Pull the plug on Palm?

A week ago I said Palm is facing a life-or-death innovation challenge. Today, at the WSJ D5 conference, Jeff Hawkins unveiled “a new category of mobile device.”

And what is it? The Foleo. A low end laptop, reminiscent of the Apple eMate. The eMate was based on the Newton OS (rather than a full-featured laptop OS), but here the Foleo is based on Linux.

The plan is that the computer be a smartphone companion. Some phone makers (NB: Nokia) might say a really smart phone needs no companion. Other smart phone users have a two pound Japanese subnotebook, or an ultracompact Windows laptop like the one pound OQO. Me, I just make do with a regular laptop, and it’s hard to imagine many Treo owners who don’t already own a laptop.

The computer is underpowered and doesn’t do much on its own (other than surf the web over WiFi). It has no software yet, and I can’t see any developers taking it seriously. CNET sums up what must be the widespread reaction:

“I think it's probably the most disappointing product I've seen in several years,” said Todd Kort, an analyst with Gartner. “To think that anyone would carry something with a 10-inch display at 2.5 pounds as an adjunct to a phone just doesn't make any sense to me.”

Today, Palm stock is down only 1.6%; the stock has spent May under $17, down from the 52-week high of $19.50, and the $24 price of 13 months ago. The bread-and-butter of the company is the Treo line, and if they don’t do something to catch up with RIM (or Motorola or Nokia or Samsung) soon, it’s toast.

If this is the bet-the-company breakthrough innovation, I say pull the plug. When you check out of a hotel, they close your folio, so I guess the new product name is (unintentionally) apt.

Technorati Tags: Palm

Apple keeps on rollin’

This morning’s Washington Post brings further evidence that in the battle between Apple and Microsoft for total world domination, that Apple at least continues to own the music industry.

Reporter Mike Musgrove writes:

Microsoft says it is on track to sell its millionth Zune music player, the software company's would-be challenger to Apple's enormously popular iPod.

Microsoft expects the player to hit the sales milestone by the end of its fiscal year in June, almost eight months after the product made its debut. Apple, which launched its iPod music player in October 2001, has sold 100 million of the music players.

Several competing music devices from hardware makers have aimed to become "iPod killers," but there has not been much change in the MP3 player market in recent years, even with Microsoft's highly publicized entry.

Musgrove cites NPD Group data that gives Microsoft 4th place (at 2.3%), after Apple (70%), SanDisk (11.7%) and Creative (4%). (Presumably these are US figures, given that Apple is not that dominant worldwide and NPD only studies the US). While SanDisk is the most credible challenger, clearly it’s not much of a fight.

It seems in the best interests of consumers and the IT industry (if not the record industry) to have different segments dominated by different firms. Once upon a time, there were no credible challengers to IBM in any segment. Now, in the computer industry alone, we have IBM dominant in mainframes, Sun in workstations, HP and Dell in PCs, various players in PDAs, and Nokia in computers-pretending-to-be-mobile-phones. That Apple owns music seems healthier than if IBM or Microsoft or HP owned it all — if, for no other reason, that Apple can credibly challenge PC leadership (on profits if not revenues) while others can challenge music leadership.

It’s also interesting that all of these firms are pursuing some variation of proprietary strategies. Yes, perhaps IBM mainframes and Sun workstations will mostly be running Linux someday, but right now they are really all updates and variations of the IBM 360 proprietary platform strategy of 40 years ago.

Two other music tidbits.

• Today is the first day of Apple’s DRM-free iTunes Plus service, with content from EMI. Who says you can’t get no satisfaction? (And whatever his critics might say, Steve Jobs is clearly driving innovation and change in the music industry).
• As the Post alluded to, Steve & Bill are doing a rare joint press conference at the Wall Street Journal’s annual Davos-in-Carlsbad IT summit. I remember the first one (only a few miles from where I then lived) seemed overpriced and pretentious, but the Journal has done an enviable job of using the D conference to make news rather than just be yet another schmoozefest.

Technorati Tags: Apple, iPod, Microsoft, music industry, Zune

ODF en route to ANSI-dom

Catching up as I prepare to end the Grand Tour.

Quick update from last week: Microsoft says they will vote for the Open Document Format backed by Sun and IBM. A number of Microsoft critics see this as a dare: I’ll vote for yours (ODF), so you better vote for mine (OOXML).

IBM’s Bob Sutor — who apparently believes in monopoly standards rather than competing standards — sees efforts to provide choice as anti-consumer:

I believe the industry wants a common set of the fewest possible non-overlapping standards, and then a large choice of applications that use those standards. An analogy: I don’t want lots of standards for electrical wires and plugs in my house, I want a few standards and then a huge choice of electrical appliances. Microsoft is deliberately trying to confuse the industry and its customers with this bizarre and self-serving “choice of standards” argument, in my opinion.

I believe we need convergence of document standards. I would welcome Microsoft’s active and honest participation in further advancing the OpenDocument Format by adding its requirements and expertise.

Andy Updegrove — who helps Microsoft rivals put together standards consortia — is equally critical:

By issuing this press release, Microsoft is therefore making it appear that it is rising above the squabble to do the right thing, and therefore setting the stage to make IBM, Sun, or anyone else that supports ODF look bad if they later vote against OOXML when/if it comes around. …

The press release also fits within the overall spin that Microsoft adopted a few months ago, first presented by Microsoft Office Program Manager Brian Jones' blog, in which he announced that it had become clear that we have "two winners" in the fomat contest - OOXML and ODF.

He also remarks on the timing of the Microsoft announcement, soon after Microsoft counsel Brad Smith claimed that ODF infringes Microsoft’s patents:

For the first time (that I'm aware of), Microsoft started talking in the Fortune piece about a specific number of patents – 45 – that it claims OpenOffice (and presumably any other implementation of ODF) would infringe. So on the one hand, Microsoft is saying "Nice standard you've got there," while on the other hand, warning "Implement it if you dare, but only for a price."

(The executive director of the Linux Foundation, Jim Zemlin, responded Friday to Microsoft’s patent allegations.)

Sutor, Updegrove and (to a lesser degree) Zemlin seem critical of Microsoft for doing what it’s in the best interest of shareholders, and trying to forestall the commoditization of software. I can’t go that far, and my main agreement is with a throwaway subordinate clause in Sutor’s attack:

The longer Microsoft continues this charade of OOXML being an independent open standard rather than its actually just being an XMLification of their proprietary product data formats …

It does seem as though codifying a proprietary format — one that competitors will never be able to fully implement — is not what an “open” standard is about. So in this regard, I hope that ANSI votes down OOXML until (ala IETF policies) there is an independent implementation showing that this standard actually has some meaning for interoperability.

Technorati Tags: Microsoft, ODF, OOXML, open standards, ANSI, XML

Using fair use to attack fair use

On Friday, Lucasfilm released clips from its Star Wars movies on Eyespot, a San Diego company that both hosts a website and produces editing software. As I noted in my SD Telecom blog, Eyespot’s cooperation with licensed content is in stark contrast to the GooTube business model.

On his Madison.net blog, Mike Madison added a copyright law wrinkle I hadn’t considered:

Of course, once Lucasfilm blesses the remixing, a couple of things happen. One, the resulting remixes aren’t necessarily examples of “fair use”; so long as the mixers follow Lucasfilm guidelines, their mixes are authorized. Two, Star Wars remixes that don’t rely on the authorized clips begin to look a bit less like fair use than they might otherwise; here again, there is a copyright owner that is authorizing parodies. Under a typical four-factor analysis of fair use, avoiding an authorized “market for parodies” appears to cut against the user.

That’s a really clever angle — don’t know if it took a lawyer to come up with, or only a lawyer to spot it.

The fair use law makes quite clear that anything that diminishes the value of the original looks less like fair use. Since Lucasfilm/Eyespot eventually plan preroll ads to support their website, parodies that bypass the site will be undercutting Lucasfilm’s business, and thus less likely to be considered “fair use.”

Some are whining that Lucas is tightly controlling the clips with possible censorship (e.g. against Princess Leia as a porn star). But if Lucas didn’t exert some control, then it would lose the ability to go after others who diminished the value of the franchise.

As for complaints that Lucas isn’t sharing advertising proceeds for user-generate content, where is this true? Geocities? Yahoo Groups? Blogger? YouTube? Hotmail? I think everyone knows that “free” on the web means “I don’t pay but others sell ads.”

Technorati Tags: business models, copyright, fair use, Web 2.0, YouTube

Palm’s life-or-death innovation challenge

Rob Pegoraro of the Washington Post is my favorite personal technology columnist. While Walt Mossberg of the Wall Street Journal is more influential, I enjoy Pegoraro’s best columns more — probably because, come hell or high water, Mossberg is limited to 900 words.

Today, in a (dead tree) column entitled “Palm’s Dumber Smart Phone,” he points to Palm’s exact problem:

Not even three years ago, the Treo 650 smart phone looked revolutionary. But its latest successor, the Treo 755p Palm unveiled two weeks ago, feels more like a relic.

The Treo’s basic concept — uniting a cellphone, handheld organizer, miniaturized keyboard, touch-sensitive screen, Web and e-mail access and media playback in one device — makes sense. But while competitors have advanced, Palm has been napping on the train tracks.

The new Treo 755p gets online no faster than last year’s model. Its basic design features few changes from the 2004 version; its dimensions almost match those of the 2003 edition. And its operating system and software for desktop synchronization received their last major updates in 2002.

Over that same period of time, almost every other hand-held device — Windows Mobile smart phones, BlackBerrys, iPods and even plain old cellphones — has seen major upgrades in capability and notable shrinkage in size.

In other words, the world will pass by even the most innovative companies if they stand still. In his blog, Pegoraro amplifies further:

Seeing how badly Palm has lost its way makes me feel like I’ve been had. I’ve recommended this company’s products many times in print and online and spent my own money on a Treo 650 two summers ago. The first year with the thing was great, as I wrote last summer. But since then, my smartphone has grown steadily less stable, especially when browsing the Web or checking e-mail. And none of the newer models shipped since then cure that reliability problem, since they all still run the same, increasingly fossilized software.

Of course, for Palm’s financial problems a key reason is that their operating system strategy is all mucked up due to the ill-advised spinoff of PalmSource, and PalmSource’s subsequent troubles leading to its ill-fated sale to Access (instead of Palm or Motorola).

This brings to mind a similar story told by Charles Ferguson about Netscape — which was unable to update its spaghetti code browser while Internet Explorer was catching up, a failing that eventually killed the company. Fortunately for the executives, it failed after AOL spent $4.2 to buy Netscape.

There are rumors of some great Jeff Hawkins breakthrough that will save the company. If Jeff’s planning on pulling a rabbit out of the hat, now would be a good time to do it.

Photo credit: Geek.com

Technorati Tags: mobile phones, Palm, smartphones

AT&T puts one over on Apple

If the reports in this week’s USA Today are true, Apple has made an incredible strategic blunder on its iPhone rollout strategy — one that could be fatal.

As Leslie Cauley writes:

AT&T has exclusive U.S. distribution rights for five years — an eternity in the go-go cellphone world. And Apple is barred for that time from developing a version of the iPhone for CDMA wireless networks.

USA Today itself provides the US market share:

• AT&T (GSM): 27.1%
• Verizon + Sprint (CDMA): 49.9%
• T-Mobile (GSM): 11.1%
• Others: 11.9%

The text does not make it clear whether will be any T-mobile iPhone users in the next 5 years, either by taking their AT&T phone or via gray market European imports.

Last year there were 145 million cellphones sold in the US, so if they are in direct proportion that’s 39 million for AT&T and 72 million for the CDMA carriers. (Yes the numbers are not proportional every year, but it’s a more realistic assumption going forward). If Apple hopes to sell 2 million iPhones this year, that’s 5% of all AT&T subscribers.

I haven’t completely suspended disbelief: the previous irreconcilable claims by AT&T, Verizon and Apple show that there are chronic problems with ”spin” (lying) in this high-stakes game of shaping market perceptions.

Not having a product to sell to half the US market for the next five years is going to guarantee that knock-off products will become well established in the US market, because they will be heavily promoted by AT&T’s rivals. Samsung and LG already have credible competing products, while Nokia, Palm and Blackberry are not likely to sit still for five years.

In fact, many of the iPod owners that Apple’s natural constituency will stick with their carrier rather than switch to the iPhone and AT&T. The chronic problem of first-movers is that competitors catch up, and here Apple is creating a whole pool of customers pre-disposed to try the competing products.

The whole question of why Apple had problems in the 1990s has been controversial, with many (not I) claiming that Apple’s mistake was that they failed to license their OS to competitors. Here they’re repeating the no-licensing decision (not necessarily wrong), and then limiting their distribution to 27% (40%) of the US market that is AT&T (GSM). No matter what kind of concessions they got from AT&T, it’s hard to see how they can hit their targets while conceding 3/4 of the market.

The AT&T-Apple view is that a hot phone will shift carrier loyalties. I just don’t see it happening to any large degree, although I may be blinded by my dislike of Cingular and SBC. Thus — absent disconfirmation of AT&T’s latest claims — I now retract my previous prediction of reaching their sales predictions.

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PS: In the same story, there was this inane comment:

“It’s guerrilla warfare,” says Jane Zweig, CEO of market researcher The Shosteck Group. “They all want to say ‘We’re No. 1.’ ”.

As defined by Ries & Trout, guerilla warfare means (as in the military sense) a small, weak competitor making vicious, targeted attacks on the vulnerable points of a big lumbering enemy. (Think the Bali disco bombing). To recalibrate the cliché usage, a “we’re number one” policy is more like blitzkrieg, saturation bombing, or no-holds-barred competition.

Technorati Tags: Apple, AT&T, iPhone

Tree huggers as tree killers

In the 1440s, Gutenberg invented the printing press. The largest book that he printed became the all-time best-seller — a timeless classic — Die Bibel.

I wasn’t around then, but I gather that printing was fairly expensive for about 400 years until dramatic improvements in printing press efficiency in the 2nd half of the 19th century. With that, printing became widely used for more transient purposes, including the tabloid newspaper (once a penny) that created the fortunes of William Randolph Hearst, and many other press barons in various countries.

It’s no secret that over the last decade, more and more people are getting their news online, rather than in printed form. The latter is often referred to as the “dead tree edition” by the younger generation or middle-aged pretenders.

The online competition hit IT trade journals first (since by definition they have good computing access), but is also putting pressure on the local newspaper. The competitive responses seem to be to seek a hybrid online/offline business model, go entirely electronic, or fold entirely.

But while voyaging beyond California the last few weeks, I’ve noticed an interesting counter-trend: the subway throwaway tabloid. Flashy, colorful, short stories: think USA Today, but not as deep or serious — and free.

I first saw this when I returned to Boston last month for a conference, and spent 3 days riding in from a friend’s house in Quincy. The two papers (Metro and Boston Now)were widely sought out by commuters on their morning or evening commutes. Although we had a couple of free weeklies (the Phoenix and The Real Paper), the free dailies certainly didn’t exist when I commuted on the “T” in 1977-1979.

The next example was this week in Switzerland, where 20 Minuten (www.20min.ch) is available in both German and French (20 Minutes). It has an afternoon competitor, Heute (i.e. “today”). Of course, in Switzerland, commuting might mean a bus, tram, streetcar, or a two-hour intercity train. It looked as though (can’t confirm this) that 20 Minuten has local news in regional editions. It looks like the company has a hybrid model, with free online news as well.

So in Boston and Switzerland, there’s free daily newspapers — dead trees and all — at a time when traditional paid dailies are shriveling and dying out. If two cities in two countries have it, it must be a trend. (In logic, we would call this inductive proof: 1, 2, … N). I haven’t checked San Francisco, London, New York or other possible cities, although the Metro website makes it clear that it’s also in New York and Philadelphia.

What’s going on? My analysis is that the dailies work as impulse reading for commuters who didn’t bring anything else to do. So as commuters in big cities save energy and carbon dioxide emissions by riding mass transit, they are killing trees that capture carbon dioxide and emit oxygen.

Meanwhile, auto-based commuters don’t have a newsrack in their driveway, and increasingly are shifting to new, electronic-only media: satellite radio, MP3 files, podcasts, etc. So as they emit evil CO2, they are consuming only bits. Satellite radio isn’t really practical in subways, and the other options often require planning ahead to have something to do in a car. (Of course, subway commuters have MP3 players too).

I’m not saying there is a hypocrisy here, only an interesting irony. The new (or existing) tabloid publishers have found a demand and they’re servicing it.

I reminds me of back in 1978, when former Newsweek reporter (then media pundit) Ed Diamond was the (adjunct) faculty advisor to The Tech, the school paper where I then worked. As I recall the story, he asked students to devise an information carrying device that could convey 10,000 (100,000) words with color pictures, be used in a variety of locations including under a tree, on a plane or in a bathtub, and mass produced and sold for only a dollar or two. His prediction has held up 30 years, and it could be another 10-20 years before e-book readers really become a practical replacement (except for the bathtub).

Note to my international readers: “tree hugger” is (often derogatory) American slang for environmentalist.

Graphic credit: cartoon from today’s (Wednesday’s) Wall Street Journal Europe.

Technorati Tags: business models, Internet, information goods

Jack is dead

Catching up on the blog while I am Sleepless in Switzerland.

Cingular is now officially dead. The mobile phone service was announced in 2000 as a 60/40 joint venture of SBC of San Antonio and Bell South of Atlanta. It instantly became the 2nd largest cell phone carrier, and plotted out a path away from the dead-end NADC (North American Digital Cellular, aka TDMA) over to GSM.

The murder was perpetrated by SBC which — after it bought AT&T and BellSouth — decided to rebrand it as AT&T. The rebranding effort announced on January 12 has now been accelerated.

AT&T Inc. today announced a new phase of the company's branding strategy. Overnight, AT&T kicked off this phase by replacing the Cingular brand with AT&T on all in-store signage, store kiosks, and point-of-sale materials in approximately 1,800 company-owned wireless retail stores. In addition, key stores in major markets also unveiled new exterior signage displaying the new brand.

The decision to move to this phase of the branding campaign is based on research that indicates that consumer awareness of AT&T — one of the best-known, most durable and iconic brands in the world — is high and ahead of expectations.

The store makeovers are also critical to prepare for the late-June launch of the Apple iPhone, for which AT&T will be the exclusive wireless provider in the United States.

The death of Cingular ties to AT&T’s grand ambitions to dominant the US convergence space:

Many company-owned stores have also installed kiosks promoting the complete array of AT&T services — wireless, high speed Internet, TV and home phone — in the company's traditional service area, and several markets are also planning for a new AT&T Experience StoreSM, a high-energy format that encourages hands-on customer interaction.

As the AP story notes, this is not without risk:

Jeff Kagan, a telecommunications industry analyst with Mindspring Inc., said there is some risk for AT&T giving up the well-known Cingular brand. But because the industry is moving toward a single provider for multiple telecommunications services, Kagan said it makes more sense to centralize the brand.

With the death of Cingular comes the death of the Cingular “Jack” logo, which has been heavily promoted for six years.

Like other carriers, Cingular’s marketing and growth seem targeted at teenagers — i.e., kids born in 1988 or later. The Bell System died in 1984, and since then AT&T has just been a has-been long distance company. How many teenagers know or care about Ma Bell?

Graphic credit: Flickr.

Technorati Tags: AT&T, convergence, mobile phones, Cingular

The looming crash in Web 2.0 hype

Apple and its management team have always gotten a lot of press, both during the soap opera era of the 1990s and the recent success of the Jobs II era. But if you measured name recognition of alumni who were not CEOs, then clearly the best success at leveraging the Apple tenure to fame (if not fortune) would be that of Guy Kawasaki.

Those of us from the Mac community know Guy when he had a real job — trying to attract/motivate software developers to support the Mac. Most people know him from his success parlaying that fame into a series of books (Amazon lists 9) and speaking gigs.

I understand that would-be entrepreneurs got both inspiration and practical advice from his most recent book, The Art of the Start. I only read the first book, The Macintosh Way. That book was a bit fluffy (Kawasaki was always more motivational than a deep thinker) but really brought home the idea of guerilla marketing introduced by Ries and Trout. His claims about his guerilla marketing for the Mac would have been much less convincing if we’d known how poorly the Mac sold in the mid-1980s — a reality disguised by the Kawasaki book(s) but brought to light in the definitive Apple histories by Jim Carlton and Mike Malone

However, Kawasaki was truly brilliant in his maxim “ask permission, not forgiveness.” His trick for getting around Apple’s bureaucracy is a universal truth for keeping organizational vitality in large established organizations — those that stamp out (or punish) such initiative (particularly in tech) are doomed to ossification and premature death. As a teacher I often mention it to my students, but as a public employee, I wish I could apply the maxim more often.

Since leaving Apple in 1987, Kawasaki had a series of brief stints at various small companies (and once back at Apple) but never anything that had the impact of his original role in promoting the Macintosh. This month, there has been speculation and increasing details on his latest venture. This week, the Wall Street Journal’s Silicon Valley columnist Lee Gomes commented (no registration required) on Kawasaki’s latest venture:

The result is Truemors.com, where people can use email or the phone to call in "true rumors" they've just heard. The submissions are categorized -- "Business," "Entertainment" and such -- then users vote for the ones they like the most. Last week, with the site open only to test users, the top-rated Truemor was that British singer Amy Winehouse would be the new Bond girl.

For someone associated with one of the great tech products of all time, who regularly tells his audiences that the only companies worth starting are those that can change the world, Mr. Kawasaki's start-up seems, not to put too fine a point on it, a little cheesy.

As Gomes and Wired (among others) note, Kawasaki’s new business is heavily swathed in Web 2.0 hype.

To me, Kawasaki’s entry is a convincing sign that the Web 2.0 fad is peaking. The hype has been promoted by a book publisher trying to sell books and conference registrations. Of course the web is changing, but it’s a silly or self-serving idea that there’s a discrete transition (2.0 vs. 1.1 or 3.2) or that all of these changes are somehow part of a unified industry change.

Once the hype/fad/boomlet crashes, then we’ll see which business ideas are sustainable and thus can survive without the hype. There is the obvious parallel to the dot-com crash, when the viable businesses dropped the “.com” and went back to selling their goods (and stock) based on a real value proposition rather than riding a web fad.

This posting is a little stale because my blogging software interacts badly with the WiFi security/authentication policy at the conference site. The net effect was that I wrote this article twice, and each time when the network blocked the posting, Ecto lost the posting and all its changes. Not exactly user friendly.

Technorati Tags: Apple, Web 2.0

The Grand Tour

I will be doing only a limited amount of blogging these next two weeks while I’m traveling in Europe — mainly catching up on stories on my hard disk rather than researching new stories. Meanwhile, here is a supremely off topic and self-indulgent reflection on what I’ll be doing.

Once upon a time, when it took a week or more to steam to Europe, Americans visited the Continent in a “Grand Tour,” of the sort ridiculed by the movie “If Today’s Tuesday, It Must Be Belgium.” (I don’t know if it’s that different when Europeans want to cram into one trip the Statue of Liberty, the Washington Monument, Yellowstone and the Golden Gate Bridge.)

When I was 22, I conned my employer into relocating me to its Dublin office for two months. After that, I took my InterRail pass, one suitcase and a wad of various currencies to visit 5 countries in two weeks. (The trip was was cut short when my spending went over budget, and fortunately I could catch an earlier PanAm flight back to my apartment in L.A.) That was my first trip to Europe, but since then nearly all of my visits have been single-city jaunts, popping off the plane to visit a trade show in Hannover, or a conference in Paris, Helsinki (twice), Aachen, Copenhagen or Geneva. (We won’t count the time my mom broke her arm in Rome and needed someone to fly over to carry her bags so she could enjoy her first and last trip to Italy).

Nearly 27 years later, over the next two weeks I’m doing my 2nd Grand Tour of the Continent. This week I’m in Paris, both keynoting and presenting a paper at one of two open innovation tracks at the European Academy of Management conference. The invitation to keynote at an academic conference is a great honor, not one that I thought I’d enjoy this early in my career. (To be honest, there are many tracks, each with its own keynote speaker(s)).

Next week, I’m presenting invited papers at the business schools of Switzerland’s two technical universities — EPFL and ETH — which at their request will be two chapters from our in-progress book. In addition to a nice dinner and a chance to make new friends, I’ll be around a larger audience for my work than I’m likely to find at home. In between, I’m also visiting two co-authors to work on papers.

This is my longest and most logistically complex trip this year, with 5 planes and 7 trains (not counting intracity trips). But then it’s a very busy year, with plans (thus far) to present at seven academic conferences and invited papers at five universities — all between January to October.

Before I got tenure, I thought tenure meant “take a sabbatical and work on what you think is important.” In my case, that meant the book. But I now realize tenure also means “take as many trips as you can afford” and “present as much as you want without regards to the tenure committee.”

Technorati Tags: open innovation

What is Sun thinking?

Last week was Sun’s annual JavaOne and thus its major announcements. This year, the big news was the new “JavaFX” brand, and the two products — “JavaFX Mobile” and “JavaFX Script.” Maybe I’m dense, or rushed, but I don’t get the logic of either one — the branding, the need for the technology, or how it fits with existing ecosystems.

JavaFX Script

Let’s start with JavaFX Script. Technically, it’s a statically-typed language with declarative features intended to tie together Java (particularly Swing) GUI code. Its emphasis on “rich” applications overlaps (if not compete with) the JavaScript-based Ajax, Adobe’s Flash and Microsoft’s new Silverlight.

Declarative languages are the best way to specify user interface/code interactions, as Mac GUI authors have known for more than 20 years. However, despite Sun’s claim to a technical need for yet another scripting language, the aims of JavaFX Script (or whatever they end up calling it) seem more about keeping Java programmers writing in Java, and developing for a Sun-controlled architecture.
Meanwhile, the latest language option raises questions about last fall’s decision to hire the “JRuby Guys” and efforts to drive Ruby development to the Java-native interpreter.

The open source and branding strategy are similarly confusing:

What Is Project OpenJFX
Project OpenJFX is a project of the OpenJFX community for sharing early versions of the JavaFX Script language and for collaborating on its development. In the future, the JavaFX Script code will be open sourced. The governance, licensing, and community models will be worked out as the project evolves.

What Is JavaFX
JavaFX is a new family of Sun products based on Java technology and targeted at the high impact, rich content market. …

Why is the JavaFX Script name so long?
Although the official name of the scripting language is JavaFX Script, we expect many programmers to just call it JavaFX as it is the core of the JavaFX family.

Everybody got that? JavaFX Script is going to be open source someday, you should just call it “JavaFX”, and this “JavaFX” has the same name as Sun’s new family of products (of which these are but the first two). If this is the long-term strategy, it’s hard to see that JavaFX Script ever becomes independent (like Eclipse) rather than captive or even dual license (like MySQL).

JavaFX Mobile

The other half of the JavaOne announcement was JavaFX Mobile.
This is based on the work of SaveJe, a spinoff of Lucent that won $71m in VC funding, and strategic support from European carriers Orange and Vodafone. Although people like the SavaJe technology — adding mobile phone features into the Java virtual machine — it ran out of money last fall and then all its IP was acquired for a song by Sun last month.

Again, Sun seems to be trying to compete head-on with Adobe (née Macromedia née FutureWave) Flash, which has successfully turned middleware into an API platform that pre-empts operating systems.

Various accounts say that JavaFX is targeted at low-end phones or "multimedia phones". (If they are the same then all phones are multimedia phones). So Sun has another six months to figure out a strategy before it ships first product. Meanwhile, it hopes to commoditize phone operating systems, pleasing carriers like Orange and Vodafone while pissing off major mobile phone customers like Nokia, Samsung and Motorola.

What does it all mean?

That Adobe, Microsoft and various second tier vendors (like Sun) want to own rich Internet content is not all that surprising. But what is interesting all these vendors are vying to offer complete solutions for mobile phones, which already has Symbian, Palm, emerging Linux solutions as well as the phone makers’ in-house solutions.

Two things seem like larger lessons:

1. Unlike with the original Acrobat, or Flash, none of the competitors are willing to let a new platform win by default. (Even MS-DOS had competition briefly from CP-M/86 and of course recently from Linux).
2. So far, all of these options (except Linux) seem to be proprietary software stacks with only an occasional bone of openness (such as the JavaFX and Silverlight open source promises). Either the vendors are right, and buyers (whether end users or hardware makers) don’t care about openness, or there’s an opportunity for someone to compete using openness as a weapon.

Technorati Tags: Java, Sun Microsystems

Do no evil — through total world domination?

The front page story in Friday’s San Francisco Chronicle had an interesting lead:

From Madison Avenue to Hollywood, some of industry's most powerful entities are marshaling their forces to combat a company that has risen to the top of the business world in less than a decade.

Fear is the motivating factor. And with every passing quarter, there is more to be worried about if you count Google as a competitor.

The news peg was last week’s rumors about the possible alliance (or merger) between Microsoft and Yahoo. That purported alliance, in turn, is part of Microsoft’s ongoing campaign to build alliances against Google by claiming “as the enemy of your enemy, I’m you’re friend.” Reporter Verne Kopytoff found someone to give voice to his theme: “Essentially, the new Microsoft is Google.” The Chronicle enumerated the laundry list of fears by Google rivals.

Google’s long tentacles have many running scared: Silicon Valley: Concerned that Google’s outsize ambition is squashing startups and raising salaries in the tech industry. Madison Avenue: Fears that Google is taking over the advertising business and making established ad agencies irrelevant. Hollywood: Takes umbrage at widespread piracy on Google's YouTube video service, claiming it violates copyright law. Privacy advocates: Worry that Google’s collection of personal information will create a massive database that can be mined by government. Source: Chronicle research

As its direct competitors have found, the breadth of Google’s control of certain aspects of our information economy are daunting. In the US, it leads its nearest search competitor (Yahoo) by more than 2:1 (54% vs. 22%). The verb “google” has become synonymous with “look something up on a search engine.”

The company has grown to $143 billion market capitalization — more than most of the Fortune 500 — with only 12,000 employees and revenues that rank it #241 on the list. In fact, Google’s market cap is nearly that of the leading firm on the Fortune 500, Wal-Mart, which has $197 billion).

This morning’s Chronicle reports that The City is willing to help Google in its goal of total world domination. The city controller blessed the mayor’s plan to have Google and EarthLink provide free citywide WiFi access, in hopes that some subscribers will pay $22 a month to triple their throughput over the tease version. However, some of socialist members of the city council* are hoping for a government-owned solution.

Friday’s story suggested that Google may falter, or, if it doesn’t falter, it will be a more benign monopolist than its predecessors. I predict that the latter prediction will be tested before the former.

* In the City-County of San Francisco, the city council is formally known as the County Board of Supervisors.

Technorati Tags: Google

Apple shareholders decide not to axe golden goose

The papers this morning were trying to build up a false sense of drama about today’s meeting of Apple shareholders. The Merc reported:

Prominent research firms are urging shareholders not to vote for the re-election of most of Apple's board in light of its handling of the company's stock-option-backdating controversy. Activist shareholders are calling for the company to change the way it grants options to senior executives and to reform its executive-pay practices.

As it turns out — surprise! — shareholders decided not to kill the goose that has been laying all those golden eggs. Maybe it’s because the allegations, complaints and shareholder proposals came from all the usual suspects:

“There's a lot of different issues at Apple,” said Rich Ferlauto, director of pension and benefits policy at the American Federation of State, County and Municipal Employees union, which plans to send a representative to Apple's meeting.

Of course, the articles had to admit there was no chance of Apple actually taking real sanctions against the leading beneficiary of the questionable option grants, CEO Steve Jobs.

For many investors - the majority of whom likely won’t be at the meeting but will vote on the company’s directors and the non-binding proposals presented there - a company's financial performance trumps concerns about how executives are paid.

Such concerns are just “noise,” said one portfolio manager who owns Apple's stock, but asked not to be named.

In the end, all the activist proposals were voted down, and Jobs got a few laughs at the expense of his critics:

When pressed by the Teamsters, Jobs said, “If you feel so strongly about this, you should run for a position on our board of directors next year.”

Why no consequences for the (reported) option backdating? It may be that shareholders have noticed that Apple’s equity performance has far outstripped its industry peer group over the past five years, and thus the ends justify the means.

Or it may be because they believe there’s no “scandal.” Perhaps they share the skepticism of a few analysts towards the whole backdating controversy. But as I analyze it, the anger over the stock option grants at other companies has been over letting execs time their strike price at the bottom, so they can make money off of cyclical fluctuations of the price.

More simply put, other shareholders are mad because incentive payments are being made to reward random noise rather than actual business growth. On the other hand, if stock option grants are supposed to provide incentives to align the interests of managers to shareholders, Apple shareholders believe those interests (however the grants were timed) have been well aligned.

Technorati Tags: Apple, Steve Jobs

Why buy the cow when you can get the milk for free?

Decades ago, I worked for a tiny suburban daily newspaper — one of the smallest in California. Most of our readers got their news from TV, so our paper gave them the local comings and goings that the big city stations couldn’t fit into their 22 minute (or 44 minute) broadcasts. I bailed out in 1983, despairing of ever making enough money to pay for my car insurance and telephone bill, let alone support a wife. Not having taken macroeconomics, I didn’t realize we were in the middle of a recession, that classified ads were at the bottom of their cyclical ebb and flow, and that (as it turns out) if I waited six months I could have won a 50% pay increase when the San Diego Union started hiring from local papers.

But over the long term, my timing was impeccable — U.S. newspaper circulation peaked in 1984, and has been falling ever since. In the most recent audit report, daily circulation fell 2.1% from a year earlier (3.1% on Sunday), with some papers losing 5% or more and only a handful of papers showing any gains. Of course, their onetime classified ad cash cow has been supplanted by craigslist and eBay.

On Monday, Walter Hussman, the publisher of Arkansas’ largest newspaper said that newspapers have no one but themselves to blame, by helping to commoditize the industry over the past decade:

One has to wonder how many of the newspaper industry's current problems are self-inflicted. Take free news. News has become ubiquitous, free, and as a result, a commodity. Anytime you are trying to sell something that becomes a commodity, you have lost much of the value in providing that product or service.

Not many years ago if someone wanted to find out what was in the newspaper they had to buy one. But not anymore. Now you can just go to the newspaper's Web site and get that same information for free.

The newspaper industry wonders why it is losing young readers. Those readers might be young, but many of them are smart, not to mention computer-savvy. Why would they buy a newspaper when they can get the same information online for free?

Some newspapers had tried to charge, such as the San Jose Mercury-News, Silicon Valley’s newspaper of record. It sold subscription content on AOL in 1993 and on the web in 1995, but abandoned subscription fees in 1998 in hopes of gaining more advertising revenues. Of course, one factor was that tech news was available free from CNET and ZDNet. Slate magazine tried to charge, too, but lasted only a year.

Beyond his intuition, Hussman was able to conduct a quasi-experiment, by comparing the circulation figures for the Arkansas Democrat-Gazette (which still charges for content) with the comparable Columbus Dispatch (which stopped charging). For the weekday paper, the latter lost 5% more subscribers than the former.

Hussman points out that the newspaper industry spends $7 billion a year on gathering news. He’s right that the industry needs to recoup that somewhere, and commoditizing its product is not in its best interest. But he doesn’t say how the industry can compete with the free alternatives, although he does hint that the owners of the Associated Press (i.e., 1500 U.S. newspapers) should force AP to renegotiate the sweetheart terms it’s given to portals such as Yahoo, MSN, etc. (Last year, AP did get Google to finally pay forsome content).

Ironically, reading Hussman’s column would normally require paying a fee, because it appeared in the Wall Street Journal, one of the few newspapers to consistently charge for content. However, the Journal offers some of its editorial page articles free on OpinionJournal.com to increase its political influence.

Technorati Tags: business models, Internet

Apples and Oranges

As the US rollout of the iPhone approaches, Apple still has not announced its overseas strategy — whether the planned December intro in Europe, or any release elsewhere in the world.

Apple is notoriously secretive, but the (plausible) rumors are that Apple will choose a single pan-European carrier and thus (as in the US) a phone locked to one carrier. Bloggers on April 21 and May 6 have claimed Vodafone is a “lock” (all pun intended).

I find more plausible the recent posts that suggest that Apple is debating between Vodafone and Orange. This is consistent with Apple’s US strategy, where it got the two leading carriers to bid against each other. Maybe Vodafone has the broadest reach, but they are also the global carrier most trying to commoditize handsets. No single Vodafone action would undercut its strategy more than carrying the Apple-branded iPhone with some subset of Apple restrictions, while Apple is not going to let any carrier dictate terms without getting a competing proposal.

Most plausible is the speculation that the iEuroPhone (EuroIPhone?) will support 3G. Still, the best (if least substantive) commentary was last week on Wired:

Has anyone else noticed the amount of insane speculation over this product? All over the web we hear every day that people won't buy it because of battery life issues, a poor touch screen experience or any other manner of nonsense.

You can't buy one. It doesn't exist yet. Why on Earth are people debating non existent problems with a non existent device?

Let's just wait and see, shall we? It's only six weeks more.

On a related note, UBS is predicting 850,000 iPhones will be sold in the first 4 months, 2.1 million total in calendar 2007, and (if you extrapolate) more than 8 million iPhones in 2008. Given there were only about 145 million handsets sold last year in the US, those numbers confirm to me that Apple expects significant overseas sales in 2008. But then, any predictions of iPhone sales prior to its launch are merely speculation.

Technorati Tags: Apple, iPhone, mobile phones, Orange, Verizon

Repositioning the videoconference

Last month I went to Cisco to see a demo of its high-end videoconferencing system, introduced to the world last October. I saw a demo of both the Cisco TelePresence 3000 — with three 65" HDTV screens and a list price of $299K — and the Cisco TelePresence 1000, with only one screen at a mere $79K. As advertised, it was a lifelike experience, and my colleagues and I agreed that it was a great way to run a meeting if you could afford the capital cost and the bandwidth.

Part of Cisco’s effort to justify the $300K (and the 6-9 Mbps to run the three screens) is avoid using the term “videoconference,” which covers everything from PC-based solutions to other high-end solutions. Its two major HighDef rivals take a different tack. HP takes the V-word head-on, proclaiming “HP Halo: Light years beyond video conferencing.” Only Polycom — the longtime leader in low-end solutions and overall unit sales — refers to its HD products as “Professional - High Definition Video Conferencing.”

Of course, “videoconference” is part of the lexicon and “TelePresence” is not. Imagine my surprise last week when I was watching an episode of 24, and presidential chief of staff “Tom Lennox” (former childstar Peter MacNicol) comes on screen and announces to VP Noah Daniels (Powers Booth):

The Russian president is calling for you in the TelePresence suite. He’s insisting on a face to face.

How about that? With two sentences, we have

1. an introduction to the buzzword;
2. the implication that this is something important for the heads of state of major powers to use for their most important meetings; and
3. the suggestion that a foreign president considers using the Cisco videoconferencing product as equivalent to a “face to face.”

Other than dropping the brand name — and the lingering Cisco logo on the TV screen — the product placement seemed natural and very effective. Looking at the Russian official arrayed on the screen (and over the shoulder of the US team) both made for a dramatic confrontation and showed the technology’s potential.

Cisco has a Flash clip of the sequence on their website, which also shows clips from an October promo of TelePresence 3000 on the Fox TV show Vanished (whatever that is) as well as placement of other Cisco products on 24. (For hardcore 24 fans, the distinctive ringing of the telephones at CTU Los Angeles is recognizably that of a Cisco VoIP phone). The level of product placement in 24 has drawn complaints from fans, but the use of a TelePresence suite seems more plausible than the claim that CTU network is impervious to attack.

Still, I wonder about the efficiency of using a consumer TV show as a way to sell a high-end business product. Of course, early in the product cycle, the goal is brand (and even category) awareness rather than closing a specific sale. And it could be relatively cheap: one guess is that the placement costs $150K — less than one TelePresence 3000.

Photo credits: all pictures taken from ”24 (Season 6): 1:00 a.m.-2.00 a.m.”

Technorati Tags: Cisco, videoconferencing

Brits sabotaging VoIP too

So it’s not just the American and German carriers trying to destroy mobile VoIP any way they can, but also the Brits.

Consultant Dean Bubley analyzes the Vodafone and also 3 and T-Mobile UK data plans. I’m rushing off to my day job, but my reading of the various contractual contortions is “unlimited use” for mobile Internet is not the same as what we’ve come to expect for the wired Internet. In some cases it discriminates against particular uses like VoIP, while in other cases it’s just about the bandwidth use.

There may be a legitimate technical basis for such restrictions, and some of the stuff about running server farms is similar to what residential DSL and cable modem users face (at least in the US). Nokia, DoCoMo and the other mobile phone promoters have been telling us for years that most of the world will get their Internet over their phone, but for now they’re offering dialup speeds and don’t even want customers to use that pipe full-time.

The VoIP regulatory issue will eventually be solved, leaving the technical network capacity issue which the operators must eventually solve. (EV-DO and USDPA are a lot better than CDPD so they’re heading in the right direction). It seems doubtful WiMax will be any better (given the spectrum limitations), but perhaps “4G” (whatever that is) will make the incrememtnal cost of wireless bits free.

Technorati Tags: 3G, mobile phones, VoIP

Baby Bells come out blasting

Back in February, Skype asked the FCC to open up cellular networks. While some called this a “Cartefone for cellphones,” Skype’s arguments were less about wireline voice and more about the FCC’s 2005 wireline datacomm (i.e. wired broadband) precedent.

If the FCC backed Skype, it would mean that VoIP software, hardware and service providers could bypass carriers’ voice services, a spectre that global carriers just hope will go away. Not surprisingly, the two largest US cellphone operators and their trade association are opposed, and on Monday they filed additional objections.

Over the past week, the CTIA has posted a flurry of reports and memos against the Skype petition at their website. There are objections from the CTIA, their high-profile lobbying firm, Verizon executives, and economic consultants hired by CTIA and Verizon. I suspect the two reports from economic consultants alone cost over $100K. Skype is unlikely to get any manufacturers to openly oppose the big carriers, so they are clearly outgunned unless they can get some nonprofits to take their side.

Interestingly, some of the objections to Skype’s petition are being made on antitrust grounds. But strangely silent in the filings is the company that now calls itself AT&T — really Southwestern Bell and all the parts of old Ma Bell that SBC Ed Whitacre was able to stitch together before he acquiring the AT&T name. As SBC got bigger, the acquisitions got more controversial, particularly when SBC gobbled up BellSouth (and with it the other 40% of Cingular).

The Reagan Administration thought it was a good idea to break up Ma Bell, but now SBC and Verizon (NY Bell) have built most of it back up into a national telecom duopoly. Maybe a company called “AT&T” doesn’t want to be mentioning “antitrust” in front of the Feds right now for fear of waking the ghost of William Baxter (1929-1998).

Technorati Tags: Internet, mobile phones, Skype, VoIP

iOuija

Seth Godin has challenged pundits to pull out their Ouija boards and put themselves on the record:

Predicting the future of the iPhone is perfect bait for marketing pundits everywhere. How about a pool and we'll see who's as smart as they pretend to be? … I invite you to make a prediction, trackback it here and a year from now, we'll take a look.

On the one hand, Godin is pretty optimistic, predicting 2 million units in 2007. In the other camp is Laura Ries, who predicts

Early iPhone sales are likely to be brisk. Apple's amazing ability to generate PR will no doubt attract many Apple fans and early adopters to purchase an iPhone. Just like they bought a Newton back in the day.

But I stand by my prediction that the iPhone will not be a long-term success. What we will see instead is further divergence not convergence. Remember Apple's brilliant iPod is a divergence device.

While Ries refuses to be committed to a number, another skeptic, analyst Shaw Wu, predicted 3.5 million phones from October 2007 to September 2008.

Ries’ skepticism seems rooted in the belief that the iPhone will die with all other convergence devices:

[T]he iPhone will end up in the convergence scrap heap along with the ROKR, N-Gage, WebTv and many others.

I agree with my (iPhone research paper co-author) Mike Mace that the iPhone will succeed because it is primarily an entertainment device, avoiding the convergence zone of death that Ries alludes to.

Also among the iPhone cynics is Steve Ballmer, as interviewed by USA Today:

Q: People get passionate when Apple comes out with something new — the iPhone; of course, the iPod. Is that something that you'd want them to feel about Microsoft?

Ballmer: It's sort of a funny question. Would I trade 96% of the market for 4% of the market? (Laughter.) I want to have products that appeal to everybody. ...

There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.

I see a couple of problems with Ballmer’s claims. First, despite Ballmer’s innuendo about the small Mac market share, it’s Microsoft that’s the niche vendor in MP3 players.

Second, Microsoft will never get 70% of the mobile phone market — Nokia and the Chinese won’t let them. Right now MacNN notes that Windows Mobile has less than 5% of the smartphone market (or about 0.35% of the overall market), so if Apple hits its targets, within two years it will have passed Microsoft.

My prediction: the iPhone ramp-up is going to be slow, due to manufacturing problems and the Cingular exclusive, and thus only sell about 1.5 million phones in 2007. Over time, they will solve this with model proliferation beyond Cingular and eventually tap overseas markets. Therefore, I believe Apple will beat its (deliberately understated) prediction of 10 million phones sold for June 2007 - December 2008. If so, Apple’s role in mobile phones would be dwarfed by the big four (Nokia, Motorola, Samsung, Sony Ericsson) but more influential than Microsoft.

Footnote: Laura Ries is a branding expert who is the ultimate brand extension — an attempt by famed marketing expert Al Ries to extend his brand to the next generation. Al Ries is the co-author of two of the most influential marketing books of the 1980s: the 1986 Marketing Warfare (which defined the concept of guerilla marketing) and the 1981 Positioning (which introduced the term to most readers for the first time). The latter ideas have been elaborated by others, but the former remains a classic (up there with Sun Tzu and von Clausewitz).

Technorati Tags: iPhone, mobile phones, smartphones

Non-compulsory sharing

One of the original goals of the GPLv3 was to make application services trigger the compulsory sharing clause. Now CNET reports that Google has shared its changes to MySQL to improve its reliability and manageability.

Google is famously secretive, treating most of its internal technical and human systems as trade secrets. Despite this, it’s decided that it’s worth sharing its MySQL changes — even though it doesn’t have to. Perhaps it wants its changes to become part of the main distribution, as I found Lawrence Livermore when shared its Linux clustering changes. Or maybe it’s hoping others will build upon and improve its code.

Either way, sharing happens without holding a gun to people’s heads. It happens in BSD. It happens in Apache. Sure, there’s a tension between common and private interest, but sharing already happens today when it’s economically rational.

Technorati Tags: compulsory sharing, Google, GPL