The big news this week is Facebook’s announcement that it would take the company public, in one of the largest offering in history, raising an expected US$5 billion in the process. As this is the largest tech IPO since Google, it is time to run the number and assess whether similarities or difference exist when it comes to base numbers. What appears there seems to justify the $75–100 billion valuation some see the company getting at IPO while providing a few points of concerns about the future growth of the company.

The topline numbers

The first numbers everyone is looking at are how much the  company is raising, how much it’s making and what its profitability look like. If we compare the 12 months preceding the offering for Google and Facebook, the picture looks like this (all figures are in thousands of dollars, unless otherwise stated):

Looking at those numbers, the Facebook IPO seems relatively cheap compared to the amount of money Google was looking to rise when it went public. However, since we don’t know how many shares Facebook is looking to sell for those US$5 billion, it is impossible to assess how much the company should be priced at.

Using Google’s market cap at its strike price and at the close of its first day, we could look at the multipliers for revenue and net income as possible hints as to how much Facebook could be valued at on its first day:

So if revenue and income were to be considered as the only indicators for what value to give Facebook, the valuation range of US$75–100 billion for the company doesn’t seem totally incredible. However, one would have to consider whether Facebook could grow its revenue at the same rate as Google did. While it starts from a substantially higher number, it also means that the company is probably in a more mature stage and may not be able to grow its revenue at the same speed as it has in the past.

Revenue

While Facebook’s revenues are impressive, we should see how they break down in order to get a better sense as to whether a comparison to Google makes sense. Digging into the S-1, we find interesting numbers such as the percentage of revenue that comes from advertising, the percentage change from the prior year’s ad revenue (and from the year before that, giving us a sense of what growth looks like) and highlights as to the percentage of revenue coming from significant external parties. I’ve summarize this data in the table below (dollar values are in thousands):

While Facebook’s ad revenue are substantially larger than Google’s were at IPO time, its reliance on advertising is 10%, showing that the company may be more successful as diversifying its revenue base. This appears to be a good thing as the last 2 years of ad revenue growth seem to have been slower than what Google was experiencing when it went public. Another sign that we may be dealing with a more mature growth curve when it comes to the company’s ad revenue is the fact that it seems to have already been fairly successful in ensuring that its revenue base was no longer just a US one, with only 56% of its ad revenue coming from the US, while Google was deriving 74% of its advertising revenue from the US when it went public.

Much has been made about the mention in Facebook’s offering that it derived 12% of its revenue from deals with Zynga, the company that has successfully provided a number of games for the Facebook platform. However, one must realize that such reliance on an external party is not so unusual and that Google was warning that 21% of its ad revenue were generated by managing the ad inventory of external partners.

So all and all, the revenue picture for Facebook looks pretty strong but advertising revenue may be decelerating, with question as to whether the other sources of revenue are growing at high enough a speed to counter that deceleration.

Costs

On the other side of the financial register, one has to look at whether Facebook is as efficient on managing costs as Google was when it went public. Fortunately, here again, the S-1 filings provide us with usable data (all dollar figures in thousands):

The first thing that jumps out when looking at those numbers is that Facebook seems to pay substantially more for its revenue than Google does. In fact, if you look at the multipliers on cost of revenue (7.06 times) and actual revenue (3.86 times), it seems that it takes almost twice as much for Facebook to make a dollar as it did for Google when it went public. Some of this has to do with R&D costs, which are substantially higher as a function of revenue than the ones Google had at IPO time. Sales and market and overall costs and expenses seem to be lower, as a function of revenue, than Google’s were at the time of its offering. This may be a sign of an organization with more mature cost control metrics.

Keeping an eye on the cost of revenue may be an important factor in assessing where Facebook is heading revenue wise. If that number keeps rising, the company’s margin may erode, making it a less attractive business. In its offering document, the company is reporting a US$.43 net income per diluted share: this is slightly better but mostly comparable to the US$.41 per share Google had reported in its offering documents.

How much revenue per employee?

Both filings provide information as to the number of employees each company had. When it filed to go public, Google had 1907 employees; by comparison, Facebook had 3200 as of its filing. This is a useful number as it allows us to compute revenue per employee, a common measure of how effective a company is. When it filed, Google was making US$504,391 per employee; by comparison, Facebook is making US$1,159,688 per employee.

This is pretty significant as Facebook appears to be making twice as much revenue per employee as Google does. But how profitable are each employee?

Using the same approach, we can find out that Google made US$55,400 in net income per employee when it filed while Facebook makes US$312,500 in net income per employee as of this filing. This is a pretty impressive number but it is in league with what Google makes today (US$336,297 as of a year ago) and ahead of the rest of the computer industry, with the exception of Apple and Google.

If we were to look at Facebook by this measure, it most definitely earns a spot in the US$100 billion market-cap club.

Methodology

For the purpose of getting this data, I pulled all the numbers from the respective S-1 documents for Facebook and Google. Because the numbers in Google’s S-1 were in thousands and the numbers in Facebook’s S-1 were in millions, I have normalized all numbers to be in  thousands. All numbers were pulled directly from the respective S-1 filings or computed from the numbers I’ve exposed.

Conclusion

I’ve looked at a number of ways to quantify how big Facebook is from a financial standpoint and compare it to what was the last IPO of this scale in the tech world. The Google IPO was the launch of a company that had been dominating a large part of the discussion in tech circles over the previous 5 years. The same is true of Facebook, which has managed to grow from a project in a Harvard dorm room into a company that is serving around 800 million people. From a metrics standpoints, this company also appears to have a very strong business that compares favorably with other tech giants and the numbers bandied about in terms of valuation do not seem to be particularly outrageous when put in the greater context of the rest of the industry.

Of course, this does not mean that it is a business that is guaranteed success in the future. Some questions still remain around the cost of its revenue and the company’s ability to continue on the same growth curve as it has in recent years.

If you were to ask me if the Facebook IPO represents a new level of froth in our industry, I would be tempted to say that, based on the core numbers, that does not appear to be the case.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Facebook IPO vs. Google IPO. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Over the last couple of weeks, I’ve looked at availability of movies and TV shows that came out in the past year. But what about movies that came two years ago? Are those more available today than they were a year ago? Let’s look at the data.

2010: Box Office Winners availability

A year ago, I went through the list of box office winners and looked at their availability online. I pulled the information again in January 2012, a full year after the initial data set. The 2012 data looked like this:

Aggregate Rental data

When you tally it up, the rental only chart (excluding movies you can purchase) looks as follows:

The data seems to show that hits from over a year ago are still difficult to get. Netflix fares best, capturing 26% of the titles but pay-per-view services like Amazon, iTunes, and Vudu turn in a paltry offering with only 15% of the 2010 box office winners being available for rent on these services.

So, having run the data for 2 years in a row, are we seeing improvements in the market?

The picture here actually shows something fairly disastrous to people who hope that things are improving in terms of availability of movies along the long tail. While Netflix turns in a stronger performance, more than doubling availabilities of 2010 box office winners from 10 to 26, all other online services are seeing availability drop by 31% or more. This means that almost one third fewer 2010 box office winners are available this year as rentals as compared to last year. The strategy here seems to call in question the existence of a long tail in terms of media availability as far as rentals are concerned.

While the cost of storing a movie is a marginal one, it appears studios prefer to not make titles available as rentals online. There is some humor in the fact that whatever corner DVD rental place is still in existence near your home probably has a higher selection of available titles from 2010 than could be found last year because ALL 2010 box office winners are now available on DVD.

Aggregate Rental and Sales data

So, with a strong suspicion that sales numbers may be better, let’s see what happens if we had movies that may not be available for rent but can be purchase (ie. are more expensive to get)

The first one notices here is that the number of titles legally available online is still relatively low a full year after all the titles have been released. While DVDs have come out, legal online streaming services online offer a bit over half of the 2010 box office winners, with Amazon having the most extensive catalog. The availability of legal movie streams, when compared to DVD, is still a challenge.

But have things improved since last year? To figure that out, let’s look at the availability of the same titles over the last couple of years:

My initial hunch was that we would have seen improvements in the sales of legal streams from one year to the next, just as we would would have seen for DVDs because of availability.

But the picture is actually surprising as the availability of legal streams for 2010 box office winners has dropped in the last 12 months. On their face, one might expect sales of legal online streams to see patterns similar to sales of DVDs, even if they would trail the plastic medium. But what’s surprising here is that it appears studios have decided to pull their movie catalogs back offline.

There is still a long way before legal online streaming matches DVD sales as it appears movie studios are still addicted to selling pieces of plastic than they are to selling movies in any form available.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Streaming held back. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Last week, I looked at the availability of 2011 movie box office winners as legal internet streams. The results seem to incense Netflix supporters, who pointed out that the comparison was unfair because Netflix was more focused on TV fares. This week, I turn my attention to availability of popular TV shows as internet on-demand streams.

Approach

As I did a year ago, I pulled the data from Deadline.com’s Broadcast series ranker and cleaned it up. I took out every live and reality TV shows as the archival value of such show is limited since they are primarily marketed as “events” and, as such, loose most of their value to the viewer after the initial broadcast.

Where part of one of the seasons was available, I gave the service a partial availability. Where seasons prior to the 2010–2011 years were available, I did not give credit if the 2010–2011 season had no availability because I was focusing the effort on availability of last year’s shows.

From a service standpoint, I focused on services that allowed for streaming to most internet-enabled television. This meant that Netflix and Hulu were the main subscription based offerings and Amazon on-demand and iTunes were listed as pay-per-view services.

The list

With­out fur­ther ado, here’s the list of top 2011 TV shows avail­able for stream­ing on the internet:

While it is fun to check if your favorite show is available or not, the real interesting trending data only comes when you re-group the information. For this purpose, I looked at two different sets of data: first, I looked at whether all the episodes of the 2010–2011 season were available for a given series. Then I re-ran my research, giving full credit to the service for having “some” episodes from that season.

The results were as follows:

As one would expect, the pay-per-view services are doing better than the subscription based ones but what is surprising is how little content is actually available on the subscription-based services: Hulu only offers some episodes of half of the most popular shows, while Netflix barely has any offerings, clocking in with just above a third of the shows having some kind of stream.

When trying to access full seasons, the data is even worse, as Netflix offers full seasons on only 9 (or 18%) of the top 50 shows, while Hulu gives you access to the 2010–2011 season for 18 shows (or 36%). The amusing thing is that Hulu appears to give you access to as many full seasons as Netflix has as partial ones. The data shows that if you want access to popular TV shows via subscription, you’re better off going with Hulu than you are going with Netflix.

What seems to be hurting those services is the fact that CBS, one of the large TV networks has decided to go it alone when it comes to their own shows and show them on their own sites instead of making them available to stream aggregators.

Another interesting thing is that Netflix seems to pick up cancelled shows more readily than any other service. In my research, I found that if a show had been cancelled over the last year, it was more likely to be available on Netflix than on any of the other services.

On the pay-per-view side, Amazon and iTunes have now reached parity, as both service offer 43 (or 86%) of the shows on either per-episode or per-season fees. Their pricing seems to be roughly the same, with shows average between $.99 and $3.99 per episodes and full TV seasons passes going for $20.99 to $40.99. I would not be surprised if next year, we saw those services having the full set of shows available for instant streaming.

Breaking it down

Looking at the distribution, one might wonder how each of the services fares on sub-sets of the overall group. Furthermore, in terms of getting a better sense of trends, if is useful to overlay this with last year’s data and see whether progress has been made:

Overall, it looks like top 10 shows are less available onall-you-can-eat  subscription-based services this year than they were last year, while there is an increase in availability on pay-per-view services.

Netflix continues to trail other services in terms of making full seasons available and it seems it is a gap that will not narrow any time soon as Hulu, Amazon, and iTunes continue to aggressively grow their catalogs. In fact, the big story in this graph may be the big push Amazon is making in adding new titles to its streaming library. It has now matched Apple’s iTunes store in terms of offering, closing the gap it had last year.

When looking at partial availability, we are still seeing some differences:

Here, Netflix appears to have actually list some ground when it comes to the top 10 list, while all the other players have made substantial progress. This may point to another weakness for Netflix moving forward. Also of note is that while Apple used to be the go-to source for all TV series, Amazon has closed the gap in the last year, establishing itself as a strong second player in the market.

Conclusion

Many people look to online TV streams as the key to increasing the number of people cutting the cord from their cable companies and moving to internet-only offerings. This year’s data seems to indicate that it is now possible to do so but that the costs associated with such a strategy may not necessarily represent a huge saving for people who consume a lot of TV content.

The greatest amount of available content in terms of legal online streams can be found on pay-per-view services and subscription-based services like Netflix and Hulu still have some ways to go before providing a TV-like selection (this may explain why both of them are starting to turn further in the direction of producing their own content). However, viewers who watch only a few select show may be able to get this content from services like Amazon and Apple iTunes for a fee.

People watching this space should pay closer attention to Amazon’s aggressive push in this arena. As the company continues to expand its digital offerings, it seems to have earmarked video as one of the areas in which it is willing to go big and it has quietly grown its catalog over the last year.

Meanwhile, while Hollywood is trying to push for laws against online piracy (things like SOPA and PIPA), creating frictions with the tech community in the process, maybe it should focus on making content available through legal channels first, before complaining that people are stealing content. One of the reason people may be drive to piracy is the lack of availability of the content through legal means. Fill that gap, and you will see substantially less piracy of content happening on the internet.

Next week, I’ll take you through last year’s box office winners and how available those are. There are more surprises there, I promise; so stay tuned.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Legal streams for 2011 TV hits. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

A year ago, I looked at the availability of recent blockbuster hits in online stream and discovered some interesting patterns in online stream offerings. This year, I’m doing the same with the 2011 list of box office hits. The great news is that we appear to see some progress.

2011: Box Office Win­ners availability

For each movie of the top 100 movies at the box office, I pulled data on for streaming info on Netflix, Amazon on Demand, iTunes, and Vudu. I also pulled up availability of DVDs to use as a yardstick in terms of overall movie availability. The final chart looked like this:

But the information, in a raw form, doesn’t really tell us much. To get a better sense of where we are, we need to re-aggregate the info.

Aggregate rental data

Looking at the rental market, we can now see the aggregation providing us a clearer picture

The data shows that Netflix appears to be missing the Flix part of its name when it comes to streaming, as it offers only 5 of the top 100 box office winners of 2011. By comparison, pay-per-view seems to be doing a better job at making top hits available for streaming, with the numbers declining as you go deeper into the list. So top movies seem to be widely available this year (in fact, 64 percent of the top 25 movies were available for streaming only 9% short of what’s available on more traditional formats like DVD).

Another interesting thing to note here is that the data seems to be relatively consistent across online pay-per-view services with Amazon, iTunes, and Vudu apparently getting access to the same movies, leading one to think that there is little differentiation between those products (of note: Vudu has actually tried to differentiate on offering by providing 7.1 surround sound and 3D movies to available TV sets.) With prices across those services being roughly the same (movies are renting for $3.99 to $5.99 on average), there is a question as to how those services will be able to provide a differentiated experience in the future.

But the big advantage of doing this again this year is that we can compare the information against last year’s data and see if progress has been made:

The story here isn’t that pretty for Netflix, which has lost substantial ground from last year’s position, offering less than half of the hits it used to offer last year. If you think of their recent moves towards creating original content, it appears that Netflix is slowly moving away from its initial strategy of providing online streaming of movies on a subscription basis and moving more to a model more akin to that of a TV network.

Another interesting development here is that online streaming seems to be some losing ground compared to DVDs. One could assume that, as a new technology, online streaming would be gaining ground on DVDs but that doesn’t appear to be the case. Granted, we only have a couple of data points so next year’s data will provide us with a better understanding as to whether hollywood is trying to slow down the progress of online streaming.

Sales Data

If we are witnessing such a slow down, one of the reason may be that movie studios are looking to maximize revenue coming from sales.

The first interesting item to show up here is that we are now seeing remarkable consistency in availability of titles on streaming services. However, the availability of legal movie streams is still trailing the availability of movies on DVDs. This gap seems to be less pronounced when it comes to the top of the list than when ones goes further back into the box office records.

Once again, looking at how availability this year compared to last year’s availability provides some interesting information:

As opposed to online rentals, sales of streaming movies seem to be gaining on sales of DVDs, with an increasing parity in availability of movies as bits (streams) or plastic (DVDs). This appears to confirm the suspicion that movie studios are trying to protect their sales revenue at the expense of promoting pay-per-view.

Conclusion

The past year has seen an increasing alignment in the libraries of titles offered by online streamers in an on-demand basis. At the same time, we have seen Netflix apparently abandon its strategy of offering popular movies on a subscription basis. Next week, I will look at whether Netflix’s efforts are getting more focused on television streams or whether we are seeing them pull back across the board in terms of availability of more recent content.

We are also seeing Hollywood now treating online as more equivalent to DVD sales, offering titles for sale online at roughly the same rate as they do on DVD. Let’s hope that this trend continues to hold and that the industry sees the wisdom of providing online streams in an earlier release window. A few independent movies have done simultaneous releases online and in theaters this year and Hollywood has a potential to increase its revenues if it were to increasingly go in that direction.

Two sets of data only provide a small view into an overall trend but I promise I will continue growing the data set and revisit those numbers next year, giving us a better sense as to whether there is any changes in this segment of the media distribution puzzle.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Where the hits are streaming in 2011. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Before we kick in a new year of post, I want to take a quick look back at things I covered on 2011 as I still believe many of those represent important trends and inform some of my thinking.

I kicked off the year with the usual prediction list (and closed it out with a review) and was surprised by how many of the themes I highlighted ended up making their way through other entries.

I had set a goal for myself to do a post a week and decide to create a framework that allowed me to do so efficiently. My process is to capture simple ideas in a backlog and then dig through them once a week, sometimes tying the story to a recent development. Every Friday night or Saturday, I then crank out a post that covers that top in as broad a way as I could.

I write mostly for myself, as a way to get a better sense of my own thinking on a topic and then get feedback on how wrong (or occasionally, right) I am. This allows me to refine the strategy behind Keepskor and get a better sense of where our industry is heading.

While I never set a narrative for what is being covered on TNL.net, one seems to emerge when I look at the work I produced over the last year.

An emerging New York

I kicked off the year by making a bold prediction about a re-emerging and re-invigorated New York technology scene.  A year later, I feel ever more strongly about the things I highlighted in that series of posts: New York has emerged as a major player and I suspect that, within a generation or two, New York has a chance to displace the valley as the center of the US tech industry (note that the longer view is something I articulated later in the year but has been a dominant theme on this site for a decade).

The series created quite a stir when it came out and was one of the most trafficked group of entries this year (in fact, it still gets a decent amount of traffic a year later.)

If you’re on the East coast, you no longer have to relocate south of San Francisco to make it. New York provides an environment that rivals San Francisco and has a few extra advantages I had not covered in that series. For example, being halfway between London and the Valley, New York is the perfect place to manage a business that is not solely aimed at the US.

Myth-busting in startup land

This feeling from the ground, as I started re-entering the startup world, got me in the direction of thinking about the broader trends relating to startups. I a series about startup myths, I debunked the ideas that startups are risky, expensive, idea-based, smooth rides where everyone makes money.

My reason for doing this series of post was to archive thoughts on this that I could send to people when they brought up those myths (and as someone who spend too much time on Wall St., I’ve been exposed to quite a few of those people.)

Financial Markets

Using some of the skills I did pick up on Wall St., I’ve been trying to make sense of the financial markets and get a better understanding of the overall economic picture. This first led me to analyze whether internet valuations were getting over-inflated (they weren’t.)

As internet companies started testing the IPO waters again, I checked to see if LinkedIn was overvalued and highlighted some concerns around the GroupOn offering and later in the year, I started thinking writing more about digital currency.

The Internet War

The concept of digital currency is but one of the hot flashpoint between the current world and the internet one. Over the past year, we’ve seen increased activity from hacker groups and the rise of the internet as a political philosophy. Calling for an end to apathy on the part of our industry when it comes to policy making, I tried to make the case for the creation of a new set of definitions and protocols to control the internet of the future.

This is in reaction to an increasing privatization of large parts of the web, balkanizing the open web,  as companies try to monetize their user base to return value to their investors or counter suspected threats by new entrants. Along the way, those companies are redefining identity ownership through surprising terms of service agreements.

A resurgent Microsoft

Meanwhile, another story that has made its way through my narrative has been a massive comeback: Over the last few years, Microsoft has become a symbol of technology decline. But 2011 has shown us a resurgent company, first in its agreement with Nokia, which will bear fruits in 2012; then with the bets its placing on the web as a core component of the next version of Windows; and then through the success of its revolutionary Kinect device.

Microsoft’s bet on the web as the core of Windows is a smart one. HTML5 is enjoying wider support and new technologies like WebGL are bringing the web to new levels, levels that could be matching native apps soon. I will probably write more about these trends in 2012.

Internet and TV Colliding

Another item I have covered extensively in 2011 is the merging of television and the internet. Last year, I looked at where 2010 box office winners were streaming, how available popular TV shows were, and whether there was a delay in availability.I also looked into why live TV streams were not available online, explaining how some of the missing pieces of the puzzle could fit together. This provided readers with a stronger understanding of where the market stood. At the time, the results showed that availability was getting better but still had a long way to go.

I will start revisiting a lot of this information next week to gauge how much progress has been made in making movies and TV shows available on the internet.

My interest in this as a trend is that it provides us with a better view into whether internet TV is ready for primetime as a new internet channel (Netflix getting into the content production business was a major event in that direction, opening the door for other internet companies to offer something on that third screen… and for a few players to become new gatekeepers if we are not careful.)

I suspect this collision is part of the reason we have seen the entertainment industry rally behind SOPA, as it has seen first the music and now the book industry getting impacted in radical ways as media increasingly become mobile and can be consumed on phones and tablets.

Other trends

However, I was surprised that I had not spent more time covering some other trends I’m seeing emerging.

My archives did not include any mentions of bitcoin, though I think that virtual currencies are one of the hot topics currently sitting below the surface. While I am not convinced that bitcoin is the one that will win in the future, I do believe that we will see increasing traffic in that arena soon.

I also strongly believe that a new manufacturing age is upon us. The revolution behind 3D printing, 3D scanning and more customized and micro-produced materials is something that we will see on the edge this year and probably in the mainstream by end of year or early next year. This will have a substantial impact on our economy in the long run and I will keep an eye on it.

Conclusion

While I have deliberately chosen not to focus my writing on a narrow area, it appears there are broad topics that I return to on a regular basis. The intersection of media, technology, business and politics are part of the broad trends I follow around here and generally form the core of what I write about. My friend Anil defines his own writing as being about culture and I believe that broadly, he and I write about some of the same things.

Over the next year, I will revisit a lot of the work I did in 2011 as I wanted to establish a few foundational posts from a trending standpoint. But as we become more public about Keepskor, I will also write about some of the things that led to its creation and some of the thinking behind it. As someone who spent a lot of time dealing a dual life as blogger and Wall Streeter, I haven’t really said much about what I’m working on but I’m sure that readers will be interested as it taps into some of the trends highlighted above and a few that I haven’t talked about yet.

2012 is going to be a very exciting year and I will try to have a body of work at the end of it that matches what I’ve accomplished in 2011.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2011: The year that was. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

With a new year kicking in, it’s time for a new batch of predictions.

Business

One of the easiest predictions to make is that Facebook will go public this year, and it will manage to do so in a very successful IPO. I suspect that this may actually be the high watermark for the current boom cycle as Facebook is the most successful of the companies that were born of the Web 2.0 cycle. In a fashion similar to what happened with the Netscape IPO in 1995, the Facebook IPO may create a small window of opportunity for many other companies to go public.

On the private end of the spectrum, I think we will see the following companies see some form of liquidity event via either acquisition or IPO: Twitter has a strong chance of being acquired by Apple, which will quickly merge the offering into all of its products; Another possibility is that Twitter and Tumblr merge to create a mico-blogging powerhouse spanning both ends of the country. Meanwhile, Foursquare will either IPO or be acquired by Facebook or GroupOn in a share-only deal. Meetup will go public, creating another great story for the New York technology scene.

When it comes to Google, we will see the company continue its integration of Google+ into everything it does, with the biggest impact being the move to migrate all Orkut users to the new service. This will create an outcry in countries like India and Brazil, where Orkut has been popular but will leave many in the American media to wonder what the big deal is as Us customers have mostly left already.

Meanwhile, a lot of the companies that went public in 2011 will meet some strong headwinds as the rigor of the public market make it much more difficult for them to maneuver. Expect some changes at GroupOn and Zynga, with many people questioning their business models and long term viability.

Media

For a couple of years, there’s been a slow ramp up to the integration of the Internet with television. The rise (and to some extent fall) of Netflix, along with the entrance of new players like Hulu and Amazon, have made video distribution on the big screen one of the areas where the Internet and television have already intersected.

However, other areas of interaction have, so far, not been quite as successful. Apple is still treating AppleTV as a hobby, Google has mostly failed so far with GoogleTV, and other players like Roku and Boxee have, to date, been only adopted on the fringe.

In 2012 all that changes as the TV screen takes center stage in a way that a new generation of smart phones arose after the 2007 iPhone announcement. First of all, we will see some increased standardization around how to deliver content to TV screens, with agreements from TV set manufacturers like Samsung, Panasonic, Sony, and Vizio agreeing to some level of standardization. Apple will also announce a large screen product it will position in the TV market: The set will have AppleTV’s technology built-in, be accessible over WiFi, and connect directly to the iTunes store as well as integrate with the iPhone and iPad and other Airplay compatible devices. The set will run iOS and will be managed by a remote that runs on iPod touch, iPhones and iPads.

Meanwhile, cable companies will start opening up their platforms with some software development kits allowing to access content on the set top boxes they use. Once the Motorola acquisition is completed, Google will start transitioning the Motorola set-top boxes, which are a large part of the cableTV market, to GoogleTV, increasing the footprint of the service in the marketplace. Along the way, we will also see GoogleTV become more streamlined and less ambitious, focusing on delivering Android apps to the big screen instead of trying to rebuild the whole TV industry.

The concept of cord-cutting will continue to gain support but will not yet jump into the mainstream consciousness. With shows now being available exclusively on the likes of Netflix, we might see some interesting positioning whereas some TV carrier will offer Netflix as a premium service.

Politics

Social media will dominate the political cycle in 2012, with Twitter, Facebook, YouTube, Tumblr, and Meetup becoming part of the political operative tool belt. However, traditional electoral models will continue to be disrupted by the rise of distributed networked organizations like Occupy Wall Street, Wikileaks, or Anonymous. Except those players and new ones built on a similar model to have a substantial impact in terms of registering new voters and getting those voters to the polls in elections in Europe, the Middle East, and the United States.

In the US, the 2012 electoral cycle will see Republicans select Mitt Romney, a candidate most of their electorate is not very excited about, to run against Barack Obama. With the unexpected support of Occupy Wall Street and its splinter organization, Obama will win re-election as issues around economic disparities and job creation continue to be big topics of discussion.

In Europe, expect to see incumbents toppled in many countries: with major elections coming up in France, Spain, Russia, and Finland, it is possible that we will see a major change in political alignments across most of Europe, along with an increase chance of protest in those different countries. In Russia, in particular, we may see the internet play a crucial role in organizing protest if there are questions regarding voting irregularities.

The continuing protests in the middle east region may also lead to substantial changes in governance in several countries including Bahrain, Syria, and Saudi Arabia. During the presidential elections in Iran, we will see increasing clampdowns on internet sites as the government tries to shut any means of communication available to large groups of protesters.

… and of course, the easiest prediction to make is that the media industry will continue to push for more restrictions on the Internet, leading to more activists pushing back.

Technology

2012 is going to be an explosive year for technology.

First of all, we will see HTML5 roaring back, as many companies realize that it is cheaper to build in HTML5 and that the gap between platform specific code and HTML5 is shrinking. The introduction of WebGL, and proper implementation of geolocation and caching within mobile devices will give developers the ability to develop applications in HTML5 that can rival some of the offerings of native code. This is a move that will be resisted by platform makers like Apple and Google as it will loosen their stranglehold on their respective platforms; however, the split side of this is that effort is that some large companies will look to free themselves from said control by creating HTML5 instances of their own products.

On the mobile end, the Microsoft/Nokia will get some real traction with Windows Phone becoming a strong third player in the mobile market. Apple and Android will continue dominating the market with Microsoft still being a distant third. RIM’s position in the market will substantially worsen and will either be sold or go into bankruptcy.

Enterprise cloud strategies will continue to grow, leading to a growing divide between companies that can get efficiencies through the use of cloud computing and companies that are kept by different regulatory frameworks from being able to realize the financial gains offered by such model.

3D will be a hot buzzword, with the introduction of consumer-oriented 3D scanners and 3D printers that will push the idea of scanning and printing your own plastic parts. This will lead to some controversy around the concept of 3D objects piracy popping up in the media, with little actual evidence to back those fears. On the 3D projection end, we will see the rise of designer 3D glasses and the first glasses-free 3D television hitting the market, as we as a few consumer-grade 3D cameras. At the same time, we will see more and more technology to upscale 2D to 3D, in an attempt to develop a larger consumer market for 3D technology.

On the PC end, netbooks will disappear as a category and the hot new trend will be to offer thinbooks that mirror much of what Apple is offering with the Macbook Air product line.  Solid State Drive will aso increasingly become standard on new computers and we will see Apple actually announce they are getting rid of traditional hard-drive in all their product offerings. This will lead to their being able to announce that all their hardware can now run for at least 7 hours on a single charge.

Any which way, we will be revisiting those predictions at the end of the year and see how well (or badly) I did. I wish you, dear reader, a very happy new year and look forward to a continued dialogue in 2012.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The 2012 Crystal ball. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Every year, I make a set of predictions as to what the new year is going to bring. At the end of year, I also review how close or far off the mark I’ve come. It is now time to review the 2011 edition of predictions, which I made on the 3rd of January of this year.

Politics

Last year’s leading internet political story was the rise of wikileaks and, as such, my views were impacted by it. Surprisingly, there has not been that many wikileaks-like organizations arising on the internet. This may be due to the fact that there just aren’t that many people leaking information.

The power of wikileaks, however, could not be denied, and my predictions of protests arising out of cablegate were right on the mark. This year, cablegate highlighted some of the abuse of governments in Tunisia and Egypt and some of that evidence was part (but only part) of what led to radical changes in those northern African countries.

On the regulation end, the FCC has indeed gotten more aggressive, with its more visible move being its attempt to block the acquisition of T-mobile by AT&T. However, to my surprise, there hasn’t been that much complaining from either political party about this rejuvenated enforcement effort.

Meanwhile, the rise of SOPA is clearly in line with the prediction that the entertainment industry will push for more internet regulation.  However, it is relatively easy to predict such thing as it appears the entertainment industry is forever locked into the concept of a more regulated internet. They basically see the internet as competition and would love nothing more than to strangle it to death.

So looking at the political end of the spectrum, I’ll give myself points for good prognostication.

Business

In that category, I decided to stick my neck out on the concept of a public-less IPO and while it was essentially something that happened with Facebook, the concept did not really take off for other companies as they decided to go the public route instead. My expectations were really that IPOs would not come until very late into the year and I was surprised by the likes of LinkedIn, GroupOn, and Zynga managing to get into the market relatively early.

Furthermore, I was pretty much off the mark when it came to NFC. NFC is (and has been) a promising technology but 2011 was not a breakout year for the technology. At this point, only a few select Android models seem to support it and there seems to be little traction from the market around it. While Intel invested in NFC, it may be a technology that grows into usage without having a particular breakout year.

The rise of cord-cutters did happen but not in as large an amount as I suspected. While this is a trend that continue to grow, it is still sitting on the edge and hasn’t gone mainstream yet. However, its a trend I will continue to monitor closely as I suspect this will move to the mainstream in relatively short order.

All and all, my predictions on business were off the mark. Maybe I’ll do better next year.

Technology

Gamification continues to grow but did not really have the big breakout year I expected. While more and more companies are continuing to integrate game-like behavior in their applications and workflows, we are starting to experience a period of consolidation in the space, with bunchball being one of the larger players. This seems to highlight that this space is one where only a couple of major players will arise and smaller players are already running out of steam. The focus around developing gamification models for computer-based applications may be part of the reason for this failing to move forward as the trend is increasingly to more and more applications moving to a mobile-first model.

The scan and shoot revolution I predicted quietly made its ways into the mainstream, with smart phones being the new weapon in every shoppers’ belt this christmas season. It’s one of those quiet revolution that arrived in 2011.

And finally, the big bet I had made on a Microsoft Nokia partnership came in mid-february, when Nokia announced that it would focus all its efforts on developing exclusively for the Microsoft platform.

The internet backlash I was expecting for this year did not come to pass. There may yet be more power in the current positive cycle that has been covering our industry and, as such, it appears that the possibility of a backlash against our industry remains a remote but slim possibility at this time.

So all and all, I’d get a barely pass on the technology side.

Arts and Entertainment

The recent multi-billion contract extensions for NFL broadcast rights are in line with my prediction that big event entertainment is becoming the core focus of the broadcast entertainment world. The continuing effort to support the existing model will increase this trend, giving more and more power to producers of real-time events.

Remixing, and Danish coolness, did not come of age in the past year, however. While groundbreaking on Bjarke Ingels first American project happened in New York, Danes haven’t really moved to the center of popular consciousness. The same is true of remixing: while supercuts are still making their way through youtube but, as a whole, remixing is still not something that has made it into the mainstream.

Maybe I should keep to the margins when it comes to making big predictions around arts and entertainment.

All and all, for this year, my performance at predictions has been average. I will try to do better for the 2012 year.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2011 Predictions: The scorecard. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

On what time horizon do you work? With 20 years of the web now behind us, our field has a fair amount of history, which has left us with a few theoretical barnacles to shake loose. But it also raises questions as to the time horizon over which predictions ought to be made and roadmaps designed. And it raises questions on what our industry obsesses about in the here and now as opposed to what it could think about in the long run.

History will teach us… something?

When Tim Berners-Lee first demonstrated the technologies behind what came to become the world wide web, he had little idea of the impact his invention would have. But what has happened since may allow us to look back and better understand how to look forward. While it took a couple of years for the web to move from academic and research circles to a more mainstream and commercialized space, some of the early battles are still reflected in what we see today.

For example, there is a constant struggle for control of the viewing experience on the internet. In the earlier days of the web, that struggle was represented by the browser wars with a large fight exploding between the dominant browser creator at the time (Netscape) and the dominant Operating System vendor at the time (Microsoft). The same fight can be seen today in the struggle over whether web applications or dedicated platform specific applications ought to rule the roost in the future.

The death of Netscape left the web barren for a few years as few contender to the supremacy of Internet Explorer emerged until the Firefox project finally found its footing. Over those years, the web largely stagnated, partly as the result of a deflation of the financial bubble that had arisen over the previous year but also partly as a result of the lack of a credible contender to the dominant browser brand.

Looking forward by looking back

When looking at the future, we can be a lot more hopeful today, because the odds of a winner-take-all have been lowered in some segments of the market. For example, the rise of iOS has been counterbalanced by the rise of Android and an increase in the number of web-based apps. With such a diversity in the mobile space, it also will make it difficult for new entrants to succeed. Marketplace tend to reward only a couple of groups and we are already at a point where we have 3 players. This is bad news for Microsoft and Nokia who are trying to play this from behind and have a real uphill fight to gain any serious traction, no matter how great their offering is.

In the tablet space, the story is a little more worrisome. Apple’s current domination of that market could lead to a new stagnant space unless a contender is identified. Amazon’s positioning of the Kindle Fire as a potential alternative may present opportunities to restore a balance, forcing all players to bring their best game. At this point, it appears that the marketplace has widely rejected other offerings in the tablet space so Amazon’s entry makes this an interesting case. The question at this point is not whether Amazon will topple Apple (it won’t) but whether it will introduce a product that appeals to a segment of the consumer market and forces Apple to keep improving its offering (and here, I would present the iPod roadmap as an example of how innovation dies in a marketplace, even if that marketplace is dominated by Apple: from a product standpoint, the iPods sold today have not really changed since the introduction of the iPod Touch four years ago).

On the standard front, we are seeing some fierce battle lining up in how browser supports new features of HTML5 and related technologies. As I pointed a couple of weeks ago, this is a good thing. The current diversity of browsers in the marketplace forces every player to attempt efforts at being on the cutting edge. This is the kind of thing that will speed up adoption of new technologies across the landscape as a whole and will help the open web become a strong contender for the future of computing. Technologies like HTML5, CSS3, WebAudio, and WebGL are helping the web become more operating system-like and, as such, increase its chances at becoming a strong player on any platform.

Roadmap 2025

But looking at today and looking forward, we are seeing a marketplace that is increasingly fragmented. So what’s a startup with limited resources to do? Should one put all their eggs in a single basket and bet on a single platform? Should a company look at introducing fewer features across all platforms, spreading their product roadmap over a longer timeline? Or should developers go to the lowest common denominator and target through the web browser?

The answer is it’s complicated but, at its core, one needs to think about what is needed to move the company forward and get it to reach early measurement markers while still focusing on the future.

At Keepskor, we call that Roadmap 2025.

I know it sounds extremely ambitious for a company to think to 2025 when it doesn’t yet have a product in the marketplace. But the issue for most startup is not ambition but the lack of such thing. By focusing on Roadmap 2025, we get a sense of how the marketplace is evolving and how we want our product to evolve accordingly. Frequent readers of TNL.net know that this column is not really concerned about the next few months and tends to focus more on the underlying cultural and business trends that can have decade-long impacts. This is why things like the impact of DVRs on the television business were discussed here over a decade ago, or more recently, I looked at what challenges existed for books and television. The 2025 consumer market will be impacted by those changes and the way in which applications designed on the internet interact with that will also be impacted. As will the dominant platforms, one of which, we hope, will be Keepskor.

But how does a Roadmap 2025 look in the present? Well, put quite simply, the present is an early alpha. The minimum viable product the marketplace will accept for something much larger. But the MVP for a platform that will exist in 2025 is substantially bigger than the MVP for a simple app. And building it requires higher levels of abstraction than a normal product. For example, no one really knows what the winning front-ends will be in 2025. What we know is that they will be different than the ones we are used to today. So we design our platform to ensure that input and outputs are separated from everything else. In the short run, this creates an added layer of translation that increases latency (measured in milliseconds) to every transactions but a slowdown we consider acceptable for now.

Iterate backwards

The basic agile method of development looks to scrums that are moving the product forward in an iterated fashion, tackling one component or another over short cycles. The level of clarity as to what will happen in the next scrums is generally dependent on how far forward you’re looking as each scrum can move a product to the adjacent possible. In a long roadmap model, one iterates backward. For example, if you are looking at what your product looks like in 2025, do you know what it looks like in 2024? You may have a rough idea as to how the product should evolve along the way. Maybe you get a sense of what it looks like in 2020 or 2015?

I call this backwards iteration. Move from the ideal state and start planting base camps backwards. It’s a strategy I learned from long-distance skating (I’ve done runs of up to 65 miles on a single day). No one wins a long distance race by focusing on the end point. The win is only by focusing on the next 100 yards and iterating those forward. But before you do so, you need to have a sense of what you need to do by each of those 100 yard markers. And that means considering how tired you will be and how much slower you will be at the end of the race and working backwards to assess the best balance of expanding and depleting energy vs. yards won.

In a business, this allows you to build a model that is pretty accurate for the first couple of years, and only mildly less so afterwards. It also allows you to go back to the roadmap when major events happen and identify whether they will have any impact on your business (and if they do, whether this impact needs to be mitigated now, and can be mitigated by moving an item forward in the roadmap).

From a communication standpoint, it also makes it easier for people getting involved in your business to get a sense of where you’re looking to go. This may mean that some investors are not interested because they don’t buy into your vision (and that’s OK because those investors would be an issue further down the road if you’re still going down some of the same paths) and also means that some people will not be interested in joining the company because they don’t agree with the steps moving forward. I consider that early filtering as it ensures that your company gets proper buy-in from all stakeholders, thus lowering the chances that employees will leave once they are fully committed.

Study the past, understand the future

But a roadmap 2025 plan is not something that one pulls completely out of thin air. What it is, more than anything, is a set of assumptions based on close study of part events. For example, the majority of the Keepskor roadmap can be explained by events that have already happened. This grounding in history and historical trends helps us ground the business into models that have been proven to work in the past and which, when combined, turn out to be substantially bigger than the initial ideas.

When looking more closely at history, I get a sense that most areas of history have some cyclical component to them, with a pendulum swinging in one direction or the other but always moving us forward ultimately. The study of previous cycles is probably the greatest tool one has in understanding what the future can look like.

However, there is one thing to note: The distant future is easier to prognosticate than the closer one because things actually do change at a much slower pace than most would expect. In the 1990s many dotcommers, present company included, made what looked like wild statements about the future and how the internet would change everything. Circa 1999 and certainly in 2001, those seemed like crazy pronouncements but, in hindsight, the world we described as coming to bear at the turn of the century is pretty much the world we live in today: the revolution has just taken longer to take hold.

A personal note

For years, people have asked me why I was writing TNL.net as I didn’t seem to derive any real income from it and the things I wrote about were, on the whole, only tangentially related to what I do. Over the last year, I’ve come to discover that the writing of TNL.net is a somewhat selfish act. First, it allows me to crystallize a lot of my own thinking: the process of writing and editing an entry forces me to focus on a topic area very closely. It also forces me to review source material and historical data to ground and inform my thinking. And then, there’s the part where you, the reader, enter. Your emails or discussion help me get a better sense of some of the flaw in my argument.

Update: I generally start writing early in the week and fill the entry up over time until it gets published on Sunday evening. This week, Fred Wilson posted “Long Roadmaps”, a great entry that covers some of the same ground. I guess there must be something in the air here in NYC that gets us to think about those things.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The long view. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The tech world is abuzz at the news that Google may start providing cable television service in the United States but there could be several challenges to their efforts as incumbents may have issues with this intrusion and may block them by withholding popular fares.

Economics of the TV business

To understand the challenges Google may front in entering the cable TV business, one must first understand that TV is not a monolithic entity but an ecosystem, with players in a number of different areas. At the beginning of the chain are the show producers, who develop TV properties, either on their own or with economic participation from a distributor. Then there are distributors, what we traditionally know as TV channels, who package groups of TV shows aiming at a particular demographic segment and then offer this up to advertisers as a way to reach a particular type of audience. This is traditionally what people think when they think of TV.

But in order for those TV shows to make their way to the end users, they need to travel to consumers’ TV screens, which themselves are controlled by a different set of aggregators, who put together groups of TV shows in order to attract consumers. In order to do so, they must pay the TV channels what is known as a carry or transmission fee, which depends on the popularity of a TV station and is negotiated individually between those aggregators and the companies that own the TV channels. Those aggregators are often known as cable companies or satellite TV companies. But there are also what are know as the TV networks (the big 4 networks are ABC (owned by Disney), NBC (owner by Comcast), CBS (owned by Viacom), and Fox (owned by News Corp.)), which are aggregates of local TV stations who deliver their wares locally over the air and negotiate carrying on cable separately.

Over the years, there have been fierce battle between the content players and content carriers over such fees, leading, for example, to TV stations not being available on certain cable channels as pressuring tactics during negotiations. Part of the reason is that some of the content players are now also owned by content carriers, leading to situations where large conglomerates that own both carriers and creators look to get an advantage by forcing higher transmission fees on their competitors.

Who are the big content owners?

Outside of the big 4 TV networks, it is hard to find data about who the biggest players in the content market are. Part of the difficulty comes from the fact that most ratings are based on the concept of shows and not on the aggregation of those shows. Last year, The Daily Beast put together an interesting list of what they considered the most valuable cable properties in the USA:

Looking at this, an interesting trend emerges: it becomes pretty clear that there is a high level of concentration in the hands of a few players. Of the top 25 owners, the list looks like this:

 Who are the big content carriers?

The next question to ask in order to understand what other players Google would have to compete with in order to succeed in the TV ecosystem requires a look at the distributors. Outside of the big 4 networks, the list of the top 10 cable and satellite TV companies looks as follows:

What’s interesting here is that we start seeing some overlap between some content owners and content carriers. Comcast, Time-Warner and Cablevision all have channels in the top 25.

Owner and distributors

But then you have to overlay the TV networks to get a fuller sense of where we sit in the content landscape. So we look at whether companies own networks, cable stations in the top 25 or both:

So, of the top 4 national networks and top 25 TV stations, all networks are owned by large distributors who also have ownership of some of the most popular cable networks. Of the top 25 cable networks, a surprising 17 (68 percent) are owned by content carriers.

Why you can’t legally get content online

The current content carriers have been eyeing the internet with some level of worry as internet protocols tend to turn what they impact into a commodity: we’ve seen that scenario happen for landline phone service (VOIP won those out) and music (offerings like iTunes and Pandora, decimated the music industry margins); We’ve also seen many other industries get decimated by contact with the Internet. How many travel agency were closed as a result of online travel booking becoming easier? How many stock brokerage firms found themselves competing with inexpensive online brokerage accounts. The internet has become a great equalizer and many of the incumbents are seeing this as a potential problem.

This is part of the reason offerings like Hulu or Netflix do not include recent shows in their offerings. It’s also why Google may have a hard time in its negotiations with TV content owners. Their corporate owners would probably welcome Google with less than open arms. The general view in many of those companies is that they do not want to be discounted as mere pipes and they will use their hold on content to ensure that the most favored pipes the content is running on is their own. To see a new player enter the market is, to them, an unwelcome feeling.

A different approach

But that feeling is one that is largely out of touch with the times. Increasingly, content consumers are looking to the internet as the place to go for content and the bundling of pipes with content is losing some of its allure. The first level of aggregation being created there may, in the end, be a losing strategy as the price of carrying content will continue to drop and, eventually, one of the players in the market will be smart enough to realize that they can gain market share by offering a lower cost alternative to consumers. We’ve seen that scenario in other countries; For example, in France, Free has emerged as one of the dominant providers of phone, TV, and internet service, on such a strategy.

Meanwhile, the content owners (the channels) have to realize they are sitting on pretty hot properties and should start offering online streaming of their stations for a fee. Today, they charge the distributors, who pass the fee on to the customer. But learning about their end users could be valuable for them if they were to go to direct charging for online streaming.

In a world where the most expensive basic cable channels fetches $4.08 per month, a content owner could easily charge $7.50 per channel for online streaming and make as much money than they currently are.

Many people may think “how is $7.50 the same as $4.08? Where did the other $3.42 go?” In the scenario I envision, the other $3.42 would go to building out and maintaining the infrastructure required for online streaming. I deliberately went with a high number to dismiss the argument that costs are too high to justify such an offering. I suspect the number would be truly be lower and eventually could lead to a $5 per month offering (also, remember that most channels do not get as much money as ESPN does so their offering could be adjusted downwards too.

Today, customers are paying a premium for channels they may or may not watch. By offering streaming for a fee, content owner could open up a dialogue with end customers that lets the free market decide which channels live and which ones die. But today, those same companies are using near-monopoly franchises in one field (distribution) to subsidize another… and internet live streaming of their stations could threaten that monopoly.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title No live TV streams: Here’s why?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The Demands

At its core, it seems the message of Occupy Wall Street is one grounded in change. Much has been made about the lack of demands and the second issue of the “Occupied Wall Street Journal” seems to answer some of the questions: one article highlighted that they would not make a list of demands because

We are speaking to each other, and listening.
This occupation is first about participation.

This is an interesting development in that the focus here is on the network more than the leadership and, in that sense, Occupy Wall Street (or #OWS) is probably one of the first protest movement for our era, based on a leadership model that relies on networks instead of top down infrastructures, on participation instead of inaction, on sharing instead of agreeing.

Because of that model, #OWS is a rejection of the current institutions, with Wall Street probably serving as a stand-in for a lot of the top down hierarchies that have been controlling much of the political dialogue for decades. I had initially thought of them as being the left-wing equivalent to the right-wing led Tea Party but #OWS is substantially more important as a movement because it redefines engagement.

The movement is increasingly based on a simple message: “we are the 99 percent,” which highlights the movement’s right to exist and its willingness to find a way to help most. It ties, to a large extent to the American ideal of a country where we can always do better and, in that sense, seems to be politically aligned with every movement that has helped the country move forward in the past.

The Network

#OWS also reminds me a lot of the Internet and while most people focus on how the movement is using Internet tools to spread its message, what’s been interesting to me is how internet philosophy seems to be at the center of a lot of the movement’s approach to spreading its message.

Whether it is by design or not, the movement has taken an approach that is steeped into some of the core beliefs of the internet founders. For example, in 1993, John Gilmore was quoted by Time magazine as follows:

The Net interprets censorship as damage and routes around it

As the protest grows, it appears it has increasingly seen some of the laws as damaging and has managed to route around them.

For example, the protest was initially planning to set up camp near the JP Morgan Chase Tower but when it was turned back, it settled only a few blocks away, on a public/private park that happens to be open 24 hours a day (the status of public private open spaces has worked to the movement’s advantage as its usually hazy legal status, which is traditionally leveraged by corporations to justify locking things up is now one of the main reason for which the city cannot shut the protest down at this time).

Another example came earlier this week, when the owners of the park attempted to evict the protesters because it needed to clean the park, the protesters routed around the challenge by cleaning the park themselves.

And a third example is the practice of the human microphone, which allows the group to make announcements without the permits needed to operate amplifying equipment in a park. This ensures the group is able to make widespread announcements without breaking the law nor creating the possibility of having a permit denied, which may create a situation allowing the law to disband it.

Another way in which one can find similarities to the organizing principles of the internet, is the lack of leadership to define the movement. On the internet, no site has any precedence over any other, and no traffic is considered more important, thanks to a principle called net neutrality. This feature means that any point on the internet is as important as any other point on the internet in terms of moving traffic around. This has been dubbed the rise of stupid networks by David Isenberg, in comparison to the controlled environments of traditional telecommunication companies. Isenberg’s principles were derided by traditional network executives as simplistic and naive when they were first published but have come to become the way in which most telecommunication is happening today.

In the same way, the lack of leadership in the #OWS movement has been derided by the traditional powers that be, who have claimed that the group lacks organization because it fails to have the kind of command-control structure that has been the way things have been run over the last few centuries. The appropriate answer to that challenge is simply to ask about how a disorganized group could be accomplishing as much as this one is and extending as much as it has in as little an amount of time as it has.

Visiting Zucotti Park was a fascinating eye opener when it comes to self-organized systems. The park has communal planning with clearly delineated areas for living quarters, eating, communication, art, etc. There is also some level of organization around how the group manages its different activities, from direct actions to the internet. The leaderless feature seems to actually be an advantage for the environment as the chaos that exists consistently enables anyone to make logistical decisions quickly while matters of planning and speaking on behalf of the group require a substantial level of communication.

The lack of leaders seems to represent a substantial part of the clash between the police and the protesters. On one side, the police has a highly structured model and is trying to provoke the protesters into confrontation. A defining traits of the protests is how few people have taken the bait (it seems Gandhi’s principle of non-violent protest runs deep within the movement) and how many assaults and arrests the police seem to have pushed. It will be interesting to see if any charges will actually stick once they go through the legal system.

The protest

Where #OWS seems to have failed in leveraging internet technology is in the way it has spread its protests out. In the Tahir square confrontations earlier this year, the organizers decided to break their protests out in smaller protests all over the place. The goal there was to deal with the fact that each protest would get broken out and people would spread out from each of the small protests. What was not broadcast was that a smaller protest was designed completely offline to be fed by the breakout of all the other protests. The Tahir movement used Google Maps to then figure out the optimal path for that smaller protest so it could grow as each of the smaller ones was broken out, feeding into the main one.

#OWS has germinated into an occupy everywhere movement and continues to grow, with new protests arising daily. There appears to be some level of coordination globally, when it comes to dates and times but little is being done in terms of focused messaging for each effort.

The lack of central message has been the most frustrating part to traditional media. Media thrives on conflict and the lack of conflict has led most traditional outlets scratching their collective heads as to how to cover this. A few have focused on the police brutality but so far the protestors have done two things that are making it difficult for traditional media to cover them:

• They have refused to engage the police and have attempted to follow the letter of the law
• The have refused to take direct actions against any specific target other than “the system” as a whole.

Imagine what would happen if they decided to organize boycotts, as Bernie Sanders suggested. Imagine what would happen if, on a particular day, they were to announce that occupy wall street would “occupy” Wall Street by keeping them busy, due to a run on the banks, with hundreds or thousands of protesters pulling their money out of the largest banks and putting them into smaller community banks. Such a “run on the banks” would get wide coverage and probably provoke substantial confrontation, giving media a chance to deride the move as destabilizing. But the #OWS movement has been either smart enough or disorganized enough to avoid creating that kind of confrontation, which would probably lead it to either condemnation or failure.

If there seems to be a message behind the protest, it may that people still have the right to protest. A question I may have on this is how long this message can go on. It’s clear that people are unhappy (you don’t need to follow the antics of #OWS to understand that as poll numbers after poll numbers show discontent across the board) but what will come next?

To #OWS, it seems what is to come next is something better than what we have today. How one defines that is the secret to what this movement is about.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title An Occupation. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Will Google become the new Microsoft? Today, I present the case that would answer this in the affirmative.

A branding problem

Google has become synonymous with search and that was great for the company when search was its main business but with company growth came expansion into new markets like office suites, mobile, and video, the company may have a problem explaining what it brands stands for. John Battelle put it best last April:

you could argue that Google still means a great search environment. But the brand also means far more. It’s the brand which stands in opposition to the iPhone — the Android Pepsi to Apple’s Coke. The same is true in the office suite — Google Docs are the Pepsi to the Coke of Microsoft’s Office. Google Chrome? The Pepsi to Internet Explorer’s Coke. And there’s a ton more — photo sharing, blogging platforms, social networking, ecommerce solutions, enterprise platforms, media (YouTube, Knol, etc.).…well you get the picture.

And Google = Search doesn’t cover all that.

Google has grown to be much more than search in the same ways as Microsoft in the late 1990s had grown to be so much more than Windows and Office. And it is faced with the same difficulty of highlighting what its own brand stands for.

A messaging problem

Going beyond the brand, however, is also what sits at the core of Google’s message. Google’s mission, per its corporate site, is phrased as follows:

Google’s mission is to organize the world‘s information and make it universally accessible and useful.

Under this model, where would something like Google+ fit? What about Google chat? They are social tools that provide a lot of value and should be part of Google’s offerings but neither of those tools really help organize the world’s information nor make it universally accessible and useful (for example, isn’t the whole point of circles in Google+ to limit access to information instead of making it universally accessible?)

Similarly, in 1997, Microsoft’s stated mission of a computer on every desk and in every classroom had failed to envision the rise of non-computer devices and created an on-going perception of Microsoft as a computer-centric company. While it has made tremendous inroads in the non-PC world (example: The XBox), the company still hasn’t been able to shed the image of Microsoft as a computer company, which may account for its difficulties in adapting and telling the world about its tablet and mobile devices ambitions.

So as Microsoft is mostly seen as a PC-centric company with a little extra stuff, Google is seen as a search-centric company with a little extra stuff.

Microsoft has retooled its mission statement with a noble, if hazy goal:

Our mission is to help people and businesses throughout the world realize their full potential.

To be honest, I’m not sure of how the Xbox and its accessories fit under that mission but it doesn’t matter as people have failed to even adopt this concept as embodying microsoft.

Hard time getting heard

The challenge that arises out of this messaging problem is that when new products are introduced, the early adopters have a hard time taking the effort seriously while the mainstream still looks to consume those new offerings. For example, a fair amount of skepticism has arisen in the tech community regarding Google’s effort in the social media space. Google+ was first seen as an interesting toy but soon lost the mindshare of early adopters. However, Google has opened the doors to the public and is growing its social network at an impressive pace.

That Google is failing to articulate how Google+ fits into its overall business is but one of the challenges it faces. With Facebook and Apple as the new darlings of the media and digerati set, Google’s attempt to be a more “social” company has been ridiculed by many, present company included and it has made it more difficult for Google’s nascent effort to be taken seriously.

In the same way, Microsoft’s early foray into the gaming world was seen as an odd pastime but something that would eventually be killed as only companies with names like Sony, Nintendo, or Sega could possibly understand that market. A decade later, it seems clear that Microsoft’s move was a brilliant one, putting it in a strong position in a more consumer focused market and reaping billions of dollars as a reward for that risky move.

While Apple often positions its new offerings as a radical departure from anything that existed before, companies like Microsoft and Google have been more focused on presenting their offerings as an evolution of things they’ve done before. But because people’s perceptions are grounded in the company’s respective monopolies, they have a hard time seeing the transition and dismiss the efforts as flawed.

Assaulted on all sides

The late 1990s might have been the top years for Microsoft: it had successfully completed one of the largest operating system transitions in history, and was starting to show progress on its internet effort. Internet Explorer, then in its 4th iteration, was finally seen as a serious contender to the dominating Netscape browser (at the time, Netscape commanded an 80–90% market share) and the company unveiled the XBOX in 2001. On the dark side, an on-going anti-trust lawsuit made its way through the court system, eventually forcing the company to make some drastic changes.

The next decade, however, saw the rise of web-based applications, mobiles and tablets, making the OS a less important part of the technology stack and thus pushing Microsoft to become a less crucial player in the industry.

It seems this decade will see a similar type of history repeating itself for Google.

Its search and advertising business are dominant today but Microsoft has made in-roads with Bing, its own search offering. Meanwhile, Apple may obviate the need for Google altogether with Siri as it introduced a radical new way to handle search on a mobile device (and with the majority of Google mobile searches coming from iOS devices, the search giant has to worry about this intrusion).

On the advertising front, Google’s database of intention, which leveraged search results to better target ads to consumers is being rivaled by Facebook’s social graph, which leverages what the social network knows about people and their friends to offer a new form of advertising that could be substantially more personalized than anything Google could offer. Meanwhile, other players are leveraging the information sharing of users on networks like Twitter and Facebook to get a better sense of user sentiment and target ads accordingly.

On the mobile end, Google has established its operating system as the top one by number of handsets being manufactured but risks abound as the company is looking to acquire Motorola, one of Android the device manufacturers. This acquisition will most definitely have a chilling effect (and people at some of Motorola’s competitors have said as much behind closed doors), giving Apple a chance to expand its own market share into a domineering position or giving Microsoft a chance to relaunch its mobile offerings in a way that would first make it a viable third player and eventually could lead it to become one of the top 2 players (note that Apple’s position, as far as I see it, will not be threatened).

In video, Netflix and Amazon are increasing their collections, offering quality content at a low price and therefore putting some potential pressure on YouTube. As more general content become available, it could be that YouTube will have more difficulties growing.

Then, there is the matter of being treated as a monopoly. I suspect it’s only a matter of time before someone finds a reason to bend government regulators ears as to how Google abused its power in the search business. It won’t matter whether the allegations are true (as it didn’t matter when Microsoft was accused of abusing its monopoly position), once the claims are made and the lawsuits are launched, the perception of the company as a big bad wolf will be forever cemented.

Meanwhile, Google will continue making large amounts of money (probably billions) on its current offering but may find it hard to show the general public how it is relevant today. A question regarding its future success will however find its root in whether Google can continue to be relevant in the online advertising business (it is, after all, its core business) or find new revenue lines to replace declining advertising revenue. The answer to  THAT question will define Google’s future.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Google is the new Microsoft. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The end of an era. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

A smaller book industry

Few people know that books are generally sold at a substantially lower cost than the printed one on the cover. I worked in a bookstore a long time ago (back in the pre-internet days) and books were then sold to bookstores for about half the cover price. I think what we’re now seeing is that e-books are sold by bookmakers at about the same price as they were before but it seems that less will be required to make and distribute books moving forward.

People who are currently employed managing the production and distribution of physical books will not be as essential as they once were. With fewer printed books going out the door, fewer people are needed to set the printers up, to provide ink, to make paper, to store books into warehouses for shipping, and to bring the books from one physical location to another. Book chains, which have worked as supermarkets for books will no longer be needed as printed books will only be sought after by people who want their book store to be staffed with like-minded people who care about books. While the independent bookstores will thrive again, the people who treated books as just another widget will mostly disappear from the book production value chain, with no new jobs to replace the ones that were displaced.

In other words, the industry of book creation and production is about to get radically smaller.

Distribution Concentration

A few weeks ago, I highlighted that a market-changing tablet would probably be priced in the $200–250 range so there is no doubt in my mind that Amazon, with its Kindle Fire will succeed in the marketplace. What I do worry about, however, is that the rise of e-reader is something that will leave control of mass market book distribution in the hands of only a few players: Apple, Amazon, and maybe Barnes & Noble (if they survive).

Longtime readers of TNL.net know that I worry about the lock-down of the internet by corporate entities. In my view, the openness of the internet has been a key to the explosion in innovation over the last couple of decades and the internet may be reaching an important crossroad.

But with the rise of e-readers, that debate may become substantially more urgent. If we are dealing with most of the public getting its content through devices that are controlled by a few companies, we may regress to a point where control of information will be substantially tighter. We already know, from recent history, that the government can ask TV stations to be “more careful” in its coverage, leaving a country in a state of war with few images about the sacrifices made by our armed forces. In a future when distribution of most reading material is concentrated in the hands of a few companies, and distribution of other media is also in the hands of a few conglomerates, should we worry about potential censorship?

What about readers?

And what will happen to readers. Anyone who has had school-aged children has learned that an important way to improve reading is to read at home. But in a world where e-readers are multi-purpose devices that can also be used to watch TV and movies or play games, how will parent send their kids the signal that they are reading? And will kids take use of laptops and tablets as signs that the printed word is dead?

Today, it is easy to curl up with a good book and send kids a clear signal that book reading is a form of entertainment. Little mimics that they are, children start reading their own books as a result and I’ve noticed that families that read have children that read and the inverse is true. If reading is an important part of education and growing, allowing kids to build up their understanding of the world, their literacy, and their imagination and creativity, what will happen if children don’t read?

Will future generations only consume video and audio content with little or no interest in printed materials? And, if that is the case, where will the printed words that sit as the scaffolding for video and audio come from? Those are all troubling questions for which I have no answer but, in a world where physical books will become the domain of the few, they could become questions with large societal impact.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title E-reader impact. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

This week, Amazon unveiled a new line of digital consumption devices under the Kindle moniker. Along the way, it may have provided us a view of the future of the book.

A short history of the book

At some point between 7000BC and 4000BC, writing appeared and, along with it came the idea of record keeping. Clay tablets then papyrus made such records more portable but required that each record be manually created. Meanwhile, printing popped up in China in 2000BC and South America around the same time (Chinese had a system to print on wood while meso-American cultures used some kind of loom to “print” using knots). Papyrus was replaced by parchment but still required manual transfers of text, making books a rare good that generally was only available to rich (and therefore educated) people.

At some point between the 2nd and 4th century, paper replaced parchment and monasteries starting generating bigger books, with scriptoriums appearing in many places. Because of their close ties to the church, the scriptorium mostly produced religious texts. The rise of paper over parchment however, made books cheaper, which meant that their diffusion became somewhat wider.

And then it was 1440!

That year, Johan Gutenberg was inspired to combine a wine screw (used to press grapes or olives) with paper and hot type to create the first priting press. Books could now be reproduced quickly and cheaply, allowing for substantially lower costs and more widespread distribution. The rotary printing press was introduced in the 19th century, speeding things further, but apart from that the printed book one gets today is basically produced in the same fashion as it was in 1440.

In the 1930s, the paperback book appeared, making printed goods a complete mass medium. The book world then became stratified with paperback at the bottom of the pile, aimed at mass distribution, hardcovers in the middle as somewhat better produced and more durable, and collectible books, produced in small quantity and created as art objects to be appreciated by collectors.

Then came e-readers!

The Kindle arrives

E-readers were initially a curiosity, offering new technology to read books but mostly without having any content on them. But in 2007 Amazon, which had already established a dominant position in selling printed matter, unveiled the Kindle, an e-reader that had access to a wider collection of new titles than any other. The company introduced a second version in 2009 and the low price of the device, combined with access to hundreds of thousands of books help fire up a new revolution for books, with readers getting more interested in the device.

Barnes & Noble, a large American book chain, introduced the Nook, a competing device that offered e-book reading in color, something Amazon did not have, as it chose e-ink, a technology that reproduces the printed page but is mostly available in black-and-white.

2011 the year the printed book changed

I think future generations will look at this year as the year the book radically changed. Already, the data seems to point to a decline in the sale of paperback books and trends seem to indicate that consumption of certain book types has moved to e-readers as the preferred form. I was recently chatting with a book seller for one of the largest publishers in the world and he remarked that thrillers and romance novels now sold more widely on e-readers than they did in print. Another person recently told me (and a quick check on the New York subway confirmed) that women are the prime users of e-readers right now, with the tablet market being more male dominated.

So if large segments of the population are moving to e-readers, what’s to become of the printed book? Is it the end of the road for something that has existed through most major technological changes? Will centuries of history go digital? Will future generations see the latest Harry Potter volume in museums, scratching their heads as to why someone would think of carrying something as heavy to read it?

Two paths for the book

What I see is something a little different. I think we’re about to see the book split down two paths and people will go down one or the other depending on how they feel about books.

Before I look at the two paths, I must highlight that there are two types of book readers:

• On one side are people who look at the book for its content, only concerned with what stories or facts are contained within the book. Those people don’t care about the distinction between paperback, hardback, or e-text. What they want is the words and sentences, not the other stuff that comes along with the book.  Those people tend to see books as information vessels to be discarded once the information has been consumed.

• On the other side are people who look at the book as a total experience, moving from the cover and its layout into the book, its size, its type, and finally its content. Those people look to book as complete objects that cannot always move to another form without changing. Those people tend to have larger libraries at home, attaching certain time periods and feelings to books.  They may pull a particularly worn tome from a shelf and be reminded of the time they acquired it, the time they read it, the people and locations they frequented with that book.

I am not assigning judgement to either category but I wanted to create a clear distinction because it has relevance to what happens next to the book. And let me get into that now:

• Death of the mass market printed book: I believe the vast majority of people fall in the first category I highlighted. Looking at the trends, it seems that price has generally been an issue with books and people who do consume them tend to consume them mostly as paperback. I’d venture that within a generation, paperback will disappear, and those texts will be moving to e-readers (I’m also assuming that e-readers will continue to drop in price until the point where they may be bundled with a first purchase of a book). This does not bode well for large chains that are selling books as they will see those revenue evaporate as more people move to e-books. In the US, we’ve already seen the death of Border’s bookstore and I suspect that it’s only a question of time before Barnes & Noble suffers the same fate (unless it adapts and finds a way to sell their nook for substantially less than Amazon does the Kindle).

• Survival of the book as object: However, the second group of readers will continue to exist and that group is about to go through interesting times as books become rarer but also more prized. The newfound rise of the book as object is more of a return to the pre-paperback days when libraries were as much status symbol as they were about learning. Books will be produced in substantially smaller quantities to appeal to this crowd, forcing their price up and their margins down. However, authors who are printed will be seen as more influential than authors who are only published digitally.

In the next entry, I will look at some of the impact those changes may have on society as a whole.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The future book. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The Open Graph

Before we look at the winners and losers, let’s recap where Facebook is going. A couple of years ago, the company unveiled the “Open Graph API”, which gave external sites the ability to add “like” buttons to their sites, and in the process allow end-users to things they like into their facebook stream, where they would be shared with their friends. This mean that a user could implicitly publish information to Facebook by just clicking a button. At that point, two things really happened:

• First, Facebook created a system that allowed it to better understand what people were reading because every time a like button is pulled down, Facebook can keep track of it and associate the information with the account of a Facebook user.
• Secondly, Facebook offered publishers a way to generate more traffic to their site by publishing content on Facebook that would return users back to their site.

This was a little creepy because it gave Facebook a tremendous amount of power but, in exchange, the company gave publishers access to more traffic so the agreement seemed balanced to everyone but the end users (which doesn’t matter, as we all know that “if you’re not paying for it, you’re not the customer; you’re the product being sold.”)

But it seems having access to that data is not enough for Facebook; now it wants more data so it can build better electronic profiles of its users. So this year, the company has decided that “Like” was not enough and they wanted to get users to give them access to anything they read on a particular site. So the company unveiled actions like “read, watch, listen” which allow developers to share all action data from a user after a one-time sign-up to the Open Graph API.

Mining the web… but not giving back

This time, the company is mining the web but the main beneficiary of those actions seems to be Facebook, which gets a better understanding of where users are when they are not on Facebook and what they are looking at. If we assume (and I am willing to take the bet that this will be the case) that most mainstream sites will start offering the new verbs, then Facebook will have one of the most complete understanding of a user’s demographic and psychographic profile. In other words, the data it will get access to is the holy grail of online marketing: users that can be tailored to based on extremely granular preferences.

That data can then be used to send ads that resonate with the user in the channels the user accesses most. Think this is crazy? Well, wait ’til next year’s F8, when Facebook unveils a tool to help external sites monetize their traffic better by targeting advertising based on users’ preferences. If this sounds suspiciously like AdSense from Google, it’s because it is part of the end-game. Facebook is no longer happy to have the largest site in the world, now it wants to have access to people when they are not on Facebook.

What’s fascinating here is that the data goes into Facebook but there is precious little information as to how to get it back out, making the word “open” a headscratcher as it is unclear how Facebook defines openness. To the Palo Alto company, it appears that openness is a one-way street: you open up your data to Facebook and in return Facebook “simplifies” the online experience by keeping your app on its platform. This is somewhat similar to the app store model offered by Apple and Google, where it’s OK to play as long as it is within their rules. Facebook is doing to the open web what Apple and Google have often been accused of doing, sticking another knife into its imminent demise.

Also of note is the fact that Facebook’s approach to getting all this data makes it impossible for anyone to create valid HTML5 pages as the Facebook code does not validate under this framework. So Facebook is also hampering the future of the web by making it nearly impossible to live by the ideal of the new web standards if you want to play in the facebook arena. This seems to shape up another fight between Facebook and the open web.

Another company has had similar ambition and it staked its approach first on offering superior search products and then on using the search data to target advertising on partner sites and eventually offer such capabilities to anyone who was willing to give them a percentage cut of ad revenue. That company, Google, has realized the limitations of its model and is busy trying to ensure it can get more data by building up offerings for ways in which people access the internet: so they’re pushing Android for mobile phones and Google Chrome as a better web browser because they want to be able to access data relating to where people are on the web, data that can then be used to create more customized ads.

Facebook at $150 billion?

This week, Google’s valuation sits around $150 and the highest Facebook has ever been rumored to be worth is $100 billion. I’d venture that people are selling the company short and that it is worth something on par with Google. It has masterfully played fears from online publishers and other sites and parlayed that in a potential position of power in the online marketing world.

The only thing that could make it more powerful than it is about to be is if it were to pair up its data with Google’s. A merger of the two of them would create an unparalleled database of internet users, containing just about anything about people’s intents (from Google’s search), their interests (from Facebook’s data), the amount of time they spend on certain properties over others (from either Facebook or Google’s data), and what they liked enough that they would share it with people their know (from Facebook’s data).

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The “Open” Graph. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Desktop and the Web as one

Much has been written already about how Microsoft is trying to be all things to all people by offering a single operating system for both tablets and computers. The company announced an operating system that marries a lot of the tablet experience as presented by the likes of the successful iPad, and the many other contenders for the crown currently on the market, with what has more traditionally been known as a windows PC.

Along the way, Microsoft has introduced Metro, a new way to interact with Windows that brings much of the tile-based experience they first unveiled with their Windows Phone 7 operating system. Like them or not, tiles are Microsoft’s attempt at getting a spot at the mobile table and they are now taking this mode of interaction from the phone to tablets and PCs. The Metro UI is probably the single largest change in the way Windows has looked since Microsoft unveiled Windows 1995, an operating system that was a significant user-interface departure from its predecessor.

Lost in the commentary has been the fact that tiles are programmable using HTML, CSS, and JavaScript, three core technologies used by millions of developers around the world. With this, Microsoft is basically saying that the languages that power most of the user interfaces for the web should be the languages that power most of the user interfaces for Windows. This is both a radical departure from mainstream thinking (although Palm tried to go down that route with WebOS) and a return to the source for Microsoft.

Looking back, looking forward

In 1997, I had the privilege of being among the people selected as launch partners for Internet Explorer 4. As such, I was able to see the product evolve from idea to release, seeing along the way many false starts and ideas that did not make it into the product. One of the most intriguing idea at the time was that of replacing the UI shell with a web browser one, essentially allowing for HTML  widgets to run directly on a user’s desktop.

I was smitten by the feature and heartbroken when I learned that it would not ship for reason that went beyond the technical. Around the same time, Microsoft was in a major war with Netscape and rumors of an anti-trust lawsuit being launched against the company were swirling. At hand was the idea that Microsoft’s ability to tie the web experience to its near-monopoly on operating systems gave it an unfair advantage in the marketplace.

While it is true that Microsoft had the leading position in the operating system, there was little evidence of the success that resulted from it tying other components to it: its web browser offering were poor and had made little headway in the marketplace, where the Netscape browser held a significant lead. So there was little evidence that just tying two products would help lift both. It wasn’t until Microsoft started matching features with other successful browser that their offering started gaining traction.

But none of this mattered in the fall of 1997 and the idea of integrating a user’s desktop with the web was either too ahead of its time or seen as too risky by the legal departments at Microsoft. The net result was that when Internet Explorer 4.0 came out, the feature to connect web and desktop had been reduced to a way to push content to the browser and potentially use it on screensaver, an offering that fell far short of the promise.

Moving forward almost 15 years, Microsoft is no longer seen as a threat on the technology market. The antitrust lawsuit has made the company tentative in its offering, often staying as far away from controversy as it can. The new darlings of the technology world have taken over most of the mindshare that was held by the Redmond giant and only a few faithful follow what the company is about. It is not a significant player in the mobile phone market at this time (this title is split between Apple, with its iPhone line, and Google, with its Android ecosystem) and many see the tablet market as one that is making the personal computer, the very arena where Microsoft is king, irrelevant.

So the house that Bill built had to do something dramatic to regain attention. It had to offer an operating system that would meet today’s users’ needs, an operating system that could compete, in terms of setting the agenda, with the much smaller iOS and OSX produced by Apple.

Along the way, I suspect that somewhere in Redmond, some of the people who had tied the web and the desktop in 1997 started talking about how this could be their time…

… and the result is the Metro UI:

OSX Xeroxing or not?

Many of the Apple zealots have pointed to the Metro UI and the fact that Microsoft can still run a more traditional Windows look in parallel as a showcase of why the company will “fail” in the market. They present this as a example of Microsoft being unable to make the tough decision of separate offerings for separate computing devices. They highlight that Apple is much smarter in its approach because it has decided to create two operating systems: OSX for traditional computers, iOS for everything else.

So I think it’s fair to assume that no one can say that Microsoft is looking to copy Apple here. I think it’s OK to point out that Apple fans have basically said that the idea of marrying a mobile experience with a PC experience is not terribly smart.

That being said, it’s also interesting that Microsoft and Apple seem to be sharing a view of the future. And that view seems to say that smaller, single purpose applications bought from an online store will take over your whole screen, scraping away any piece of the visible interface. For Apple, this is best manifested with the version of OSX they most recently released (Lion) which offers the experience I described above and tries to marry some of what the company has learned from iOS with what has traditionally been seen as their computer operating system.

So the idea of an App store is definitely something where Microsoft is following Apple; the idea of running apps in full screen with no vendor interface is also something where Apple had the lead; the idea of bringing tablet and phone-like behavior to an operating system is something Apple has claimed as its own.

So the only question remaining is really: should we have separate operating systems for separate devices or should we have a single operating system that can be used for multiple devices. For Microsoft, the answer is now the latter; for Apple, the answer to date has been that OSX is for computers and iOS is for everything else. My question to Cupertino might be about how long it will be before they decide that one OS is sufficient for both computers and all other devices.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Windows 8 is Microsoft’s bet on the future. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The tablet market

Today, the clear leader in the tablet market is Apple, with its iPad. According to a study by iSuppli, the device costs Apple between $230 and $346 (depending on configuration) to manufacture and is sold between $499 and $829.

Meanwhile, HP came out with its touchpad and, thanks to another isuppli study, we learned that it costs between $306 and $328 (depending on configuration) to manufacture it. Currently, the company has put those device in fire-sale mode, retailing them for $99 and $149, leading many to highlight that the company is losing large amounts of money.

Comparing the two, based on roughly the same feature sets, we get the following (for the sake of comparison, I used the non-3G version of the iPad since HP has only sold WiFi enabled tablets and doesn’t have a 3G product out):

Looking at this chart, it is clear that Apple is substantially more efficient in its supply chain, being able to build a tablet for about a third less than HP. But what also becomes clear is that the Cupertino company has been pricing the device to maximize profit and there seems to be a lot of room for selling tablets at a lower price without losing one’s shirt.

But how much would people be willing to pay?

Listening to the market

One of the most fascinating things I’ve noticed recently is that the price of ebay auctions, on most goods, tends to be relatively consistent as the auction comes closer to its conclusion. Take any given good and you will find that there is relatively little difference in the bids on several auctions for the same thing ending within minutes of each other.

Another interesting artifact is that the price of a second hand device on craigslist tends to be close to the price of the same device at the end of an ebay auction.

Those two facts seem to point to a natural equilibrium when it comes to pricing goods, where a majority of sellers and buyers cluster around a price point that seems to be what the market is agreeing to as a price point.

On its face, it’s interesting to see that iPad2, as a product, does not seem to loose much value on the resell market, with second-hand versions reselling for roughly the same price as the retail one.

However, there is an interesting phenomenon here with the HP Touchpad selling for over $100 more in the after-market than the suggested retail price. While this is partly due to scarcity, it is interesting to see that the price ceiling has actually sustained itself for the last couple of weeks, even as more supply has been made available.

The evidence seems to point to customers being interested in buying a 16Gb tablet for between $200 and $250 and paying up to $50 more for double the space. The challenge still remains that HP actually would continue losing money at those price points.

Looking at this, however, it seems the losses could get lower if HP priced the market closer to what the market currently seems to dictate. However, a loss is a loss and there would still be question as to how the company could actually make this a success.

Options for HP

Based on the above data, it looks like there could be a chance for HP to attack the marketplace and make WebOS the second most popular operating system in the tablet space, succeeding in establishing WebOS as an alternative to iOS and potentially besting Android in that arena. To do so, the company could look at a number of different approaches to subsidize the difference in price.

One of the first things HP might want to look at is the lifetime value of a customer. Is there a way they could recoup the $28 or $56 they are losing on that customers.

Could they, through the sales of apps, make that money back? Assuming a 30% cut, as most people seem to take these days, it would mean that they would need to sell $96 (for the 32Gb) or $186 (for the 16Gb) worth of app. Assuming apps are selling for $3 per app (which a cursory look at the recommended apps seem to point to as an average price point), they would need to sell an average of 32 apps per 32Gb Touchpad sold or 62 apps per 16Gb tablet sold.

What about movies? A downloadable app on the Touchpad is called the HP movie store. It appears movies rent for $3.99 and sell for $20. Assuming the same 30% split, they would make $6 on every movie sold or $1.20 on every movie rented. To recoup their cost, they would need to either sell 10 movies per 16Gb tablet or 5 movies for the 32Gb model. Alternately, they would need to rent 47 movies for the 16Gb model or 24 on the 32Gb one.

Assuming a two year life on the devices and its associated customers, it seems that recovery of cost could be realized.

But let’s not forget some of the other (potentially more lucrative options). As a successful alternative to iOS, the company could develop an ecosystem of components (keyboards, cases, etc…) that work with the device. They could charge a small fee for certification as “Made for HP Touchpad” and receive revenue from that source. Furthermore, with a strong position in the market for their offering, they could then potentially license out the operating system itself (as more and more devices enter the market, the chances that more developers will be attracted to the platform increase), generating enough revenue to more than subsidize the cost of the initial production run.

Looking at the production costs of Apple’s iPad, it also seems clear that there is much that can be done to optimize the supply chain and manufacturing of the Touchpad. HP could initially target their own internal efforts with a goal to get the Touchpad produced at a rate that was low enough that they could first offer them at cost and eventually make a small profit on the hardware itself.

As a long term play, though, it looks like the main goal of this slew of HP touchpad would be to establish WebOS (and thus HP) as a leader in the tablet market. To do so may allow the company to build some strong margins on OS licensing at some point in the future. However, it would require a willingness to take some short term losses (under 12 months) to establish a strong position in the market in the long term.

Options for tablet manufacturers

It seems the HP touchpad has given the industry an idea of what the market is willing to pay for a tablet not produced by Apple. While it is true that the WebOS operating system is very polished, I think that factored less in people’s interest in the device. The market wants an inexpensive tablet that works relatively decently and they’re willing to spend $250–300 for it.

There are now rumors that Amazon is considering entering the market with its own Android-flavored tablet, priced in that range. To do so, considering the fact that Amazon will generate revenue from alternate sources like the Kindle store, the app store, and streaming movies and TV shows, seems to be a natural evolution and it appears that a pricing strategy that would be the tablet in the sub-$300 range makes sense. If they do so, it will be interesting to see how their offering fares. A failure to take off could translate in trouble for Android as a lower price point Android offering ought to be successful and failure would mean a problem with the OS. If it takes off, Amazon could reignite the tablet market and cut off HP’s chances to establish their operating system as a strong contender in the tablet space.

Because technology costs continuously go down, it is clear that we will see a sub-$250 tablet within the next 24 months from someone other than Apple (Apple has a tendency to price rigidity and may drop some older generation iPad models to the $299 range but I doubt they would go much lower than that). Efficiencies in production and supply lines make that not just a possibility but pretty much a sure thing.

As to who will control the second most popular operating system (assuming Apple retains its lead) in the tablet business, it’s really up to HP to decide how it wants to play. It has a unique opportunity to take that spot right now but the window of opportunity may be closing extremely fast for them.

As a final note, realize that the observations I’m making above are only relating to the tablet market and do not affect the smartphone marketplace at this time: that ship has mostly sailed and it’s a two-player game at this time: iOS and Android.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Pricing a Tablet. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The landscape so far

To date, many technology companies have tried to go after the TV screen as a market to conquer and most have failed. For example, Microsoft has, for a long time, tried to create a Media Center edition of their popular Windows operating system but outside of a few computer geeks, that concept never really took off. On the hardware end, companies like Boxee, Roku, WD (with the WDTV), Apple (with the Apple TV) and Google (with Google TV), have tried to offer a system that would connect users to a variety of internet content. Roku and Apple have had some early successes in the market, largely due to their pricing strategy.

On the provisioning end, companies like Netflix, Hulu and Amazon have started working as aggregators of streaming content that is delivered straight to your TV, without the need of a computer. Their strategy has been to work with consumer electronic companies to embed their players into DVD players and televisions. Along the way they have solidified their position in this market, going beyond early adopters and far into the mainstream.

And yet, something may have been missing from the equation to make internet TV a business that is as viable as computer or mobile software.

But things could change very rapidly.

A second wave for the third screen

In today’s busy media attention environment, there are three fundamental screens: your computer, your mobile, your television. The technology sector has successfully navigated itself in a position of control over the first two but a grasp of the third one has remained elusive. Consumers were mostly not interested in adding new devices to their entertainment centers, leaving even Steve Jobs to consider his own company’s attempts in the space as nothing more than a hobby.

But if recent rumors are true, the war is about to heat up again. A couple of weeks ago, Google announced it would acquire Motorola mobility. At the time, most people viewed it as purely a patent play. However, buried inside Motorola is a little extra reward: the second largest player in the TV set-top box provider in the United States (the other is Cisco). So if a cable TV box has the name Jerrolds, General Instruments, or Motorola on the front, it will soon be a Google box. And right now, those brands represents almost a third of all cable boxes in the world, giving Google a very strong foothold in the living room. The challenge for the search and mobile giant will now be to find a way to upgrade all those boxes to support the Android Operating System.

Meanwhile, there have been rumors that Apple is going to start building its own television, embedded with the iOS and all it supports. The rumors seem to be corroborated by a few facts.

In a January investor call, then-COO and now CEO Tim Cook mentioned that the company had secured access to supplies that were “focused in an area that we feel is very strategic.” In February, Apple paid close to $4 billion to secure supply of LCD screens for the next two years: at the time, the general consensus was that it was to cover iPhone and iPad screens but why make that assumption? It seems that some of those LCD agreements could be linked to the development of a TV set line, long rumored by Apple watchers and I would venture than when it comes out, it will be called the iTV (for Internet TV), explaining why Apple’s current set-top box product does not carry that moniker.

The revenue opportunity

Interestingly enough, when you look at Apple vs. Google, and some of their moves towards the living room, you seen pieces of their DNA show up. In Apple’s case, it’s all about optimized supply chain management combined with a piece of hardware that they will probably sell at a premium compared to the rest of the market. For Google, it’s about a subsidized hardware that is given for free or almost free to its users but generating through another channel (probably advertising).

At the same time, in both cases, the attempts will be towards trying to integrate their other offerings (for Apple, the iOS ecosystem and for Google, the search engine and Android) with the TV screen. In order to do so, they will not only have to work on ensuring a smooth transition from one screen to the other but alos provide development platforms and tools for others to build on their offerings (Today, for example, Roku, which initially was focused on streaming media, is offering a box that can now support casual games). I suspect as soon as the AppleScreen and GoogleTV start getting more mindshares, we will see more videogame offerings pop up on those devices, eventually upsetting Microsoft (with its Xbox), Nintendo (Wii), and Sony (PS3).

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The third screen. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

An inexpensive patent bet

In his note announcing the acquisition, Larry Page made it clear that a lot of the acquisition was due to Motorola’s strong patent portfolio. At the current time, the company holds 17,000 patents and has filing for another 7,500.

Earlier this year, Carl Icahn, Motorola’s largest shareholder, estimated that the patent portfolio alone could be worth $4 billion. In June, Apple, Microsoft, and RIM banded together to acquire 6,000 patents from Nortel and keep them out of Google’s hands: the pricetag on that acquisition was $4.5 billion. This means that the consortium had paid about $750,000 per Nortel patents. If you were to apply the same number to Google’s acquisition of the Motorola patent portfolio, the price tag would be $12.75 billion. It is interesting to see how this number is extremely close to what Google ultimately offered for Motorola.

But it gets better…

Motorola Mobility, the unit Google is acquiring, has $3 billion in cash on hands, reducing the price of the overall deal to $9.5 billion and dropping the per patent price to just under $560,000 per patent, assuming none of the filed patents are accepted or under $390,000 per patent if you assume that Motorola will get all 7500 filed patents approved.

… and realize this is all based on a $0 valuation of the rest of Motorola’s assets.

So what’s in there? In order to get a better understanding, one just has to look at some of the patent-related lawsuits Motorola has filed in the mobile space. For example, last October, they assessed that Apple had violated 18 specific patents in areas like WCDMA, GPRS, 802.11, wireless email, location based services, device synchronization, etc…  The next month, they sued Microsoft around things like an online marketplace, map services, video coding, etc…

So the company has a set of patents that are covering large areas of what we now know as the smartphone space but that’s not all.

The handset business

A lot of people are going to focus on the fact that Motorola has a healthy mobile handset and accessories business. This business has been valued at about $3 billion and generated $3.3 billion in revenue in the last quarter. That business covers handsets, as well as accessories.

If Google were true to its word that it wants to continue working closely with its partners in the Android ecosystem, it might have to reconsider the handset unit as part of the asset mix it’s offering. A way to handle some of this could be through divestiture, by selling off some of the parts or exchanging them for patents, if that’s what Google is after.

For example, the company could hand off the accessories business (bluetooth headsets, etc…) to HTC, which has traditionally been a strong player in the manufacturing of such devices, in exchange for a guarantee that the company would continue developing on Android and/or some of the patents the company may have acquired in its recent deal with S3. The company should also look to sell Motorola’s manufacturing divisions to HTC, which could merge them into their more traditional contract manufacturing offerings.

The company could also sell the handset unit to Samsung in exchange for a similar deal.

Google would then be able to consolidate the patents and protect all companies in the Android ecosystem and avoid any potential channel conflict in the process.

The TV business

Another noteworthy part of this acquisition is the TV set-top business, which has been valued at $2.5 billion in the past but is also seen as having a value of near $0 in this acquisition deal.

Through acquisitions, Motorola has become the leader in providing boxes that connect cable and satellite broadcasts to television. In the US, for example, they are part of the duopoly with Cisco in the TV set-top box business.

This creates ample opportunities for Google and its floundering Google TV offering. Through this acquisition, the company now has a chance to control a large part of the future access to the living room. It won’t happen quickly but I would not be surprised if GoogleTV started showing up as part of cable package offerings over the next few years.

Along this path, Google acquires a large amount of relationships with cable TV providers which may help it in ts quest to deliver YouTube content to more people.

Winners and Losers

A deal of this size is so disruptive that it engenders its own set of winners and losers.

I would say that, at first glance, the big winner on this is obviously Google and the big loser is Apple. With this deal, Google has gone on a full assault on the Cupertino-based giant (which, just last week, became the most valuable company in the world.)

First, the cold war between Google and Apple has now gone hot: Motorola and Apple were involved in several lawsuits prior to this acquisition and I assume that Google will not back down from those.

Secondly, Google is not only going after the mobile business but gets to be disruptive to the movie and TV business (due to the set-top unit) and could potentially thwart Apple’s burgeoning AppleTV business while at the same time undercutting iTunes in the video space.

It is unclear as to whether Microsoft and Nokia are either winners or losers in this deal.

Microsoft could end up a winner if Samsung and HTC decide to spend less time on Android and use Windows Phone as a hedge. Or it could be a loser if it turns out that integrating hardware and software is the key to success in this market (the company acquired Danger a few years ago and was unsuccessful with its own handsets).

Nokia could be acquisition targets for Microsoft, which could make them winners moving forward. Or Google could offer free phones, killing both Microsoft’s chances at selling an independent OS and Nokia’s chances at selling many Microsoft-OS based phones.

RIM and HP (due to the Palm unit) strike me as the biggest losers in this market. Neither of them has a strong footing in the marketplace and today’s announcement seems to further strengthen the Android position, giving them less room to maneuver. Furthermore, the rich patent portfolio Google is acquiring may mean that the two companies will have to pay more royalties to a business that has been killing them. Either way, the future is, at best, uncertain (if they were to license their OS out, they may have a chance).

Conclusion

Today’s announcement substantially reshapes multiple competitive fields. The effects will be felt in both the mobile and living room spaces for months and years to come. It’s a bold play by Google but also one that is pretty conservative because the benefits accrued as a result of this acquisition are substantially larger than the price tag (let’s not forget that, considering Motorola’s cash reserves and revenue projections, Google is bidding less than 1x Motorola’s yearly revenue on this).  This deal seems like a real game changer with little or no downside for Google.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Google Acquiring Motorola. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The industrial age: An abbreviated history

The industrial movement initially was born out of a need to integrate several capabilities into a single streamlined model in order to gain efficiencies. Those efficiencies resulted in goods being produced on a more massive scale at a substantially smaller cost and heralded an era of widespread availability of goods to a larger segment of the population. As a result, things that had once been available to only rich people (basic things like soap, shampoo and running water) became available to the masses, improving everyone’s living standards and creating a lot of the world we live in today.

As time went on, however, the rise of the publicly traded corporation and the demand for increasing returns on investments lead to increasing consolidation into larger and larger conglomerates. In the search for improved efficiencies, those conglomerates worked hard to first figuring out how to get more out of their existing production lines. Eventually, the leadership of many of these organizations came to the conclusion that they could not improve efficiency any further on the existing model and found that the salary people who worked for them were the only portion of the system that had not been optimized.

Searching for ways to optimize salaries, large corporations moved their production overseas, where workers in less developed countries could manufacture goods at a cheaper rate than those in more developed economies. In order to effectively manage this new approach, companies had to define new approaches and methods to creating and manufacturing goods, giving rise to a new portion of the economy focused on offering services around small portion of that value chain. Eventually, a lot of manufacturing ended up in the hands of manufacturing specialists: companies that did not necessarily take part in the development of new ideas and products or in the marketing, sales, and distribution of those goods but provided an optimized way to manufacture goods.

The near death of the artisans

Prior to the industrial revolution, most goods were manufactured by artisans (or craftsmen) who focused on producing goods manually and generally offered them within a limited geographical range. Because labor was primarily manual, artisanal goods were not mass produced: their scarcity also meant that the produced goods were generally more expensive and not traditionally available to all.

With the rise of industrialization, many artisans disappeared, as their craft became automated and they were unable (or unwilling) to produce goods at ever decreasing costs and in ever increasing amounts.

Some, however, thrived by focusing on smaller and more high-end markets, in niches where goods could not be mass produced. Artisanal work increasingly got praised for its uniqueness and the thought that has gone into its design.

In more recent times, this has meant that artisanal work has been seen as more exclusive because of its scarcity. However, along the way, an interesting phenomenon happened.

The new artisans

Caught in the gap between mass produced offerings of the industrial age and one-offs presented by artisans sat a whole class of potential products that could not previously be made available to people. Those products were the kind of offerings that could appeal to a small portion of the public but may not be appealing to enough people to warrant the interest of large corporations.

At the same time, fewer large entities became interested in taking risks because doing so could potentially end up in failure, thus lowering the returns they made to their investors. This risk-wariness has allowed start-ups to thrive as smaller enterprises concerned themselves with innovating and either failed, grew large, or were gobbled up by the larger players.

Up until the end of the last century, however, most new startups focused on services or offerings like software that required low upfront capital requirements. The manufacturing and delivery of physical goods was still something that was best left to large corporations.

With the rise of contract manufacturing and increasing access to networked resources across the internet, the cost of developing, manufacturing, marketing, and delivering goods has dropped substantially, making it possible to create and distribute an increasing amounts of goods to small er and smaller markets.

The new artisan supply chain

Simplifying the traditional approach to building and selling ones, one can organize things as follows:

• Individual or team comes up with idea
• Individual or team builds and test prototype(s)
• Prototype is tested in the market to assess if there is demand for it
• If there is demand, money is raised to build final product
• Product gets manufactured
• Product gets shipped to warehouse or distributor
• Product gets sold
• Product is shipped to buyer

In this model, a large amount of money is required to manufacture and store the product. In more recent time, the concept of just-in-time manufacturing has lowered those cost but there is still some costs associated with it.

The new artisan model, however, turns the whole process on its head:

• Individual or team comes up with idea (same)
• Individual or team builds and test prototype(s) (same)
• Individual or team does pricing research to assess how much it needs to sell product for
• Prototype is shown in online video to assess if people are interested
• Kickstarter campaign is kicked off to sell product BEFORE it is manufactured
• If Kickstarter campaign is successful, product is manufactured and send directly to buyer

 NY DiY

What’s been amazing to me is that a lot of this revolution seems to be emerging out of New York. Kickstarter is based in lower Manhattan. Etsy, which provides storefront and a marketplace for craft-makers is based in Brooklyn. Meanwhile, Adafruit provides inexpensive electronic components to manufacture new gadgets and is based in mid-town Manhattan. Buglabs offers a modular set of electronic components to build complex electronic goods out of a lower Manhattan space. And Makerbot industries offers inexpensive 3-D printers from a space in Brooklyn.

It appears as if the next industrial revolution infrastructure will be coming out of the most unlikely of places: New York city. Now all that is needed is for a marketplace for contract manufacturers to bid on turning prototypes into real products and the whole value chain will be completed. And that appears to be another software problem that could be solved by a New Yorker.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The New Artisans. You can follow him on twitter here or receive his weekly newsletter by subscribing here.