Saturday, February 28, 2009

Social Network Regulation

Telecommunication companies unbundled the local loop in the past decade to comply with government regulation designed to spur competition in broadband services. The regulation was enacted for allowing competitors to use the last-mile copper, which belongs to incumbent telecommunication companies, in return for a fixed (small) fee. For example, Germany has dozens of broadband providers that use Deutsche Telekom's infrastructure to reach all customers that DT reaches. A customer can switch from DT to another provider if she prefers. Therefore, the governments motive of creating competition in the marketplace has succeeded.

Now lets fast-forward to 2015. Social networking has become ubiquitious. The inevitable shakeout, M&A and standardization forces have linked up all social networks into one huge giant network. People communicate primarily over social networks. The search engine has become second to this the human Gaia - the social uber network. A collective virtual intelligence, call it society 2.0, overlaid over the society we know. Last time a technology, voice telephony, became the flagship mode of communication, government stepped in to regulate it, control it, and overhear if needed. Before last time another technology, snail mail post, became the flagship mode of communication, government stepped in to regulate it, control it, and read it if needed. And so it shall be with be with social networks.

How and when will social network regulation come about?

Tuesday, February 24, 2009

Reinventing the software development business for the mobile world

Here is Pinch Media's presentation "AppStore Secrets", a data analysis of about 30m downloads of from the Apple iPhone application store. There were several insights in the presentation. The first thing that struck me was the relatively short lifespan of mobile applications compared to PC based applications.

Consider this: According to the presentation, most mobile applications seemed to "die-out" within days. They lie unused, or worse, they are uninstalled within a few days. Not even months. Compare that with Microsoft's MS Office, which usually lives on a PC for its entire lifetime. Usually a new MS Office user increases her usage over the months and years after purchasing it. While MS Office is expensive relative to mobile applications, the former's "per-run" cost may actually be lower than app-store mobile applications.

Fortunately the number of man-hours going into simple mobile applications for things like storing recipes and writing notes is quite small and most applications seem to be coming out of garage startups. I think this will change and we will see the emergence of a conglomeration of developers (e.g. a large mobile development company or even a developers' cooperative) who can amortize the risk and costs of mobile development. This may curtail rags-to-riches stories of 'lone star developers' as success will also be amortized. Still, the synergies of a large developer group working together, sharing code and risk make this a valuable preposition.

High level, reusable and modular tools that can be used to compose applications easily should emerge as the winners for mobile application prototyping and development. Developing everything in C++ from the ground up will not be economically feasible. Instead development tools like Python for the Symbian platform and .NET tools for Windows Mobile will become popular with developers. Given the variety of platforms, a cross-platform tool will have a huge advantage. In my opinion, Adobe's mobile development tools like Flash Lite are well positioned for such high-level and cross-platform mobile development.

Saturday, February 21, 2009

Sirius XM satellite radio almost went bankrupt. A lesson for paid cellular mobile video?

Satellite radio seemed like a good idea. Crystal clear, ad-free, broadcast distance-agnostic , high-quality audio content for those long commutes, all for about $10 per month. But apparently Sirius-XM, the 800-pound gorilla of US satellite radio, is in dire straits. It avoided Chapter 11 bankruptcy after Direct TV propped it up with funding, probably at the price of being taken over by Direct TV.

But what does this say about users' appetite to pay for content while they are on the move? If paid radio did not fly, then will paid mobile video not fly either? We have a simple analogy here

free FM : paid Satellite radio :: free Digital TV (e.g. DVB-H) : paid cellular mobile video


Its tempting to write up the requiem for paid cellular mobile video based on the satellite radio example. But here are some things going for cellular mobile video
  1. Mobile VoD allows users to select what they want to see, unlike satellite radio, which is a broadcast medium.
  2. Cellular video is truly untethered because it is consumed on the mobile device. On the other hand, satellite radio is not carried in the pocket - it is usually built into car entertainment systems. No extra equipment is needed for cellular mobile video unlike satellite radio.
  3. Video is inherently a richer and more engaging medium than radio.
  4. Telecom companies are going to sink a lot of marketing effort into making mobile video a success. Paid mobile video service is one of the most significant use-case for high speed wireless networks. And perhaps, the best escape pod from the dumb-bit-pipe scenario that telecom companies want to avoid.
Still, users' tepid response to satellite radio should worry cellular mobile video hopefuls.

Friday, February 20, 2009

Mobile application stores and Telcos

Today's WSJ carries an article about online software application stores being the latest "me-too" business being promoted by mobile device manufacturers, telecom companies, and even independent companies. The first notable app-store came from Apple last year, for its iPhone and iPod Touch platform. Apparently IBM has already created a generic platform to create such app-stores, making it easy for any company to start its own app-store.

Third party mobile applications have been around for for a long time - ever since there were APIs and development platforms for mobile devices. I remember developing applications for a Palm III device using the Code Warrior IDE back in 2001. Microsoft also promoted Windows CE/PocketPC/Mobile development via Visual Studio and .NET from early on. In response the developer community created tons of mobile device applications that have been sold or given away for free on the Internet. So what has changed with the advent of the app-store? And why all this sudden interest? These are some of the obvious reasons for app-stores to exist:
  1. The host company gets a cut of the revenue. For example Nokia will get a 30% cut on each sale in its Ovi software store. The developer gets to keep the balance. In addition, by providing this portal facility to developers host companies can attract developers who create cool applications, spurring the popularity of their devices.
  2. The developer gets a suitable hosting platform for her applications. This includes a payment system, and users may be more willing to trust big names (Apple, Nokia) instead of a small unknown development company when they give out their credit card information.
  3. The user gets a one-stop application shopping solution where she can compare applications and buy with confidence since hosting companies are most likely to certify applications for compatibility, quality, security, and legal compliance before selling them.
One of the challenges for telecom companies is going to be the consequent loss of control over the application mix on mobile devices and over mobile device hardware. Why? Because by creating an alternative revenue stream for device manufacturers, app-stores will force them to consider application developers' wishes while designing devices. Until now device manufacturers have largely depended on telecom-operated retail outlets to generate the bulk of device sales, making device manufacturers very pliable for telcos. Now device manufacturers can also lean on software developers, who create cool applications for their devices, to drive device sales and to generate revenue. The days when telcos could dictate device capability and decide which software got installed on mobiles are numbered.

Its not all red for telecom companies though. Smart phones and new applications are driving up data plan usage in a big way. There are some unknowns here, for example, users may start using flat-rate data plans for voice (through VOIP) and SMS (through IM and email) substitution. But will the cannibalization hurt telcos or will data plans compensate for the loss of voice and messaging revenue?

Wednesday, February 18, 2009

The Storage-Processing-Bandwidth triangle in mobiles

The three fundamental "juices" of mobile devices - storage, CPU, and bandwidth - have been improving over the past decade. Storage has grown thanks to better and cheaper flash memory, CPUs have become spiffy thanks to Moore's law and advances in low-power CPU design, and bandwidth has improved thanks to 3G network roll outs. These 3 define the operating point of mobile device applications i.e., what are the trade-offs application designers make based on these underlying capabilities of a device. For example, if bandwidth was free and infinite then there would be less motivation to cache data on devices and instead most data (e.g. an address book) would be stored online. This would have the advantage of letting users access the same address book from different devices and computers.

But the truth is that while storage (bits per dollar) has doubled almost every year in the last decade, CPU and bandwidth have not kept the same pace. CPU power can still be jacked up if one is willing to trade battery life for faster CPUs. But bandwidth remains expensive (bits per dollar) and unreliable (spotty coverage) as compared to storage. Where is the operating point of upcoming mobile devices like smartphones heading? Will the distortion due to seemingly limitless storage lead to a redefinition of the mobile phone into a device that is less phone and more storage/CPU? Will voice and data lose their killer application status on the mobile device? What will users be doing with all that storage and CPU becoming available on their mobile phones?

It is safe to state that whenever data can be cached it will be cached. It just costs much more to transmit a bit than to store it, and transmission latency is also a problem. So expect applications to reduce bandwidth usage through local caching. High cellular bandwidth cost will also promote disruptive services like Wifi-enabled smartphones that can easily bypass operators' expensive data networks. With applications like Fring, users can already make phone calls using Skype on Wifi enabled phones. Mobile phone cameras routinely take images at multiple megapixel resolutions. But these high resolution pictures are seldom transmitted over the mobile wireless interface and are instead stored for later downloading to a PC. Many mobile device mapping solutions do not use cellular data networks and instead rely on storing all the maps locally. Multiplayer mobile games have not taken off either, partly because of the technical and pricing limitations of cellular bandwidth. I download my email over my home Wifi connection into my Nokia E71, reply to these emails on the train while commuting to work, and then connect via Wifi to send the replies once I am in office. Similarly, applications like Avantgo give users the option of avoiding the usage of expensive cellular data plans.

The argument I have tried to make is that the mobile device is not shackled to voice and cellular data only. Market forces will spur creativity to utilize these little wonders of modern technology in engaging and inexpensive ways. Voice and data may not remain the killer-apps on these devices.

Tuesday, February 17, 2009

Clearwire, Wimax, and cheap broadband

There is a interesting article in the current Fortune about the troubles Clearwire is facing in rolling out Wimax on a large scale across the US. Apparently, it is working out to be much more expensive than was hoped.

In the city of Portland, Or, about 300 Wimax towers were needed to cover the whole area. Although in principle each Wimax tower covers several miles, uneven terrain can quickly spoil this. Clearwire offers Wimax for 30 dollars a month, a price that is significantly lower than wired broadband. But with the necessity of new hardware on the user side, will it work? Especially with Telcos supporting LTE as the Wimax alternative?

The answer lies on the business model for Wimax. Wimax has the edge in terms of early deployment and heavy weight supporters like Google and Intel. The key is the ubiquity of rollout as compared to telcos' LTE. Another question is whether Wimax equipment will be bundled as standard Laptop/phone equipment . Wired Broadband also bundles services like voice and increasingly, TV. How suitable is Wimax for these value-added services?

Test blog posting via email

And this works!

Sunday, February 15, 2009

The computing world meets the home electronics world

One would think that computers and data networks can be easily integrated with home electronics like Hifi systems and TVs. Not so. Try hooking up a Hifi to your iTunes collection. Even if you are able to pipe the audio from the computer's sound card into the Hifi's line-in, its hardly convenient to browse and select songs on the computer and have them play on the Hifi. Computers are still lean-forward devices that require active user participation with keyboards and mice. I want to listen to music on my Hifi and browse my music collection sitting on my couch with a remote control. I want to control the music without having to unlocking the computer's screen saver and then using the mouse to control the software music player. And yes, I want to listen to my music with the fidelity that my Hifi offers.

Its interesting that content like movies, music, etc., produced primarily for home electronics, has moved from home electronics to computers and networks but the opposite movement of computing and networks features into home electronics has been slower. One could argue that computers can be easily programmed to mimic home electronics (e.g. software media and DVD players) whereas home electronics have to implement things in hardware - a more complex preposition. But modern electronics is easily capable of integrating computing and networking into products given how modular ASIC technology has become. Most home electronics has digital control circuitry since the 90s. These things are being controlled by computers for the past 2 decades! Then why aren't these computers interfacing to other computers and the big I(nternet)?

In my opinion, the reasons for this relative one-way street between computers and home electronics are more business and consumer related than technology related.

  1. Silo thinking and protecting markets: For the home electronics industry, one living room = 1 Hifi + 1 TV + 1 DVD player + 1 Home theatre... Home electronics makers are reluctant to provide interfaces to connect up devices, especially digital interfaces like data networking capabilities, because there is scope to squeeze out redundancy. Today most living rooms have 3 audio amplifiers (TV, Hifi, home theatre) instead of one. But how long can this redundancy last if all music could be noiselessly (digitally) piped into one amplifier?
  2. End users' lean back leanings: Home electronics buyers were people in their 30s-70s who were not too comfortable dealing with computers and Internet technologies. On the other hand users who used computers for entertainment were mostly younger. But an increasing number of people are totally at ease with the concepts of computing and data networks.
  3. The computer vs. home electronics experience: There is certainly a difference between watching a DVD on a laptop and watching one on a DVD-TV setup. Up until recently this was enough to sway many toward home electronics. But the gap has narrowed significantly now. My wife's Dell XPS laptop comes with a remote control! Acquiring content is more convenient over the Internet (iTunes, Netflix, etc.) instead of acquiring it for home electronics ( store).
  4. The other side: Unlike home electronics, the computer and telecommunications industry have been pushing any software application that consumes CPU, disk-space and network bandwidth - i.e. - music, video, and TV.

But things are changing. Our shiny new Denon M37 Hifi came with a USB port proudly placed on the front panel! The new war of the electronics world and the computer world. Or their confluence.