Commentators have focused on the apparent "old guard, new team" battle inside Vodafone, as cricket supremo McLaurin and former Voda boss Chris Gent distance themselves from the company. In fact, none of that is the real threat to boss Arun Sarin; rather, he should fear the loss of the American holdings.

8:21:15 PM    comment   

Related:
India More Attractive Market Than China For Content Delivery Technology Vendors: OpenTV Chairman [ContentSutra]
8:17:56 PM    comment   

Yahoo, which has already released a new version of its Communicator (Instant Messaging) product overseas, plans to launch a similar client next week, according to sources familiar with the company’s plans. The new release of the IM client has a brand new voice core, and it allows users to make phone calls to PSTN phones as well, in addition to PC-to-PC calls.

The pricing for the callout numbers is not certain as yet, though the current generation communicator allows unlimited incoming calls for $2.99 a month or $29.99 a year. The new offering, according to those in the know is likely to put Yahoo on an equal footing with Skype. Yahoo, clearly has designs on stealing market share from Skype.

As part of this new release, Yahoo is also going to incorporate banner ads in the Communicator client and will use some of the inventory to educate folks about how to use the built in phone/conference type features. The thinking within Yahoo is that by since they serve a more mainstream audience, a little handholding is not such a bad thing. Of course, the advertising revenues could help defray the “everyday low prices” on voice minutes.

While walking down the VoN showfloor, I discovered a wifi phone which will be sold by AT&T and has a link-up with Yahoo IM client. It looked pretty slick. Seems like Yahoo is getting serious about VoIP and Voice opportunities. It took them long enough, it seems.

8:13:26 PM    comment   

Vodafone is getting out of dodge - errr Japan, which is fast becoming a telecom Dodge City, thanks to a bitter price war between NTT DoCoMo and Softbank. Vodafone sold its Japanese subsidiary to Softbank for about $15.4 billion, after consistently losing market share and money. Softbank, in what is being called the biggest leveraged buyout in Asia, gets a wireless asset that will allow it to offer four-play services to its customers and compete NTT on an equal footing. Vodafone will get about $11.87 billion in cash. Rest of will amount to about 10% stake in a holding company, and some warrants. Vodafone had about 17% of the total Japanese market.

The proceeds of the sale will be used for giving out dividend to shareholders, but in my opinion, that is a classic bad move from greedy mutual funds. The company should be hanging on to its money and using it for growth in other countries where it can make a perceptible impact. On the flip side, this sale takes away a lot of pressure from Vodafone to make a hasty deal with Verizon Wireless. It now has enough breathing room to basically negotiate a premium for its share in VZW.

8:11:29 PM    comment   

The Saudi Telecom Company announced yesterday that it was planning to launch third generation mobile phone services this year in all major cities of the Kingdom. "We'll launch 3G service with all the related services," said Saud Al-Duwaish, acting STC chairman. He hoped that 3G service would strengthen the STC's position as the market leader in the Kingdom. Al-Duwaish did not say when the company would actually launch the 3G service, which is expected to improve telecommunication services in the country.
Tag:3G | Posted in: Countries Specific 3G News Africa+ME Country
Our 3G Support Service - 3G Assistance-at-a-Distance [The 3G Portal 3G News Feed]
7:11:42 PM    comment   

In case you don’t know, the Yahoo! that I work for is actually a separate company from Yahoo! Japan which is run by Softbank. That’s why my first thought the other day when I saw that Softbank was buying Vodafone’s assets in Japan was “Cool! Yahoo! might be its own carrier in Japan!” which isn’t our global plans by any stretch, but it’s still a fun thought! But since Softbank is a holding company, I figured I’d hold off on that thought, as they might go ahead and create another brand or something (which would be insane, if you understand how huge Yahoo! is there).

Turns out my suspicions were correct -Softbank issued this press release yesterday, which says in part:

SOFTBANK Group and Yahoo! JAPAN will enter a business alliance in the mobile communications field whereby Yahoo! JAPAN will provide a portal site for mobile terminals offering comprehensive services and content. This will enable a seamless environment between PC and mobile users, through which SOFTBANK will provide innovative new services.

Very cool. Having a phone company in one of the world’s most advanced mobile markets is pretty damn awesome - I can’t wait to get my hands on some killer super-advanced Y! branded phone.

:-)

-Russ

7:03:29 PM    comment   

Craig Moffet of Bernstein Research was asked to testify before the Senate Commerce Committee on the subject of Net Neutrality.  His comments were of course right on the money. The interesting conclusions that can be drawn from his testimony are just as relevant to the discussion of the future of media on the net as they are to net neutrality.

Craigs sites facts and figures that should make anyone who believes that the net as alternative to TV is just around the corner, or will happen this decade for that matter, rethink their position.

’Some of the nuggets from Craigs testimony

”despite a great deal of arm waving from “visionaries,” our telecommunications infrastructure is woefully unprepared for widespread delivery of advanced services, especially video, over the Internet. Downloading a single half hour TV show on the web consumes more bandwidth than does receiving 200 emails a day for a full year. Downloading a single high definition movie consumes more bandwidth than does the downloading of 35,000 web pages; it’s the equivalent of downloading 2,300 songs over Apple’s iTunes web site. Today’s networks simply aren’t scaled for that.

In a series of recent research reports that I entitled ”The Dumb pipe Paradox” – which I believe provided the original impetus for the Committee’s invitation to testify today – I tried to address the expectation that the telcos are rapidly rushing in to meet this need and to provide competition for cable incumbents. In fact, by their own best estimates, they’ll be able to reach no more than 40% or so of American households with fiber over the next seven years.

And most of that will be in the form of hybrid fiber/legacy copper networks, such as that being constructed by AT&T under the banner of ”Project Lightspeed.” These hybrid networks are expected to deliver 20Mbs average downstream bandwidth. After accounting for significant standard deviation around that average, that will mean many  enabled subscribers will actually recieve far less. I and many others on Wall Street harbor real doubts as whether these hybrid networks will provide technologically sufficient to meet future demands

More importantly, in 60% of the country, there are simply no new networks on the horizon, and the existing infrastructure from the telcos – DSL running at speeds of just 1.5Mbs or so – simply won’t be adequate to be considered “broadband” in five years or so. That includes wireless networks, by the way. Current and planned wireless networks – including the over-hyped Wi-Max technology – offer the promise of satisfying today’s definition of broadband, but simply can’t feasibly support the kind of bandwidth required for the kind of dedicated point-to-point video connections that will be required to be considered broadband tomorrow.”

Craig is right.  The last mile into our homes wont have enough bandwidth to support all that we will want to do via our internet connections at home. There is no moores law for bandwidth to the home. THere is a huge misconception that bandwidth will just continue to experience unlimited expansion for every broadband household.  Its what we are used to with hard drives, processors, all technology. It gets faster, cheaper, bigger. Thats not the case for the next decade with bandwidth

The net result is that TV is going to be TV, delivered like TV for a long time to come. (I consider IPTV to be regular TV).  There wont be enough bandwidth for it to be any other way.

The problem is that our consumption of digital media at home will continue to grow. The bandwidth  we want to consume will many times exceed the bandwidth available to us at that time.

The viewing of internet video will continue to grow. We will upload and download more and more video, consuming increasing amounts of bandwidth. We will want to download movies in High Def quality. Digital pictures will increase in resolution, and we will upload and share our lives through digital pictures that consumes multiple mbs per picture. Too do all of the above without limit, where and when you want to do it just cant happen. For the vast majority of us, there wont be enough bandwidth for at will , unlimited downloads.

You heard it here first.  In the next few years, if you have multiple heavy net users at home, you will be scheduling your internet time and downloads. Instead of Net Nanny at home, you will have Download Nanny on yours and the kids or roommates PCs.  If your roommate tries to download a 2gb movie at 9pm, and you still have to work to do later, you cant face the risk of the connection slowing to a crawl and timing out . You are going to set Download Nanny to pop up the dreaded “I dont think so Tim” window that reschedules the download to whatever open time it calculates is available based on the average download speed at any given time of day for your internet connection.

We will reach a point in the next few years where we are complaining about internet speed all the time.  This wont be a corporate issue, it will be a home issue. We wont be able to do all the things we want to do on the net how and when we want to do it.

As far as the idea that everything we will ever want to watch on TV, the concept of unlimited video on demand from the internet ?  The videos will be out there, stored on the net somewhere. THe problem is, you wont be able to download them and watch them whenever you want. You will be able to download them when you have bandwidth available and can schedule time to do it.

Kind of like the way it works with  cable and satellite TV PPV and VOD today

It will be fascinating to see how it all plays out.

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7:00:17 PM    comment   

Another intriguing acqusition by Verisign, which most pople know (if at all) for digital certificates and domain names. It's buying Kontiki, the company founded by former Netscape CTO Mike Homer that offers a P2P private delivery system for video. What's the connection?

I once called Verisign potentially the Microsoft of VOIP. I still think the company could occupy a pretty significant position in the converged broadband Internet ecosystem. Vernon Irvin, the EVP of Verisign who oversees the Communications group, will be speaking at this year's Supernova, so I look forward to further discussion there.

6:55:27 PM    comment   

Editor's note: This news will be all over the Web in a few minutes. What a sad end to what could have been a highly valuable synergistic move into the world's most advanced 3G market! Defeated by fickle consumers, the lack of a low-end tier in the segment, and the challenge of coordinating terminals and technologies across borders, Vodafone is heading home. The price of the deal, a whopping 15 billion bucks, proves that Vodafone KK is a valuable commodity -- in the right hands. -- Eds. [Wireless Watch Japan]
6:02:53 PM    comment   

Average monthly revenue per subscriber (ARPU) has declined to Rs 370 for the quarter ended December 2005 for GSM operators.

Hutch had the highest ARPU of Rs 422.22, a decline of 3.7% from Rs 438.29 in the quarter ending in September.
Bharti had an ARPU of Rs 406.03 compared with Rs 410.13 in the period to September, a marginal fall of 0.9%.
Idea Cellular was third with an ARPU of Rs 342.78.

Among the circles,

Delhi had the highest ARPU at Rs 499.06, followed by Karnataka at Rs 456.60 and Kolkata at Rs 428.69. Mumbai, which has three GSM operators, was fourth with an ARPU of Rs 428.24. Chennai had the lowest ARPU among the metros at at Rs 421.76. Interestingly, the ARPU in J&K, where only Bharti has operations, was Rs 414.24.

Source: Financial Express

3:54:17 PM    comment   

Some numbers from iSuppli Marketwatch to put things into perspective.

Mobiles subscriber base in 2005 grew at an astounding rate of 47% to reach approximately 75.3 million at the end of 2005, up from 48 million at the end of 2004.

India in 2005 emerged as the world[base ']Äôs sixth-largest market in terms of mobile-phone subscribers, and will become the second largest in 2010, second only to China.

iSuppli expects the Indian market for mobile phones to rise to approximately $5.8 billion in 2010, double the $2.4 billion in 2005.

Mobile user base in India predicted to rise to 278 million in 2010, resulting in a cellular penetration rate of 23.9% of the nation[base ']Äôs population.

Average mobile-phone prices have dropped by more than 70% from 1999 to 2004.

From their peak rate of around 50 cents per minute in 2003, mobile tariffs have decreased significantly and now are in the range of about 2 cents per minute.

3:35:25 PM    comment   

Indiantelevision.com interviews Saumil Nanavati, president of Singapore based 3G radio service provider Sydus.

Last year the company, in partnership with Virgin Radio, introduced MobileRadio, claimed to be the world’s first 3G radio. Indian users are amongst the top six users of Sydus’ MobileRadio technology for Virgin Radio UK’s service.

According to a recent study, The Future of Mobile Music, which studies the growth of the mobile music market in 28 countries the mobile music market is the most valuable mobile content market globally, generating gross revenues of $4.4 billion in 2005, rising to nearly $6 billion in 2006. Mobile, it is said, now accounts for nearly 15 per cent of the entire music market globally.

Consumers require a Symbian or MS Windows handset, the Sydus software and GPRS connection to use the service. What it means is that listeners to Sydus Mobile Radio will have to pay GPRS data download charges everytime they tune in to the service. This is in contrast to FM radio which is very popular among Indian mobile users. Many handsets already come with FM radio capability and one doen’t have to pay extra for listening to broadcast radio stations.

Nanavati explains that Indian content publishers can benefit from Sydus’ technology by reaching Non-Resident Indians or Indian-content-loving users. The technology is only as lucrative as its reach, which is dependent on the number of client software downloads and installations. But the article doesn’t mention the installed base of the Sydus app. Since they are not tying up with operators they are relying on content publisher brands like Virgin Radio for spreading the word.

3:34:04 PM    comment   

Reuters has compiled some facts and figures about Reliance Communications Ventures Ltd., which made its stock market debut recently and was trading at Rs 322.40 on Friday.

Reliance Communications is the holding company for top CDMA operator Reliance Infocomm Ltd., GSM operator Reliance Telecom Ltd., bandwidth company Flag Telecom Ltd. and Reliance Communication Infrastructure Ltd.

• Stock market value of about $8 billion, putting it among India’s top 15 listed firms.
• The Ambani family holds 40.5 percent and foreign institutions have 25.2 percent. Retail investors hold 16.3 percent, with the rest held by banks and funds.
• Trading at an estimated price earnings multiple of 28, based on results for the third quarter to December, compared with 34 for Bharti based on forecast 2005-06 earnings.
• Much of its revenue come from its holding in CDMA services provider Reliance Infocomm Ltd.
• Reliance has the largest optic fibre network amongst private players at about 61,500 km, compared with about 30,000 km for Bharti and 29,000 km for Videsh Sanchar Nigam Ltd.
• Reliance has a book value of about 90 rupees a share and a net debt of nearly 37 billion rupees.
• It has a consolidated net worth of 110 billion rupees after two of its firms made write-offs and provisions in excess of $1 billion last month, ahead of the listing.
• It has a capital of 1.223 billion shares, each having a face value of five rupees.

Also Read: RCoVL restructures its operating companies

2:20:14 PM    comment   

Krishnan Thiagarajan takes stock of Bharti Tele-Ventures, Reliance Communication Ventures and Hutchinson Essar from a financial markets perspective.

While BTV and RCV are integrated (mobile, fixed and long distance) players, Hutchinson Essar is a mobile pure-play.

Operating profit margin:

Across the three companies, the sequential (quarter-on-quarter) revenue growth of the mobile business for the third quarter ended December 31, 2005 was quite healthy in the 11-14% bracket.

But it is the operating profit margin, at 36.5% in the mobile segment, that puts Bharti ahead of the pack and makes it the most efficient.

This is the metric that will be tracked across companies on a quarterly basis.

According to Bharti, as long as it remains in the capital investment mode, more than ARPU, it will track its performance across a three-line graph comprising gross revenues, opex productivity (operating expense divided by gross revenues), and capital productivity (gross revenues divided by gross fixed assets and intangibles). As a part of this formula, Bharti believes that as long as absolute revenues keep increasing, productivity of opex either stabilises or keeps coming down and capex keeps improving, the company’s overall financial health can be tracked.

Usage metrics:

While the average revenue per user (ARPU) is the highest for Hutch at Rs 511 for the third quarter, its average minutes of use per user, is the lowest among the players.

Bharti has an ARPU that is 8% lower at Rs 470, but the usage is higher, at 411 minutes, than Hutch.

RCV has the lowest ARPU of Rs 412. However, its minute of usage is 33% higher than Bharti, at 547 minutes.

Performance metrics:

Enterprise value (EV; market capitalisation plus debt) to EBITDA (earnings before interest, tax, depreciation and amortisation) reflects the operational cash flows that can be deployed for growth.

Based on the annualised third quarter performance, the EV/EBITDA of the mobile segment of Bharti works out to 16.6 times.

RCV’s valuation is at a 15 per cent discount to Bharti.

For Hutch, the discount is under 5 per cent to Bharti, if the enterprise value is based on Kotak’s sale of equity in Hutchison Essar, struck at $6 billion of market capitalisation.

EV/subscriber reflects the potential for future cash flows.

The EV on a per subscriber basis for Bharti works out to Rs 32,000.

On this metric, RCV trades at 25per cent discount to Bharti and Hutch about 20 per cent.

A must read even if you don’t invest in stocks.

1:52:55 PM    comment   

It seemed almost farcical, to American eyes anyway, when Jacques Chirac and Gerhard Schroder stood up last April and proclaimed that the governments of France and Germany were going to spearhead the creation of a world-class search engine. A bunch of Eurocrats out-Googling the great Google? As if.

Now, less than a year later, the development of the European search engine, called Quaero, is well under way, and as the Economist reports in its new issue, the effort looks anything but farcical. Contributing to the public-private venture are commercial powerhouses like Thomson, Siemens, France Telecom and Deutsche Telekom as well as smaller tech firms like LTU Technologies and Exalead and several top research universities. Billions in government funds are being funneled into the program, "carefully distributed via a complex system of favourable loans, interest-free cash advances, forgivable loans and grants for pre-competitive research, all of which are allowed under international trade rules."

The effort's "stunningly ambitious" technological goals, writes the Economist, "show that Quaero is intended to be far more than just another would-be Google, but a leap forward in search-engine technology." Quaero is, for instance, being designed to allow images and sounds to be used as search terms, in addition to traditional keywords:

Quaero will allow users to search using a ìquery imageî, not just a group of keywords. In a process known as ìimage miningî, software that recognises shapes and colours will then retrieve still images and video clips that contain images similar to the query image ... When Quaero finds an image without a description that matches a properly labelled image, it will append the description from the labelled image to the unlabelled one. This technique, called ìkeyword propagationî, will enrich the web linguistically ... Quaero's voice-recognition and translation technology ... will find audio files - such as political speeches or radio broadcasts - and then automatically transcribe and translate them into a number of European languages. The original audio files can then be found using keyword searches. In addition, speaker-identification software will allow users (via computer microphones) to search the internet for audio clips recorded in their own voices, or those of other speakers.

It might seem like a longshot for a government-led effort to produce something able to compete effectively against what the Economist calls "American free-market techno-capitalism." And when Quaero is launched, perhaps as early as the end of this year, we may find that it falls short of its goals. But it's worth remembering that a similar European public-private initiative produced Airbus, which has grown to become the commercial and technological equal of the U.S. giant Boeing. One thing Quaero has going for it is focus: While Google, Yahoo and Microsoft all have complex business interests extending well beyond search, Quaero does not. It has the kind of clean slate that Google had ten years ago when it came to life in a university.

1:45:23 PM    comment   

In discussing Dell's recent weakness in an interview with the Financial Times today, the company's CEO, Kevin Rollins, makes a revealing confession:

"We were fearful that we moved to the low end too aggressively [in the second quarter]," he says, referring to the company's decision to focus on the market for low-cost consumer PCs in the US. "We moved to the other guardrail of all high-end stuff, which was a mistake in Q3 ... It was a bit of a guardrail-to-guardrail swing."

Dell's a very well managed company, and it has long been held up, for good reason, as an exemplar of supply-chain efficiency and the effective use of information technology. Because the company waits to make a computer until it gets an order, it operates with essentially no inventory and needs little in the way of working capital. Because it takes orders directly from customers, it has a perfect window onto the market - and it shares its moment-by-moment information on demand all the way back through its supply chain. Tightly woven together with sophisticated software, Dell's business is about as close to "transparent" and "real time" as you can get.

Yet just a few months ago, the company misjudged near-term demand and found itself bouncing between guardrails.

It just goes to show: Nobody's perfect. And neither is any information system. Companies today are often told that "business intelligence" is something produced by software. But while information technology can certainly help managers collect and analyze the information flowing through their business, it can't provide good judgment. It's just a tool. As Dell's glitches show, not even the most sophisticated software can supply you with data on tomorrow's sales.

1:31:40 PM    comment   

In an article I wrote last June for Business Week Online, I modestly proposed that Amazon split itself in two, separating the retailing operation from the technology services operation. I pointed out that the economics of those two businesses are very different, and that trying to run them within one company inevitably leads to management conflicts that can damage one or both businesses.

I admit that it seemed like a pretty radical suggestion eight months ago, but I think Amazon's moves since then have only underscored the fundamental schism that runs through the company. Amazon's launch today of an online storage service called Amazon S3 is only the latest in a series of moves - opening up of its Alexa search engine, launching its Mechanical Turk human-computer interface - that show the company is intent on expanding its tech services business well beyond the rental of its retailing infrastructure. It wants to create the platform of choice for developing consumer web services. As Rob Hof says, S3 "seems to suggest that ultimately, Amazon could offer a wide range of services to do whatever businesses and consumers want to do online."

The question to ask is: What the heck does this have to do with being a glorified catalog retailer? The answer, so far as I can see, is: Not much. If Amazon is serious about expanding its tech business alongside its retail operation, its economic, managerial, and organizational conflicts will only grow more severe. It doesn't take a Solomon to see that this baby should be split in two.

1:30:02 PM    comment   

A couple of days ago, a thoughtful reader (thanks, Omar) pointed me to the text of a terrific speech, "A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business," that was given in 1994 by Charles Munger, Warren Buffet's second-in-command at Berkshire Hathaway. Munger offers a bracingly clear-headed and plain-spoken lesson on how to think strategically about business and competition. He has great insights into the tricky balance between specialization, scope and scale that seem particularly relevant today, when, as Om Malik recently wrote, "everybody is in everybody's business."

But my favorite moment comes when Munger explains why investing in great new technology often leads to economic pain, if not ruin:

The great lesson in microeconomics is to discriminate between when technology is going to help you and when it's going to kill you. And most people do not get this straight in their heads. But a fellow like Buffett does.

For example, when we were in the textile business, which is a terrible commodity business, we were making low-end textiles - which are a real commodity product. And one day, the people came to Warren and said, "They've invented a new loom that we think will do twice as much work as our old ones."

And Warren said, "Gee, I hope this doesn't work because if it does, I'm going to close the mill." And he meant it.

What was he thinking? He was thinking, "It's a lousy business. We're earning substandard returns and keeping it open just to be nice to the elderly workers. But we're not going to put huge amounts of new capital into a lousy business."

And he knew that the huge productivity increases that would come from a better machine introduced into the production of a commodity product would all go to the benefit of the buyers of the textiles. Nothing was going to stick to our ribs as owners.

That's such an obvious concept - that there are all kinds of wonderful new inventions that give you nothing as owners except the opportunity to spend a lot more money in a business that's still going to be lousy. The money still won't come to you. All of the advantages from great improvements are going to flow through to the customers.

Keep that in mind the next time your company's considering a big investment in information technology. You know you're going to pay the bill, but who's going to end up reaping the rewards?

1:29:00 PM    comment   

Google's much-discussed but little-used Google Base appears to have even bigger ambitions than previously speculated. The company's top man in Europe, Nikesh Arora, divulged yesterday that Google is planning to turn Base into a full-fledged retailing platform, at least in Europe. It would thus compete head-on with other retailing platforms such as Amazon's and eBay's.

Arora told the Financial Times

that Google wanted companies in retail -- and possibly sectors such as real estate -- to submit details of their goods and prices [to Base]. Google would index and package the information into a consumer-friendly search engine, giving its users a virtual supermarket across a number of retail brands. Mr Arora said: "Google Base is going to have a huge impact on retailers," adding that the move reflected internal research, which found many leading European retailers did not feel they were competitive enough online.

It's a mystery to me how search-engine shopping would improve the competitiveness of individual retailers. It seems more like a means of further reducing e-commerce to an endless, automated price war - ruinous rivalry on steroids. But maybe there's more to the story. A major UK retailer told the FT that "Googleís retail offer would be of interest if the internet company could also arrange for distribution." That's a prospect that should strike terror into the hearts of Google investors. Google Prime, anyone?

1:17:37 PM    comment   

Twenty-two years ago, Apple Computer aired its famous "1984" commercial during the Super Bowl. The ad's message was clear: By giving power to the individual, Apple's decentralized computing technology would bring an explosion of personal creativity that would demolish the oppressive control represented by IBM's traditional, centralized computing technology. As Ted Friedman explains:

With the 1984 ad, Apple identified the Macintosh with an ideology of "empowerment" - a vision of the PC as a tool for combating conformity and asserting individuality ... It turn[ed] the confusing complexity of the Information Age into a Manichean battle of good vs. evil. There's the bad technology - centralized, authoritarian - which crushes the human spirit and controls peoples' minds. Read, IBM. But we can be liberated from that bad technology by the good technology - independent, individualized - of the Mac.

Yesterday, Microsoft launched an assault on IBM using a very similar message. Microsoft, said CEO Steve Ballmer, offers "people-ready" computing. "Our innovations facilitate the power of people," he went on, drawing a direct comparison with IBM: "Their pitch is to let IBM help your company with its innovation. Ours is to empower your people to innovate. The two approaches are striking in their contrast." IBM is The Man - the hidden power behind the hegemony of the centralized, spirit-crushing Corporate IT Department - and Microsoft, like Apple before it, is going to help you stick it to him. "People, people, people," boomed Ballmer, in case anyone missed the point.

But Microsoft's Apple strategy goes deeper than its marketing message. Apple promoted the "integration" of its technology as a core strength. By maintaining a closed system, combining proprietary hardware and software, Apple could offer, it claimed, a better "user experience." You didn't have to worry about the technology - it just worked - so you could concentrate on doing your work and being creative.

Microsoft, which built its dominance in PCs on an open architecture, is now taking the Apple approach here as well. It's saying that its integrated platform of corporate software, from the operating system to the desktop application, offers a better user experience - again freeing the individual to innovate. Microsoft's Jeff Raikes argues, according to Business Week, that Microsoft "provides additional capabilities by integrating its products. 'A combination of Microsoft technologies will always have more impact,' he says."

Will Microsoft's strategy work? Will it erode IBM's hold on corporate computing? I don't know. But it's worth remembering how the earlier Apple-IBM tussle turned out. The victor was neither Apple nor IBM. It was a third company that, at the time, both Apple and IBM viewed not as a competitor but as a benign partner. The company's name was Microsoft.

1:14:57 PM    comment   

I read two compelling, yet contrary, takes on the question of "net neutrality" this week, one by Douglas Holtzeakin, the other by Doc Searls.

Holtzeakin, the former head of the Congressional Budget Office, argues in a Financial Times op-ed against using legislation or regulation to protect the "one-size-fits-all" neutrality of the internet. He contends that "one cannot find a real-world network that operates neutrally":

Try freight transport. If I want to buy a case of French wine, I can have it shipped ocean freight. If I want it quickly, I can pay more and have it flown to the US. [Or] think of traditional poles-and-wires telephony. Even in those networks, many consumers have the option - and parents of teenagers typically pursue it - of paying more for greater capacity, or "call waiting". These arrangements have flowed naturally from market forces and reflect the nearly limitless capacity of tailored contracts to meet the dual goals of cost recovery and optimising customer satisfaction.

The internet, he says, should be allowed to evolve in the same way, guided by market forces rather than regulatory fiat.

In an article in Linux Journal, Searls argues that the internet's neutrality needs to be safeguarded if it is to continue to be a platform for innovation. To Searls, the past offers plenty of examples of neutral networks, the openness of which provided large public benefits:

How about framing the Net as rivers and oceans, which nobody owns and which float everybody's boat? Or how about framing the Net as public land? [Or] how about framing the Net as the "Information Highway" that became a cliche (without ever quite happening) a decade ago? To get what I mean by that, consider what the US would be like today if we hadn't created the Interstate Highway System fifty years ago. What would the lack of Interstate Highway infrastructure have cost us by now?

The analogy to roads is particularly interesting because it seems to cut both ways. Searls is right that having an open road system, with free and equal access to all, has provided a wealth of economic benefits. On the other hand, as anyone who has driven into or out of a big city recently knows, those roads are often horribly jammed, resulting in the waste of huge amounts of people's time. Holtzeakin picks up on this theme:

The profound desire to pretend that highways are free has produced massive urban congestion - and a revolution in the form of toll roads and even congestion pricing. When London decided to charge for its valuable automobile capacity at peak times, the city did not disappear. Instead, it raised the social value of the overall traffic network by creating explicit priorities and the open opportunity for all to choose - or not - to pursue them.

Holtzeakin seems a little too sanguine about the power of large network operators to control or distort market forces. But I think Searls goes too far in saying that the choice is between "net neutrality" or "net neutering." I'm not sure it's so black and white. A lot of different people use the internet for a lot of different purposes. The goal should be to accommodate as many uses as possible rather than to limit them based on narrow commercial or ideological interests. Just because public highways are good doesn't mean toll roads are bad.

12:23:50 PM    comment