So much for the $99 Zune

I responded last week to a comment left on our blog by Mike Evangelist hypothesizing that Microsoft could do some serious damage to Apple's iPod domination by launching its Zune music player at $99. Well, so much for that theory. Today, Microsoft announced that the Zune will retail for $249.99, $0.99 more than Apple's fifth generation iPod video. I suspect that still represents a subsidy of the product, but probably only about $50 per device. And blog readers got that prediction right, by the way; more than a third voted on my blog entry that they believed that Zune would launch for $249.

The bad news: at that price, this interim product is going nowhere. It will sell to those people that love Microsoft products and few others. Microsoft even managed to alienate music lovers who already have bought a lot of Microsoft music, since the player won't play protected Windows Media files other than those from the Zune store (that includes ones bought from stores like MSN!), and it will impose sharing restrictions on unprotected MP3 files that the user owns. With no compensating price advantage, this marketing plan provides little differentiation from iPods and many disadvantages. And without a massive deployment of these devices, the wireless sharing feature becomes moot.

At least Microsoft is consistent: users will have to wait for Zune 2.0 before we find out whether Microsoft will actually challenge Apple for digital music player leadership. But Zune 1.0 appears to be dead on arrival.

Full disclosure: I do hold some Apple shares.

Technorati Tags: Apple, iPod, iTunes, Marketing, Microsoft, Music, Windows Media, Zune

Intel's message: We're winning the core war -- sort of

Because of our deadlines here, we're missing Intel's Developer's Forum (IDF) this week in San Francisco. But we've been keeping up by reading the accounts in various publications, such as today's article in the New York Times. And in that article, we saw a bit of a marketing struggle, as Paul Otellini proudly announced that Intel would introduce a quad-core processor in November:

“This is about bragging rights,” the Intel chief executive, Paul S. Otellini, said in an interview after his speech opening the three-day Intel Developers Forum, an annual event for makers of PC’s and accessories.

....

...the company decided to package two dual-core chips in a single package to gain a half-year lead in the new quad-core approach.

At a news conference, Mr. Otellini defended the approach, asserting that it would not result in any performance disadvantage. “The initial ones are multi-chip, but so what?” he said. “You guys are misreading the market if you think people care what’s in the package.”

Intel also announced that it was making quicker progress on an initiative it introduced at its annual developer conference last year to reduce the power required for processing by a factor of 10. “In 2008 we’ll meet our decade goal of a 10X reduction in power,” he said.

Now, we're all about marketing your advantages, but the two chip, quad-core processor feels a bit disingenuous, particularly when Intel starts crowing about being more power efficient. Do the math on the power calculation: if one dual-core chip in a package consumes X watts, then two dual-core chips in a single package consumes -- you guessed it -- 2X watts. You don't get any power efficiencies by putting two chips together in a single package.

It's nice to have bragging rights. But don't blame companies like Google and Sun if they decide that AMD turns out to be the better choice for their quad-core systems. No matter how good the boast, bragging rights don't pay the data center power bills.

Full disclosure: I have no positions in Intel or AMD.

Technorati Tags: Processors, Core wars, Intel, Multi-core, AMD, Marketing

What The Paradox Of Choice means

This week's audio TedTalk is Swarthmore professor Barry Schwartz discussing the findings from his book, The Paradox Of Choice. If any of you are fans of the tyranny of too much, you'll enjoy Barry's talk. We both use many of the same examples, but Barry comes at the topic from the point of view of the consumer, and we address it from the marketer's viewpoint. But his points on issues of impossible expectations for products and decreased consumer satisfaction from choice are ideas every marketer should be thinking about in today's business.

Technorati Tags: Barry Schwartz, Marketing, Paradox of Choice, Tyranny of too much

Sporadic blogging this week

We're in the midst of a maelstrom of activity here at Blackfriars World Wide Headquarters as we are putting our Sizing US Marketing 2006 report to bed this week, so blog posts will be sporadic. So in lieu of any detailed analysis, here are some of the stories we've been noticing lately as worth of marketing comment:

• The HP phone pretexting story continues to spiral out of control. Today's New York Times recaps CEO Mark Hurd's Friday press conference where he accepted both responsibility and Patricia Dunn's job of Chairman of the Board. While accepting Dunn's immediate resignation was the right thing for the company, as we noted when the event first came to light, Hurd taking over as Chairman is certainly going to raise issues of proper corporate governance, thereby providing more grist for the news mill. This would be the right time for HP to bring in someone completely independent and with unquestioned integrity as Chairperson to do a proper investigation and set things right. Sadly, with Hurd as both Chairman and CEO, that is unlikely to happen, and we'll keep reading bits and pieces of HP's misconduct for months to come. So much for HP's comeback.


• The electronic voting machine debacle is just getting started. In the aftermath of serious voting irregularities in Maryland and revelations about these machines being about as secure as your local hotel minibar (namely, not very), articles like this one in the New York Times are starting to raise serious concerns with officials and voters alike. The voting machine companies like Diebold and ESS are doing a terrible job of communicating with the public, leading voters to conclude one of two things: 1) the companies don't know how to secure electronic systems correctly, or 2) they really are trying to stonewall election officials and voters. This is another story with legs, created by poor communication.

I have about four more articles I noticed that will have to wait. But one other I have to comment on: I saw my ex-Forrester colleague Bill Bass and his new company Fair Indigo featured in today's New York Times Business section. Bill is a truly sharp guy and a terrific marketer, having shaped Lands End's online retailing operation prior to and after its sale to Sears. I was particularly interested to read a Forrester analyst's comment on the company:

Marketing could present difficulties for the company, especially since Fair Indigo is banking on word-of-mouth in its early stages. “If costs are higher, it leaves less money for building a brand and introducing new designs,” Mr. Dhar said. “Some of these could be offset by word-of-mouth and other forms of buzz, but the examples of a mass brand built purely through these media are rare.”

Given the online nature of Fair Indigo's operation, I doubt Bill is relying purely on word-of-mouth for his marketing. After all, didn't he just appear in the New York Times? Sounds like good old fashioned public relations and press is working just fine for him.

Technorati Tags: Bill Bass, Fair Indigo, Hewlett Packard, Mark Hurd, Marketing, Patricia Dunn, Security, Sizing US Marketing, Voting, Voting Machines

The new flat panel TV retailers -- and why Apple will become one

Yesterday's Wall Street Journal noted that companies like Office Depot, Home Depot, and RadioShack are branching out into flat-panel TVs.. With companies like Circuit City and Best Buy reporting robust profits driven by flat panels, we shouldn't be surprised at these retailers suddenly embracing flat panels.

But the recipe for flat panel HDTV success is complicated. Dell's HDTV business, for example, has basically flopped because of poor quality and worse marketing. HP's flat-panel business is similarly floundering. This isn't the PC business where a few component choices and low prices drive mass adoptions; it requires equal parts of stylish design, consumer marketing, differentiation, and high-technology support. Retailers aren't going to find success by outsourcing those key differentiators.

And the big box retailers aren't necessarily an answer. Why? Because any big box retailer like Home Depot isn't just going to carry the best flat panels. They are going to promote choice for consumers, and that means the typical big box video wall of TVs. The only problem: that is nothing like the typical consumer's living room, and that means a lot of consumers will make poor choices for their homes, especially under the watchful gaze of the commission-driven sales person. And that means dissatisfaction, returns, and lost profits.

But it is a different story for Apple, just as music and PCs were. Apple has design icon Jonathan Ive (among many other great designers), one of the best and most powerful brands in the world, incredible differentiation, and is repeatedly ranked number one for product support. It has a chain of 161 stores that generate 67% of the revenue of Best Buy with 10% of the floor space. And most importantly, Apple sells experiences, not low-priced hardware. They'll offer two or three choices to avoid the tyranny of too much -- and amaze everyone again by making more profits on fewer products.

We saw Apple's iTV set-top box last week, showing the company has targeted the living room as its next frontier. A $299 set-top isn't going to boost Apple's revenues to new heights, but beautifully designed, elegant flat panels would. And such products at stylish stores would extend the company's reach far past computers and iPods into a wide swath of consumers who just aren't going to drop $3,000 or more in a high-touch lifestyle purchase at Home Depot.

In my view, it's not a matter of if Apple will enter the flat panel market; the only question is when.

Update: Apparently, I'm not the only one who thinks this. John Montellaro over at The Mac Observer just wrote an article that comes to a similar conclusion from a different set of premises.

Technorati Tags: All In One HDTV, Apple, Branding, Home Depot, iTV, Marketing, Opinion, Retail, Tyranny of too much

Disney's and Apple's million-dollar week says "Get with the program!" to competitors

At a Goldman Sachs investor conference yesterday, Disney CEO Robert Iger reported that Disney sold 125,000 movie downloads through Apple's iTunes Store in less than a week, accounting for more than a million dollars in revenue. He further noted that he expects this trend to continue with Disney capturing more than $50 million in revenue from movie downloads in the first year.

This result is nothing short of remarkable. Remember, that the iTunes Store launched movies with fewer than 75 titles from Disney properties. No loss leaders were offered; every single one of these movies was paid for at prices ranging from $9.99 to $14.99. And while Disney and Apple will share those revenues in some undisclosed split, because this is digital distribution, Disney's share of that $50 million will largely show up as profit on its income statement.

What does this mean for movie studios? It means they should:

• Sign with Apple soon or miss out on the movie downloading profit stream. Amazon Unbox hasn't posting anything like these numbers with its download service yet. And while other services like MovieLink have possibilities, as of now, Apple appears to be the path of best digital distribution -- and best revenues.


• Stop holding out for variable pricing of movies. Studios that won't sign contracts with Apple or Amazon unless they get variable pricing for new releases are cutting off their profits to spite their faces. This is a market just getting started. Making the movie downloading process simple and a pleasant experience is far more important during this phase of the market than optimizing profits. The result? By holding out for the best possible profits on digital downloads, these studios are getting no profits from them whatsoever. Not exactly a recipe for business success.

What does this mean for Apple's competitors? It means that just as in music, Apple is demonstrating that a working system, a compelling store, and a simple business model is a far more powerful business proposition than promises of software, untried stores, and perfect profit optimization. In four years, Apple went from having no music presence to being the fifth largest retailer of music in the United States (and will pass Amazon to become #4 in early 2007). It has just started this process with movie downloads. And if the first week is any indication, Apple may see similar success -- and dominance -- with movies.

Postscript: By the way, there's another interesting metric lurking in those sales. Apple is currently selling about 20 million songs a week or about a billion a year. Given the average song is about 3 Megabytes, that means Apple delivers about 60,000 Gigabytes or 60 Terabytes a week. That's 100 Megabits per second (Mbps) of music every second of every day. But the movie business -- where movies are one gigabyte each -- is upping the ante. The movie business in the first week consumed 125,000 Gigabytes (125 Terabytes) of bandwidth, adding another 200 Mbps of average throughput to the mix. That's about double the bandwidth consumed by the entire music delivery service.

We don't really know what Apple is paying for that kind of bandwidth, but we do know they should be asking for bulk pricing.

Technorati Tags: Amazon, Apple, Bandwidth, Disney, iTunes, Marketing, MovieLink, Movies, Music, Studios

Blackfriars research cited in USA Today

Blackfriars research on non-traditional marketing was cited in Steve Strauss' Ask The Expert column titled How To Cut Through The Advertising Clutter. He writes:

The problem is that unconventional advertising is becoming so popular that it is in danger of becoming conventional. According to Blackfriars Communications, non-traditional marketing (e.g., online promotions, creating buzz, and so forth), rose 12% in the last year.

We were very impressed that he actually interpreted our Blackfriars Category Indices correctly to figure out the year to year change; not all reporters dig quite so hard to get the right numbers. Kudos to Steve.

Technorati Tags: Advertising, Marketing, Non-traditional marketing, USA Today

Why business communication gets jumbled

At last: a posting that's not about iPods or Zunes.

Jared Sandberg today has a terrific piece in the Wall Street Journal noting the how messages get distorted and misinterpreted within businesses. Think that doesn't happen at your firm? Check out the way Sandberg starts his column:

The childhood diversion known as the Telephone Game, in which the details of a sentence or phrase deteriorate with each retelling of it, is played the world over. Sometimes called Whisper Down the Lane and Pass It Down, it's also played, inadvertently, in almost every corporation on the planet.

George Franks, who runs a Bethesda, Md., management-consulting group, witnessed it, appropriately enough, when he worked at a telephone company. Years ago, when the company brought in an Italian executive to improve a division, the executive suggested that the business become more international. "Before long, staff and line managers were wearing double breasted continental suits and using cigarette holders -- to emulate the executive and be more 'international,' " he says.

The reason behind this is simple:

Research suggests that "when we listen, we drop information because we can't remember every word that someone has said," says Mark Redmond, associate professor of communications studies at Iowa State University. "When we retell it, we put information back in, adding elements that may completely change the meaning of the original message."
There's a double-whammy. Not only might you recall it incorrectly, but the added stuff reflects your own ideas, he says.

Much of Blackfriars' communications methodology focuses on the fact that no matter how educated and wise we all are, we can only easily remember three to five unrelated messages or ideas from an interaction, be it an article we read, a discussion with a person, or a speech we hear. Give people more information than that, and they start throwing away ideas and concepts. Worse, they start getting confused and don't necessarily remember much of what you are trying to get across at all.

So how can you tackle this problem? We have three simple solutions:

1. Distill down any important message to three to five key ideas and focus on those.


2. Repeat these ideas at the beginning and end of your communication.


3. Don't overload the listener with extraneous information that doesn't support those ideas.

Blackfriars trains corporations on how to communicate clearly and effectively with training courses such as "Making Messages Work" and "Creating Strategic Statements" as well as consulting. We also license a piece of software that helps companies create good messages with a consistent process. If your company is lost in your own games of telephone, use your telephone to give us a call.

Technorati Tags: Blackfriars, Business, Clarity, Communication, Marketing, Process, Telephone

Microsoft's Zune marketing strategy: subsidize razors for blade subscriptions

Mike Evangelist, writer of the excellent blog Writer's Block Live, had an interesting comment on my weekend article on Microsoft's marketing strategy for its Zune music player:

...it occurs to me that there may be another answer that explains Microsoft's odd behavior regarding the price and compatibility of the Zune. I think they are going to subsidize it...sell them for $99, or something like that. Buy their way into the market, then milk users for the rest of their lives as they buy/rent media.

I think Mike may have hit on Microsoft's plan. It's very akin to the XBox 360 pricing strategy, where Microsoft loses about $156 per XBox 360 they sell, with the assumption they'll make up the difference in game and Xbox Live revenues sometime in the future. With music subscriptions offering up visions of consumers playing $120 to $240 a year to Microsoft, subsidizing a Zune player by $150 or $200 might make a lot of sense to grab market share. While it would cost Microsoft something around $300-$400 million this year in subsidies and more next, such a strategy would have a chance of breaking Apple's dominant position. However, history doesn't favor a Microsoft win here, though; there are no examples of a company successfully building a sustained profitable business from such a subsidization strategy with one exception: the Sony Playstation 2.

So keep your eyes peeled for the possibility of $99 30-GByte Zunes. If Microsoft does that, Christmas music player sales could get very interesting.

Full disclosure: I do own some shares of Apple.

Technorati Tags: Apple, Marketing, Microsoft, Music, Playstation 2, Zune

The anti-iPod alliance splinters

Today's Wall Street Journal notes that RealNetworks' Rhapsody service is ditching Microsoft's Windows Media technology in favor of developing their own music player with SanDisk. I noted last Saturday that PlaysForSure licensees would be storming Microsoft's Redmond headquarters in protest because of Microsoft's launching its own proprietary Zune player and service to compete with them. Sounds like RealNetworks CEO Rob Glaser is in the front row with a pitchfork.

But the marketing challenge for RealNetworks and others is that without Microsoft's deep marketing support and subsidies, they are going to have to spend millions to successfully parry Apple's iPod marketing juggernaut. Given RealNetwork's online heritage, Blackfriars predicts they'll turn to online and non-traditional marketing for their cost efficiencies and ability to reach a young and hopefully influential music buyer. But it is going to be an uphill slog, since Real will be competing against not one but two big technology brands -- Apple and Microsoft -- to win customers.

Who knows? If enough PlaysForSure licensees sue, maybe Microsoft will pay enough in settlement fees to fund the marketing program. But frankly, I wouldn't invest money betting on that outcome.

Full disclosure: I do hold some Apple shares.

Technorati Tags: Apple, iTunes, Microsoft, Music, RealNetworks, Real, Rhapsody, Zune

Zune won't play content from Rhapsody, Yahoo! Unlimited, Movielink, and others

According to the Electronic Freedom Foundation, a careful reading of Microsoft's Zune press release (specifically footnote 4) indicates that Zunes will not be able to play protected Windows Media Audio and Video files. What does that mean? It means that Zune will provide no choices for content; you either buy protected content from Zune marketplace or are on your own to find unprotected content. Microsoft's own PlaysForSure content, if it is protected as most subscription and rental sites require, won't play on Zune.

I've posted previously that Microsoft is now suffering the fallout from its long string of business errors, so I won't belabor that point. But this marketing decision seems particularly wrong-headed because it is alienating its hardware and content partners -- the very people responsible for paying it the license fees that keep Microsoft's lights on.

I can understand that the Zune marketing strategy is to separate the brand and technology from the overall Microsoft media strategy. But Microsoft is sacrificing the PlaysForSure brand and all the partners that bought into that program (which already was referred to as "might PlayForSure") on the altar of Zune marketing. This may be nothing new from the company that bragged about "cutting off Netscape's air supply", but the difference here is that these were allies, not enemies in Microsoft's digital music business. If I were iRiver, Creative, Samsung, and just about every other music hardware OEM, my marketing VPs would be lining up with pitchforks and torches outside Microsoft's Redmond headquarters asking for the head of J Allard.

Microsoft had better be feeling really good about its new hardware and content businesses. With business partners getting this type of treatment, it's going to have a lot more trouble signing up licensees in the future.

Technorati Tags: Consumer Electronics, Creative, iRiver, Marketing, Microsoft, Music, PlaysForSure, Windows Media, Samsung, Video, Zune

The real target market for Zune

In following the reaction to Microsoft's Zune announcement today, I came across this piece from Reuters claiming that Zune's wireless connection is one of the characteristics that make it an "iPod killer". So I started thinking about consumer usage scenarios, and suddenly ran into a brick wall.

Now first, credit where credit is due. Microsoft marketing has decided sharing is Zune's big differentiating characteristic, so they are emphasizing that characteristic in all of their messaging. That's good marketing strategy.

But stop and think for a minute. A consumer decides sharing is for them, and they run down to their nearest Best Buy on the day that Zune is actually released. There they plunk down their $299 (at least that's the price at which Crutchfield sells Toshiba Gigabeats), run home, load up their Zune with ripped CDs, and head out to their favorite hangout for a full night of music-filled sharing. Sounds great right?

Only problem: no one else there has a Zune to share with.

Do the math. Microsoft can probably ship at most one to two million units by Christmas, and that will be the peak selling season for the year. During that same quarter, Apple will probably ship anywhere from 14 to 20 million iPods to add to the 60 million it has already sold. So Zunes are going to be two to three percent of the installed music player base this year -- and that's about the best case scenario. How do you have a great sharing experience with only two to three people of out a hundred? You'll be lucky if you see anyone else with a Zune in the first year -- after all, that was the way iPods were in 2001.

And then think about the purchasing decision and the purchasing profile. These aren't inexpensive devices. They cost as much as an XBox 360 (and, if Microsoft decides they don't want to take a complete bath on the extra cost of WiFi, more than an equivalent iPod), and therefore, they aren't an impulse purchase. And while they are ramping up, for every Zune sold, five or ten other people will buy iPods because they are the obvious choice for a music player.

So let's recap. Microsoft's target market is a group of people who have high disposable income, like to think differently, enjoy sharing experiences, and like going against the crowd. This is actually a wonderful target market. We know a lot about them. In fact, they've created some of the highest profit margins in the entire computer and consumer electronics industry for a single company.

The only problem: they've been buying Apples for years. Oops.

Technorati Tags: Apple, iTunes, Marketing, Microsoft, Music, Strategy, Zune

Microsoft's Zune pre-announcement throws away its hope to steal Christmas from Apple

Two days after Apple refreshed and lowered the prices on its iPod line (and thereby wrought havoc on Microsoft's launch plans), Microsoft today announced its own 30 Gigabyte Zune music player. This first product in the Zune line is, in fact, a rebadged Toshiba Gigabeat. It offers an FM tuner, will be available in black, brown, and white, and will provide wireless connectivity between Zune devices. In its press release, Microsoft commented on the Zune-to-Zune wireless sharing:

Wireless Zune-to-Zune sharing lets consumers spontaneously share full-length sample tracks of select songs, homemade recordings, playlists or pictures with friends between Zune devices. Listen to the full track of any song you receive up to three times over three days. If you like a song you hear and want to buy it, you can flag it right on your device and easily purchase it from the Zune Marketplace.

That sounds pretty restrictive from where we sit and a far cry from a the unlimited WiFi sharing previously rumored. It will be interesting to see consumer reaction to this feature and whether it actually drives or inhibits Zune sales.

But from a marketing point of view, this was not really an announcement, since Microsoft neither announced the price nor made the product available to consumers. Microsoft also declined to mention a launch date. Yet, the lack of any actual product didn't stop Microsoft from immediately positioning Zune as a platform:

“The digital music entertainment revolution is just beginning,” said J Allard, vice president, design and development, at Microsoft, who is leading the charge for building the family of Zune products. “With Zune, we are not simply delivering a portable device, we are introducing a new platform that helps bring artists closer to their audiences and helps people find new music and develop new social connections.”

But consumers don't care about platforms. They want music players that look cool, work seamlessly, and don't require paying monthly fees forever to listen to their own music. And pre-announcing a product without pricing, availability, and actual services is just a waste of a press release.

Microsoft had an opportunity to build some mystery around the features that would actually be in Zune and some buzz about what the Zune experience would be like. But with Microsoft laying out the major features of Zune now, it is letting consumers compare Apple's new fifth generation iPods with Zunes head-to-head with an important distinction: consumers can buy Apple iPods and can't buy Zunes.

Microsoft may have thought it needed to do this announcement to respond to Steve Jobs' event this week and staunch the new flood of iPod sales. But if Microsoft thought they were going to spoil Apple's biggest iPod Christmas ever, it just threw away one of its chances to do so.

UPDATE: I did some checking on the wireless sharing digital rights management. It turns out that the play-three-times-over-three-days limit applies not only to purchased music, but also to any music you may have transferred from CDs. Definitely not a feature.

Another sharing detail: some bloggers have been drooling over the possibility of DJing music to a room full of Zune users. However, I've seen no evidence that the device can stream music to other Zunes, just share the song itself. Without devices in the field, it's too early to know which way this goes, but my bet is that streaming over an uncontrolled WiFi connection turned out to be too iffy to make work. We'll see.

UPDATE 2: I did some additional thinking about the target market for Zune and its differentiation by WiFi sharing as noted in the Reuters story. If you liked this posting, you'll love my subsequent one.

UPDATE 3: In another bizarre revelation, footnote 4 of the Zune press release warns that Zune will not play protected Windows Media Audio or Video formats used by content providers like Rhapsody, Yahoo! Unlimited, Movielink and others. Here's my commentary on what that means; it isn't good.

Technorati Tags: Announcements, Apple, iTunes, Marketing, Microsoft, Movies, Music, Zune

Three markets that are different today after Apple's Showtime event

Apple's announcements yesterday mostly confirmed what we already knew: that . And even though the broad strokes were expected, some of the details of the actual announcements will have ripple effects into other parts of the industry. Specifically:

1. The new iPod pricing just cut off Microsoft's Zune at the knees. Microsoft's first Zune device is a rebranded Toshiba Gigabeat, which was planned to launch at $299. But with the dominant market share video iPod now starting at $249, that price is a non-starter. And since Microsoft is not the leader but the challenger in this market, Zune will have be be priced less than Apple's offering to get any traction. Microsoft's Robbie Bach is probably spending this week throwing darts at Steve Jobs' photo, since he just added several million dollars of red ink to Robbie's launch plans.


2. Apple's iTV pricing also whacked TiVO's Series3 video recorder. I'm a huge TiVO fan, and I was excited to see the latest HDTV Series 3 launch this week. But it's launch price is $799 -- and it would cost me another $199 to move over my lifetime service subscription. With Apple's iTV planning to launch at $299 and offering many (not all) of the same features of TiVO, suddenly, the decision to stick with TiVO may be a lot tougher to make. And at the very least, Apple's pre-announcement will put a chill on the DVR market over the Christmas selling season and hurt TiVO's pipeline of customers.


3. Apple's iTV isn't Apple's final living room play. The iTV box Steve Jobs showed is really a video Airport Express, probably with 802.11n wireless networking. But Steve showed that product just to demonstrate the completeness of his vision for delivering movies to the living room, not to give away his living room strategy. iTV really exists just to support "legacy TVs" -- that is, ones you already own. But the components that fit so nicely into a Mac mini case fit just as well inside an LCD display (as demonstrated by the 24-inch iMac announced last week) or a plasma TV -- better in fact, since it wouldn't require all the myriad connectors on the iTV. The fact that Apple didn't fire a shot across the bow of TV makers like Sony and Matsushita yesterday doesn't mean that it only intends to be a set-top box maker. It only means that Apple doesn't have all the pieces in place to completely blow people away -- yet.






Technorati Tags: Apple, Apple Movies, Apple TV, Consumer Electronics, HDTV, iPod, iTunes, iTV, Marketing, Matsushita, Microsoft, Pricing, TiVO, Sony, Toshiba, Zune

On HP's pretexting phone records: taking over isn't enough

Today, Hewlett Packard announced that Patricia Dunn is stepping down as the Chairman of the board in January and that Mark Hurd, current HP CEO, will take her place. HP is taking these actions in response to the recent disclosure that Dunn asked for phone records of board members to find out who was leaking company information to the press. Those phone records were obtained through a third-party agency that used "pretexting" (falsifying their identities) to obtain those records.

With CEO Mark Hurd taking over the Chairman position, it's story over right? Certainly the majority of analysts cited over at the Wall Street Journal think so. They are so wrong. This is a public relations and business disaster that's just getting started.

Think about this from the point of view of a possible HP customer, say, a large multinational bank. I'm interested in having HP provide me with hardware and services for my data centers for the next three to five years. But now I hear that the chairman of the board can't really distinguish the bright line between staunching a leak and breaking the law? And not only that, but that the FBI AND Congress are now investigating the firm for criminal violations? And the person who did this isn't even fired, but kept on as a member of the board? This type of publicity generates a clear response on the part of prospects and customers: an immediate reflex to look up the number of the nearest IBM or Sun salesperson. And despite all the good will that Mark Hurd has generated on Wall Street, losing customers is the surest way to put the stock back onto life support.

Mark Hurd this morning said, "I am taking action to ensure that inappropriate investigative techniques will not be employed again. They have no place in HP." And that's right. The founders of HP, Bill Hewlett and David Packard, never would have stood for them. The surprising thing is that even today, someone at HP thinks that a person who used those techniques should stay in a governing and fiduciary role at the company. Though people at HP will try to forget about this crisis, I doubt Congress, the FBI, or serious customers will forget about it for a long time to come.

Full disclosure: I have no positions in HP stocks or derivatives.

Technorati Tags: Crisis management, Hewlett Packard, Mark Hurd, Pretexting, Public Relations

Apple goes to the movies -- and more

[Apple's sneak peak at its iTV, a HDTV video box for the living room]


Apple's invitations to today's event read, "It's Showtime". And what a show it was.

To be fair, we had predicted many (but not all) of Steve Jobs' announcements today in San Francisco last week. And most of the items announced fell right into line. It started with Jobs noting that iPod connectivity is an option in 70% of the new cars sold this year (that will become significant at the end). We also heard about:

1. Movie downloads. As expected, Apple launched a new iTunes Store that supports full-length movie purchases and downloads. Price points are as expected: $14.99 for the latest releases, $12.99 if you pre-order or buy in the first week of availability of a movie, and $9.99 for older titles. Apple also added a variety of new TV content, including NFL football highlights for $1.99 each and $24.99 for a season pass. And the resolution of these shows all went up to 640x480 -- not quite 480p resolution, but very close. But sadly, DVD burning isn't allowed. That means that watching these movies on your couch on your big screen TV is out of the question -- at least until early next year as you'll read at the end of the article.


2. iTunes 7 music player. Apple updated its market dominating music player to now feature album art downloads for all the music in your music library, provided you have an iTunes account. It also dramatically steamlined to make it easier for you to find music, videos, and movies. Particularly impressive were the new capabilities to have both gap-less music, loss-less compression, and scan through your music by album art, a feature Apple calls Album Cover Flow.


3. Sixth generation video iPods. The latest iPods, despite being widely predicted, are decidedly not what most people predicted. The form factor hasn't changed from the fifth generation, but the price has. These iPods are now available for $249 for the 30 gigabyte version (7,500 songs) and $349 for the new 80 GByte version (20,000 songs). And now there are casual games such as Tetris, Pac Man, and Mahjong available for iPods from the iTunes store for $4.99 each.


4. Larger capacity, thinner, and colorful iPod nanos. Jobs also used the event to update one of Apple's most popular iPods, the iPods nano. The form factor has become thinner, but the product line broader. These systems are now available in 2 GByte ($149 in aluminum color only), 4 GByte ($199 in blue, pink, green, and silver), and 8 Gbyte ($249 in black only).


5. New iPod shuffles. The low end of the iPod product line got a refresh to be square, aluminum, and incredibly tiny. And it now sports both a belt clip, better headphones, and a new price: $79 for a 1 GByte player.

But of course the splashiest news was that Apple finally made its first foray into the living room with the iTV (not its final name). This is actually a pre-announcement, since Steve said the product will not be available until Q1 2007. But it looks a bit like a Mac mini, but hosts a huge variety of outputs -- HDMI, WiFi, FireWire, component video, analog video, and optical digital audio. It also boasts a wireless connection and is supposed to be everything you need to connect your computer to your home theater system. It's the missing link between the computer and the living room -- and should finally allow consumers a proper theater experience -- the ability to view movies on their sofas instead of in front of their computers. Steve actually demonstrated one working and displaying a HDTV movie of the Incredibles. The target price for iTV is $299.

Steve summarized the event with these words:

So, you can download all this great content online. It's:
Now playing on a computer near you
Now playing on an iPod near you
Coming soon to a TV near you


Apple is in your den
Apple is in your living room
Apple is in your car
Apple is in your pocket

What does it all mean? It means that Apple has finally started its march out of the computer room and into consumer living rooms and dens. Apple is repositioning computers, not as a tool for work, but as a tool for entertainment. This is the end computers as IT, and the beginning of computers as TV.

So while there's only one major movie distributor onboard now, expect the rest to join up, just as the music labels did with the iTunes Music Store. Because despite companies like Microsoft trying to build complicated ecosystems with hardware from one company, software from another, and content from a third to satisfy the consumer, Apple is pulling all the pieces together under one brand to make it simple and easy to buy. And as they make more inroads into your den, your living room, your car, and your pocket, that value proposition will become harder and harder for consumers to resist.

Full disclosure: I do own some Apple shares in my personal account.

Technorati Tags: Living room, Movies, Consumer Electronics, Music, iTunes, Apple Movies, Consumers, Apple Store, Marketing, Apple TV, iPod, Apple, Audiences

Apple stores and iTunes are now offline

You know it's a big event when both the Apple Store and the iTunes Store both go offline at the same time. Most interestingly, the iTunes Store (notice the lack of the Music name) has been down since this morning. Expect both back up around 2:30 or 3 pm EDT.

Technorati Tags: Apple, Apple Store, Apple TV, eCommerce, Events, iPod, iTunes, Media, Movies

When should we expect Dell's NASDAQ delisting notice?

The wires are abuzz this morning about Dell's announcement that it will delay its Q2 financial filing its second quarter report. As I read those headlines I remembered a near-identical announcement Apple made just over a month ago that caused it to delay filing its quarterly report. That announcement led the NASDAQ to send Apple a notice noting that it no longer met financial reporting requirements of the exchange, and therefore should expect to be delisted. So if delays in reporting caused exchange officials to threaten Apple with delisting, we should expect Dell to receive a similar letter in about a month.

What does this options scandal and the threat of delisting mean for Dell? It means that investor confidence is at risk. If Dell is demoted to the pink sheets even temporarily, many mutual funds won't be allowed to own it according to their charters. That will create less demand higher volatility in the stock.

Now to be honest, I don't think that Dell will *ever* be demoted to pink sheets in the near future. They will just request a hearing as Apple did and plead their case. Frankly, if NADSAQ were to delist everyone who had an options problem nowadays, the NASDAQ 100 would turn into the NASDAQ 3. And I think they know that.

But it is the perception that Dell could be delisted that is dangerous. It raises Dell's risk profile dramatically, even if there is no actual risk. Perceptions of serious risk to investments are the makings of runs on banks and stock crashes.

The best strategy Dell could adopt to shore up confidence would be for Michael Dell o go back to being the public face of the company again. After all, he is the guy whose name is on the company, and he is the one that investors and shareholders will look to for assurance that the company isn't going down the tubes. The best thing Michael could do today is to say that he is going to personally drive the restatement process, vouch for the results, and guarantee nothing of the type will happen again. If he does that, Dell could weather this crisis and return better than ever. If he doesn't, the business is in for a long, tough slide.

Full disclosure: I own no Dell stock and do not have any positions with regard to Dell stock movements (i.e., no options, no short positions, etc.).

Technorati Tags: Delisting, Dell, Michael Dell, NASDAQ, Options, PCs, Stocks

Today's land rush for branded content

As of today, SeekingAlpha.com is now providing financial content to Yahoo Finance. I believe this deal will cause signficant changes in financial analysis; here is why.

Back in January, I wrote a piece titled, "Sounding The Alarm For Publishing's Decline". In that rather gloomy analysis, I predicted that the tyranny of too much, the overwhelming proliferation of blogs, TV channels, Internet media, and advertising, would cause wholesale deflation in the average value of content. I further predicted that this deflation would push branded media companies to enter a land grab for high-quality content to differentiate themselves from the average. I concluded with a prediction that companies like Google and Yahoo would be the most successful aggregators in that land grab.

Today's deal between SeekingAlpha.com, where my writing is regularly syndicated, and Yahoo Finance is just one of the proof points for those predictions. But this deal also illustrates another interesting trend: the rise of open analysis.

What do I mean by open analysis? Here's my definition:

Open analysis is the aggregation, interpretation, and distillation of public data by a community of independent writers.

Open analysis relies upon a large pool of expert analysts who sift and analyze news events, stocks, and strategies, for their own businesses. That pool of content is then itself graded, sorted, and organized into a single, branded site such as SeekingAlpha.com (and, as of today, Yahoo Finance).

This approach contrasts with traditional business coverage that relies on a set of select journalists who can only cover the biggest stories of the day. Because a traditional publication can only afford to support a limited number of journalists, economics forces it to pre-select the topics it considers worthy of analysis. And that pre-selection often misses big opportunities and bigger stories brewing in less covered subjects.

Why is open analysis important? Because it:

• Broadens business coverage. Even the hundreds of reporters at Dow Jones can't possibly cover the thousands of diverse businesses on the NASDAQ, to say nothing of the tens of thousands of startups. Why? Because they can't parlay that coverage into a hit story that will drive revenue to pay their wages. Open analysts have no such constraints. They can choose to write articles for an audience of ten; their only risk is their own time.


• Creates more insights. Open analysts, writing from their own business interactions, often deal with small and unknown companies regularly. These interactions provide new points of view and deeper insights than any press interview could -- and those insights get passed along to readers.


• Fosters honest opinions. Despite Chinese walls, no Wall Street analyst wants to critique the business strategy of a company if the sell-side of their company is trying to find buyers for that company's stock. Yet most open analysts make their living being independent from the big guys and calling shots as they see them. Open analysis gives independent research and opinions equal time with those that have a larger agenda.


• Parallels other social networking businesses. Open source software development has created the GNU Linux operating system and Apache Web server, both of which rival commercial products produced by Microsoft and others. The open encyclopedia, Wikipedia, now has far more articles than the Encyclopedia Britannica and on average has fewer factual errors, despite being developed entirely by volunteers and open development methods. Open analysis applies similar methodology and community to the task of analyzing business. And while we're at the beginning of that process and therefore don't know the results yet, this method is certain to introduce new voices and ideas into mainstream media, where readers can judge its success and failure themselves

So open analysis is important. But there's a dark side too, that I mentioned in the beginning. Open analysis adds to the tyranny of too much content.

In an era of three TV networks, it was easy for 80% of America to choose to watch The Ed Sullivan Show when there were only two other choices. In an era of 250-300 TV channels, we never see 80% audience shares even for the Super Bowl. Too many choices dilute content value.

Ironically, as we've been given more choices on the Internet, the more we've turned to a very small number of content aggregators -- companies like Google and Yahoo -- to overcome the tyranny of too much. It is only as those companies have grown and tackled this new tyranny of too many choices that open analysis has become possible. They have taken the wealth of Internet knowledge, and branded not the content itself, but how you get to it. So while the Internet landscape has been growing, Yahoo and Google have been building superhighways to connect users to that content -- and selecting where the off ramps to the best locations are.

My original article forecast a bleak future for traditional publishing and media. But in any serious decline, a few companies always manage to keep their heads and figure out a way to thrive on change. Yahoo Finance and SeekingAlpha are using today's deal to open up some new territory around open analysis. And while there's still a lot of construction here on the frontier, it feels like it might drive a lot of growth around here too.

Technorati Tags: Analysis, Blogs, Financial analysis, Open analysis, Publishing, Publishing 2.0, SeekingAlpha, SeekingAlpha.com, Stocks, The Long Tail, Tyranny of too much

Moving beyond the iPod video

I read an article on Gizmodo.com on Sunday saying that in the New York Times advertising fliers this weekend, there were *no* iPod ads. I can't verify that fact, but I did take a run to Target, and was somewhat surprised to see no iPods for sale there -- they all seemed to be out of stock at the store I was at. This morning, I went to the online The Apple Store (U.S.) and checked out the special deals section, only to find that refurbished 30 Gigabyte video iPods are now $199. Now given that that is the same price Apple is selling 20 GB iPod Colors (without video), it sure sounds like Apple is trying to clear stock.

This is all circumstantial evidence, but it is what I'd do as a marketer if I were trying to avoid a lot of returns from unhappy customers who bought products just before they were replaced by much cooler ones.

As an aside, everyone should note that Apple has changed its major announcement schedule to accommodate its consumer market. For much of its history, all of Apple's cool announcements were at the January MacWorld in San Francisco, and a smattering of others were in a Boston or New York MacWorld. But anyone who studies consumer retailing knows that those are both lousy times to announce consumer products. The best time to launch consumer products is in September and October, just prior to the holiday selling season where retailers make most of their annual profits. It's no accident that the iPod nano and the video iPod were both announced in September and October respectively.

My prediction: we'll get new, cooler video iPods tomorrow and a new way to distribute movies wirelessly to the living room. But the one more thing I'm holding my breath for is the all-in-one 40-inch and 50-inch Apple HDTV. While the 24-inch iMac mounted on a wall would work well for an apartment, Apple has an opportunity to make a play for the larger American living room. It's the right time for such an announcement, and LCD and plasma price cuts have made it affordable. The only question is whether the product is ready.

Full disclosure: I own some shares of Apple computer in my own personal account.

Technorati Tags: Apple, Business, HDTV, iPod, Mac OS X, Marketing, Movies, Steve Jobs, Video, Video iPod

Amazon's Unbox movie service isn't any threat to Apple

As noted in this article in the New York Times Amazon's Unbox movie downloading service launched last night. Sadly, I think it is going to go nowhere. Why? Because it's not a service designed to meet the needs of real users; instead, it's all about protecting the studios and accepting Microsoft's very limited view of consumer rights in the digital world.

Why so negative? Because Amazon's Unbox service provides:

• No living room experience. These movies and TV shows can be burned to a DVD, but not to one that will actually play on a DVD player other than the computer that downloaded the video. The result? Unless your computer is a Media Center PC hooked up to your TV in your living room (a configuration I estimate to be in fewer than 3% of US homes), forget watching these movies on your couch.


• No guarantee of a good portable experience. Yes, these movies can be transferred to six non-iPod devices, including some (but not all) from Creative, Archos, iRiver, and Toshiba. We can assume they will also play on Microsoft's Zune, since that will be based on the Toshiba product. Of course, these devices constitute in aggregate far less than 5% of the portable media player market. But check out this disclaimer right out of the frequently asked questions: "If your device is Plays for Sure compliant it may work" (emphasis is mine). Wasn't the whole point of Plays For Sure to guarantee media would play for sure?


• No support for anything other than Amazon's Media Player on a hefty Windows XP computer. The only way to play one of these videos is by downloading a piece of software from Amazon; the files aren't standard MPEG2 or MPEG4 formats. And the software requires that you run it on Windows XP with at five gigabytes of free disk space and at least a half a gigabyte of main memory (which, by the way, is incorrectly cited as 256 MBytes of memory on this installation page. If you run Windows 2000, ME, 98, Linux, or a Mac, you are out of luck.


• No discount for all these restrictions. With all these restrictions and by reducing the need for the studios to provide you with a disk, a case, and supporting materials, you'd think that consumers would be seeing hefty discounts over buying a DVD of the same movie. Think again. When I shopped for a DVD of "The Matrix" it cost cost $9.88. When I shopped for the same movie on Unbox, it cost $9.88 -- exactly the same. And the DVD I can play in my living room or on any computer in my house, rip to a file that will play on my Video iPod, and even sell to someone else when I'm done with it.

I predict you are going to see a very different service from Steve Jobs next week, and consumers will get to vote with their wallets for which version they prefer. But Jobs at least understands that any movie download service has to create a rich, valuable experience for the consumer, and not just be a way for studios to pocket more money for less work. And until someone else in the digital media business starts to understand that balance, Apple will continue to rule paid digital downloads.

Technorati Tags: Amazon, Apple, Apple Movies, Digital home, Internet, Marketing, Media, Merchandising, Microsoft, Unbox, Windows

A portrait of Ubuntu's free software rocket man, Mark Shuttleworth

Forbes yesterday published a refreshing piece on Really Free Software and its newest rock star, Mark Shuttleworth. Mark is definitely an interesting guy, having both pocketed about $700 million from the first Internet boom by selling digital certificate company Thawte to Verisign and then using about $20 million to hitch a ride to the International Space Station. But lest you believe that he is your run-of-the-mill dot com playboy, he has already invested $15 million into Canonical, the company behind Ubuntu Linux, expects to invest another $15 million before he knows whether it will be profitable, and has put another $10 million into the Ubuntu Foundation to support his vision into the future.

What has he gotten for his investments? Four million happy Linux users being supported in 22 languages, many of them desktop users. And more importantly, he has created a development community that actually cares about the end user experience on Linux. It's too early to tell yet, but Mark's investment of about $40 million may actually overcome the traditional "chicken and egg" problem of new platforms. With four million users, it's worthwhile for a person or company to develop a package or service to sell to those users. And the more packages (there are already about 16,000) and services, the more users who will adopt it.

In the first Internet boom, I used to keep an eye on whatever Jim Clark was doing. Jim, whom I met in 1994, as responsible for putting Silicon Graphics, Netscape, Healtheon, myCFO, and Neotris on the map because he had the vision, the money, and the connections to make new things happen. Mark Shuttleworth may be the new 21st century Jim Clark. And the fact he's not one of the California VC gang (Mark hails from South Africa) may break the media myth that all good technology comes from Silicon Valley. And you know what? It's about time.

Technorati Tags: Linux, Mark Shuttleworth, Marketing, Open source, Software, Ubuntu

Sony Playstation 3 rollout cutbacks: bad news, but good risk management

Last month, I noted that Sony's launch preparation for its Playstation 3 appeared to be ahead of the pace Microsoft set last year with its Xbox 360 launch. However, that hasn't made Sony immune to setbacks to its schedule. According to the International Herald Tribune, European sales of Sony's PlayStation 3 will be delayed until March. Further, because of a shortage of blue lasers, production will be reduced from initial goals. Sony had planned to have 2 million units available for world-wide launch in November; now, that number has been cut back to 500,000, of which 400,000 will be for the US market and 100,000 for Japan. By the end of the year, Sony now hopes to ship 2 million Playstation 3s, where it had previously planned to ship 4 million. Projections for sales by the end of Sony's fiscal year of March 31, 2007 remain at six million.

While this is clearly bad news for Sony, I have to give Sony some credit for focusing their efforts on just two markets instead of attempting a world-wide launch with limited stock as Microsoft did last year. Europe's panoply of languages, tarifs, voltages, and regulatory standards poses much larger marketing and distribution challenges than the somewhat more homogeneous markets of Japan and the US. With only two languages, one voltage, and two regulatory environments for the initial rollouts, Sony should be able to put more of its energy into debugging, production, and marketing efforts in the two markets where it will launch. While it doesn't change the bad news of short supplies and poor production, it at least maximizes the odds of good customer experiences with the units they do have.

Technorati Tags: Games, Gaming, Marketing, Microsoft, Playstation 3, Sony, XBox 360

Why an Apple Internet HDTV is crazy -- like a fox

I got a few questions as the result of my speculation yesterday about Apple's new 23-inch iMac being the company's entry into consumer HDTV. Well, today, we got the official announcement that the iMac is actually a 24-inch one with Core 2 Duo upgrades. But after the first few questions that asked if I was crazy, the most common query was, "Why would Apple go into the TV business?"

Here's my take. Apple wants to sell movies from the iTunes Music Store (presumably up for renaming someday soon) because it can profit from the wonderful economies of digital distribution. But once the consumer downloads that movie, how can Apple guarantee them a good experience that will bring them back for more?

Sure, people can play their movies on their computers. But think about that. You settle down in your chair and start watching a movie on your desktop. That's fine for about the first 30 minutes or so, and then you start getting uncomfortable. So you move things around a bit, maybe adjust the screen some more, and tough your way through it. But at the end of two or three hours, it isn't fun any more, and I predict, most consumers will rapidly migrate back to Blockbuster DVDs or Comcast video on demand if watching on a computer is all that Apple offers. It's just not a compelling and comfortable consumer experience.

Some will say, Apple's digital movie business is to support the new video iPod. Could be. But again, how great an experience is it to watch a full-length movie on a seven or nine-inch screen? And more importantly, how likely is that to drive sales of millions or billions of copies of digital movies?

No, digital movies are designed for people to sit back in comfortable chairs and become immersed in a movie experience. That means having a high-resolution image and good quality sound. And mobile experiences are a part of this, they aren't the bulk of the demand. The real demand is in the living room. And that means Apple needs a device there to deliver that experience.

When the Internet boom started in the mid-1990s, Apple sparked consumer adoption with its all-in-one iMac. Why? Because consumers could unpack an iMac and be on the Internet in 5 minutes. That was a huge differentiator in a market where the more traditional Windows experience was an hour or more of unpacking, connecting, installing, and configuring boxes. Simplicity sold and re-started Apple's business.

The HDTV market and digital movie delivery today is still in its complex connecting, installing, and configuring infancy. Apple has the same opportunity to reinvent these markets with a new plug-and-play system that radically simplifies the process, an iMac for Internet HDTV. Will they? We should have a better idea on September 12. I may be crazy, but from where I sit as a marketer, it's Apple who would be crazy not to do it.

Technorati Tags: Apple, Consumer Electronics, Front Row, HDTV, Home theater, iMac, Internet, iTunes, Marketing, Movies

What Apple update is happening today?

As of 9:40 am today EDT, the Apple Store is offline. That usually indicates that Apple is updating its products. The question today is, what are they adding or subtracting?

Update: It is back online now, and nothing appears to have changed.

Technorati Tags: Apple, Apple Store, Marketing

Apple's first all-in-one HDTV: the 23-inch iMac

We've been speculating for about a year that Apple would roll out both an all-in-one HDTV and an on-demand, Internet-based TV/Movie network. Well, rumors from AppleInsider say that the wait may be over:

Though largely unconfirmed, there has been anecdotal evidence to support the notion that the streaming device may find its way into the AirPort Express product family. In particular, Apple last month began to constrain new shipments of AirPort Express modules to its US-based retail distributors, promising fresh shipments at a later date. In an August 6th filing, the company also reapplied for an 'AirPort Express' trademark with the United States Patent and Trademark Office.

Still, it should be noted, that although the streaming device has been targeted for an unveiling during this month's affair, it has yet to receive Jobs' official stamp of approval. Insiders say spotted development of the device, most likely related to its embedded firmware, is still undergoing tests. And unless completely satisfied with its performance, Jobs could delay roll-out until a slightly later date.

Nevertheless, this month's media event will bear the fruits of several other Apple product initiatives. First and foremost, insiders have said, will be an introduction of the company's largest and most stunning iMac to date: a widescreen, possibly high-definition model, built around what appears to be a 23-inch display.

This is particularly interesting when combined with a report from ThinkSecret about the ability to wall-mount the 23-inch iMac.

Also rumored, but not confirmed, is that Apple will be introducing a VESA-compliant mounting kit or its own wall-mount for the new iMacs. Apple has not offered such an accessory since the original (pre-iSight) iMac G5.

So next week, we may see a 23-inch iMac, 1080p HDTV (Apple's 23-inch displays are both both progressive and greater than 1080p resolution, so 1080p is almost a given). You can mount it on the wall, and you can wirelessly stream TV shows and movies to as well as display photos, play music, and edit and burn videos and DVDs. Now a 23-inch display isn't exactly home theater sized, but it's certainly a way for Apple to test the waters for consumer acceptance of an all-in-one solution. And if the 23-inch takes off, you can bet that Apple has the ability to package the same computing hardware with 30-inch, 40-inch, and 46-inch LCDs as well. And by allowing some ambiguity as to whether this is a computer or consumer electronics device, Apple gets both market data and device revenue at the same time -- to say nothing of creating demand for movie digital downloads. And when venturing into new markets, marketing doesn't get any better than that.

Technorati Tags: 1080p, All In One HDTV, Apple, Apple TV, HDTV, iTunes, Mac OS X, Macintel, Macintosh, Marketing, Media server, Movies, TV

The deeper meaning of free enterprise: more tales from Ubuntu Linux

I mentioned a few weeks ago that my two boys, Robert and David, built their own Ubuntu Linux computers this summer. The computers have worked brilliantly, and other than one stick of RAM that had single bit errors and had to be sent back, the project has been a huge success.

But there was one big surprise lurking: I had no idea how much the boys would love Ubuntu Linux.

For those of you who aren't familiar with Ubuntu Linux, it is the brainchild of Mark Shuttleworth, founder of Thawte digital certificates and ISS cosmonaut, among other credentials. Ubuntu (which means respect, helpfulness, sharing, or community) Linux itself is a particularly user-friendly child of the Debian series of Linux distributions that "should just work." While it isn't on a par yet with the ease of installation and use of Mac OS X (which, to be fair, runs on a much more restricted set of hardware), it certainly setting new standards for ease of use in the Linux market.

So it's a cool Linux. Why do Robert and David love it so much? A few things make it truly special for teenage exploration:

• Pre-installed software. The system comes with a complete installation of OpenOffice for creating documents and the open source standard for photo manipulation, Gimp. And What kid doesn't love games? Ubuntu Linux already comes with a host of fun family games installed, from FreeCell to Tux Racer. And once the kids are done with those, there's always...


• Add/Remove software.. Unlike on Windows, where this is just a way to launch and modify CD-ROM software installers (and clean up after them), the Ubuntu Add/Remove software function is really a point-and-click software Internet downloading system. It categorizes and lists software available on the Internet for your computer. You tick off the software pieces you want, and add/remove finds them, downloads, installs, and verifies the software and any libraries or other components you might need to run them. The result? When the boys tired of the pre-installed games, they could download even more of them -- and other nifty bits of software like the Open-GL-based XGL desktop.


• WINE. Part of the frustration of being in a Mac-based family has been watching PC-based game titles go on sale for $5 a copy, while the Mac versions remain at $29.95. But once the boys figured out they could use Add/remove software to get a copy of WINE, install Warcraft III using the original CDs, and then play the game, they saw that suddenly that equation had changed. We now have $8 copies of Diablo II and Starcraft that they couldn't really afford on their Macs.


• Malleability. While it seems like games are all that matter to Robert and David, it really isn't true. Both boys are learning about computers and programming, and not just in trivial ways. Robert is busily studying C and how to build his own interfaces under GNOME. David is fascinated by how he can customize his system to reflect his personality. And best of all, it's learning that is fun and engaging.

In my mind, though, the biggest value they are getting from Ubuntu Linux is that their computers aren't products of a large, anonymous corporation. They put the hardware together themselves from parts. They select and download many of the software pieces that make up the whole of their PC experience. They are starting to understand that as they learn more and make their own contributions, be they modifications, new scripts, or completely new games, they'll be able to share those back with the community as well.

My belief is that the boys are learning with their PCs lessons not unlike those promoted by Jimmy Wales of Wikipedia or Nicholas Negroponte of the One Laptop Per Child project. They are learning that the true value of free enterprise isn't necessarily making a big business or reaping a huge profit. It is exploring their interests, acting on their passions, and creating new things with a community of like-minded people. If that isn't exciting, I don't know what is.

Technorati Tags: Build-it-yourself, Education, Free enterprise, Free software, Internet, Linux, One laptop per child, PCs, Ubuntu, Wikipedia, Wine