*michael parekh on IT*

ON THE ANTICIPATED END OF MASS MEDIA

THE SKY IS NOT FALLING?

The topic under discussion in Mark Evan's post titled "The End of Mass Media is Greatly Exaggerated", has been on my mind of late.  Mark makes several good points in the piece on the reasons why, but one of his opening reasons is perhaps the most compelling, at least in the near-term:

"I think people who believe the mass media will disappear are wrong because they focus too much on the wonders of technology and too little on how people actually consume media."

It's a valid point, at least in the near-term.  That period is at least about 3-5 years by my definition.  Why?  If for no other reason than we tend to over-estimate the impact of disruptive change in the early years and grossly under-estimate it in the long-term. 

The post is good food for thought nevertheless.

ON BATTERY BOOSTERS FOR iPODS

FITS LIKE A GLOVE

With all the audio and video one can stuff into a 5th Generation 30 or 60 Gigabyte Video iPod today, the major constraint while traveling seems to be battery life. 

I've checked out a number of "battery boosters" for the iPod, and the iLuv Battery Booster Sleeve seems to be a good bet.  It fits the iPod like a glove, and makes it twice as thick, but as Gizmodo explained it back in March:

"Give that iPod video or nano’s battery a little boost with this snap-on accessory from iLuv. The i603 and i604 can extend the battery life of the iPod video up to 55 hours. Nano owners need not fret. iLuv also has the i602 and i601 that give upwards of a 50-hour boost to the nano, too. They each come with a silicone skin to keep the attachment secured and protect the iPod overall. They retail for $85."

They come in appropriate colors and sizes for the other iPods as well.  The only small problem is that the sleeve does not have a clear sheet protecting the screen of the iPod, as other iPod cases seem to do.

Nevertheless, I've got one all charged up for an upcoming long flight.  Will report back in a few days on whether I get the 50-55 hours of claimed juice-to-go.

ON CURRENT WIRELESS DATA OPTIONS IN U.S.

DIFFICULT CHOICES

This New York Times article provides a good summary snapshot of the current options for wireless data via cellular carriers in the US.  As it explains:

"Such services are available from  Verizon  Wireless,  Sprint and Cingular. Access plans range from about $20 to $140 a month and, not surprisingly, the terms of the plans resemble those for cellphones: in most cases contracts with early-termination fees are required; activation fees are about $25 to $35; and rebates are offered on essential hardware — specially equipped PC cards with antennas — to entice new users to join. (T-Mobile, the other major carrier in the United States, said 3G services were scheduled for 2007.)

The services deliver download speeds of about 400 to 700 kilobits a second, which is roughly 10 times the speed of dial-up and the wireless services that have been offered by carriers for years; the upload speeds are less, though, in the range of about 50 to 100 kilobits per second, which is still usually faster than dial-up but could be slow for users who frequently need to transfer large amounts of data from a laptop to, say, a server on a corporate network or Web server.

To use the services on a laptop ordinarily requires an available PC-card slot; certain notebook models from companies like  Lenovo,  Hewlett-Packard and Dell offer options to include built-in wireless modems."

I would add Sony to that list of companies that offer built-in wireless options, although currently they're limited to Cingular's EDGE service, which is much slower than the services offered by Verizon Wireless and Sprint.

The one thing the article could have added is that if you travel overseas a lot, the Verizon and Sprint phones won't work there since they're not on the GSM network.  For that capability, you need an AT&T/Cingular or T-Mobile phone, which don't have the fastest wireless data services yet. 

A difficult trade-off for global travelers, for now.

ON PALM TREO 700p TRUMPING THE 700w

SECOND TIME'S A CHARM

Well, one of the first mainstream reviews for Palm's 700p Smartphones is in, and David Pogue of the New York Times...likes it...he actually likes it. 

Much more than he liked the Palm 700w Smartphone, based on Microsoft's Windows Mobile software (50% of Smartphones now shipped have Microsoft's software currently). 

This is notable primarily because the 700w was almost universally panned by mainstream reviewers, including the Wall Street Journal's Walter Mossberg, PC Magazine, not to mention Mr. Pogue as well from the NY Times.

The new 700p uses Palm's owned tried and true operating system, and it seems to make much of the positive difference, according to Mr. Pogue.

"Good things come to those who wait. The 700P is the Windows Treo without the Windows, and it's almost everything you'd wish it to be.

That is, it offers all the same hardware perks of the Windows Treo — the high-speed Internet, better keyboard, Talk and End keys, sharper camera, improved specs — while sticking to the more efficient Palm operating system."

The new gizmo is initially available on the Sprint and Verizon networks in the US, leveraging their respective, high-speed EV-DO wireless broadband networks.  T-Mobile and Cingular (AT&T) versions of the Treo 700, based on GSM technology and thus usable overseas, will likely be available later this year.

Pricing is a bit on the high side, as David elaborates:

"The Sprint version costs $550 or $400, depending on whether you sign up for a one- or two-year contract. Unlimited high-speed EV-DO service starts at $15 a month, including a TV channel and a Sirius satellite radio channel (not including the price of a voice plan). Unfortunately, that doesn't include using the Treo to get your laptop online, which costs another $40 a month.

Verizon's version of the 700P costs $400, after rebate, when bought with a service package, like $110 a month for 1,350 minutes of talking and unlimited high-speed Internet. Here again, the dial-up networking for your laptop costs extra: $15 a month."

But it's apparently all worth it, for as Mr. Pogue puts it,

"...the new Treo itself is a joy — a communicator with immense power and potential whose software is a help instead of a hindrance. If you've held off on a smartphone until now, congratulations; you've played this game of high-tech leapfrog like a pro."

Guess I should have waited a couple of months before springing for Verizon's Windows based Smartphone.  Anyone want an almost never used Windows Smartphone?  Cheap?

ON WHY APPLE STORES REALLY WORK

AGAINST ALL ODDS

The Wall Street Journal has an article titled "How Apple's Store Strategy Beat the Odds", by Nick Wingfield worth reading.  It's a subject worth pondering, as Apple opens it's grandest store to date, number 147, on Fifth Avenue in New York, on May 19th at 6pm.

As the Journal explains:

"On Friday evening, five years after opening its first store, Apple will unlock the doors to a subterranean store that sprawls beneath the plaza in front of the General Motors Building, just across from Central Park.

In keeping with Mr. Jobs's penchant for eye-catching designs, all that will be visible from the street is the entrance, surrounded by a roughly three-story-high glass cube jutting from the ground, reminiscent of I.M. Pei's glass pyramid at the entrance to the Louvre museum in Paris."

"The store is located in one of the most highly trafficked tourist and retail corridors in the world. If it is successful, it will enhance Apple's visibility as the company attempts to grab a bigger slice of the computer and electronics industries. Charlie Wolf, an analyst at Needham & Co., says an Apple executive told him the store will be open for business 24 hours a day, a first for the company."

Lines will likely start forming at the location, hours if not a day before the grand opening.

The question of course is how Steve Jobs did it.  In an over-marketed, over-retailed world, how did he manage to succeed in retailing computers and music players when others failed.  Again, the Journal notes:

"Apple's stores are an unlikely success story in an area littered with failures -- and another vindication of Mr. Jobs's marketing savvy. In April 2004, computer maker Gateway Inc. shuttered a chain of 188 company-run retail stores after an aggressive expansion, eliminating 2,500 retail jobs.

More recently, hand-held device maker Palm Inc. has attempted to mimic Apple's success, opening its own gadget shops in airports and shopping malls."

And it's been financially successful too, something that gives comfort to Apple shareholders like yours truly:

"Revenue from the Apple stores was $2.35 billion in fiscal 2005, ended Sept. 24, or 17% of Apple's total sales, up from $621 million in fiscal 2003. Apple says the stores have been profitable for several years, providing $151 million in operating income in fiscal 2005..."

"The numbers have been just astonishing in terms of the traditional retail numbers we look at," Mr. Wolf says."

So what's the secret sauce of making this work?  The Journal article takes a stab at some of the ingredients, including

1.  Steve Jobs' personal attention to the stores and various design details.

2.  Showcasing the products much better and prominently than other retailers handling Apple products.

3.  Having successful, cool products like the iPod music players.

4.  Offering on-going "how-to" instructional demos on Apple hardware and software, along with a "Genius Bar", where customers and potential customers can get their questions answered.

And they're all valid, and differentiating points that make the stores attractive to visit, shop, and window-shop in.

But I think there are also some additional, more subtle things that make the stores a little cooler than most others in retailing.

1.  All the computers in the store are connected to the internet via broadband.  This is a big deal, because it encourages folks to come in for reasons other than the products.  It's almost like an Internet Cafe without the coffee.  You can go in, check your email, check out some info online, and as you're passing through the aisles of cool products, check out some Apple products.

The connections are also important for another reason.  It allows customers not just to try out the products themselves, but also look up information on the hardware and software online, both on Apple's website, and third-party reviews.

This is especially important when shopping for third-party software and computer accessories showcased in Apple's stores. 

I've often taken a stack of software to a computer, and looked up the reviews online.  This has often resulted in my NOT buying certain products, but it made me appreciate the fact that Apple empowered me to do my own research and make the decision.  Which brings me to the next point.

2.  Non-pushy salespeople.  At a time when most computer stores have their salespeople hovering around you constantly when you're checking out a computer or consumer electronics item, asking if you're ready to buy, the Apple approach is a breath of fresh air.  The Apple folks are there only if you need them.  They're generally well--informed, and if they don't know the answer to a question, they'll generally point you to another colleague who may know the answer.

3.  The Kid's corner. Every Apple store, large or small, has a little kid's corner, where computers are set up in a circle, loaded with tons of kid-friendly software, and kid-level seating is available.  This is truly one of the only places in the computer retailing world, where you can take your little kids to check out the hardware and software, and make informed decisions about products they might like.  At a time, when more and more mainstream customers have kids, Apple's struck on a brilliant way to get them into the stores.

4.  A Club of like-minded folks. Going to an Apple store is almost like going to a club that caters to folks with a particular interest in common.  If you're an avid Apple fan, it's like going to a place where you can potentially chat with other people who share your interest.  If you're new to Apple products, you'll more and likely find another browsing customer volunteer advice and help on a given product or service.  And a recommendation that doesn't come from a salesperson is always more credible, right? 

These are some of the "little things" that strike me as unique differentiators that make Apple stores cooler than their competitors.  If you have some other observations, do let me know.

In the meantime, see you soon at the New York "Cube" Apple Store.

ON SKYPE PUTTING THE HURT ON VONAGE?

CURVE-BALL

Yesterday I offered a couple of reasons why Skype would offer free internet telephony services to any phone number in North America until year-end.  Andy Kessler, a pragmatic ex-Wall Streeter offers another, more Machiavellian reason, in a "guest-post" on Om Malik's GigaOm. 

His pithy headline summarizes it:  "Will SkypeFree KO Vonage IPO?"  He elaborates:

"The buzz on the Street is that the Vonage IPO is on the rocks. They HAVE to raise money or they are in a world of hurt. Their investors don’t want to put another penny in and the company seems to still be bleeding cash, $75 million in the first quarter of 2006...

Ebay knows this, why not toy with the mouse before you kill it. What better way to do away with the Vonage IPO and raise their cost of capital then scare investors even more. Every prospective buyer on this deal asking the same questions: what about pricing, why will anyone pay a flat fee per month when skype connects in the US for 2 cents a minute. $25 per month to Vonage is the equivalent of 1250 minutes.

At Skypeout = zero, its infinite minutes. The value of what Vonage provides has just gone from $25 per month to somewhere close to $0, goose egg, nada. Tough to get a return on equity with those kind of numbers."

As an ex-Wall Streeter myself, I've seen this type of move before by incumbents trying to put a world of near-term hurt on emerging competitors trying to navigate a path to the public markets.

Andy's point is well taken...some things don't seem to change on Wall Street.

The whole piece is worth reading.  Recommended.

ON SKYPEOUT GOING FREE IN NORTH AMERICA

FREEFALL

Well, the number one story on TechMeme right now is that Skype, a division of eBay, has made it free to call any US/Canadian telephone number (land-line or mobile), from the Skype service. 

That is to say, it's SkypeOut service is free within North America. 

Why is this significant?  Well, letting the Skype folks explaining it themselves:

"As far as we know, this is the first time in history when unlimited calls to a standard telephone network are free without any form of payment or subscription. That’s kind of cool."

The caveat?  Well it's free, at least until the end of 2006.  Again, from Skype,

"The only condition is that we have said free SkypeOut within the US and Canada is guaranteed to last until the end of this year — that is, until December 31, 2006. We’re not quite sure yet what we will do after that. Maybe we extend the free period, maybe not. You’ll hear more about this towards the end of the year."

Why would they do this?  Well, a couple of reasons come to mind:

1.  Mainstream portals like Yahoo!, AOL and Microsoft's MSN are aggressively implementing internet telephony features within their instant messaging clients (see earlier post).

2.  Skype, despite being hugely popular in Europe and rest of the world, is still not as widely used by mainstream folks in the US.

So at it's simplest, this is a short-term, customer acquisition move.

It accelerates further the trend of voice communications by itself becoming a commodity application on devices.

And it hopefully encourages ordinary folks to put up with learning a new way of talking to people, despite years of using the regular POTS (plain, old telephone service) lines having made that experience almost second nature.

And all that is a good thing.  Even though it takes another leg away from the Skype business model, if only temporarily. 

But that's something for eBay shareholders (like yours truly), to assess.  One mitigating factor on the cost side of such a customer acquisition move is that it's limited to North America.  As Om Malik points out:

"...in Canada and US, the termination costs are so low... the overall costs of a marketing stunt like this aren’t high."

Nice coincidence that North America is also the place where Skype needs to ramp up it's mainstream subscriber base.

ON THE CULTURE OF ONLINE CREDIT CARD CRIME

CAUTIONARY TALE

David Kirkpatrick, senior editor at Fortune magazine, offers some eye-opening Sunday reading today in a piece titled "The Net's not-so-secret economy of crime".  It grips your attention with this opener, especially if you're a bit of a geek:

"Raze Software offers a product called CC2Bank 1.3, available in freeware form - if you like it, please pay for it..."

"...CC2Bank's purpose is the management of stolen credit cards. Release 1.3 enables you to type in any credit card number and learn the type of card, name of the issuing bank, the bank's phone number and the country where the card was issued, among other info."

David takes us on a tour of how this underground, global crime ecosystem works, with the help of some computer security consultants.  What's striking is how the main cultural tenets of both Web 1.0 and Web 2.0, which serve as the underpinnings of core internet businesses like eBay, have been transplanted into this wide-ranging realm of illegal activity.  An example:

"Says Marc Gaffan, a marketer at RSA: "There's an organized industry out there with defined roles and specialties. There are means of communications, rules of engagement, and even ethics. It's a whole value chain of facilitating fraud, and only the last steps of the chain are actually dedicated to translating activity into money."

This ecosystem of support for crime includes services and tools to make theft simpler, harder to detect, and more lucrative."

The article sheds insight into some of the economics of this underground trade.

"On TalkCash.net you can buy CVVs (...Creditcard Validation Value - an extra three- or four-digit number on the front or back of a card...) for card numbers you already have, or you can buy card numbers with CVVs included. (That costs more, of course.)

"All CVV are guaranteed: fresh and valid," writes one dealer, who charges $3 per CVV, or $20 for a card number with CVV and the user's date of birth. "Meet me at ICQ: 264535650," he writes, referring to the instant message service (owned by AOL) where he conducts business."

The author also wisely warns readers not to visit these sites directly from their computers:

"Don't visit any of these sites. Tapping into them could lead to unpleasant consequences. I only looked at them via the safety of RSA's computers."

My favorite example of the "politeness" in this culture,  is this quote by one of the bad guys, channeling Edward R. Murrow from George Clooney's movie "Good Night, and Good Luck"

"Have a good carding day and good luck," writes another seller..."

Fascinating article, and a quick Sunday read.  Recommended.

ON APPLE RUNNING OS X ON iPODS?

CURIOUSER AND CURIOUSER

Yet another Apple-related post today inspired by this thoughtful post by Rick Segal.  In it, he quotes a "super-smart" friend of his, Pete Field, who wrote in the following sharp-eyed observation:

"With Apple’s announcement a few weeks ago that it was dumping the Portal Player chips in favor of a Samsung chip, I was struck by the big question of…why?

The Portal Player is a 16bit chip and has proven itself as a solid performer for the main applications of a portable media device (music, photo’s video), and Portal Player is releasing a new chip with improved video performance.  The Samsung chip is a 32-bit chip based on an ARM design. This will of course result in decreased battery life, and I didn’t really see what was to be gained.

Then I was struck by the possibility that they could run OS-X on a 32-bit ARM with very little changes to the OS. Though I haven’t come across much data about Unix running on an ARM, I have run across some details of Linux running on ARM devices so I don’t think it is a huge step for OS-X to make that jump. Look how quickly they made the jump to x86.

Once again Apple gets second mover advantage (following Microsoft devices OQO and UMPCs). I suspect they are smart enough to not have a device try to do all things for all people, but the new caveat may be – at all times.  I think this is where Microsoft and their hardware partners are missing the boat with the UMPC. Running OS-X on an iPod would quickly gain market share for their OS.

I see the potential for Media mode and computer mode.

1) Media mode – a non-docked iPod with the ability to play Music, video and view pictures. Very little overhead and clutter of the complete OS.

2) OS-X mode – running the complete OS – potentially the device may have to be docked to use most of the features as the experience of running a full desktop OS on a limited device doesn’t seem to match apple’s dedication to usability.

With a number of people using iPods as portable storage devices, the iPod could quickly move into the Mac Mini as Media Center role, with the exception that the iPod already comes with you anyway.  By the time the iPod with the Samsung chips are released, flash memory will be available in the 20gb range, and hard-drives should be nearing the 200gb range. 

I believe that Apple has also attempted to patent some new computer input methods and this would go a long way to getting the iPod adapted by more business users. The whole thing is as big as the power-supply for most laptops. How many business users would ditch their laptop for something like that?  And the cost of the iPod would not have to increase much in order to fulfill this goal." 

Why is this of interest to me?  In a post back in August last year, I speculated:

"In two years, iPods with a 100GB or more in storage space will be an affordable reality. 

The company could offer a "Mac iPod", loaded with the latest Intel based Mac operating system, which the customer DOES pay for.

But this iPod has a special USB adapter, AND an on-board processor/CPU, much like I've discussed in my "computer-on-a-stick" posts before here and here.

The user can plug this into any existing Windows PC, whether it has Microsoft Windows XP or the new Windows Vista software, and in effect have a dual-boot computer that turns into a Mac.  Of course, Apple would bundle all its cutting edge application software that it already delivers with every Mac.

It would be the new "Mac Micro-Mini"!  And it could be priced under $700, possibly less."

Apple-addled minds think alike, huh?

ON APPLE & SOFTBANK DOING HANDSETS TOGETHER?

TWO HEADS BETTER THAN ONE...

Engadget Mobile has an interesting story titled "Apple said to be working with Softbank on co-branded handset".  It reads:

"Japanese news agency Nikkei is reporting that Apple and new Vodafone Japan owner Softbank are working together to develop cellphones capable of downloading and playing music from the iTunes store.

Details are, of course, very slim at this point, as we don't even know whether to characterize this as a "true" iPhone, or simply a ROKR-like model featuring only software from the iPod manufacturer powering a non-Apple handset.

However, Nikkei is quoting sources that say the phone, which may be released as early as this year (and which is definitely NOT pictured alongside this post), it is expected to sport both Softbank and Apple branding, which may indicate that Cupertino will have a hand in developing the hardware as well."

If true, it's interesting to see Softbank moving so fast after it's recently announced acquisition of Vodafone KK from Vodafone, the third largest mobile operator in Japan.  That move of course supplements Softbank's already hefty investment in wired broadband infrastructure in Japan, where it's the number two provider already.  It potentially makes possible the triple packages for consumers (wired and wireless broadband, along with internet telephony).

It'll be interesting if Softbank's close relationship with Yahoo! via their joint history on Yahoo! Japan, comes into play with any relationship with Apple.  This could be especially interesting given that Softbank and Yahoo! Japan are already working together on leveraging the Vodafone KK acquisition.

Neither Apple or Softbank of course doesn't have any direct experience in handsets.  Given that the leading providers like Motorola and Nokia have close customer relationships with most of the world's wireless carriers, the two companies are likely going to need a handset partner that's relatively less conflicted in those types of relationships.

It's speculation on my part, but Taiwanese handset maker BenQ could be an interesting partner for Apple and Softbank, especially after BenQ's acquisition of the Siemens handset infrastructure recently, and it's CEO K. Y. Lee's  global ambitions.  In particular, BenQ doesn't yet have major customer relationships with the major wireless incumbents, and is still ramping up those relationships in Japan.

In any case, it all bodes well potentially for the "iPhone", the current holy grail for Apple geeks everywhere.