Devices, Media, And The Future Of Everything

Good bye and thank you

by Josh Bernoff

Thanks for all who participated in this blog -- as readers and writers -- since our inception two years ago.

Since then I've personally moved on to The Groundswell, where we're talking about social media.

Forrester continues to cover the fascinating world of devices and media, so you'll see more blogs from us in the future. In the meantime, here are a few of my favorite posts:

Steve Jobs' Brilliant Strategic Move: Kill DRM

Internet Video Devices

Over the top TV and what's in the way

The iTunes debacle

OLPC, Nicholas Negroponte, and the threat to Microsoft

YouTube is goin' down

Flamin' laptops

TV at gas stations and airshows

Mobile video stinks

DVRs bedevil network ad sales and Advertisers worry about commercials

The end of analog TV

And finally, Cable a la carte -- and the argument still holds up after two years!

Look for Forrester in the news and more devices and media coverage from James McQuivey, Charles Golvin, and J.P. Gownder.

Steve Jobs' brilliant strategic move: kill DRM

[Josh] Couldn't resist weighing in on this one.

Steve Jobs proposed to eliminate DRM on music files. Wow. This is a typical Jobsian move, a radical shift to get ahead of the market. James McQuivey's piece on this will appear at Forrester's site soon, but in the meantime, here are my thoughts on why it's smart:

• It deflects the European lawsuits. To the government entities in Europe claiming Apple's Fairplay amounts to an illegal monopoly, Jobs says, basically, "Don't blame us, blame the labels. We'll end DRM if they let us."

• DRM on music is silly. Every song on a CD is easily pirated. Why protect music online? If you choose to, you can even burn iTunes songs to a CD and rip them into unprotected format.

• More stores means more iPod sales. Apple makes its money from iPods far more than iTunes. Killing DRM will open up any store to sell music for iPods. Stores will pop up selling ad-supported music like Spiral Frog, subscription music like Napster, and who knows what other variants. Every single one will make the iPod worth more. Apple will make more from increased iPod sales. And iTunes sales will probably go up anyway, since those held back by fears about protected music will make purchases. iTunes sales aren't plummeting, but 22 iTunes songs per iPod sold is nothing to write home about.

• This would make Zune obsolete. Microsoft just finished painstakingly duplicating Apple's device-plus-store system. Now Apple says DRM is obsolete. If the labels agree, a Zune is just a brown iPod with a bigger, fuzzier screen and a music sharing feature with DRM built into it. Tough to compete with Apple that way.

Technorati tags: Bernoff, Forrester, Apple, DRM, iTunes

Posts from the Demo 07 Conference

[Josh] For those interested in new entrepreneurial products, have a look at my two recent posts at blogs.forrester.com/groundswell.

More coming tomorrow.

AT&T's Unity -- The First Step To The Converged Network Is A Small One

Today AT&T announced its first service offering to leverage its combined wireless and wireline (now including BellSouth) network: Unity (press release here, and the offering itself here). For Unity subscribers all calls within the AT&T network -- every Cingular mobile phone, every AT&T consumer line (including CallVantage and UNE-P), and every AT&T business line -- are free. That's a lot of numbers -- 100 million, according to AT&T -- and sounds like a compelling value. Is it? Unity plans require:

• An unlimited local and long distance package (on average, $50/month);
• A minimum 900 minute wireless plan -- without Rollover. (at least $59.99 per month, one line).

After taxes and fees this will cost in the neighborhood of $125 per month -- $12 more than US households that subscribe to local, long distance, and mobile service said they spend on average for these services according to our 2006 Benchmark survey. And these households average more than 2 mobile phones.

The customer value proposition here is entirely on the wireless side -- any additional savings will come exclusively from calls made to and received from AT&T fixed lines on weekdays, before free nights kick in. Consumers who attempt to do the calculus will be incapable of estimating the savings since they rarely know whether they're calling or being called by an AT&T line.

AT&T will pitch this as simplicity for the customer, but their real motivation is to protect their profitable fixed line business. It's smart packaging and will likely have some success, but they'd do better to focus on what their customers want -- like a naked DSL line bundled with wireless service and Yahoo! Go to tie the two together, with an optional CallVantage line. Sure, the ARPU will be a bit lower but if that's what the customer wants they'll buy it as separate services from an MSO and another cellular provider, and AT&T's ARPU will be even lower.

Personally I'm looking forward to hearing their next announcements -- the ones that truly leverage a converged wireline and wireless network. Stay tuned.

Meet me in the groundswell

[Josh] After 11 years of covering media, television, and technology for Forrester, I’m about to take on a new role: author.

Forrester is supporting me in my quest to understand a new the most powerful phenomenon on the Web – the trend toward people using social technologies and undermining the power of institutions in the process. We call it the groundswell, and it’s a hell of a phenomenon.

I’m really just a baby in this field. The expert is another Forrester analyst, Charlene Li, the queen of social computing (as we’ve called it in the past). Luckily for me, Charlene has agreed to collaborate with me on this project.

For those of you who’ve worked with me in my exploration of media trends, thank you. I’ve gotten to meet incredible people, learn amazing things, make friends and enemies, and get quoted an awful lot. What a great trip it’s been. I’ll be helping behind the scenes as analysts like Brian Haven, Maribel Lopez, Charlie Golvin, JP Gownder, and Paul Jackson pick up the torch, with help from a new analyst or two we’re hiring right now. Media trends like online video, digital video recorders, and HDTV are still changing rapidly, and we’ll be all over them.

If you’d like to join me in my new project, pop on over to blogs.forrester.com/groundswell. That’s where we’re launching the ideas behind the book. Be a part of it.

Internet Video Devices: Post-Apple TV Summary

[Josh] Today I visited AT&T, Intel, Sling Media, and TiVo. And, of course, we heard from Apple at MacWorld -- my colleague Charlie Golvin was there for that announcement. So here's a rundown of the necessarily incomplete list of Internet Video Devices with some brief analysis for each. This is random and not parallel, but hey, I thought you'd like to see the results of a few days research.

• Apple TV. We've been talking about this product for a year -- and we described a version of it earlier in this blog, under the name AppleVision. The Apple TV product is $299, with a 40 GB hard drive and connections to wireless home networks and output up to 720p HD. It features the usual iTunes video content and movies from Disney and now, Paramount. Also shows photos and plays music. PROS: Apple design, broad content collection, lots of Apple advertising to sell it. CONS: Set top boxes rarely, rarely catch on (CDi, WebTV, there's a whole slew of examples). They have to replace something (DVDs and DVRs replaced VCRs, for example). So forcing this onto the TV will be tough. $299 sounds great, but then you have to pay for all those movies and shows. No renting. And your home network had better have pretty good throughput if you don't want to wait for those videos (this applies to all the products below that use a hard drive).

• AT&T Homezone. Combines Dish Network satellite service with an AT&T broadband connection. Features a wide selection of content from Akimbo and MovieLink (see previous post). PROS: If you're getting Dish Network this is a hell of a deal, bundled service plus a nice DVR. And the movie selection is far broader than typical cable VOD, over 1000 movies. They're advertising heavily, too. AT&T will make sure your home network delivers. CONS: Only available in AT&T areas (remember, that now includes BellSouth). And you have to switch to Dish Network to get it.

• Moxi. So far just a plan to go into retail with their current cable box, and a CableCARD connection. PROS: People seem to really like the interface, nice integration with Internet and video content. CONS: Not available yet, don't know what content it will feature or pricing. And it's a new brand consumers don't know.

• TiVo. Internet content available through "TiVoCasts." These include CNET, the New York Times, RocketBoom, iVillage, and soon, some stuff from CBS, Forbes, and Reuters. You subscribe to them as you would to a season pass. PROS: Comes with a TiVo people already like, and there are about half a million TiVos connected to the net already. CONS: Not much of a content selection so far. And you have to buy a TiVo if you don't already have one.

• Xbox 360. If you connect it to the Net, you can get access to content downloads including Paramount and Warner movies and a bunch of TV shows. PROS: Probably has a head start of about a million Xbox 360's connected to the Net. Very simple, and the Xbox is already there. And the more Xbox's sell, the more prevalent this will get. The clear leader so far. CONS: When will YouTube get there . . . never. Could use some more download content, and some streaming content as well.

• Windows Vista PCs. Connect one to your TV and you can use the 10-foot interface and see content from . . . well, so far, from Showtime, Starz/Vongo, Nickelodeon and Fox Sports. PROS: The PC already has a net connection, and can function as a DVR. And some models will have CableCARD slots. CONS: Let's see. It's a PC, so it's expensive and an odd thing to hook up to your TV set -- are you only going to use it for games and video? And why so little content. The Web is full of video -- but not for the 10-foot interface in Microsoft's view.

• Sony Bravia TVs. Will feature an optional module that connects to the Net and streams content, including some from Yahoo! and AOL. PROS: Built into the TV (sort of), use the TV remote to access the content. CONS: You'll have to wait for Sony to get the content you want. And streaming has significant limitations because of home network bandwidth.

• Sling Catcher. This new product from Sling Media will come out by mid year. A hard drive accessory is optional. It will show video from your SlingBox on your TV, along with Net video from a PC. PROS: Low price, nice setup for your vacation home or spare bedroom TV. CONS: Like the Apple, is there enough in this device to get you to buy one and hook it up? And stay tuned, we'll find out more about the content for this soon, but for now, that's unknown.

Our report that lays this all out will be available to Forrester clients soon. But this was definitely the story of CES this year, as we had anticipated.

Technorati tags: Bernoff, Forrester, Internet video, Apple TV, AT&T Homezone, Moxi, TiVo, Xbox 360, Windows Vista, Sony, SlingCatcher

Akimbo and USBTV: Prepackaged Device Content

[Josh] Of all the things I saw yesterday, one of the most interested was Akimbo. The CEO is an old colleague of mine, Josh Goldman, and I had almost written the company off since it was (a couple of years ago) trying to sell a separate set-top box that downloaded content from the Net.

The current strategy is working far better. Akimbo has collected content from 200 sources -- networks programs, oddball stuff, and with help from MovieLink, recent Hollywood movies. This is your basic collection of nearly everything on the Net you'd like to see on your TV, except for user-generated content -- and I'm sure that's coming.

Then they go out to IVD platforms and say "hey, why not license our complete content collection." If the company is Sony, they may respond "no thanks, we'll do that ourselves." But if it's somebody a little less connected (or a little more in a hurry), they see Akimbo as far preferable to making their own deals with 200 content companies.

So far Akimbo is on an RCA standalone set-top box that does downloads and the AT&T Homezone service. It wouldn't surprise me if they make deals with Digeo and many of the other players entering this market. If you can't make your own portal, come to Josh Goldman.

I should mention they support one other product that's pretty interesting in its own right. SanDisk announced a new product called USBTV. It's a weeny little thing that comes in three parts. One plugs into your PC's USB port like a thumb drive with a weight problem. The second is an adapter that plugs into your TV. The third is a remote. You plug the USB part into your PC and copy over some content, including unprotected videos or Akimbo files. Then you plug the USB into the TV adapter and view the content using the remote. Slick as can be - and yet another way to do the Internet Video Device thing.

Back to the show . . .

Technorati tags: Bernoff, Forrester, Internet video, Akimbo, USBTV

Sony and Microsoft IVDs -- Keep Your Eye On The Device Portals

[Josh] Just a quickie before I head out on my bike.

Sony at its press conference revealed its Bravia TVs will have an optional module you can get to connect them to the Net. And Microsoft promoted HD video and movie downloads to the Xbox 360 in Bill Gates' keynote speech. We also heard about SlingCatcher from SlingBox, which allows you to get access to both SlingBox broadcasts and Net video on a TV.

There's more coming. But here's what to keep your eye on. Every one of these devices has a portal. Sony's will feature content from AOL and Yahoo. Microsoft has movies from Warner and Paramount. Ask yourself -- how do content companies get onto these portals? Who gets promoted? That's the real story here -- once these things catch on (and it will take a few years) the portals become sources of power.

Gotta fly . . .

IVDs, CES, and Technology On A Bike

[Josh] LAS VEGAS -- today starts my CES experience. In addition to the keynotes, I'll be meeting personally with Sony, TiVo, AT&T, Sling Media, and Microsoft. My colleagues will be visiting with DirecTV and Apple (at MacWorld). So come back daily for updates on IVDs at CES.

For those who haven't experienced CES, it can be a dehumazing experience. 140,000 people crowd into the city and at any given time they are all milling around Las Vegas' huge convention center or the other major CES venue, the Sands/Venetian. Getting around is impossible -- cab lines run to 30-45 minutes, the new Monorail is crowded and doesn't stop at all the venues. Or you can take the shuttle buses the show provides, if they happen to be there when you need them, and you don't mind waiting in line with hundreds of other people. Renting a car doesn no good since parking is neither widely available nor near the venues, and if you like to walk, you'll soon find out that Las Vegas is spread out over sites miles apart.

There's only one answer -- find another way. So I did. For the second year in a row, I'll be biking between venues. Roger Kay, formerly of IDC and now independent, started it, and it works great (so long as it doesn't rain!). I wear a bright yellow fleece in an attempt not to get killed by the Las Vegas drivers, who aren't used to seeing bikes on the strip. So if you see a flash of yellow zipping by your gridlocked cab at CES, it's me.

Biking also gives you a unique view on the show. As I passed the stretch limo for Garmin (GPS) driving up to the Hilton near the convention center, it was all I could do to resist knocking on the window and asking the driver "do you need directions?"

See you at the show.

Why Internet Video Devices Matter: Over The Top TV

[Josh] Now that we've published our report on Over The Top Television, I can explain a little more why Internet Video Devices make a difference.

My clients in the television business have become very interested -- okay, obsessed -- with the question of whether producers and networks can deliver content directly to the TV. Why not bypass the cable operator and send video directly to the consumer? Whether you make your money from advertising or direct consumer payments, this sounds great.

Well, it's too great to be true -- at least for a while. There are four key obstacles.

1. Devices to connect the TV to the Internet. This is what everybody's trying to do at CES and MacWorld. But it's not enough, even when those devices get going, you also need to solve . . .

2. Better home bandwidth. Right now you can't stream HDTV over home networks, and streaming DVD-quality is iffy. You can do downloads, but that means the device needs a hard drive, and you can't cache the entire world of Net video in one person's house. But you'll also need to solve . . .

3. Business models. Cable networks get paid $0.10 to $3.00 or more per subscriber per month out of your cable bill. Why would they give that up to try to get money from you directly? And then there's the wildcard.

4. Navigation. It's hard enough to find Internet video on a PC. Try navigating 500,000 Internet videos with a TV remote -- you can't. That's why preference engines like Choicestream and new pointing devices like Hillcrest's Loop are important.

Solving all of those challenges will take years. CES is just the first step. But look for new video -- especially niche video -- to come to a TV near you within the next few years. And TV will never be the same after that.

Technorati tags: Bernoff, Forrester, Internet video, Over The Top