Punk’s Posterous

Don Dodge aptly argues that the economy of micro-payments for content (the subtext of many of previous posts) is simply not feasible.  

A Web 2.0 company can be defined in many ways, but for the purposes of this post, it is defined as a platform where users can share different types of information (pictures, status updates, videos, etc) with a network they themselves define.  The most famous examples of this are Facebook, MySpace, Twitter, Flickr, YouTube, etc.  While enormously popular with almost an ubiquitous audience these sites have historically relied on ad revenue whose worth is based on site popularity for business models.  Although many of the most popular sites do not even have this to rely on further complicating matters, with the subsequent decline in the economy, this model will only diminish.  Web 2.0 sites (as generalized for the sake of argument) have failed to come up with a sustainable business model and despite relying on the back bone of Internet Service Providers (ISPs) have little to no synergy with the companies that deliver their traffic to them.  Monetization of this traffic is best suited to come in the form of a partnership between service providers (who often provide no service aside from connectivity) and these sites in the form of a minimal tax to the user.  Without implementation of which, death is certain.

A generalization of this model is not constructive as the nuances of each Web 2.0 Platform and corresponding usage through ISP's is not necessarily common.  The privately held company, Twitter is used below to demonstrate the merits of a relationship.

Twitter is widely popular micro-blogging site that has a large, loyal following that with little direction and no substantiated prediction of is ability to do so, is changing media as we know it.  Anyone can tweet (the nomenclature for an entry) anything as long as it is less 140 characters (including spaces).  The range of tweets is almost innumerable, from those that silently broadcast the details of their current situation, to scholars and experts who post links of things they find interesting at the moment.  The current President used the service to keep his volunteers and voters informed of what he was doing.  There are similar services on different social networking sites and other aggregators, but Twitter has the most dominant market.  So much so, they were recently rewarded, with a promise to its investors of a large payday by receiving a generous round of funding at a $250 Million evaluation.  

Internet Service Providers today provide, almost exclusively, connections (with corresponding hardware necessary) to their backbone which through a consortium with one another provide connectivity to anywhere on the internet.  There are some pay as use models, but for the most part the price of the connection is some measure of limited bandwidth you pay for on a monthly basis.   There have certainly been attempts, by service providers, to monetize additional services however, the adoption of these by users was dismal because the services themselves were not useful.  ISP's are not known for their innovation.  They are however well known for squeezing service fees for their assets.  ISP's charge for access (to its Internet backbone) at every point, including charging Twitter's Operations (where Twitter access's the Internet) and everywhere users access the internet.  Thus ISPs are making money from users as well as from Twitter, who in turn isn't making anything from the users using their service and if it weren't for sites like Twitter likely wouldn't be paying for ISP's access.  

One potential revenue stream is therefore for ISP's to pay Twitter a tax for driving an estimated 4,000,000 users online everyday many of whom pay upwards of $150 a month in cell phone, internet and assorted other connectivity bills.  The truth is, should Twitter suggest this to the ISP executives, they'd likely be shown the door.  The rationale being if Twitter goes out of business, someone else will simply replace them.  However, if Web 2.0 companies unionize and put forth a united front demanding a tax for the revenue it is generating for ISP's, a compelling model could be presented.  Facebook boasts 30 million users whose demise would definitely impact ISP usage.  Even so this is highly unlikely a viable solution.  Ultimately, should ISP's have the foresight to do this, they would profit the most in the long run.

Changing behavior in an established paradigm has historically not worked, even if there are cost savings involved.  However, because Web 2.0 companies with connectivity have unhinged personal computing, the next paradigm, that of NetBooks should employ a usage model with profit sharing in conjunction with Web 2.0 platforms that legitimately drive traffic.  A NetBook by definition is a thin computer with all services coming directly from Web 2.0 platforms.  Their success is reliant on ubiquitous connectivity likely delivered by a 3G card.  These devices are poised to either follow the previous paradigm of flat rate bandwidth, or the likely more profitable for all involved pay by usage.   

Usage statistics are can neatly be mapped using an interface much like that provided by a company like RescueTime.com where the exact metrics of how long what service is used is measured and stored.  The usage should be cheap enough where the user never feels limited as to spending too much money visiting some site. 

Small niche ISPs will initially sprout to test the demand and deployment of usage based service in the NetBook market.  Part of the business model for these ISP's should include a (non-exclusive) profit sharing program with the Web 2.0 Platforms such that they make some money from the usage and thus have incentive to further develop for this particular market and continue to bring users online.  One would argue that they'd do this regardless of pay, but in order for this eco-system to work all must be fed for the starvation of one will kill off the rest.  While the NetBook and PC experience may start off with similar experiences the two will diverge to eventually complement one another. 

Cisco should purchase Palm who, in an effort to survive, should make itself an attractive acquisition target. Elevation Partners is, without a doubt, looking for a return on their substantial investment comprised of the development of the Palm Pre  and the accompanying OS platform. Battling for market smart phone share is not the quickest return on investment and a legal battle is a  costly venture. Before the legal issues are addressed, it is important to understand why this acquisition makes sense.
 
Palm has approximately 1000 employees and is based in Cisco's backyard, where an acquisition would immediately eliminate redundant job functions, thereby reducing the hemmoraging of cash on the balance sheet in operating expense. Palm could further save money by moving some groups into Cisco's vast 52 building campus and using their worldwide network infrastructure and other administrative functions. The access to business function resources (including manufacturer relationships, strategic partnerships, worldwide sales force with existing IT executives relationships, etc) would free up Palm to simply concentrate on making GREAT products.
 
Cisco benefits because it does not have to worry about product overlap or elimination of technology as the two companies don't have any competitive products. The acquisition ought to be run in a similar manner as WebEx, a wholly seperate entity that takes advantage of the corporate umbrella.
 
Furthermore, Cisco has no such product in its vast portfolio and while the consumer business is not necessarily its focus today, in order to continue to grow, it needs a cohesive consumer strategy that should include netbooks and mobile computing as a platform for its cloud services. The acquisition of an intuitive, easy to use, sexy user interface on a mobile platform is well worth the investment as it is the defining competitive advantage when selling to consumers. Palm's WebOS platform if properly road-mapped with NetBooks and next generation hardware could become the foundation for which Cisco builds its cloud services (webex, webex connect).
 
As consumers move to doing all their work through browsers. Eventually there will be little need for fat applications on a robust personal compute operating system. Most companies are looking to leverage this market by providing traditional PC services through the browser. Google has its application suite that ZOHO competes with, and of course Salesforce has steadily gained dominant market share.  These services have not been widely adopted by enterprises because there is no single platform that is Enterprise ready. Google Docs has notorious reliability problems. ZOHO is simply an office productivity suite in the cloud. Cisco should position its WebEx Connect product as more than a collaboration tool, but as an all inclusive user's cloud desktop. Such that when deployed, a customer could access their work desktop, including all the applications required for business  function from anywhere securely.  The cost savings realized by outsourcing the support of these applications are substantial enough for all enterprises to consider.  Plus the further flexibility in work environment plays into Cisco's overall vision of "Changing the way we work, live and play."
 
Today this requires development independent of platform on multiple browsers. With the purchase of Palm's WebOS, Cisco could develop exclusively on this and drive the adoption (and sales) of the complementary NetBook (product) hardware. Thus cornering both the hardware and software sales and giving the enterprise an all inclusive option for cloud computing to their employees.
 
An added benefit is integration of a mobile device would complete Cisco's Unified Communication story. This has long been a hole in the product portfolio and while prudent given the commoditization and low sales margins of handsets previously, the Smart Phone (evidenced by Apple's complementary products of iTunes and iPhone) has become a vehicle for continued run-rate revenue through the sales of applications developed by individuals in an eco-system.

And this strategy is playing to Cisco's strength, selling to enterprises.  The acquisition would also open the door to a completely untapped market for Cisco in the way of consumers.  By leap frogging Apple (as discussed in the previous post) to the NetBook market, Cisco can easily become the standard in a market not really invented as of yet.  The use of the interface (or developers of) could also be leveraged to further Cisco's home media server ambitions. 

Palm is the only company that has the potential to compete with Apple's user interface and Cisco could certainly use the help with
user interfaces.
 
The elephant in the room for any buyout is the war of words between Palm and Apple on pending lawsuits. Should Palm, as they retorted, have IP they can defend, making Apple's initial taunt baseless, they should aggressively be looking for cover from a large corporation who can handle a lengthy patent lawsuit. Palm cannot be distracted by legal warfare as it attempts to rebuild its brand.  Cisco has already dealt with an Apple lawsuit (over copyright infringement of the use of the term iPhone). While there was never any real legal ramifications, Cisco leveraged the lawsuit for free press, putting its brand in the same sentence as Apple's brand for free marketing.
 
Once again, any lawsuit costs (should they indeed be baseless) could be chalked up as free marketing for the future line of products.  Cisco also has nothing to lose here in terms of its relationship with Apple. While there is certainly a balance of trade between the companies, however the two don't necessarily share customers who would we weary of a battle between them.
 

Cisco's acquisition of Palm would put them in a superior position to HP, Microsoft, Apple, and Google (see comment from previous blog) by giving them a product offering attractive to Enterprise employees and subsequently consumers.  The very notion of that is worth exploring.

Tim Cook's (Apple's acting CEO) recent conference call with investors sent a shiver down the spines of Palm investors and caused a firestorm in the media when he inadvertently threated Palm for intellectual property infringement.  While the merits of this threat will be hashed out in our judicial system over the next decade, he, perhaps unwittingly, gave Palm insight into its NetBook strategy.  A market segment that is only coming into fruition and one that can arguably dominate personal computing for the next decade.  Palm's resurgence does not lie in the Pre; this is hopefully a pre-cursor to their fulfilling their ultimate destiny which is building slick, intuitive netbooks that fit in the palm of your hand.

In their annual predictions for 2009-2014, IBM predicted that speech technology would become the standard for navigating the web.  While conversation with a website is far from reality, there is no doubt that the ability to access information using speech can revolutionize our everyday interactions with the internet.  For one, the biggest real estate barrier to mobile communication, the screen, would be wholly eliminated freeing users to utilize the internet without being pre-occupied by the experience.  The entire experience is not likely to be replaced, but certain aspects are ripe for this technology.

Google recently released the ability to search by voice commands on the iPhone.  After extensive use, the technology is far from impressive or mature.   The simple fact remains, once a search is commanded by voice, it is still required to look at the screen for the results.  Eliminating typing, while useful, doesn't serve much purpose if the device still requires your eye attention.  This limitation requires a singular use of the device as opposed to multi-tasking, much like talking on the phone (hands-free) or listening to music while driving.  Voice dictation of the search results, in the manner of automated call menus on a customer service line would have the propensity to further alienate people from adopting the technology.  

This begs the question, in what manner would voice navigation of the internet be useful, if at all?

To answer this question, one simply needs to look at what users do today while multi-tasking to understand what a solid first iteration for voice navigation of the internet would be.  Music is what people listen to, often times the same songs repeatedly or ones that not necessarily to their liking, but good enough because nothing else is on.  Users replaced the radio with taped media (be it tapes, CDs, or mini-disks and eventually MP3) because the ability to choose what interests you has high adoption rates among users.  Apple resurrected its entire empire by giving the power back to users with music.  By purchasing songs cheaply that they could listen to anywhere and when ever they choose, they've revolutionized the music industry, or brought it to its knees, depending on where you sit.  The same can be done for information.

Currently RSS readers (for instance Google reader) are a phenomenal tool for aggregating websites that interest you.  By entering the RSS site of your specific interest into the reader, it will automatically update each time a new article is posted such that you don't have to continually go back to the site.  While some site's design is a large part of its retention, most sites employ the same layout structure making them unnecessary to go back to.  If all the new information is put into a central repository for you to click through, you can stay abreast much more efficiently.  Initially the use of a reader was limited to so-called power users of the internet who blogged and needed to stay on top of the latest posting, but today, with so much information being updated daily and at all different hours, any user would find one useful.

News broadcast through spoken word is done so through talk radio with a handful of other varieties for free and is widely accessible.  However, this medium of information passing, now more than 50 years old, can hardly keep the attention of people largely disciplined to seek out information that interests them and move on (quickly) to something else.  Today this is accomplished by changing the station.  Most people have a dozen programmed stations.  Satellite Radio and variants of such (internet radio) do little to change the paradigm aside from offering more choices.  The personalization of spoken news is a completely untapped market.

Navigation by speech technology could revolutionize this.  Most smartphones have the inherent ability to support readers.  Using the iPhone, one can easily access their Google Reader, leaving all their information in the cloud to be updated and accessed by many disparate devices seamlessly.  By voice enabling this reader to work on a smartphone, one could now listen to the characteristically short articles on subjects that interest them and navigate through their reader as they do other things.  This could effectively provide an alternative to listening to music.

Imagine, as you walk down the street, or drive in your car, rather than listen to music, you could instead listen to articles or blogs.  This differs from podcasts in that, you have to download a podcast prior to going mobile and podcasts by design are much like radio talk shows.  Instead, the voice enabled reader would simply read an article (in a harmonious voice of your choosing) until you have garnered enough information, whereupon you say next (or alternatively double click the microphone on your iPhone as you do to change the song) and it moves on to the next article in the reader.  If the article so interests you and get to the end, it would simply move to the next in that feed.  If the feed loses your interest, then you can pick another one and it would begin to go through that.  If an article interests you, you can say share, and it will flag it to share with those already set up to get the feeds, or say email and a username and it will forward it off.  Asking for more would prompt the reader to search for more articles on the particular subject of the article that you took an interest in. Of course for this to be effective the speech itself cannot be a monotonous voice that mispronounces a multitude of words.  

After a particularly exhausting day, I'm re-posting a thought train I
had from 2007 as foundation for further posts.
 
**************
MIT recently announced plans to make all 1800 courses taught at the
prestigious university free to anyone with a broadband connection. The
courses, covering everything from Aeronautics and Astronautics to
Writing and Humanistic Studies overs an insight as to how the world's
academically gifted students are taught. In this unprecedented move,
MIT is changing the face of higher education by bringing what was once
priviliege only to the academic elite to anyone.
 
Dating back to the dawn of civilization, education was for the rich or
religious. Across civilizations around the world, often times, the two
went hand in hand. The common man was subject, not neccasarily
begrdgingly, to the knowledge bestowed upon them by the educated
elite. This transfer of knowledge, few minds influencing the masses,
had been the societal norm. Libraries were not public places and there
were no initiatives to educate commoners, it was popular belief that
there was no reason to.
 
While this school of thought reigned, despite education being limited
to few, there was explosions of genius that has propelled our society
to its current state. Now with courses beginning to open to everyone,
we are likely on the brink of a more dramatic intellectual
renaissance.
 
That isn't to say, that because MIT opened up the kamino on
theoretical physics, some joe schmoe whose never studied any material
will make some discovery, but what it does open up is the possibility
that because all of this information can be searched and referenced,
bits and pieces will more easily fall into place, lending themselves
to quicker discoveries. In the past, collaboration was a means of
getting people in a room together, or publishing some literature and
waiting for some consensus on whether or not it was feasible. This
paradigm is changing.
 
MIT is boldly sponsoring a program that gives underpriviledged kids in
developing nations a laptop where they can learn the fundamentals of
education. For the first time, there is an initiative to educate the
masses. The laptop built my MIT, is not a Window office productivity
box, but an intuitive GUI that focuses on child creativity and not a
means to compelete a pre-defined task. It will be interesting to watch
the impact of this project on those societies in the years to come.
 
Couple teaching kids to learn via a computer and putting all the
knowledge and steps to learn it (courses) hand and in hand and society
as we know it will change.

The great social projects scoped to boost our economy out of its
current stagnation will be the foundation for inn ovation that define
the better part of this century. Just as Eisenhower invested heavily
in the non-existent national infrastructure at the time to build what
has become the current national interstate system, Obama has the
unique opportunity to leverage a similar investment to define this
century.
 
It was during the early 1950's that the automobile really began to
become a household item not limited to the affluent. But the roads in
the United States lacked the connectivity that would allow the
automobile to symbolize freedom, that very notion that a multi-billion
dollar industry and world wide economy would be built off of. One of
Eisenhower's crowning achievements during his Presidency was the
Federal Aid Highway Act of 1956. With the help of the US Government
each state become connected with its neighbors and subsequently their
neighbors in a reliable and comfortable highway system. The
multi-lane roads allowed fast travel at your own pace in your own
space for the first time in your life. Previously and around the rest
of the world, traveling meant boarding some form of public
transportation. It was only in America that a vast network of
freeways was available to travel in your car for thousands of miles.
The likes of which are still not standard in many places around the
world.
 
The ensuing monotony of the highways was broken up by the increasing
eloquence of the cars that traveled upon them. Cars could hardly be
defined as a means of getting from point A to point B as the very type
of car driven defined an owners personality. The cars had to make up
for the simple, almost dumb roads that while laying the foundation
marred any scene it landscaped. Automakers increasingly made bigger,
louder, brighter cars with no acknowledged comprehension of the
monster it was creating.
 
It is, after all this very industry that is to blame for the green
house gases that are allegedly causing global warming. It is almost
unquestionable at this point that the Bush Administration invaded Iraq
for the very oil that our Nation depends on to fuel its automobile
addiction. There have been countless coups in various countries with
notorious dictators unchallenged at the helm to secure US interest in
Oil. And why, because Eisenhower built an interstate highway that
begged to be driven and defined an unsustainable culture that
ultimately folded under the weight of itself.
 
There have been many advances in technology since the simple
combustion engine that blows up gasoline in a compressed chamber to
drive a piston that rotates a gear shaft that turns our wheels. A
standard car today can travel just about 300 miles before needing to
be refueled. That dictates the maximum length, about 4.5 hours, one
can drive without stopping. The stop has to be a gas station to
refuel the car and indefinitely relieve and refuel yourself.
 
And 52 years later with a significant portion of our infrastructure
falling apart, our newly elected president has the opportunity to once
again make the investment to define an era. It'd be unfair to expect
him to select a direction with the foresight that it wouldn't cause a global
meltdown 50 years down the road, but it would be shameful if he
doesn't learn from the past.
 
If looked at as single entities our current transportation system is
quite simple but as an eco-system it is pretty clear that the current
situation is more of a tumor, growing undesirably and uncontrollably, than a                                                                                     well designed solution. The lifeblood, oil, after all is largely held by states                                                                                      whose ideals are the polar opposite of our own. One could argue that this was by                                                                    design, however the religious conflict pre-dates any disputes over fuel. 

It is therefore, President-Elect Obama's [administration's] duty to
understand the entire system before spending tax payer money to
rebuild the national infrastructure. If we are to fill the potholes
with the same oil-based tar that we put in our cars we're only
bandaging a situation that is clearly cancerous. We need to rethink
and modernize the whole system.
 
The beauty of the newly resurrected roads cannot lie in the
individualism of the cars that occupy them, but rather in the
efficiency in which each car speeds along at rates unmanageable by
today's standards but possible because of interactions with the
integrated circuits embedded in the roads allowing each vehicle to
travel closely enough with those around them such that they act as a single
unit in complete harmony. The interstate should foster clean energy and ergonomic travel
such that a 5 hour trip yields you far more than halfway to anywhere
and a sore back. It is this initial foundation that will give the
automakers a freeway of ideas to drive away with.
 
By limiting ourselves to the standards of tar, concrete and yellow
signs, we are building next generation's highway with our
grandparent's tools. All transport based innovation will look keenly
on the administration's lead. And if history is any indicator, this
decision will prop up an eco-system that is the foundation of our
economy and likely our foreign policy for the next century.