Since the U.S. election, I’ve continued consuming more than my normal diet of political content. Pundits on Meet the Press today were discussing what Obama needs to do next, given the worsening state of the economy in particular. Talking about the potential parallels to Roosevelt taking over from Hoover, Doris Kearns Goodwin pointed out that Roosevelt was handed a phenomenal chance to be the history-making leader he became. She finished: “From great crisis comes great opportunity.”

And so it is with the revolution in ubiquitous connectivity that we call Anywhere. Will network providers, enterprises, and consumers all cut their connectivity spending in the coming two years? That seems beyond question at this point; instead the concern is by how much. And slowed spending, particularly by network providers whose continued investments are critical to a seamless, intelligent, high-capacity communications fabric, will slow the evolution of the Anywhere Economy. But with the right 21st century New Deal, here’s what else could happen:

• Free wireless broadband. The looming return in February of 2009 of U.S. wireless spectrum freed by the end of analog TV broadcasting is a tremendous opportunity to take the long view. What better time for a proposal like that of M2Z Networks, which wants to use that wireless capacity to offer a free, advertising-funded consumer broadband service.
• ‘No house left behind’ fiber mandate. Why stop with wireless? The New Deal funded national infrastructure both to provide jobs and to create public good. Roads, dams, public art, and Social Security all stemmed from the belief that public funding for the right type of endeavors would prime the economic pump. Rather than help the U.S. automotive sector continue to make cars we don’t want to buy, the government could fund a national fiber buildout to needy homes and schools.
• Access devices anywhere. From a chicken in every pot, to the means for all Americans to use the public networks. We can’t replace manufacturing jobs that went to China with new manufacturing; that’s looking backwards. What we need to do is prepare more U.S. workers to join our service economy — which means giving them the means and the education to participate online.

Am I dreaming? Perhaps. But at one point I thought electing this President might be a dream as well.

The cable television industry is still on a pretty major high, with CNN beating the broadcast networks for the first time last Tuesday on Election Night. The cable industry drives significant revenues and profits for media companies, albeit with a series of what we would otherwise call “mid-tail sites.” Broadcast networks have generally commanded large audiences in the 5-20 million household range, and cable networks have a sweet spot between 1 and 3 million HH — which is why media companies tend to own quite a few of them.

And I could imagine the tone at Turner Broadcasting in Atlanta on Wednesday, with everyone shaking hands, slapping backs with the congratulatory, we’ve finally done it!!! It took 25 years, but we’ve finally beaten broadcast.

And then the broadcast networks went back to work on Tuesday, Wednesday and the rest of the week, beating cable in prime time just like they do just about every night. But even as this happens, does it matter who wins on which network? Will the audience get wise to cable’s double-dipping tendencies? Or will cable be an also-ran in a battle of the broadband networks. Read the rest of this entry »

i have a friend who was recently shown the door from his job. times are bad, and the financial market has been tight. after twelve months of looking for a third round of pre-ipo financing, it was time to downsize the team. and my friend and former colleague protested that, “i will gladly go, but i’m frustrated because it isn’t my time.”

some things are best left unfinished. i’ve just spent the week at ad:tech, and i have a message for a key industry figure — dear jerry, you’ve done well, but now it’s time.

Read the rest of this entry »

If you’ve read earlier entries here, you’ll know one of my favorite topics is how wireless connectivity will progressively augment more devices in our lives, making them more useful to us in much the same way that electricity transformed the tools in our lives a century ago.

To help prove my point, I collect near-term examples; in addition to my Ambient Devices connected umbrella, Vitality pill-bottle and EyeFi camera card, of course the best-known one in the US marketplace is the Amazon Kindle. Yamaha hasn’t yet offered to send me one of their connected grand pianos to try out -– they must not know that I can play. (Note to self: send a demo tape to their PR folks.) This last device makes huge sense; why shouldn’t a source of its bits be the entire Internet?

But where are the rest of my connected gizmos? I feel some days as if I’m waiting for a missing train – getting up periodically from the bench, pacing the platform, and peering down the track, wondering if I’ve gotten confused about the schedule.

Certainly the CE sector is grappling with numerous challenges: cratered consumer confidence, wildly swinging foreign exchange rates, and incredibly tight product margins, to name just three. YG foresees further problems, such as lengthening consumer upgrade timetables on key products like digital cameras and DVD players. So why aren’t manufacturers moving faster to add connectivity features to devices?

I was chatting with Bruce Anderson, the head of IBM’s $4B electronics sector business providing product and services to the CE sector among others. His thoughts only amplify the opportunity: “Where was the value captured in the rise of the PC? Not in the devices themselves, but at the semiconductor level and the OS. Manufacturers are driven to scale, and then from there to marginal profitability.” Right–they need new features and a service-oriented model. So what am I mssing? I see three main obstacles; here are my rebuttals.

• Which network? Try a European operator with 3G capacity to sell in a market with a high density of CE products. Or a struggling US vendor, Sprint; they seem pleased as punch with their Amazon deal. Why wouldn’t they? It’s one-way text, not bit-sucking two-way video. And they haven’t let pride get in the way of whose brand faces the consumer.
  
• How pay for it? Bundle it in; it’s the simplest way. This means focusing for now on more narrow-band uses, with more predictable transmission needs -– things that update themselves a few times a day with specific data — so that the price you have to add into the upfront product cost is manageable.
  
• Will consumers get it? Maybe these businesses are so large that they suffer from the problem that new offers have to have a huge initial opportunity or extraordinarily stubborn stewardship to move ahead. (This recent Business Week article about Sony’s efforts here wasn’t encouraging.) You have to start with a small core group of consumers, such as Actualized Anywheres or Outlet Jockeys, two segments of the population who respond well to messages about portability of experiences.

Maybe I’m feeling a bit grumpy, but I suspect that it’s really a crisis of imagination dressed up with these surmountable hurdles. It’s easy to look enviously at the elegant Apple product family, and wish you had your own vertical product+service structure to power your quarterly margins. But the key differentiator isn’t the iconic graphic design or the simple user interface. It’s that their creators thought of it. Where is the thinking about how to radically change what devices do? Intel’s trying to inspire the sector with MIDs… That’s inside-out thinking. What we really need are some creative use cases … from the outside in. Let’s start with key consumer behaviors and find ways that devices, with connectivity, can make them easier.

PS Rich Miner was asked at our Mobile Internet World event whether he thought Android would show up in embedded systems — devices besides phones. His response: The open distribution plan almost guarantees it, revealing that academic organizations have flocked to the website for the code since Google opened it up last week.

President-Elect Barack Obama’s campaign over the past two years has been historic. But equally as historic has been the transformational force that today’s Anywhere Network — the near-ubiquitous Internet and mobile connectivity we enjoy today — played in Obama’s march to the White House. Consider just some of these contributions that the network made to his election victory:

• Online contributions. Barack Obama raised more than $600 million in total for his campaign via barackobama.com, the vast majority of which was from more than 3 million Internet contributors. With money the lifeblood of politics, this ability to raise money in small amounts from a large number of contributors will force everyone to rethink political campaign strategies for years to come.
• Socially-networked organizing. If you consider Obama’s net-based fund-raising organization as a Silicon Valley social-networking startup, it went from zero to 700 people and raised more than $200 million in revenue in the 12 months prior to June 2008, according to The Atlantic. And unlike most social-networking companies, this organization is making money — lots of it.
• Text message announcements. Remember Obama announcing his vice-presidential pick of Joe Biden by text message? Not only did this initiative mark the campaign as net-savvy, but it also collected hundreds of thousands of phone numbers that could be texted again as the campaign wore on.
• YouTube videos. The Obama campaign wasn’t content to simply load a ton of content onto YouTube and promote it; it created its own branded YouTube Channel at http://www.youtube.com/user/BarackObamadotcom. And of course, that YouTube site features a very prominent “Contribute” button as well (see first bullet about money being the lifeblood of politics).
• Mobile social marketing. The Obama campaign created a compelling mobile web site, Obamamobile.mobi, for its volunteers, voters, and donors and carried on the Democratic tradition started by Howard Dean. But the campaign’s commitment to its Anywhere constituents broke new ground with mobile applications. As an example, the campaign created an iPhone application distributed through the Apple App Store that encourages an iPhone owner to call people from their address book in battleground states. The application not only suggests calls and logs calls you’ve made, but it also sends anonymized log data back to campaign headquarters so they can measure their outreach on this channel. The result: the Obama campaign created a viral phone bank army without spending a single dollar on office space, volunteers, or phones.
• A networked army of Obama workers. The same Atlantic article linked above notes that by June, Obama’s social networking provided him with more than 750,000 active volunteers, 8,000 affinity groups, and 30,000 events. To put that in perspective, the Obama campaign manages more employees using its network than the employees of Toyota, General Motors, and Honda put together.

President-Elect Obama’s campaign discipline and inspirational messages were the foundation of this 2008 election. But those messages would have fallen flat if no one had heard them. Obama funded, created, and distributed that message to millions of voters using our growing connectivity and did it in ways not thought of just a decade ago. Just as President John F. Kennedy did with television, Obama has transformed both the message and the medium of political campaigning.

Yet, these campaign innovations that touched so many people are just a harbinger of changes we as consumers can expect in the coming five years. Today, the United States is a transforming nation in the $580 billion worldwide Anywhere Economy, with slightly more than one broadband line for every two people. But by the next presidential election in 2012, the connectivity revolution in the US will have passed a new watershed, what we call the Anywhere tipping point of one broadband line per person. Connectivity won’t just be frequent then; it will be everywhere.

As Obama’s first term of office draws to a close and he runs for re-election in 2012, he will have the opportunity to change the face of politics again. That year, as the networked strategies of this campaign promise, he can and likely will become our first Anywhere president. And that is a change all of us here at Yankee Group can believe in.

Lately, Carl Howe has been getting cranky every time anyone (namely me) brings up the expression “Over The Top.” I wouldn’t say that it’s pure crankiness but more like qualified clarity. Carl likes clear definitions and telling stories from the beginning — in other words, he’s a consummate analyst who prefers for us to not use ambiguous shorthand such as over the top.

And the reason for this is simple. If you have a color — say, green — then the color blue falls equally in the categories “not green” as well as “not red” and so on and so forth. “Over the top” is another such slippery slope. By defining “over the top” businesses as any business that runs across a communications network but that isn’t monetized as a transaction on that network, we quickly reach the simple ideas such as online advertising, internet video, and iTunes as over-the-top businesses that somehow manage to escape monetization from the network itself — the Anywhere Network of yore.

But what about transactions? If I buy a car online, is that a transaction that goes over the top? Or is that just the nature of telecommunications?

At some point, we no longer expect that the network will participate in revenues. If we transact a billion-dollar deal over a combination of airplanes, hotels, conference rooms, rental cars, e-mail, mobile telephones and conference bridge lines — we clearly don’t count the deal as accruing to those companies involved in the delivery of the underlying services.

Most of our economy consists of over-the-top transactions. Which makes it ambiguous to define some digital media as being “over the top.” Someone is making money off of these activities, it’s just not the same set of companies each and every time.

There has to be a better way to talk about this, and as analysts, it’s our job to develop new terminology while speaking in language that makes sense to everyone. This means that we can’t invent new terms every day and expect everyone to step to our new rhythm.

But with that in mind, it’s time for us to get to work.

I’ve been waiting for a while to write something about the Google/Yahoo! search partnership if only to say that there’s really nothing to see here. After all, it really doesn’t matter if Yahoo! includes AdSense on some of its search properties. Yahoo! is still doing the searching, so what difference does it make who sells the advertising?

So as news leaked out that the companies had come to terms with the U.S. Department of Justice limiting the deal to 25% of Yahoo!’s search revenues and to a deal length of two years, I couldn’t help but wonder who stood to benefit from the revised deal. As Yahoo! hemhorrages executive talent and the company’s revenues remain flat in an industry that continues to grow, it’s clear to me that Yahoo! needs all the help they can get.

There you have it. A meaningless deal rendered even more irrelevant by the passage of time. The media industry is rife with antitrust issues (Hulu, anyone?), advertising networks are par for the course co-opetition, and this is the example the DOJ chooses to make? An ailing digital media property lacking direction and leadership making a deal with the foregone winner in the race.

Next time, I suggest that someone at the DOJ talk to someone at the SEC, get a copy of the latest annual report and think hard before running in circles for the next several months. This is what they mean by “re-arranging deck chairs on the Titanic.”

Maybe you were a little shocked when you found out that your ISP was trying out some behavioral targeting technology. But more likely than not, your eyes glazed over at the whole discussion of online privacy. Surely, you want your online behavior to be private, but what’s private in this world anyway? And the kids. Yes. The kids. They’re different because of that whole Facebook thing.

So you can imagine the head-scratching that has gone into the online advertising industry’s softest launch so far. A few weeks ago, content delivery network, Akamai, purchased acerno and sneaked in an announcement of their Advertising Decision Solutions group. I don’t quite see how an online shopping network suddenly translates into a behavioral targeting platform, but the gratuitous Flash landing page at acerno.com announces quite subtly that “Akamai Acquires acerno and Gets Into Behavioral Targeting.”

Read the rest of this entry »

Sling Media’s Slingbox has been on the market for a few years but despite the generally positive press coverage and expanding footprint, penetration remains low. Yankee Group’s survey data shows that less than 1% of survey respondents own a placeshifting device with little year over year growth.

The data is not surprising, most consumers see Slingbox as a device for road warriors hoping to catch up on content during their various jaunts around the globe. Sling is hoping to change this perception with the Sling Catcher - a device best used within the home.

I recently hooked up a Slingbox and experienced some difficulty with the original installation software. Set-up of course can be a major barrier to adoption for these types of devices. Sling seems to have addressed this with their new installation software which I downloaded. Before I knew it, my Slingbox was up and running.

After a few weeks of use, I have found my usage of Slingbox surprising. Instead of not using Slingbox because I am traveling I have been using it frequently in my home.  While working in my office I will occasionally turn on Sling Player to watch something off the DVR. When on the treadmill, I bring my laptop and watch VoD.  While I have yet to sit outside and watch content, that is due to the fall weather in New England. Taking a break at work I catch up on the latest episode of The Office (Mind you, such scenario has yet to be tried - I would never watch TV at work Emily, I promise).

The point is, Anywhere technology can be enjoyed while at home. While some of Sling’s appeal is the ability to watch content wherever you are the world over it really has more practical applications as well. At home uses could be compelling for the broader market, such as The Digital Shut-ins and The Technophytes who like technology but may not be road warriors per se. So while advanced technology like placeshifting may seem uninteresting to the mass market - this example proves that Anywhere can truly be for anyone. Now if service providers would only start embedding the technology into their STBs…

Today, Apple announced a refresh of new MacBooks and MacBook Pros. For pictures and hands-on of the products you can look at Gizmodo or Engadget.

Apple’s expected notebook revamp was, like the iPod event before it, ruined by leaks as pictures of the MacBook and the new manufacturing process had found their way onto the internet over the weekend.  But the sleek new products made up for the lack of surprise. Apple’s product refresh will certainly excite its users as the MacBook lines had needed a refresh.  This should bode well for Apple as it heads into the holiday season poised to steal more marketshare from the PC manufacturers.

The market share grab may not be as substantial as it would have been if Apple met the rumored $899 price point. This is especially true in an environment where many netbooks cost less than half of the entry level plastic MacBook and economic conditions are tumultuous. But Apple has never had to compete on price so even slight reductions will inevitably result in Apple growing its slice of the pie.

For those dead-set to purchase a MacBook the pricing of the aluminun clad Macbook “Pro Mini” could have many consumers reaching deeper into their wallets come this holiday season helping further propel Apple’s revenue and this upgrade decision could really light a fire for Apple.

Apple has clearly found the winning formula for avoiding a battle to the lowest price. Spectacular design, unique software, innovative input (such as the glass trackpad with gestures), and other niceties such as an LED screen. It is amazing that despite Apple’s success no other company has been able to use their formula to stand out from the increasingly crowded PC landscape.

Now if they would only release that Tablet PC with the embedded 3G connectivity everyone would be happy.