I have seen the future - and it is a geekdom.

Or at least that is what the folks over at Facebook believe based on their f8 Developer conference held last week in San Francisco. f8 is like no other conference I go to, because the audiences is like no other. Based on what I observed, Facebook developers skew young (often just out of college) and have dreams of making it big in the tech industry through their best friend and favorite social network - Facebook. Hence the work areas around the conference floor, such as the Hackathon, containing couches, beanbag chairs and shag rugs. More dorm room than office space or even living room.

And although f8 is a bit of a love fest between the developers and Facebook, it is also a chance for developers to get up front and personal with the social network. And Facebook wants them to do so.

That was a big theme from the conference - “developers we are listening” - and for good reason as both Mark Zuckerberg and Ben Ling at Facebook noted. Last year’s platfrom launch made for great buzz, but in the subsequent months criticisms have been launched by developers for abuses of the application system as well as rogue applications in the environment.

And as a developer friend of mine and I agreed, more than simply a technological solution needed to be leveled to fix the problems. Hence the Facebook Certified Application and the Great Application programs, reassuring users of the legitmacy of applications served up through the Facebook system.

Much to their credit Facebook has openly dealt with the trouble with open applications environments heads-on. More so than even Google or Yahoo! has in their own API and developer environments. Yet, Facebook should also be lauded with credit for their development environment. Ask any developer and they will tell you how much they prefer the environment because of its stability and relatively easy-to-use environment over the competition. They are also pushing their applications development into other realms such as mobile and beyond their own website through Facebook Connect.

Is the future perfect for Facebook? No there is still that icky problem of making money.

However, the geekdom is upon us, and so far the king of that castle is Mark Zuckerberg with Facebook.

Do you ever drive by an excavation or road construction project and think to yourself, “Hmph… the Anywhere network won’t affect work like that in a decade.” The funny thing is that you’d be completely right but for the wrong reason — the Anywhere network extends to construction equipment today. How? Many backhoes have built-in wireless network connections today

Telco 2.0 has an excellent story today on how backhoe manufacturer JCB has worked with Qualcom has been starting to build in Qualcom’s GPS/GSM modules into its backhoes. Now this is more than a location-based asset tracking service; location is just one of the pieces of data that the backhoe sends back through its Livelink system. The system also tracks mechanical status of the equipment, logs running time, and flags when maintenance can and should be scheduled to keep the expensive gear running.

JCB isn’t the only construction equipment manufacturer doing this. I worked with John Deere nearly a decade ago on a similar program they had introduced for their equipment. Whether they work for Amazon building Kindle book readers or for JCB building backhoes, connected devices made possible by an ubiquitous Anywhere Network is an idea that is captivating designers. The big challenge is finding common ground with the network operators for that connectivity and agreeing to business models that build the network cost into the device.

Now the skeptics out there might argue that finding this type of business model common ground with network operators is about as likely as making a JCB backhoe dance. To those skeptics, I offer this linked YouTube video of the JCB Dancing Diggers. They may not be fast, but they do dance.

Who doesn’t love recycled cliches? Clearly I don’t and neither does Dell which is rumored to be releasing the fifteenth coming of an iPod killer in the Dell DJ 2.0 (name made up). Unlike past incarnations, this version of the DJ will utilize technology from a company I was impressed with a few years ago, Zing.

Zing provided the back-end connectivity for the Sansa Connect which facilitated communication between the device and Yahoo Music (RIP). The company seemed to be going places until it was acquired by Dell and nary a peep heard about it since. At the time the acquisition was curious - why would Dell, out of the MP3 space buy a company that provided this connectivity? Now the answer is becoming clear.

The reason Apple’s competitors falter:

1. They are only as good. Apple enjoys a 70%+ marketshare and a 95% satisfaction rate. You cannot compete with that by offering similar products at similar price points. You will not succeed.
2. They have no content. Creative Labs, iRiver, Archos, and others create interesting products but have no direct relationship to content or to music management software. The relationship between iTunes and iPod is a key to success and no one has been able to replicate that and those that have tried have failed. Does anyone remember the SamsungNapster player? I didn’t think so….
3. There is no effective use of new technology. The Zune and the Sansa Connect beat Apple to the connected device game but failed to deliver a use case that compelled users to buy. Sandisk required a Yahoo Music subscription to access content and Zune failed to allow remote download and discovery of content even for subscribers. This left them competing on the same featuresets as the iPod and for more on that - see #1.

However, many music services are fighting for their lives and competitors to Apple continue to flounder creating conditions that demand a paradigm shift. Connectivity will provide such a feat. Apple lives off the ala carte model and seemingly has no plans to change anytime soon. If Dell can use Zing to offer connectivity to free (Pandora, Last.fm) or subscriptions content - perhaps offered for free with ad suport (Rhapsody, Napster) they could create an interesting alternative to the iPod. Especially if it is cheap.

For Dell to succeed it must:

1. Link to free content. Without free content, adding WiFi and content partners is meaningless.
2. Offer a killer UI. Navigating through multiple services and libraries will confound users unsure of what music they have access to, what is streaming, what they have to pay for, etc. Take a cue from Verizon’s media manager software on how to effectively manage multiple sources of content.
3. Make it upgradable. As new content partnerships become available users should have access to their service. Conversely, users should be able to delete services they aren’t interested in to make the experience more personal.
4. Add Social Networking. One thing the iPod lacks is social networking around music. Allowing users to (insert gasp here) share music or playlists would be interesting. Although the Zune alreadys offers some of this and has failed to catch-on as a must have feature.
5. Don’t call it a DJ. Worst. Name. Ever.
6.  Consider cellular connectivity. While business models are not yet vetted, following the Kindle’s lead would separate theNot DJ from other devices on the market by offering truly pervasive connectivity. Even the iPod Touch can’t do that.

Even with these features can Dell really compete? Honestly, probably not. Dell does not have the cache or the cool factor of Apple.  Connectivity - the last bastion for competing with a disconnected iPod is slowly disappearing as the iPod Touch sets an example of where future iPods are likely headed. With a platform now open to applications such as Last.fm and Pandora the reason to buy a competing device becomes questionable.

Dell’s new DJ will not be a great underdog tale like Rocky, an unknown competitor upsetting the champion. Instead Apollo scores a quick knockout this fall when new iPods are released.

The announcement today that Patricia Russo, Alcatel Lucent’s CEO and Serge Tchuruk its non-Executive chairman are stepping down should come as a surprise to no one.  The merger of U.S. based Lucent and France based Alcatel, formed in November 2006, can be viewed as nothing short of a major disappointment to date.  These moves have been rumored for a while but it was generally thought that ALU would wait until they found a replacement CEO candidate before announcing departures.  Today it was announced that Russo will depart the company at the end of 2008 or perhaps earlier as they also announced net losses in the quarter close to 1.7B.  Thus far, investors are tepidly applauding the move moving the stock price up around 6% as of this writing, relatively little solace for those long timers who have seen their stock’s value drop by 60% since the company being formed.

Key Recommendations to Alcatel-Lucent
Alcatel-Lucent MUST:
• Identify a suitable CEO candidate (potentially from the outside of the company and industry) who will take the measured risks and bold actions required to be successful in a disrupted telecom industry, such as divesting non-core assets, rationalizing the workforce, establishing new channels to market, addressing emerging market requirements, determine a strategy to branch out into tangential opportunities such as a provider of technology and services to media companies.
• Get out ahead of LTE, which will be driven by the CDMA operators such as Verizon. This goes beyond providing infrastructure to supporting the development of the broader service, platform and device ecosystem that LTE is being targeted toward.
• Continue to strengthen its presence in the services market by broadening its customer base beyond merely the traditional communications market and into, for example, the media industry. Creating greater coordination with its product business is also essential.
• Augment its IMS and SDE offering so that it anticipates the bifurcation of infrastructure requirements between those focused toward traditional communications services and those targeted toward the long tail of services and applications that are emerging under the guise of the Anywhere Network.
• Capitalize on its strong incumbent position as the telecommunications industry transforms itself from its traditional communications roots. We expect further margin pressure on the business driven by the increasing market pressure of the Chinese vendors and growth of business in emerging markets.
• Position itself to better serve operator clients in emerging markets across Asia, Africa, Middle East and Latin America who are presently investing heavily in next-generation networks, but also in service-led business models that offer new margin opportunities for equipment vendors.

As an analyst we are afforded the luxury of seeing many products. The result is a numbness to new and interesting technology which should elicit tongue wagging oohs and aahs. But this morning I saw The Microsoft Sphere at Gizmodo and I was ready to get in line to pre-order one.

While Microsoft has no commercials plans for the rounded version of Surface, it should. Would it be ridicliously expensive when it would first be available? Yes. Would very few people be able to afford it? Yes. Would prices eventually drop so others could buy it too? Yes.

I often look at the future of the PC in the home. From the big clunky beige boxes of yesteryear to the slim stylings of the aluminum iMac to the innovations of the HP TouchSmart PC - the desktop has evolved in form and function. Why shouldn’t the envy inspiring Sphere - playing a circular slideshow of your most recent trip, allowing you to plan a trip via Google Earth in unexpected interactive ways, or displaying an interactive recipe to help you cook be the next revolution in computing? The desktop has to change to remain relevant and while I think The HP MediaSmart PC represents an important step in the right direction the Sphere is a leap.

If prices dropped and technology shrunk sufficiently there could be a portable Zune Sphere (that would offer a UI and form factor to compete with the iPod) or Xbox Sphere (which ironically would be more apt to the already used 360 moniker). The platform would change the way users interact with a computer, would enliven the development community and  hardware manufacturers while making the “desktop” relevant again and ushering in a new age for Microsoft. Surface could afford Microsoft the same luxury. It is this type of innovation that will allow the CE industry to be propelled forward despite years of relentless technology advance.

Now if they had only called it the iSphere….

Anyone reading the Yankee Group Blogs or research knows that Anywhere matters to us. It is the fundamental core of our research and yet we are still often asked why it matters. After arriving at the office and taking care of urgent matters such as checking my fantasy baseball score (I am winning this week!), I rolled through my RSS Feeds when this little ditty from PC World popped up: Toshiba Ends Direct to Handset Broadcast. As someone who covered Blu-ray and HD-DVD since the beginning I was intrigued to see how Toshiba had failed in another format.

The failure of Toshiba’s MBCO in Japan was the result of two factors - requiring a dedicated terminal and only offering a linear experience. While the article highlights how some other services worldwide are succeeding they remain niche plays. Failure is the result of a lack of understanding that experiences cannot be transposed from one use case to another and assumed to be a success. Consumers are getting acclimated to accessing their desired content on demand (already happening en masse), on any device they choose (happening on a smaller scale), whenever they want it.

Direct to handset broadcast services may be interesting to a small segment of the population but for Actualized Anywheres (the most advanced Anywhere Consumer segment) these use cases are not particularly compelling. Instead they own Sling Boxes (or other placeshiting technology) to view subscription TV content, have home media servers to access their personal libraries, and use their handsets to access content from the web. For time sensitive information like sports scores, stock quotes, and news there are ways other than video that provide the information faster and in a more personalized manner.

While I still feel there is strength in linear broadcast for traditional television content, bringing that experience beyond the home is a challenge unless it too offers flexibility, such as an embedded DVR in your handset (which would do wonders for your battery life).  To succeed, companies must enable users to personalize their experience in a way that is unique and relevant to them as an individual. Doing so will allow manufacturers and SPs to gain cutting edge (and high ARPU) subscribers today and grow their base as more consumers actualize their Anywhere behavior.

The fact that MBCO failed in Japan is an indication that Anywhere is in fact a global phenomenon. It will not stop it will only proliferate faster. And as Toshiba spends over $200M to shut down its service it now knows why Anywhere matters.

A note: This is my third consecutive post that has not mentioned a certain fruit company in Cupertino - a new record for me.

The window of opportunity for digital media adapters appears to be closing. The category which has vexed the strong such as Apple and felled the weak such as Moviebeam and Akimbo may finally go mainstream - but it won’t be brought to you by any of the aforementioned companies.

Instead, it will be ushered in from the unlikeliest of sources - a company that wasn’t even in the video game just  a few years ago - Verizon. Today, Verizon is beta testing a new streaming service marrying its FiOS set-top box with content delivered directly from the internet. Initial content partners include: youtube, veoh, and blip.

The feature is another component of Verizon’s strategy to single-handedly slay the DMA category and prove my long standing theory that the DMA category would only be a blip on the radar until its functionality was subsumed by the pay TV STB, correct.

Already, Verizon’s Media Manager service allows subscribers to stream personal content such as photos and music (video is coming soon) from their PC to their TV - another function DMAs promised to fulfill.

The launch of internet video available via the set-top box, combined with the aforementioned features is an indication of what the future of pay TV will look like. The STB will not longer just be a vehicle in which users access content from one proprietary network. Instead it will serve as a multimedia gateway bringing together disparate sources of content into one endpoint - in an easy to use and searchable interface. This will pose a challenge to competitors who will be forced to improve their user interface, create new content relationships, and develop new hardware to serve these functions as Verizon is doing.

But that will not happen immediately. Yes, competitors will probably take note of this announcement but their focus on adding HD channels at the behest of other features, to compete better with satellite services remain the primary short term goal. In fact, this announcement is unlikely to result in otherwise uninterested subscribers opting for FiOS.

What it will do is serve two very important goals

1.         Improve Customer Retention. Without competing services from other SPs, FiOS subscribers that switch service will lose significant functionality and may lead them to stick with FiOS.

2.         De-commoditize the service. As others race to offer the cheapest bundle, Verizon’s ability to offer new services allow them to remain above the fray. They are not selling a commodity but an experience. And experiences can never be commoditized which will actually help Verizon grow ARPU as subscribers upgrade to more advanced tiers.

This test will hopefully be just the beginning for Verizon - as they continue to build out their partnerships but avoiding conflicts of interest will be an ever present challenge. Would a partnership with Netflix devalue its VOD service? If so, is it still worth incorporating? Verizon will have to make these decisions. It has tipped its hand as to its thinking already by offering customers Starz Play - a subscription online video service featuring content from Starz, Encore, and MoviePlex.

The pace at which Verizon is adding subscribers is making competitors take note. Perhaps they too will realize that they are not competing in a commoditized environment any longer and need to improve the experience to compete with Pay TV 2.0.

My friend Rich Mogull (ex-Gartner) recently posted an article in Dark Reading  called “iPhone Smackdown: Security v. Consumerization” that nicely summarizes the security problems that will arrive when employees being powerful consumer devices (like the iPhone) to work. His basic point is, “get over it; this stuff is coming whether you like it or not.” He then recommends three strategies IT departments should take to deal with it.Rich’s point is sound. It echoes what we at Yankee have been saying for over a year: consumer technologies are transforming IT. This is as inevitable as gravity, and the underlying reason is simple: the consumer technology experience is better than what corporate IT can offer. And the gap will keep getting wider. Consider that corporate capital depreciation cycles are three years. Consumer electronics product cycles have now compressed to about 6 months, one year max. That means, by definition, that the average employee is going to “feel left behind” two-thirds of the time. The same perceptual gap is present in software, too. Why buy (and capitalize) an expensive SPSS license when Swivel works does 90% of what you want? Or implement Remedy when GetSatisfaction.com is good enough? And of course, why tote around a clunky corporate Treo when you can smuggle in an iPhone that is half the thickness, lighter, nicer looking and a whole lot more fun?The key to dealing with rampant consumerization is to move to what we call Zen IT: an architectural approach that puts the right amount of scaffolding in place to allow employees to support themselves, regardless of what kind of shiny object they bring to work. With respect to security, Zen IT demands that enterprises master five key competencies:

1. Manage assets regardless of ownership
2. Make user identities portable
3. Control access to network resources
4. Control content as it moves
5. Secure customer-facing webware

Yankee Group described these strategies in detail in the April 2007 (!) presentation, Securing the Anywhere Enterprise (available to Link Research subscribers). I’d also point readers to colleague Josh Holbrook’s excellent report, Zen and the Art of Rogue Employee Management, to which Sheryl Kingstone, Zeus Kerravalla and I contributed.

Cisco, Cisco, Cisco. Another week, another acquisition. For those of you unaware of Cisco’s latest purchase details can be found here. Cisco’s acquisition of Pure Networks furthers a notion that CE manufacturers must accept: some skills cannot be found internally. For Linksys, the skills necessary to develop a simple set-up interface for its line of routers and complement that with a robust management tool to ensure network efficiency were found at Pure - which is why they initially partnered and ultimately acquired them.

For Cisco, the acquisition accomplished a number of important goals:

• Inhibiting competitors. With Pure as an independent entity its expertise could have been utilized by Cisco’s competitors. Acquiring them prevents this from happening and likely brings some Pure IP along with it.
• Reduces Commoditization. In a market increasingly sold on speeds, feeds, and price - offering additional functionality will help reduce the race to the lowest price for Linksys devices.
• Repeated customer interaction. Instead of simply engaging with the customer at purchase and then having their brand hidden under a desk amongst a mess of wires, Linksys can have a regular presence as an application providing means to monitor home network health, inform users when firmware upgrades for devices are available, and manage network traffic. This regular interaction could open the door for new business models and…
• A Linksys Ecosystem. With so many companies offering connected devices, Linksys could get into the game and offer its own connected ecosystem with its routers playing extra nice with its devices. This would ensure an easy set-up, up to date software throughout the ecosystem and advanced interoperability.

As important as the acquisition is for Cisco/Linksys to grow its digital home presence it is equally demonstrative of a major market shift: set-top box manufacturers ( Hey Cisco, don’t you own one of those?), HDTV manufacturers, pay TV service providers, mobile phone manufacturers must recognize their weaknesses (such as developing UIs) and find partners that complement their strength.

It’s not just the device, it’s not just the software or experience, and it’s not just about a static product. To succeed in the Anywhere world, you need it all. This acquisition demonstrates that Cisco has already figured this out.

We keep saying that ubiquitous connectivity will change how we work and how we play in the future. But did you ever think it would provide you with unlimited vacation days?

According to an article in the Sunday Boston Globe magazine, it does at Netflix. Netflix is one of the visionary companies who has done away with the traditional corporate policy of “two or three weeks off a year” and instituted a policy of “no set number of vacation days.” Salaried employees are allowed to spend as much or as little time out of the office as they want. The catch? They still have to ensure that they get all their work done, vacation days or not.

Now not requiring employees to take vacation may simply be corporate speak for no vacation at all as mobile phone-tethered executives check in as easily from Chile as from Chicago and answer email before and after their golf games. But what goes unsaid in the article is that Anywhere networks have given employees that choice. There is no rule that says employees must stay connected while on vacation. Connectivity simply gives them the option.

The Anywhere Network is reshaping the balance between work life and home life, and businesses and employees are still groping for the right answer. We can’t really say if the Netflix solution is the right or wrong approach (although from where I sit, it sound eminently reasonable assuming that appropriate management responsibility and authority). But there is one upside to businesses not mentioned in the article and that bears contemplation: when employees are entitled to unlimited vacation days, businesses don’t have to pay employees for unused ones.