Puls from will.i.am

The Incumbent Challenge

“I’ve got a feeling… that tonight’s gonna be a good night” – Black eyed peas

In the fight for wearable, a challenge has come totally from left field, and is being executed in a way that is oddly familiar. Last night, at Dreamforce, Black Eyed Peas frontman will.i.am introduced Puls, a new wristband that combines communication (phone, email, SMS), music, social networking (Facebook, Twitter, Instagram), health tracking and GPS-mapping into a single device.

To date, all offerings in the wearable market have been focused on packing a small square similar to a watch with electronics without looking at the band as a part of the offering. The net result is that sacrifices had to be made, forcing those devices to be accessories to your mobile phone. But Puls rethinks the approach, making a bold fashion statement that moves away from the established approach. Using something that is more akin to a bracelet, this new device packs the battery, phone antenna and radio into a portion of the offering that extends far beyond the surface area of a watch.

It’s a re-imagination of the approach to wearables. will.i.am was trained as a fashion designer (he went to the Fashion Institute of Design and Merchandising) and while not everyone will like the look and feel of the wristband (he seems to be intent to not position it as a watch), it is clear that he is going for a market that may be seeking to be different.

And the funny thing is that, to those of us who are tracking tech, it feel oddly familiar. Let’s take a quick look at the video that is positioning the Puls:

Just listen to the copy:

There are leaders and there are followers and followers follow leaders. And leaders are followers too. But they don’t follow the crowd. They follow their gut; they follow their instinct; they dance to the beat of their own drum. They have the Puls because they follow their dream. They go against all odds. They’re the oddballs, the bizarre, the weirdos, the freaks, the dreamers, the unique. They’re hip-hop; they’re punk rock; they’re geek; they’re chic; They are artists; the black sheep… and a lot of people think they are outcasts, cast from society, but the reality is, they are an army, a strange imaginative wild and complex and beautiful people. And they are leaders. They are cultural taste makers; they’re trailblazers. These are the people that set the stage. These are the people that rock the stage. They’re the ones who think of things you can’t fathom and imagine the things that have not been imagined. I am will and we are fashionology.

People who follow technology will get a sense that there’s something familiar here. To me, this ad sounds suspiciously like another, older ad, one that came up in 1997:

Here’s the copy from that ad:

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. But the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.

In 1997, when Apple created it, they were the underdog, the company that was appealing to the edge, to the people who weren’t part of the mainstream, the ones who didn’t use a Windows PC. Fast forward to 2014 and Apple is the mainstream. The battle is between Apple and Google, with no one else being part of the dialogue. So to pick an iPhone or an Android device is the kind of thing that doesn’t differentiate you any more.

You can’t lead an insurgency from the head of the pack

While Google and Apple work hard on filling the gap each of their product has and seem increasingly similar, there is room for something new.

Microsoft tried a new approach with their operating system and largely influenced the dialogue, bringing us a design sensibility that is flatter in both iOS and Android. Unfortunately for Microsoft, the baggage they carried as the incumbent from a previous era meant they could not be seen as an insurgency candidate. And the overly corporate tone of their messaging did not tug at people’s heart chords.

To unveil something different, a new player would have to be different. It would have to be someone who would lead you with a story, something to believe in. Steve Jobs could do that. He could make users yearn for a new piece of electronic by just giving it a feeling. It wasn’t a story led by technology, but one led by fashion.

So the insurgent would have to understand fashion. And this is where will.i.am comes in. He’s the kind of guy who understand fashion, a man with his own label, a man who is closely following trends in order to influence popular culture. Not only did he turn the Black Eyed Peas into a critical and popular hip hop band but he also helped turn political speech into something cool and relevant, as he did when he produced the “Yes, We Can” video for Obama.

Leveraging the power of music, combined with political speech, that’s how one can influence. Of course, it didn’t hurt that he could leverage his friends in the music and movie industry to attract a younger demographic towards the polls.

The Puls, as it is presented in its intro video, lives in a Peter Pan world, where those over 30 are not admitted. This is not your father’s wearables, it screams, this is a device for us cool kids. And in the same way will.i.am sold a candidate, he’s now selling a different approach to technology. It’s not a world where we are tethered to our phones but a world where are phones are accessories, in our lives but not central to it. This is not your father’s phone, this is different. And different is cool. That’s the message will.i.am is packaging.

David vs. Goliath

For a performer, he seems superbly humble, the little guy who reluctantly went into the space, someone who was just “encouraged” to get out there among the giants.

“To develop something like what we developed… it’s something that a giant would do, something that big companies do, not a company of awesome people from Bangalore, India and Singapore (but I’ve got a f*ing awesome team),” he says. The presentation seems awkward, a reluctant revolutionary, the kind of guy that you want to root for, the ultimate underdog in a clash of titans.

In 1997, Apple is hurting. They need to change the dialogue and reintroduce themselves to the world so Steve Jobs went on a rethinking that led to the ad you see above. Here’s what he had to say at the time:

It’s a more quiet Jobs that makes this intro. The swagger of his youth is gone. He seems downright humble, a trait not often associated with the master showman. A simple slogan (“Think Different”) and the Apple logo grace the final shot of that campaign. It is the scream that leads Apple’s revival and embeds it with everything it does for the next decade and a half.

In 2014, Apple sits on top of the world. It makes billions of dollars in revenue, is recognized as a world-class influence in what the tech industry will do, as its iPhone and iPad dominate thinking about mobile. And so it announces a watch. The Apple way is a nice accessory but it’s exactly that, an accessory. While it is bound to be successful, it is not truly groundbreaking, as it presents only a different iteration of what others have done, not so much a departure as much as a refinement of what’s on the market instead of a radical force for change.

Innovation makes us uncomfortable

The first iPhone reshaped the system because it was so different from anything before it: it was a piece of glass where all the interaction happened; it wrestled control of the “deck”, the things that were on the phone, from the carrier, leaving only Apple in charge; it didn’t hobble the internet experience; and it was a beautiful fashion item, the kind of thing you wanted to be seen holding, unlike most phones before it.

It redefined the category and forced everyone to rethink what a phone should be.

The Puls is similar. To date, we’ve been presented with the idea that a wearable is something that attaches to your phone and works as an accessory to it. To date, we’ve been told that the primary device, the one the experience would be centered around, should be the phone. To date, we’ve established that you need a camera on your phone. The Puls says “the heck with that.”

Because he’s a new insurgent, will.i.am does not have a mobile phone business to protect. He does not need to ensure that his shiny glass rectangle sells and thus can go in a totally different direction. Jackets that work as batteries? backpacks as blue-tooth speakers? Glasses doubling up as cameras? All ideas he’s talked about. This is a man who’s thinking about wearables as fashion and electronic, a man who’s had a foot in both fields (a music artist, movie and TV star, and clothing designer who also happens to have serious geek cred, working as director of creative innovation for Intel, streaming music to and from Mars, and pushing robotics competitions.)

Now I’m not saying it is guaranteed to win as a product or a company. But one thing is clear: the design of the puls will influence the debate from now on. The question after the Puls’ unveiling is not whether it will beat Apple or not but whether Apple will consider its design and “evolve” it.

When he worked on Beats, will.i.am pushed for turning a headphone company into a fashion statement and the star-branded headphones quickly became the strongest alternatives to Apple’s white earbuds. Apple, a company that rarely does big acquisition, went in and bought the company for over $3 billion and, for the first time in its history, is now running a separate brand altogether. It would not be all that surprising if, in a few years, Apple decides that Puls is a brand it needs to own… unless Google beats it to the party.

New York City Skyline

13

New York City Skyline
The Manhattan Skyline, as seen from Queens

Relentlessly time marches on. Today marks 13 years since the frightful day the redefined America in the 21st century. And with new conflicts in eastern Europe and the middle east, a deadly Ebola epidemic in Africa, and racial tensions in the heartland of America, it almost seems quaint to spend the time to stop and think about events that happened so long ago.

9/11

It’s a date that sits in the history books for most. And yet, it’s still a date that feels deeply personal. At the same time, this marker makes me realize that all wounds do heal over time.

9/11

A series of events that use to make it difficult to think of labor day as merely the end of summer, as a time to get into the fall. So overwhelming was the pain of those early September days that it kept repeating itself, increasing one’s level of anxiety as the calendar made another turn to its 9th month.

9/11

The beginning of a war that seems to see no end. While Orwell talked about always being at war with Oceania (or was it Eurasia), it seems that yesterday’s enemy seen in Al Qaeda has been replaced by today’s new ISIS forces. It seems that a war that started with a few radicals on our doorsteps in lower Manhattan has now turned into a global conflict where good and evil are hard to differentiate, where our very own nature is reshaped, turning us into a more repressive, more suspicious, and more cynical world.

9/11

A tag used to justify our own torturing of our enemies; A tag that used to justify spying on our own people. A tag that used to paint our political opponents as weak and the people we support as strong; A tag that has been manipulated, sliced, and thrown around so much that it’s been drained of its own meaning.

9/11

A marker of things that existed before and things that existed after. But most of all a question that has been left unanswered.

In the days after the attacks, there were calls for justice and calls for restraints; In the days after the attacks, there were questions about how and why this happened; In the days after the attacks, there were rushes to judgements and mistakes were made, mistakes that were meant to be corrected.

But since 9/11, there has been a question left uneasily asked and hardly answered: What kind of society do we want to be?

With the hindsight of years, that question has taken on a new nuance. As the historical record, it has become clearer that a large part of the terrorists’ goal on that day was to scare us and turn us into a society that was more in line with their world view. Today, as we dutifully take off our shoes before getting in an airport, as we look over our shoulder when we do an internet search that could be controversial, as we wonder if we or anyone we know ended up being spied on by our own government, we have become our own worst enemy. We are more scared and less hopeful than we were 13 years and 1 day ago. But in the same way, we have seen other types of disaster strike our country, increasing the level of distrust in our institutions: if they cannot protect us, who can?

At the same time, those 13 years have marked amazing leaps in the world’s knowledge.

13 years ago, the Martian landscape was the stuff of Sci-Fi book and today, we have a robot there telling us about the daily state of the red planet; Mars and the moon are known to have had (and possibly still have) water, another amazing development in our understanding of nearby astral objects. And somewhere beyond the edge of our solar system, a man-made ship continues its journey, having pushed beyond it in the past 13 years. We’ve kicked Pluto out of the planetary club and private entities are now routinely delivering equipment (and soon people) in space. And technology has gotten so cheap that hobbyist can now take pictures from the edge of our atmosphere for a few hundred bucks.

13 years ago, the Higgs boson was only a theory but we now have gone a deeper level in understanding the forces that shape our universe; Closer to the self, we’ve sequenced the human genome with 99.99% accuracy, opening up a new era for medical research.

13 years ago, those of us who had mobile phones used them to make phone calls, or maybe text; today, our phones are so powerful that they are starting to replace traditional computing devices (odds are that you are reading this on one right now); 13 years ago, the idea of electric cars that could drive by themselves was the kind of stuff you only saw in movies about the future; today, they’re almost there, with the only question being whether they are a better mode of transportation than drones, another set of robots which didn’t exist beyond sci-fi circles.

13 years ago, AOL and Yahoo were hot companies and Apple was a minor player in the computing industry. The iPod (remember that classic iPod wheel? It died this week, short of its 13th birthday), iPhone, iPad, and app stores didn’t exist. Nor did Facebook, Twitter, Spotify, Uber, or AirB&B. Netflix was famous for its DVD delivery service (DVDs were those plastic discs you got movies on, because streaming movies was uncommon back then); and Amazon was famous as a company only focused on selling physical goods (The Kindle, Amazon web services, Prime, streaming services, etc… were way off in the distance).

We routinely talk to our computers (“OK Google”, “Hey Siri“), so much so in fact that a love story between a man and an artificial intelligence entity doesn’t feel completely futuristic.

So we’re short on flying cars but yesterday’s future is today’s present and it seems that every day, the gap between what is imagined and what is possible shrinks at an accelerating rate. Is it a failure of imagination on our part? Or an acceleration in making the surreal real? I don’t know. But what I do know is that we live in exciting times and we live in scary times. Maybe we always have but in marking the 13th anniversary of the lowest day of collective pain in my lifetime, I realize that the future belongs to us, that we are the ones who can make it better or worse, and that it comes down not only to our leaders but to our own personal choices. “We will never forget” was the easy sentence thrown around after 9/11. Today, I say let’s not forget that the future of America was built on a sense of hope and potential, a sense of accountability from those in power, and let’s rekindle that flame and drive forward to a better world and a better future.

 

In Memoriam

Car­los Dominguez, Mark Ellis, Melissa Vin­cent, Michael DiPasquale, Cyn­thia Giugliano, Jeremy Glick, David Hal­der­man, Steve Wein­berg, Ger­ard Jean Bap­tiste, Tom McCann, David Vera.

This post is part of a continuing series in which I remember those I knew who were lost on that day. Here are the previous years: 20132012201120102009200820072006200520042003, and 2002. For context, you might want to read The day after, which is about as raw as one can get about that day as I wrote that piece less than 36 hours after the first plane hit. This is the longest series I’ve ever written and I expect to continue yearly until I can no longer write.

A nuclear mushroom cloud

My choice is the internet

It was a year ago that revelation the NSA spying on internet data came about. And since then, more has been revealed and activists have tried to fight back. Meanwhile, the FCC unveiled a proposal to alter the way the internet works to give those with money an ability to distribute their content more efficiently than those without and more activists have tried to fight that proposal.

But unfortunately, as technology activists, we have failed to talk about how all those fights connect to each other and to everyday life. To many people living in democratic countries, the debates around net neutrality or NSA surveillance are interesting news item but things that only geeks worry about.

And while coalitions are built to fight the latest threat to the Internet, whether it is government surveillance, telecom or cable mergers, net neutrality, or something else, there has not been a unifying force tying all of those discussions together into a message that is easily understood by anyone outside of the technology world.

And that unifying force is choice.

This choice is about debating whether we want an internet where we give up a right to personal privacy in exchange for the promise of potential security from terrorist or whether we want policing forces to be under the same kind of check and balances as they are in the real world, requiring warrants before searches, but somewhat slowed down by the process.

This choice is about debating whether we believe that the convenience of faster access to content should be traded in in exchange for letting the cable/phone/wireless company decide which site or app goes faster (based on financial arrangement with the provider of said app/site) or whether we want to retain the existing level playing field where every site/app works at the same speed albeit a potentially slightly slower one that could lead to an occasional hiccup when watching a movie on Netflix/YouTube/Hulu/Amazon/Vudu/Aero or whatever new video service pops up.

This choice is about deciding whether we want our internet to be more like a television, where tight regulations and a limited set of suppliers control what can and cannot be seen but also provide higher production value content or whether we want it to be more like our real world mailboxes, where pamphleteers have similar rights to express their opinions as newspapers do but the flood of content can also mean seeing things that you were not expecting.

This choice is about whether we think the internet we have today fosters creativity and the development of new products and services or whether we believe that the internet is fundamentally broken and should be fixed by giving a small set of people/companies/organizations a large amount of control over its future.

This choice is about defining whether we want an internet that is more messy but more free, creating a level-playing ground for anyone with an idea and the willingness to work hard on making that idea a possibility or whether we want an internet that is more convenient but less diverse, creating a more homogenous experience while granting the right to distribute new products and services only to those who can afford it.

And in this fight, there are two sides: do you believe in the internet or do you want something else?

If you choose the internet, you choose an internet where you have rights to free speech and privacy that is no different than the ones you have offline (in the US, those rights are covered under the first and fourth amendments to the US constitution); If you choose the internet, you choose an internet where all products and services are delivered at the same speed;

Of course, that choice does not come without some costs: If you choose the internet, there is a chance that some illegal activities will be performed on it; If you choose the internet, there is a chance that some things you disagree with will be appearing on it; If you choose the internet, there is a chance that your convenience will be impeded by that of other people.

Those are the trade offs you have to make. I know which ones I’m willing to make: for over two decades, I’ve seen an internet where thousands of businesses have flourished, creating billions (or maybe even trillions) of dollars in value for millions of people; I’ve seen millions of voices being given a chance to rise up against injustice, organize themselves, and share their message through the tools that are available on the internet.

As a result, I stand with the internet and I proclaim on high “my choice in the internet.

My choice is the internet because I believe that the traditional system of search warrants is strong enough not to have mass capture of data by the NSA. The government may want access to my data but I should have a right to fight it publicly in court if I disagree with their reasoning. 

My choice is the internet because I believe that every entrepreneur should have a level playing field against the established online players. How fast my internet hookup is based on my willingness as a consumer to buy a faster line and when I do, all providers benefit equally, whether it is one guy with a personal app or a multi-billion dollar corporation.

My choice is the internet because I believe that all voices, even the ones I disagree with, have a right to be heard. I may make a personal choice to not go to those sites or download those apps but I do not believe in anyone else making that choice for me.

My choice is the internet. What’s yours?

Film

Streaming movie hits – 2013 edition

For the past few years, I’ve been taking the temperature of the online streaming world by looking at how many of the previous year’s box office winners were legally available for online streaming (see 2013, 2012, 2011). This year we seem to see some major progress in how Hollywood is treating the internet, finally offering large swath of content to people who are willing to watch it legally. Let’s take a look…

All you can eat

Netflix and Amazon Prime have established themselves on an all-you-can-eat model around movies and, to date, have not fared that well with recent content. So let’s take a look at this year’s movies:

Rank Title Netflix Amazon Prime DVD/Blue Ray
1 The Hunger
Games: Catching Fire
No No Yes
2 Iron Man 3 Yes No Yes
3 Despicable
Me 2
No No Yes
4 Frozen No No Yes
5 Man of Steel No No Yes
6 Monsters
University
No No Yes
7 Gravity No No Yes
8 The Hobbit: The
Desolation of Smaug
No No Yes
9 Fast & Furious 6 No No Yes
10 Oz The Great and
Powerful
No No Yes
11 Star Trek Into
Darkness
No No Yes
12 Thor: The Dark World No No Yes
13 World War Z No No Yes
14 The Croods Yes No Yes
15 The Heat No No Yes
16 We’re the
Millers
No No Yes
17 The Great
Gatsby (2013)
No No Yes
18 The Conjuring No No Yes
19 Identity
Thief
No No Yes
20 Grown Ups 2 No No Yes
21 The Wolverine No No Yes
22 G.I. Joe:
Retaliation
No No Yes
23 Anchorman 2:
The Legend Continues
No No Yes
24 Cloudy with a
Chance of Meatballs 2
No No Yes
25 Now You See Me No No Yes
26 Lee Daniels’ The
Butler
No No Yes
27 The Hangover
Part III
No No Yes
28 Epic No No Yes
29 Captain
Phillips
No No Yes
30 American Hustle No No Yes
31 Jackass
Presents: Bad Grandpa
No No Yes
32 Pacific Rim No No Yes
33 This is
the End
No No Yes
34 Olympus
Has Fallen
Yes No Yes
35 42 No No Yes
36 Elysium No No Yes
37 Planes No No Yes
38 The Lone Ranger No No Yes
39 Oblivion No No Yes
40 Insidious
Chapter 2
No No Yes
41 Turbo No No Yes
42 The Wolf
of Wall Street
No No Yes
43 2 Guns No No Yes
44 White House
Down
No No Yes
45 Mama No No Yes
46 Safe Haven No No Yes
47 The Smurfs 2 No No Yes
48 Saving Mr.
Banks
No No Yes
49 The Best Man
Holiday
No No Yes
50 Percy
Jackson: Sea of Monsters
Yes No Yes
51 A Good Day to Die
Hard
No No Yes
52 Warm Bodies No No Yes
53 Jack
the Giant Slayer
No No Yes
54 The Purge No No Yes
55 Last Vegas No No Yes
56 Ender’s Game No No Yes
57 Prisoners No No Yes
58 After Earth No No Yes
59 Escape
From Planet Earth
No No Yes
60 Hansel
and Gretel: Witch Hunters
Yes No Yes
61 Free Birds No No Yes
62 Evil Dead
(2013)
No No Yes
63 The Secret
Life of Walter Mitty
No No Yes
64 Red 2 No No Yes
65 Tyler
Perry’s A Madea Christmas
No No No
66 Tyler
Perry’s Temptation: Confessions of a Marriage Counselor
No No Yes
67 The Call No No Yes
68 Pain and Gain No No Yes
69 Lone Survivor No No Yes
70 Gangster
Squad
No No Yes
71 Jurassic
Park 3D
No No No
72 The Internship No No Yes
73 Instructions
Not Included
No No Yes
74 Snitch No No Yes
75 Riddick No No Yes
76 A Haunted
House
Yes No Yes
77 12 Years
a Slave
No No Yes
78 47 Ronin No No Yes
79 The Family (2013) No No Yes
80 Carrie (2013) No No Yes
81 Texas
Chainsaw 3D
Yes Yes Yes
82 Walking
with Dinosaurs
No No Yes
83 R.I.P.D. No No Yes
84 Blue Jasmine No No Yes
85 Kevin Hart:
Let Me Explain
Yes No Yes
86 Side Effects
(2013)
Yes No Yes
87 Scary Movie 5 No No Yes
88 The
Mortal Instruments: City of Bones
No No Yes
89 Delivery Man No No No
90 One
Direction: This is Us
No No Yes
91 Grudge Match No No No
92 Kick-Ass 2 No No Yes
93 Rush (2013) No No Yes
94 The Host (2013) Yes No Yes
95 The World’s End No No Yes
96 21 and Over Yes No Yes
97 Escape Plan No No Yes
98 Don Jon No No Yes
99 The
Incredible Burt Wonderstone
No No Yes
100 Philomena No No Yes

With 11 titles available this year, Netflix seems to have made a tremendous jump compared to other years (last year, it had only 5 of the top 100 movies from the previous year). So while Netflix’s 2013 story has been about its original content (House of Cards, Orange is the New Black), it seems the company is also quietly working on improving its position in delivering studio content. Meanwhile, Amazon Prime comes in with only 1 title (Texas Chainsaw 3D) in its offering, even less than it did in the previous year. This, of course, is compared to a total of 96 titles being available on DVD today so if you’re looking at the all you can eat model to feed your recent movie habit, you’re out of luck.

But let’s now take a look at whether you can rent those movies in an on-demand fashion over the internet.

VOD

To do so, I pulled data on the most popular rental services online: iTunes, Amazon on-demand, Vudu, and the emerging YouTube service.

Rank Title Amazon digital rental iTunes Vudu YouTube DVD/Blue Ray
1 The Hunger
Games: Catching Fire
No No No No Yes
2 Iron Man 3 Purchase only Purchase only Purchase only No Yes
3 Despicable
Me 2
Yes Yes Yes Yes Yes
4 Frozen Yes Purchase only Yes No Yes
5 Man of Steel No Yes Yes Yes Yes
6 Monsters
University
Yes Yes Yes No Yes
7 Gravity Yes Yes Yes Yes Yes
8 The Hobbit: The
Desolation of Smaug
No No No No Yes
9 Fast & Furious 6 No Yes Yes Yes Yes
10 Oz The Great and
Powerful
No Purchase only Purchase only No Yes
11 Star Trek Into
Darkness
Purchase only Purchase only Purchase only Yes Yes
12 Thor: The Dark World No No No No Yes
13 World War Z No Yes No Yes Yes
14 The Croods No Yes Yes Yes Yes
15 The Heat No Yes Yes Yes Yes
16 We’re the
Millers
Yes Yes Yes Yes Yes
17 The Great
Gatsby (2013)
No Yes Yes Yes Yes
18 The Conjuring No Yes Yes Yes Yes
19 Identity
Thief
No Purchase only Purchase only No Yes
20 Grown Ups 2 Yes Yes Yes Yes Yes
21 The Wolverine No Yes Yes Yes Yes
22 G.I. Joe:
Retaliation
No Purchase only Purchase only No Yes
23 Anchorman 2:
The Legend Continues
No No No No Yes
24 Cloudy with a
Chance of Meatballs 2
No No Purchase only No Yes
25 Now You See Me No Yes Purchase only Yes Yes
26 Lee Daniels’ The
Butler
No Yes No Yes Yes
27 The Hangover
Part III
Yes Yes Yes Yes Yes
28 Epic Yes Yes Yes Yes Yes
29 Captain
Phillips
Yes Yes Yes No Yes
30 American Hustle No No No No Yes
31 Jackass
Presents: Bad Grandpa
No Purchase only No No Yes
32 Pacific Rim No Yes No Yes Yes
33 This is
the End
No Purchase only Purchase only No Yes
34 Olympus
Has Fallen
No Purchase only Yes No Yes
35 42 No Yes Yes Yes Yes
36 Elysium No Yes Yes Yes Yes
37 Planes Yes Yes Yes Yes Yes
38 The Lone Ranger No Yes Yes Yes Yes
39 Oblivion No Purchase only Purchase only No Yes
40 Insidious
Chapter 2
No Yes Yes Yes Yes
41 Turbo Yes Yes Yes Yes Yes
42 The Wolf
of Wall Street
No No No No Yes
43 2 Guns Yes Yes Yes Yes Yes
44 White House
Down
Yes Yes Yes Yes Yes
45 Mama No Purchase only Purchase only No Yes
46 Safe Haven No Yes Yes Yes Yes
47 The Smurfs 2 No Yes Yes Yes Yes
48 Saving Mr.
Banks
No No No No Yes
49 The Best Man
Holiday
No No No No Yes
50 Percy
Jackson: Sea of Monsters
No Yes Yes Yes Yes
51 A Good Day to Die
Hard
No Purchase only Purchase only No Yes
52 Warm Bodies No Purchase only Purchase only No Yes
53 Jack
the Giant Slayer
No Purchase only Purchase only No Yes
54 The Purge No Yes Yes Yes Yes
55 Last Vegas No No No No Yes
56 Ender’s Game No No No No Yes
57 Prisoners Yes Yes Yes Yes Yes
58 After Earth No Purchase only Purchase only No Yes
59 Escape
From Planet Earth
No Purchase only Yes Yes Yes
60 Hansel
and Gretel: Witch Hunters
No Purchase only Purchase only No Yes
61 Free Birds No No No No Yes
62 Evil Dead
(2013)
No Purchase only Purchase only No Yes
63 The Secret
Life of Walter Mitty
No No No No Yes
64 Red 2 Yes Yes Yes Yes Yes
65 Tyler
Perry’s A Madea Christmas
Yes No No No No
66 Tyler
Perry’s Temptation: Confessions of a Marriage Counselor
Purchase only No No No Yes
67 The Call Purchase only Purchase only Purchase only No Yes
68 Pain and Gain Yes Yes No Yes Yes
69 Lone Survivor No No No No Yes
70 Gangster
Squad
Purchase only Yes Purchase only No Yes
71 Jurassic
Park 3D
No No No No No
72 The Internship Yes Yes Yes Yes Yes
73 Instructions
Not Included
Yes Yes Purchase only Yes Yes
74 Snitch Purchase only Purchase only Purchase only No Yes
75 Riddick Yes Yes Yes Yes Yes
76 A Haunted
House
Yes Yes No Yes Yes
77 12 Years
a Slave
Purchase only Purchase only Purchase only No Yes
78 47 Ronin No No No No Yes
79 The Family (2013) Yes Yes Yes Yes Yes
80 Carrie (2013) Yes Yes Yes Yes Yes
81 Texas
Chainsaw 3D
Purchase only Yes Yes No Yes
82 Walking
with Dinosaurs
No No No No Yes
83 R.I.P.D. Yes Yes No No Yes
84 Blue Jasmine Yes Yes Yes Yes Yes
85 Kevin Hart:
Let Me Explain
Yes Yes Yes Yes Yes
86 Side Effects
(2013)
Yes Yes Yes Yes Yes
87 Scary Movie 5 Yes Yes Yes Yes Yes
88 The
Mortal Instruments: City of Bones
Yes Yes Yes Yes Yes
89 Delivery Man No No No No No
90 One
Direction: This is Us
Purchase only Yes Yes Yes Yes
91 Grudge Match No No No No No
92 Kick-Ass 2 Yes Yes Yes Yes Yes
93 Rush (2013) Yes Yes Yes Yes Yes
94 The Host (2013) Yes Yes Yes Yes Yes
95 The World’s End Yes Yes Yes Yes Yes
96 21 and Over Yes Yes Yes Yes Yes
97 Escape Plan Purchase only Purchase only Purchase only No Yes
98 Don Jon Yes Yes Yes Yes Yes
99 The
Incredible Burt Wonderstone
Purchase only Purchase only Purchase only Purchase only Yes
100 Philomena No No No No Yes

Here, we see substantial improvements compared to last year. iTunes has 55 of the top 100 available for rent, closely followed by YouTube (52) and Vudu (49) but Amazon is trailing with only 35 titles. If you throw in titles one can purchase (generally purchases are in the $15-20 range as opposed to rentals which average around $5), iTunes has 78 titles, Vudu 72, YouTube 53, and Amazon 46. The puzzling thing her is around Amazon’s video on demand service: on the one hand, they’ve been aggressively promoting Amazon Prime and building out new original content and on the other, they appear to be trailing the competition in terms of VOD.

You may wonder what it looks like compared to previous years so I’ll delve into my historical data for rentals:

Amazon iTunes Vudu YouTube DVD/Blue Ray
2010 48 46 46 No data 74
2011 45 44 44 No data 74
2012 44 44 46 38 77
2013 35 55 49 52 96

The first thing that jumped at me was how many of the titles were actually available on BlueRay/DVD this year. I actually went back to look at the sources as it seemed incongruous but the data appeared valid. Secondly, we seem to be witnessing the quiet rise of YouTube as a rental service and the floundering of Amazon VOD.

If you factor in sales, the data looks as follows:

Amazon iTunes Vudu YouTube DVD/Blue Ray
2010 56 60 57 No data 74
2011 61 62 61 No data 74
2012 57 59 59 38 77
2013 46 78 72 53 96

Here, we’re still seeing an Amazon service that appears to be struggling compared to the competition. iTunes and Vudu are strong players in the sales space while YouTube seems to have little interest in in.

Conclusion

2013 and 2014 are boom years for media streaming. While a lot has been written about the emergency of Netflix, Amazon and others as sponsors of new filmed content, another interesting story the data gives us is that 2013 seemed to have been the turning point in terms of Hollywood’s acceptance of streaming as a legitimate form of media consumption.

However, we are also seeing an industry that is clinging to the old release window model, distributing movies on plastic before they do so online (in fairness, the time lag between the two has been growing increasingly small so one can hope they will eventually do away with that approach).

With the Oscars broadcasting tonight, one could wonder whether the next step for the movie industry is not same time release. For example, many of the movies in the running are still not available online, even though they have been in movie theaters for a couple of months already. One could hope that the movie industry will look into this practice and decide that they want to release movies in a legal fashion earlier so that interested fans could catch them online. That said, there are still more movies available on plastic disks than there are online, which brings up the question as to why aren’t we seeing more simultaneous releases on DVD/BlueRay and online.

So kudos to Hollywood for embracing digital and now on to the next challenge of making content available in everyone’s home (for a fee, of course) at the same time it is in theaters.

Methodology

To capture the data set, we went to canistream.it and plugged in the titles of the top 100 winners at the box office in 2013. The research was performed during the first week of February 2014. I would like to thank Mary LoPorto for her help in gathering this data set.

The world of Tristan Louis

20 Years

This weekend, TNL.net turns 20.

Two decades, 1040 weeks, 7300 days.

Over those two decades, TNL.net has added up to thousands of web pages. Over the past few weeks, I’ve gone back and trimmed it. Starting from a fresh page, I decided to refocus TNL.net on what it’s been best known for: its content.

An evolving infrastructure, an evolution of process

The story this site is a story of evolution further and further away from the “metal”. The first version ran on a computer I had physically assembled out of parts, picking the memory, processor, network card, and hard drive carefully for optimal performance. I compiled the operating system myself, wrote the web server on which the site was running and developed every single pages manually.

The site has since gone through many iteration, running on Windows, Linux, and later CentOS; going from a web server I wrote to one I haven’t even configured myself. And with this 20th anniversary, I’m actually moving to a design with most of the CSS, HTML, and JavaScript written by others with the focus now being squarely on the thing that has truly differentiated this place: thoughts turned to words.

A marathon, not a sprint

I’ve tried to find something I have done for as long as I’ve run this site.It was the first step in a decades long journey: TNL.net was my 6th presence on the internet, with earlier personal pages hanging from other websites dating back to 1992. TNL.net maps the realization of my journey to the web. While I started hanging online in the 1980s, I went to the web in 1992 after I learned that you could read the source code of a web page. My first web page was mostly a rip-off of one of Tim Berners-Lee’s. I copied his page and slowly replaced text, then links. But getting my own domain was a major jump: it was a commitment I was making to the medium.

Some have asked me why it’s TNL.net and not TNL.com. When I created TNL.net, there was a logic to domain names: .com was commercial and was supposedly only available to US companies. .net was an international domain and could be used for purposes other than commercial. While domains were free, those considerations seemed more significant then so .net it was, the result of my looking at this site as a personal one instead of a commercial enterprise, a place to hang my shingle, while I worked on the site building other .com sites. It was an acknowledgment that this was not intended as a commercial enterprise but an experimental workshop.

Subsequently, the internet became a hot thing, then it wasn’t, and later it came back. But along the way, I learned a few lessons:

1. The future is easy to predict if you watch technology closely enough: Details and omissions often are where the stories hide. Whether it is predicting that Apple would move to Intel processors, the rise of something like Bitcoin, or that Nokia would end up leaving mobile, one thing has been consistent. Whenever I make such calls on the internet, a number of articles/blog posts get written calling me a total idiot.. and within 12-24 months, the prediction turns out to be mostly correct. Why is that? Because I spend a lot of time doing pattern matching around our industry and trying to understand how similar issues fit in an historical context: it is that history, combined with interviews of people at the companies concerned, that give me a better sense of where things are headed.

2. Beware of the blind spots: I totally missed the growth of Twitter. While I was an early member, I could not figure it out nor did I understand its utility for a long time. Long-form writing blinded me to the utility of 140 characters. In fact, I advised an angel friend of mine to not invest in the company when he asked me for advice (Sorry!) So while I have a decent track record of predicting things, I must humbly recognize my own biases and realize that there is still much I need to learn.

3. The internet as we know it is in danger: The 1990s and early 2000s were a golden age of the internet because it was largely dismissed as a toy. Now that it’s a core infrastructure of our world, the powers that be want some form of control around it: whether it is the NSA trying to turn it into a surveillance network, large telcos trying to provide preferential treatment to specific forms of content, or large companies trying to wall users in into their own ecosystem, we, as users, have to stand up and fight for our right to a free and open internet. If we do not protect it, people will look at the 1990s as an aberration and the internet of the future will be undistinguishable from today’s cable television.

4. Question the party line: TNL.net has been syndicated to traditional media publications around the world and I’ve learned that the more controversial pieces, whether it was my early support for Wikileaks, or my observations on Occupy Wall Street, are generally frowned upon. If a story does not conform to the mainstream story line, few publications have the courage to publish it. I’ve been thankful to have understanding editors over the years but cumulative experience highlights a bit of black and white thinking going around storylines (eg. Apple is innovative; Microsoft is evil.) Either story lines fit a pre-established narrative or are frowned upon. So an organization like Occupy is not one that most are willing to learn from; or looking at Wikileaks in the context of the Pentagon papers is a bad idea. I hope that the new organizations like the one coming soon from Pierre Omidyar and Glenn Grenwald will help rectify this issue and restore a higher level of critical thinking in more of our media.

5. Leaders are not infallible gods: Over two decades, I’ve been called a tool of Microsoft, Apple, Google, Facebook, Twitter, and Netflix; I’ve been told I don’t understand Microsoft, Apple, Google, Facebook, Twitter, and Netflix; I’ve been accused of trying to pump up (or down) the stocks of Microsoft, Apple, Google, Facebook, Twitter, and Netflix. I often worry that there is an unhealthy worship of those companies: I wish that more people were looking at them with a more critical eye and I’d encourage other influencers to do so. I do like products and offerings from many of them but I also realize that little of their efforts are purely altruistic: at the end of the day, they are businesses with specific goals and often, collateral damage happens.

6. A marathon is run one step at a time: There are now 2732 entries on TNL.net. The average page on this site clocks in at over 1,000 words. That means almost 3 million words make up the content on this site. I didn’t know I was signing up for a marathon when I got started but I’ve been thankful for every step in the journey. It’s an astounding amount of time I’ve spent here but it pales in comparison to the amount of time TNL.net readers have generously given me in exchange: every comment, every mention has allowed me to more clearly understand the topics I’ve written about. All of this from one entry at a time, one foot in front of the other. Along the way, I’ve experienced joy and happiness, pain and suffering (the more brutal pieces to write are the ones about 9/11), and sheer exhaustion. This year I’m giving up writing my weekly column on Forbes so I can pace myself better as I felt that trying to do too much had degraded the quality of my writing. Expect pieces but not necessarily weekly.

7. Plan, Research, Write, Promote: TNL.net follows a simple formula: Plan the story and see if someone else has already written it (if yes, don’t rewrite it); Research the material and provide new insights; Write and edit multiple times before pressing publish; Promote the material on social media as an unseen idea is a dead idea. Repeat with the next story. Many of my readers have received emails, IMs or phone calls as a result and I’m thankful for all the help I’ve gotten in my attempt to create original content.

8. Community is the lifeblood of good writing: I owe a debt of gratitude to so many, whether it is readers of the site, readers of the newsletter, or fellow bloggers and journalists. From Philip Elmer-Dewitt to Bruce Upbin, the content you see on this site would not exist or not be of the quality you see without so many. Here, I’d like to also put in a shout-out to my friends at the IPG, who have been a great source of support all those years, quietly helping in the background by helping me steer difficult stories to completion.

9. 20 years is long; it doesn’t make 30 years look any easier: I often sit down at the keyboard with a sense of dread, worried that what I’m going to publish is not going to be good enough for my readers (and if you’ve read this far, you’re one of my readers). Creating original material on a regular basis is not something that comes easily: just like the marathon runner wakes up to train every morning, writing this site has been an exercise in self-discipline. When I look at people like Fred Wilson, who has sustained a daily rhythm on his site for years, I am in awe. Many bloggers have come and gone over the years but the ones we now know as successful are the ones who have shown up on a consistent basis, regularly updating content and making things interesting for their readers.

10. If a written piece isn’t read, is it a written piece? TNL.net has been called a set of pages, an online magazine, a newsletter, a blog, a thought journal but one thing has been consistent: my writing highlights the digital revolution, packaged up with the intent to refine my thinking, often provoking discussion in the broader community. You, like so many others, have come along for the ride and I’d like to thank you for that. Without readers, this place would be pretty useless but because it has a vibrant community, it is a great starting point for many conversations. So thank you for being here and let’s look forward to the 25th anniversary in a few years.

So on to that next milestone. The last 20 years have been an amazing time in our history and I suspect the next 20 will be as interesting.

Apple

iBeacon Opens Door for iWallet

This week, Apple unveiled the first large-scale integration of iBeacon, a technology that, when coupled with their fingerprint identification system, may be another building block in building a revolutionary new payment system.

What is iBeacon?

Before we go into the details as to how this new frictionless approach to payment will work, let me explain what its component pieces are. In very simple terms, iBeacon is an indoor positioning system. While your GPS can identify where you are, its accuracy can be limited by a number of factors when you are indoors. So iBeacons are little radio transmitters that use very small amounts of electricity and can send information to a smartphone. The technology leverages improvements in the Bluetooth standards called Bluetooth Light Energy and is available on every iOS device since the iPhone 4S and every Android phone that supports Bluetooth 4.0 and Android OS 4.3 or later (that means that popular devices like the Samsung Galaxy S III and 4, the Nexus 4 or later, HTC One, and Droid DNA all support it).

When a consumer gets close to an i-beacon enabled location, information can be pushed to their device via push messages and the consumer’s location is made available to the retailer, which can allow for such uses as in-store specific promotions, payment capabilities, or other use cases to be defined.

This week, Apple rolled out the technology in all its stores, allowing consumers to skip the register lane and purchase items directly from their device when shopping for holiday items. With over half a billion users on iTunes, the company has a large trove of credit card numbers from most returning members, allowing it to optimize the payment process for existing customers.

How they rolled it out is an interesting case in widespread enablement of new technology. In order to understand how such a rollout can happen as quickly and quietly, one needs to delve into the technical specification for what is happening. And that’s where things get interesting.

The following line was buried into the iBeacon specifications for developers (emphasis is mine):

The Objective-C interfaces of this framework allow you to do the following:

  • Scan for Bluetooth accessories and connect and disconnect to ones you find
  • Vend services from your app, turning the iOS device into a peripheral for other Bluetooth devices
  • Broadcast iBeacon information from the iOS device

Objective-C is the programming language that is used by iOS developers. Vending service from an app made it clear that the technology is not just about location. But the last line about broadcasting iBeacon information from the iOS device is the important clue here. With this, Apple has essentially declared that every iPhone, iPod Touch, or iPad sold since the iPhone 4S can turn into an iBeacon.

In a world where an increasing amount of point of sales systems are being replaced by iPads, this is a revolution in the making as Apple can now have local broadcasting in every store using an iPad. But how does that tie to payments?

The iWallet

In order to understand how Apple can do payments quickly, one has to take a step back and think of where Apple stores information: for most users, that information is store in iTunes, gathered the first time they paid 99 cents for a music track, TV episode, movie, or app. That information has quietly added up to around half a billion different customer, a trove of data only match by Amazon in terms of sheer size.

Earlier this year, with the rollout of iCloud Keychain on mobile devices, Apple started taking information from iTunes and mac computers down to their users’ devices. With loyalty cards increasingly being stored into Passbook and credit card information being stored in iCloud Keychain, Apple has been downloading the content of consumer wallet’s onto its devices, leaving only cash as the use case it does not directly compete with.

To secure all this, the company has been leveraging the one unique thing that customers will always have with them when they’re using their phone: their fingers. With the release of the iPhone 5S, the Cupertino giant unveiled the touchID system, which allows users to use their fingerprint to unlock a device. While Apple ensures users that the fingerprint is not stored on the device, it is clear that it has found ways to uniquely tie that fingerprint to information on the device, creating a secure key based on a user’s unique pattern. The net result is that, when combined with iCloud Keychain and Passbook, an iOS device sporting touchID is now more secure than a physical wallet.

And since any iOS phone can turn into a point of sale, the last thing remaining in your wallet can easily be replaced as Apple has turned your phone into both an outbound payment system and a system that could potentially receive money too, with no physical credit card being required.

Winning through reduced friction

With such a large opportunity, it’s obvious that competitors are bound to emerge and they have. Square, for example, was an early mover, offering a credit card scanner that attached to smartphones. Meanwhile Google has been trying to push the Google Wallet, a piece of software that was supposed to replace user’s wallets but has been increasingly moving away from the space; the large mobile companies (Verizon, AT&T, Sprint) have banded together to back ISIS, a solution that is supposed to allow users to pay with their phones.

While Square has focused on leveraging the existing payment systems (credit or debit cards), all the other players have had difficulties trying to enable a frictionless approach to mobile payment. Google wallet required widespread deployment of NFC on both registers and devices, a solution that was too expensive for more businesses; the ISIS conglomerate found its different stakeholders arguing over control, bringing its product to the market in a fashion that requires not only specialized hardware on the device but also a trip to the wireless carrier store to replace one’s SIM card in order to enable the capability.

The net result is that those previous efforts have largely failed because they required too much work on the part of the user. By building the components one by one and providing value around each of them, Apple may be close to assembling a complete payment revolution.

In the past few years, it has gotten user’s payment information by asking them to enter it into ITunes when they bought an app, a video, or some music. This allowed the company to build up a large database of payment details. Then it added iBeacon to every new device it rolled out without asking anything of its users. Later, it pushed users to share their payment information on the device through iCloud keychain by saying it would also synchronize passwords in the process; and finally, it unveiled fingerprinting as an easier way to unlock the iPhone.

Every step of the way, the company focused on reducing friction and providing increased value for the user when its competitors asked the users to do more work. The net result is that users have voluntarily provided all the components Apple now needs to enable a payment revolution. And we’re about to witness the rise of the iWallet, maybe not this year but pretty soon.

 

Bitcoin

Bitcoin At Crossroad

Bitcoins, the peer-to-peer currency with no central bank, based on digital tokens with no intrinsic value, appears to be headed where no other virtual currencies has gone to date. Its lack of centralization mirror that which has defined the internet to date but also represent new challenges for regulators.

First mentioned in a research paper written under a pseudonym 5 years ago Bitcoin has, in the last year, moved from the domain of crypto-geeks to a more mainstream type of adoption. Today, companies are offering specialized computers and chips to “mine” bitcoins, and many middlemen have emerged to help turn it from an interesting math problem into a useful currency that can be used to purchase items or make donations. A new ecosystem has arisen around the currency with both good and bad actors.

This has forced governments and regulators to scramble and define how the new currency fit into the global regulatory framework. In March, the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued regulations that would require people mining bitcoins for financial gains to register with the government. A couple of month later, the Kenyan government gave its approval to a project linking bitcoin to M-PESA, a popular mobile currency in that country. By August, the German government had essentially recognized bitcoin as a real currency sitting alongside the euro and the dollar.

And by late November, the US Senate was holding hearings on the currency that were described as a “lovefest” and US federal reserve chairman Ben Bernanke gave the currency some extra legitimacy by mentioning its potential as an alternative currency. A recent note by the Chicago Federal Reserve concluded that Bitcoin “represents a remarkable conceptual and technical achievement, which may well be used by existing financial institutions (which could issue their own bitcoins) or even by governments themselves,” a rallying cry to all central bankers that the currency could be a very strong emerging standard that needs to be regulated.

All this has added up to Bitcoin becoming a new hope in the long road to creating a virtual currency. That road is littered with the corpses of many previous efforts, dating back to the early days of the commercial internet: Digicash, Ecash, Beenz, Flooz, Linden Dollars, and Qcoins were all heralded once as the new currency to be born out of the internet and unattached to any governments. Digicash ended up being acquired by Ecash, which itself was acquired after the dotcom crash; Flooz collapsed after the FBI found it was used as a tool for credit card fraud; Beenz turned itself into a reward scheme; the Linden dollar met with the same kind of enthusiasm as bitcoin did but didn’t get widespread acceptance beyond its initial base of Second Life; and the Qcoins set China on fire, even leading the Chinese central authorities to complain about its impact on the Yuan.

Each of these case is instructive about the roadmap for bitcoin.

Regulatory Issues

Over the next few months, expect a lot more legal activity around bitcoins. The currency has already received some negative press due to criminal activities being performed with it (in truth, all successful technologies have good and bad uses so one may consider this as another validation point): In 2011, security firm Symantec noted that criminals were using computer trojans to create botnets that could use a victim’s computer to mine bitcoins; Earlier this year, US authorities seized assets from Mt. Gox, the leading bitcoin exchange, arguing it was being used for money laundering; In October, Silkroad, a sort of ebay for drugs and other illegal goods was shut down, throwing a pal on Bitcoin as it was the currency of choice for the marketplace. These have led prominent politicians like New York state senator Chuck Schumer to look at bitcoin as a money laundering tools while some senatorial candidates now take bitcoin donations.

So the future of bitcoin may be defined by how well the regulatory frameworks adopt it. With legitimate uses behind it, there is room for the currency to succeed but remember that legitimate uses existed behind every other previous efforts. To meet a better fate than previous cryptocurrencies, the bitcoin communities may have to make certain concession around tracking or identifying bitcoin activity, loosening some of the anonymity that has been a defining element of the currency and potentially making it more like a credit card or paypal type of transaction.

Today, a large part of the financial system is based on understanding and reporting how money flows, with different types of reporting and identification requirements based on the size of transactions.For example, US financial institutions are required to file a Currency Transaction Report (CTR) for every transaction of over $10,000 (at today’s bitcoin rate, it would mean somewhere around 10 bitcoins); donations to politicians or non-profit organizations need to be accounted for for tax purpose so every individual or organizations willing to accept bitcoins as donations must have a way to track the source and size of a transaction; companies that set themselves up as exchanges for bitcoins are treated as money transmitters (or money transfer operators) and fall under other sets of regulations. In order for bitcoin to survive, each element in the distribution chain will have to agree to moving closer to the regulatory framework.

Then, there is the question of threat: when the Qcoin started gaining traction as a mean of transaction, the chinese government started applying pressure on Tencent, the company behind the Qcoin. But as bitcoin is decentralized and does not have an individual corporate owner, expect a fair amount of hang wringing from regulators who generally see threat in the things they cannot control.

Technical challenges

The technology that has made bitcoin successful to date may also represent issues down the road. At the current time, over half of all the bitcoins that could ever be in circulation have been mined, due to a hard limit set into the mathematical algorithm controlling its distribution and limiting the total number of bitcoins to 21 million coins in circulation. That feature has lead to an inflationary bubble in bitcoin to dollar trading, with prices fluctuating largely from one day to the next. As fewer and fewer bitcoins become available through mining, new entrants in the market may be limited, making it more difficult for the currency to increase its overall float.

Today, bitcoin chains keep track of all financial activity in a block. As the currency changes hands, that register gets longer and longer and will require some changes to the protocol in order to go beyond a certain point. And more problems exist from the fact that no compensation exists for people who relay transactions, an important part of what makes the network successful. The increasing cost of relaying such transaction may end up making the currency to expensive to manage outside of a small core group of users. To date, the protocol has been edited several times, with agreement from most members of the community but as the currency grows larger, getting to agreements on changes may take substantially longer.

As the currency is gaining interest, it is already getting more attractive to criminals, who will look for ways to exploit security flaws in order to steal bitcoins. While the algorithm has not been cracked yet, expect increased attempts to find ways to steal or counterfeit bitcoins to emerge over the next few months.

Societal Acceptance

And beyond the technical and regulatory issues is the societal challenge of getting acceptance from the general population. On that end, there is hope as many recent changes have made such currencies more acceptable. The success of the Qcoin in China has led to increased acceptance of bitcoin. In Europe, the generational move to the Euro a decade has gotten individuals to become more attuned to the idea of using a different currency and some seeing the new currency as a great alternative the Euro.

For bitcoin to gain more widespread acceptance, advocates will have to make the case that it is as safe to use as any other form of payment, bringing a message to the masses that this is a legitimate and valid currency that can be used in the same fashion as dollars, euros, or yuans.

To date, the growth of bitcoin has been extremely impressive but the currency now sits at a difficult crossroad: on one side, its backers may have to make concessions to established governments and financial operators, abandoning some of the core features that have made it successful to date (anonymity, artificial limits, etc…); on the other, the community may decide that it will not compromise the core philosophy of the currency, setting itself up for an uphill fight against established actors. As a result, the next 12 months will be ones of transition for the cryptocurrency, defining whether it will be sitting alongside debit or credit as a valid form of payment next holiday season or whether it will be seen as another historical footnote in digital currency history.

Connectivity

Cable Not TV

As rumors of mergers and acquisitions are increasing in the cable industry, with the recent news that Time Warner Cable may be acquired by either Comcast or Charter, one thing is becoming increasingly clear: cable TV is more about the cable than it is about the TV as those companies vie to become the next big internet providers.

Broadband at the core

What started as a trickle a few years ago is increasingly looking like a steady flow away from television subscription. In the 3rd quarter of 2013, 113,000 people switched off their cable or satellite TV service. The number may be small but when compared to the 80,000 people who had turned off similar service over the previous year, it seems to represent a substantial acceleration in the process. Yet, the cable providers do not seem to be overly worried as this loss of customers doesn’t seem to translate into any direct impact to their bottom line.

While TV subscriptions were being turned off, cable and telcos added over half a million new high speed internet customers in the last quarter. While Comcast (18 million subscribers), AT&T (16 million), and Time Warner Cable (10 million) sit at the top of the industry, the vast majority of other providers in the space have under 5 million high speed internet subscribers, creating a space that is rife for consolidation.

One of the chief proponent of this consolidation, John Malone, is a cable industry veteran who built TCI, a cable giant that was bought by Charter Communications and Comcast. He is now looking to use Charter, the 6th largest provider of high speed internet service in the US (3.6 million subscribers), to launch that consolidation and turn the company into one of the next big internet providers.

One may wonder how the 6th largest company would look to jump several places by acquiring the number 3 in the space. The answer comes down to geographic concentration. According to the national broadband map, the areas Charter and Time Warner Cable occupy are physically close without being directly competitive, which could simplify physical integration and upgrades. The technology stack they use are similar and both in need of an upgrade if they want to compete for the next generation of subscribers.

And then comes the question of bandwidth regulation. Time-Warner is currently tied to a model where unlimited bandwidth was provided to users, a descendant of the all-you-can-eat offering that was created around internet access in the 1990s. As Charter came to the market later, it charged on a different model, providing some caps on the amount of bandwidth a user can eat up. These small changes allow the company to charge more for the same amount of bandwidth: in a world where Netflix, YouTube, and others provide video services that eat up large portions of internet traffic, that small difference can translate into richer revenue for a combined entity.

TV channels are apps

But why are people leaving TV for the internet? Is Netflix the only company that can be blamed for this? And is it just a temporary? To understand this, it is important to talk to upcoming generation. For example, kids under 12 have less of an understanding of TV channels than they do of TV shows: in a world where Netflix provides a kid-friendly interface, the focus is on the shows and the characters and the offerings are always on-demand. This will present a generational challenge in a decade or so as those individuals make buying decisions on cable and internet service.

Combine this with the increasing offerings from individual channels as apps and you can easily see where this is going: TV is increasingly getting unbundled, as channels are now only loosely associated to the underlying cable package. Aereo, for example, has been bundling live over-the-air TV into a convenient app; Netflix, Hulu, Apple and Amazon have arisen as aggregators of content that are now starting to produce some of their own offerings; HBO has created a successful app that provides its shows on-demand; and increasingly, TV station are debuting new shows in mobile apps. Add all those pieces together and the pattern that emerges is that TV channels are increasingly becoming apps. Those apps can then either be bundled and sold as packages as cable TV operators have done, or a la carte, over any internet provider.

Where is the box?

While this may all be fine when it comes to looking at a show on a tablet or a smartphone, people may feel that the experience of a large screen is substantially better, which has brought forth a number of offerings: today, you can watch Netflix or Hulu either through smart television or through boxes that attach to you TV. Those boxes from providers like Apple (AppleTV) and Roku, and enhanced TV allow you to get access to a limited set of offering but may not fully present what the future has to offer because they require that individual channel create a separate app for each device. In all of this, Google has taken a more intriguing approach in that it now sells Chromecast, a small device you attach to your TV’s HDMI port, for $35. The device in itself doesn’t do much but when it is paired with an app on your smartphone, it can turn magical as it allows you to use your smartphone app essentially as a remote for your TV, giving you access to all the content that exists in the app but sending the video stream to the TV screen. This reductionist approach means that any app provider can easily add functionality to their app and not worry about the type of TV on which it will run. And considering the price at which the device sells, we might see the company license the technology to embed it directly into TVs.

Once you remove the set-top box from your TV and turn every channel into an app, the only thing the cable companies have to offer is those big pipes that come into your house. And consolidation of those pipes can make a big difference when negotiating with equipment providers or trying to eek out profit from customers. Viewed through this lense, it becomes increasingly clear that the cable consolidation has little to do with TV and everything to do with  cable.

Calculator

Putting Snapchat in context

Snapchat

Snapchat shows that people are getting concerned about privacy

The internet industry has been abuzz with the rumor that snapchat, the hot app that allows anyone to take pictures and videos that expire after a limited time period, rebuffed a $3 billion offer for acquisition by Facebook.

While billion dollar offers in the consumer internet space are relatively rare, we can still look the roughly 20 deals that have been put forward into that space in order to get a sense of what those kinds of valuations can entail. This allows us to put Snapchat in a wider context and get a better understanding as to their decision.

But first, let’s take a look at the list of consumer internet companies that have been rumored or completed acquisitions in the greater than $1 billion range:

 

Company Offering party Price Result Year company founded Year offered was made Current value (in billion)
Facebook Yahoo $1B Declined 2004 2006 $120B
Instagram Facebook $1B Acquired 2010 2012
Tumblr Yahoo $1.1B Acquired 2007 2013
Mapquest AOL $1.1B Acquired 1996 2000
Waze Google $1.1B Acquired 2008 2013
Paypal Ebay $1.5B Acquired 1998 2002
YouTube Google $1.6B Acquired 2005 2006
Facebook Viacom $2B Declined 2004 2007 $120B
Skype Ebay $2.4B Acquired 2003 2005 Resold for $2.75B
Rovio Zynga $2.5B Declined 2005 2011 $9B (rumored)
GroupOn Yahoo $3.6B Declined 2008 2010 $7.5B
Snapchat Facebook $3B Declined 2011 2013 $4B (rumored)
Geocities Yahoo $3.6B Acquired 1996 1999 $0 (Dead)
Netscape AOL $4.2B Acquired 1994 1998 $0 (Dead)
Broadcast.com Yahoo $5.7B Acquired 1995 1999 $0 (Dead)
Groupon Google $6B Declined 2008 2010 $7.5B
Twitter Google $8B Declined 2006 2010 $24B
Skype Microsoft $8.5B Acquired 2003 2011 In 2009, the company had been valued at $2.75B
Twitter Facebook $10B Declined 2006 2011 $24B
Facebook Google $15B Declined 2004 2008 $120B
Yahoo Microsoft $44B Declined 1994 2008 $36B

Looking at this graph, the first thing that becomes clear is that Snapchat’s chances of getting other offers are getting limited. This points to the company having a strong belief that it can be the social network of the future and trump the likes of Twitter and Facebook at their own games. At this high a valuation, the number of potential acquirers becomes limited: Facebook may still try and Google and Microsoft would be among the few other US based companies which could play here. Tencent and Alibaba seem like the only other potential suitors for an acquisition on a global basis.

At this point, the company is 2 years old. By way of comparison, Facebook was 2 years old when Yahoo attempted to acquired, as was Instagram when Facebook picked it up. Skype was 2 too when Ebay bought it for $2.75B and GroupOn rebuffed a $3.6 billion offer from Yahoo and a $6 billion one from Google in its second year of business; So one could argue that snapchat has a lot of upside potential as it is still a relatively new business that is being valued at a much higher rate than other companies at this point in its evolution. Whether that translates into sustained growth over longer period is yet to be debated but it seems clear that we will hear about another offer at a higher valuation for the company within the next 12 months.

Their path to success, however, becomes a little more complicated. If the company wants to offer liquidity to its investors, it will have to find a way to either increase the value at which it is acquired or start generating substantial revenue and complete a public offering. If it were to chart a course similar to Twitter’s, snapchat would have to essentially triple its worth over the next couple of years and then double it again over the next two. This would set its value at somewhere around $9 billion by 2015 or a potential IPO of around $18 billion by 2017.

However, success on those courses are relatively rare. Witness, for example, Groupon. The company turned down a $6 billion acquisition offer from Google in 2010, two years into its business life; 3 years later, as a public company, it is thought to be worth around $7.5 billion. Meanwhile, acquired darlings of the 1990s like Geocities (acquired by Yahoo for $3.6B in 1999), Netscape (acquired for $4.2B by AOL in 1998), and Broadcast.com (acquired for $5.7 billion by Yah00)  all ended up being closed up. And in 2008, Yahoo rebuffed a $44B acquisition from Microsoft; today, its market capitalization sits at around $36B.

Of course, Snapchat may pin its hopes on becoming either Skype, Twitter, or Facebook. Skype was acquired for $8.5B by Microsoft, a price higher than what Microsoft paid for Nokia; Facebook and Twitter have taken their hopes and turned into rich advertising-based public companies with market caps that sit several multiples higher than the acquisition offers they received. Interestingly, Snapchat has a number of similar characteristics in common with those offerings:

  • It’s about communication: Skype, Facebook, and Twitter built their business on facilitating communication between individuals. Snapchat is doing the same by taken a mode of communication that had changed (moving from one on one text and audio chat over Skype to publicly open chats on Facebook and Twitter and taking them back to a more private realm).
  • It’s mobile: Snapchat exists only in the mobile space, a place that is hot. By comparison, with the exception of Instagram and Rovio, all the other companies that ended up in the billion-plus acquisition club had background in the PC space. Because all the giant players (Twitter, Facebook, Google, Microsoft, Yahoo) need a stronger footprint in the space, they may be willing to pay a premium.
  • It taps into some dissatisfaction with the current model: Facebook’s and Twitter default open model to privacy seems to worry an increasing portion of the market. By offering self-destructing messages, snapchat may present a solution to the social media conundrum of “do I share or do I worry about my digital footprint”.

Today, though, Snapchat sits in a very gray area. At $3B, it sits on the high end of potential offers. So your view on whether the company was right to accept the deal or not ties into your expectations as to whether it can become the next Twitter or Facebook. If you believe that’s the case, then the $3 billion valuation was low; otherwise, it is high. And considering recent rumors that Google had offered $4 billion, it’s unclear how far up the sticker price could go.

Twitter

Product Management Lessons From Twitter

When Twitter was born, the 140 character limit looked like a capricious attempt at conciseness. In a world where blogs were dominant, Twitter looked like a toy and it was unclear what its prospects would be but as the mobile world grew, so did Twitter. And along with it, a number of valuable lessons for every product manager in the tech world has arisen. In the wake of the company’s successful IPO this week, let’s take a look at how product features helped the company succeed.

Purity

At its core, the purest unit of Twitter is a tweet, or a grouping of 140 characters that can be shared. This serves as the nerve center of everything the company does. Any company that wants to succeed needs to find its core atomic unit: for Google, it’s the search box (look at its front page); For Facebook, it’s the user profile; For Instagram and Pinterest, it’s the picture; For LinkedIn, it’s the business card (or business profile); For Foursquare, it’s your location. Startups that want to follow in those companies’ footsteps need to think of what is the most basic component that remains when they strip everything away from their product.

That kind of reduction seems easy but is actually a huge challenge as this core component then needs to be different enough to be able to succeed. The most successful companies are the ones that can find a unit that resonates at the smallest level. The core question anyone should ask at that stage is what can I remove from my idea? The more you remove, the clearer the picture becomes and the more focused the offering can get.

But removing does not mean throwing away. It just means temporarily putting things aside until you can figure out what makes the product successful. Once you cannot remove anything more, you have the basic unit for your product. While Twitter did this before the product was out in the market, we can see similar elaborations in products like the Apple iPod shuffle. When Apple could not progress the iPod by extending what it could do, it went in the reverse direction and figured that, at its core, the Apple had been about the song as a core atomic unit. So it produced a product that could play songs.

Functionality

Twitter in 2006

The next step is how to make that atomic unit work. The 140 characters Twitter has needs to be posted so a box to enter the data and a button to post it is necessary. And once it is posted, anyone reading it needs to know who the message is from so the Tweet now needs to have a name attached to it. This is an important distinction as people look at Twitter as a social network like Facebook but the reality is that Twitter is centered around the message, not the individual.

But here again, one has to be careful about not overloading the functionality. Successful products should be easy to understand. For example, if you were to take the original Twitter interface and the original Google interface, the whole of the difference in the initial experience was encapsulated in what was on the button next to the text entry box: for Twitter, it was “send” (it was eventually changed to “update” and then “Tweet”), clearly highlighting that the utility was to send the text entered into the box onto the internet; for Google, the same button had “Search” (which has morphed into “Google Search” over the years), making it clear that the utility was to find something that had been entered in the box.

The same can be true in hardware: the initial iPod shuffle had a button to start and play music, skip tracks, and change volume, reducing functionality to its bare essential.

So when you’re thinking past the atomic unit you’re creating, you have to think about what that minimum group of functionality you need to add to it in order to make it work.

Utility

Twitter in 2007

Once that core unit has been define, the next challenge is figuring out how to add utility to it. For Twitter, it started with the ability to reply to a Tweet and “Favorite” a tweet; then it was expanded to the concept of retweeting (or sharing a tweet). Over time, they layered in more functionality but always with the concept of enhance the core unit.

Because Twitter was about communication among friends, the concept of following and followers was born. Here again, the distinction with a social network arises: While Facebook wanted to make sure that the relationship between two people was agreed upon, requiring from both party for confirmation, Twitter looked at those relationships as much looser, similar to one being a fan and thus did not require an agreement between all parties.

Note that these new functionality steps were not in the initial package, they were added progressively. The reason for taking that approach is two-fold: first, it ensures that your customers are not overwhelmed with new functionality on day one, making sure that the product is easy to use and comprehend. Secondly, it gives developers time to think through the different portions of interaction and develop them based on demand.

Tightening

Twitter in 2010

As the product evolved, the company had to think about how to improve the experience. This meant balancing the need to remain true to its core and the wants of the users. In 2007, developer Chris Messina introduced a convention from an earlier internet chat system (IRC) on Twitter when he asked fellow users if they would be interested in using a # before some text to make it easier to search through tweet. Thus the hashtag, now thought to be an essential feature of Twitter, was born. It remained a geeky thing for a couple of years before the company started to incorporate it in its design. A 2009 redesign brought popular hashtags into the navigation bar but it wasn’t until 2010 that they became clickable within the discussion flow.

This kind of listening to the customers and assessing what should and should not go into the product makes the core of product management focus and the slow cautious approach to the hashtag integration shows how even a quick-moving company like Twitter can take a long time to make radical changes to its product offering. Here, the lesson for product managers may be that small groups of vocal users may be right but requirements should be dictated by a critical mass of users.

Expanding

Twitter in 2013

There comes a point in every product life where the core unit of a product may require expansion. If you remember, a few weeks ago, we talked about how Twitter cards allowed the company to expand beyond the 140 characters limit. to recap, cards are extra information carried in a message when it includes a URL. That extra information can then be presented by the Twitter interface to offer a richer experience that may include pictures, videos, or more.

Once again, we see a company that is deliberate in its approach to growing its offering. Looking back at its core unit, it has figured a way to wrap it but not change it, retaining the original purity while extending its functionality.

When Twitter first came out, its core unit was aimed at text messaging. At the time, MMS (the version of SMS that allows you to attach pictures) was already common but Twitter decided to stay close to the text medium (that core unit). The original product could have easily incorporated images but it did not. Again, that essential purity gave it its start but the fact that extra content could be loaded at the time highlighted a potential path.

Twitter could have added that extra functionality in the tweet but decided to put it one layer above it when it implemented the new functionality: this is a smart move as it keeps its core intact. The lesson for product manager is that the core should not be changed if it has been designed properly.

Conclusion

Twitter provides some very valuable lessons into how a product ought to be built. Its success in the marketplace and among consumers shows that small unit, properly expanded, are the best way to go when you want to build a service that will work at scale. Product managers would be served right to visit their own product and figure out what that core unit is. And if they cannot find it, they may have to deal with a large issue as to the future prospects of their product.