ATRACs of my tears

Sony — the Japanese master of proprietary system integration — today announced that it’s surrendered in an important front of the consumer electronics standards wars:

Acknowledging its proprietary audio technology was a marketplace flop, Sony Corp. is shuttering its Connect digital music store and will open its portable media players to other formats.

With the death of the download store goes Sony’s ATRAC proprietary DRM format — although the AP story implies ATRAC may survive in the domestic market. American and European music players will instead support MP3, AAC (the format used by unprotected iTunes files), and of course Windows Media Audio.

As the AP story continued:

Sony Connect launched in 2004, but like other online music services, it has had a tough time competing against Apple Inc.'s iTunes Store, which is tied to the market-leading iPod portable player.

I’m not sure what galls the Sony execs more — losing to Apple (which it could have bought for a song in the 1990s) or having to license Microsoft’s Windows Media to have a viable product. Both must be creating a few tears around the Sony building in Tokyo’s Minato ward.

Yes, I know the title refers to a Motown or Warner/Elektra/Asylum title. No metaphor is perfect.

Technorati Tags: DRM, iTunes, MP3, Sony

Too cheap for my own good?

I usually work at home, where I have good computers, a printer, a (usually) adequate Internet connection and all my books. Usually it’s the most productive place to work.

Today isn’t one of those days. This afternoon the temperature is in the mid-90s here in the South Bay.

Today is a “stage one” power emergency for California because the projected peak demand of 49 gigawatts is approaching the state’s system capacity of 49.8 gigawatts. We are supposed to conserve energy by not using A/C, but (to conserve energy, money and reduce pollution) we never bought A/C for our house — so there’s nothing I can cut.

Today is also a “spare the air” day according to Bay Area air pollution regulators — which is usually triggered in the summer by projected high levels of ozone. There are limited transit subsidies available (but only in the morning) but transit isn’t very useful in getting to our off-campus MBA center (ca. 1:20 one-way instead of 0:30). Mondays I take the (light) rail because service is relatively convenient to downtown SJ.

I suppose if I had a Prius, I could drive around town in my air-conditioned splendor and feel good about “saving” energy. Instead, I’m at home for another two hours hoping to be able to concentrate as sweat drips off my brow (OK, more than anyone wanted to know). If work were closer with better parking, I’d be there already: back in Oceanside, I had a 7-minute one-way commute, making the prospect of driving to the A/C much more appealing.

More evidence of total world domination

In my MBA class tonight, we talked about the disruptive impact of VoIP service on the telecom industry. At the end of our discussion of the various firms offering VoIP service, I asked:

Professor: Who’s going to be our VoIP provider 10 years from now?
Student (enthusiastically): Google!

(I didn’t see who it was — so whoever made the prediction should take credit.)

Yes, we’d mentioned the VoIP service available with Google Talk, Yahoo! Messenger and the like. Perhaps my class was sensitized by the ongoing mention in my blog of Google’s aims for total world domination.

Perhaps — whether or not they know Google has a 29% return on sales and is throwing off $4 billion/year — they see that Google has the resources and strategic intent to diversify into voice communications in a serious way.

Or maybe — after discussing the Skype reliability debacle — they were hoping that if anyone could provide quality, scaleable services for free, it’s Google.

Technorati Tags: commoditization, Google, VoIP

Monetizing innovation

Sometimes an engineer or scientist will make a technical breakthrough but have a hard time figuring out how to monetize it. If markets exist for innovations — as with open innovation — then such breakthroughs can readily be commercialized, whether or not the innovator has the relevant complementary assets (as defined by David Teece in 1986) to bring them to market.

Last week, George Hotz announced that after working all summer, he had unlocked the iPhone so it can be used on other networks. While he graciously credited his collaborators, Hotz won 15 minutes of fame that has included national TV and his own Wikipedia biography. (He had also previously won some recognition as a finalist in the 2005 International Science and Engineering Fair). He used the new media — a blogspot blog and YouTube — to get the word out. But it seemed like a curiosity — and an advertisement for future employment — rather than something that could be directly monetized.

Over the weekend, he announced that he had traded his unlocked iPhone for a Nissan 350Z, a story picked up by the news media today after he finally arrived for his first week of college. He got the car from a cell phone refurbishing company that wants him to teach unlocking secrets to its other technicians — whether or not they will be able to unlock and sell iPhones.

So this is a clever way to commercialize something that may or may not be legal to commercialize. Even if the invention cannot be commercialized, the ability to invent can.

As various commentators have noted, Hotz has great career possibilities, although I’d add two caveats. One is that many early stars flame out, so hopefully he won’t let the acclaim go to his head. The other thing is that his choice of car is exactly the model that a reckless 19-year-old last month wrapped around a tree here in San José, killing himself, his teen passenger, and two pedestrians. Let’s pray that Mr. Hotz has more responsible parents than the late (not so great) Z-head of Almaden.

Technorati Tags: iPhone, open innovation

What, me worry?

Two weeks ago, I saw it as a disadvantage that Skype went offline in an unprecedented service failure. Shows how little I know.

Globetrotting Business Week correspondent Stephen Baker has set me straight. Last week he got around to writing a magazine article. (Shows how 20th century I am — I thought that’s what a senior writer for a news magazine normally did.)

But in his article from this week’s dead tree edition, Baker proclaims:

Say you have a crucial conference call in an hour and your phone goes dead. What do you do? A generation ago, this wasn't much of an issue, at least in the U.S. Phones in the days of the Bell monopoly were engineered to be “mission critical.” You picked up one of those heavy receivers back then, and the dial tone was as prompt and reliable as water from the tap. It worked.

Yet these days, even as we pack global multimedia in our pockets, phone service sometimes seems to march backward. …

Are communications getting worse? Not by a long shot. We’re surrounded by miraculous machines and services, most of them calibrated to a level software engineers have long called “good enough.” In the right circumstances, good enough is great for the entire economy. A marketplace that’s not hung up on fail-safe standards is open to risk and innovation, and drives down prices. Ever since the dawn of the PC — the archetype for a good-enough machine — inventors have been freer than ever to piece together and launch their visions. Some are brilliant, some are half-baked, many are a blend of the two. A precious few are up and running 99.999% of the time — Bell's old standard. But they cost far less to build.

Clearly I’ve been worrying about the wrong things all these months, like telecommunications services that are reliable enough for real business use. I guess I should have adopted the adolescent motto: “What, me worry?”

Experimentation is good. Unreliability of mission-critical business infrastructure — whether a PC, cellphone or VoIP phone — is not.

The other alternative is more interesting. Linux used to be much less reliable than Unix — a decade ago, no one would consider using Linux for mission critical applications. That’s no longer true: open source users now enjoy the benefits of the millions that IBM has poured into Linux since 1999 — in addition to the the contributions of Intel and HP and others funded by/through OSDL/LF.

Not controlling the end-to-end Internet infrastructure makes it harder to deliver voice-quality signals across a network entirely controlled by Bellheads. Still, if the Internet was designed to reliably transmit packets in the event of nuclear war, transmitting a simple voice call should be a solvable problem. Although the solution might come long after Business Week has stopped killing trees for Messr. Baker’s observations.

Technorati Tags: commoditization, Skype, VoIP