon, many people have suggested that digital downloads is a traditional retailing loss leader.  It drives people to their page, where Amazon hopes to sell them something above and beyond the digital download.
  • for wal-mart, CDs and DVDs have been used for a long time as a loss leader.

The New York Times is reporting that Apple’s new deal to sell movie downloads (as opposed to their rental business) is not a great deal for Apple from a dollar perspective.  So, Apple appears to be using the same model here as they did with the iPod.  Effectively they are relegating the movie downloads to a loss leader in the hopes of selling more Apple TVs.

So is content no longer king?

Live Mesh – the ultimate P2P platform

Live Mesh was introduced yesterday by Microsoft.  It is the brain child of Ray Ozzie and really seems like an out-growth of the work he did with Groove.  At its simplest, Live Mesh is basic file sync.  But another way to think about Live Mesh is as the ultimate P2P platform.  When people think of P2P they think about Kazaa, Napster etc where everyone’s files are available to everyone else.  Live Mesh is different from vanilla P2P because it adds the following:

  • control over who sees what files
  • creates a personal P2P cloud amongst your own devices (file sync)
  • the concept of your own cloud store
  • a platform, which will let ISVs build applications on top of it

So what does this mean?  Live Mesh has the following implications:

  1. Cloud storage companies can kiss their businesses good bye because cloud storage is integrated with Live Mesh.  Cloud storage is a thin margin business and only those with scale can make it work.  After the shake-out likely survivors are MSFT, GOOG and AMZN.  I should be clear that there may be still be a lot of 3rd party applications that leverage the infrastructure of the big 3 but if you are doing your own storage thing, you better switch now.
  2. Sync is a big deal because if done right it has the ability to transform our digital lives.  I know that sounds like hyperbole but if you have more than one computer you will likely have blown productivity managing your files.  It basically makes computers (and devices) more useful.  There is a lot of people playing in this space but by virtue of creating a platform and a standard set of APIs and protocols, MSFT has the chance to win big time.
  3. MSFT has an advantage over GOOG and AMZN here because they have better distribution (by virtue of their operating system).  Additionally, they have been marketing to ISVs for years.  Don’t underestimate this.  Once Live Mesh is integrated into Visual Studio, any kid with rudimentary Basic skills will be able to build applications on top of the mesh.
  4. Going back to the P2P angle, Live Mesh can be a content delivery platform.  If I were a content company I would start thinking about this right now.  Streaming media has economic issues that Live Mesh solves.  Microsoft should be out licensing this to every device maker on earth.  The consumer electronics companies will be reluctant participants but they should embrace it because it enables them to compete with Apple and frankly they need help in this area.  If you look at Ray Ozzie’s memo, he talks about the 3Cs the first being content.
  5. Social networks are about interaction whether it be IM, posting or sharing.  Guess what?  Live Mesh addresses posting and sharing and if done right will make it easier.  YouTube flourished because it let people embed videos in HTML.  Well, Live Mesh can take this to the next level, facilitating what Fred Wilson calls micro chunking.

However, the biggest key to Live Mesh’s success will be how much lock-in is baked into the platform.  If all protocols are published and any one can interact with Live Mesh completely at the protocol level and for free, then Live Mesh could be transformative.  If the above is not true, the Live Mesh will fail because lock-in does not work on the web.

The future of music on the web – streaming and Topspin

Fred Wilson has a post this morning about streaming audio services on the web.  Fred’s point is that streaming music is changing how people listen to and discover music on the web and that this type of use will accelerate.  And I agree with that.  But some fundamental problems still exist with streaming music.  For one the user experience will always be somewhat compromised as compared with getting data from your hard drive.  It will get better over time but your connection speed is always going to be variable.  However, more fundamental is the economics of streaming.  As Fred points out, advertising will play a role here but that only helps the labels/artists get paid (and I am not sure this pencils out).  However, the elephant in the room is your ISP.  Right now all these streaming services do not have any agreements with the ISPs of the world.  We already know that the ISPs are “shaping” bandwidth and if/when streaming becomes mainstream it will strain networks.  Even worse from a bandwidth standpoint is that no network caching can really go on because in this new world of streaming everyone is getting a custom stream.  So the networks will start to have issues and the ISPs have no economic incentive to play along.  Now let’s move this to the mobile space and these network issues become even worse.  The networks are even more tightly controlled and constrained (LTE/Wimax etc notwithstanding).  In some ways constant streaming from large number of users will be a nightmare for mobile operators.  Which brings me back to the user experience I touched upon in the beginning of the post.  One of the things that made iTunes/iPod so successful was the user experience.  It just worked as opposed to any number of pre-existing services and devices.  It’s my contention that streaming will have a place in this new world but that I am not as bullish on it as Fred is because of the above issues.  So if not streaming then what? Well, I believe trickling content to a hard drive will become a major delivery mechanism for content.  It delivers a better user experience and the network economics make a lot more sense.  In some ways that is already the model that iTunes uses but I think we will see it used in innovative ways (eg AppleTV).Now for the crystal ball gazing about Topspin media which Fred also talks about in his post.  I am guessing that Topspin will try to connect artists more directly with buying public and thus bypassing the labels.  This will have to rely on the internet to a large extent and will finally address the distribution issue in today’s music business model.  It needs to happen and it’s way overdue.  Peter and I both had a hand in democratizing music production and I am guessing that both Ian and Peter are eager to knock down this last barrier for artists.  It will be cool and will have a bigger impact than streaming because every article about music on the internet will not be filled with a bunch of caveats about the labels and what they think.  The labels will not be invited to the party and new business models will flourish.  And that may be a bigger deal than MySpace’s music service because that service will be about lock-in just like every other music service on the net today.

MySpace launches music service – ad-supported as well as DRM-free downloads

The music space news keeps coming.  MySpace is launching a music service with 3 out of the 4 majors on board (EMI curiously sitting this one out).  It could obviously have a huge impact and you have to believe that Facebook will do the same thing.  It will likely not have that much effect on Apple/iTunes but could have a big impact on others such as Amazon.  For right now it is a little hard to discern what will be the major focus of the MySpace music service because the press release seems to indicate that they are offering everything.  The unique aspect is the tie-in with MySpace where lots of kids spend lots of time.  Still if I have an iPod I will likely only “listen” on MySpace (perhaps via ad-supported model) and continue to “buy” from Apple.  Another interesting angle would be if ad-supported model generated enough cash to “subsidize” lower download pricing.  That might move some people away from iTunes but it probably would not matter a great deal to Apple anyway as long as the iPods kept flowing.  Now if there was all of a sudden a ton of cel phones that supported the MySpace music service that might move the needle.  Over-the-air content acquisition would also be cool and a clear differentiator because you take the PC requirement out of the picture.

Is free ad supported music the future of online music?

The Wall St Journal has an article this morning saying that Google will launch an ad-supported music service in China.  This is in part a response to Baidu’s lead in the Chinese market (where a large share of the searches are for music on the web) but could also be a harbinger of things to come in other geographic markets.  If this indeed has been blessed by the majors it is an interesting step for the music industry.  In some ways, the nature of the Chinese market may have forced them into this.  Note that the majors are also suing Baidu so the timing is a little strange here. 

However, the tracks that Google (together with will be providing will be watermarked to allow download tracking although it’s not clear how this will work exactly.  Somewhere in the download chain something/someone will have to inspect the files for the watermark for this to work.  This therefore implies that whoever is providing the pipes will be inspecting all the content which seems like a serious problem.  As I mentioned before the music industry is already pushing for ISPs to snoop on internet users and this is most likely already going in China where the internet is not really open.  So while the business model here is interesting, I don’t much like what is going on behind the scenes:  Google (“do no evil”) and music labels using the fact that the Chinese government (“not open”) already is snooping on internet connections to further their own economic good.  Of course Google has already agreed to censor their searches in China so I suppose this move should not be a surprise.

I think Google and the majors could have been more innovative because the ad-supported music sales angle has legs.  But I don’t think it requires intervention by the government and ISPs of the world to work.  Perhaps I have this wrong but it does smell funny.  And lastly we should all work to prevent ISPs and our governments from routine 24/7 monitoring of our internet connections.  This is just plain wrong.  Additionally, when (not if because I think it will happen) someone comes up with a non-evil scheme for ad-supported music sales, it could potentially alter the internet music landscape in a big way.

Backing up is hard to do

Backing up your data is a pain.  And so not many people do.  This is very broken in this day and age when hard drives are cheap.  Jeremy tells you why you should.  Add to this that more people have more DRM’d data on their hard drive.  In theory it’s no harder to back up this data.  In practice, it’s a bit more complicated than that.  Stories abound.

Now please backup your data!  And do it before Valentine’s day because otherwise it might be “breaking up is hard to do”.

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