Apple's Mac App Store Transforming Desktop Software, Slowly But Surely

Small, independent software developers have along had a huge impact on the vibrancy of IT platforms.  While corporations depend on a small number of big packages like SAP or Microsoft Office, they also rely on thousands of smaller, specialized applications.

Many are written as one-offs and struggle for distribution and recognition, yet to a small base of customers, these small but specialized applications are essential to running their business.  That's as true for individuals in the home as it is for corporations.

The App Store has done an amazing job for the iPhone of making app discovery and purchase much easier.  The iPhone and iPad now have thriving ecosystems of small developers (1-3 people) who might not have had much of a chance in the past.  Mostly, they're not getting rich, but they are earning a living and contributing enormously to the vibrancy of the platform.

The result: lots of small, well-done applications that sell from $1-5 and a few specialized ones that sell for much more.  And the same phenomenon is popping up in the Mac App Store.  Right now, many of these are apps that already existed, but now they're more accessible.

It's hard to see how such a small change (going from Internet distribution to the App store) can make such a big difference, but it seems that Apple has cracked the code on getting people to make smaller app purchases.  The rate of paid purchases is much higher in Apple's App Store than it is elsewhere and that's attracting developers to a platform that's nowhere near as large as Windows.

Simple solution discovery and purchase is clearly becoming one of the key differentiators in the competitive battle of the ecosystems.  Having owned an iPhone, iPad, Mac, Windows Machine, Android device and Blackberry, I can say that I buy far more on the Apple platforms that anywhere else.

Apple's Mac App Store is modeled on the iPhone one, and makes buying amazingly easy.

Sayonara IVI.tv

It was nice knowing you, but the courts granted a preliminary injunction today.  And that means IVI.tv is out of business, at least for the moment.  And that moment could be a long one: up to two years to complete the full legal review process in the courts.

It's unlikely that IVI.tv will emerge on the other side of this tunnel or even make it most of the way through.  It takes time and deep pockets to fight the content industry, and they're counting on the fact that few people can stomach the long battle.

But fear not, for every victory in court, it seems, the industry is equally capable of shooting itself in the foot.  Finding new ways every day to alienate customers and encourage piracy.

Ivi posted the bad news on their web site ivi.tv

Why Has TV Become So Good While Movies Have Become So Bad?

It's long been agreed by critics that we're in a new golden age of television.  From The Sopranos to 30 Rock, the quality of the writing and production has never been better.  So why are movies getting worse?

First, they are getting worse.  It's not something I've been consciously aware of, but my movie consumption has been dropping year-on-year for a long time.  The folks over at Moki, a movie and TV search engine, have an answer to a question I didn't know I had: yes, they're getting worse.

They did a bit of number crunching and they found that, indeed, over the last 20 years, movies have been getting worse.  The basic trend is towards more polarizing movies (some people like them, some don't) and movies with generally lower reviews.

From Moki - Visual Evidence That Movies Are Getting Worse

Of course, it's hard to objectively measure things that are inherently subjective.  It's a bit like asking is art getting better or worse - but movies are art as well as commerce.  And it may be the commerce part that is making movies worse.  (I don't believe in the idea that society is somehow in permanent decline and that our art is a reflection of that).

It's long been known that movies suck, at least in the money-making department.  Hits are hard to make and hard to predict and they can cost a ton of money to promote.  And that trend has been increasing.  Despite several efforts by movie studios to rein it in, the average cost of a blockbuster movie has been rising dramatically.

And the bigger the bet becomes, the more conservative the bettor gets.  And so Hollywood has shifted from risk-taking to careful nurturing of reliable movie franchises.  (Nurturing defined as using until thoroughly exhausted, and then trying again like Star Trek, Spiderman, and Superman.)  And sequels, prequels, and remakes are, more often than not, not as good as the original.

So if that explains why movies are getting worse, why is TV getting better?  Because the economics in TV are flowing the other way.  The cost of making good TV is going down thanks to digital production and distribution.  Furthermore, while a movie is often a one-shot deal, good TV builds over time, so the first episode is cheap and it only gets expensive when a series becomes a hit.

So even as risk-taking gets more expensive with movies, it has gotten cheaper with TV. The result: more risk-taking and better results.

Bad airline service? Take action and complain with the DoT. Airlines just throw away your complaints. http://ping.fm/eUQjx

@United Reciprocal status recognition, Prez Club access tough on CO, filed DoT complaint. Clean up your act.

Sustainable Roaming - A Product Concept For Wireless Carriers

The era of the unlimited international roaming plan has come to an end.  That's too bad, but I personally suspect it'll be back.  Nobody can really remember how much a Gigabyte is how much they're using when they listen to a song.  For the moment, wireless carriers are far too strong in the US market to offer reasonable plans and prices, though that will change soon enough.

Roaming Bill Shock - Bills in the thousands of dollars are not uncommon for short trips overseas.  Photo by "Me And The Sysop"

In the meantime, I'd like to suggest a product idea: roaming controls.  Right now, carriers offer very crude roaming controls: on or off.  And when it's on, maybe you can be notified before you use your life savings downloading that email.

It's hilarious reading carrier web sites saying that 1 megabyte is equivalent to 1,000 text pages.  Yes, that's true, but one HTML e-mail can be between 1 kilobyte and 25 megabytes, depending on what crap is embedded in the message.  With that kind of variability, it's very deceptive to suggest to a reader that buying 1-2 megabytes of data in advance for roaming should do them just fine.  It won't.

But it doesn't have to be this way.  When we're on the road, we can live with less if it's controlled well.  I, for one, could do with a stripped down offering to control bandwidth:

• Text mail only, no HTML
• Calendar, text messaging, memos and to-do lists, all in text
• No automatic downloading of pictures
• Basic maps and GPS

Much of this could be controlled at the carrier level with an offering for controlled roaming, doing transcoding of e-mail and blocking non-core functions like streaming audio.  When you do it that way, you can indeed manage a trip on 1-2 megabyte a day for roaming - just $1-5 dollars from most carriers per day, if you buy a package in advance.

Wireless carriers can and should deploy these products, making it easy for users to roam worldwide and encouraging them to take their phones, not leave them at home.  Is there a way to make this work without the carriers offering a solution?  Yes - at least on some phones.  I explain tomorrow.

Not-So-Clever Commerce

The bar is always rising for what constitutes smart usage of eCommerce.  It used to be that I was quite satisfied just to receive news of offers that might interest me.  Today, I expect web sites to do more than that: I expect them to tailor their offers to what's actually available.

I got to thinking about this because I got an e-mail earlier this week from Patagonia announcing an end-of-year clearance sale.  As interesting as that might have been for me, a regular sucker for their over-priced clothes. (Let's be honest, I'm not doing any mountain climbing soon).  I scurried over to their web site to see what would make me look more athletic than I am and sure enough, there were a few items that I was interested in.

Too bad not a single one of them was going to fit me.  As much as I might wish for one, I will never have a 30" waist and I can only pray that I will never balloon up to an XXL.  As for all the stuff in-between, almost all of it was sold out.  Really, Patagonia should know better.  Any scan of my past orders would show up sizes in the M-L range with a 32" inseam on pants.  And all of it mens clothing.

What do I really want?  A tailored email showing me only the items that were on sale in my size range could have resulted in far less disappointment.

Gosh, which size should I get?

Nap Time

Will Apple's Content Rules Energize HTML5?

Despite good intentions, HTML5 has been slow to take off compared to native app development.  Native apps offer more power for developers and a proven, profitable distribution method (App stores) as well.  However, as Apple tightens its control over the iPhone ecosystem, that may bring HTML5 development efforts back to life.

Amazon.com offers Kindle here, there, and everywhere.  HTML5 would be a good addition.

The reason: HTML5 "apps" cannot be controlled by Apple.  And for that reason alone, it could become immediately more attractive to content publishers.  While still far behind native apps in terms of power, for many content publishers, HTML5 could be as good as a native application.

Take books and magazines, for example: I haven't seen anything on my kindle or kindle app or any magazine app that could not be delivered by HTML5.  And while having a distribution mechanism in the Apple App store is powerful, if you're Amazon.com, it may not be entirely necessary.  Similarly, other publishers like Sony could also make use of HTML5 as an alternative.

The content battle will play out slowly in the coming months, the end result could be a much more aggressive development of HTML5 as an alternative to a controlled ecosystem.

United's 757s seem to be back in the air. On UA5 now, JFK-SFO, and it's jammed with refugees from the last few days of cancellations.

NYC Taxi Fare = Meter + {(75% Tip)-(Pedestrian Fatalities + Duct Tape on Seats + Phone Usage + Dirty-Looks for Using Credit Card)}

Apple's Online Subscription Fight Is Evidence of Failure, Not Success

Apple is losing in the online media business, so they're placing a big bet and playing hardball to catch up.  Photo by Uwe Hermann

Apple is picking a big fight with online media and subscription companies.  And the assumption in the blogosphere is that they're doing it from a position of strength.  They're not.  Sure, Apple is a strong company, but the reality is that Apple is losing the battle for online content.  From a compelling lead position just a few years ago, Apple is now behind in every major form of online media: books & newspapers, video, and music.

How did this happen?  Whatever it is, it's probably not Apple's fault.  You'd have to be buried under a rock not to notice the enormous success of other players in this space.   Amazon is the leader here in print, the Kindle is a blockbuster of epic proportions.  Apple and Amazon faced off in a fair fight, and Amazon crushed them.

Music and TV, however, were not fair fights.  Apple pioneered the business with a buy-and-download model, but success has come in the streaming approach - namely Pandora, Spotify, Hulu, and Netflix.  Make no mistake: most industry insiders know Apple has been trying to offer comparable options (subscription plans, TV show rental) and failed.  And not because they haven't offered a lot of money but because the content owners have not offered the same deals to Apple that they have to others.

The result: a group of cross-platform winners are starting to erode some of the media capabilities that make the Apple ecosystem special.  Kindle, Hulu, Spotify, Netflix, and Pandora are all trying to become almost utilities: operating on every TV set, smart-phone and tablet in the marketplace.  This is bad news for Apple's ecosystem which is becoming less special.  As more content migrates to the cloud, the complexity of integration across devices goes down, and with it, some of the magic that Apple had in the tight interaction of Mac, iPad, iPod, and iPhone.

And so Apple is fighting back and playing hardball.  And I say good for them.  As ugly as this fight might get, it could be good for consumers and for the industry.  Right now, content owners have been able to have their cake and eat it too: back their preferred non-Apple winners while enjoying access to a gargantuan marketplace created by Apple, all the while trying to handicap Apple's efforts to compete.  This is all born out of a fear that, should they give Apple the same terms as others, they would crush the competition.  (A not unreasonable fear, given Apple's track record).

How could things work out better: let's imagine the ways.  Put yourself in the place of ABC TV, selling content to Apple and Hulu.  Right now, ABC sells very expensive content to Apple and cheap content to Hulu, in which they own a big stake.   Hulu get to sell adds and low cost subscriptions, Apple can only offer thee items at $0.99 or $1.99 or $2.99, much less attractive.  For $8, I get an entire month of Hulu plus, with few commercials. For the same price, I can have four episodes of TV from Apple, 2 if I want them in HD.  The choice is for Hulu and that's a no-brainer.

Now, if I'm ABC, I have to face some tough choices.  My options include:

1. Give up on subscription or purchase revenues through the Apple ecosystem.  An ugly choice given Apple's lead in mobile devices.

2. Cut prices to Hulu even more so they can afford to work in the Apple ecosystem.   This would strengthen Hulu, creating a stronger cross-platform competitor, but possibly infuriate cable companies and other distribution channels.

3. Sell the same content to Apple directly at prices similar to what they were offering Hulu - getting back from Apple the subscription revenue they will lose when Hulu can no longer sell in that ecosystem.

Option 1 is strategically risky.  It's not just that you lose revenue, you may also lose viewers, especially younger ones who no longer know or care about networks - they just want to watch their favorite shows.  (I'm not young, but I must admit, since CBS shows are not Hulu, I don't want much CBS anything anymore...).  If that happens and some other companies start growing their content with Apple, it could rewrite the landscape for entertainment, especially if those newcomers aren't traditional operators with competing cable TV and broadcast interests.

Option 2 could strengthen Hulu and preserve the status quo in the short run.  In the long run it too could result in big industry changes if Hulu or another company emerge as a viable virtual cable TV network operator.

Option 3 brings the fastest re-write to the industry script.  This could make Apple into an overnight virtual cable television network operator, transforming the industry landscape as well by giving it competitively priced subscription models.

See where I'm going here: each and every one of these options breaks the industry's model of creating a viable competitor to Apple while trying to milk Apple's ecosystem for users and subscription revenue.  What happens in TV is just, writ larger, a model for how other content areas could go too: subscriptoin has won and buy-and-download has died.  And, short of an anti-trust intervention, every likely reaction to Apple's big bet requires content providers to make their own big bet.

In this respect it's like a big global industry poker game.  Apple just pushed all their chips into the pot and the content industry players need to decide: are we matching the bet and playing on, or do we fold now and give our winnings to Apple?

5 Reasons To Put A Mobile Device O/S On Your Laptop or Desktop

Last week, HP promised to start putting it's webOS operating system in lots of new places - like PCs.  And there are a lot of good reasons to put a mobile device on your laptop.

Coming soon to a desktop near you.  Picture from Abul Hussain

Here are a few I can think of:

• Fixed-Mobile Convergence.  It's not just for voice: it also works for your apps.  Watching, viewing or editing something on your phone?  Once you get home or to the office, putting it up on a big screen can make editing much easier.

• Instant On.  PC operating systems take time to boot up, even when you are using an SSD.  Small, mobile OS like webOS can be on in an instant, perfect for keeping people productive while Windows slowly gathers steam.

• Apps.  PCs seem to run "software" but mobile devices run Apps.  In truth, there's not much difference between an "App" and an "Application" except that Apps tend to be smaller chunks of software narrowly tailored.  There's more than one or two apps I'd like to run on my desktop that I have on my phone.

• Carrier Billing.  Mobile devices now have strong carrier billing integration, making it easy to make in-app purchases, especially small ones.  For consumers, it's a convenience.  For carriers and software developers, it's a huge market opportunity.

• Engagement.  For carriers, app makers, and content companies, offering desktop access means keeping people engaged throughout the workday with their service an applications.  If you depend on advertising, that's crucial.

Of course, desktop versions of the same software can be made but recreating the full mobile environment may have a lot of advantages - like instant on, carrier billing, and increased engagement.  One more idea:

• The Virtual Mobile Phone.  Mobile phones are more than just phones, they're your whole life on a palm-size piece of silicon.  Enabling a virtual environment could let people take their phone everywhere, including enjoying continuity should they lose it or offer access at lower cost when roaming overseas.

Apple is already taking elements of this concept in their "back to the mac" approach, but why not go all the way and offer a virtual iPhone.

Finger Input Just Can't Keep A Good Stylus Down

Suddenly, pens are everywhere in electronics, and that's a big change from the recent past.  Starting with the Apple Newton, the pen has come in for a drubbing.   Once upon a time, Apple excited us with the idea of a natural language interface based on a pen.  Then the Newton arrived and hopes were dashed.  Unless you wrote like a school-teacher, the feature was not particularly useful.

Things for the pen went from pad to worse (get it...ha-ha) with the arrival of early Windows Mobile devices, that needed a pen just to do what we all do with a finger now on the iPad and iPhone.  And when the iPhone arrived, the pen was banished and we all went finger crazy.

But now, we see, pens are back with a vengeance.  Starting, ironically, with the iPad, where pen-based applications routinely top the business charts.  Clever application development has enabled software to tell the difference between a finger or a palm and a pen even without a traditional hardware-based magnetic stylus.

Now along comes the HTC Flyer, a stylus-enabled Android tablet and Qualcomm's new ultrasonic pen. Both face up to a critical reality: pens are a great way to take notes.  In meetings or the classroom, laptops are a distraction or worse: they are a barrier between people.   A pen and paper is not a barrier and so neither is a stylus working on a tablet.

The market has spoken: we want our pens.

Qualcomm's ultrasonic pen.  Read about it on Engadget.

The HTC Flyer - a pen-based Android PDA - also at Engadget

Coming This Fall: Real Competition In Mobile Broadband

Lightsquared is a start-up in the mobile broadband space, but one with $7 billion in capital commitments and a chunk of wireless spectrum.  How the company got a hold of it is a long an interesting story - it's tied to satellite bandwidth that wasn't really originally intended for high intensity ground network.  Nonetheless, the letter of the law allows the company to do exactly that, provided it integrates the ground network with a satellite network.

While the specifics of the ground to satellite integration are not trivial, for users on the ground, no real difference will be visible between Lightsquared's network and any other mobile operator.  Lightsquared will offer data only, as I understand it, leveraging a 4G LTE network.  The Lightsquared offering will only be available at the wholesale level, so other companies will have to package and sell the service.

Competition From Space, On The Ground.  Photo by KiWanja

This could lead to a big wave of innovation and service.  Today, all the major Virtual Network Operators depend on a branded network operator like Sprint or Verizon to provide their service.  As a result, whole sale rates, while lower than commercial rates, are set to enable price discrimination but not real competition.  Lightsquared, without any branded network of their own, could inject dramatically different practices into the market.

Launch is set for late 2011 in selected markets and accelerates into 2012 with a goal to cover at least half the US population by 2016.

Selling Your Stuff: eBay vs. Amazon

If Rentalship is the new Ownership, then eBay and Amazon have really become rental marketplaces. You buy stuff, use it, and then sell it off again.  For things that you use only briefly, depreciation can be low and as good as traditional renting.  I've found both eBay and Amazon to be great ways to dispose of used electronics, as I tend to buy the newest items, try them out, get bored, and move on fairly quickly.

eBay

Well known as FeeBay for the endless surcharges imposed on everything, eBay is in terminal decline.  The marketplace is cluttered, con-artists abound, it's difficult to search, and quality varies enormously.  Despite these problems, eBay has a couple of advantages: volume and stupid buyers.

Economists have proven that auctions bring out the stupid in people.  They bid to win even if they end up paying more than they should.  I've found this to be true time again and have been frequently astounded at the prices I get for my products.  I sold my last iPhone for more than the regular retail price.    Of course, the extra benefits of this marketplace are taxed away by eBay's fee structure.

Amazon

Amazon is a much cleaner, simpler and well structured marketplace.  Search is easy and set is great too. The downside: Amazon uses only fixed prices, has somewhat less volume (hard to say to how much less,  it's a qualitative guess) and much more transparency in the marketplace.

That said, it's fee structure is a bit lower, and they will help you move your merchandise in a way that's much easier and simpler: they can hold and fulfill it.  Fulfillment by Amazon is the single best feature of selling stuff on Amazon.  You can ship them your product and they will stock it and fulfill it as if it is their own.  It even becomes eligible for Amazon Prime, the free 2 day shipping offer.

You can even use Amazon's in-bound shipping rates, which are a fraction of what UPS will charge you if you just tried to ship something on your own.  While Amazon will charge holding and handling fees, making your product eligible for Amazon fulfillment will move that item very fast.  I've never had anything sit for more than a day or two when it's eligible for Prime, so holding charges are always small.

Amazon also handles all payments, eliminating the distressing number of con-artists that infest the eBay marketplace, trying to get you to ship items to Nigeria and sending you fake PayPal confirmation notices.

Cool photo by Sindy

And The Winner Is: Amazon.com

From a fee structure, not only is Amazon cheaper than eBay, it's much faster and more reliable and the company exudes a level of customer service and integrity that eBay can never hope to match.  I don't begrudge Amazon or Jeff Bezos one penny in their commissions and fees.   I can't say the same about eBay and eMeg.

The Triumph of Innovation

We live in interesting times, and that's a good thing.  Just when it looked like mobile devices were becoming a two horse race - Apple and Google - everything gets re-arranged.  Earlier this week HP showed off some genuinely innovative ideas around mobile devices and yesterday Nokia faced reality and ditched MeeGo for Windows Phone 7, arguably the best new mobile phone operating system on the market.

This weeks biggest losers were Intel, which will have to face up to the failure of MeeGo, and Google, which is facing some revitalized competition from Nokia and Microsoft in Mobile as well as a humiliating plunge in market-share at Verizon now that the iPhone is available to those customers.  Both firms will recover, no doubt.

Yes, for the moment.  Picture from KniBaron

This endless battle of the tech giants is great to watch, and great for consumers too because what's happened here is real innovation.  Windows Phone 7 has all the makings of a great mobile O/S, except, perhaps, for cut and paste.  It's also a big step up in design and usability over the iPhone, and once multi-tasking arrives it will be the equal of Android and the iPhone, if not better.

HP showed some cool thinking earlier this week too.  The hardware, release date and lack of price data were all disappointments, given the moving target they are chasing, but there was vision in software and evidence of execution skills in spades.

The ability to transfer applications between phones and the tablet and back again was impressive.  Lots of companies have talked and thought about how phones, tablets, and PCs should work together, this is the first demo I've seen of how it really can work.  And the extension of this to PCs and laptops could make WebOS a powerhouse in mobile devices.

Contrast this flurry of real innovation with what's going on the network operator side of the equation: lots of marketing and fluff mixed with a bit of price gouging for good measure.  The network operators are busy tweaking their offerings but only at the margins.  In the core the same vision still stands: high prices for poor service with lots of strings attached.

Just how are we supposed to dress for success anymore?

Jon Rubinstein from HP's Touchpad launch.  Jeans and button-down.  Fine for those already at the top of the food chain.  For those on their way up do you:

1. Take the traditional path - e.g. wear a suit and until you get there?
2. Dress like you're already there - e.g. ditch the suit and wear jeans?

Jon Rubinstein at HP's Touchpad launch.  (From Engadget's liveblog coverage)

Game Plan for Selling Content Online Is Shifting

Apple recently rejected Sony's e-Reader application as it did not allow users to buy content online through the Apple store.  Truth be told, Sony's e-Reader is a minnow in the online content market, and Apple was picking on the small kid on the block.  But the implications of Apple's decision are rippling through through online content world this week.

Most of the speculation has focused on Amazon's Kindle application, but Amazon is probably not as at-risk as many other companies.  The reason is simple economics and not user convenience: giving a 30% cut to distributor for managing online sales makes selling through Apple unprofitable for almost some online content companies.

Companies selling online content now face a tough choice: give up their profits entirely on all sales through the Apple platform, or give up the costs of operating an independent platform.  If you are going to give Apple 30% of your revenues, you cannot afford to operate your own online sales and management infrastructure.  This can actually improve profitability for small companies, provided you can shed enough overhead costs.

If, however, you want to operate through Apple and Android and other segments, you may need to continue to maintain your own online content sales infrastructure.  This means no profit on your sales through one channel that would be needed to support and sustain your overhead costs.

For many content managers, this would lead to a second logical decision: ditch any sales infrastructure and operate entirely through Apple's app-store and Google's app-store.  This is already the most cost effective and scalable approach for smaller companies.  For larger companies, it could force an uncomfortable dependence on a couple of platforms.

Many many start-ups are also re-examining their business plans in light of this.  For many companies that plan to aggregate content and sell it online (textbooks, animated stories, interactive books), they have agreed to model where they pay 60-70% of their revenues for content and live off the remaining 30%.  For that margin, they will wrap the licensed content in an iPad app and while the app will be free, users will have to buy or subscribe on their web-site.

I know of several companies who feel that their business models are now at risk and they face either bankruptcy, tough content renegotiations, or some other radical re-think of their approach.

Oh for the good old days.  Photo by Gastev.

The Bubble In Inflation Fears

It was famously repeated during the housing bubble that when your hairdresser / shoe-shine guy / [insert-low-skilled-low-paying job here] was buying houses to rent them out, you knew you were in a bubble.  Set aside the condescending nature of these remarks (because let's be honest, on an hourly basis, plumbers are so well paid, I thinking of encouraging my kids to skip college) and apply that to inflation.

Las week, I got a lecture from my car service driver (thank you San Francisco bureaucrats for making taxi trips from SFO to Woodside Meter-And-Half, making it insanely expensively just to go to the curb at the airport and hail a cab) on how he'd put all his savings into silver coins because the Obama administration is going to cause hyperinflation.

In fact, short of a real bout of hyper-inflation, the forces that keep prices down now are much more powerful than they used to be.  I think there are three forces that are making it extremely hard for companies to raise prices:

1. Low Cost Imports.

Free trade has always been a big driver of growing economic wealth, but the speed and power with which it operates has accelerated in the last decade.  China is a big part of that, but I actually think it is not China but rather Wal-Mart and other US companies that have really driven this process.  The Economist has a great blog entry on recent research showing how Chinese imports have saved US consumers about $800 billion in the last decade alone.  Link.

2. The Internet.

The Internet facilitates two things that drive down prices in a very big way: one obvious and the other not so obvious.  Most obviously and directly, price comparisons keep cost down on commodities and push retailers to be aggressive.  It only takes a few people to switch their purchasing behavior to drive companies to cut prices and win them back.

The second, less obvious effect is in feature and product comparison.  Companies have spent a lot of time and effort trying to differentiate their products.  Internet sites spend a lot of time comparing them.  The Internet has made it harder for companies to charge a premium for differentiation that doesn't create a lot of value.  This pushes good products into "higher" categories and caps the price that brands can earn as a premium just for the name.

From China With Low Costs (Picture Cliff1066)

3. Shifting Consumption Towards Electronics.

For retailers and consumers alike, electronics are the gift that keeps on giving.  Over the last 40 years, the electronics content of a consumer shopping basket keeps increasing.  In 1980, the average shopper did not buy many electronics, today they buy a lot of electronics and related services.  All of those keep dropping in price so even as their share of the inflation-calculating basket goes up, their big annual price declines contribute to lower inflation.


Combine all three and it's hard to see how inflation can get a grip again without a very concerted effort by the Fed.

2011 Is When the IPTV Truce Collapses?

Watching TV over the Internet in the US today is governed by a kind of moderate truce between a bunch of warring parties.

• Content owners allow services like Hulu to exist in order to reduce piracy and to help prove the market for online content.
• Content owners want multiple buyers for their content to maximize their pricing - but only if they start charging a lot more money.
• Content Owners and Cable TV companies want services like Hulu to die because they are setting prices much lower than traditional cable packages.

Right now, the forces keeping services like Hulu alive are roughly balanced with the forces that want it dead.  And Hulu is important - much more important than Netflix in this battle.  Netflix shows stale movies.  While they get a lot of press, the truth is that what most people watch on TV are TV shows and sports and that's what they're pay $70-100 per month for cable to see.

Photo from Thms.NL

Hulu focuses on TV and that's what makes them much more a focus in the content battle than Netflix at the moment - though Netflix is entering that fray as well as they start bidding for TV reruns more aggressively.

Lately, though, the signs in the press show that the forces that keep Hulu somewhere between life and death are getting out of balance.  And the forces that want to kill are getting stronger.

1. Hulu's scale and viewership is starting to attract attention and cable companies are struggling to keep subscribers.  Cord cutting hasn't taken off, but it also won't die.  Every week there's a new testimonial on how people seem to like it just fine.
2. More recently, there's been the news that many of Hulu's content contracts are up for renewal and the company is under pressure to become something more like a virtual cableTV operator - and charge much higher prices.

Killing Hulu completely, right now, is likely to attract too much interest from the justice department, so soon after it approved Comast's acquisition of NBC.   But if the forces working against Hulu and for higher cable bills are ascendent, then expect too Hulu die a slow, miserable death of a thousand small cuts.

A Week After Porting To Google Voice

Just about a week ago today, I completed porting my number from T-Mobile to Google Voice.  Unlike some people, I had a painless porting experience because I had no contractual commitment to my wireless carrier.  I just added a new line to my wireless contract and for about two days had two lines.  When the Google Voice port was complete, one of those went bye-bye.

From BizBuzzMedia

What Is Better with Google Voice:

Truthfully: nothing substantial.  Same phone, same carrier, different number now.  Everything else is the same.  Incoming calls can now be routed to mulitple phones - something that's useful in marginal coverage areas and when traveling overseas.  Google won't forward your calls to international numbers (yet) but they will forward to domestic or Internet addresses that can be forwarded.

What Could Be Better (Depending on your circumstances):

Cheaper:  You can save $250/year with AT&T or Verizon by eliminating texting fees.  Thanks to the Google Voice Port, Verizon and AT&T can now be $20 cheaper per month because I don't need text messaging - just voice and data since Google Voice can route your texts through the data service.

Unlimited voice on Verizon and AT&T are both $70 and data is $30 on Verizon (unlimited) or $25 on AT&T (very limited).  T-Mobile's bundled plans include texting, so there's no savings to be had from them, but they are more generous with data than AT&T.

More Secure:  Your phone number, if you've kept it a long time, is valuable.  It's how a lot of people contact you.  You need to keep it - and you need to make sure you can keep it across jobs and over time regardless of your wireless carrier.

What Is Worse:

Caller ID:  Google Voice can make your calls if you want it to, but it cannot (yet) show your caller id.  That means people who screen their calls won't know it's you calling.  That could be good or that could be bad - depending on how popular you are.

To avoid confusion with my new number, I restricted caller ID - I figure it's better to show no number than one you don't want people to know.

Call Quality: Eventually, when Google enables caller ID for your number, it may still not be attractive ot use it because the call quality on Google's calls is not very good.  The VoIP system still cannot quite match regular lines and when you add in issues relating to signal and cell coverage, calls can get very bad.


Overall, most users will not find the reasons to change compelling.  For gadget freaks like me, the ability to test any number of wireless devices and VoIP systems without risking the loss of my number is great.  And should I go to a company that gives me a cell phone, I won't have to worry about choosing between giving up my number to the company or paying to keep a second phone.

One possible market that may find this very appealing are immigrants and lower income folks.  Google Voice can provide a continuously owned phone number at no cost that can be paired with disposable pay-as-you-go cell-phones - but that was possible even before number porting.

Smartphone TCO Coming Down, Varies Enormously

To own a Smartphone on the Verizon network costs about $100 per month, before taxes.  Add in taxes and it's about $110 or more per month, $1,320 per year.  At the low end, owning a smartphone on MetroPCS is  $720 per year, a savings of $600 annually.

MetroPCS is now offering the Hauwei Ideos, a very basic Android smartphone for $120 (at Best Buy).  That's a deal that's hard to beat.

A capable if somewhat limited smartphone.  But for $120 unsubsidized, who cares?

While the Ideos is only a mid-range smartphone, it's perfectly functional and includes access to the full Android market.  That $120 purchase price is contract free as well.  It's hard for me to see how such enormous price differentials sustain themselves in the market, but I don't think they can last as MetroPCS reaches national coverage.