Technik

The Cellphone as the Next PC

Or maybe not.

There has been a search for the Next PC since the first PC. In the late '80s, John Doerr thought it was pen-based computing, and invested in Eo and Go, later merged into what a long-forgotten wit called Ego. Now Ego is long forgotten. In the early '90s, John Sculley thought it was PDAs, and he began his long slide from tech fame after his infamous proclamation that the Newton would win a major part of a "Trillion Dollar Market." In the mid-'90s, Jeff Hawkins said handwriting recognition was not possible on a small device, and then he went on to prove himself wrong a year later by founding Palm. He left Palm and innovated a second time by adding cellphone capability to a PDA , calling it the Treo; but by then was destined to lose out to the RIM and its addictive Blackberry, called the Crackberry among the Digerati. Why he lost is very instructive - more on this below.

In the 'Oughts we now believe that the Cellphone is the Next PC. And what a PC it is! The PC is a mature product with annual sales around 200M units, while the cellphone has rocketed past those volumes towards 1B units per year. Features in the cellphone either get adopted at massive scale, or dropped. Cellcams made the cut. Music is now being tried. Microdrives may be next. And keyboards. And so on.  Is it the next PC?  Let's take a closer look. 

Chilling Resonance of Grokster Down-Under

This is a guest-blog from The Jamster on a related decision in the land of Oz, which imposes liability on the carrier in the middle that seems to go beyond the liability in Grokster for the direct infringer, an odd and disturbing result:

Yelnick's description of the "search for intent" in the Grokster decision as "chilling" has a strong resonance, especially for ISPs, with the decision last week of the Australian Federal Court in Universal Music Australia v Cooper.

Grokking Grokster

The Grokster decision held that Grokster and Streamcast were not protected by the Betamax decision and were potentially liable as having blatantly induced copyright infringement. The initial view held that Hollywood won, but that view has given way to a belief that the Betamax decision was reaffirmed and even expanded. The truth is in between. The Betamax decision was expanded by finding that instead of imputing intent to infringe from infringing use, a higher standard of actual inducement was necessary. But - there is always a but - the new inducement test may create a chilling effect for a period of time until it becomes clear (after other cases) that a fairly high standard of intent is required.

In Betamax, the Court borrowed from patent law on contributory infringement to create the "substantial noninfringing use" defense. In Grokster, the Court borrowed from patent law to create a new test of inducement to infringe. Inducement is a subjective question of intent, and can be shown from internal emails not just external marketing messages. So copyright now evolves from an objective, strict liability doctrine to a subjective, search-for-evidence area of law.

The concurring opinions appear to expand Betamax by allowing fairly minimal legitimate use to offset infringing use. And they make it clear that merely knowing of substantial unlawful use does not take one out of the Betamax safe harbor. What takes the technology provider out is the intent to induce infringement.

Often the stated principle of a case is less important than the footnotes. Grokster has footnote 12, which says "in absence of other evidence of intent, a court would be unable to find contributory infringement merely based on failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses." Fair enough. But what if copyright holders ask the technology provider to modify the tech to limit infringement? Lack of response might be construed as evidence of intent to induce infringement.

The search for intent is rather chilling. The post-bubble ritual punishment of bad CEOs hung people such as Frank Quattrone on as little as one ambiguous email. Could a new technology be shut down due to an overzealous middle manager's emails? The Court uses words like "purposeful" and "clear" to describe the level of intent that rises to unlawful inducement. This is a high bar. Let's hope the lower courts apply the higher test and reduce the chill. But that will take some time and a few cases.

The net net is yet another set of prophylactic procedures, to dumb down marketing messages and get marketing managers off email (IM anyone?). Copyright holders will try the 'please modify' letter to create a trail of intent where none may have existed. Google has already backed off its video service a bit due to complaints from content companies. And the use of "-ster" in the name will go away - the very name Grokster, riffing on Napster, was evidence of intent.

Best advice is not to ask what users are doing, and not to sell them on aggressive use

Or: don't ask, don't sell.

Blogging the Under the Radar event

The Under the Radar events are a reality show for entrepreneurs - MIT venture forum meets American Idol.  Entrepreneurs pitch their new venture to a panel of VCs.  They get 3 slides in 5 minutes or they get gonged.  The venture panel asks questions, then the audience, then the winner is picked. The venture panel gets to explain their reasoning, and on a good day can really have fun with the venture contestants. GONG!

This event was an all day affair with four sets of companies: search, social software, mobile apps and digital entertainment.  More info and notes are here. I was on a panel for the mobile apps sessions.

Stanford Symposium (2): New Media

Here are some further notes from today's Stanford Symposium on new networks and content models.  The Symposium was broken into four panels.  This is panel 2. 

New Media: Is Content Still King?

Rob Glaser of Real Networks pitched his new Rhapsody 25 service - 25 free samples of music per month. Cute. His demo failed. DRM, perhaps?

David Weinberg of Universal Music painted a good strategy for a music label - just 5 years too late!  He supports digital music everywhere, as long as he gets paid.  Seems that music is done for now, meaning the models are now largely known.

Best so far is Bob Greene of Starz. He pounded home how Starz and HBO own the VOD + payTV + basic/broadcast windows - they own the title from month 3 to year 10. So back off all ye little video bypass ventures! He also showed how subscription is worth much more than a pay-per-view model due to larger user base and recurring revenue model.  He also sees the value of the Long Tail, hence is trying to own the library for longer periods of time.  New initiatives: Starz on PC (looks pretty useful, done with Real, has 300 top run titles - remember he owns the rights!), and the biggee, Starz on PSPs and other portable devices. Lots of interest in the new personal media players.

Jeremy Allaire, CEO of Brightcove, one of the first of the budding group of "Flickr for Video" companies, pitched an open TV platform he calls Internet TV. The IPTV panel made a point that IPTV is not Internet TV. Right they are - Internet TV wants to bypass the distribution control by cable and telco, IPTV is the way they maintain control and yet adopt to the Internet.  He also calls it Long Tail TV but he defines the long tail differently than Starz.  Starz's Long Tail means the library of first run content; Brightcove's Long Tail means all the small or foreign stuff that is hard to find.  Maybe best to call the first one the long tail, and the second the broad tail, since is not focused on library but breadth.  Many obstacles to an Internet TV business model, including getting content rights and being dependent on the very broadband providers it is trying to bypass. It is conceivable that an open STB or equivalent could make this feasible, but better would be a third pipe into the home or into portable media players

Sean Parker, formerly of Napster and most recently of Plaxo, has founded a sleeper social network company, thefacebook.com.  Facebook is coming up the tailpipe of the leader in social networking, MySpace.  (Friendster has faded.)  Has 2.8M active registered users with 65% returning per day, 85% per week and 95% per months.  Billions of monthly page views.  Real names not fakesters due to tie in to colleges: 45% list their cellphone & even more post their real picture. Consequently, the Facebook social network matches the real world network, and the usage is for real world events and interactions.  Is this the next paypal? Or will users drop it after graduation? Enquiring minds wish to know.

His opening point: old media eats up margins - too much to cable, too much to labels/studios, etc. New media can have free content (generated by users), free distribution (piggyback on broadband) and cheap marketing (viral). He is on to something - he defines the long tail as user-generated content.  We could call this the How-to-get Tail, given the prime use of social networks, or maybe the Tail Tail, but perhaps better is to call this the Free Tail. We should not underestimate the value of user-generated content, as the interpersonal communications market (telephony) is much larger than the content market. The cost of delivering new media on the web is so cheap it can use an ad-supported model, including self-service ads (online ad placements, bought not sold).  The sleeper in here is the localization angle - local pizza ads for college kids, or Craig's List, as examples.

Q&A: is content still king? Rob makes the outstanding first point that the bypass models like mp3.com failed in music due lack of the social interaction required to promote new acts (touring, cross-promotion, taste-making by influencers). David agrees, and notes that the Internet is more useful for established acts. Labels are venture capital for artists, and the Internet does not substitute for it. Then the Starz guy began piling on new media.  He commented that crap is crap so having more content is not the answer, free or not.  Now the panel was getting interesting! The new media guys sat like couch potatoes when they should have grabbed the mike and asking the Starz guy what leads him to believe that the vast wasteland of TV is peddling anything beyond crap? Crap sells! 

They all agreed mobile content would be a big winner. Bono at a recent concert called for people to hold up their cellphones rather than lighters to call for an encore.

Blogging the Stanford / Accel Network Technology Symposium

Here are some notes from today's Stanford Symposium on new networks and content models.  The Symposium was broken into four panels, with come pretty impressive speakers and fairly robust Q&A sessions.  Overall, it came out to a bit of draw between the Forces of Freedom and the Forces of Control. 

IPTV: Will The Triple Play Be A Home Run?

Balan Nair, the CTO of Qwest, kicked things off with the business case as to why telcos need to build out a video capability to the home - video spreads the cost of fiber build.   (Seems a bit of a tautology, put like that ...) He thinks he can get 20% of cable fast by picking up those disgruntled with cable, and even if he loses the 20% of disgruntled voice customers to cable, he thinks he got the higher ARPU out of the swap.  What if they are the same 20% (disgruntled with both)?  They go to satellite and Vonage I suppose, and his business case begins to weaken.  Well, we all want them to *finally* build out, whatever the reason, so no one played spoiler and asked any tough questions. 

John Cioffi, a well-known Stanford Prof, lays out how DSL can get to gigabit speeds through MIMO and other techniques.  This means besides FTTP (fiber to the premise), FTTN (fiber to the neighborhood with DSL over copper to the premise) can also result in broadband with speeds over 100 mbps .  His techniques are based on bandwidth management across copper pairs to optimize throughput. 

Kenny Frank, CTO of Alcatel North America, sees the US bandwidth need at 20 mbps down / 1 mbps back.  Assumes 1 HD and 2 SD simultaneous unicasts. Requires more capable QOS in the switches than now for data networks. Video is multicast deep into network before switching off into unicast streams.  Lots of network elements need to work together, means what keeps the telco guys like Jeff Weber of SBC awake at night is integration. I wonder what Alcatel does?  Ah, he described Alcatel as SBC's preferred integrator, and MS as a partner for middleware due to their enhanced EPG experience for consumer. Lists 2wire, Thomson, Pace, Samsung as CPE brands.

Adam Tom, CEO of RGB Networks, who is a very clever guy (he was at GI when they set up their digicipher system for satellite distribution of encrypted video & at Imedia when they developed a multicast multiplexing algorithm for satellite that created a frenzy of interest), has invented a new network element: a switched digital video processor, which combines GigE switch with video processing such as grooming, encryption, splitting from multicast to unicast.

Q&A: most panelists believe telcos can win because switched video is more personal than broadcast, and breaks the need for the content aggregator. The lone pro-cable guy says they will push new content to on-demand tier and take it to broadcast if it becomes popular - point being the personalized MyChannel sounds great but promoting new shows and building an audience are still major needs- in other words, telcos don't understand video. Also their rollout is going to be slow - Qwest estimated only 10% of lines across all ILECs would be upgraded to 20 mbps+ speeds by end of 2006.

Funny moment: question about BitTorrent (which is now 35% or higher of all Internet traffic) and the panelists didn't seem to have heard of it.  Don't they keep up with the bloggers?

Boob Tube

One of the most competitive and entertaining Super Bowl games is being overshadowed by a cheap marketing stunt for selling CDs. Lost in the debate over the bare breast is the accomplishment of the losing quarterback, who set two Super Bowl records, and the winning quarterback, who never lost his cool and methodically marched to the win in the final seconds.

Tha battle lines have been drawn in that cauldron of the true voice of the people, talk radio. Rush Limbaugh insists it could not have been an accident, as otherwise why would she be wearing a pasty? Howard Stern counters that he got a good look, and it is not a pasty but protection for a body piercing. Michael Savage complains that this gratuitous titillation plus all the Animal House ads is grist for the mill of Osama bin Laden and his demonizing of America.

Not to be outdone, the new voice of the people, the blogsphere, scooped talk radio. The Drudge Report hinted that the stunt had been planned, but a 'wardrobe malfunction' had exposed more than was intended. Somehow the racy red bra came off, too. Does this somehow make it all right?

The FCC is weighing in to start an investigation. Not sure if this is another signpost on the road to a police state, but the effectiveness of the FCC in regulating morality has been a bust, so to speak. As FCC Commissioner Michael J. Copps noted: "Nothing this commission has done so far has accomplished anything to slow down Big Media's race to the bottom." Or race to be the breast that it can be. The Boob Tube lives down to its name.

Ironically, the more they react, the more they prove her point - the stunt worked. The music industry has always been about rebellion, pushing the limits. The more she gets in trouble, the more CDs she should sell. And just before the Grammies, too ... Her career has been a bit of a bust until now.

The biggest boob in this whole affair may turn out to be the Prez. While the whole town was a flutter over what to do, The Leader Of The Free World said he had fallen asleep watching the first half (well, it was a bit of a 'defensive struggle') and didn't see the incident. Shades of his behavior on 9/11, where he seemed strangely out of touch for the critical first few hours, finally emerging after having flown around on Air Force One all morning. Not knowing what to do, and not wishing to offend, he abdicates leadership. But he is gathering new intelligence reports on her weapons-of-mass destruction. Maybe he will need to pre-emptively invade Hollywood.