Media companies awaken to find Apple way ahead of them

A couple of news stories this morning said to me that any company planning to beat Apple in media distribution had better bring their A game.

First, was the news that Wal-Mart has cancelled its movie download service announced with much fanfare last year. I had predicted the service wouldn't get any traction when it was announced because it tied downloads to DVD sales (a market category that Wal-Mart makes a lot of money at and was reluctant to cannibalize) and appeared to have no regard for how the customer would actually use it. But even more amusing was the reason Wal-Mart gave for canceling the service: HP discontinued the technology that powered it. If that reason is true, it says as much about Wal-Mart's technology decision-making as it does about its media business savvy. I doubt anyone will miss Wal-Mart's service; it was actually discontinued before Christmas, but the story didn't come out until after the holiday.

Secondly, the New York Times, the Boston Globe, and the major news wires are breathlessly noting that Amazon has signed on Warner Music to provide digital rights management-free MP3 music to its download service. The Times article does provide some interesting color starting around the fourth paragraph, quietly noting that Apple actually backs DRM-free music:

Warner, which releases music by artists including Josh Groban and Matchbox Twenty, was considered to be particularly reluctant to drop restrictions on copying. In February, after Apple’s chief executive, Steven P. Jobs, called on the major record companies to abandon D.R.M., Edgar Bronfman, Warner’s chairman, retorted that since movies and games carry copy protection, the notion of withdrawing it from music was “completely without logic or merit.”

The music companies had argued that Apple, which dominates the digital music market with its iPod player and iTunes service, should license its copy protection software to rivals. But Mr. Jobs has refused, saying that such a move would invite several problems, including the possibility that hackers would crack the technology. EMI Group broke ranks with the other major labels and agreed to sell unprotected music through iTunes in April.

Now, some music executives are privately backing the idea of dropping the software from music sold through virtually every service except iTunes, in order to strengthen Apple’s rivals and potentially diminish Mr. Jobs’s advantage. The major labels have been upset with Apple’s inflexibility on music pricing, among other issues.

So this announcement is being spun as a snub of Apple's approach, despite the fact that Steve Jobs asked the music companies to abandon copy protection in February. All I can say is that despite the spin, Warner has come around to embrace Apple's approach. And in fact, the article admits as much in the third to last paragraph:

Warner’s move comes roughly four months after the industry’s biggest company, Universal Music Group, part of Vivendi, said it would sell music without restrictions through an array of services, including digital stores run by Wal-Mart, Real Networks and Amazon, but not iTunes.

Warner may not adopt the same approach. A person briefed on Warner’s plans said the company was seeking to negotiate a deal to sell unprotected files through iTunes.

The bottom line: Bad music results just woke Warner Music to the fact that consumers don't want DRM. But there's another wake up call coming, just as it came to Wal-Mart: competing with Apple will still only reach a small part of the digital download market. It sounds like Warner understands that fact and is working to fix it; it's only a matter of time before Universal gets with the program too.

And what about movies? That market is still developing. But with yesterday's news that Apple has signed Fox for movie rentals, I think Apple is using an old advertising slogan as its strategy to succeed in that market too: rinse and repeat.

Technorati Tags: Apple, Downloads, iTunes, Media, Movies, Music, Universal Music, Wal-Mart, Warner Music

Finally: Apple signs Fox for movie rentals

Speaking of digital TV, the Wall Street Journal today notes that according to its sources, Apple will offer Fox movies for rental through iTunes. I've been predicting Apple would offer movie rentals since this summer, but negotiating these contracts has been much harder than Apple expected, largely because the movie studios don't want Apple to have the power over their businesses that it currently wields over music. Fortunately, in this era of $200 million movies, the promise of new revenue streams cures a lot of studio objections.

Technorati Tags: Apple, Movie rentals, Movies

With over the air HDTV like this, who needs cable?

With Christmas past us now, I thought I'd write a bit about an old technology that is becoming very new in our house: TV. Not video, but real, honest to goodness, over the air TV.

My wife and I gave our two sons somewhat geeky presents for their MacBooks: Pinnacle analog and HDTV USB tuners (I bought Mac versions, but PC versions with different and apparently somewhat poorer software are here). For those of you not familiar with TV alphabet soup, these tuners receive not only ordinary standard definition (abbreviated NTSC) TV stations numbered 2 through 82, but also receive digital television signals using the new digital standard (abbreviated ATSC). These new digital television stations typically have numbers like 5.2 or 44-1 on modern TVs. Woot.com offered these USB tuners on sale during the holiday shopping season for about $80, so I figured it might be fun for them to be able to try receiving television over the air, just as we did when we were growing up. We live on the side of a hill with a nice southern exposure, so I figured we ought to be able to pull in a few stations to watch.

So the boys and I plugged in these little gizmos on Christmas Day. We installed the ElGato EyeTV Lite software that provides a nice online TV guide, allows you to switch channels, and record programs like on a TiVO. And then we hooked up the wimpy little monopole antennas -- not even rabbit ears, but just a single pole -- that came with the tuners. With such lightweight hardware -- just a little USB plug and an indoor antenna, we didn't expect much, but we hoped we could watch and record a few programs.

Boy were we wrong. Because while the analog TV signals we got over these little adapters were just OK -- they were a little snowy with ghosts and color rainbows -- the digital signals were crystal clear, and the HDTV signals were breathtaking. While the tuners picked up only about eight analog TV stations, we had 23 digital stations to choose from, of which most were offering true HDTV programming in the evening.

Admittedly 31 stations isn't the 125 or more stations you get from your local cable TV company. It's only about the number of channels you get from your basic, $14.95 a month cable TV subscription. But instead of the $180 you'd pay each year for basic cable, these over the air stations are free of charge. If you're like me, you actually don't watch the Golf and Home and Garden channels anyway, making most of those 125 channels of additional programming irrelevant. And that basic cable price doesn't include any HDTV channels, which typically are only available as a $3 a month upgrade to a $45 per month digital service, making the annual cost more like $600, or about half the price of a nice, flat screen TV. And what about cable extras like electronic program guides (EPGs)? The EyeTV software provides its own EPG over the Internet through a service called TitanTV.com. And EyeTV further provides you with personal video recorder functions so you can select a show from the EPG and have your computer to record it in all its HDTV glory. Cable companies would charge you about $10 a month additional for those functions, would also charge you about $5 a month for your cable box and another $1 a month for your remote too. Oh, and did I mention that if I bought the full version of ElGato's software (about $75), it would let me put all my recorded TV shows on my iPhone and iPod? No service from the cable TV company lets me do that.

Now I've been thinking about getting a nice big flat panel HDTV for quite a while now, and I had ATSC reception a requirement before we tried out these computer tuners. But given what we saw on my kids computers this Christmas, I'm now thinking more radically. With over-the-air ATSC TV, TiVO HD, and a NetFlix subscription for movies, I could drop cable TV service and never miss it.

The fact of the matter is that the problem that cable TV was created to solve -- that of snowy, ghosting pictures due to weak signals and reflections -- now has been solved by digital technology. The US Federal Communications Commission has mandated that all TV signals will be digital by February 2009, meaning that consumers will have access to crystal clear TV throughout the US in just over a year. ATSC tuners are now standard for all TVs sold in the US. And these trends are bad news for cable TV and telecom companies whose story to Wall Street has been to expect annual price increases and always rising average revenue per customer from their bundled TV services. After all, with free TV like this, who really needs cable TV?

Full disclosure: the author has no positions in any of the companies and categories mentioned in this article at the time of writing.

Technorati Tags: Cable, ElGato, HDTV, Pinnacle, TitanTV.com

Apple passes $200 a share again

As of 1:43 pm today, I saw Apple's stock price pass $200 a share again (it had done so momentarily last week), and it is now up around $200.24 a share. While Apple is only 29 years old, the stock is now entering its third century -- at least in terms of dollars.

Conventional wisdom from technical analysts is there is typically a lot of resistance at century marks. Option strike prices that end in double zeros often have very large open positions as well. The fact that Apple has broken the $200 mark indicates some short-term strength for the company, since those barriers have now been broken.

Full disclosure: the author is long Apple Inc. at the time of writing.

Technorati Tags: Apple, Stock prices, Stocks

Will the public or Google own future maps of the world?

On Morning Edition today, National Public Radio had a thought-provoking piece on how GPS receivers are changing the relationships that consumers have with geography. Avid hikers and map-readers use GPS to explore new routes and vistas. The directionally-impaired, on the other hand, now have new confidence they can actually get to their destinations without getting hopelessly lost.

But most interesting, I thought, was a question posed at the end of the piece about the mapping databases behind these GPS navigation systems. Who will own our geography? Will latitude and longitude mappings to businesses, points of interest, historical landmarks, and natural wonders be a public resource (like today's Internet), or will those mappings be for sale to the highest bidder? Said another way, when you ask for directions to the best outlook over the Grand Canyon, will you hear about the wonders of the view or will it be brought you by Fedex or the local Burger King?

Perhaps it's time to revisit to proposal made at the turn of the decade for a .geo top level Internet domain. Internet domain names created an international database of Internet addresses without any one central controlling agency. We could do worse for a public way to map our real world. And if we don't? With Google Maps and Google Earth already compiling much of this data, Google might end up owning our world instead.

Full disclosure: the author is long Google at the time of writing, but doesn't want them to own the master database of world geography.

Technorati Tags: .geo, Domain names, GPS, Internet, NPR

Wharton Business School profs debunk the market share myth

Regular readers know that I've always been a skeptic regarding business strategies that use loss leaders and other techniques to maximize market share instead of profits. Well, astute reader Marc points out that Wharton Business School professor J. Scott Armstrong now has data that demonstrates that market share maximization strategies provide poorer long-term business results than profit maximization strategies, both in the lab and in the field. One of the things I like about the article is that they cite the video game business as one of the worse offenders in chasing the wrong metrics:

The harm that competitor-oriented objectives can cause the companies that pursue them was the subject of a December 4, 2006, article in The New Yorker by James Surowiecki, the magazine's business writer. Surowiecki describes how Sony, with its PlayStation 3, and Microsoft, maker of the Xbox 360, are beating each other's brains out trying to capture the biggest share of the video-game market. Meanwhile, third-place Nintendo, with its new game console called Wii (pronounced "wee"), has quietly become the most profitable game console company in Japan.

Nintendo "has not just survived out of the spotlight; it has thrived," Surowiecki writes. "It has $5 billion in the bank from years of solid profits, and this past year, though it has spent heavily on the launch of the Wii, it made close to a billion dollars in profit and saw its stock price rise by 65%. Sony's game division, by contrast, barely eked out a profit and Microsoft's reportedly lost money. Who knew bringing up the rear could be so lucrative?"

So now if anyone asks why Apple's business value and stock price keeps going up despite its small market share, we now have an answer: it's because they focus on customers and profits, in that order, rather than market share. For over a decade now, they've been the most profitable computer maker in the US. And while Apple has since diversified into other markets, that one metric says more about their success than any other.

Full disclosure: the author is long Apple Inc. at the time of writing.

Technorati Tags: Apple, Business, Games, Gaming, Microsoft, Nintendo, Wharton, Sony

iPhone: capturing nearly 0.5% global mobile phone market share in six months?

9to5mac.com rumors that it expects Apple to announce sales of 5 million iPhones at Macworld. If that's true, it would put Apple at half of its 2008 sales goal before 2008 even starts. It also means that despite Apple only selling one model of GSM iPhone in four countries with four carrier dedicated carriers, Apple's shipments in this quarter -- around 3.5 million -- will be very close to the 3.9 million Blackberry smartphones Research In Motion shipped in its most recent quarter across more than 100 carriers and 13 product lines (N.B. RIM's quarter ended Dec. 1, while Apple's will end Dec. 31, so the unit shipments are not precisely comparable, since RIM didn't count the holiday shopping season. On the other hand, consumer products only make up only a fraction of RIM's business too).

So what do I take away from this trend? If Apple actually will sell 5 million units by MacWorld AND it keeps up its aggressive deployments AND it makes no serious missteps with new products (like its 3G iPhone), the iPhone could pass the Blackberry to become the best-selling smartphone on the planet in 2008, and possibly the most rapidly adopted phone in the world. Not bad for an entry product in a market that most pundits claimed was impossible for a new manufacturer to enter.

Full disclosure: the author is long Apple Inc. at the time of writing and expects Wall Street's Santa Claus rally to be very good to that position.

Technorati Tags: Apple, Blackberry, iPhone, Mobile phones, Smartphones, Research In Motion

Apple TV's "failure" depends on your yardstick

It's a slow news week. So what better to add spice to your life than
Phillip Swann, president of TVpredictions.com, who claims that Apple will dump Apple TV by the end of 2008. He also doesn't put any facts behind this prediction, relying instead on estimates of 400,000 units sold as the basis of his argument. He also complains about the $300 price tag which he seems to think is excessive considering that it only lets you buy videos from the iTunes store.

Now I'll be the first to admit that the Apple TV value proposition is incomplete; I've been expecting Apple to offer high-definition movies and rental content for the Apple TV for more than six months now. And why haven't they done so? That's simple: for Apple to provide HD content and movie rentals, they need deals signed with the movie studios, and the movie and TV studios fear Apple having as much power in their industry as it now does in music. So instead, Apple now has hardware in the field waiting for the content that makes it valuable to the consumer.

But that 400,000 estimated sales number isn't the damning evidence that Swam thinks it is. That number is from a Forrester Research report that we've noted has some logic flaws before, and follows up on its earlier incorrect claim that paid media can't ever compete with free TV (Comcast, HBO, and Showtime will be very upset to hear that given the billions they make from paid media) and Forrester's incorrect claim that iTunes music sales were slowing back in January). Quick quiz: how many dedicated HD DVD and Blu-ray high-definition players have been sold in the US, excluding game consoles? Turns out that the TOTAL number of HD-DVD players sold to date after almost two years is about 750,000, of which 269,000 were sold as attachments to XBox 360 game players, leaving only about 580,000 as pure high-def TV players. The Blu-ray numbers are similar: There have been about 2.7 million Blu-ray players sold to date in the US, but those include all Sony Playstation 3 gaming consoles. Subtract out the roughly 2.5 million PS3s in the US, and Blu-ray is left with only 200,000 or so stand-alone players. Suddenly 400,000 Apple TVs doesn't look bad, not bad at all. Oh, and last time I checked, consumers had to pay hundreds of dollars for those devices that allow them to play high-definition content, a flaw which Mr. Swammi claims dooms Apple TV

One more point: I was in a recent brainstorming session for a client with about 20 or so other consumers. At one point, one gentleman from the audience struggled to articulate what he wanted an upcoming product to work like, and he ended up raving about his Apple TV, which was small, easy to use, and produced beautiful results, particularly with his home photos, on his HDTV (he didn't get the memo that the lack of HDTV content made it a failure). So even without HDTV content, Apple TV isn't a failure in consumer minds; Apple adding HDTV content could be as explosive a boost to its fortunes as the iTunes store was to the iPod.

The bottom line: Yes, Apple could decide to cancel Apple TV. But my bet is that they won't, since by my analysis, they will be #2 in the high-definition TV movie player market when they release high-definition content. The only thing that could stop them would be the movie studios deciding that they don't want their content distributed by Apple to consumers. And given that Apple customers have been proven to provide more revenue to music labels than the general population, that would be the movie studios' loss, not Apple's.

One final bit of irony: Phillip Swann, the analyst who posted this prediction, didn't write it. He posted the prediction on YouTube. So far as I know, the only way you can easily sit down at your HDTV, pick up your remote, and watch Mr. Swann's predictions without firing up a computer is, you guessed it, to use an Apple TV.

Full disclosure: the author was a Forrester analyst until 2002 and is long Apple at the time of writing.

Technorati Tags: Apple, Apple TV, Blu-Ray, Forrester, HD-DVD, HDTV, TVpredictions.com

John Gruber dissects Fast Company's Apple doomsaying

John Gruber at Daring Fireball does a spectacular job today
taking apart the latest Fast Company article predicting that Apple has had its day. Not only does he point out the many inaccuracies and straw men in the article, but he does it with great style. You've got to love it when you get real thinking, great writing, and cutting sarcasm all in the same article.

I'll add one more point the Fast Company article misses: their doom and gloom is running contrary to what I would claim is the consensus view on Apple currently, namely that not only is it not fading, but that most analysts have underestimated how successful its business results are (a point of view I concur with).

Full disclosure: the author is long Apple at the time of writing.

Technorati Tags: Apple, Daring Fireball, Fast Company, John Gruber

Personal GPS navigation to grow to about half the iPod market this year

Digitimes notes that for the first time, GPS makers Garmin and TomTom will both ship over 10 million personal navigation devices this year. That puts total production this year for those two manufacturers at around 22 million units. To put that in perspective, that's about half of the 55 million iPod music players we expect Apple to sell in calendar 2007. That's huge.

One comment about GPS units: just like in music players and Web sites, there is a lot of variation in how usable different brands are. If you're considering buying one, find a store where you can actually play with a real, operational unit. Try entering addresses and routes and listening to the output. And finally, ask the sales rep, or better yet, take a couple units outside, and see how long they take to sync up to your location. You'll quickly find that some units will suit you better than others -- and some will have you scratching your head in frustration trying to figure out how to use them. The market will eliminate the worst units in a few years, but meanwhile you don't want to be stuck with one.



UPDATE: There was a lot of volatility in GPS stocks today, specifically with Garmin, due to a Banc of America analyst stating that NPD reported Garmin's market share had dropped to 29% in November from 47% a month earlier. Yet, NPD itself wasn't able to confirm those figures, and other analysts have noted that the data cited excluded some large retailers of Garmin products. However, if we ignore the market share squabbling, the most important note of the story is in the third paragraph:

Analysts said overall sales of the devices were up about sevenfold from a year ago.

It's hard to go wrong with an industry growing 700% a year.

Full disclosure: the author has a long position in Garmin at the time of writing.

Technorati Tags: Apple, Garmin, GPS, iPod, Tom Tom

Summize: a way to consider many product reviews at once

Regular readers know that we're always looking for ways to cope with what we call The Tyranny of Too Much. That tyranny becomes particularly difficult to handle when considering products to buy, movies to see, or books to curl up with. Yes, there are gazillions of online reviews of such. The bad news: there are gazillions of online reviews to wade through.

Enter Summize.com. It lets its robots do the Google-like Web walking of all those reviews and boils those reviews down to a single graphic called a "snip" that reflects the overall sentiment about that product. Green is positive, red is negative, just as you'd expect. So if you look up digital cameras, you get a nice overview of all the popular models. Already decided you want a Canon camera? Search for that and you get a quick comparison of all those models.

Now if you're one of those who doesn't like to go with the populist opinions (I know you are out there; you know who you are), there are other options. You can, for example, only look at products that others dislike or that reviewers disagree on. And in fact, the only feature I've found myself missing off the bat is the ability to sort the results by the number of reviews summarized (or summized, as I suspect summize.com would want me to say, even though it isn't a word). I thought the site also was missing the ability to sort by the overall rating, but it turns out that if you only display products people like, it is sorted by rating (which becomes more evident if you display by "star" ratings rather than "snips").

But regardless of that nit, in this crazed holiday buying season, Summize.com deserves a place in your bookmarks for that emergency last-minute decision on which book Uncle Henry really would like best or which holiday movie you should go see to get out of the house. It really does a good job of taming the tyranny of too many reviews and leaves you more time to focus on enjoying the holidays too much instead.


Thanks to TechCrunch for recommending Summize.com.

Technorati Tags: Product reviews, Reviews, Summize.com

More information doesn't drive better decisions

Bloomberg has a very interesting article noting some academic studies that show that more data doesn't necessarily help people make better decisions, and, in fact, may simple distract decision makers from focusing on the most important factors. I particularly like their conclusion:

Need a New Year's resolution? One word: Simplify.

Technorati Tags: Bloomberg, Less is more, Decision-making, Tyranny of too much

Multi-core software thrust neglects the real challenge: killer apps

Today's New York Times cites an ongoing claim by Microsoft that
faster chips are leaving programmers in the dust. Surprisingly for the Times, it is somewhat breathless in its admiration for the work that Microsoft is doing in this area, to the point where it cites no other software companies in the article.

To accelerate its parallel computing efforts, Microsoft has hired some of the best minds in the field and has set up teams to explore approaches to rewriting the company’s software.

If it succeeds, the effort could begin to change consumer computing in roughly three years. The most aggressive of the Microsoft planners believe that the new software, designed to take advantage of microprocessors now being refined by companies like Intel and Advanced Micro Devices, could bring as much as a hundredfold computing speed-up in solving some problems.

Microsoft executives argue that such an advance would herald the advent of a class of consumer and office-oriented programs that could end the keyboard-and-mouse computing era by allowing even hand-held devices to see, listen, speak and make complex real-world decisions — in the process, transforming computers from tools into companions.

The flaw in Microsoft's strategy around parallel processing becomes apparent toward the end of the article.

Microsoft sees this as the company’s principal opportunity, and industry executives have said that the arrival of manycore microprocessors is likely to be timed to the arrival of “Windows 7.” That is the name the company has given to the follow-on operating system to Windows Vista.

The opportunity for the company is striking, Mr. Mundie said, because manycore chips will offer the kind of leap in processing power that makes it possible to take computing in fundamentally new directions.

He envisions modern chips that will increasingly resemble musical orchestras. Rather than having tiled arrays of identical processors, the microprocessor of the future will include many different computing cores, each built to solve a specific type of problem. A.M.D. has already announced its intent to blend both graphics and traditional processing units onto a single piece of silicon.

In the future, Mr. Mundie said, parallel software will take on tasks that make the computer increasingly act as an intelligent personal assistant.

“My machine overnight could process my in-box, analyze which ones were probably the most important, but it could go a step further,” he said. “It could interpret some of them, it could look at whether I’ve ever corresponded with these people, it could determine the semantic context, it could draft three possible replies. And when I came in in the morning, it would say, hey, I looked at these messages, these are the ones you probably care about, you probably want to do this for these guys, and just click yes and I’ll finish the appointment.”

So here's a question for skeptical readers: how long do you think the above email response example cited by Mr. Mundie would take on today's dual-core Intel processors? The answer: a few seconds at most. No matter how much semantic analysis you layer in here, email is not by any stretch of the imagination constrained by processor speed. So why does Mundie cite this example? Because Microsoft sells email systems.

The problem articulated in the article isn't with chip technology, software design, and parallel processing development. The real underlying problem is marketing. Microsoft and other technology companies haven't identified a consumer segment or application that desperately needs high-performance computing. Said another way, there's no killer consumer application for ten core processors, to say nothing of the 60 or 100 core processors currently on the drawing board.

Now this revelation isn't exactly new. The technology industry was struggling a decade ago to find a killer application for faster processors. And some killer applications emerged, but each had some issues about driving demand for faster processors:

1. Internet browsing and email. As noted above, these applications are not exactly processor-intensive. Rather, these apps spend most of their time waiting for either the user to input something or for an Internet web server to respond over a broadband connection. Today's multi-gigahertz processors deal with these applications just fine, so fine, in fact, that nowadays mobile phones are nearly as responsive on fast networks as computers are.


2. Advanced photo and video editing. These applications can be very processor intensive, as can be validated by anyone who runs Photoshop, Aperture, Final Cut, or Adobe Premiere. But the challenge here is that these applications don't have a broad base of users. Yes, professional photographers, TV stations, and movie studios need them. But those uses account for sales of a few million computers at most, not the hundreds of millions needed to justify a decade of new software development.


3. Computer gaming. This application is today probably the biggest consumer of PC computing cycles. Ask any gamer, and they'll tell you that they'll buy as much computing power as they can afford. But because of the high cost of computing power to date, this industry segment has moved toward dedicated gaming hardware, since gaming console manufacturers can optimize their hardware for this specific task. The result: Computer gaming is only a weak driver of parallel processing software development, despite its need for as many gigaFLOPS as possible.

Vendors won't crack the problem of parallel processing software by focusing on broad "everyone needs them" applications like email. Instead, they need to identify early adopter market segments -- communities who today are desperate for more computing power and are already rolling their own multi-core software to get that power. Some of those communities are obvious, such as pharmaceutical companies who need to explore countless chemical compounds to come up with new drugs, and Wall Street trading firms and hedge funds who model financial markets for profit.

As Geoffrey Moore noted in his classic book, Crossing the Chasm, products never hit a broad-based majority right out of the gate. Instead, they evolve through much smaller market segments of technology enthusiasts and pragmatic early majorities who demand a whole product that solves a significant problem. Even Microsoft Excel wasn't originally used by most computer users; its early adopters were Mac users (where the product was released first) and accountants who really needed spreadsheet functions that ran under Windows. Why would anyone think multi-core software would be different?

I assume that with such a star-studded group of parallel processing researchers, Microsoft will figure out the technical issues fairly quickly. And if it wants some suggestions about some very important, highly parallel applications, here's some food for thought: Google was so unsatisfied with the price, performance, and physical density of PCs for its highly parallel applications that it designed and built its own machines for its data centers. Unlike today's PCs, those processors and cores get used whenever and wherever there is demand. And when you have billions of requests per day for your services and applications, as noted by this article in the New York Sunday Times, parallelism is pretty easy to find.

Full disclosure: the author is long Google at the time of writing.

Technorati Tags: Crossing the Chasm, Geoffrey Moore, Google, Microsoft, Multi-core, Parallel processor, Processors

Apple stock hits $200 a share momentarily -- at least according to some tickers

For those Apple stock watchers out there, Apple stock momentarily hit $200 a share today, which is an all-time high as well as a century mark (note to skeptics: check the daily high on Yahoo Finance and Google Finance as well as the 52-week high on Google; all these have been updated to $200. Apparently Yahoo Finance doesn't change its 52-week high based on intraday numbers, so it is still at $196 and change. Sounds to me like someone started their Christmas celebration a bit too early and hit the wrong key on their trading computer, given that the price sank back to its more mundane $190 mark. But perhaps it's an indication of what may be a very nice Santa Claus rally next week.

UPDATE: Some are questioning whether the $200 figure was a real trade or not. Others say that there was a single large trade (150,000 shares?) at 10:39, which would imply that someone wasted about $1.5 million by trading at the non-market price. I will say, though, that Fidelity now reports the daily high as $200 as well.

Technorati Tags: Apple, Stocks

Real business owners don't let IT dictate what phones they use

Forrester released a rather poorly argued report yesterday describing why IT shouldn't support Apple's iPhone. Why do I claim it is poorly argued? Because the summary promptly contradicts the lede of the article saying that C-level executives will insist on deploying iPhones anyway. So why should IT be fighting that process? To make matters worse, Fortune picked up the story and and retitled it as "Top 10 reasons IT won't support the iPhone".

Well thankfully, a reporter over at the Wall Street Journal did what Forrester should have: they dug up a senior executive of a company who had deployed iPhones as business tools, and ran Forrester's 10 reasons past him. That produced a nice rebuttal story that proves many of Forrester's reasons false or at least moot for real applications. Admittedly, one point does not make a sample, but for anyone who has actually used an iPhone in a business setting, the Journal article is much more credible than Forrester's was.

My two cents: Forrester got it wrong for the second time this month. Whoever is in charge of research now at Forrester now needs to take a look at its research and editorial methods. Something is broken.

Technorati Tags: Apple, iPhone, Wall Street Journal

The top Christmas electronics brands

With only 11 shopping days left until Christmas, it's always kind of fun to surf over to Amazon.com and see what is selling in the realm of electronics. As of nearly 10 am on Thursday, December 13, here are the top 5 best selling electronics products on Amazon:

#1: Apple 4 GByte iPod nano
#2: Garmin nuvi 350 GPS
#3: Amazon Kindle ebook reader
#4: Garmin nuvi 200 GPS
#5: Canon Powershot A570IS camera

I'm not going to keep running down the list because what you get after the top five are largely repeats of those categories. In the top 25 products, there are 7 Apple iPods, 8 GPSs, and 8 digital cameras. The only two odd ducks that don't fit into these categories are the Kindle eBook reader and a Toshiba HD DVD disk player at #18.

If we think in terms of brands, then the buying consensus gets even more interesting. Of the brands in the top 25 Amazon.com products, we get:

7 Apple iPods
6 Canon cameras
6 Garmin GPSs

and then a bunch of one-product brands, mostly from different manufacturers of cameras and GPS systems.

The first non-Apple music player that shows up is the 80 GByte Microsoft Zune at #35, followed by the SanDisk Sansa e250 2 GByte player. Oh, and three more iPods show up in the second 25 products as well as four more Canon cameras and a Garmin GPS.

My biggest surprise is that video games don't appear to be big sellers at Amazon this year. No video game consoles show up on the top 100 best sellers; I'd have thought at least the Nintendo DS Lite would be there. And only one video game -- Dance Dance Revolution SuperNova 2 Bundle for the Playstation 2 -- shows up at #27. Go figure.

The bottom line: if you're looking to follow the crowd in buying Christmas electronics, you'll be in good company if you buy a GPS navigation system, a digital camera or a music player. And if you want to buy the top-selling electronics brands, at least as recorded by Amazon, buy Apple, Canon, and Garmin.

Full disclosure: the author is long Apple and Garmin at the time of writing, for exactly the reasons noted in this article.

Technorati Tags: Amazon, Apple, Canon, Garmin, GPS, Holiday shopping, cameras

A really bad marketing idea: redefining PlaysForSure as Certified For Windows Vista

It's bad enough that Microsoft's Zune now competes with and is incompatible with Microsoft's PlaysForSure hardware suppliers, but Microsoft redefining the PlaysforSure DRM brand to promote Windows Vista is just partner hostile. And forget about consumers; they now have no chance of knowing if their Microsoft music will play on any vendor music player. Whoever thought up this rebranding program should be banned from ever doing marketing again.

Technorati Tags: Marketing, Microsoft, PlaysForSure, Windows Vista

Speculations on the MacBook tablet

After I browsed through Time Magazine's top 10 gadgets of 2007 today and noted its selection of Apple's iPhone as the #1 gadget, I came across this Toshiba subnotebook with solid-state storage as Time's #7 pick. The more I looked at it, the more I thought, "Gee, that could easily be a next-generation MacBook." Why? Well because it:

• Weighs half of what existing MacBooks do. With an optical disk drive, this notebook weighs in at a mere 2.4 pounds. Now that's a product any road warrior can carry, without sacrificing the ability to watch DVDs on a plane or make backups of an important presentation.


• Boasts a solid-state disk. The press has been abuzz about the potential for Apple eliminating spinning disk drives in its notebooks just as it has in the iPod touch and iPhone. The Toshiba Portege proves such a feature makes sense in a production device.


• Sports a design reminiscent of the latest generation iMacs The black screen combined with the silvery pseudo-metalic finish on the rest of the notebook resonates nicely with the latest black-and-aluminum iMac designs (see picture above).

Now I can hear the groans noting that a simple MacBook update that mimics a six-month-old Toshiba isn't exactly the stuff of MacWorld keynotes. And that's why I expect that this MacBook replacement that Apple will introduce will have some nice little differentiators that will still generate some oohs and ahs from users. Specifically, I believe that Apple will include:

• Sexier packaging and materials Walt Mossberg panned this Toshiba Portege because it felt fragile as glassware. Apple has moved to colored aluminum enclosures for its current generation iPods; I expect to see similar materials and packaging attention to detail that will make this new MacBook feel solid and attractive to consumers, despite its light weight.


• A reversible touch-enabled display. Already the hallmark of Windows-based tablet computers, I believe that Apple will incorporate new LED-backlit displays that can be folded over to create a flat, touch-enabled surface. When set up in this way, the computer will look like a giant iPhone-like display with similar interaction modes. When opened the other way, the MacBook will work like a normal notebook computer.


• A multi-touch keyboard. Apple has noted publicly that unlike the iPhone, you need more than a touch screen for great user experience on a notebook or desktop computer. Fortunately, Apple already has a patent on a keyboard that allows multi-touch gesturing as well as providing haptic feedback necessary for touch typing for long periods of time. This multi-touch keyboard surface would be an ideal bridge between the iPhone and sub-notebook experience -- and would eliminate the need to clean fingerprints from the notebook screen several times a workday when you are sitting at your desk working.


• New Mac OS X multi-touch-enabled applications. Expect to see notebook applications that have the same radical one-touch simplicity that users have come to expect on the iPhone. These won't be heavy-lifting computing apps like Pages or Numbers, but more lightweight apps like we see on today's Leopard Dashboard. In fact, these may actually be Dashboard Widgets given one-touch icons for casual use without opening the laptop or using the keyboard.

Such a product would be a worthy follow-on to Apple's successful, yet 18-month-old MacBook line. It would also be the first real packaging revision to its notebook line since Apple converted to Intel processors. We'll find out how close this is to the truth in just over a month from now when Steve Jobs takes the stage at MacWorld San Francisco. But speaking as someone who will be in the market to replace his nearly five year old PowerBook in January, I'd be first in line to buy one.

Full disclosure: the author is long Apple Inc. at the time of writing.

Technorati Tags: Apple, Mac OS X, MacBook, Portege, Toshiba

Changewave Research: Apple laptops now top brand in buying intent for consumers

Ben Worthen put up another great post yesterday about Apple Macs making inroads in business. But most interesting is a statistic he cites at the bottom of his entry:

Just in case there’s any doubt where that momentum is coming from: The study found that more consumers will buy Apple laptops than any other brand. Twenty-nine percent of consumers who are buying a laptop next quarter said they’ll buy a Mac, ahead of Dell (28%) and H-P (21%). Among consumers who plan to buy desktops, Macs came in at 29%, just behind Dell (31%) and ahead of H-P (24%).

So you read it first in the Wall Street Journal: Apple is now the number one laptop brand for consumers.

Technorati Tags: Apple, Computers, Laptop, Changewave Research

When enterprise software will finally get respect

I was going to weigh in on the Bill Gates/Robert Scoble/ Michael Krigsman debate on whether enterprise software can or should get respect, but happily, Wall Street Journal reporter Ben Worthen chimed in this morning with exactly the response I was going to write. So the next time you hear Bill Gates complain that Microsoft gets no respect for the great work it does, think about this:

Nick Carr is next to weigh in, saying that reliability versus ease of use is a false choice. Good software should be both, and he points to Amazon.com’s Web site as an example of something that’s reliable, secure, and intuitive. Carr seems to think that people would care about business software if it was designed better.

Our feeling is that people do care about business software – if you spend eight hours a day in front of a computer, the quality of the software you use is going to have a big impact on your day. It’s just that much of this software is so frustrating to use that all the thoughts people have about this software is negative. Another factor: Most people who write about business software use language that you’d need a PhD in engineering to understand, turning away any non-techie.

If tech departments don’t find a way to make people care about the software their companies choose – and we think that ease of use is the factor that makes people care – then workers will start choosing their own software. Think salespeople buying subscriptions to Salesforce.com, when the company is supposed to use Siebel for salesforce automation.

A decade ago, the average worker was impressed when software worked. Today, people expect software that’s easy to use – you can blame the rise of consumer software (i.e. the stuff Gates thinks people care about) for that.

Said another way, the consumerization of technology -- created by consumer experiences with digital video recorders, iPods, and mobile phones -- has raised all our expectations way above breathless declarations of, "The Wow Begins Now.", especially when we confront real systems at work that increase workloads, enforce meaningless restrictions that don't help customers, and sport user interfaces that feel Kafka-esque in their user hostility. It's not surprising that enterprise software gets no respect; it is surprising that there aren't more cases of employees throwing their computers out windows in frustration.

Consumers and employees now expect technology to look good, help them do their jobs, and not make them feel dumb. Too much enterprise software does none of the above. Almost no software does all three. That's going to change, whether Bill Gates gets on board or not. And when it does, enterprise software will be sexy -- and that moment can't get here a moment too soon.

Technorati Tags: Ben Worthen, Bill Gates, enterprise software, Microsoft, Michael Krigsman, Robert Scoble, Software, Wall Street Journal

iPhone EDGE browsing comparable to Nokia 3G Web

There were a lot of readers who said I was nuts to claim that the iPhone's EDGE service was at all comparable to a real 3G experience on my Nokia E61i. Now MacDailyNews has uncovered data to show that I am not crazy. German Web site iPhone Infoblog videotaped both phones with WiFi turned off and raced the iPhone's EDGE service experience against a Nokia E61i using UMTS. The video, shown above, demonstrates that in fact, the two experiences are nearly identical in speed, largely because the iPhone's much faster processor and quicker rendering compensates for the E61i's multi-megabit UMTS bandwidth on real Web pages.

This experiment demonstrates the power of mobile phone carrier marketing. The ideal business model is one where a vendor can bill for a service that people don't or can't actually use; ask anyone who owns a gym. Mobile phone carriers have been pushing multi-megabit 3G mobile phone services, knowing full well that most mobile phones actually can't keep up with them. And that's why data service for laptop 3G adaptors is so much more expensive than 3G mobile phone services. Laptops with multi-gigahertz processors actually use significant portions of 3G bandwidth, requiring mobile carriers to incur more provisioning costs to support those platforms.

But it also proves that raw bandwidth isn't the be-all and end-all of a mobile Internet experience, just as my prior article claimed. Processor speed, memory capacity, battery life, latency, and cost all affect the consumer's experience in different ways. Good product design strikes a reasonable compromise among those constraints. Great product design creates user experiences that transcend them. And the iPhone appears to have done just that, despite its lack of 3G bandwidth.

Full disclosure: The author is long Apple at the time of writing.

Technorati Tags: 3G, Apple, EDGE, iPhone, Nokia, Nokia E61i, UMTS

Nokia: looking for revenue sharing in all the wrong places

MacDailyNews has a great note on how Nokia wants an Apple-style cut of service revenues from its handsets. While I think that type of deal unlikely on top of Nokia's existing subsidy stream for many of its handsets (note to Nokia: who do you think pays those subsidies for your handsets? Hint: it's not the carrier), what's more interesting is the color provided by long-time Nokia veteran Mike from Helsinki about a conversation he had two years ago with a Nokia SVP:

I flatly told him that Nokia should considered Apple to be a very serious threat.

With a straight face, this SVP told me that I was hallucinating.

He proposed that iPod and iTunes was an exception, and would be eclipsed by a Nokia/Microsoft partnership in short order. Why wouldn't he believe that? The largest maker of consumer devices in the world teamed up with a company that has 95% market share of the computer OS business [seems like a sure thing].

He further pointed out to me that Apple could never match Nokia's legendary and titan logistics chain throughout the world, and that Apple, an MP3 device maker, had no clue as to the complexities of the mobile phone world, how mobile phones should be built, how to deal with operators, etc. Apple, said this SVP, was simply out of their league.

He also pointed out to me that Nokia already had umpteen gazillion MP3 players existing on their phones (never mind that NO ONE used them), and that they had just acquired white label music aggregator Loudeye and would parlay the Nokia/Microsoft/Loudeye team into a competitive offering - be damned their operator customers.

This SVP is a keenly smart, competent, accomplished guy, supremely educated and also a person who I consider a friend. And he was utterly clueless.

That conversation echoes the one that nearly every music player manufacturer on the planet has had to date. And Microsoft's DRM and poor business decisions has managed to undermine the business of every single one of them, especially now that Microsoft's Zune competes with them and yet isn't compatible with Microsoft's own PlaysForSure music software. If Nokia continues to pin its hopes on Microsoft and rights-managed music -- which, by the way, fights the DRM-free trend that Apple, Amazon, and now Wal-Mart have successfully deployed -- there's no limit to the revenue cuts it could negotiate with the carriers. After all, 20% of zero is still zero.

Technorati Tags: Amazon, Apple, iPod, iTunes, Microsoft, Mobile phones, Music, Nokia

14th Street Apple Store opening leads to near riot?

Kenn Marks over at PowerPage.com was at the New York 14th Street Apple Store opening on Friday while we were enjoying our first skiing and boarding of the season out at Wachusett Mountain. And what an opening it was; Kenn observes that unlike the typical well-behaved crowds, this one had line jumpers, pushing, shoving, and generally unruly crowd behavior. What was everyone jockeying for? Some posters and chances to win some gear. Kind of sad.

Pro photographer Mark Forman has some great photos of the event, including the spectacular glass and stainless steel spiral staircase that is the 14th Street store's hallmark. That said, I'm glad I wasn't there; I really don't like crowds of that magnitude. But looking back at the predictions of failure bandied about when Apple opened its first store in 2001, who'd have ever thought that Apple store openings in 2007 would draw crowds like rock concerts? And with 40 new stores planned for 2008, including one in Beijing, I doubt the crowds are going to thin any time soon.

Technorati Tags: Apple, Apple Store, Kenn Marks, Mark Forman, Powerpage.com

Today's physics experiment

My boys and I are going to do some research today on the dynamic interactions of linear planes and crystalline H2O in the presence of a gravitational field. Yup, we're going skiing and snowboarding for the first time this year. Besides, it looks like a dull day in the market anyway. Have a great weekend everyone.

Technorati Tags: Skiing

Employees vote with their wallets for iPhones in business

Let's see, the iPhone 'may never be secure' (from Computing Business), there are five reasons the iPhone won’t infiltrate your business (from CIO magazine), Microsoft says that the iPhone lacks business savvy (from CNET.com), and enterprise hurdles await iPhone (from eWeek.com). Gee, Apple must be distraught from its complete failure in the enterprise, huh?

Well, not so much. Reuters notes today that the iPhone is winning corporate fans anyway, despite its supposed lack of security, enterprise flaws, poor business savvy, and hurdles to overcome. It turns out executives like it, and guess what -- they actually have some sway in deciding which technologies they use. Think of that.

There's a pretty big sea change going on in the IT world. Consumer technology built to be simple use is catching on with knowledge workers. It's how the PC ended up in corporations despite the prohibitions of the MIS organization in charge of mainframes -- when MIS prohibited them, executives just brought them in from home. The only difference: today, the PC is an iPhone.

With the latest estimates from IDC saying that IT spending is declining going into next year, should we be surprised that employees are bringing their own technology to the party?

Technorati Tags: Apple, Business, iPhone

Now with video: Forrester Announces the Death of iTunes again

Sigh. First it was Josh Bernoff at my corporate alma mater Forrester Research predicting the death of iTunes, now it is James Mcquivey. Daniel Eran Dilger does a nice job of taking apart James' argument again this year, so I won't do that again (see here if you want to read my article from last year). The basic story: just because the networks have rebelled doesn't mean Apple will fail to sell a ton of video content, any more than the availability of free TV prevented HBO from being hugely successful.

But just as I said last December about music, analysts have to be very careful about extrapolating proprietary data into any type of "Death of iTunes" scenario. After all, you're talking about the third largest retailer of music in the US. It's not like Apple has no clue about how to sell digital media. Further, just because Apple charges money for video when the networks don't doesn't mean they will fail. Apple's success in music was also discounted by analysts because it was competing against free P2P downloads. And somehow, DVDs have done very well competing against ad-supported free TV for about 20 years.

There's one big problem with free TV shows: consumers don't value them at all the same way they value things they pay money for. That's why the Motorola, the provider of seemingly free mobile phones to AT&T and other carriers, is replacing its CEO, while Apple, selling phones for list prices of $400, is making money hand over fist. No, it doesn't make sense to an those schooled in least-cost economics. But then again, who said consumer behavior had to make sense?

One final note: if you want a great reference to prove to you how little consumer behavior actually correlates with economics and other rational decision-making, read Robert Cialdini's classic book Influence: The Psychology of Persuasion.

Full disclosure: The author is long Apple Inc. at the time of writing.

Technorati Tags: Apple, Forrester, iTunes

Massive Apple holiday sales across product lines

At least, that's what what RBC says. But Bear Sterns has an even better story and higher estimates. The short version: retail checks say that Apple products ranging from Macs to iPhones are flying off the shelves. I've also seen data predicting more than 25 million iPods to be sold over the holidays. A good indicator: iPod nanos now occupy Amazon's #1 and #3 positions, separated only by Amazon's Kindle book reader.

Technorati Tags: Amazon, Apple, Holiday shopping, iPod, Macintosh

AT&T opens its network -- by doing nothing

USA Today has a rather breathless story today titled, "AT&T flings cellphone network wide open". Here's the lede:

Starting immediately, AT&T (T) customers can ditch their AT&T phones and use any wireless phone, device and software application from any maker — think smartphones, e-mail and music downloading. And they don't have to sign a contract.

"You can use any handset on our network you want," says Ralph de la Vega, CEO of AT&T's wireless business. "We don't prohibit it, or even police it."

AT&T's push to give consumers maximum control of their wireless worlds is being driven, in part, by Google. The tech giant is a monster in the Internet search business for personal computers, and is hoping to replicate that success in the wireless market.

Google (GOOG) recently announced plans to link arms with more than two dozen wireless companies, including Sprint (S), with the goal of developing an operating system that lets consumers use any application on mobile devices, much as they now do on PCs. Other partners include Japanese cellphone giant DoCoMo and handset maker Samsung.

Everything that Google has promised to bring to the wireless market a year from now AT&T is doing today, de la Vega says. "We are the most open wireless company in the industry."

The funny part about this openness by press release is that nothing has changed. AT&T's network allowed unlocked GSM phones to use AT&T SIM cards just as much yesterday as it does today. The major difference, as noted in the article, is that AT&T salespeople will be trained to tell consumers that they can buy unlocked phones and a SIM instead of buying a phone from ATT.

All this said, I can't complain about the trend that AT&T is jumping on. As I predicted when they were announced, Apple's gutsy iPhone marketing and Google's Android open handset software are forcing US wireless carriers to embrace a more open model. Carriers are beginning to recognize that open networks may actually be better for their businesses than the closed monopolies they have traditionally run, where the carriers told you what handsets to buy and what software to run.

The US mobile phone world is changing. But who knew that change would come by press releases instead of technology?

Full disclosure: the author owns Google and Apple stock, but has no positions in mobile carriers.

Technorati Tags: Android, Apple, at&t, Google, Mobile phones, Open networks, USA Today

iPhone browsing market share demonstrates usability drives use

Net Applications reports that in November 2007, iPhone browsing market share was 0.09% -- nearly 0.1% -- of all browsers in their sample. Now that may not seem like much until you compare it with the share for all Windows Mobile/Windows CE devices, which only tip the scales at 0.06%. Said another way, the approximately 2.5 million iPhones sold to date are being used about five times more than the nearly 7 million Windows Mobile phones sold over the past six years.

Don't think this usability matters? SAP does; it is delivering its new CRM package to iPhones ahead of more business-oriented phones like RIM's Blackberry. And I think that's smart -- after all, SAP is simply targeting the platform that gets used more on the Web. And usability drives use.

Technorati Tags: Apple, iPhone, SAP, Windows Mobile

GPS navigators: the iPods of Christmas 2007

Today's New York Times Circuits section is chock-a-block with articles about the current hot gadget for the holiday season: Personal GPS naviagation systems. With entry level and sale prices on these devices occasionally dipping below $100, these satellite navigation systems have become the hot gift idea for commuters, road warriors, hikers, and joggers.

I'm a big fan of these devices and believe they will do amazingly well over the holiday season, eclipsing nearly every other category of device other than MP3 music players like the Apple iPod (and by the way, some GPS systems do that too). But for people thinking that these are great replacements for a built-in navigation system in your car, you might still want to consider the built-in systems. Many built-in GPS systems have more inputs to the navigation system than just GPS; some will actually use information from steering and speedometer readings to maintain navigation in areas where satellites aren't visible (for example, in skyscraper canyons in New York or in the Ted Williams tunnel here in Boston) and to improve the accuracy of the navigation, perhaps avoiding embarrassing flubs such as these. Further, many built-in systems have access to traffic data too, which can make a big difference in commuting.

But these are all nits. GPS navigations systems are one of those technologies that once you find a product you like, you'll ask yourself how you ever lived without it. I always recommend them as the ideal Christmas present for men, because, to paraphrase the cliché from the old movie "Love Story,"

"GPS means never having to stop and ask for directions."

And for guys, you can't put a price tag on that.

One final useless trivia fact: GPS navigation systems are the only consumer technology I know of that includes corrections for both general and special relativistic effects.

Full disclosure: the author is long Garmin, a GPS navigation manufacturer, at the time of writing.

Technorati Tags: Global Positioning System, GPS, New York Times, Relativity

Long Tail products create demand for social networks

Bokardo.com has an interesting article today titled, "Did the Long Tail Beget Social Design?", arguing that digitally delivered products without the constraints of shelf space create a paradox of choice for consumers

When content is digital, a public good, it is freely distributable by electronic means. It is infinitely copyable at 100% fidelity. Moreover, as the Long Tail shows, libraries of content can be built cheaply which provide value for the long term. Once Google digitizes all the books in the world they won’t ever have to again.

In other words, all content is available at all times.

What does this lead to? The Paradox of Choice! There are simply too many things to choose from. Which of the thousands of movies on Netflix do I rent? Which of the books on Amazon do I read? Which of the songs on iTunes do I listen to?

Ironically, the article posits that the answer to the plethora of digital products is people.

Social design is thus forced upon the marketplace. The Long Tail begets social design. The only way for people to find out what’s best for them is to route around the system in the way they’ve always done.

Ask other people. Have conversations. Give and get recommendations. Tell someone what your preferences are, and they’ll give you their best guess.

And that’s what Netflix and Amazon and iTunes have done. They were forced to, in a sense, for they had no other way to give recommendations to their customers. The old constraint of shelf space is gone.

I've argued similarly here in the past, so it's always nice to hear someone else come to a similar conclusion. I pose one final question though: what will we do when we are overwhelmed with social networks ranging from Facebook, MySpace, LinkedIn, NetFlix, Amazon, and countless others? Who will guide our choices then, when we must choose among the wisdom of multiple crowds and communities?

Technorati Tags: Paradox of Choice, Bokardo.com, Social networking, Tyranny of too much, Wisdom of crowds

A not so merry Christmas for Madison Avenue

All year, we here at Blackfriars have been bemoaning deep cuts in marketing spending. But advertising, the most conservative and cut-resistant type of marketing spending, has been pretty resilient. But now, bellweather advertising sizer Robert J Cohen has cut his growth forecast for ad spending for 2007 to an anemic 0.7%, according to the New York Times. That's down significantly from his forecast last December of 4.8% growth, and his June forecast for 3.1% growth. And these numbers include one category that's been growing dramatically: Internet advertising. The result: spending on all other types of advertising and marketing is suffering, particularly since our survey of senior executives says that marketing budgets are down sharply this year.

And 2008? Don't even ask.

He [Coen] is also crunching his forecast for next year. Last June, Mr. Coen predicted American ad spending in 2008 would be 5 percent higher than in 2007. Yesterday, he revised his estimate downward to an increase of 3.7 percent, to $294.4 billion, which would represent an anemic 2.04 percent of the gross domestic product expected for next year.

Again, the standout medium for ad growth will be the Internet, Mr. Coen predicted, up 16.5 percent from 2007. In contrast, national newspapers will fall 1 percent, he estimated, and local radio will be flat with this year.

“We don’t see a great deal of improvement immediately ahead,” Mr. Coen said, which “doesn’t make me very optimistic about 2008.”

Technorati Tags: Advertising, Marketing, Marketing 2007, Marketing spending

How everyday tasks sell iPhones

I'm often using my iPhone to do routine things, like checking the weather, stock prices, and Internet sites. In fact, just yesterday, I was in the supermarket with my shopping list on my iPhone and saw Eye of Round beef on sale. So I googled, "Cook eye round roast beef", found a recipe titled "Burgundy Eye of Round" on Cooks.com, bought the other ingredients, and got a great Sunday dinner with leftovers for about $10, all in about 5 minutes. It was so easy -- and something I wouldn't have bothered with on my Nokia E61i, just because that machine was so hard to make work properly on the Internet.

Well, the simplicity of doing everyday tasks on my iPhone hasn't been lost on observers either. I now have run into two people at my church who have decided to get iPhones after seeing how easy it is for me to use mine for seemingly ordinary tasks. Both people already own either a Palm PDA or a Blackberry, but don't use most of the functions because they are just too hard to master. They see me do a quick weather lookup or Google search with a couple touches, and you can see the light bulb go on over their heads saying, "That's so easy; I'd love it if my phone were that easy."

I'll be interested to see how this plays out in a larger community of people. But if my experience is any indicator, we may see the 1.5 million iPhones sold to date exhibit a powerful multiplier effect on future iPhone sales.

Full disclosure: the author is long Apple at the time of writing.

Technorati Tags: Apple, iPhone, Mobile phones