Posted on June 28, 2010
A couple of weeks ago Apple introduced a “redesigned” MacMini computer. It’s the unit’s biggest upgrade in five years making it especially attractive as an Internet gateway and media center for televisions.
A MacMini is a computer typically sold without a monitor. Increasingly it is often mated to an HDTV, just like a DVD player or video game console. As a result, the television becomes a gigantic computer monitor. Users often buy a wireless mouse and keyboard in order to control the MacMini from a convenient viewing distance such as the living room sofa.
The unit includes lightning fast dot-11n WiFi enabling it to connect over a home network to the Internet. Consequently, broadband ISP subscribers get high speed Internet right on their televisions. They can choose to watch conventional TV with a one-button click on their TV remote by selecting, for example, the CATV input. Alternately, they can chose Internet access on the TV with a one-button click on the same remote by selecting the socket where the MacMini is connected. Read more…
Posted on June 21, 2010
According to Metcalfe’s Law the value of a network is proportional to the square of the number of connected members. With apologies that WordPress does not permit superscripts, the concept is expressed algebraically as:
Metcalfe’s Network Value = n<2>
where n is the number of network users and <2> is a symbol for squared.
The Law is more of a metaphor than an ironclad rule. But it accurately describes the importance of adding participants. For example, the infant telephone industry of the late 19th century provided little value when there were few subscribers to call. But as numbers grew the network’s utility for each subscriber increased exponentially. In principle the law applies to all multilateral networks such as fax machine users and social websites like FaceBook and FourSquare. Read more…
Posted on June 17, 2010
Extensive research into usage-based pricing of communications services conclusively demonstrates two points. First, consumers hate it. Even when metered-pricing would consistently result in a lower bill, they prefer a flat-rate. Second, flat-rates markedly stimulate network usage.
Consider how Rochester, New York telephone subscribers reacted to the following message from the Bell System 124 years ago in 1886.
Unlimited telephone use leads to unnecessary occupation of our wires and to much borrowing of telephones by parties who are not subscribers. This encumbers the system with unnecessary and illegitimate calls resulting in greatly impaired service.
When Bell switched Rochester to metered rates, nearly everybody in the city quit subscribing. Read more…
Posted on June 14, 2010
During the past few months Apple twice implied the Digital Living Room of the Future is not a good market for the company. In February Tim Cook said that AppleTV remains a “hobby” since its potential is considerably smaller than the markets for mobile and tablet devices. Partly in response to GoogleTV, earlier this month Steve Jobs amplified Cook’s point with analysis.
Download audio to iPhone, iPad, and iPod here. (six minutes)
Essentially, Apple minimizes the Digital Living Room because there can be no “go-to-market” strategy. Jobs reasons that modernizing television requires replacing conventional set-top boxes with better designs. While readily conceding that Apple could develop such designs, he assumes they could not profitably sell them because the cable and satellite industries rent current set-tops for artificially low fees cross-subsidized by programming charges. By way of example he notes that TiVo, ReplayTV, Roku, Vudu, and similar products failed to tap into the mass market. Read more…
Posted on June 10, 2010
AT&T Wireless’ decision to replace iPhone and iPad $30 monthly unlimited Internet access with metered pricing is significant for two reasons. First, consumers will learn that it is much more restrictive, or costly, than they want. Second, it will stimulate the development of competitive lower cost municipal-mesh-WiFi-networks or alternate technologies which consumers will eventually prefer. Consequently, AT&T has planted the seeds of self-destruction.
AT&T claims that most subscribers will save money under the new plan. While presumably valid when based upon historical usage, there’s not a shadow of doubt that the projected future usage patterns for all-you-can-eat pricing were going to be much more data intensive for two reasons. One is that iPhone patterns were already trending that way. For example, it was recently reported that iPhone data traffic was bigger than voice traffic. A second reason is that iPad Internet usage is expected to be even more intensive than that of the iPhone particularly considering the new product’s enthusiastic market reception. Read more…
Posted on June 7, 2010
Last year Michael Kaiser of the J.F.K. Performing Arts Center lamented that Arts Programming was vanishing from TV. Since most PBS stations lack the money for quality recording of local performances, he concludes that PBS should reorganize. Instead of relying upon local affiliate productions, he prefers that the parent organization “determine the best in American arts and fund its broadcast across the nation”. Presumably that means PBS must reduce its financial contributions to affiliates, or get Congress give more than the $400 million it presently donates annually – 90% of which passes thorough to local stations.
Like many leaders of slowly changing businesses, Kaiser fails to recognize how fast the Internet already shifted the ground under his feet. While focusing on PBS and taxpayer subsidies, he neglects to notice that a critical mass of top-quality cultural programming already populates the Net. One example is YouTube which provides three advantages over conventional television. First, it’s free. Second, viewers may watch at anytime instead of designated broadcast times. Third, it’s searchable. Read more…
Posted on June 3, 2010
Public Broadcasting offers high quality programming. Presently most of us watch it via one of about 400 local PBS affiliates. However, the most popular shows like Charlie Rose, Masterpiece Theater, Antiques Roadshow, and Nova are produced by only a few originators. Increasingly the creators are also putting many of those shows on the Internet where they can be watched at the viewer’s convenience without needing the local affiliate.
Last year Congress gave the Corporation for Public Broadcasting $400 million. About $360 million passed through to local affiliates. They generally used the money to purchase programs such as those noted above. However, the grants only represent about 20% of the typical affiliates’ overall budget. The other 80% was mostly used to fund affiliate operating overhead. Most of that 80% came from (1) prominent corporate underwriters, (2) grants from the individual states, and (3) “viewers like you”. Read more…