31 October 2005

What's a record company?

An excellent article in the Sunday Observer Business Section from John Naughton about the failure of the record company's to embrace technology to the advantage of all.

It's the first time I've come across the specific breakdown of how revenue is shared from traditional CD sales (not sure how accurate and whether that is the same whether Amazon or via an HMV store). You don't really have to do the maths to see how compelling the arguments should be for doing the right thing.

My only quibble is "In the end, of course, rationality will prevail..". Well, it's not a quibble it's more a question of when we can expect the "end" to come? Somehow I'm beginning to think it may be a long while.

And then, that's just the music business. What about the video side of things (movies, tv)? Why do these businesses deserve protection from disruptive change when no other industries have had such protection? If it was about protecting the copyright holders, I could perhaps understand it. But in fact, they are perhaps the biggest losers of all (incidentally, I believe that copyright holders actually get LESS of a cut from online sales - a point John doesn't make. Can anyone confirm or correct this?).

When the industry consolidated to 4 big players, it was clear this sort of thing would happen. This is a clear case of a cartel/oligopoly. It will be revisited in countless business case studies in the future. Governments need to intervene to free this market URGENTLY and should be reversing legislation that counters fair use and fair distribution. They could start by freeing the copyright holders from exclusive contracts and ensuring that different channels of distribution (eg CD, Online) are via separate companies.

I'm getting quite pessimistic on this subject and think we'll still be debating this in 5 or more years. Each time we watch/listen to something, we'll be forced to watch/listen to a lecture on pirating (those FACT ads at the start of most DVD's are really starting to grate - it's like seeing those Bacardi ads in the cinema over and over again, only worse).

What is perhaps needed is a revolution. Someone somewhere defines an agreement (eg Creative Commons or GPL-style - but for the consumer - let's call it a Digital Rights Agreement - DRA) that we can sign up to about fair use and non-piracy. An agreement that protects the copyright holder, but one that allows a consumer to use the material they have purchased in a reasonable way. If you sign up to DRA (once, not everytime you buy), you get indemnified against action from the labels unless you have violated the agreement. The labels couldn't afford the lawsuits. And, they would lose because the agreements would be seen as fair. But this means people agreeing to SOME form of a DRM (either active or passive) that allowed the DRA to be adhered to. I don't really have a problem with this, but for some any DRM seems to be a no-no. Would enough people sign up to something like this? Could an agreement cover all the ways in which people could (mis)use the rights? And could it adequately take into account changes in the future which might render the agreement useless? I'm going to give a bit of thought to the rights I think would be reasonable, and revisit this in another post. Open Source changed computing for the better. We need something similar NOW.

28 October 2005

Mobile Music

Great article over at Wired magazine by Frank Rose on the Battle for the Soul of the MP3 Phone (not just about the ROKR failure but that explains a lot as well)

One piece of information I learned that explains a lot is that the record companies are demanding a consistent percentage of the revenues from downloaded songs. Today that figure is around 70% of the revenue. Fair enough you might say. But then the cost of distribution comes in. Frank quotes a figure of between 15 and 50cents just for the bandwidth cost of downloading a track. So, the record companies want the same share again, which means the distributor must add between 45cents to as much as $1.50 to the price of the track just to keep the labels happy! Now, I would imagine SOME people might pay a premium to have SOME tracks downloaded instantaneously. But if that premium is essentially 2 or even 3 times the price from a normal online store, they just ain't going to do it that much. And remember, most people getting it to a mobile will also want to have a track downloaded to their computer for back-up purposes at the least. That also costs money.

The labels want more (more than they get from Apple, and even more from the telcos). The telcos need/want a premium price but would of course rather share less. And the phone manufacturers would want something for making a decent phone that does it all. The labels maintain people are willing to pay more than 99cents a track. And indeed they probably are for SOME material. There are certain bands I like that I would pay more for their music. But then there are others I wouldn't try if they cost more than I pay today. And indeed, there are some I just don't try today because it's not worth the experiment. The labels trot out Robbie Williams or a few other examples, but really, there's no point in using 0.1% of your artist roster to justify a point. Jupiter Research have consistently maintained the sweetspot is around 99cents per track. That is what will generate the biggest volume. And that in the end is what is best for the industry. $3 tracks are not going to fly - at least in volume terms.

So, the telcos are pretty stuffed as far as music goes. Until they can agree a reasonable deal with a greedy cartel of labels, they can't really do much to get into the volume market. Is there any sign of that happening? I don't think so. Even then I think there is a fundamental flaw in the telcos thinking they are going to have a real business selling downloads.

Take the UK. There are 5 mobile telcos not including the virtual operators (eg Virgin). People are not super-loyal for the most part towards any one brand. Even if they are, why on earth would they choose to buy music from the Orange music store for example? This would tie them in much much more than they would want. The phone co's think they'll go for this but they won't. So, surely using WMA and MS DRM would make this less painful? Perhaps, but so far that's unproven. Who in their right mind wants to pick up a collection of online music from multiple stores? Do they really expect it to keep on working for a long long time on whatever gadgets they own and whatever networks they are on? And from what I've seen, different stores offer different DRM's. That's a recipe for customer confusion.

Even then, let's assume the telcos strike a good deal with the labels and can offer a competitive download service. Assuming the market is split 20% each in the UK to the 5 operators and ignoring the virtual operators, that means the very best any operator can do is to corner 20% of the market (after all, an Orange customer is not going to be downloading their material from a Vodaphone music store). To get 20% of the market, you'll need to do so well that ALL your customer base uses your service in preference to any other music service (Apple, Napster, Real, Yahoo....) To limit yourself to your own customer base is not the way to make this successful. So, all the companies are destined to have a niche business which in the end cannot be sustainable.

Why, oh why, don't they realise this? They could do a deal with a major company (such as Apple, or maybe Real or Napster if Apple's too greedy) and offer a compelling service. Don't try and brand it OrangeMusic for goodness sake. You didn't brand it OrangeText did you? It was called SMS and it worked, whatever the network. Your customers think you know NOTHING about music, so don't try and pretend you do. Make sure people get a good price for all their music but pay a premium for having it NOW; Offer value-added services which can utilise the value of the network; understand people want the music on their phone, on their mp3 player and in their home; and they want it securely and with reasonable DRM; and they want a decent phone to play it on - one that has real benefits from being a converged device, not a compromise.

The longer they take in getting this message (and hampered by the greed of the labels) is manna to Apple to make the iTMS/iTunes/iPod so completely ubiquitous that the only deal they'll be able to do is with Apple on it's own terms. Music would have been a great way for phone companies to get a lot of their customers using data services. Once you've used your first data service, it's easier to do others. They are missing (and perhaps have completely missed?) a compelling opportunity to get their customers using the networks they've paid so much to license and create.

No wonder Apple is quietly (ha!) going about adding more and more features in smaller and smaller packages at price points the whole market can take in. The only other competition as Apple has rightly said time and time again is from the pirates. And that's what will happen with mobile music too. I suspect a lot of people in the business know all this (as the Wired article suggests), but that Corporate greed fanned by stupid lawyers "protecting" their clients' interests are what will prevent the right business model emerging and everyone missing out.

Disagree? Why not sign up and post a comment?

25 October 2005

This was fun...

This was fun...
Originally uploaded by Hobflickr.
Had to share this with you.
It's a Formula Ford car. I was braking from close to 100mph at this point failing to get it into 2nd gear for a chicane.
First time in anything remotely like this.
I'm sure you're not interested in my racing exploits (unless there was blood and gore which this time thankfully there was not). But, from a geeks perspective, I was fascinated to see how much the internet has changed so many hobbies in ways in which you wouldn't imagine.
The track was booked via bookatrack.com for instance. Such a service almost certainly boosts attendance at these tracks and allows even the small ones to eke out a living. In browsing around, I was also amazed how many different enthusiast sites there were for this type of racing.
And on another geeky note, if you look carefully above/behind the driver's head is a lens attached to a video camcorder which gave great footage as I traversed the track - something I'd assumed only F1 could do. An early candidate for something to go on the iPod video I'm considering?!)
I'd like to thank my friends Iain & Julie for indulging me.

17 October 2005

Why Firewire will never make it

For those of us wondering why the excellent Firewire standard has not become more mainstream, and why Apple increasingly seems to be distancing itself from the standard it did so much (but not enough) to promote, I refer you to this white paper by James Wiebe, Founder of Wiebe Tech - a maker of storage solutions.

It is a disappointing story of technical issues (though none insurmountable), failure to deal with said problems quickly, greed from various vendors involved, closed-mindedness, poor marketing, etc... While Firewire 800 promised so much - fixing many of the issues of Firewire 400, and having a significant lead over USB2 in so many ways, it's failure to be promoted as a mainstream consumer technology condemns the whole standard to be an also-ran - limited to the niche professional market for limited uses.

This does not reflect well on Apple. It is another indication that it falls down when it comes to the right time and methods to open up it's technologies

Fortunately for those of us worried that we'd be left with USB2, the article suggests that while this will be in common use for many devices, we will fortunately have another standard in the form of SATA II for higher speed requirements (such as storage).

James invites comments (though doesn't promise to answer them). I love this aspect of the blogosphere - we can get to understand topics in far more detail than we would otherwise have done. Do read the article if you're interested in this topic either technically or for a business studies analysis of what went wrong! Thanks James

14 October 2005

Sony PSP vs iPod

I have already seen some comments trashing the new iPod in numerous ways and suggesting it should have inherited many of the (video) features of the Sony PlayStation Portable (PSP). Now most of these comments are coming from people who probably haven't actually used the new iPod, but looked at the specs. And I suspect some haven't used the PSP either.

I came across this article from an online magazine specialising in the PSP, comparing the two. The author HAS experience of both and makes some excellent points. While suggesting that it might be unfair as the PSP is a gaming machine (but then isn't the iPod a music player, first?), it's a pretty damning article about the PSP (for non-gaming features) and Sony's approach to video overall. The author doesn't even award points to the iPod for it's portability (it's significantly smaller than the PSP of course) - he/she concentrates purely on features, costs, and the overall quality of the experience. The final sentence sums it up:

"...if Sony doesn’t pull together and start taking advantage of the PSP’s multimedia capabilities, they are going to lose sales of PSPs to the video iPod. It’s just that simple."

13 October 2005

After the curtains closed

(in relation to Apple's announcement on 12th Oct)

Well, I'm feeling quite good about my predictions this time. I've usually got many things way wrong, but this time I think my predictions were pretty accurate.

Let's deal with what I didn't get right.
1. I didn't forecast the iMac changes. But I understand why they chose this machine rather than release the pro-machines at such an event. This event had the eyes and ears of the world (and therefore switchers). The machine Apple would like people to switch to is the iMac. The faithful may be more interested in Powerbooks and Powermacs, but many of them aren't interested in iPods. For them (me too), I still think there'll be new Powerbooks in the next 2 weeks - and maybe Powermacs too. So, the iMac announcement was a pleasant surprise. Nothing earth-shattering but it gets some extra features all at the same price with a slightly smaller enclosure. I'm not sure about built-in iSight - I occasionally move mine around to give people other views of where I am - can't do that very easily with a fixed one. But then, heh, it's free!

2. My "finale" suggestion - rather tongue-in-cheek - of Madonna on stage with a pink iPod was also not correct. But I did note that Madonna's entire(?) video collection is on the store, and publicised heavily. I wouldn't discount a Special Edition version of the iPod either before Christmas to coincide with the release of her next album. Also note the gap now the U2 iPod is discontinued. Anyhow, a pink Madonna iPod is not for me!

On the iPod front, I'm pretty pleased with what I predicted. I had perhaps expected 80GB version for the top end. But then, the reduced size of the 60GB version more than makes up for that (I'm sure an 80GB isn't far away). I think it's great what they've crammed in. It's also very conservative really - as predicted. This is, first of all, the next generation music iPod - bigger screen and a few other features (30GB at lower end) that just happens to do video too, and at the same price as the old models AND in a smaller package. Can't argue too much with that. I predicted Steve would not trumpet them as full blown iPod videos - it's just an extra feature they've added - much like the first mobiles that had a digital camera. Having just bought a nano (though offered that to my better half), I now have more incentive to consider a new top end iPod rather than a second nano. If I'm typical (and I'm not) then that would indicate they've done enough to re-invigorate the top end models.

I'm also pleased with predictions of the content - the music videos and TV programmes in particular. I never thought there would be full blown movies - I don't think we're ready for that in all sorts of ways. I did perhaps think there might be special video podcasts - eg news, weather, available free. But maybe they'll come along (I think there's room for them in the current menu structure). I'm also pleased with the price point with one big exception I'll come back to. I felt £1.50-£2 would be doable. In the US, at $1.99, I think that's excellent though again with the same caveat I'm about to come to.

Clearly, they've focused on getting some content out there, and also providing it in a way that can be used FIRST in the home, and second on the go. The content isn't just for the iPod, but the iPod gives you the flexibility to view that content on the go. I also understand (but haven't tried it) that it should be possible to move recordings from, say, EyeTV to the iPod. So that's good too.

I had also predicted (though this was at the higher end of my prediction) the Airport Express 2 device. In fact we didn't get this, but we did get a Universal Dock with remote control. In essence this does much of what I had said, but is tethered to the computer OR to the TV/HiFi and requires physical connection to a source (eg the iPod). I think something that allowed the computer to play the video THROUGH the TV remotely would have been really cool. Maybe we didn't get that today because it's too much to take in? Or perhaps they needed something big for MacWorld in January? Or perhaps they really need 802.11n to settle to make it a workable solution? But really this device is just a Universal Dock with an Airport Express component. It shouldn't be too hard, and it shouldn't be too far away.

I'm not sure where they're going is EXACTLY where I personally would like them to go. I still don't see a family or a couple sitting in front of an iMac for couch-potato like (in)activity. And in my case I still prefer something more like the mini as the answer for my needs. But then in all reality I'm still on the bleeding edge of this use.

So after all this, what is there NOT to like?

Well, actually quite a few things. Mostly (hopefully?) fixable.

The biggest disappointment for me is the resolution of the video. I would snap up a lot of the music videos IF they were of DVD-quality (I don't need HD for these, yet). And ideally, I'd liked to have had them with 5.1 sound as on the DVD itself. I haven't tried them yet (I had problems using the store right after the announcement), so maybe they'll look better on my plasma than I expect. But I would have liked the option of having a higher resolution version for home use, and either conversion or a low-res stereo version for mobile use. I know there are issues with bandwidth here. But, I'm not going to buy these things even at the attractive US price point of $1.99 when I can get much better with a DVD off Amazon. I'll limit my use (if at all) to one-offs much like I buy the odd single off iTMS.

The next disappointment relates to the UK market. The videos here are £1.89 - admittedly within my initial price point. But then I had expected them to be full SD or ED resolution. I'm particularly disappointed that the price gap between singles and videos on UK iTMS is £1.10, when it's $1.00 in the US. Take the VAT off, and do some exchange rate calcs, and this difference is very substantial. I expect we're seeing the hands of the greedy labels again (what a pity as they usually get nothing from music videos - just publicity. At that price and quality they'll continue to get nothing!).

Also for the UK market there are no TV programmes available. Given the location of the UK announcement (BBC headquarters) I'd thought this was the obvious outcome. I suspect it will come, but I'd hoped for something (or a mention). Given the BBC doesn't do adverts and has already got a license fee from us, I might also hope that either they will cost a lot less here (for a low res version) or even be free to UK iTMS users. I'm sure US users would be happy to pay $1.99 for their BBC Office episodes.

Another gripe with the announcement is that they've just provided the FrontRow application on new iMacs as best I can see. Why can't I get this for my mini? Why couldn't I run this on another Mac? I could use my Bluetooth remote control for this on any Mac. I suspect this is designed as a way to incentivise people to buy iLife06 when it comes out next year.

I'm also slightly disappointed with the complete omission of Firewire. But I guess this was inevitable. Most users do not value this, so making it a part of the device would just reduce margins for apple, and even perhaps make it bigger. Unlike others though I'm not disappointed with the video DRM. I understand why burning a DVD would be an issue. I don't think I need this, though I would need backup capability (which I think can be done).

Some might say the iPod video should have been even more adventurous? Wide screen aspect ratio and a bigger screen for instance? But to do much of this would have changed the iPod significantly and presented the challenge of how to have a scrollwheel on a horizontal device (or a device that allowed rotation). Given 10% left handers, I think a right-sided scrollwheel would have got a few complaints too. And of course an appropriate battery would have made the device much bigger. But I think time will solve these. If the demand is there, Apple will jump in with something more serious. But for now, you've got a MUCH better top end music iPod in a smaller package at the same price that happens to do video. There'll be more things that come along that make use of that bigger screen and/or video capability.

So, I think overall it was a very positive announcement - worthy of the hype. The iPod range has gone from looking a bit stale to being very exciting and at the forefront again in just 6 weeks. The content deals are interesting and hopefully just the start. The simplicity of the whole will again be compelling - especially to the real public rather than the geeks. But I think there'll be a lot of people who were happy to buy compressed music but that will not buy video in such a degraded form. For Steve's next trick(s) I'd like to see that weakness addressed, I'd like a lot more content deals - esp. internationally, and I'd like to have the content moved wirelessly around from computer to TV for those times when you do just want to slouch on the sofa.

Anyone want to offer their thoughts, or are you all fed up with it by now!

12 October 2005

Real Networks and Microsoft - Winners and Losers

Yesterday we learned that Microsoft and Real Networks have buried their differences and joined forces (perhaps to take on Apple in the music area). Cost to Microsoft, approximately $460m with other soft dollar considerations taking the figure up to $761m. According to my calculations, Microsoft has now agreed to pay approximately $5.5bn to 8 companies (Sun, AOL, IBM, Novell, Real Networks, Intertrust, Gateway, Be) over the last few years in settling anti-competitive lawsuits. Many of the other cases have also been settled not just with money but with new alliances, most notably in the resolution with previous arch-enemy Sun Microsystems.

Now just think about that figure for a minute. $5.5bn is a truly huge amount of money. Assuming 1bn computers out there, it is $5.50 for every single computer user. That Microsoft has accepted to pay this figure is indicative that their profits from such anti-competitive behaviour have in fact been considerably more than this figure (I have read of detailed studies indicating the actual cost of the MS virtual monopoly to be in the region of $10bn EVERY YEAR).

Now anti-competitive behaviour is very bad for the firms competing against Microsoft. It is bad for their employees and it is bad for their shareholders. They should indeed be compensated. Financial compensation of this magnitude is perhaps reasonable given the opportunity that has been lost by those companies. But is it? Not if it takes years and years to happen. The shareholders affected by such behaviour have probably long since departed. They will never get to see any of this compensation, though it was they who took the risks at that time. No doubt long-term employees may feel the wait has been worth it perhaps with more security in their jobs or a one-off bonus to make up for those lean years. But what about the employees around when this all took place? I'm not talking about just their missed compensation. But their career prospects - delayed or even destroyed by this behaviour. They will never get this back.

Then let's look at the real losers of all this - the users - whether consumers, small, medium or large businesses. They were denied a choice when they should have had one. They were forced to endure a worse solution than they could have had.
And, they were forced to pay more than they should have. In fact, this very compensation has come from THEIR pockets after all.

And there is the rub. Not only have they paid dearly for the anticompetitive behaviour of MS, they will not see any benefit from the resolution, and indeed, such resolutions have more often than not led to even less choice, less competition and further barriers to new entrants trying to provide consumer value in innovative ways.

It has been said that this deal will not affect the EU stance against MS (which has cost them another $500m or so of course in fines). But of course it will. It already has. Evidence may have been collected and documented but the unwillingness of previous complainants to pursue their cause can only lead to a reduction in overall noise levels. Solutions proposed are usually too little too late to affect that market, which has moved on. The next set of battles are already being fought (somewhat one-sidedly), but what should have been permanent, effective and general remedies have become specific, lottery-style payments, akin to paying off witnesses in a criminal case. And no more honourable.

Was it coincidence that the announcement was timed for the day of Apple's FY financials which continue to show dominance in the music area, and the day prior to Apple announcing another (possible) leap forward in it's offerings? Maybe it was, but I can't help feeling the headlines have been a lot more sympathetic to this resolution, than if Apple wasn't in the news reminding everyone that it is on the road to becoming the Microsoft of personal music players.

I think Apple is possibly a big loser in this announcement (strange that the share price didn't immediately react to that news, but then did react significantly when they didn't quite overhit the higher targets predicted by analysts?). But then Apple may need some competition if it is not to get too complacent and too greedy (eg reports this week of levying a 10% "tax" on 3rd parties). But I don't think competition between 2 organisations, one of which is Microsoft is what I want to see on the world stage. And that is perhaps what this may come down to.

And that leads me to who I think are also losers in this. It's the companies that have tried to compete with Apple by adopting Microsoft's "more open" WMA technology. Plays-for-sure may be the term used, but I think now the consumer may perceive "plays-slightly-more-sure" for the Real solution. Napster, Yahoo, HMV and others are the biggest corporate losers in this. But then perhaps they'll be the ones winning big lottery payouts in a few years. And then once again, we'll look round and we'll see that the true losers, time and again are the end users. After all these shenanigans, you still have just one music player on your computer out of the box (windows users that is), and you have even less choice about alternatives, about where you can get the content and will be forced to accept the restrictions imposed on that content.

FInally, in wrapping up, I'd like to congratulate the only other winners I can see in this. Microsoft's and Real Network's lawyers/law firms must be very pleased to have come up with such a settlement and with their respective cuts of it. I'm sure they can look back with pride on their work and how they have once again served the public with a resolution that serves to make a mockery of the laws that were used to bring about the dispute.

11 October 2005

The Finale???

So, Steve is nearing the end of his spiel when he invites Madonna onto the stage. She introduces the new pink special edition iPod video (wow, that's a mouthful), and pops it into the just-announced "asteroid"/iDock and hits PLAY. It's the new video for the first single off her new album, playing in full screen (though perhaps not of HD quality!).

Available TODAY for $2.99 or €2.99 or £1.99 on the iTMS in ALL countries and playable in the new iTunes 5.1 available TODAY for PC and Mac. Plus, there are 1,000 more music videos available right now, with many more to come, and lots of new video podcasts for you to access. Download and watch on your iPod video which you can order TODAY for delivery starting in 2 weeks. View on your regular TV with iDock which you can also order today from the AppleStore for delivery before Christmas. Connect any PC or Mac with 802.11g or ethernet, or plug in any iPod with dock connector (audio/photos only) or iPod video....

Thanks everyone. See you at MacWorld 2006."

Or perhaps it will be just a 80GB iPod?"

06 October 2005


Time for another impending Apple announcement to get the faithful all hot, bothered and dissing each other. So, time for speculation here too! (250 word limit out the window for this post).

First off, the announcement invitation (you've got to interpret these carefully) shows a set of rich red velvety curtains; the event is taking place in a theatre, and it says "One more thing...". That is a reference to the way Steve keeps the BIG announcement till last when he does a keynote.

So, this announcement will be significant. The symbolism of the curtains and location should not be underestimated (the iPod nano announcement showed a pair of jeans, but the key was to focus on the CHANGE pocket on the jeans).

I'm more certain of this symbolism after hearing what I think is a gaffe from our very own BBC in announcing that Apple is to unveil a video iPod at the BBC Television Centre on the same day. It also mentions availability of video bundles from the iTunes music store from that date. This was broadcast in the news section on BBC6 on Wednesday 5th.

So, the stage is set for the release of the video iPod. Or is it? After all, hasn't Steve Jobs dismissed such a device on numerous occasions? How can people watch a movie on such a small screen? What about battery life? Heh, the nano's just been released, and Apple isn't going to want to dampen enthusiasm for that, are they? It's just not going to work, and nobody will want one.

Here's what I think will happen, and what I think might happen.

There WILL be announcements of new hardware - either Powerbooks (my favourite guess due to extended delivery times, and age of current line) or Powermacs (dual core versions). Possibly both.

However, even both of these is not sufficient to warrant such an event. Perhaps if they were the first Intel macs, maybe. But there is no way that will happen yet. In fact, perhaps Apple will not even mention these upgrades at this event, and release them more quietly? Now, for what might happen...

We're back with the iPod. Here again, a larger capacity 4th generation iPod is not itself sufficient for the scale of this announcement. Something different and distinguishing is required - I'm sure that the larger iPods just look a bit uninviting for many people now compared with the nano. The primary reason for the larger device is capacity, and the vast majority of users do not have collections bigger than a large nano. So, how to boost demand again for the more expensive, higher margin devices? The clue has to be in the BBC announcement if you believe it.

I don't think Apple is going to release an iPod that can play 2 hour movies. Apart from the lack of suitable technology, there are all sorts of problems to be solved with the content providers, and there is the question of demand. Do you know anyone who is going to watch a 2 hour movie on a small screen in one sitting?

I would guess that a lot of iPod usage is for relatively short durations - first thing in the morning and at the end of the day during commuting hours. If video capability comes to the iPod it will be targeted at this usage first. iTMS already has music videos. There could easily be an expansion of this part of the service - and a way to get people to pay more for their singles and pre-release material. There is a massive collection of made-for-MTV videos created as well. I'm not the first to suggest this. I know Charles Arthur suggested this some time back on his blog but I'm damned if I can find it in his archive section. I would pay for some music videos this way (though not necessarily only in a small screen format).

The next level up from this would be video podcasts. A sort of Tivo-2-go service. As you head off for work, you pick up your iPod out of its dock, pre-loaded with your chosen excerpts from TV - a 5 minute news broadcast, weather, sports report, for which you'd set up subscriptions in iTunes. You don't sit in front of your TV waiting for the items to come when THEY want you to see them. You get the news as YOU want it WHEN you want it. Now, I can see why some TV stations may not like this. But I could see why the BBC (and in the US, NPR) might consider this quite exciting (as public service broadcasters). And I wonder if this is an angle for the BBC announcement? It's only 10-20 minutes of video each day, so the battery life is not a serious problem. And the time and place shifting angle is the value. The downside is that it's not live. But compared with TV on a mobile (which basically is not ready for primetime and too expensive), it'd be a better bet for many people as they head to work on a bus or train.

Finally, one level further up would be a more fully-fledged Tivo-2-go service. Again involving public broadcasters. You download your favourite episodes of the Office etc and have them on your computer and, if you like, your iPod with video. Great for the BBC. The cost of selling these on DVD is not insubstantial. Cut out all the manufacturing/distributing lark, and you could perhaps sell such episodes at maybe £1.50 -£2 and make more profit. Plus, you could make them available almost instantaneously making the most of the publicity. The iTMS would be capable of this very easily. And most of us would find the DRM (assuming similar to today, but perhaps without DVD burning?) acceptable, especially with the introduction of one additional device!

And this is where I'm really going out on a limb. Remember the break-out box - mentioned on a few rumour sites late last year - codenamed Asteroid? It got Apple pretty excited, so much so that they sued the rumour sites that ran it, and yet it's nowhere to be seen. I just wonder whether such a device in the guise of an Airport Express 2 box is going to be the other piece in this puzzle. A device that connects to your stereo (as today) but also has video out capability to connect to normal tv's (though I think it would be analogue connections). You would be able to play the videos from your iTunes computer through this device to any connected TV. Furthermore, it would have a docking port to allow you to dock your iPod both for play back of photos, music and perhaps the video and to receive it's podcasts via syncing functionality for the next day. The nice thing about this is that anyone can start doing this at home WITHOUT a video-capable iPod. Just like everyone could use iTunes without an iPod on their computer. They already had the content (their music CD's). This way you create the demand for the device with content, rather than have the device create the demand for content and hope it comes along.

Maybe this is all too ambitious from just one announcement, but I think this way of bringing video doesn't really conflict with much of what Apple have said publicly. They've said "customers aren't telling us they want a video iPod" for instance. Well, yes, but that doesn't mean you can't LEAD them that way by creating an experience they hadn't imagined but is so easy, it just works. They've also said about not believing in PC/TV convergence. Well, fine, this is not a converged device, is it?

And while you may say that all these things are too difficult, I just don't believe that. More than 18 months ago, Elgato introduced EyeHome - a device that does a great deal of what Asteroid might do (without the iPod dock and iTMS DRM-capability). On the PC platform, there is Slingbox which is garnering positive reviews. Apple was not the first with a hard-based iPod, but they waited until the key technologies were there to make the total EXPERIENCE as simple as it could be. This is a way in which they can make the next transition from music to video in a way which leads people to want something they didn't think they needed, and in a way which is compatible with many existing devices (eg tv's), and in a way which pleases a significant number of content companies. Apple aren't going to go to battle on movies yet - that's still a sit down experience for most, and the DRM issues are too big for Apple to solve themselves. But the way I'm proposing establishes a straightforward method for video content distribution that can benefit all the key parties in the chain.

Perhaps they'll err on the side of caution with the iPod - preferring to call it "the little music iPod that could" rather than the video iPod and setting false expectations about watching 10 hours of video.

What I'm suggesting is also a safe ploy now that the nano is set to be the primary music iPod for the vast majority of people. They have cemented their market leadership in that space, and they will go for something on the top end that re-establishes the technological superiority of the bigger iPod and gets people buying that model again.

Oh, and of course, there'll be a black version!

04 October 2005

Dell Mistakes?

I've seen a few things about Dell that make me really question where they're heading lately.

First is the Dell DJ Ditty - yet another iPod "killer". You can tell how seriously Dell is taking this by:
1. It's name
2. The fact that it's not even mentioned on the front of their webpage, even in the "What's New at Dell" section.

Really, you'd have thought by now they'd have figured it out. And surely some strategy of a good name, a reasonable design and legendary Dell pricing (package pricing can hide all sorts of deception can't it, Dell?), would have allowed them to offer SOME sort of competition? Instead it's rather pathetic on all fronts.

Fine you might say, Dell isn't really in that market, but what about this?
Basically Dell is launching a higher priced range of machines known as the XPS range.
There are lots of comments on this move - Inquirer, CNet etc as well as the link above which I've posted to because it links to others.

But this just sounds to me like Dell is telling it's existing customers NOT to buy Dell because really we don't give proper customer support. If you want that, pay more. Sure you get "better design" (not sure about that) and higher-end components. But then isn't Dell all about giving value for money? It's like Ryanair introducing sleeper beds. Dell has lost a lot of credibility lately around its customer support - dropping significantly in some recent surveys (you can google on this). Many people have turned away because of the Dell Hell reputation, and/or the Dellhi experience. So, the answer is to charge a lot more and say you only have to wait half the time to be answered by someone who is more trained than the usual call centre monkey we give you. That's not a strategy that I see is going to work.

But if you're a higher priced quality company like Apple or Sony, you might be comforted in knowing that the world leader is basically admitting that you can't just compare equipment on price anymore, and that for the better experience you have to pay more. Isn't that what Apple, Sony and others have been saying for years?

Of course, the other thing it says is that PC's are too damned complicated so our support costs are too high. Wouldn't you start to do something about that too?

I think the Dell machine is stuttering a bit. Too early to say anymore, but I think they'll need to refocus their ideas a bit better than that to resume their amazing growth.

Brief Tribute to Ronnie Barker

I was sad to note the death of Ronnie Barker this morning (Ronnie was a very popular UK comedian to anyone reading outside the UK).

Just like Richie Benaud (still in this world, but gone from our screens) who I wrote about earlier, Ronnie is one of those characters who's been around my whole life. I'm not a mad fan of any of his series, but whenever I watch them it is quite clear that he had a mastery of timing. He also had the common touch - you felt he was one of you (even if the prison he inhabited in Porridge was a Daily Mail-sanitised version of reality).

I was also thinking though about what a difference a generation makes. Ronnie was one of our most successful comedians (and actors even). He worked hard - even into retirement; he was famous and well-loved throughout the country. But he wasn't a celebrity. We knew little or nothing of his private life. We didn't care, and I'm sure he preferred it that way. Did he make a lot less money than he might have done because that's the way it was? Did he have less fame? He was a normal person with a life that just happened to be a very good comedian and on our tv sets in the homes of half the population.

Our lives have been enriched because of him, and I'm sure he's had a great life too (and a somewhat private one). While I relish change and like to encourage it, our society has gone backwards in needing to create celebrities, pump them, exploit them, and then trash them. To me, Ronnie Barker epitomises one aspect of British life that I wish we could return to.

03 October 2005


(Warning: 250 word limit about to be breached)

This is a hot topic currently. While there are 2 aspects of convergence talked about frequently - convergence of television and pc in the home, and convergence of mobile phone and music player - I am going to address here just the latter. According to some this spells the beginning of the end of the iPod phenomenon. That's important to many of us who hope Apple thrives as competition to the Redmond monopoly. Apple's financial performance (and public persona) is now heavily dependent upon the success of the iPod brand.

Previous convergences in this area have been predicted, contradicted, but ultimately by-and-large happened - and in favour of the phone. I refer to PDA's and secondly to cameras. Sales in each of these categories has dropped dramatically. Logically, people look at the iPod/MP3 player as the next victim to be subsumed within the functionality of the mobile phone. Charles Arthur is a recent convert to this cause - though he is wisely not predicting it overnight.

I have to say that I thought that camera convergence wasn't going to happen. But it clearly has. People will still buy digital cameras - for holidays, serious photographic moments etc. But they now find their phone good enough for many other situations. And the phones are getting better and better, eliminating the weaknesses one by one until they are every bit as good as a digital camera. And let's face it, today's digital cameras are as good as most people ever need for most times. Even if people will still have a digital camera, they'll use it less and less (I certainly do despite having just a 1.2MP phone), and at best the replacement cycle will elongate significantly. At worst, the market will be decimated leaving just the high and low ends.

On PDA's I was less certain. I have never found a PDA as useful as I think they are going to be. So they have generally lain unused. The smartphones that are now around (though you could argue that some are PDA's first and phones second) are now very very good indeed for most functions that the PDA was used for.

So, it's quite obvious that music players are next in line for this treatment. Or is it?

Among Charles argument's are that the average player has just 375 songs on it. However, further inspection notes that many of the players in the survey would be incapable of playing more than 100 or 200 songs. But even so the average iPod user (including 512MB and 1GB shuffle users) had around 500 songs. Not much really. But it's probably true that if you gave users a free vote here, they would elect for more capacity. And, while not wanting to fill it to the brim (I like to keep some space for all sorts of different things), I suspect most users below the top 20% would consider 1,000 songs to be a comfortable limit. But actually, even this is within a phone's limit (and one or two phones such as next year's Nokia N91(?) will have a hard disk included for greater capacity). So, on this argument, whether you set the limit at 250, 500, 1,000 the phones are not disadvantaged. Charles, you're right on this.

But let's look at a few other things. Charles doesn't really address usability and usage too much, which is strange because I think he's been quite big on this in the past - especially usability. He is taking the view about something being good enough that people will elect to have two functions combined in one device, rather than separate devices. My take on this differs slightly.

I would maintain that the iPod only became a phenomenon because of the convergence of several technology trends combined with clever design of the user experience. Those trends are as follows:
1. Tiny hard disks allowing storage of multiple MB and low power
2. Low power but sophisticated chips to process the data and handle audio
3. High-speed connections (Firewire first and USB 2.0 later). I think this is often underestimated. 5GB players for PC's were massively hamstrung by requiring in excess of 12 hours to download songs. The first iPods could be filled in just 15 minutes - and updated in seconds. The first pc iPods required Firewire which limited the population. Only when USB 2.0 support came out did the iPod really invade the Windows world.
Combined with the clever design of the hardware (including scrollwheel navigation) AND the integration with iTunes, we had a unique experience that could be easily understood by the average Joe without recourse to a manual.

Well of course all these technologies are available in a mobile phone package too, so there's no disadvantage there. And, we've seen what it takes to make a successful mp3 player, and so if we boil that down into a mobile phone package, then we'll have success, right? But what about usage, and what about usability? Let's look at the user experience part in terms of usage (how, when it's used) and usability (how easy it is to use).

One difference with a convergent device is that it has to do MULTIPLE things, and if not do them brilliantly (eg cameraphone) do them well enough that people will consider it as either a partial or (eventually) a complete replacement. Now using a phone is quite event-driven. You need to make a call, or to answer a call. Or you need to send a message or view a message. They are discrete events. When completed it's back in your pocket. Likewise, taking a photograph. Have you ever needed to take a photo of something while on the phone (ok, so they show this sort of thing in the ads - but really)? Again, the usage is for the most part discrete. Similarly for PDA functions - address lookup etc. So, you can essentially have your device switch modes for these functions.

With music, it's not so much a discrete event as a continual experience. With current technology you would have to leave music mode to use any other key function. Now that may make sense with a voice call, but it makes less sense with a text message, or surfing the web, or perhaps taking a photo. I think there is a lot of design still to do to make a music player on a phone adequately usable as a phone/text device/camera AND mp3 player (and this assumes the underlying technology can multitask well).

Another aspect of usage is when it actually gets used. With discrete events like phone calls and photos which typically take place at different times, one device can be used (modal is ok). But let's look at when people use their mp3 players. They may be down the gym; they may be in the car; they may be in a plane; they may be at home with it plugged into the stereo. I would bet that these activities count for more than half of mp3 player usage. And the phone in those situations is actually not that useful. I wouldn't want my phone at the gym, and I wouldn't be able to exercise for the duration with a phone in my pocket or around my next. I wouldn't be allowed to use a phone in a plane (though that might change); When I'm in the car, I can't use my phone, but if I did, perhaps my passenger would answer it, and meanwhile, I wouldn't want it disconnected from my stereo (though I might want the stereo to mute); And at home, most people don't want to stick their phone in a docking device to play through the stereo. What would they do when it rings - pick it out of the cradle?

Then there is the usability angle. Well, by now we should know how to do this shouldn't we? Perhaps, or perhaps not. Key to a successful music player - even one with a few hundred tracks is easy navigation. And that has not yet been incorporated into a phone (strange perhaps, as large contact lists could benefit from such navigation). Essentially the phone has been very key-based, whereas the best music players have done clever things with very few buttons. And also, let's not forget the PC interface and back-up. While it sounds exciting to have music downloaded to the phone, this will leave the user more exposed than the PC method. Sure, you could sync a phone easily, but the phone isn't really going to win out over a separate device in this area (and currently, the phones fall down in this area).

Personally I think these 3 issues - how, when and how easily it's used - are enough to create a barrier to convergence in the short term. I'm not saying they won't get solved, but I don't think they're that well understood yet (people still can't agree why the iPod was successful can they?). Sure there can be compelling reasons for a merged device. And, if the future was between full sized iPods or even iPod minis and phones, then I would come down on the phone being the primary device "good enough" for most. But here's where I think Apple has been clever, and given the separate mp3 player a couple more years in the clear. By re-inventing the mini as a device that is about 1/4 the size of the mini and more robust (please don't argue the screen issue here!), they have made the issue of the music player competing with a phone for pocket/handbag space a non-issue. That was never done by the camera or PDA manufacturers. The nano has enough storage for 80%+ of users (and the other 20% would not be able to get away with a phone anyway). It has enough juice for a few days of normal activity (we haven't dealt with phone batteries here, but they are getting worse not better imho). And it is a first class music player that works beautifully with your pc. Use it at the gym around your neck, use it in the car, use it at home. Your music is there. That's all, nothing more. If it takes almost zero space, then why not take it with you as well as your phone of choice? That's an argument used by Jupiter Research analyst David Card recently - How iPod nano resets the bar. On the other hand, phones seem to be getting bigger. Sure, they're getting more functionality too, but everytime you converge with some device, there is definitely SOME additional size, to say nothing of the power drain.

And, I think that is why the iPod's got more life in it yet. Personally, for me the convergent device would be either one that physically docked into my phone (primarily the storage part only?) so could be used as one when I needed it, but could also be separated to give me the separate functions when I wanted just one. Or, if the devices didn't physically connect, that they could be aware of each other - for instance both talking via the same bluetooth headset, muting the player when a call came in, yet allowing you to use the phone for surfing/texting etc while still using the music player.

I really don't think it was a coincidence that the nano and the ROKR were announced on the same day, and it is interesting to see which has garnered the critical acclaim. Even if some of the ROKR's deficiencies were not there, I think the reaction would still have been similar. I'm not saying these devices won't converge, but I think it's not going to be as quick as people think. Whatever the public statements of Apple, I think they know that convergence will happen, and that's why the experience with Motorola will be a learning one. But with the nano, they've given themselves more breathing room.

To finish, I'd just like to ask one more question. Is it the phone that has to be dominant this time around? And could that be the problem that holds it back? If the designers think about the bigger problem - one of a hand-held communicator and personal storage box, then the phone's functions are not necessarily the most important. Maybe the phone will gobble up the music player, but perhaps there's something that'll come along to gobble up the phone too?