Google’s Plans to Dominate the Home

Posted on February 10, 2012 by Michael Stroud

Google's Home Domination Plans

If you ever had any doubts that we’re moving from an era of technology markets to technology ecosystems, Google’s latest news should quash them.

Google is quietly creating a branded entertainment hardware system that will wirelessly stream entertainment content throughout the home, the Wall Street Journal reported. In so doing, Google’s taking a page from Apple, Amazon, Barnes & Noble and a coterie of others who hope to control the flow of digital content.

Once you’re in Google’s ecosystem, you’ll presumably be able to stream or download any movies, TV shows, books and games you’ve bought from Google or stored on its servers.

Not surprisingly, Google’s also reportedly close to launching a cloud service that will allow you to sync your content across multiple devices, competing directly with Apple and Silicon Valley startup Dropbox.

The interesting question is how open Google’s ecosystem will be. To date, its kept the barriers to entry to its Android platform low — compared to Apple and Amazon, which take a piece of everything that flows through their hardware.

Google differs from Apple and Amazon in one key respect: most of its revenue comes from search. So it has an incentive to give away content for free or very little, as long as it gets to insert its ads.

Google does have one other massive competitor with a closed ecosystem who makes most of its money from ads: Facebook. Can a Facebook entertainment device be far behind?

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The L.A. Times’ Silver (Online) Lining

Posted on December 14, 2011 by Michael Stroud

It’s another sad day for the L.A. Times, and Lord knows, there have been too many of them.

With Russ Stanton out as top editor, the Pulitzer Prize-winning newspaper faces a grim future of dwindling staff, dwindling circulation and dwindling revenue. The pending layoffs of up to 20 staffers (on top of 350 others over Stanton’s four-year tenure) were apparently the last straw for Stanton, who was also said to have clashed with the paper’s new digital editor.

So the fifth-largest metropolitan newspaper faces a grim future. Or does it?

Amidst  circulation declines, Stanton built the paper’s unique online readers to about 17 million a month. If only those readers could be effectively monetized, and the importance of  the paper portion of its business gradually diminished, the Times might mount a turnaround.

The paper is considering two ways to do just that: launching its own tablet; and creating its own pay wall, as the New York Times and the Wall Street Journal.

For the tablet plan to succeed, L.A. Times newspaper executives need to swallow the unwelcome truth that their customers want the tablet more than they want the newspaper.  Cost and flexibility will be the determining factors: offering a free tablet to anyone who signs up for a one or two year newspaper subscription might well persuade many cost-conscious people to sign up. The tablet — probably some generic knockoff — would also have to offer music, TV watching, movies and other things consumers have come to expect.

For the pay wall to succeed, the newspaper would do well to look at the Wall Street Journal, not the New York Times. From the beginning, the Journal has enforced a strict pay wall  – only paid paper or online subscribers get access to all content. Free site visitors can access only a very limited amount of material. The cost of all-digital access to the newspaper is a palatable $3.99 a week and the Journal is a joy to read on a tablet.

The New York Times’ pay wall, by contrast, allows viewers to have roughly 25 free articles per month, before being locked out by the pay wall. The pay wall is easy to circumvent: just start reading the newspaper on your smart phone or tablet when you run out on your laptop. A few simple modifications to your computer, and you can read the newspaper there, anyway.

What incentive does that leave for anyone to sign up for the New York Times? I haven’t, and I (guiltily) read around half a dozen stories a day.

The New York Times is also far too pricey. The digital version is $8.75, or more than twice the cost of the Journal’s offering. The proof is also in the pudding: the Journal’s online edition has been consistently profitable.

Unfortunately, the L.A. Times’ success with its tablet or pay wall strategies probably depends upon the newspaper tolerating some short-term cannibalization of  its core newspaper business.

Better now, through a careful strategy, than bleeding out another few hundred thousand subscribers over the next few years in an unforgiving market.

 

 

 

 

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Apple’s Voice App Has Siri-us Implications for TV

Posted on November 6, 2011 by Michael Stroud
Apple SVP Phil Schiller Intros Siri

Apple SVP Phil Schiller Intros Siri

So, I  tested Siri, Apple’s iPhone4s voice recognition app,  and here’s my conclusion: It ain’t a miracle app, but it raises the bar dramatically and sets the stage for a revolution in user interfaces for TVs, cars, and many other devices.

My tests weren’t exactly scientific — mostly involving shoving aside other customers at my local Verizon outlet and hogging the iPhone 4s  for 15 minutes. But I think I got a good idea.

“Who is the president of the United States?” gave me a chart of all Barack Obama’s particulars. ”What’s the phone number for Apple?” surprisingly got me AppleOne Employment Agency in Los Angeles, but adding “Inc.” and “Cupertino” gave me the right answer.  ”Where’s the nearest Chinese food in Culver City?” gave me maps and directions for places 3,000 miles away from my little town, but changing the place to “West Los Angeles” worked fine.

When I asked “Who’s your Daddy?” Siri replied “You are.” But, of course, that’s pre-programmed and I read that in a news story.

The point is, Siri is miles ahead of any other mobile phone voice recognition program on the planet. On my current iPhone4, if I ask it to call my local bike shop, I end up calling someone I haven’t talked to in 10 years. I ask it to play songs by “The Beatles” and it plays songs by “The Eagles”.

Siri’s accuracy level isn’t superb, but it’s a lot better than that. It means you can now realistically manage tasks in your car like playing your favorite songs, calling people, getting directions and sending simple messages to people without taking your hands off the wheel.

As I mentioned in a previous blog, this has huge implications for other devices. It means that Siri or a similar artificial intelligence-enhanced system, can easily manage your TV set. “Turn on the Dodgers game”, “Play the third episode of “Bones’ from this season” or even “Scan Netflix to see if it has the original ‘Planet of the Apes’ movie and if it isn’t rent it on iTunes” become totally doable.

It’s not much of a jump from there to “Turn on the lights”, “Set heat at 73″ and “Pre-heat my oven”. “Minority Report” had those kinds of things in 2040; we’ll have them now by 2020, and maybe a lot sooner than that.

But it’s TVs that could see the biggest initial impact after cars. The connected television — TV hooked to the Internet — is close to becoming ubiquitous, and Siri relies upon a Web connection to connect you with distant servers powerful enough to crunch your voice accurately.

Thus, it’s fair to say that several years after connected TV becomes ubiquitous, voice-controlled TV will become ubiquitous — especially if (as expected) Apple launches a Siri-equipped TV by the end of 2012.

Once that happens, I, for one, plan to throw my remote control in the trash.

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King of the Jungle

Posted on October 17, 2011 by Michael Stroud

Speaking of ecosystems, Amazon is treating publishers to the law of the jungle.

It will reportedly publish 122 books this fall in both e-book and physical formats, thumbing its nose at the very publishing houses who built its business. Among its first sallies: publishing self-help writer Tim Ferris and paying $800,000 for a memoir by actress and director Penny Marshall, according to the New York Times.

Amazon can afford to play nasty. With e-books capturing a growing percentage of the book market, publishers don’t have many viable alternatives to selling to Amazon. Apple’s pound-of-flesh deals begin to look tolerable next to a company that simply wipes you out.

Billboard speculated today that Amazon might next try to take down what’s left of the music business.

Now you get even more clearly why Amazon CEO Jeff Bezos needed to launch his Fire device. He’s creating an ecosystem in which Amazon controls the flow and sale of content from inception to consumption — cutting out publishers, agents and bookstores. Or at least as much as he can without getting slapped with an anti-trust suit.

 

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Netflix’s Real Problem

Posted on October 17, 2011 by Michael Stroud
Gossip Girl: At What Price?

Gossip Girl: At What Price?

Netflix has a BIG problem. Not because it angered customers by doubling its price or even because it enraged them by attempting to spin off its DVD business.

Netflix’s problem is that it fundamentally has little leverage with the studios. That was manifestly clear when Starz cancelled its movie contract with Netflix last month. And it was manifestly clear when Netflix signed a deal last week to pay $1 billion for the right to stream CW shows like “Gossip Girl” over the next four years.

If Netflix is unwilling to pay the studios’ ever-spiraling prices, the studios can simply go to Apple, Amazon, Google or Hulu (now apparently off the auction block). Netflix’s customers have no more loyalty to the brand than Myspace or Napster had back in the day; the customers will fly in a split second, as the departure of enraged Netflix customers proved over the last week.

Unlike Apple, Google and Amazon, Netflix doesn’t have its own ecosystem. With their own hardware and publishing platforms, these companies have tremendous leverage with the studios — not least because the studios understand that if they don’t sell to those platforms, consumers will pirate their product and play it on their Flames, iPhones and Android phones, anyway.

Even if Netflix successfully jettisons its DVD business and gets itself on every BluRay player, mobile phone and DVR imaginable, the studios will still have the upper hand. If they want to put it out of business, they just stop selling it product.

To ensure Netflix’s survival, CEO and Co-Founder Reed Hastings ultimately has two  options: he must make Netflix a content player in its own right — something he’s attempting to do by reportedly paying more than $100 million for Netflix’s first original TV series, The David Finch/Kevin Spacey thriller “House of Cards”.

Or he can merge with a player that guarantees him distribution such as Hulu, Google, Amazon, or Dish, which has its own content-streaming network built from satellite business and the ruins of the Blockbuster video chain.

Or he can continue as he has, hoping that Netflix’s consumer growth stays one step ahead of the studios’ ever-greedier demands. But, as the last few weeks indicate, that thriller may not have a happy ending.

 

 

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One More Thing….Does Jobs Have a Final Trick Up His Sleeve?

Posted on October 10, 2011 by Michael Stroud


Steve Jobs always use to titillate audiences with his famous “Oh, and one more thing” line at the end of his product intros — saving the best and most groundbreaking stuff for when he was walking off stage.

So how’s this for a groundbreaking finale? Jobs remakes the humble TV set.

Rumors have been rampant for months that Apple is working on a TV. IOS5, its latest iPhone operating system, includes support for a next-generation Apple TV device.

But Apple TV, often referred to as Jobs’ “hobby” — has never really taken off, and remains a very limited device that allows you to access Netflix, YouTube, selected podcasts and websites, your computer library, and not much more.

It’s a near-certainty that Apple will update the device. But Jobs specialized in creating entirely new markets by reimagining existing ones.  And he supposedly left Apple with a game plan for the next three years.

Think about it. Your living room is a jungle of devices. Sometimes you can’t even figure out how to turn on the TV.  You have a jumble of cable services, most of which you don’t want. This is the kind of market Jobs specialized in simplifying.

It’s also the one existing screen he hasn’t conquered, after inventing or reinventing PCs, movie screens (Pixar), mobile phones, music players, and electronic books.

Imagine just turning on a TV that looked like a giant iPad and allowed you to easily browse the Internet, play all your songs, get any TV or movie content you wanted, and so on. Would you buy a new TV? Would you switch to a cable company that offered a 60-inch screen for $199 as part of a two-year commitment? Suppose Apple told the cable companies the price of getting that must-have screen and millionws of new customers was making a lot more network content available a la carte?

I could well be whistling in the dark. I’m not privy to any inside information. Still, wouldn’t this be the most insanely great thing ever — one more thing from beyond the grave?

More reading:
Venture Beat: http://venturebeat.com/2011/10/09/next-gen-apple-tv-likely-to-have-dual-core-a5-processor-1080p-playback/

Digital Trends: http://www.digitaltrends.com/apple/opinion-could-an-apple-itv-really-succeed/

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RIP, Steve Jobs

Posted on October 5, 2011 by Michael Stroud
Steve Jobs and Steve Wozniak, circa 1977

Steve Jobs and Steve Wozniak, circa 1977

When I was growing up in Palo Alto in the 1960s, it was a town of engineers and Stanford professors. Today, it’s the capital of Silicon Valley, the home of venture capitalists, titans of industry and $1 million teardowns.

More than anyone, Steve Jobs was responsible for the change.

Jobs was the prototype for all the famous entrepreneurs who followed him — a college dropout who started a company in his Palo Alto garage. He didn’t invent the personal computer. But he was the first person who had the vision and the balls to sell one to consumers.

Until then, the big tech news in Palo Alto was Hewlett-Packard. My Dad used to come home with the latest HP calculator, and I used to think that was cool. He also used to take the punch cards from defense contractor Westinghouse to a giant computer off University Ave., crunching numbers that an iPhone could do in a nano-second.

Today, HP is failing. Apple, almost undone after Jobs was ousted by John Sculley, has rebounded under Jobs’ leadership to become valuable and respected tech company in the world.

PCs, computer animation, iPods, iPhones, iPads, music, video — you’d have to go back to Edison to find a businessman who’s had such a wide impact over so many industries.

No saint. Working for him could be hell, and his anal control over Apple’s ecosystem infuriated millions of us and enabled the rise of Windows PCs and even Android.

But he is irreplaceable. It’s perhaps fitting that he died a day after the mildly disappointing launch of the iPhone 4S — a phone that was a stepwise improvement over previous iPhones but certainly not revolutionary. Jobs, for better or worse, was all about sweeping, fundamental change in people’s relationship to technology. The world won’t be the same without him.

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Apple’s New iPhone Voice App: Revolution or Another Disappointment?

Posted on October 4, 2011 by Michael Stroud
Knowledge Navigator Redux?

Knowledge Navigator Redux?

If Apple really has its Siri voice app down, we’re looking at a revolution in user interfaces. If it doesn’t, we’re looking at one more frustrating detour in the search for a computer that responds intelligently to voice commands.

Today, Apple announced its latest iPhone update, and the voice app was a highlight of the show. The app apparently has the software smarts to hear “Do I need a raincoat today?” and respond with “Looks like rain today.”

But, of course, it’s one thing to demonstrate an app before an adoring crowd, and quite another for it to work with your voice in a moving car. Apple’s voice recognition on the iPhone until now has been abysmal. Try getting it to consistently pick out your favorite songs or artist. It’s like using the “shuffle” function. Use Google’s voice search to find the phone number for your favorite restaurant or a movie, and you might just get lucky. But then again, you probably won’t, so pretty soon you’ll probably be pulling over to the side of the road.

Apple has been mining this particular fantasy since at least 1987, when former CEO John Scully posited the idea of “software agents” that could access massive databases for near-instant responses to user questions. Apple famously created “Knowledge Navigator” videos that showed a bow-tied “butler” who performed everyday tasks for a lucky professor.

Apple’s first attempt at that vision, the Newton, was a flop. It’s next attempt, the iPad, took well over a decade to materialize.

So has Apple nailed it this time with Siri?

If it has — and I define “nailed” as getting your requests right well over 90% of the time, just like good dictation software — then you will quickly see a revolution in the way people interact with their mobile phones. Even the fastest texter, after all, can’t text as quickly as they can talk; and no one presumably wants to be texting in a moving car. “Tell me what time 50/50 is playing in Culver City and where,” would be amazing stuff. It would very likely become a standard app on PCs, smart TVs and all kinds of other appliances in the next few years.

But if Siri only gets it right around 50 percent of the time or so, it will become one more novelty that quickly wears out its welcome. You should know the answer within 24 hours of getting your iPhone 4S.

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AOL and Yahoo!: Fingers in Google’s Dike

Posted on September 16, 2011 by Michael Stroud

AOL and Yahoo! both revolutionized the Internet. And both  have completely lost their way.

Back in the 1990s, AOL introduced millions of people to email and online content. Yahoo! taught people how to find things online.

Now both seem reduced increasingly to saving their businesses, not innovating. In today’s lightning-fast tech cycle, that’s a recipe for failure.

Take AOL, Yahoo! and Microsoft’s decision to sell advertising on each other’s sites to fight Google’s dominance. That’s like putting up levees to stop a hurricane: you know you’re still going to get clobbered in the long run. As if to spite them, Google display ad chief Neal Mohan said in a blog today that its top advertisers nearly doubled their ad spend over the last year

On Monday, AOL announced the departure of the TechCrunch’s  acerbic founder, Michael Arrington, in a terse press release moments before Arrington appeared on stage to launch its namesake conference . So much for a $25 million acquisition designed to bring Arrington’s unique voice to AOL.

Arrington left after clashing with AOL content queen Arianna Huffington. AOL purchased her Huffington Post for roughly $300 million earlier this year. And what did AOL get for its money? The media world’s most effective search engine optimization vehicle — wire service material carefully labelled to attract the maximum audience — along with an army of mostly unpaid bloggers. (Arrington sported an “unpaid blogger” T-shirt during a brief appearance at the conference, which I attended.)

AOL wants to build a content juggernaut that will attract millions of people. Sound familiar? It should. Think AOL Time Warner in 2000.

Yahoo!, meanwhile, gave up its raison d’etre when former CEO Carol Bartz signed a 10-year deal for Microsoft’s Bing to power its  back-end search in 2009. Yahoo!’s 43% stake in China’s Alibaba, worth $2.32 billion last March, may or may not have served to protect its interests in China. It did nothing to freshen the brand.

Bartz, of course, was fired last week and replaced by Yahoo! CFO Tim Morse, who reportedly once joked that managers who didn’t make their numbers would be electrocuted at one of the company’s data centers. Cute, but you get where his focus is.

Some speculate that Yahoo! and AOL’s problems might be solved if you merged them together to create critical mass. A bigger mess is more likely. Sadly, the best thing to do with either is probably to dismantle the parts and sell them to companies that actually know how to make content profitable. Time Warner might even be interested again in a morsel.

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Lord of the Ringtones

Posted on September 1, 2011 by Michael Stroud
One Telecom to Rule Them All

One Telecom to Rule Them All

Everyone’s focusing right now on whether AT&T’s proposed merger with T-Mobile will give it too much power in wireless. But that’s only part of the worry.

AT&T also wants to sell you a so-called “triple play” of cable, telephone and Internet service. Or better yet, a “quad play” of cable, telephone, Internet and wireless. Arch-competitor Verizon has the same game plan.

Already, more than 75% of AT&T U-Verse cable customers receive their service as part of triple play or quad play services, according to research firm Strategy Analytics. The average revenue per triple play customer has increased 8% to $175 a month. Now add wireless to the picture, and you’re talking well over $200 a month paid to Ma Bell.

You’ll be paying just as much for Verizon FIOS TV for its quad play bundle.

If AT&T’s merger with T-Mobile goes through, it’s a virtual certainty that Sprint will have to hook up with Verizon to remain alive, giving a duopoly vast control over how much you pay for phone, mobile, Internet and pay TV service.

What of cable powerhouses like Comcast and Time Warner? Well, since they don’t have strong wireless offerings, they’ll be at a competitive disadvantage — especially since people who sign up for quad-play services are much less likely to “churn”, or switch to another provider, according to Strategy Analytics.

I’m not particularly sympathetic to cable companies’ woes — Time Warner already charges me more than $200 a month for my triple play — but you have to ask yourself what these mega-companies do when they feel their “pipeline” is threatened. Well, what did Comcast do when it wanted to ensure steady access to content? It bought NBC Universal (surprisingly blessed by the Commerce Dept. and DOJ in January).

Could you imagine Comcast merging with Verizon? How about News Corp. buying a stake in AT&T now that BSkyB is effectively scrapped?

To be sure, cable and entertainment companies will remain on the acquisition war path even if AT&T/T-Mobile is scrapped. Smart money has T-Mobile (and probably Sprint, too) looking for other sugar daddies if the deal doesn’t go through.

DOJ’s lawsuit at least serves notice that at least someone’s minding the government till these days, unlike the previous administration.

There really is no endpoint to mega-mergers once you open the door. As David Lazarus of the Los Angeles Times noted some months ago, AT&T could just as easily argue that the best “economies of scale” and peerless wireless coverage would be gained by merging with Verizon.

Yep, one big mega-company to rule them all and in the darkness bind them. And if you think that company’s going to have your interests at heart, you’ve probably been reading too many fantasy novels.

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