WTF? Sandals?
Posted on January 5, 2009
Filed Under Uncategorized |
Kind of makes one wonder what the hell Google was extracting from the content that would suggest an ad for sandals would be a good fit.
Get Ready for Cable Wars
Posted on January 5, 2009
Filed Under Uncategorized |
This is a really interesting article that highlights the disruptive nature of online content. We’re going to see more of this as the web continues to mainstream as a video distribution platform that upends broadcast and cable broadband.
During the negotiations, Time Warner Cable threatened to make it easier for its subscribers to connect laptop computers to their televisions so that Viacom shows could stream directly onto subscribers’ televisions. The cable company also argued that it shouldn’t have to pay more to distribute shows that Viacom made available free in other media. At one point, it looked as if Viacom might have escalated by trying to block Time Warner Cable broadband subscribers from accessing its Web sites to see its shows.
[From Opinion: Consumer Choice Saves 'Dora' - WSJ.com]
Blu-ray Format Struggles
Posted on January 5, 2009
Filed Under Uncategorized |
Here’s the problem, I can keep my old DVD player (which upconverts and actually has a pretty nice presentation) while using iTunes or Netflix’s download service to bring HD movies to my laptop which can then play through to my display. I don’t need a Blu-ray player to get HD video for movies.
“The Blu-ray format is in jeopardy simply because the advent of downloadable HD movies is so close,” said Roger L. Kay, president of Endpoint Technologies Associates. a research and consulting company. “Streaming video from the Internet and other means of direct digital delivery are going to put optical formats out of business entirely over the next few years.”
[From Blu-ray Format Struggles With Uncertain Prospects - NYTimes.com]
I wrote a post in 2006 making the same point that downloadable movies would prevent Blu ray from ever achieving critical mass. Through pricing, say in the sub $150 range, it is entirely possible that Blu ray could shift DVD buyers to Blu ray as a substitution buy because you can still play DVD discs in a Blu ray player, but broadly speaking Blu ray will never have the market impact that VHS to DVD did.
Movie studios have been selling extended play capabilities with DVD and now with Blu ray but the fact of the matter is that consumers pop in a disc to watch a movie and only a small percentage of consumers actually ever take advantage of the extras. Nonetheless, as NewTeeVee pointed out, this could be great content to tie viewers in with a complimentary online experience… download Indiana Jones #43 from Hulu and get linked to the Paramount sponsored website with all of the extras.
Blu ray isn’t DOA, as I wrote back in 2006, when looked at from the standpoint of market adoption, but the aspirations of Sony and the other movie studios to have a breakout replacement for DVD that would accelerate movie purchases in the retail channel and at the same time provide them with a strong DRM enabled format (let’s not forget that is one of the strategic objectives that the movie industry had with Blu ray, frustrate global DVD piracy), well then Blu ray is certainly a disappointment.
Israel’s Location Based Warning Service
Posted on January 4, 2009
Filed Under Uncategorized |
The 10 minute warning system that Israel has been using to notify civilians in the vicinity of structures they will be bombing is fascinating. I could not find an online description of the system but the way it works is that civilian neighbors of a structure that will be attacked are given a 10 minute warning by phone to evacuate the area. It appears to be fairly precise given the counterproductive nature of giving evacuation warnings across too broad of an area.
Think for a second about what it would take to make such a system effective. First and foremost, they would have to have a map of every structure in Gaza, which is clearly something Google does on a daily basis, but then they would have to have a database of phone numbers attached to every person in each structure (remember this is predominately a mobile based telecom system).
The real challenge would then be to feed in targeting data with ETs for attacks because it’s a 10 minute system, precisely a 10 minute warning. The system would then have to make assumptions about blast radius based on ordinance and then calculate the number of buildings that could be affected. Upon determining the warning perimeter the system would then have to make potentially thousands of concurrent calls with the automated warning message.
I’m tempted to say that there are a lot of potential uses for such a system that go beyond, you know, warning me that my neighbors house is going to be bombed, but I can’t thing of many scenarios beyond emergency response. At any rate, it’s still pretty cool.
Smart Solar Application
Posted on January 4, 2009
Filed Under Clean Tech |
I saw these today at Home Depot, solar powered attic ventilation fans. This is really smart for a couple of reasons, the first being the fact that heat built up in the typical house attic results in excessive AC usage in the summer as the attic heat keeps the house warm even with insulation. Ventilating attic air also ensures that moisture is evacuated and the attic environment stays generally healthy, so attic fans are just plain old smart building practice.
I have one in our house and it’s set to a thermostat that kicks the fan on when the ambient air temperature reaches 115 degrees in the attic. Basically this is everyday during the summer. These fans are lower power consumption fans but they are running continuously for at 7-10 hours on a typical summer and autumn day.
Here’s why a solar powered attic ventilation fan is a no-brainer, the fan only runs on days that the sun is out and then the fans only run during the day time hours. An attic fan is mounted as either a roof mount or a gable mount, meaning it’s always installed in a location that is sun exposed and if you roof is not sun exposed then you probably don’t need an attic fan to begin with. In short, this is a perfect application for a solar powered appliance.
The price is about $100 more than a line current option but if you are doing this yourself and would have to hire an electrician for a non-solar powered unit then the cost savings alone more than cover the premium for the solar option. This is clean tech that I like, not only does it reduce your energy consumption but it does so in a package that is well tuned to the application and for a price point that is really quite fair.
California is Insolvent, Fiscally and Otherwise
Posted on January 2, 2009
Filed Under Uncategorized |
California, the most populous U.S. state, is a social trendsetter that is also at the leading edge of local governments failing to come to terms with an economic crisis.
[From California governor offers new budget fix plan | U.S. | Reuters]
What is really amazing about the fiscal situation in California is how many people simply don’t make the obvious connection of the two observations noted in the above quote.
California already has some of the highest income and sales taxes in the country, it is cognitive dissonance to suggest that more taxes will solve our financial crisis when that has failed miserably as a strategy to date.
The governor’s plan also fails the common sense test by suggesting that attaching an additional $14 billion in tax assessments will result in anything but more economic contraction. Just think about it for a moment, the state is proposing taking an additional $14 billion out of the hands of consumers in the state, their spending will simply not be at the same level because consumers don’t have an extra $14 billion to give the state.
Lastly, the state is now saying that they will be paying their bills with IOUs come February. Taxpayers of this state should respond in kind with a massive civil disobedience campaign, let’s pay our taxes with IOUs to express our displeasure with the political leadership in Sacramento.
Decline and Fall of Europe
Posted on January 2, 2009
Filed Under Uncategorized |
This is a really interesting book that should be viewed as informative for the American experience. Prof. Thornton cites economies as less adaptable and competitive because of an enormous regulatory burden, social welfare entitlements are incredibly expensive, and low birth rates (often as a function of cost of living) as factors in the demise of Europe.
There’s also an interesting discussion about the role of secularism in eroding the fundamental belief system that created Europe and the New World.
What I find interesting about Europe and the U.S. is that as manufacturing economies become less competitive and shrink as a result, financial services industries grow disproportionately and government strategical dependency on financial services sectors becomes unavoidable. Well that hasn’t worked out so well for Europe or the U.S.
“Decline and Fall: Europe’s Slow Motion Suicide” (Bruce S. Thornton)
Chrysler Blog, Probably Not a Good Time for “Conversation”
Posted on January 1, 2009
Filed Under Marketing |
Chrysler has a blog and on it they posted a digital copy of that stupid “thank you America” ad they spent $100k of your money running. The comments on the post speak convincingly about the depth of anger felt by the vast majority, probably 98%, of people on this subject as evidenced by what they are posting.
“Hey Crysler! You’re not welcome. You took my hard earned tax dollars without congressional approval. This is not the time for a “thank you.” This would be a good time for a refund…and an apology. “
“Bob Nardelli - thanking Americans for stealing their money is NOT something to boast about on your website.”
“Obviously nothing has changed. Chrysler is still making stupid decisions by wasting its stolen taxpayer money on useless ads.”
GM’s Fastlane blog has a similar statement about the bridge loans but the comments are markedly more measured. I think this reflects a couple of factors, the first being that Fastlane is much more respected in the automotive world as a blog about cars on GM’s site, whereas the Chrysler blog is simply a marketing exercise. The distinction is subtle because technically both are marketing tools but the Fastlane blog has substance that is conspicuously lacking in the Chrysler blog.
The second factor is likely the anger about the ad that Chrysler ran, which show further tone deafness about the displeasure that the American public feels about these bailouts. Chrysler also has two other problems, Cerberus and Bob Nardelli. The former being a private equity firm represents to many people a symbol for why our global economy is in the shitter to begin with, and the latter is a reviled man in many corners for his outrageous severance package at Home Depot and also because he’s not a “car guy” so he is viewed as an interloper.
Chrysler would do well to shut down the blog at this point. There is no way the comments will turn positive and because they can’t whitewash them away, the comments only serve to reinforce the negativity surrounding this company.
New Year Poll
Posted on December 31, 2008
Filed Under Uncategorized |
2009 Predictions
Posted on December 31, 2008
Filed Under Uncategorized |
Every year I say “I’m not going to write one of those damned prediction posts” but I end up doing just that. For this year I was thinking over the Christmas break that I don’t have just a list of predictions but also a list of aspirations (but because search engines send a lot of traffic to posts titled “predictions” around this time of year, that’s what I’m calling it.)
2008 was a tumultuous year and it revealed fractures in many of the assumptions that we have built our economy on. We have also seen a generational shift in politics and that has many consequences, some good and some bad, but clearly the big story for 2008 was the economy because that, unlike politics, really does affect everyone in a very direct manner so it’s fitting that we begin there.
1) Consumers re-evaluate the notion of value.
There are 2 major events taking place right now that will impact how consumers value products and services next year, the first being confidence for one’s job security and the second being an inevitable contraction of consumer credit as a result of the financial turmoil but also because important new rules that affect credit card issuers were put into effect a few weeks ago. One third of credit card holders pay only the minimum payments on their balances and fewer than half pay off the balance monthly, so simply put, revolving unsecured credit is a profitable business to be in but the new rules enacted will make it less profitable and as a result financial companies will move away from these businesses.
If people don’t have access to credit we will drift toward being a cash economy and when people have to save in order to buy things they tend to value those goods and services differently. While it may be tempting to suggest this is a flight to quality, I don’t think it’s that alone but rather a flight to utility. This is important for hardware and software companies because their products will have to have a less speculative and hard ROI story as a result.
2) Word of mouth marketing increases in importance.
I would not suggest that WoM marketing has not been important but the fact remains that very few companies do this well and despite all the “conversation marketing” that is going on, it’s hard to point to a repeatable success story as a result. Indeed companies that are downright hostile to critics, e.g. Apple, continue to prosper, which only proves a negative that WoM marketing is useful but not essential.
This could change in 2009 and companies like Zuberance are well positioned to take advantage of the trend, but only if it is evident that their solution works broadly and has demonstrable benefits. It’s early for them but with startup cycles on overdrive in a race to prove their merit, it will be essential for Zuberance to come out swinging in 2009 with clear and compelling case studies.
3) A major American city will be without a daily newspaper.
There are over 30 newspapers for sale in the U.S. right now and few buyers. It is not inconceivable that a major American city will be without a daily newspaper in 2009 and a raft of shutdowns will occur across the newspaper industry. If 2008 was bad for newspapers, 2009 will be devastating.
I take no pleasure in predicting this because the news is essential for a functioning government democracy and we all suffer as a result. Online news and blogs simply can’t fill the void left by a newspaper closure, if for no other reason that most current event bloggers preoccupy themselves with writing about what newspapers are writing and have little investigative or original content creation capabilities themselves.
In Federalist Papers #9 and #10 by Hamilton and Madison respectively, they cite extensively the danger to a republic from factions and partisanship, however it is Madison who identifies a serious source of faction to be the diversity of opinion in political life which leads to dispute over fundamental issues, but rather than advocating narrowing or controlling of diversity Madison warns about homogeneity of opinion and interest being more destructive. A lack of competition in any market leads to a weaker product for consumers and it’s no different in information businesses.
For all of their faults and weaknesses, newspapers perform a valuable function in our society. Having said that, it’s clear that their business models are outdated and ill functioning so with the crumbling of newspapers there will be an opportunity for something to rise in their place. If I were to make one wish for this subject in 2009 it would be that consumers of news more stridently differentiate between news reporting and opinion, placing once again greater value on the former.
4) Advertising as a primary business model for consumer web services will be abandoned.
In 2002 we witnessed a wholesale collapse in the online advertising industry because it was so overvalued through the dot com bubble. Today online advertising is less speculative and certainly not dramatically overvalued, therefore pain in this current economic downturn has been limited. Ask any network and they will tell you that rate cards are probably 20% adjusted, which is still a lot but not at all what we saw in 2002.
The problem is twofold, online advertising is dominated by remnant inventory which is, on a per unit basis, a pretty weak revenue driver and publishers don’t want more remnant inventory because they can’t sell everything they already have.
There is a basic mismatch between what advertisers want and what publishers can deliver, and not to digress but social network advertising is an unmitigated disaster when looked at through the lens of what was promised just a few years ago.
The bottom line is that most web sites and application services don’t generate the level of volume that is required for a sustainable advertising driven business, and similarly they don’t have the capacity to go out and drive their own ad sales which relegates them to what 3rd parties can rep.
Online media sites will be able to take advantage of existing networks, new and emerging, and while their revenue will likely come under pressure they will be able to survive nonetheless. Application services, on the other hand, simply cannot put forward a reasonable strategy that relies on advertising because of volume, user experience issues, and what advertisers want for their brands.
5) Enterprise software nuclear winter
I’ve spent most of my career in enterprise software and if there was ever a time that resembled a nuclear winter it is now. Microsoft, IBM, SAP, and Oracle (referred to as MISO) control these markets and the dollars that are spent in them. For startups the odds are daunting, very few businesses can get to $15m in annual revenue and then the hurdle to get to $30m is 4x as difficult and so on.
Software as a service has not had the dramatic impact in enterprise that has been predicted over the years even with Salesforce.com putting up some great numbers for the year the total software-as-a-service spend as a percentage of overall enterprise software is small. SaaS is probably around $3b a year in total size while the broader enterprise market is easily $180b annually.
I guess it would be incomplete to talk about enterprise and not include a comment about Google. Simply put, they are a non-issue in the enterprise and as the company retrenches into core markets and competencies, it’s inevitable that next year we will hear less about Google in the enterprise.
6) What SMB gives, SMB takes away
Companies large and small have devoted inordinate resources to moving downmarket into SMB and very small businesses. In any economic downturn the hardest hit segments are small business oriented and because these businesses are less technology dependent than large business it is one of the first areas to get cut back in lean times.
The weak holiday sales season exposed most dramatically the weakness in retail, where it is expected that retailers will shut down as many 12,000 stores in 2009, a fraction of overall projected small business closures. An economy is a woven fabric with interdependencies across wide swaths of sectors, which means that small business contraction is a certainty in 2009.
7) Role of government in business
This is not a one time thing but current events are forcing us to consider what role government has in markets and businesses. I really don’t know what the outcome will be here but I would hope that Congress and the President Elect would make it a priority to examine how regulation imposes costs on businesses without the promised benefits as a result.
Sarbanes-Oxley is the poster child for government regulation run amok. Not only did SOX impose significant costs on public companies without any of the promised benefits, but the downstream consequences for businesses aspiring to go public have been enormous. We have seen fewer companies go public post SOX despite generally favorable economic conditions than almost any other period in history and it’s make U.S. based exchanges weaker as a result.
Accounting regulations are similarly damaging American businesses without providing the clarity that is necessary to understand the financial conditions of the companies in question. T.J. Rodgers recently published a scathing critique of GAAP rules, summing up his sentiment with a single statement, “my financial statements are a mystery, even to me.”
It will be very difficult for the new Congress and the new administration to avoid simply throwing more money at the problems but given the magnitude of the crisis we have just experienced I would hope that more of the same and outdated Keynesian reflexes about building roads and bridges would be put aside to deal with the more substantive issues.
Generational shifts
Lastly, I’ve been thinking about how generational shifts impact the workplace and now believe that this is not the significant factor that it once was considered. To be sure, the workplace does evolve and adapt to new technology but not because younger employees espouse it but rather because the benefit is self-evident.
Younger workers entering the workforce don’t change the workplace, they adapt to it. Companies like Google and Netflix, which are consistently rated as good workplaces, serve as role models but they continue to be the exception and not the standard bearers.
In 2009 I think it is a safe assumption that younger employees will simply be thankful to have a job, less discriminating about the perks and benefits.
keep looking »-
About
My name is Jeff Nolan and I write Venture Chronicles. These are my thoughts on technology, innovation, management, public policy and pretty much anything else that I find interesting.
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