What was so remarkable at IBC?

It’s a common ritual: analysts, industry observers and other hangers-on always like to compare notes about what they see at conferences. Sometimes, it’s part of being social. Often, it’s part of the process of formulating your own opinions. Exhibiting vendors want to know how they are succeeding in new areas, and how they are doing against their competitors. All of this was very much the case at the 2011 International Broadcasting Convention (IBC) in Amsterdam.

This year was at once evolutionary, revolutionary, and anticlimactic. A lot of people that I spoke with thought there was nothing “big” at this IBC. I beg to differ: multi-screen TV is real, it’s here, and it has moved through the science project, trial, and first deployment stages – into mainstream deployments and refinement – in less than a year.

Sure, we saw the beginnings of it a few years ago with all the buzz about video content delivered ‘over the top’ (OTT) via the open Internet – as something separate, experimental, a vague threat to pay TV, something to monitor from a distance. In fact, just nine months ago, I was involved in a project with an industry organization that was trying to encapsulate for its membership whether OTT represented a threat to pay TV operators or an opportunity.

Yet now, OTT and multi-screen delivery are simply two ingredients of ‘this complete pay TV breakfast.’ In my book, this rapid transition from ‘what is it?’ to ‘it’s table stakes!’ has been pretty revolutionary. As a result, virtually every TV middleware, encoder, and video security company had something ‘multiscreen’ to show at this year’s IBC. And the primary driver has not so much been the maturation of the enabling technologies – it has been social media. Vendors were sorted into two camps: those using IBC to announce pending or actual commercial multiscreen deployments, and those who were still talking about product roadmaps.

What was evolutionary? Although the first multi-format video encoders started showing up nearly a decade ago, their time has finally come with the multiscreen opportunity. It’s actually a very active area, as vendors race to support adaptive-rate streaming, multiple screen formats and aspect ratios, and to improve video quality – all while reducing energy consumption. In some American political circles, it still may not be cool to talk about ‘green’ technology, but if a company can cut thousands or even millions of dollars from its power bill, the ‘let the marketplace decide’ crowd should sit up and listen.

Competitive wins were another evolutionary phenomenon. One of the biggest was the announcement by Ericsson that it had won the IPTV business of Chunghwa Telecom, the Taiwanese incumbent Telco, which has nearly a million IPTV subscribers in service. For some years to come, Ericsson will operate alongside Alcatel-Lucent, where ALU was the sole incumbent vendor previously. As the TV world transitions from the living room to multi-screen, and as service providers outgrow their first-generation IPTV platforms, we will continue to see this from service providers of all sizes, worldwide.

Another evolutionary area is the now-mainstream recognition that the semiconductors residing in consumer devices – particularly in set-top boxes – are a key part of the end-to-end pay TV ecosystem. This stems from that fact that video security now resides on shipping chip-sets and that these ‘security blocks’ are now integrated with TV middleware and CAS systems, to control access to content and for output control. This situation stands to reduce costs for operators that can move from card-based to software-based video security.

Another IBC highlight was the inaugural ConnectedWorld.TV Awards, which were given in association with IBC, and for which I was one of the judges. We evaluated well more than 100 substantial entrants across 19 categories, and it was not merely a popularity contest. James Cameron and Vincent Pace (The Cameron Pace Group) were given a special award for their contribution to the broadcast industry.

Yet at the same time, 3D – a technology inextricably linked with James Cameron through his movies Avatar and soon, a 3D version of Titanic – seemed a bit anticlimactic. For the past few years, there has been at least one 3D feature on the bill at every movie multiplex. Cable, satellite and Telco (IPTV) providers alike trumpeted 3D sporting events. Set-top companies announced 3D software updates and published lengthy white papers. The past two IBC (and NAB) shows were full of companies demonstrating 3D video technologies.

But as I compared notes with others – both at the Awards dinner, and at IBC at-large – there was some irony in the fact that none of us seemed to notice 3D quite so much this time at IBC. Even the circular glass projected 3D TV demonstration that’s between Halls 1 and 7 every year was missing. (Did you see it? I didn’t). You would get a flash of recognition from most people – ‘Wow, I hadn’t really thought of that, but it’s true!’ – when mentioning the lower profile of 3D this year. Yet Mr Cameron insists that the best years of 3D are yet to come. I hope he’s right because I, for one, enjoy it – and the industry has put a lot of time, effort and money into placing 3D into the mainstream. Maybe it’s that 3D is now so commonplace that we don’t notice it as much anymore.

So, what’s going to be big next year? In my opinion, it will be home gateways. Although service providers have talked about establishing a ‘beach-head’ in the home for many years, the compelling reason is finally emerging: the need to transcode commercial and home media content for consumption across multiple device environments while maintaining content protection for the commercial side. Multi-screen may be the catalyst, but it remains to be seen whether consumers will accept such a camel’s nose in their home tents.

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H-P TouchPad: We were just kidding but we mean it this time

Hewlett-Packard must be having its “let the marketplace decide” moment. After announcing its demise on August 18, H-P sources reported on August 30 that the company is resuming production of the TouchPad tablet to “meet unfulfilled demand,” placing the product squarely in the realm of the undead before the tide goes out again later in the year.

Can anyone say which company has the record for “shortest product life in an emerging category?” The old record-holder was Microsoft’s Kin smartphone? (Remember the Kin? Didn’t think so). The Kin was discontinued quickly, as has happened with the TouchPad. Both the Kin and the TouchPad had fairly good initial reviews, but cooler heads must have prevailed in those companies.

The ghosts of Bill and Dave must be having a chat right about now in their old Silicon Valley garage about what The HP Way might mean these days

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Steve Jobs resigns

On August 24th, 2011, Steve Jobs announced his resignation as CEO of Apple, although, at his request, he was quickly elected Chairman. On August 25th, The New York Times published an article listing Mr Jobs’ 313 patents. They are shown as thumbnail images of the inventions, and clicking on each one brings up the individual patent filing document. Nice work, New York Times.

The 30-year-old “PC vs Apple” war has gotten as nasty as American politics of late, as boomer-age computer geeks transition from vitality to curmudgeondom. They should take a minute, step back, and think about the impact that Apple and Mr Jobs have had. Not just on computing but on society. No, I don’t think that’s hyperbole.

Interacting with a computer would have been very different, had Apple not commercialized Xerox’ windows-and-mouse user interface. Smartphones would probably still be limited to corporate enterprises. There wouldn’t be Blackberrys without Apple’s Newton, which – being 3 years ahead of the Palm Pilot – failed for being ahead of its time. People wouldn’t be watching TV on tablets.

We’d likely have MP3 players and perhaps even a media content ecosystem resembling iTunes, but it probably still wouldn’t have the media industry’s blessing and piracy would probably still be rampant. Publishing would not have been desktop until years later. Just as Twitter was part of the Arab Spring this year, desktop publishing was part of the fall of the Soviet Union; allowing Boris Yeltsin to circumvent the state propaganda apparatus – 2 years before the Web was even proposed. You’d still be getting floppies in the mail from AOL, because we’d probably still be using them. Plus, everything would still be as difficult to use as Windows. Think about that.

On January 22nd, 1984, Apple Computer ran a TV ad during the Superbowl that became instantly famous and changed advertising.

The end of an era.

[ Postscript: A Windows 7 user in my household installed a new toolbar in Internet Explorer the other day, which carried something nasty that crashed the laptop fatally. Fortunately I had run a backup of this computer in July. After reinstalling Windows, the suspect toolbar had somehow reappeared in the IE browser and neither Firefox and AVG antivirus would reinstall, nor would the firewall activate. A waste of an evening, and for what? Over the course of many Macs since the 80s, I have NEVER had a virus. Kaspersky found about 12 on my Mac last week but they were all in the Windows 7 virtual machine that I sometimes use. What does this have to do with Steve Jobs, you might ask? Well, his company has surely saved me countless hours not having to scour my Mac for ka-ka-ware every time I start the thing. I guess that makes me a clueless Mac fanboi. ]

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Googarola, H-P: Consolidation happens – Microsoft again a wild card

Last week’s announcement that Google would acquire Motorola Mobility caused a fair amount of tea leaf reading by observers in industry segments ranging from mobile to tablets to TV (both the traditional variety of TV and the interactive Internet-enabled variety). Myself included. A lot of people reflected on Google’s pending (if it goes through) acquisition as a way that Google will arm itself with a bounty of patents that might deter potential Google adversaries.

I think that this event occurs at an inflection point for two device categories: tablets and mobile smartphones. Smartphones first. Briefly speaking, I agree with others that say the MMI acquisition will drive some mobile device companies away from Android unless there is some contractual assurance by Google that MMI won’t get any kind of competitive advantage over other Android licensees. But where would those device companies go? Right to Microsoft. Verdict: a win for Microsoft, and indirectly, a win for Nokia.

But the tablet story could have been more interesting. Unlike the smartphone, whose market dynamics are a three-player game between Google, Apple and Microsoft in a mature category, the tablet category could have had four or five players for some time (“tablet wars” could have echoed the “browser wars” of the 1990s-2000s). At first glance, the MMI-Google alignment seemed to compress the number of tablet operating systems down to two: Google (Android) and Apple (iPad/iOS). But I don’t think that game is yet quite over.

According to Strategy Analytics, Android had 30.1% share of the tablet category as of Q2 of 2011, up nearly 30% from a year eariler. Apple had 61.3%, down 33%. The fact that Android is on the rise bodes well for MMI’s Android-based Xoom tablet, which has been available from Verizon and others since early this year. Because Motorola is an incumbent supplier to pay TV service providers as well as to wireless carriers, the Xoom is well positioned in front of two kinds of consumers.

Granted, Hewlett-Packard’s sudden discontinuation of the H-P TouchPad – and the rest of its WebOS business, formerly Palm, which was acquired by H-P just 16 months ago – also helped consolidate the tablet category. Not only did H-P discontinue the device, it discontinued the whole operating system. RIP Palm, really this time. The TouchPad was launched amidst an expensive advertising campaign and promises that it would be everywhere in our lives – only about 50 days ago. It went into fire sale mode a few weeks later with a permanent $100 discount. A 64GB version was launched in Europe just last week! Clearly, the decision to kill that business was made some time ago – and the launch was done just to clear inventory. H-P seemed to be “all in” – H-P even launched a store – until H-P was suddenly “all out” (except for the inventory). Only Carly Fiorina could love such a debacle. Sad.

RIM’s PlayBook tablet debuted to mixed reviews. This device anticipated that HTML5 would win over Flash for video delivery (and had a little help from Apple). As a nod to its corporate enterprise accounts, it’s tied to the Blackberry ecosystem – but it’s at a time when iPads are gaining acceptance in the enterprise. RIM’s QNX operating system was ranked #4 in tablet OS market share by Strategy Analytics in Q2 of 2011, that share was only 3.3 percent. The tablet OS called “Other” made up just 0.7 percent, but H-P was not even part of that, since the TouchPad launched in July.

In summary then, Apple and Google are the clear category leaders, while another potential player (H-P) exited the category abruptly. Perhaps RIM will stay in the tablet category for awhile, having its greatest appeal in Blackberry enterprise accounts, but its overall share will remain very small – maybe small enough for RIM to fold its hand. If so, that would leave two, right?

Not so fast. First, Apple is defending its leadership position not only through innovation but also through litigation. Samsung was barred from selling its Android-based Galaxy Tab model in Europe and Australia, although it won at least a temporary reprieve soon afterward. And according to some analysis posted by Daring Fireball, the number of Android-based tablets actually in use is much lower than its market share estimates. In other words, they are selling in to the reseller channel; they’re just not selling through to consumers.

Then, there’s Microsoft. According to Strategy Analytics, Microsoft holds the number three spot in the tablet category, at 4.6%. For Microsoft, tablets have always been seen as another distribution channel for the Windows franchise. Microsoft has already demostrated Windows 8 on tablets.

In fact, Microsoft may actually (finally) fill a gap that needs to be filled in the tablet category. One of the frustrations of the iPad is that it does not have the full Mac experience. Unless an iPad user accesses a Mac via a virtual machine, he or she does not have access to most of the tools that are fundamental to the Mac, such as Microsoft Office, Photoshop, etc. So, the iPad is not a Mac substitute. Google does have virtualization to Google Docs, so in that respect, Google offers a better solution than Apple does, for Mac users. But for Google Docs, you need to be online. Therefore, neither Apple nor Google provide a satisfying solution. (Yes, I know – the iPad is a ‘lean-back’ device, and was not envisioned as a computer replacement. It makes a fine TV sceen via the Slingbox or via ‘TV Everywhere.’ Bla bla bla – call me old-school.).

Because Microsoft offers a full Windows experience on computers that are built in a tablet form-factor, there is less compromise. Funny, because Microsoft has been trying to succeed in the tablet category for upwards of 20 years, and finally it seems to have a formula.

(Apple, are you listening? How about a MacBook Air that’s built in a tablet form factor, with keyboard attachable via USB, Thunderbolt or Bluetooth? I – and I’d bet many others – would buy one, since Windows ‘insists’ on being more and more difficult to use with every subsequent release.)

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Google and Motorola Mobility

This morning, we were greeted with the announcement that Google – a company that built its business on top of the Internet, search and advertising – would be buying Motorola Mobility (MMI), the mobile smartphone, TV set-top box and home networking portion of Motorola that became a stand-alone company at the beginning of 2011.

There is little doubt as to the strategic and product-level advantages that this combination would give to both parties, should the acquisition be approved by shareholders and regulators.  Strategically, it’s about intellectual property, as stated in Google’s afore-linked press release – with the un-said subtext that it will probably give pause to potential adversaries before becoming embroiled in the kinds of law suits that have gone back and forth between Apple and HTC, Apple and Samsung, and others.

Product-wise, in addition to the obvious synergies between Google (Android) and Motorola in the mobile smartphone (Droid) and tablet (Xoom) device categories, Motorola benefits by having an opportunity to make Google’s industry benchmark search technology native within all of its products.  Search has been a long time focus of Motorola, on the TV infrastructure side. We’ll see over time whether or not this drives non-Motorola Android-based smartphone makers into the clutches of Microsoft Windows Phone.

Google potentially benefits in that MMI has the industry presence to help move Google’s Google TV technology from something of a pariah status within the TV industry into the industry mainstream. This would give Google TV a better opportunity to receive a broader test in the marketplace, through Tier-1 pay TV operators that buy from Motorola. With Motorola’s imprimatur, TV service providers might be more apt to test and adopt it (content owners willing). Conversely, if Google TV were to receive more of an industry blessing as a result, Motorola’s value proposition could be strengthened.

There are some “devil in the details” things that hopefully will be ironed out.  For example, a Google-owned Motorola Mobility will have two IP television security solutions for conditional access and encryption: Google’s Widevine and Motorola’s SecureMedia.  Will one of them “win”?  My belief is that they could be complementary, and not an either-or situation, because Widevine shifted its focus to connected consumer electronics devices (e.g. smart TVs and other video-capable devices) a few years ago. Of course SecureMedia is going in the ‘multi-screen’ direction too, so we’ll see.

Another interesting area will be how the two companies leverage one anothers’ advertising technologies. MMI has an investment into Black Arrow, an advanced advertising specialist; and has an entire product line (Medios) devoted to the merchandizing of content on any screen.

It’s the cultural fit that’s less certain. Can the acquir-or handle the business that the acquir-ee brings? Will the acquir-ee bring some grown-up discipline to the acquir-or? In a way, I liken today’s Google to the Cisco of years past. Google’s acquisition binge of recent years resembles Cisco’s of 10-15 years ago. By its own admission, Cisco lost some of its focus in the process.

In retrospect, Cisco has been, and will remain, a network infrastructure provider (just as, at the end of the day, Intel will always be a chip company). Strategically, Cisco’s acquisition of one of Motorola’s biggest TV industry competitors – video infrastructure and set-top box supplier Scientific-Atlanta – a few years back made sense for Cisco, since video helps Cisco justify its network offerings. But culturally, Cisco has never truly become a “video” company, even with the company’s launch of Videoscape, which purports to unify large subcontinents of Cisco under a video solutions banner.

I ask myself: why did Cisco (S-A) lose its momentum in its video business, which has resulted in Cisco selling off a set-top factory, not to mention big layoffs, and not to mention Cisco’s abrupt shut-down of the once-hugely-popular Flip video business. Will the same thing happen to Motorola Mobility in a few years?

Or we can go off on another tangent and ask whether – by having bought its way into being Nokia’s primary smartphone OS supplier – Microsoft will have brought both Windows Phone and Nokia back from the brink – just as Android breathed new life into MMI’s mobile phones a couple of years back. Or, we can ask whether Apple feels in the slightest way threatened by any of this. Sequentially, too early to tell, and they’d never admit it if it did. But Google’s effect on Motorola Mobility, and vice versa, is not tangent to the conversation at all.

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Dell loses at playing in commodities

The Wall Street Journal ran an article today about Dell’s losing its way in today’s consumer device marketplace. According to the article, one of the company’s beliefs is that slick hardware will win back the consumer. This is very dated thinking, and here is why.

Dell and many other Windows OEMs have lost the consumer because they fail to provide three things: a solid and consistent user experience, an ecosystem approach, and an ability to take calculated risks. By comparison, Apple succeeds in all three by providing an ecosystem that consists of a common core operating system, application development tools, a wide range of content, and a marketplace (oh, yes, and also hardware) – combined with strict application development guidelines and the uncanny timing that helps it win at bringing new device categories into the mainstream.

Google has been moving in that direction, with an operating system, a user experience, and a marketplace; depending upon third parties for the hardware (which is where it loses some control). Google is already addressing the fragmentation of its Android platform and its user experience, and probably regrets allowing mobile vendors like Motorola to put their own overlays on top of the “pure” Android experience. It will probably take time (and a few release cycles) to right the ship completely.

This helps make Google Apple’s most significant competitor, not Dell. And not Microsoft. Microsoft will keep trying to buy its way back into relevance (e.g. the Skype purchase), but will fail because little of what Microsoft does these days is original. We’ll see what happens.

Speaking of Skype, my hypothesis is that Microsoft will try to take Skype’s platform proprietary, turn it into a vertical offering for corporate enterprise segments, and in a few years either sell it (as eBay did) or kill it (as Cisco did with a business that wasn’t their own core business, called Flip Video). Begging the question: “Why didn’t Skype IPO instead?” – since IPOs seem to be succeeding with some regularity these days (see: LinkedIn).

Defenders of Dell – or Windows in all of its many flavors – just aren’t seeing the forest for the trees. The same fate has befallen H-P and other such OEMs. It’s also why Linux has never made it big in the broad consumer marketplace.

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Microsoft: “Shh, don’t tell anyone…”

For those of us waiting for Microsoft to acknowledge the passing of the PC, don’t hold your breath. Instead, they have tacitly acknowledged that the post PC era has indeed commenced by quietly but diligently turning their attention to other areas.

One example is Microsoft’s recent alliance with Nokia. Many scoffed when it was announced that Microsoft was licensing Windows Phone software to Nokia and that instead of charging Nokia a license fee, as is common practice for a technology provider, Microsoft was paying Nokia for the privilege of putting its software on Nokia phones. Now, the initiative has moved past the “deal” stage: Nokia recently announced that it is outsourcing its whole Symbian (mobile operating system) business to Accenture. Also, Nokia’s Ovi mobile apps store is migrating to Windows Phone.

So Microsoft’s investment in Nokia might not have been an act of desparation after all. In fact, it was symbiotic. In a single move, Microsoft and Nokia gave one another a lift back toward relevance in the smartphone market that both companies have seen eroded by Apple and Google.

Similarly, Microsoft has been steadily moving its pieces forward in the search category. At the beginning of May, RIM (Research in Motion) and Microsoft announced that Bing will become the default search engine for RIM’s Blackberry. Verizon ships a lot of mobile smartphones with Bing in the default position as well.

Another such category is interactive television. Although it didn’t really work very well at the beginning, Microsoft Mediaroom has become the foundation software for more than 20 IPTV deployments worldwide, which puts them in the top tier for market share in that space. AT&T U-verse TV is based on it, as is Deutsche Telekom’s T-Home Entertain service in Germany. Another category is Microsoft’s adaptive-bitrate video streaming technology, which use proprietary Silverlight and PlayReady DRM technologies.

Now, take a step back and look at the bigger picture. Microsoft has always been good at making incremental advances, and at being “good enough.” In other words, not great, but serviceable and eventually good enough to scale. The same goes for search, mobile and IP video.

But the game has changed: instead of Microsoft proprietary technology being an advantage, it has become a liability. For example, Verizon’s new Flex View multi-screen video feature within its FiOS TV service uses Silverlight and PlayReady DRM, which doesn’t work on all of the consumer devices that Verizon wants to leverage. Verizon is said to be planning a transition to HTTP streaming and HTML5 delivery, which would also allow Verizon to phase out its Windows PC-resident Media Manager video transcoding application in favor of using cloud-based delivery.

In another example of a proprietary approach, Microsoft Mediaroom (IPTV) developers must use Microsoft’s Presentation Framework for application development, which also requires the Microsoft Visual Studio authoring environment, and deployment via the Microsoft ASP.NET platform. It also uses a proprietary markup language that allows applications to call content from repositories and servers in the network, assemble the user interface and present it to the consumer.

I wouldn’t cry for Microsoft. They still have a good gig. When’s the last time you read about Steve Ballmer jumping up and down at a Microsoft sales meeting, screaming “Windows Windows Windows!” No, Microsoft has moved its old “Embrace and Extend” game to some new venues. But this time, there are alternatives.

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It’s modern life – get used to it!

This past week, Sen. Al Franken wanted answers! The target of his ire was the Apple iPhone and its ability to track users by location. Millions of Americans were horrified (horrified!) and went running through the streets screaming in fear at the concept that Big Brother could see exactly where you are and potentially lock you up in one of those secret Federal deportation facilities in the Midwest

These were typical of the news coverage that Sen Franken generated:

In reality, Apple should be no more a victim of this outcry than any other technology company or service provider that enables location-based services in their offerings. Consumers – particularly users of social media – take location-based services for granted. It’s how they find friends, family, communities of interest, restauants and (OMG!) marketers use this information!

Here is a more rational analysis. Some may still find it scary, but it’s how the world works today, folks.

Shelly Palmer had this to say about it…

Shelly asks the right question (paraphrasing here): “As a society, are we willing to give up our privacy?” – to which he answers (correctly and paraphrasing again): “The cat is already out of the bag.”

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FCC’s Apps competition

Who’d have known that the US Federal Communications Commission is running an apps development contest! I stumbled upon it by accident Deadline is June 1st.

Here’s the URL:

http://challenge.gov/FCC/114-fcc-open-internet-apps-challenge

People can whine and moan that the FCC is clueless and behind the times, but I think they are trying. It would be nice if the same people who perennially try to undermine these kinds of well-intentioned efforts (and that includes the National Broadband Plan and the FCC’s “Allvid” proposal) would instead join the discussion, to make them better.

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Thoughts about Over-the-Top TV – Part II

Pay TV providers have moved beyond the “sky is falling” thinking, that the Internet will be their doom – and indeed have also moved from the thinking stage about new service models that leverage Internet delivery. Comcast and Time Warner Cable, not to mention both major satellite TV companies, AT&T and Verizon, are all in the process of launching Internet-delivered features.

Because operators would love to avoid subsidizing their cost, the emergence of Internet video-enabled consumer electronics mean that STBs can actually become optional. Certainly, Internet-delivered video can supplement their limited walled garden approach, and reach a wider range of screens within their service footprints.

The two biggest impediments to pay TV’s success in distributing content over the Internet are the ability of their networks and legacy CPE to accommodate it, and their ability to secure the rights to distribute the programming over the Internet to non-TV devices.

Today (April 6), DISH Network announced that it won a bankruptcy court auction for the assets of Blockbuster Video, with the deal closing later this quarter. Now this is interesting! Just as DISH and other pay TV operators have really started to gain momentum in harnessing the Internet, this almost looks like a move in the other direction. I’m really looking forward to hearing their side of the story!

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