I use the “subscribe to a search” feature in Bloglines to turn up nuggets of interest.

Searching for “disintermediation” comes up with an article or two every day. Many of them are mine ;)

Searching for “Skype” hits the 200-article limit every couple of hours.

Anyone who thinks they can roll a VoIP strategy without taking Skype into account has lost the plot.

Some more Skype musings, since I’ve got Skype on the brain at the moment…

Skype reminds me of a consumer packaged good company. It’s more like Coca-Cola or Procter & Gamble than a telco. Their strategic differentiator is their sales and distribution method. Glugging another coke from the machine by the elevators is easier than hunting down a clean mug and boiling a kettle for coffee. P&G work hard to get their toothpaste on just the right shelf at Wal-Mart and 7-Eleven. Anyone can make sugar water and peppermint-flavoured microabrasives. Few people understand how to market and sell them.

Skype is about convenience, and putting new features within easy reach; leading users through small incremental advances in how they communicate.

You can also view Skype in two very different ways. A recent Analysys report talks about the class of “Private Voice Applications”, of which Skype is an example. This is a node-centric view of the world — Skype the PC software application. But looking through the other end of the telescope, you can view Skype as a virtual network — just at the application layer, divorced from transport.

This takes us to a more familiar realm. Suddenly we start to see all those familiar network-centric terms and issues crop up — interconnect, termination charges, roaming, vertical integration — and have some more clues as to how Skype might gain market power and their business model evolve. The word “Skype” has this fuzzy definition that blurs the corporate, product and network identities. Just because we don’t have a snappy buzzword for the Skype Network doesn’t mean it doesn’t exist.

In a similar vein, we lack another word in our vocabulary. A decade ago the Web burst upon us. HTTP as the protocol; Netscape as the user interface; the Web as the network of public HTTP-speaking nodes. SIP is an analog to HTTP. Softphones are similar to Netscape. But we don’t have a word to describe the virtual network of public SIP-speaking nodes. If Mosaic and Netscape spawned the hypertext Web, the equivalent today would be the voice “Vob”.

But the Vob is a failure to date. The number of open SIP nodes addressable via ENUM (or otherwise) is miniscule compared to the proprietary Skype virtual network. SIP has been absorbed by the telecom borg. At Sprint I watched Dynamicsoft struggle for a year to get a SIP push-to-talk engine to work. (Flarion demo’d a PTT app they whipped together in 2 days using standard Microsoft development tools, because they didn’t need to bleed low-level optimisation across various layers of the stack.) Sprint is still probably working on pointless faux-smart network reincarnations on IP and SIP. Next-Generation Voice Network? You must be kidding. Last Generation Voice Network, maybe.

SIP is history as far as the future of voice is concerned. Get over it. The Vob is dead. Shuffled off to join the big pile of dead over-complex standards. DCE, CORBA — please make some space between you, we’ve got company tonight.

Skype isn’t this decade’s Netscape either, because it isn’t substitutable; they own their private Vob — they’ve achieved what Microsoft failed to do with MSN and the Web. Yet they retain the strategic power Netscape had to reverse themselves from the client into various centralised server functions. (Yes my dears, even in P2P voice there’s a pile of trust, directory and routing stuff that some people are going to want to do behind private barricades.)

It would be a tragic mistake to underestimate the potential market power Skype is accumulating. According to Skype’s own figures from VON Canada, they’re sustaining a growth rate of 1000% a year. Just another 2 years of this growth and they would have over 200 million concurrent users online. This is not beyond plausibility given how Skype and broadband are symbiotically driving adoption of one-another; the addressable market is exploding too.

That means even if you’re a mega-telco — a Verizon or a Vodafone — you’re screwed. You can create your own Private Voice Application, and start marketing it to your early-adopter users, but who ya gonna call? Ain’t nobody but Skypers out there. Want some Skype presence in your Vodafone-branded VoIP app? Gonna cost ya!

I almost can’t believe what I’m seeing unfold in front of my eyes. This time last year I was being rapped over the knuckles by corporate security for running Skype inside the Sprint corporate network. Somehow, I don’t think they’ve got the joke yet.

12:51:00 PM    comment   

Back in the day, it was all about the desktop PC. Starting with the Altair in the 70s and accelerating with the IBM PC in 1981, the desktop PC was the focus of personal computing innovation.

Used to be all the good stuff started as an add on for the PC and found its way on to the motherboard. It was an all too predictable obsolesence curve. Remember the AST 6 Pack, Hercules Graphics Cards, 3com Network Cards, US Robotics Modems? When you bought a PC, you used to have to buy all these cards to make it get where you wanted it to go. How many slots the PC had was actually an issue because any power or corporate user expected to add features via cards.  There was even a time when it seemed like a good idea to try to upgrade the CPU.

All those features migrated from seperate cards down to the motherboard. Hercules Graphics. Gone. AST. Gone. There is a long list of casualties over the years of companies who made good money for a short period of time selling products that soon would become part of the PC Motherboard.

The PC Desktop used to be a happening place. It was fun to read PC Week, PC Mag, Computer Reseller News, Infoworld and other publications that would speculate about the latest and greatest products coming to a PC near you.

Not any more. Could the PC desktop be any more boring these days? Could it be any more emblematic of a mature product?

Sure, HP, Dell, IBM, Gateway are trying to liven it up. The hard drives are bigger and faster. THere is more memory. The graphics cards can do more. The industry tried to juice the PC by coming up with a faster, better express slot on the motherboard, but next to nobody is even using it!

About the only thing even resembling anything fun is coming from Modders.  Typically gamers who are putting flames on funky case designs and bumping processor speeds.  The PC desktop has gotten to the point where kids turbocharge the old family PC rather than throw it away like kids used to turbocharge the old car in the garage.

The desktop is boring.

All the fun is happening with portable devices. Phones, Ipods, gaming consoles, PDAs, digital cameras, even hard drives and flash drives. All the good stuff is coming in small packages.

Remember the frustration of shopping for a PC in the 90s. Every couple months the PC would have something new and cool in it, and the price would drop. It was tough to know what to buy and whether you should do it now or wait.

That’s exactly what is happening in the portable.mobile device market. My Ipod, My Sidekick, my hard drives,my PSP, my Xbox even my laptop all have overlapping features. Each is getting closer to each other in feature set every day.

Which means that the war for my pocket is on. Which is going to allow me to only fill one pocket rather than the 2, or 1 plus beltclip that I’m filling now.

It’s a fun time for portable.mobile devices. It’s the 80s and 90s for desktops all over again. Every time I go into CompUSA or Best Buy to see what new stuff is on the shelves that I can play with, every phone has a new feature. Every hard drive is smaller, cheaper, faster. Every PDA has new features and software.

The implications of this transition are huge. Particularly for the retail world. Right now most new technology is sold in big stores. Lots of room for monitors. Lots of room for desktops. But those are the stagnant products.

All the good stuff is small. All the traffic generators are small. Which means that we could see big changes in how retail stores are merchandised and in the size of future retail stores.

It won’t take much square footage to show every possible cellphone, PDA, console, portable hard drive and attachable device. About the only ”big” product that will need to be there are HDTVs.

Better yet, all of those devices, including the HDTVs are purely digital and consume and store or playback digital content. For under 20k dollars in storage (and falling in price every day), it’s feasible to store EVERY digital product and offer it for sale.

Even more interesting is the fact that we are used to buying service agreements with these devices. Our phones, our PDAs, we want phone service and more and more often, broadband service with it as well.  We don’t buy them, we subscribe to them.

That can be a problem in a world where new features are appearing every 3 to 6 months, but we can’t trade out our devices for 12 to 24 months. Service Contracts will have to be more flexible, or they can impact the success of the very products and services they are trying to sell

We are entering a golden age of features in portable devices that will far exceed the fun we had with desktop PCs.  The quick rate of change in these products and how they are sold, will completelty alter both how the products are sold, and how we expect to buy them.

Finally, if you are expecting new and exciting features from your PC Desktop…forgettaboutit!

[Blog Maverick]
12:47:52 PM    comment   

I have a vested interested in seeing HDTV take off. Every new HDTV set sold is another reason for someone to subscribe to HDNet and HDNet Movies. But sales of HDTVs don’t really need much help. They are flying off the shelves. The CEA says that digital TVs account for more than 25 pct of TVs sold this year and that percentage is growing.  Some are even predicting that digital will outsell analog in 2005! As prices decline further and further, analog TVs will continue to disappear from retail shelves and HDTV sales will continue to boom.  So on this end I’m covered.

I also have a vested interested in seeing the adoption of HDTV not happening too quickly. The fact that it has taken all these years to get this far is a beautiful thing. The conventional wisdom among cable networks is that the market of HDTV consumers is still too small for them to cost justify investing in new content, equipment and distribution, which for the biggest network conglomerates will reach hundreds of millions of dollars in conversion costs, incremental equipment and distribution costs. The bigger the perceived cost for them, the slower they move,  the less the competition for HDNet and HDNet Movies.

This headstart has allowed, and will continue to allow us to release groundbreaking programs and events like the day and date premiere of Enron The Smartest Guys in the Room  on HDNet Movies and in theaters. (we are ramping up to do this quarterly, then monthly!)

To take chances like broadcasting live from the Iraq Elections, The Vatican and The Middle East.  To be way ahead of the curve with our sports, news and entertainment programming. The more time, the further ahead we will be when the transition finally takes place.

However, I also have a vested interest as an American citizen to see the analog spectrum occupied by regular TV returned to the government so that it may be resold. Heck, our budge deficit needs every penny it can get, and billions from an analog spectrum sale can’t hurt .

The spectrum can also be used for far better applications than regular analog TV. From military to high speed data applications, it won’t take much to accomplish more. Plus, its not like free over the air TV is going away, it’s just being replaced by over the air free digital TV signals.

The argument against replaceing the over the air  analog TV signal with an over the air, free digital signal, to return the spectrum has been two fold.

First, there are 10s of millions of TV sets that still get TV from over the air analog signals. Most are 2nd, 3rd, 4th sets in homes. In some places however, like here in Dallas, the percentage of homes that receive their primary TV signal over the air in analog, can be as high as 40 pct. The question is, how are these people made happy when their over the air analog signal is turned off and they are forced to get some form of equipment that enables their TVs to receive an over the air digital signal. After all, in the USA, TV is as much a right as the First Amendment.

Which leads to the 2nd argument against.

Politicians want to be re-elected. If mom and dad, or grandma and grandpa can’t get their TV, or are confused about how the whole thing will work, then they will be up in arms and we will see more political activism against candidates than we have seen since the 1960s…

So of course politicians are afraid of the entire issue with just a few exceptions. Rep Barton of Texas has attempted to take the lead on forcing this issue forward. Rep Barton wants to set a date of Dec 31st 2006 as the cutoff date.  And he is right. That should be the date.

That cut off date provides plenty of time for everything that is going to happen to enable the transition to happen. From reading and hearing all the debate, and I won’t rehash all the issues here, I think there are several points that will ease the transition that have not been discussed.

Here they are:

1. The minute a date is set, everyone and anyone who can make money selling their product and service to the estimated 20 pct of the American population who gets their analog TV over the air is going to start selling like it was their last chance.

a. There will be a price war between cable, satellite and telco video providers to reach those 20mm homes. I would expect that  we will see deals like ”$1 to get your entire home ready for the digital conversion”. Instead of a free DVR, they will bundle in STBs for everyhome in the house. No video provider wants to lose out on the chance to convert  those 20mm to customers.

b. The explosion in subs for all the video providers will also provide for an explosion in stock prices for all of them. Sure their customer acquisition costs will go up, but they will also see an explosion in digital subs. The stock market will ignore the costs as 1 time and extrapolate the digital opportunities per new sub and stock prices will rocket up.

c. There will also be a price war among TV manufacturers. This will be a once in a lifetime opportunity for them to blow product out the door. They won’t miss out on the chance. Like the video providers, they will advertise unbelieveable pricing specials and instead of offering promotion dollars for things like sound systems and recliners that we often see at retail, we can expect to see trade in programs for analog sets and even bundling of analog to digital convertors.

If there is a risk to the 12/31/06 date, its that manufacturers can’t ramp up fast enough to handle the demand and to gain volume efficiencies on sets. If they do have enough time, look for this to be the push that sends Plasma and LCD sets far below 1k dollars for a 42”HDTV set.

d. From a government perspective, there won’t be near the need for subsidies that most fear. The subsidies will come from the video and TV providers in the form of customer acquisition investments in set top boxes and promotional bundles of analog to digitial convertors.

e. The biggest winner in the transition will be anyone who sells advertising. The amount of money spent by interested parties to educate, confuse, market, brand and gain customers could dwarf what is spent on a Presidential election because the stakes are higher. There arent many situations where 20mm new customers are pushed to buy something by a deadline.

If the big media companies want to see their stocks go up in 2006, seeing that this bill passes is the one way to do it.

2. Finally, the last big gain from the analog to digital transition will be the bandwidth freed up on cable networks. Once MSOs don’t have to provide bandwidth for analog cable tv networks at 38mbs each, that bandwidth can be freed up and used for other services, from HDTV to VOD to High Speed data. It could be the impetus for download speeds to finally get far higher than where they are now.

It’s time for the analog to digital transition. Let’s support Rep Barton in his plans. We all stand to gain.

[Blog Maverick]
12:14:29 PM    comment