Sleepy Backwater

Just a quick follow-up to my early post about the future of paid content.

Long coming, Hulu Plus is now available for TV-watchers. My guess is we’ll start to see more invasive advertising on regular Hulu now, less choice and more inducements to move to Plus. By the way, Plus, still requires you to watch ads. #FAIL

John Biggs, on Crunch Gear, talks about the pay wall. He highlights the Onion’s Future News TV show – on the iTunes Store – and Popular Mechanics iPad app as examples of content providers moving to the for-pay model.

The key here? Compelling content, expertly produced. Isn’t that what we all want anyway? Without the interruption of invasive advertising?

While the developed world is rapidly moving over to smartphones, the preponderance of the wireless users are still using basic devices. Sebastian Anthony, in this post, asks how so many people – 4.8 billion, by his count – could be ignored when it comes to providing them with exciting applications.

I don’t know Sebastian, but it seems he’s asking the same questions many new or unfamiliar with the wireless business ask when they encounter this field. This has grown even more true of commentators – professional and amateur – who know only the success of the iPhone and wonder why that success can’t be applied to other devices.

There are, in my view, two reasons why the explosion of applications – available at a full range of prices – happened only on the iPhone (and, more recently and to a lesser extent, on Google’s Android platform): the wealth of the underlying market and the inherent compatibility of all other devices.

Sebastian, here’s something that’s hard to swallow: there might be 4.8 billion mobile phones in the world, but only a few hundred million of those devices are owned by people who have the disposable income to purchase (what amount to) frivolous applications. By frivolous I mean applications that are not life-saving, do not substantially reduce personal or business costs, and do not result in significantly lower expenditure of natural resources. Modern applications for the iPhone and Android are, largely, for convenience. And the members of world society who are willing and able to pay for convenience have, relative to the owners of those other 4.8 billion devices, wealth. Their wealth makes it profitable to develop applications.

The bigger problem, though, is device incompatibility. The marketplace for feature phones (which, in fact, have very few features) is vastly different from the marketplace for smartphones. Feature phones dominate the world market in terms of volume – those 4.8 billion devices are mostly feature phones – but are themselves dominated by the demands of the world’s mobile carriers. Let me tell you about how that market works.

Feature phones run one of many real time operating systems (RTOSs) all closely guarded by, and usually proprietary to, the device manufacturers. Until Nokia’s Series 30 and Series 40, numerous variants of each RTOS where created as new “features” were developed. I’m talking about “features” like one-tap-to-voice-mail, or special-ringtone-for-mom. Nokia tried to standardize that a bit, given the breadth and depth of its worldwide coverage but, largely, the operators rebelled. They wanted each phone to be slightly different from its logical twin on another network in order to differentiate in the marketplace. Further, each feature phone is tediously vetted by each mobile carrier (at great expense to the application developer) and carefully packaged with “features” that lock the customer into other carrier services (voicemail, ringtones, payment, etc). Sony Ericsson’s C902, for example, might have different features in the UK market on the O2 network than it does on the Telefonica network in Spain.

The software industry behind the very popular Java programming language tried to change that. Put one language runtime on all proprietary RTOSes and developers will be able to write one application that will run on top of all of them without change, they said. But the software industry did not anticipate how deeply ingrained the differentiation model was to the carriers’ way of doing business. Each carrier mandated different release levels of the Java runtime, and different suites of Java’s “optional packages”. Developers were back to square one – building for over 100 variants of Java in any typical release cycle. It was simply unprofitable to continue, and firms that tried to make it easier also shut down. Java’s promise of write once, run anywhere became a myth in mobile, recognized as early as 2002 – years before iPhone. But until iPhone, feature phones – even with very little true software innovation – remained the core of the business for both device manufacturers and wireless carriers. And it’s still the success model the carrier’s know best.

In late 2006, Apple, with its huge modern reputation staked on the iPod and iTunes Music Store, leveraged its strength to completely reverse this model. Instead of cow-towing to carrier demands and building tens of incompatible devices, Apple went to market with a single carrier and a single device. Luckily, it happened to be a compelling device – the likes of which the industry had never seen. Customers doubled their expenditure for mobility overnight and every carrier on the planet wanted to take part, no matter Apple’s demands. And when, later, Apple developed a software model that was controlled by Apple rather than by the wireless carrier’s – a model where any developer could create an application for the phone without needing to have it vetted by the carrier – developers jumped at the chance. Even more important, over time Apple has maintained a high degree of software compatibility across its devices. An application that runs on an early iPhone still runs on the newest iPhone – whether it’s running in the US on AT&T or in Luxembourg on Tango. Simply put, this model makes software profitable. Google has successfully used this same strategy for it’s Android platform which has the advantage of leveraging the big device vendors and their creativity and experience in building hardware. But Android devices are expensive smartphones, too.

There is some hope. In modern times we have GetJar, a big-tent app store which is now vending applications at a rate of 80 million units a month to a vast gallery of mobile devices. The jar in the name comes from Java’s software packaging model – witness to the fact that Java is barely hanging on as the only cross-device compatibility model. GetJar’s modest success shows that developers are keen on the low-cost, high-volume model. And it also shows that consumers are willing to trust a previously-unknown entity (GetJar) much more than they are willing to trust their wireless carrier when it comes to buying applications. Let’s hope so – at 80 million/month it’ll take only 600 months for GetJar to reach every phone in the world!

Relative to the iPhone 4’s antenna issues everyone’s howling about, I’m trying to square this with this. Is the software really displaying the reception-strength bars wrong, or is it really a hand-position-muffles-antenna issue?

Independent, Apple loses an opportunity to shed its ‘too authoritarian’ image by stone-walling, especially with it’s somewhat shocking press release on the topic, parodied here by @gruber.

The Anandtech review – using real reception measurements not the graphical bars – indicates that iPhone 4’s antenna is better than earlier models in areas of low reception. This is great news for folks who have to endure poor connectivity in their usual locations, but it does nothing to explain the mysterious death grip issue – whereby holding the phone in a normal and comfortable way reduces the antenna’s effectiveness.

It’s important to point out that all phones employing the built-in-antenna or antenna-inside-case paradigms can suffer from attenuation just being held in the hand. It’s just that Apple’s problem seems dramatic – and surprisingly like something that would/should have been caught early on in the product cycle.

From my viewpoint – I’m not an iPhone owner, though I have had a long succession of smartphones – it makes perfect sense for iPhone 4 owners to get themselves a bumper-type case which reduces (resolves?) the attenuation problem. The double benefit: normal handling doesn’t ding up the phone’s case and even an occasional drop will be tolerated. To those who would get pissy over spending $29 on such a case, I’d simply ask that you take a long look at what the iPhone is costing you over the two-year period of your contract (upwards of $2000 including all fees for hardware and services) and recognize that perhaps $29 is worth it to protect that investment.

UPDATE: Here’s a great, recent, review of the iPhone 4 discussing both the quality of the device compared to earlier models (and Android devices) and the antenna issue (which, it’s claimed, happens only under low-connectivity conditions).

Microsoft is ending production of its Kin line of mobile phones, just a few weeks after US launch and days prior to their projected European debut.

That Microsoft would kill a product this early in the production cycle is a stunning change of strategy. Stunning also, given that Microsoft opted for a very different character for these devices: essentially feature phones with rich social networking capability. This approach was strikingly opposed to its traditional it’s-all-about-Windows-OS approach of the past. And it cost the top people in Microsoft’s gaming and mobility division their jobs.

What’s really sad about the loss of Kin is that Microsoft will now return to its strategy of pushing the Windows OS (Windows Phone 7) – and doing so into a marketplace where the OS has become nearly irrelevant. It’s the application model which now controls the marketplace and Microsoft long ago became a non-player in that arena. Apple’s CocoaTouch (backed up by the iTunes App Store) and Google’s Dalvik (backed up by the Android Marketplace) both have solid cores of developers – who are able to make money in these markets without being hampered by the constraints of carrier-approval. And there’s yet another core of developers pushing the limits with HTML5 and Javascript. For a broad class of applciations, this mobile web application model works fabulously on mobile browsers based on Apple’s open sourced WebKit – including Apple’s Safari on iPhone and Google’s Android Browser, along with Nokia’s Web Runtime. Perhaps needless to say, Microsoft’s mobile browser – Pocket Internet Explorer – is not based on WebKit.

Further, Microsoft’s traditional hardware partner for mobile devices – HTC in Taiwan – has all but abandoned them in favor of Google and its hot-selling Android OS. HTC got PocketPC and Windows Mobile off the ground in the early part of the decade with HP’s striking and successful line of Personal Digital Assistants, called iPaq. Later, they built a long list of mobile devices running the Windows Mobile operating systems and branded by carriers. But, after the solid (if low-key) success of its first Android phone, the Dream device – branded by TMobile as the G1 – HTC has been going to market with its brand in the forefront. Without Microsoft.

Microsoft, once the undisputed king of the industry (not to mention the stock market), looks in total disarray in the mobile space.

After opening up their international sales shortly after crossing the two million mark, Apple’s iPad was even quicker to cross the three million threshold – just twenty more days, another million units sold. Can you spell S-U-C-C-E-S-S?

Apple also announced it had sold 1.7 million iPhone 4 units in the first 4 days of availability, almost making a mockery of iPad’s great run and setting a company record.

Hopefully, this will signal to anyone listening that we’re offiicially in the post-PC era now. America, especially, is moving closer to the European and Asian model where the main Internet access point is mobile. Yes, it took the larger screen of the iPad to convince us, and it’s a great sign that our foreign colleagues and friends also see the new form-factor as valid.

As I talk to clients and potential clients, the world has changed. With the exception of enterprise customers – still stoically soldiering on with their secure, managed, and aging PC-based applications – the new focus is on crafting a new range of experiences adapted to the easy-to-carry, easy-to-access iPad hardware. The set of ideas pouring forth from clients – who in the past wanted, at best, “me too” mobile applications – is really quite exciting. And the iTunes AppStore model for delivering low-priced applications in high volume will assure these new treats will be accessible to a broader range of people.

I’ve enjoyed my iPad since the first day of sales in April, and I’m completely happy with my wifi-only unit. I urge potential customers to consider this option instead of the wifi/3G edition simply because the tariff for 3G connectivity is way too high (in both initial, and on-going, costs). If you need occasion access via 3G, consider purchase of a smart phone that allows tethering – e.g., all the Google Android-based devices can be modified to add tethering. See my blog post on this topic.

Kudos, Apple, for a fine product!

AT&T is ending its unlimited data plan. Owners of Apple’s iPhone – who account for a very high percentage of data traffic on AT&T’s network – will be affected. But I predict most iPhone users will be affected positively. That’s because AT&T claims that 3% of its users account for 40% of the traffic. Once those 3% of users are reigned in – by making it more expensive to over-consume bandwidth – everyone on AT&T will start to see better performance, particularly in the very congested areas (New York and San Francisco in particular). And, the 97% of typical users will pay less for the bandwidth they do consume.

Frankly, you don’t need an economics degree to understand this situation. What AT&T is doing is arresting a true Tragedy of the Commons situation on their network. AT&T’s network approximates a public resource – a network utilized by a large customer base with widely differing aspirations and needs. Some of these users – a tiny percentage – have destroyed the resource by making overly-aggressive use of it, to the point the some users can’t even acquire access to the network at all for reasonably long periods. Everyone – including, curiously, the over-users – is frustrated.

Certainly, AT&T’s problem is not created solely by network over-use. AT&T has internal policies for managing its network, and the company in effect “places bets” on how the network will be used in order to craft the best possible access characteristics. AT&T also decides when, and how, to upgrade its network. None of us is privy to any of these considerations, and we can only believe AT&T’s public announcements on these matters. But overuse has seriously limited the tools AT&T has at its disposal. Something had to give.

It should be noted that Carnegie Mellon University – one of the nation’s most prestigious Computer Science schools – has instituted a fairly bold policy that throttles bandwidth available to users who have consumed too much in a given period of time. Students are subscribed automatically to CMU’s network, and there is no additional fee for network over-use. But this policy is deemed prudent here because it limits the tragedy of the commons situation (which affects all users). In the mobile arena, TMobile is already employing traffic shaping.

What sorts of usage consume lots of bandwidth? As explained here, streaming media, peer-to-peer file sharing and file download account for 66-75% of mobile bandwidth usage; web browsing 25-33% of usage – in both cases, dependent on region. To quote:

“…voice (VoIP), instant messaging, email and all other apps besides video and Web applications are a negligible driver of bandwidth consumption”

That’s right – the network is not being over-consumed by the Blackberry crowd, heavy users of Facebook, or people exchanging IMs. It’s being overused by consumption of media – streamed or downloaded files, legal and illegal. If you’re one of the people who’s got SlingBox Mobile, or a jailbreak phone running iHulu, or just can’t get enough AirSharing – well, you’re one of the people in AT&T’s crosshairs. And deservedly so (in my opinion).

Frankly, despite all the hype or what it’s called – 3G, 4G, LTE, WiMax, EV-DO – the mobile networks are simply not ready for high levels of media consumption. So those who do consume in this fashion need to compensate those harmed (impractical in this case) or pay more for over-consumption (which, indirectly, will compensate those harmed).

Please note that the altruistic blogosphere will no doubt erupt in anger over this change. Curbs on our freedom! Control by the Wicked Overlord! A slippery slope to usage monitoring, privacy invasion and government censorship!!! All very odd for a group of people normally in favor of spreading the most benefit to the most people (and disallowing the maximum benefits from accruing to the privileged few).

Haters gonna hate…

…but, nonetheless, Apple’s iPad has two million customers in less than 60 days. At that figure, iPad has already eclipsed the total sales of Amazon’s Kindle (which has been in the market for over 2 years) if we extrapolate a bit from this 3Q09 estimate. Barnes&Noble’s Nook device entered the market later than Apple’s iPad, and no sales estimates have been forthcoming from B&N. And, the Border’s Kobo…well.

In the run-up to Apple’s January 2010 announcement, the pundits misjudged the iPad as a tablet-format computer and embued the non-existent device with all sorts of wished-for laptop features. When iPad arrived – as primarily a media-consumption device rather than a new-format personal computer – these same pundits, now wronged by Apple, derided the device for lack of the features they’d projected on it. Even those that liked it commented how Apple’s control over media sales and distribution to the device would create a world Google recently labelled “one man, one company, one device”. Cory Doctorow went bonkers on the iPad.

I think we’re seeing the “one superpower” problem here. With IBM and Microsoft both vanquished, Apple is clearly king of the hill in personal digital technology these days. And digital entertainment. There’s no longer any we versus they. No over-arching ideological battle. There’s only a string of solid home runs from Apple – redefining digital music, redefining the mobile phone, and now defining a new category of must-have device, the portable high-definition media consumption device (that’s jjjuuuussstttt good enough at work-related tasks to possibly supplant the need for a laptop for a lot of people).

So the conspiracy-theory types have come out of the woodwork to turn the former David into the new Goliath. You’d think Apple had turned into Alan Moore’s vision of Norsefire, the totalitarian regime that runs Britain in the movie V for Vendetta. In fact, it’s worse than that. We’re at Redactio ad Hitlerum already (whereby it is nearly impossible to discuss Apple’s incredible success without mentioning their “unprecedented level of control”).

I have another theory, however, and it’s simply this: We lived too long under the computing dominance of Microsoft. Except for Apple – who remained the only company clearly rebelling – everyone else just fell into line. The consumer-oriented companies of the last twenty years simply waited for Microsoft to innovate, and Microsoft always innovated in a single way – the way that best suited Microsoft’s need to keep itself powerful (which, some would say, usually included appropriating the ideas of others more than inventing new ideas itself). Now the sun is shining again – we have a true consumer-oriented innovator in personal computing – and writers and bloggers everywhere (let alone competitors) can’t figure out how it all happened so quickly and without their blessing.

Customers are now showing themselves to have been waiting all these years for an alternative to the Microsoft-dominated world. They want a device that puts less between them and their media, not more. They’re ready to embrace books, magazines and newspapers in this new format whose user experience technologies seem tailor-made to encourage new-found creativity among publishers. They’re ready to think beyond the personal computer.

Frankly, I think Apple’s success does more to pave the way for genuine competition than the vast majority of pundits are willing to admit. With Google’s Andoid operating system running on mobile phones, tablets and now TVs, many companies can participate in this freedom to move beyond the stale personal-computing world defined first by IBM and later monopolized by Microsoft.

We should all be thankful for that.

NewsCorp’s newspaper properties in the UK – The Times and Sunday Times – are switching to a subscription model roughly June 1, 2010. Currently, highlights from both papers are available free with advertising support via NewsCorp’s Times Online.

The Times is a highly-respected paper, perhaps the UK’s most-respected (in terms of its journalistic content, if not its management). Rupert Murdoch – Chairman of NewsCorp – thinks worthy writers should be paid accordingly, and I happen to think he’s right. The question is: Can The Times create a publication that stands apart plainly enough to make it valuable to customers hooked on free news?

I believe we’re entering a new era here. To be worth paying for, The Times – and all others newscrafters that pride themselves on journalistic excellence – are going to have to re-invent what being a newspaper means. They’re going to have to embrace technology, but more importantly they are going to have to end their ugly reliance on advertising support. Face it: newspapers – and their mostly-awful on-line services today – are crafted for advertisers, not for readers. This will be the subject of an upcoming (long!) post, but for the meantime, the news industry needs to return to providing readers quality journalism in a form and format that customers enjoy and derive value from.

If NewsCorp’s new electronic editions are simply identical to the current offering – replete with unreadable layouts, flashing ads, and unblockable full-page ad insertions, but with a login required – I suggest they will fail. The New York Times – America’s most venerable daily publication – failed at this model. A newspaper online needs to be different than a newspaper-in-the-hand and it needs to be crafted – journalistically and structurally – for the reader. Until newspapers recognize that, paid subscriptions will fail.

Let me point, here, point back to my recent post on MasterCard opening its credit card payment system to developers. Perhaps “subscriptions” is also the wrong approach. Perhaps newspapers need to experiment with other models for generating revenue – alternatives to buying the whole enchilada when you only want one article.

Best of luck, Rupert!

This portends something big: MasterCard is opening its payment platform to developers. PayPal, who’ve been open to developers since November 2009, had to respond. Visa will be forced to follow suit. Perhaps Apple’s recent payment patent got everyone moving?

Competition in this area is a good thing and, hopefully, will make accepting payments easier, especially for small values (less than one US dollar). That could unleash a wave of innovative services that do not need to be funded by advertising. Right now, payment for small items or services when mobile is next-to-impossible. And paying for information in small bites is certainly not possible. Happy to pay for one article out of a magazine, but don’t want to buy the whole thing? Sorry. Want to read just the bullet points from the WSJ’s famous summary section without buying the entire paper? Can’t. There’s a treasure-trove of information and services waiting to be unleashed, but for the lack of a trustworthy, convenient payment mechanism.

Perhaps we’re about the see that change.

You’ll remember that I recently rooted my TMobile G1 so that I could run a WiFi tether and use my Apple iPad on the TMobile 3G network. Boy, is it sweet! That process (rooting) turned out to be more conceptually frightening than actually difficult. So with all the Android action at Google’s recent I/O conference (much of which can be found online here), I’m pretty excited to upgrade my device to the newer versions of Android OS.

At I/O, Google confirmed that running the 2.x operating system on the Dream/G1 was “technically possible”. That seems to be geek code for “you’re unlikely to see the upgrade via official channels” (e.g., the operators and/or Google itself) but, (b) “Dear hackers, go forth and prosper”. Cyanogen (and the community that have sprung up around his original work) seems to have heard that loud and clear. They’ve got Android 2.1 nearly baked.

This is great for a couple of reasons. The most important? It shows Google has gone to lengths to assure that their original hardware is still supported. We’re still very early in what is likely to be a very long game and it would have been unfortunate if Google decided to cut life-support. It’s worth noting, though, that the operators themselves are not being supportive of Google’s efforts. By appearances, they’ve determined the right approach is to make their G1 customers upgrade to a newer phone (which will likely require re-upping for a 12- or 24-month extension to contract as well). Nonetheless, in the past there was no avenue to upgrade an older phone. Google has, at least, given us one with Android.

The major reason to go to extremes (metaphorically) to get Android 2.1 is speed. These later releases of Android have, we hear, seen a lot of work on performance. So, it’s not just the modern hardware making Android fast – it’s Android itself. As with other open source projects, we’ve got lots of eyes on Android, and a community generating requirements. That seems to be pushing Google in the right direction.

In addition to speed, there are a number of new OS and application-level tweaks and features available with the 2.x OS upgrade. The list is virtually identical to this description provided for the Nexus One. Wow, it would be a shame to miss out on this stuff!

So, I’ll be upgrading as soon as Cyanogen gives the word. A quick thanks to both Google and Cyanogen for keeping Android’s original fans current!