It's a slow time in the technology industry. Breakthrough innovations
are few and far between: the iPod is almost four years old, and it's
hard to point to anything very interesting since then. Because
revenue growth has slowed, mergers and acquisitions have become the
main order of business at such companies as Oracle and, for a time,
HP. Venture capital is increasingly migrating to biotech, physical
security, and other sectors only tangentially related to computing.
The industry could use an injection of energy, activity, and not least
important, revenue.
Given this state of things, everyone is watching Microsoft, which is
preparing to launch a new operating system next year. Last month
merely changing the name from code (Longhorn) to product (Vista)
devoured a lot of attention, and more recently a stripped-down version
of the product shipped to beta testers. The product has been a long
time in coming, and the scope has been managed downward in several
respects. Nevertheless, both Microsoft and the industry more
generally see Vista as a potential jump-start very much in the same
category as Windows 95 ten years ago. Because Vista represents the
first opportunity in over ten years to begin with a "clean sheet of
paper," unlike Windows 3.1, 98, ME, and 2000/XP, Bill Gates has
repeatedly linked the two products in public.
Before looking at whether that association is warranted, it's worth
remembering just what Windows 95 brought to market. In 1994, loading
a browser onto Windows could be complicated by the operating system's
lack of Internet Protocol support. DOS prompts were very much a
day-to-day reality. File names were limited to eight letters, and
CD-ROM support was spotty. E-mail was used only by fringe populations
rather than being nearly universal. Adding hardware was more
difficult than it needed to be, multitasking was nearly impossible for
both processing and user interface reasons, and multimedia computing
was, again, the province of only a small subset of users.
Windows 95 changed all of that. Even before Gates' famous "Pearl
Harbor" speech helped turn Microsoft into an Internet-aware company,
Windows 95 made Internet connection, through both browser and e-mail,
a mass phenomenon. Multimedia, too, became an everyday event with
better hardware support (including CD-ROM drivers). Overall
usability, despite the initial confusion at using a "Start" button to
shut down a machine, was enhanced by deeper camouflaging of the
command-line layer, longer file names, and plug-and-play peripheral
support. Finally, the operating system kept pace with Intel's chip
performance and supported more realistic instances of multitasking.
The public responded. In the quarters immediately following the
launch, retail sales of Windows 95 software soared, augmenting a
strong increase in OEM sales of pre-loaded operating systems.
Responding positively to improved networking support and promises of
enhanced manageability, corporate IT organizations spent at record
levels: Microsoft's operating systems revenues jumped from $1.5
billion in fiscal 1994 to $4.1 billion only two years later.
What might we deduce about the prospects for Vista based on the
Windows 95 experience? First, it's hard to see a parallel burst of
initial interest, with or without a Rolling Stones commercial.
According to Microsoft, the benefits of Vista fall under five general
headings:
-Reliability
-Security
-Deployment (for organizations managing large rollouts)
-Performance (including better power management and faster boot up)
-Management of distributed users' machines
These categories of improvements are clearly aimed at corporate buyers
more than individuals. Most of the things a consumer-grade user will
see - including better desktop graphics, and RSS support within
Internet Explorer - already come standard in Mac OS X. Backward
compatibility will be substantial, to the point that many Vista
improvements (including the IE browser) will be available as retrofits
to Windows XP. These upgrades will also slow Vista adoption.
Here's another way of thinking about the comparison. In 1995,
Microsoft turned the telephone network into an extension of the
computer, or vice versa: between them AOL and Windows 95 made the
Internet a household utility. In 2006, no parallel leap into an
adjoining domain - think of home entertainment, specifically the
television - will be supported. Bill Gates longstanding prediction
about widespread adoption of a voice and speech interface to the PC
will be addressed with Vista support, but even given a powerful
standard processor configuration at its disposal, Vista still won't
make masses of people retire their keyboards.
In short, Windows Vista looks like a solid product for corporate
purchasers, but the lack of "gee-whiz" and "I've always wanted to be
able to do that" desirability will prevent end-user excitement from
reappearing the way it did ten years ago. An industry in search of
the next big thing will probably have to keep looking.
Wednesday, August 10, 2005
Monday, August 01, 2005
July 2005 Early Indications II: Virtual Trust
[Business notice: I have officially formed a company, Still River Research, to deliver consulting and analysis services. The website (www.stillriverresearch.com) is now out of beta after generous suggestions from several newsletter readers. I am now booking projects for the fall; please notify me if I can be of service.]
Security stories currently dominate much of the news. Between London, the Patriot Act, data thefts and losses, and renewed efforts to mandate identity cards for immigrants, it's difficult to help but feel that the world is a scary, dangerous place. My focus here, however, is on a near neighbor to security: trust, and how it can be both reinforced and undermined in new ways via digital networks.
It doesn't take long to see how various online efforts attempt to prove their trustworthiness:
-eBay relies on collated word of mouth to label bad apples and reassure good citizens. The company's institutionalized reputational currency ("view my 100% positive feedback!") is not patentable yet constitutes an enormous barrier to competitive entry.
-Some social network and dating sites use acquaintances as proxies: "you don't know me, but you know Mike, and Mike knows me, so I'm probably OK." As the Spokes and Friendsters of the world have discovered, trying to scale friend-of-a-friend trust is neither obvious nor cheap. When was the last time you used one of these services and could honestly say it was overwhelmingly positive?
-Other dating sites rely on the objective authority of social science. At eHarmony, potential daters are greeted by "relationship expert Dr. Neil Clark Warren" who has built a "detailed questionnaire measures the intricate facets of a person, including the 29 dimensions that are most important in relationship success." Not only that, an American Psychological Association conference included a paper that suggests that eHarmony marriages are happier than marriages built on other matchmaking techniques.
-Some entities have had a difficult time recreating the trust they built offline in new media. According to Lawrence Baxter, chief e-commerce officer at Wachovia quoted in the July 21 Boston Globe, the bank can no longer use e-mail to communicate with customers because phishing attacks so skillfully recreated the look and feel of official correspondence that customers routinely delete real messages. Cost structures used in the online bank's business case, meanwhile, almost certainly are rendered obsolete by the need to revert to physical mail.
-Amidst all of the 10-year celebrations of e-commerce sites (eBay, Amazon, CNet), some longtime readers may recall our discussion of Encyclopedia Britannica, which was nearly wiped off the map after over 225 years of operation. The company still exists, still publishes multi-volume hard-copy products, and recently announced it had re-formed and upgraded its panel of experts. That body, once home primarily to white males, now includes four Nobel laureates, two Pulitzer Prize winners, and a much more representative cultural makeup. Significantly, the last meeting of the board was ten years ago.
Several conclusions emerge:
1) Trust pays: eHarmony says they get 10,000-15,000 new members a day, each of whom has spent between $50 and $250.
2) Trust is expensive to build. As I searched for a new cell phone, Staples referred me to an outside vendor, but the vendor's site retains a Staples logo at the top, with the reminder that Staples will stand behind any transactions. The vendor's own site, with no such guarantee, sells the exact same service plan and phone for $50 less. Given the failure rate and overall dissatisfaction with U.S. wireless carriers, that $50 insurance looks very appealing.
3) There's a fallacy that identification can routinize trust: TSA screenings assume that someone with a driver's license that matches her face won't try to do anything bad to the aircraft. Conversely, someone who doesn't provide ID is kept off the plane: former Sun Microsystems employee John Gilmore is in federal court challenging the unwritten and/or secret law (nobody has yet produced it) that states that an "internal passport," as he calls it, is a condition for public transportation. (Here's the Gilmore site.)
4) The Britannica case, in its contrast with Wikipedia, highlights a particular dynamic on the Net, that of open vs. closed credibility, or trust if you will. Much as "many eyes make bugs shallow," as Eric Raymond argued in The Cathedral and the Bazaar in reference to open-source software, Wikipedia establishes trust in the volume of researcher-reader-editors who will spot and fix errors. Unlike the Staples model, money is less effective than reputational currency - the same stock of "funds" that makes eBay work.
Britannica, on the other hand, seeks the credibility of the few: the Encyclopedia's editor stated that "At a time when vast quantities of questionable information are available on the Internet and elsewhere, rigorous and reliable reference works are more important than ever." They are, but Britannica has a lot to answer for: the BBC reported that a 12-year old boy in London found five errors in two entries. Add to the errors the cost to fix paper editions, and the lag between error detection and correction - how many readers will propagate errors in the interval?
5) In the physical world, institutions can convey cues that reassure patrons of their solidity and presumably good intentions: marble pillars on a bank, brightly lit colorful plastic in a strip mall, even flight attendants' and pilots' uniforms. Online, Wells Fargo, Target, or Delta can't convey the same kind of authority in pixels, so the task becomes twofold: connecting to the existing credibility through branding, and capturing various kinds of word of mouth.
In the coming months, several trust stories will bear watching:
-Pharmaceutical companies, particularly in the COX-2 (Vioxx) neighborhood, have suffered major reputational damage, much of it related to online behavior, and the legal proceedings will be only one element of a fight to regain public trust.
-The 2008 presidential race will begin heating up, particularly the early-stage fundraising. Watch for the lessons various candidates learned from the Howard Dean experience.
-After the "golden age" of the CEO as hero, the past few years have reversed the public reception of business leaders. Huge severance packages following poor shareholder results, lawsuits, criminal guilty verdicts, and general tarnish on the aura make for a tough time to be a leader. Will Mark Hurd fare better at HP than did Carly Fiorina? Can Ford and GM rise to the challenge of viability and profitability? Will Boeing build a lead on Airbus? In each case, much will hinge on how much trust the leader can generate in his or her own company, the market, and the financial community. So far, by the way, it appears that Hurd understands the power of e-mail better than Harry Stonecipher at Boeing, who apparently let it become his undoing.
Security stories currently dominate much of the news. Between London, the Patriot Act, data thefts and losses, and renewed efforts to mandate identity cards for immigrants, it's difficult to help but feel that the world is a scary, dangerous place. My focus here, however, is on a near neighbor to security: trust, and how it can be both reinforced and undermined in new ways via digital networks.
It doesn't take long to see how various online efforts attempt to prove their trustworthiness:
-eBay relies on collated word of mouth to label bad apples and reassure good citizens. The company's institutionalized reputational currency ("view my 100% positive feedback!") is not patentable yet constitutes an enormous barrier to competitive entry.
-Some social network and dating sites use acquaintances as proxies: "you don't know me, but you know Mike, and Mike knows me, so I'm probably OK." As the Spokes and Friendsters of the world have discovered, trying to scale friend-of-a-friend trust is neither obvious nor cheap. When was the last time you used one of these services and could honestly say it was overwhelmingly positive?
-Other dating sites rely on the objective authority of social science. At eHarmony, potential daters are greeted by "relationship expert Dr. Neil Clark Warren" who has built a "detailed questionnaire measures the intricate facets of a person, including the 29 dimensions that are most important in relationship success." Not only that, an American Psychological Association conference included a paper that suggests that eHarmony marriages are happier than marriages built on other matchmaking techniques.
-Some entities have had a difficult time recreating the trust they built offline in new media. According to Lawrence Baxter, chief e-commerce officer at Wachovia quoted in the July 21 Boston Globe, the bank can no longer use e-mail to communicate with customers because phishing attacks so skillfully recreated the look and feel of official correspondence that customers routinely delete real messages. Cost structures used in the online bank's business case, meanwhile, almost certainly are rendered obsolete by the need to revert to physical mail.
-Amidst all of the 10-year celebrations of e-commerce sites (eBay, Amazon, CNet), some longtime readers may recall our discussion of Encyclopedia Britannica, which was nearly wiped off the map after over 225 years of operation. The company still exists, still publishes multi-volume hard-copy products, and recently announced it had re-formed and upgraded its panel of experts. That body, once home primarily to white males, now includes four Nobel laureates, two Pulitzer Prize winners, and a much more representative cultural makeup. Significantly, the last meeting of the board was ten years ago.
Several conclusions emerge:
1) Trust pays: eHarmony says they get 10,000-15,000 new members a day, each of whom has spent between $50 and $250.
2) Trust is expensive to build. As I searched for a new cell phone, Staples referred me to an outside vendor, but the vendor's site retains a Staples logo at the top, with the reminder that Staples will stand behind any transactions. The vendor's own site, with no such guarantee, sells the exact same service plan and phone for $50 less. Given the failure rate and overall dissatisfaction with U.S. wireless carriers, that $50 insurance looks very appealing.
3) There's a fallacy that identification can routinize trust: TSA screenings assume that someone with a driver's license that matches her face won't try to do anything bad to the aircraft. Conversely, someone who doesn't provide ID is kept off the plane: former Sun Microsystems employee John Gilmore is in federal court challenging the unwritten and/or secret law (nobody has yet produced it) that states that an "internal passport," as he calls it, is a condition for public transportation. (Here's the Gilmore site.)
4) The Britannica case, in its contrast with Wikipedia, highlights a particular dynamic on the Net, that of open vs. closed credibility, or trust if you will. Much as "many eyes make bugs shallow," as Eric Raymond argued in The Cathedral and the Bazaar in reference to open-source software, Wikipedia establishes trust in the volume of researcher-reader-editors who will spot and fix errors. Unlike the Staples model, money is less effective than reputational currency - the same stock of "funds" that makes eBay work.
Britannica, on the other hand, seeks the credibility of the few: the Encyclopedia's editor stated that "At a time when vast quantities of questionable information are available on the Internet and elsewhere, rigorous and reliable reference works are more important than ever." They are, but Britannica has a lot to answer for: the BBC reported that a 12-year old boy in London found five errors in two entries. Add to the errors the cost to fix paper editions, and the lag between error detection and correction - how many readers will propagate errors in the interval?
5) In the physical world, institutions can convey cues that reassure patrons of their solidity and presumably good intentions: marble pillars on a bank, brightly lit colorful plastic in a strip mall, even flight attendants' and pilots' uniforms. Online, Wells Fargo, Target, or Delta can't convey the same kind of authority in pixels, so the task becomes twofold: connecting to the existing credibility through branding, and capturing various kinds of word of mouth.
In the coming months, several trust stories will bear watching:
-Pharmaceutical companies, particularly in the COX-2 (Vioxx) neighborhood, have suffered major reputational damage, much of it related to online behavior, and the legal proceedings will be only one element of a fight to regain public trust.
-The 2008 presidential race will begin heating up, particularly the early-stage fundraising. Watch for the lessons various candidates learned from the Howard Dean experience.
-After the "golden age" of the CEO as hero, the past few years have reversed the public reception of business leaders. Huge severance packages following poor shareholder results, lawsuits, criminal guilty verdicts, and general tarnish on the aura make for a tough time to be a leader. Will Mark Hurd fare better at HP than did Carly Fiorina? Can Ford and GM rise to the challenge of viability and profitability? Will Boeing build a lead on Airbus? In each case, much will hinge on how much trust the leader can generate in his or her own company, the market, and the financial community. So far, by the way, it appears that Hurd understands the power of e-mail better than Harry Stonecipher at Boeing, who apparently let it become his undoing.
Friday, July 22, 2005
Signals and Noise on Broadband
(distributed July 11)
Patterns are emerging from some seemingly unrelated recent developments:
Item: After the mass transit bombings in London, what used to be called "man on the street" perspectives provided some of the most vivid news sources. The BBC has long solicited cameraphone images and personal accounts, and this week's events proved the value of this approach as one element in comprehensive newsgathering.
Item: Wasting no time integrating the Keyhole technology, Google launched a free beta of Google Earth, an even more addictive variation on the satellite imagery embedded in Google Maps. In the Wall Street Journal, Walt Mossberg questioned the utility but not the fun and wonderment fueled by the technology. For example, Google Siteseeing, a weblog unaffiliated with the company, gathers readers' harvests of interesting (for whatever reason) images from the air: shadows of airplanes about to land, smoke plumes, college campuses with giant initials on nearby hillsides, Bill Gates' house. The site has proved so popular it's had to rehost onto commercial-grade infrastructure. (For lots more on this theme, see the coverage of O'Reilly's Where 2.0 conference: http://www.oreillynet.com/where2005/.)
Item: Earlier this month, a carrier in a major European nation announced 3G cellular service over which it will broadcast 42 channels of television to mobile devices. People would be accustomed to this kind of activity in South Korea, but in France? France Telecom is involved along with Orange, giving rise to speculation that national policymakers have decided to emphasize broadband as an economic growth engine.
Item: Apple's new OS, nicknamed Tiger, includes an RSS feedreader within the Safari browser. It wasn't that long ago that people who wanted aggregated feeds needed to install and understand scripting languages. Bloglines changed that, but Tiger appears to be the cleanest implementation to date: I've heard of people upgrading only for this one feature.
Item: After MTV's North American feed of the Live 8 performances was interrupted by ads - midsong - music fans were delighted to see AOL open up a nearly complete video archive of six venues' performances. Apple's Quicktime format is supported, but not Firefox; in Internet Explorer, the viewer is treated to annoying Microsoft ads.
Conclusion 1: Diversity is good. Even without worries of terrorist attacks, viruses, and tightly coupled grids that may or may not have adequate bulkheads to prevent cascading failure (as in the US-Canada power failure of two years ago), convenience and basic prudence suggest that heterogeneous communications channels make a lot of sense. Anyone who switches to sole reliance on voice over IP, the cable company, cellular, instant messaging, or anything else risks total lights-out, as London residents discovered this week. (According to the Wall Street Journal, officials decided against shutting down the cellular networks; the lack of service was apparently caused by heavy traffic.) The success of AOL undoubtedly spurred MTV's decision to re-broadcast Live 8 without interruption.
Conclusion 2: Innovation is happening from both top down (as in Google Labs) and bottom up. Historically the Web has made it easy to find big news sources, but with RSS, it's similarly simple to find small ones. I'm finding it educational to watch media outlets attempt to include and/or co-opt blogs: the Wall Street Journal regularly includes Glenn (Instapundit) Reynolds in the print paper, while publications all over the map are including various blog voices. It's unclear as to what editorial oversight news-organ bloggers enjoy, how they're paid, and what precedence the "day job" medium has with regard to liability, scoops, retractions, and the like. There's still much to be sorted out here.
Conclusion 3: Broadband makes things happen. Whether it's telemedicine, gaming, or secure transmission of private data, its low broadband penetration means that untapped opportunities abound in the United States. As of March the OECD rated the U.S. 17th out of 30 nations in terms of broadband service cost, but this is deceiving as the U.S. ranks only 6th in average broadband speed: Japan's standard service is merely 12 times as fast (26 MB/sec to 2, with a theoretical limit of 51; fiber to the home is expanding rapidly and delivers 100 MB/sec). In short, U.S. customers pay a lot for service that's only charitably defined as mid-band.
The implications can be found in multiple domains. For example, the recent data thefts are increasingly being reported not from hackers but from boxes of backup tapes falling off the back of trucks. It's an open question whether an employee or customer would rather have her sensitive information carried on MCI fiber or a Fedex van.
Remote work is an even more pressing example: between 1970 and 2002, vehicle miles traveled in U.S. urban areas has tripled. Road mileage has in no way kept pace, and the next thirty years will be worse for congestion: few states can afford to maintain the roads and bridges they already have, much less build more. Broadband promises to help create alternative ways of organizing resources, with Jet Blue's virtual call center (consisting of work-at-home customer service reps) serving as one real-life progenitor.
Other promising signs keep cropping up: on the connection front, services like Sprint's EVDO and Verizon's FiOS support reasonably symmetric speeds up and down in part because the business case for customer uploading (digital photos and the like) is getting harder to ignore. Furthermore, increasingly multi-modal communications media like the Weather Channel on cell phones and Google's purchase of Dodgeball support heterogeneous redundancy. Finally, at the FCC and elsewhere people who can make a difference seem to be raising communication policy to a slightly higher level of import.
One great thing about the current cornucopia of technologies is that some can be deployed very rapidly, to the point where Japan, for example, was able to leapfrog much of the world in a matter of a few years. Who will be the next Korea, the next Japan, the next Sweden? It's no exaggeration to say that the whole world is indeed watching - and, increasingly, contributing to content creation and distribution.
Patterns are emerging from some seemingly unrelated recent developments:
Item: After the mass transit bombings in London, what used to be called "man on the street" perspectives provided some of the most vivid news sources. The BBC has long solicited cameraphone images and personal accounts, and this week's events proved the value of this approach as one element in comprehensive newsgathering.
Item: Wasting no time integrating the Keyhole technology, Google launched a free beta of Google Earth, an even more addictive variation on the satellite imagery embedded in Google Maps. In the Wall Street Journal, Walt Mossberg questioned the utility but not the fun and wonderment fueled by the technology. For example, Google Siteseeing, a weblog unaffiliated with the company, gathers readers' harvests of interesting (for whatever reason) images from the air: shadows of airplanes about to land, smoke plumes, college campuses with giant initials on nearby hillsides, Bill Gates' house. The site has proved so popular it's had to rehost onto commercial-grade infrastructure. (For lots more on this theme, see the coverage of O'Reilly's Where 2.0 conference: http://www.oreillynet.com/where2005/.)
Item: Earlier this month, a carrier in a major European nation announced 3G cellular service over which it will broadcast 42 channels of television to mobile devices. People would be accustomed to this kind of activity in South Korea, but in France? France Telecom is involved along with Orange, giving rise to speculation that national policymakers have decided to emphasize broadband as an economic growth engine.
Item: Apple's new OS, nicknamed Tiger, includes an RSS feedreader within the Safari browser. It wasn't that long ago that people who wanted aggregated feeds needed to install and understand scripting languages. Bloglines changed that, but Tiger appears to be the cleanest implementation to date: I've heard of people upgrading only for this one feature.
Item: After MTV's North American feed of the Live 8 performances was interrupted by ads - midsong - music fans were delighted to see AOL open up a nearly complete video archive of six venues' performances. Apple's Quicktime format is supported, but not Firefox; in Internet Explorer, the viewer is treated to annoying Microsoft ads.
Conclusion 1: Diversity is good. Even without worries of terrorist attacks, viruses, and tightly coupled grids that may or may not have adequate bulkheads to prevent cascading failure (as in the US-Canada power failure of two years ago), convenience and basic prudence suggest that heterogeneous communications channels make a lot of sense. Anyone who switches to sole reliance on voice over IP, the cable company, cellular, instant messaging, or anything else risks total lights-out, as London residents discovered this week. (According to the Wall Street Journal, officials decided against shutting down the cellular networks; the lack of service was apparently caused by heavy traffic.) The success of AOL undoubtedly spurred MTV's decision to re-broadcast Live 8 without interruption.
Conclusion 2: Innovation is happening from both top down (as in Google Labs) and bottom up. Historically the Web has made it easy to find big news sources, but with RSS, it's similarly simple to find small ones. I'm finding it educational to watch media outlets attempt to include and/or co-opt blogs: the Wall Street Journal regularly includes Glenn (Instapundit) Reynolds in the print paper, while publications all over the map are including various blog voices. It's unclear as to what editorial oversight news-organ bloggers enjoy, how they're paid, and what precedence the "day job" medium has with regard to liability, scoops, retractions, and the like. There's still much to be sorted out here.
Conclusion 3: Broadband makes things happen. Whether it's telemedicine, gaming, or secure transmission of private data, its low broadband penetration means that untapped opportunities abound in the United States. As of March the OECD rated the U.S. 17th out of 30 nations in terms of broadband service cost, but this is deceiving as the U.S. ranks only 6th in average broadband speed: Japan's standard service is merely 12 times as fast (26 MB/sec to 2, with a theoretical limit of 51; fiber to the home is expanding rapidly and delivers 100 MB/sec). In short, U.S. customers pay a lot for service that's only charitably defined as mid-band.
The implications can be found in multiple domains. For example, the recent data thefts are increasingly being reported not from hackers but from boxes of backup tapes falling off the back of trucks. It's an open question whether an employee or customer would rather have her sensitive information carried on MCI fiber or a Fedex van.
Remote work is an even more pressing example: between 1970 and 2002, vehicle miles traveled in U.S. urban areas has tripled. Road mileage has in no way kept pace, and the next thirty years will be worse for congestion: few states can afford to maintain the roads and bridges they already have, much less build more. Broadband promises to help create alternative ways of organizing resources, with Jet Blue's virtual call center (consisting of work-at-home customer service reps) serving as one real-life progenitor.
Other promising signs keep cropping up: on the connection front, services like Sprint's EVDO and Verizon's FiOS support reasonably symmetric speeds up and down in part because the business case for customer uploading (digital photos and the like) is getting harder to ignore. Furthermore, increasingly multi-modal communications media like the Weather Channel on cell phones and Google's purchase of Dodgeball support heterogeneous redundancy. Finally, at the FCC and elsewhere people who can make a difference seem to be raising communication policy to a slightly higher level of import.
One great thing about the current cornucopia of technologies is that some can be deployed very rapidly, to the point where Japan, for example, was able to leapfrog much of the world in a matter of a few years. Who will be the next Korea, the next Japan, the next Sweden? It's no exaggeration to say that the whole world is indeed watching - and, increasingly, contributing to content creation and distribution.
Friday, June 17, 2005
June Early Indications: Can IT Fix Health Care?
"The solution seems obvious: to get all the information about patients out of paper files and into electronic databases that -- and this is the crucial point -- can connect to one another so that any doctor can access all the information that he needs to help any given patient at any time in any place. In other words, the solution is not merely to use computers, but to link the systems of doctors, hospitals, laboratories, pharmacies and insurers, thus making them, in the jargon, 'interoperable'."
-"Special report: IT in the health-care industry," The Economist, April 30, 2005, p. 65
There's no question that North American medicine is approaching a crisis. According to the Washington Post, 45 million Americans carry no health insurance. Between 44,000 and 98,000 people are estimated to die every year from preventable medical errors such as drug interactions; the fact that the statistics are so vague testifies to the problem. The U.S. leads the world in health care spending per capita by a large margin ($4500 vs. $2500 for the runners-up: Germany, Luxembourg, and Switzerland), but the life expectancy ranks 27th, near that of Cuba, which is reported to spend about 1/25th as much per capita. Information technology has made industries such as package delivery, retail, and mutual funds more efficient: can health care benefit from similar gains?
The farther one looks into this issue, the more tangled the questions get. Let me assert at the outset that I believe electronic medical records are a good idea. But for reasons outlined below, IT by itself falls far short of meeting the challenge of rethinking health and health care. Any industry with the emotional freight, economic impact, and cultural significance of medicine can't be analyzed closely in a few paragraphs, but perhaps these ideas might begin discussion in other venues.
1) Definitions
What does the health care system purport to deliver? If longevity is the answer, clearly much less money could be spent to bring U.S. life expectancy closer to Australia, where people live an average of three years longer. But health means more than years: the phrase "quality of life" hints at the notion that we seek something non-quantifiable from doctors, therapists, nutritionists, and others. At a macro level, no one can assess how well a health care system works because the metrics lack explanatory power: we know, roughly, how much money goes in to a hospital, HMO, or even economic sector, but we don't know much about the outputs.
For example, should health care make us even "better than well"? As the bioethicist Carl Elliott compellingly argues in his book of that name, a substantial part of our investment in medicine, nutrition, and surgery is enhancement beyond what's naturally possible. Erectile dysfunction pills, steroids, implants, and blood doping are no longer the province of celebrities and world-class athletes. Not only can we not define health on its lower baseline, it's getting more and more difficult to know where it stops on the top bound as well.
Finally, Americans at large don't seem to view death as natural, even though it's one of the very few things that happens to absolutely everyone. Within many outposts of the health care system, death is regarded as a failure of technology, to the point where central lines, respirators, and other interventions are applied to people who are naturally coming to the end of life. This approach of course incurs astronomical costs, but it is a predictable outcome of a heavily technology-driven approach to care.
2) Health care as car repair for people?
Speaking in gross generalizations, U.S. hospitals are not run to deliver health; they're better described as sickness-remediation facilities. The ambiguous position of women who deliver babies demonstrates the primary orientation. Many of the institutional interventions and signals (calling the woman a "patient," for example) are shared with the sickness-remediation side of the house even though birth is not morbid under most circumstances. Some hospitals are turning this contradiction into a marketing opportunity: plushly appointed "birthing centers" have the stated aim of making the new mom a satisfied customer. "I had such a good experience having Max and Ashley at XYZ Medical Center," the intended logic goes, "that I want them taking care of Dad's heart problems."
Understanding health care as sickness-remediation has several corollaries. Doctors are deeply protective of their hard-won cultural authority, which they guard with language, apparel, and other mechanisms, but the parallels between a hospital and a car-repair garage run deep. After Descartes split the mind from the body, medicine followed the ontology of science to divide fields of inquiry -- and presumably repair -- into discrete units.
At teaching hospitals especially, patients frequently report feeling less like a person and more like a sum of sub-systems. Rashes are for dermatology, heart blockages set off a tug-of-war between surgeons and cardiologists, joint pain is orthopedics or maybe endocrinology. Root-cause analysis frequently falls to secondary priority as the patient is reduced to his or her compartmentalized complaints and metrics. Pain is no service's specialty but many patients' primary concern. Systems integration between the sub-specialties often falls to floor nurses and the patient's advocate if he or she can find one. The situation might be different if one is fortunate enough to have access to a hospitalist: a new specialty that addresses the state of being hospitalized, which the numbers show to be more deadly than car crashes. (To restate: something on the order of 100,000 people die in the U.S. every year from preventable medical accidents.)
The division of the patient into sub-systems that map to professional fields has many consequences. Attention focuses on the disease state, rather than the path that led to that juncture: preventive care lags far behind crisis management in glamour, funding, and attention. Diabetes provides a current example. Drug companies have focused large sums of money on insulin therapies, a treatment program that can change millions of peoples' lives. But when public-health authorities try to warn against obesity as a preventive attack on diabetes, soft-drink and other lobbies immediately spring into action.
Finally, western medicine's claim to be evidence-based contradicts the lack of definitive evidence for ultimate consequences. The practice of performing autopsies in cases of death where the cause is unclear has dropped steadily and steeply, to the point where doctors and families typically do not know what killed a sizable population of patients. A study at the University of Michigan estimated that almost 50% of hospital patients died of a condition for which they were not receiving treatment. It's potentially the same situation as storeowner John Wanamaker bemoaning that half of his advertising budget was being wasted, but not knowing which half.
3) Following the money
Health care costs money, involves scarcities and surplus, and employs millions of people. As such, it constitutes a market - but one that fails to run under conventional market mechanisms. (For example, excess inventory, in the form of unbooked surgical times, let's say, is neither auctioned to the highest bidder nor put on sale to clear the market.) The parties that pay are rarely the parties whose health is being treated; the parties that deliver care lack detailed cost data and therefore price services only in the loosest sense; and the alignment of patient preference with greater good through the lens of for-profit insurers has many repercussions.
Consider a few market-driven sub-optimizations:
-Chief executives at HMOs are rewarded for cost-cutting, which often translates to cuts in hospital reimbursement. Hospitals, meanwhile, are frequently not-for-profit institutions, many of which have been forced to closed their doors in the past decade.
-Arrangements to pay for certain kinds of care for the uninsured introduce further costs, and further kinds of costs, into an already complex set of financial flows.
-As Richard Titmuss showed over 30 years ago in The Gift Relationship, markets don't make sense for certain kinds of social goods. In his study, paying for blood donation lowered the amount and quality of blood available for transfusion; more recently, similar paradoxes and ethical issues have arisen regarding tissue and organ donation.
-Insurers prefer to pay for tangible rather than intangible services. Hospitals respond by building labs and imaging centers as opposed to mental health facilities, where services like psychiatric nursing are rarely covered.
-Once they build labs, hospitals want them utilized, so there's further pressure (in addition to litigation-induced defensiveness) for technological evidence-gathering rather than time-consuming medical art such as history-taking and palpation, for which doctors are not reimbursed.
-As a result, conditions with clear diagnoses (like fractures) are treated more favorably in economic terms, and therefore in interventional terms, than conditions such as allergies or neck pain that lack "hard" diagnostics. Once again, the vast number of people with mental health issues are grossly underserved.
-Medical schools can no longer afford for their professors to do unreimbursable things like teach or serve on national standards bodies. The doctors need to bring in grant money to fund research and insurance money for their clinical time. Teaching can be highly uneconomical for all concerned. One reason for a shortage of nurses, meanwhile, is a shortage of nursing professors.
4) Where can IT help?
Information technology has made significant improvements possible in business settings with well-defined, repeatable processes like originating a loan or filling an order. Medicine involves some processes that fit this description, but it also involves a lot of impossible-to-predict scheduling, healing as art rather than science, and institutionalized barriers to communication.
IT is currently used in four broad medical areas: billing and finance, supply chain and logistics, imaging and instrumentation, and patient care. Patient registration is an obvious example of the first; lines and foodservice the second; MRIs, blood tests, and bedside monitoring the third; and physician order entry, patient care notes, and prescription writing the fourth. Each type of automation introduces changes in work habits, incentives, and costs to various parties in the equation.
Information regarding health and information regarding money often follow parallel paths: if I get stitched up after falling on my chin, the insurance company is billed for an emergency department visit and a suture kit at the same time that the hospital logs my visit -- and hopefully flags any known antibiotic allergies. Meanwhile the interests and incentives are frequently anything but parallel: I might want a plastic surgeon to suture my face; the insurer prefers a physician's assistant. From the patient's perspective, having systems that more seamlessly interoperate with the HMO may not be positive if that results in fewer choices or a perceived reduction in the quality of care. On the provider side, the hospital and the plastic surgeon will send separate bills, each hoping for payment but neither coordinating with the other. Bills frequently appear in a matter of days, with the issuer hoping to get paid first, before the patient realizes any potential errors in calculating co-pay or deductible. The amount of time and money spent on administering the current dysfunctional multi-payer system is impossible to conceive.
Privacy issues are non-trivial. Given that large-scale breaches of personal information are almost daily news, what assurance will patients have that a complex medical system will do a better job shielding privacy than Citigroup or LexisNexis? With genomic predictors of health -- and potential cost for insurance coverage -- around the corner, how will patients' and insurers' claims on that information be reconciled?
A number of services currently let individuals combine personal control and portability of their records. It's easy to see how such an approach may not scale: something as trivial as password-resets in corporate computing environments already involves sizeable costs -- now think about managing the sum of past and present patients and employees as a user base with access to the most sensitive information imaginable. With portable devices proliferating, potential paths of entry multiply both the security perimeter and the cost of securing it: think of teenage hackers trying to find their way to Paris Hilton's medical record rather than her Sidekick.
Hospitals already tend to treat privacy as an inconvenience -- witness the universal use of the ridiculous johnnies, which do more to demean the patient than to improve quality of care. The medical record doesn't even belong to the person whose condition it documents. American data privacy standards, even after HIPAA, lag behind those in the European Union. From such a primitive baseline, getting to a new state of shared accountability, access, and privacy will take far more diplomacy than systems development.
Spending on diagnostic technology currently outpaces patient care IT. Hospitals routinely advertise less confining MRI machines, digital mammography, and 3D echocardiography; it's less easy to impress constituencies with effective metadata for patient care notes, for example. (Some computerized record systems merely capture images of handwritten notes with only minimal indexing.) After these usually expensive machines produce their intended results, the process by which diagnosticians and ultimately caregivers use those results is often haphazard: many tests are never consulted, or compared to previous results -- particularly if they were generated somewhere else. NIH doesn't just stand for National Institutes of Health; Not Invented Here is also alive and well in hospitals.
Back in the early days of reengineering, when technology and process change were envisioned as a potent one-two punch in the gut of inefficiency, the phrase "don't pave the cowpaths" was frequently used as shorthand. Given that medicine can only be routinized to a certain degree, and given that many structural elements contribute to the current state of affairs, it's useful to recall the old mantra. Without new ways of organizing the vastness of a longitudinal medical record, for example, physicians could easily find themselves buried in a haystack of records, searching for a needle without a magnet. Merely automating a bad process rarely solves any problems, and usually creates big new ones.
Change comes slowly to medicine, and the application of technology depends, here as always, on the incentives for different parties to adopt new ways of doing things. Computerized approaches to caregiving include expert knowledge bases, automated lockouts much like those in commercial aviation, and medical simulators for training students and experienced practitioners alike. Each of these has proven benefits, but only limited deployment. Further benefits could come from well care and preventive medicine, but these areas have proven less amenable to the current style of IT intensification. Until the reform efforts such as Leapfrog can address the culture, process, and incentive issues in patient care, the increase in clinical IT investment will do little to drive breakthrough change in the length and quality of Americans' lives.
-"Special report: IT in the health-care industry," The Economist, April 30, 2005, p. 65
There's no question that North American medicine is approaching a crisis. According to the Washington Post, 45 million Americans carry no health insurance. Between 44,000 and 98,000 people are estimated to die every year from preventable medical errors such as drug interactions; the fact that the statistics are so vague testifies to the problem. The U.S. leads the world in health care spending per capita by a large margin ($4500 vs. $2500 for the runners-up: Germany, Luxembourg, and Switzerland), but the life expectancy ranks 27th, near that of Cuba, which is reported to spend about 1/25th as much per capita. Information technology has made industries such as package delivery, retail, and mutual funds more efficient: can health care benefit from similar gains?
The farther one looks into this issue, the more tangled the questions get. Let me assert at the outset that I believe electronic medical records are a good idea. But for reasons outlined below, IT by itself falls far short of meeting the challenge of rethinking health and health care. Any industry with the emotional freight, economic impact, and cultural significance of medicine can't be analyzed closely in a few paragraphs, but perhaps these ideas might begin discussion in other venues.
1) Definitions
What does the health care system purport to deliver? If longevity is the answer, clearly much less money could be spent to bring U.S. life expectancy closer to Australia, where people live an average of three years longer. But health means more than years: the phrase "quality of life" hints at the notion that we seek something non-quantifiable from doctors, therapists, nutritionists, and others. At a macro level, no one can assess how well a health care system works because the metrics lack explanatory power: we know, roughly, how much money goes in to a hospital, HMO, or even economic sector, but we don't know much about the outputs.
For example, should health care make us even "better than well"? As the bioethicist Carl Elliott compellingly argues in his book of that name, a substantial part of our investment in medicine, nutrition, and surgery is enhancement beyond what's naturally possible. Erectile dysfunction pills, steroids, implants, and blood doping are no longer the province of celebrities and world-class athletes. Not only can we not define health on its lower baseline, it's getting more and more difficult to know where it stops on the top bound as well.
Finally, Americans at large don't seem to view death as natural, even though it's one of the very few things that happens to absolutely everyone. Within many outposts of the health care system, death is regarded as a failure of technology, to the point where central lines, respirators, and other interventions are applied to people who are naturally coming to the end of life. This approach of course incurs astronomical costs, but it is a predictable outcome of a heavily technology-driven approach to care.
2) Health care as car repair for people?
Speaking in gross generalizations, U.S. hospitals are not run to deliver health; they're better described as sickness-remediation facilities. The ambiguous position of women who deliver babies demonstrates the primary orientation. Many of the institutional interventions and signals (calling the woman a "patient," for example) are shared with the sickness-remediation side of the house even though birth is not morbid under most circumstances. Some hospitals are turning this contradiction into a marketing opportunity: plushly appointed "birthing centers" have the stated aim of making the new mom a satisfied customer. "I had such a good experience having Max and Ashley at XYZ Medical Center," the intended logic goes, "that I want them taking care of Dad's heart problems."
Understanding health care as sickness-remediation has several corollaries. Doctors are deeply protective of their hard-won cultural authority, which they guard with language, apparel, and other mechanisms, but the parallels between a hospital and a car-repair garage run deep. After Descartes split the mind from the body, medicine followed the ontology of science to divide fields of inquiry -- and presumably repair -- into discrete units.
At teaching hospitals especially, patients frequently report feeling less like a person and more like a sum of sub-systems. Rashes are for dermatology, heart blockages set off a tug-of-war between surgeons and cardiologists, joint pain is orthopedics or maybe endocrinology. Root-cause analysis frequently falls to secondary priority as the patient is reduced to his or her compartmentalized complaints and metrics. Pain is no service's specialty but many patients' primary concern. Systems integration between the sub-specialties often falls to floor nurses and the patient's advocate if he or she can find one. The situation might be different if one is fortunate enough to have access to a hospitalist: a new specialty that addresses the state of being hospitalized, which the numbers show to be more deadly than car crashes. (To restate: something on the order of 100,000 people die in the U.S. every year from preventable medical accidents.)
The division of the patient into sub-systems that map to professional fields has many consequences. Attention focuses on the disease state, rather than the path that led to that juncture: preventive care lags far behind crisis management in glamour, funding, and attention. Diabetes provides a current example. Drug companies have focused large sums of money on insulin therapies, a treatment program that can change millions of peoples' lives. But when public-health authorities try to warn against obesity as a preventive attack on diabetes, soft-drink and other lobbies immediately spring into action.
Finally, western medicine's claim to be evidence-based contradicts the lack of definitive evidence for ultimate consequences. The practice of performing autopsies in cases of death where the cause is unclear has dropped steadily and steeply, to the point where doctors and families typically do not know what killed a sizable population of patients. A study at the University of Michigan estimated that almost 50% of hospital patients died of a condition for which they were not receiving treatment. It's potentially the same situation as storeowner John Wanamaker bemoaning that half of his advertising budget was being wasted, but not knowing which half.
3) Following the money
Health care costs money, involves scarcities and surplus, and employs millions of people. As such, it constitutes a market - but one that fails to run under conventional market mechanisms. (For example, excess inventory, in the form of unbooked surgical times, let's say, is neither auctioned to the highest bidder nor put on sale to clear the market.) The parties that pay are rarely the parties whose health is being treated; the parties that deliver care lack detailed cost data and therefore price services only in the loosest sense; and the alignment of patient preference with greater good through the lens of for-profit insurers has many repercussions.
Consider a few market-driven sub-optimizations:
-Chief executives at HMOs are rewarded for cost-cutting, which often translates to cuts in hospital reimbursement. Hospitals, meanwhile, are frequently not-for-profit institutions, many of which have been forced to closed their doors in the past decade.
-Arrangements to pay for certain kinds of care for the uninsured introduce further costs, and further kinds of costs, into an already complex set of financial flows.
-As Richard Titmuss showed over 30 years ago in The Gift Relationship, markets don't make sense for certain kinds of social goods. In his study, paying for blood donation lowered the amount and quality of blood available for transfusion; more recently, similar paradoxes and ethical issues have arisen regarding tissue and organ donation.
-Insurers prefer to pay for tangible rather than intangible services. Hospitals respond by building labs and imaging centers as opposed to mental health facilities, where services like psychiatric nursing are rarely covered.
-Once they build labs, hospitals want them utilized, so there's further pressure (in addition to litigation-induced defensiveness) for technological evidence-gathering rather than time-consuming medical art such as history-taking and palpation, for which doctors are not reimbursed.
-As a result, conditions with clear diagnoses (like fractures) are treated more favorably in economic terms, and therefore in interventional terms, than conditions such as allergies or neck pain that lack "hard" diagnostics. Once again, the vast number of people with mental health issues are grossly underserved.
-Medical schools can no longer afford for their professors to do unreimbursable things like teach or serve on national standards bodies. The doctors need to bring in grant money to fund research and insurance money for their clinical time. Teaching can be highly uneconomical for all concerned. One reason for a shortage of nurses, meanwhile, is a shortage of nursing professors.
4) Where can IT help?
Information technology has made significant improvements possible in business settings with well-defined, repeatable processes like originating a loan or filling an order. Medicine involves some processes that fit this description, but it also involves a lot of impossible-to-predict scheduling, healing as art rather than science, and institutionalized barriers to communication.
IT is currently used in four broad medical areas: billing and finance, supply chain and logistics, imaging and instrumentation, and patient care. Patient registration is an obvious example of the first; lines and foodservice the second; MRIs, blood tests, and bedside monitoring the third; and physician order entry, patient care notes, and prescription writing the fourth. Each type of automation introduces changes in work habits, incentives, and costs to various parties in the equation.
Information regarding health and information regarding money often follow parallel paths: if I get stitched up after falling on my chin, the insurance company is billed for an emergency department visit and a suture kit at the same time that the hospital logs my visit -- and hopefully flags any known antibiotic allergies. Meanwhile the interests and incentives are frequently anything but parallel: I might want a plastic surgeon to suture my face; the insurer prefers a physician's assistant. From the patient's perspective, having systems that more seamlessly interoperate with the HMO may not be positive if that results in fewer choices or a perceived reduction in the quality of care. On the provider side, the hospital and the plastic surgeon will send separate bills, each hoping for payment but neither coordinating with the other. Bills frequently appear in a matter of days, with the issuer hoping to get paid first, before the patient realizes any potential errors in calculating co-pay or deductible. The amount of time and money spent on administering the current dysfunctional multi-payer system is impossible to conceive.
Privacy issues are non-trivial. Given that large-scale breaches of personal information are almost daily news, what assurance will patients have that a complex medical system will do a better job shielding privacy than Citigroup or LexisNexis? With genomic predictors of health -- and potential cost for insurance coverage -- around the corner, how will patients' and insurers' claims on that information be reconciled?
A number of services currently let individuals combine personal control and portability of their records. It's easy to see how such an approach may not scale: something as trivial as password-resets in corporate computing environments already involves sizeable costs -- now think about managing the sum of past and present patients and employees as a user base with access to the most sensitive information imaginable. With portable devices proliferating, potential paths of entry multiply both the security perimeter and the cost of securing it: think of teenage hackers trying to find their way to Paris Hilton's medical record rather than her Sidekick.
Hospitals already tend to treat privacy as an inconvenience -- witness the universal use of the ridiculous johnnies, which do more to demean the patient than to improve quality of care. The medical record doesn't even belong to the person whose condition it documents. American data privacy standards, even after HIPAA, lag behind those in the European Union. From such a primitive baseline, getting to a new state of shared accountability, access, and privacy will take far more diplomacy than systems development.
Spending on diagnostic technology currently outpaces patient care IT. Hospitals routinely advertise less confining MRI machines, digital mammography, and 3D echocardiography; it's less easy to impress constituencies with effective metadata for patient care notes, for example. (Some computerized record systems merely capture images of handwritten notes with only minimal indexing.) After these usually expensive machines produce their intended results, the process by which diagnosticians and ultimately caregivers use those results is often haphazard: many tests are never consulted, or compared to previous results -- particularly if they were generated somewhere else. NIH doesn't just stand for National Institutes of Health; Not Invented Here is also alive and well in hospitals.
Back in the early days of reengineering, when technology and process change were envisioned as a potent one-two punch in the gut of inefficiency, the phrase "don't pave the cowpaths" was frequently used as shorthand. Given that medicine can only be routinized to a certain degree, and given that many structural elements contribute to the current state of affairs, it's useful to recall the old mantra. Without new ways of organizing the vastness of a longitudinal medical record, for example, physicians could easily find themselves buried in a haystack of records, searching for a needle without a magnet. Merely automating a bad process rarely solves any problems, and usually creates big new ones.
Change comes slowly to medicine, and the application of technology depends, here as always, on the incentives for different parties to adopt new ways of doing things. Computerized approaches to caregiving include expert knowledge bases, automated lockouts much like those in commercial aviation, and medical simulators for training students and experienced practitioners alike. Each of these has proven benefits, but only limited deployment. Further benefits could come from well care and preventive medicine, but these areas have proven less amenable to the current style of IT intensification. Until the reform efforts such as Leapfrog can address the culture, process, and incentive issues in patient care, the increase in clinical IT investment will do little to drive breakthrough change in the length and quality of Americans' lives.
Tuesday, June 07, 2005
May 2005 Early Indications II: Power laws for fun and profit
(shipped May 26, posted at www.guidewiregroup.com, and archived here)
Five years ago, the Internet sector was in the middle of a momentous
slide in market capitalization. Priceline went from nearly $500 a
share to single digits in three quarters. CDnow fell from $23 to
$3.40 in about 9 months ending in March 2000. Corvis, Music Maker,
Dr. Koop - 2000 was a meltdown the likes of which few recreational
investors had ever seen or imagined. Science was invoked to explain
this new world of Internet business.
Bernardo Huberman, then at Xerox PARC, and others found that the
proportion of websites that got the bulk of the traffic fell far from
the 80/20 rule of thumb: as of December 1, 1997, the top 1% of the
website population accounted for over 55% of all traffic. This kind
of distribution was not new, as it turned out. A Harvard linguist
with the splendid name of George Zipf counted words, and found that a
tiny percentage of English words account for a disproportionate share
of usage. A Zipf distribution, plotted on a log-log scale, is a
straight line from upper left to lower right. In linear scale, it
plunges from the top left and then goes flat for the characteristic
long tail of the distribution: twosies and then onesies occupy most of
the x-axis.
Given such "scientific" logic, investors began to argue that the
Internet was a new kind of market, with high barriers to entry that
made incumbents' positions extremely secure. Michael Mauboussin, then
at CS First Boston and now at Legg Mason, wrote a paper in late 1999
called "Absolute Power." In it he asserted that "power laws . . .
strongly support the view that on-line markets are winner-take-all."
Since that time, Google has challenged Yahoo, weblogs have markedly
deteriorated online news sites' traffic, and the distinction between
"on-line markets" and plain old markets is getting harder to maintain.
Is the Zipf distribution somehow changing? Were power laws wrongly
applied or somehow misunderstood?
Chris Anderson, editor of Wired, has a different reading of the graph
and focuses instead on the long tail. In an article last fall that's
being turned into a book, Anderson explains how a variety of web
businesses have prospered by successfully addressing the very large
number of niches in any given market. Jeff Bezos, for instance,
estimates that 30% of the books Amazon sells aren't in physical
retailers. Unlike Excite, which couldn't make money on the mostly
unique queries that came into the site, Google uses adwords to sell
almost anything to the very few people who search for something
related to it. As of March, every iTunes song in inventory (that's
over 1 million) had been purchased at least once. Netflix carries far
more inventory than a neighborhood retailer can, and can thus satisfy
any film nut's most esoteric request.
At the same time, producers of distinctive small-market goods (like
weblogs, garage demo CDs, and self-published books) can through a
variety of mechanisms reach a paying public. These mechanisms include
word of mouth, search-driven technologies, and public performance
tie-ins; digital distribution can also change a market's economics.
Thus the news is good for both makers and users, buyers and sellers;
in fact, libertarian commentator Virginia Postrel has written for the
last several years on the virtues of the choice and variety we
currently enjoy.
There's currently a "long tail" fixation in Silicon Valley. Venture
capitalists report seeing a requisite power law slide in nearly any
pitch deck. CEO Eric Schmidt showed a long tail slide at the Google
shareholder meeting. Joe Krause, formerly of Excite and now at
Jotspot, tries to argue for a long tail in software development upon
which his product of course capitalizes. The term has made USAToday
and The Economist. In some ways this feels like the bubble again, for
better and for worse.
At one level, the Internet industry seems to need intense bursts of
buzzword mania: you no longer hear anyone talking about push,
incubators, portals, exchanges, or on-line communities even though
each of these was a projected multi-billion dollar market. The visual
appeal of a Zipf distribution may also confer Anderson's long tail
with a quasi-scientism that simple terms like "blog," "handheld," or
"broadband" lack. Netflix, Amazon, and Google lacked power law
graphs, I'm pretty certain, in their startup documents and have
managed to thrive regardless. Anderson's own evidence illustrates
what a long way it is from explanation to prediction: showing how some
firms can profitably address niches doesn't prove that a startup will
similarly prosper in an adjacent market. To his credit, he focuses
primarily on entertainment, where digitization is most prevalent.
The recourse to supposed mathematical precision to buttress something
as unscientific as a business plan is not new. Sociologists
investigating networks of people have been overshadowed by physicists
who bring higher math horsepower to the same sets of problems, yet
it's still difficult to understand Friendster's revenue model.
Complex adaptive systems research was very hot in the 90s, following
in the course of the now barely visible "artificial intelligence."
The problem extends beyond calculus to spreadsheets: much of what
passes for quantitative market research is barely legitimate data. To
be reduced to a single semi-reliable number, a simple 5-point
questionnaire response should have the answers vary in regular
intervals, yet words rarely behave this way. Is "most of the time" 8
times out of ten or 95 times out of 100? Who remembers to count
before someone asks? Purchase intent rarely translates to purchase.
Yet executives make decisions every day based on customer satisfaction
scores, opinion surveys, and focus groups, all of which reduce noisy
variation to apparently clinical precision.
Make no mistake: Chris Anderson has identified something important and
widespread when he groups superficially dissimilar businesses to spot
their shared reliance on the medium's powerful capability for matching
big, sparse populations to things they want and will pay for.
Returning to our opening question with regard to what's changed since
2000, the necessary preconditions of successful long tail models
include large populations and strong search, a relatively new
capability. What will disrupt today's incumbents by 2010? New kinds
of batteries? Flexible displays? Enforced shutdown of the
peer-to-peer networks, possibly by a massive worm/virus of unknown
origin?
It's also important to see the both/and: just because quirky tastes
can constitute a profitable audience in new ways does not preclude
hits like the Da Vinci Code, let's say, from being major news. And
power laws still apply to traffic (and presumably revenue): Google and
Amazon profitably handle massive volumes of site visits whereas Real's
download service, about which Anderson rhapsodizes, still loses money.
At the end of the day, no algorithm in the world can negate the most
powerful "law" of business, that of cash flow.
Five years ago, the Internet sector was in the middle of a momentous
slide in market capitalization. Priceline went from nearly $500 a
share to single digits in three quarters. CDnow fell from $23 to
$3.40 in about 9 months ending in March 2000. Corvis, Music Maker,
Dr. Koop - 2000 was a meltdown the likes of which few recreational
investors had ever seen or imagined. Science was invoked to explain
this new world of Internet business.
Bernardo Huberman, then at Xerox PARC, and others found that the
proportion of websites that got the bulk of the traffic fell far from
the 80/20 rule of thumb: as of December 1, 1997, the top 1% of the
website population accounted for over 55% of all traffic. This kind
of distribution was not new, as it turned out. A Harvard linguist
with the splendid name of George Zipf counted words, and found that a
tiny percentage of English words account for a disproportionate share
of usage. A Zipf distribution, plotted on a log-log scale, is a
straight line from upper left to lower right. In linear scale, it
plunges from the top left and then goes flat for the characteristic
long tail of the distribution: twosies and then onesies occupy most of
the x-axis.
Given such "scientific" logic, investors began to argue that the
Internet was a new kind of market, with high barriers to entry that
made incumbents' positions extremely secure. Michael Mauboussin, then
at CS First Boston and now at Legg Mason, wrote a paper in late 1999
called "Absolute Power." In it he asserted that "power laws . . .
strongly support the view that on-line markets are winner-take-all."
Since that time, Google has challenged Yahoo, weblogs have markedly
deteriorated online news sites' traffic, and the distinction between
"on-line markets" and plain old markets is getting harder to maintain.
Is the Zipf distribution somehow changing? Were power laws wrongly
applied or somehow misunderstood?
Chris Anderson, editor of Wired, has a different reading of the graph
and focuses instead on the long tail. In an article last fall that's
being turned into a book, Anderson explains how a variety of web
businesses have prospered by successfully addressing the very large
number of niches in any given market. Jeff Bezos, for instance,
estimates that 30% of the books Amazon sells aren't in physical
retailers. Unlike Excite, which couldn't make money on the mostly
unique queries that came into the site, Google uses adwords to sell
almost anything to the very few people who search for something
related to it. As of March, every iTunes song in inventory (that's
over 1 million) had been purchased at least once. Netflix carries far
more inventory than a neighborhood retailer can, and can thus satisfy
any film nut's most esoteric request.
At the same time, producers of distinctive small-market goods (like
weblogs, garage demo CDs, and self-published books) can through a
variety of mechanisms reach a paying public. These mechanisms include
word of mouth, search-driven technologies, and public performance
tie-ins; digital distribution can also change a market's economics.
Thus the news is good for both makers and users, buyers and sellers;
in fact, libertarian commentator Virginia Postrel has written for the
last several years on the virtues of the choice and variety we
currently enjoy.
There's currently a "long tail" fixation in Silicon Valley. Venture
capitalists report seeing a requisite power law slide in nearly any
pitch deck. CEO Eric Schmidt showed a long tail slide at the Google
shareholder meeting. Joe Krause, formerly of Excite and now at
Jotspot, tries to argue for a long tail in software development upon
which his product of course capitalizes. The term has made USAToday
and The Economist. In some ways this feels like the bubble again, for
better and for worse.
At one level, the Internet industry seems to need intense bursts of
buzzword mania: you no longer hear anyone talking about push,
incubators, portals, exchanges, or on-line communities even though
each of these was a projected multi-billion dollar market. The visual
appeal of a Zipf distribution may also confer Anderson's long tail
with a quasi-scientism that simple terms like "blog," "handheld," or
"broadband" lack. Netflix, Amazon, and Google lacked power law
graphs, I'm pretty certain, in their startup documents and have
managed to thrive regardless. Anderson's own evidence illustrates
what a long way it is from explanation to prediction: showing how some
firms can profitably address niches doesn't prove that a startup will
similarly prosper in an adjacent market. To his credit, he focuses
primarily on entertainment, where digitization is most prevalent.
The recourse to supposed mathematical precision to buttress something
as unscientific as a business plan is not new. Sociologists
investigating networks of people have been overshadowed by physicists
who bring higher math horsepower to the same sets of problems, yet
it's still difficult to understand Friendster's revenue model.
Complex adaptive systems research was very hot in the 90s, following
in the course of the now barely visible "artificial intelligence."
The problem extends beyond calculus to spreadsheets: much of what
passes for quantitative market research is barely legitimate data. To
be reduced to a single semi-reliable number, a simple 5-point
questionnaire response should have the answers vary in regular
intervals, yet words rarely behave this way. Is "most of the time" 8
times out of ten or 95 times out of 100? Who remembers to count
before someone asks? Purchase intent rarely translates to purchase.
Yet executives make decisions every day based on customer satisfaction
scores, opinion surveys, and focus groups, all of which reduce noisy
variation to apparently clinical precision.
Make no mistake: Chris Anderson has identified something important and
widespread when he groups superficially dissimilar businesses to spot
their shared reliance on the medium's powerful capability for matching
big, sparse populations to things they want and will pay for.
Returning to our opening question with regard to what's changed since
2000, the necessary preconditions of successful long tail models
include large populations and strong search, a relatively new
capability. What will disrupt today's incumbents by 2010? New kinds
of batteries? Flexible displays? Enforced shutdown of the
peer-to-peer networks, possibly by a massive worm/virus of unknown
origin?
It's also important to see the both/and: just because quirky tastes
can constitute a profitable audience in new ways does not preclude
hits like the Da Vinci Code, let's say, from being major news. And
power laws still apply to traffic (and presumably revenue): Google and
Amazon profitably handle massive volumes of site visits whereas Real's
download service, about which Anderson rhapsodizes, still loses money.
At the end of the day, no algorithm in the world can negate the most
powerful "law" of business, that of cash flow.
Friday, May 27, 2005
May 2005 Early Indications I: O Brother, Where Art Thou?
(shipped 5/16)
Issues of electronic identity and mobility have recently been playing out in quiet but important ways. Each of three instances from last week's news is a classic case of social or economic problems being tangled up with a technology challenge. To see only one side of the question is to create the possibility of unintended consequences, allow hidden agendas into play, and generally confuse the allocation of sometimes-scarce resources. The emergence of location-sensitive services has occurred in sometimes unpredictable ways: rather than driving by the mall and getting an ad on my cell phone or satellite radio telling me about the sale at Penny's (to quote Airplane!), I and many others have much more pressing concerns about being identified and found - on our terms rather than someone else's.
-Google Buys Dodgeball
Dodgeball is a social networking service built - literally - by two guys, possibly in a garage. It combines mapping and location-awareness with connections to friends and friends-of-friends. Right now it has achieved its greatest traction in New York city, where people can find each other and meet up with help from the software that runs on cell phones. Last week Google announced that it had purchased the company for an undisclosed sum.
The connections to Google's expanding portfolio are fascinating to contemplate. The more I use Google Maps, toggling between a map location and a satellite photo or seamlessly dragging a map into a viewable window, the more impressed I am. It's a useful exercise to compare Mapquest and Google Maps, given that the underlying map data comes from the same source (NAVTEQ): the implementations have significant differences. Dodgeball also could connect with the Orkut social networking work, the Hello and Picasa photo sharing tools, and of course Google Local.
Viewed in isolation, the Dodgeball service raises the revenue questions familiar to watchers of Friendster et al: who will pay for what, and who collects, by what mechanism? But in the context of the Google suite, Dodgeball becomes a feature rather than a product, and those revenue concerns vaporize, particularly in light of the massive runup in online ad spending that's enriching both Yahoo and Google.
-Real ID Becomes Law
Buried in a Senate appropriations bill devoted to funding the war in Afghanistan, the Real ID provision mandates that states adhere to a federal standard for issuing drivers' licenses, effectively creating a national ID card. According to F. James Sensenbrenner, the Republican Chair of the House Judiciary Committee and the bill's author, "American citizens have the right to know who is in their country, that people are who they say they are, and that the name on the driver's license is the real holder's name, not some alias." Opponents of the bill - which numbered 600 - included states, pro-immigration groups, and privacy watchdogs. Encapsulating the Real ID language deep in the appropriations bill prevented consideration of the proposal on its own merits, a fact that both Republican and Democratic Senators bemoaned.
The Smart Card Alliance announced its support for the measure, which will cost an estimated $100 million to $750 million to implement. Expect other technology lobbies to follow; Oracle, for one, has been active in the debate for some time. That cost will be paid by the states, which are now in the position of having to make their licenses "machine readable" without any further guidance. The Departments of Homeland Security and Transportation will set standards for deployment; states that opt out will have their citizens kept off airplanes and out of Federal buildings.
More chillingly, as Bruce Schneier points out, nobody can use post office boxes on their license - even judges and undercover police officers. Illegal aliens, or "undocumented workers," will be forbidden from holding driver's licenses, which in purely statistical terms will result in more uninsured motorists and higher insurance premiums. States will be required to retain the documentation (such as a birth certificate) on the basis of which they issue a given license, in sharable digital form, for years afterward, increasing the risk of identity theft still further. As Schneier points out, a national ID requires a national database, and the abuses of the database, not the card, are the main cause for concern. Substantial breaches have already occurred at current leaders in identity management: credit card companies, state DMVs, health authorities. With more agencies connected into a de facto national identity database, the scale of risk magnifies. But Congressional leadership decided that a debate over the costs and benefits of such a system was not as important as preventing Latinos from driving to work. Expect those 600 groups of opponents to fight this battle further.
-The Breakdown of 911
After a series of implementations beginning in 1968, Americans on wireline voice connections could reliably dial the same three-digit emergency number anywhere in the country. As the Bell System of the twentieth century fades farther and farther from view, the presumption of 911 reliability declines proportionately with the old business model even as demand increases: New York handles about 30,000 calls a day to 911. The problem comes in two variants.
First, a number of Voice over IP customers with life-threatening - and as it turned out, life-ending - emergencies could only reach a recording at Vonage saying to call 911 from another phone. The Texas Attorney General is raising the question after a 911 call failed during a home invasion in Houston. A baby's death in Florida is being blamed on a Vonage 911 failure. According to the Wall Street Journal, "In a letter to Florida's Attorney General, [the mother] said the Vonage customer-service representative laughed when she told her that Julia had died. 'She laughed and stated that they were unable to revive a baby'. . . ."
For their part, Vonage includes bold-print instructions for manual 911 mapping during the sign-up process, but it's been estimated that up to a quarter of the U.S. population is functionally illiterate. One feature of VoIP is its portability: plug the phone into an RJ45 jack anywhere and receive calls at a virtual area code of the customer's choice. Navigating firewalls, dynamic IP addresses, wireless connections, and frequent network outages taxes anyone but the most technically adept Internet user. Children are also a key 911 constituency. Taken collectively, these overlapping populations raise dozens of tricky questions. At the infrastructure level, the FCC and other agencies face the substantial challenge of determining the fairest, safest set of technical interconnection requirements incumbent on the Regional Bells and VoIP carriers.
From the Bell perspective, 911 obviously costs money to implement and maintain, and declining wireline revenues translate to declining 911 funds. Connecting 911 to the Internet in a reliable, secure manner is nontrivial - network attacks have used modems to target the service in the past - and until contractual arrangements are finalized there is reluctance to subsidize the same firms that present themselves as full wireline replacements.
911 isn't just a VoIP problem either: cellular users represent about a third of emergency callers, but math and economics conspire to make finding them difficult or impossible. In rural areas, cell towers often follow roads, so attempting to triangulate from three points in a straight line can limit precision. States have raided 911 tax revenues for budget relief. According to the National Emergency Number Association, quoted in the Wall Street Journal, "sixteen states, including New Jersey, Arizona and Ohio, have upgraded less than 10% of their counties. Six of those states haven't finished a single county."
It's turning out that the phone is a major platform in the identity debate. Number portability was an unexpectedly popular mandate a few years ago, and the fastest technology adoption in history was a phone feature: 55 million people signed up in a matter of months for a service - the Federal Do Not Call registry - that didn't exist when it was announced. That's even faster than the previous champ, Netscape Navigator's zooming to 38 million users in 18 months. Given the global nature of some of these questions, not to mention numerous issues with ICANN and DNS, the discussions and solutions will only get more complicated. As the examples illustrate, getting social arrangements to keep pace with technology innovation is if anything more difficult than the innovation itself.
Issues of electronic identity and mobility have recently been playing out in quiet but important ways. Each of three instances from last week's news is a classic case of social or economic problems being tangled up with a technology challenge. To see only one side of the question is to create the possibility of unintended consequences, allow hidden agendas into play, and generally confuse the allocation of sometimes-scarce resources. The emergence of location-sensitive services has occurred in sometimes unpredictable ways: rather than driving by the mall and getting an ad on my cell phone or satellite radio telling me about the sale at Penny's (to quote Airplane!), I and many others have much more pressing concerns about being identified and found - on our terms rather than someone else's.
-Google Buys Dodgeball
Dodgeball is a social networking service built - literally - by two guys, possibly in a garage. It combines mapping and location-awareness with connections to friends and friends-of-friends. Right now it has achieved its greatest traction in New York city, where people can find each other and meet up with help from the software that runs on cell phones. Last week Google announced that it had purchased the company for an undisclosed sum.
The connections to Google's expanding portfolio are fascinating to contemplate. The more I use Google Maps, toggling between a map location and a satellite photo or seamlessly dragging a map into a viewable window, the more impressed I am. It's a useful exercise to compare Mapquest and Google Maps, given that the underlying map data comes from the same source (NAVTEQ): the implementations have significant differences. Dodgeball also could connect with the Orkut social networking work, the Hello and Picasa photo sharing tools, and of course Google Local.
Viewed in isolation, the Dodgeball service raises the revenue questions familiar to watchers of Friendster et al: who will pay for what, and who collects, by what mechanism? But in the context of the Google suite, Dodgeball becomes a feature rather than a product, and those revenue concerns vaporize, particularly in light of the massive runup in online ad spending that's enriching both Yahoo and Google.
-Real ID Becomes Law
Buried in a Senate appropriations bill devoted to funding the war in Afghanistan, the Real ID provision mandates that states adhere to a federal standard for issuing drivers' licenses, effectively creating a national ID card. According to F. James Sensenbrenner, the Republican Chair of the House Judiciary Committee and the bill's author, "American citizens have the right to know who is in their country, that people are who they say they are, and that the name on the driver's license is the real holder's name, not some alias." Opponents of the bill - which numbered 600 - included states, pro-immigration groups, and privacy watchdogs. Encapsulating the Real ID language deep in the appropriations bill prevented consideration of the proposal on its own merits, a fact that both Republican and Democratic Senators bemoaned.
The Smart Card Alliance announced its support for the measure, which will cost an estimated $100 million to $750 million to implement. Expect other technology lobbies to follow; Oracle, for one, has been active in the debate for some time. That cost will be paid by the states, which are now in the position of having to make their licenses "machine readable" without any further guidance. The Departments of Homeland Security and Transportation will set standards for deployment; states that opt out will have their citizens kept off airplanes and out of Federal buildings.
More chillingly, as Bruce Schneier points out, nobody can use post office boxes on their license - even judges and undercover police officers. Illegal aliens, or "undocumented workers," will be forbidden from holding driver's licenses, which in purely statistical terms will result in more uninsured motorists and higher insurance premiums. States will be required to retain the documentation (such as a birth certificate) on the basis of which they issue a given license, in sharable digital form, for years afterward, increasing the risk of identity theft still further. As Schneier points out, a national ID requires a national database, and the abuses of the database, not the card, are the main cause for concern. Substantial breaches have already occurred at current leaders in identity management: credit card companies, state DMVs, health authorities. With more agencies connected into a de facto national identity database, the scale of risk magnifies. But Congressional leadership decided that a debate over the costs and benefits of such a system was not as important as preventing Latinos from driving to work. Expect those 600 groups of opponents to fight this battle further.
-The Breakdown of 911
After a series of implementations beginning in 1968, Americans on wireline voice connections could reliably dial the same three-digit emergency number anywhere in the country. As the Bell System of the twentieth century fades farther and farther from view, the presumption of 911 reliability declines proportionately with the old business model even as demand increases: New York handles about 30,000 calls a day to 911. The problem comes in two variants.
First, a number of Voice over IP customers with life-threatening - and as it turned out, life-ending - emergencies could only reach a recording at Vonage saying to call 911 from another phone. The Texas Attorney General is raising the question after a 911 call failed during a home invasion in Houston. A baby's death in Florida is being blamed on a Vonage 911 failure. According to the Wall Street Journal, "In a letter to Florida's Attorney General, [the mother] said the Vonage customer-service representative laughed when she told her that Julia had died. 'She laughed and stated that they were unable to revive a baby'. . . ."
For their part, Vonage includes bold-print instructions for manual 911 mapping during the sign-up process, but it's been estimated that up to a quarter of the U.S. population is functionally illiterate. One feature of VoIP is its portability: plug the phone into an RJ45 jack anywhere and receive calls at a virtual area code of the customer's choice. Navigating firewalls, dynamic IP addresses, wireless connections, and frequent network outages taxes anyone but the most technically adept Internet user. Children are also a key 911 constituency. Taken collectively, these overlapping populations raise dozens of tricky questions. At the infrastructure level, the FCC and other agencies face the substantial challenge of determining the fairest, safest set of technical interconnection requirements incumbent on the Regional Bells and VoIP carriers.
From the Bell perspective, 911 obviously costs money to implement and maintain, and declining wireline revenues translate to declining 911 funds. Connecting 911 to the Internet in a reliable, secure manner is nontrivial - network attacks have used modems to target the service in the past - and until contractual arrangements are finalized there is reluctance to subsidize the same firms that present themselves as full wireline replacements.
911 isn't just a VoIP problem either: cellular users represent about a third of emergency callers, but math and economics conspire to make finding them difficult or impossible. In rural areas, cell towers often follow roads, so attempting to triangulate from three points in a straight line can limit precision. States have raided 911 tax revenues for budget relief. According to the National Emergency Number Association, quoted in the Wall Street Journal, "sixteen states, including New Jersey, Arizona and Ohio, have upgraded less than 10% of their counties. Six of those states haven't finished a single county."
It's turning out that the phone is a major platform in the identity debate. Number portability was an unexpectedly popular mandate a few years ago, and the fastest technology adoption in history was a phone feature: 55 million people signed up in a matter of months for a service - the Federal Do Not Call registry - that didn't exist when it was announced. That's even faster than the previous champ, Netscape Navigator's zooming to 38 million users in 18 months. Given the global nature of some of these questions, not to mention numerous issues with ICANN and DNS, the discussions and solutions will only get more complicated. As the examples illustrate, getting social arrangements to keep pace with technology innovation is if anything more difficult than the innovation itself.
Tuesday, May 03, 2005
April Early Indications II: My Way
Until further notice, I'll be posting at the Guidewire Group site (I'm on their advisory board). The posts will be archived here, however.
April 2005 Early Indications II: My Way
One of the great but difficult thinkers of the twentieth century, the economist and satirist Thorstein Veblen, wrestled with people's interconnected relationships both to what Marx named the means of production and to the consumption of mass produced goods. Veblen attributed a nobility to work that he called the "instinct of workmanship": man the maker "has a sense of the merit of serviceability or efficiency and of the demerit of futility, waste, or incapacity." By contrast, what he memorably named "conspicuous consumption" was "ceremonial" in that it sorted people by reputation, the basis of an ultimately unwinnable competition.
By mentioning Veblen I raise an unanswerable question. The people who buy mass-produced stuff, often called "consumers," want in some deep-rooted way to shape their environment beyond just piling up purchased goods. How much people want to stand out as unique, and how much they want to create something tangible, is of course impossible to differentiate or quantify, and of course sometimes an artifact embodies both consumption (or conspicuousness) and workmanship. But the current business landscape provides too many examples for this to be a fad: there's something very potent afoot in the rise of personalization and customization.
-Nike's ID (www.nikeid.com) mass-customization site has been up for a long time now. Back in 2000, an MIT grad student wanted his custom label to read "sweatshop," and Nike's refusal turned into a PR bonanza for both the grad student and the site itself. I don't know when it was most recently upgraded, but the current range of product and color options is truly dazzling: the Flash visualization tool is a lot of fun, to the point where designing your own stuff can get addictive. The price points have come down too: you can get a customized bike messenger bag for $50 or a watch for $85, while shoes seem to sell for $10 over retail.
There's a lot of cleverness embedded in the site. The color palettes, for example, are constructed such that it's truly hard to get two adjoining colors to clash. In some shoes, you can order two different sizes - 8 right and 8 1/2 left, for example - at no extra cost. The number of potential configurations is huge, but the volume is sufficiently small to justify the cost with customer "delight" - it's clearly an opportunity to surpass expectations.
Nike in turn plays directly to Veblen: university sports teams and elite athletes frequently get shoes in custom color schemes. It used to be a mark of distinction, or perhaps what Thorstein would call "invidious [unfair] comparison," to have shoes that aren't available in stores. Now, anyone can just do it - and not only with youth-oriented brands either: for the same $10 premium, you can design your own L.L. Bean canvas tote.
-One of the many reasons for Japanese automakers' success in the U.S. relates to their conscious courtship not of the NASCAR audience (which with few exceptions has been offered unmemorable racing-related products to buy by the American Big Three) but of the street-racing subculture central to "The Fast and the Furious." Honda, Mitsubishi, and Subaru have sold inexpensive cars that have serious upgrade and customization potential, and while some offerings such as the Dodge Neon SRT have come from U.S. badges, they're clearly late to the game. The difference between car as finished artifact and car as a platform for creativity was grasped first by some astute observers of Asian-American teenagers.
-Rupert Murdoch recently told the U.S. newspaper industry convention that paper news is in danger missing the key young adult demographic: circulation numbers are off, so badly that many big papers have been caught padding them to maintain ad revenue. TV news is also in decline: viewership is off by a third since 1993. In contrast, the most comparable online sites are either highly opinionated and interactive, or else highly selectable: Yahoo and Google News are growing far faster than any mainstream online news operation.
-Keeping with the TV theme, TiVo may have made it out of the woods with the Comcast deal. The future of TV ad revenues is being reshaped not by the remote control, which was frequently used to skip advertising, but by an automated device that does the same thing. Broadcasters are accustomed to control over the viewing experience: even mighty Microsoft has its logo disappear at bootup, as do cellular carriers and handset makers, so people can display any pictures or colors they choose on their computer and mobile phone screens. The networks, meanwhile, are fighting time-shifting and time-compression even as they find new ways to insert logos, promotional announcements, and other reminders of whose interface we're watching. Viewer annoyance with Jim Nance during the NCAA basketball tournament reached new highs, for example. By contrast, the cellular industry has supported customization and is profiting: U.S. ringtone sales were $850 million last year, double the 2003 total.
-One of the most powerful trends in electronic gaming is the creation and maintenance of virtual worlds. SimCity originally went nowhere among distributors because there was no winning and losing. Now, there is a cottage industry of Sims furnishers, not to mention players: in a hot industry, the Sims 2 was 2004's top-selling PC title. In racing games, players often configure their own cars. The examples go on from there.
-Burger King has had over 30 ad slogans, and the chain recently adopted the second, most memorable one: "Have it your way." Returning to that message was part of a turnaround that took average annual franchise sales from $970,000 to $1.3 million.
-At the top of the digital camera mass markets are "prosumer" models that mimic the functionality of the top 35mm film cameras. Canon's Digital Rebel was the first to market at the $1,000 price point, and it has sold 1.2 million units; Nikon's D70, released slightly later, sold over a million units between March 2003 and February 2005. These single-lens reflex cameras allow the photographer to compose the picture based on what the lens "sees," and, significantly for our discussion, to interchange lenses. These cameras also support file formats that better facilitate complex manipulation software like Adobe Photoshop. The range of possibilities is a long way from taking film to the neighborhood drugstore for processing.
-The music industry has yet to adjust to a model in which listeners choose what they play and in what order, as opposed to embracing the album or CD as the unit of consumption. Playlists are a textbook example of user customization, and unlike the old Uplister business, which only published playlists, Apple has integrated playlist publishing into the iTunes operation.
-Under the radar, Creative Memories has become a substantial business. Never heard of it? The Minnesota-based company began in 1987 as a spinoff of a photo album-manufacturing company and now uses 90,000 "consultants" to help people build personalized scrapbooks. 2004 sales were roughly $425 million; for comparison in the direct-sales industry, the Longaberger basket company made $1 billion in 2000, at which time it employed 8,000 people - a figure cut in half since then as demand fell with the economic slowdown.
-Not-so-random facts: Do-it-yourself (DIY) has helped drive Home Depot and Lowes to strong, sustained growth. As we discussed in February, O'Reilly Media has tapped a nerve with MAKE magazine, aimed at people "who don't mind voiding the warranty." Home entertainment digitization is being led by hobbyists building PCs to serve as music and video servers. One of the most popular campus and young adult activities is reported to be knitting; celebrity knitters include Julia Roberts and Cameron Diaz.
What does this batch of widely-ranging examples suggest? Companies that fail to understand and market to the customization mentality will face an uphill climb: General Motors and Ford, the paragons of mass production, are in deep financial trouble. Toyota and Honda serve more niches more profitably and are thriving. Subway, where each sandwich is made to order, has severely dented McDonalds' industrial model. Dell's dominance of the PC market begins with customization. Financial services companies that rely on brokers and brokers' commission structures like Merrill Lynch have had to respond to the Schwabs of the world - but now that firm is fighting a two-front battle against lower-cost low-service brokerages and established firms like Fidelity that provide a range of interaction options.
As I noted at the outset, it's difficult but important to separate and identify a number of forces. Daniel Bell identified "The Coming of Post-Industrial Society" thirty years ago, but it took the Internet for us to feel what it's like to transcend factories the way factories had trumped farming roughly a century before Bell. As information about stuff becomes more valuable than stuff, the activities of creation and individualization take on a new shape in both tangible and intangible realms. First, in an economy largely devoted to non-essentials there exists some [essential?] desire to make meaningful stuff, not just ideas and decisions. Secondly, we can see a broad-based quest to differentiate oneself by differentiating one's stuff. Finally, there's a sense of entitlement, related to the "affordable luxury" trend embodied by Starbucks, itself a primo customizer: I want the best (of something) made for me because I'm worth it.
The digital world both contributes to the desire for and enables the fulfillment of customization, but, returning to the theme of last month's "Being Analog," we still have a lot to learn about the boundaries, permeable and otherwise, between the worlds of ether and of earth and its offspring.
April 2005 Early Indications II: My Way
One of the great but difficult thinkers of the twentieth century, the economist and satirist Thorstein Veblen, wrestled with people's interconnected relationships both to what Marx named the means of production and to the consumption of mass produced goods. Veblen attributed a nobility to work that he called the "instinct of workmanship": man the maker "has a sense of the merit of serviceability or efficiency and of the demerit of futility, waste, or incapacity." By contrast, what he memorably named "conspicuous consumption" was "ceremonial" in that it sorted people by reputation, the basis of an ultimately unwinnable competition.
By mentioning Veblen I raise an unanswerable question. The people who buy mass-produced stuff, often called "consumers," want in some deep-rooted way to shape their environment beyond just piling up purchased goods. How much people want to stand out as unique, and how much they want to create something tangible, is of course impossible to differentiate or quantify, and of course sometimes an artifact embodies both consumption (or conspicuousness) and workmanship. But the current business landscape provides too many examples for this to be a fad: there's something very potent afoot in the rise of personalization and customization.
-Nike's ID (www.nikeid.com) mass-customization site has been up for a long time now. Back in 2000, an MIT grad student wanted his custom label to read "sweatshop," and Nike's refusal turned into a PR bonanza for both the grad student and the site itself. I don't know when it was most recently upgraded, but the current range of product and color options is truly dazzling: the Flash visualization tool is a lot of fun, to the point where designing your own stuff can get addictive. The price points have come down too: you can get a customized bike messenger bag for $50 or a watch for $85, while shoes seem to sell for $10 over retail.
There's a lot of cleverness embedded in the site. The color palettes, for example, are constructed such that it's truly hard to get two adjoining colors to clash. In some shoes, you can order two different sizes - 8 right and 8 1/2 left, for example - at no extra cost. The number of potential configurations is huge, but the volume is sufficiently small to justify the cost with customer "delight" - it's clearly an opportunity to surpass expectations.
Nike in turn plays directly to Veblen: university sports teams and elite athletes frequently get shoes in custom color schemes. It used to be a mark of distinction, or perhaps what Thorstein would call "invidious [unfair] comparison," to have shoes that aren't available in stores. Now, anyone can just do it - and not only with youth-oriented brands either: for the same $10 premium, you can design your own L.L. Bean canvas tote.
-One of the many reasons for Japanese automakers' success in the U.S. relates to their conscious courtship not of the NASCAR audience (which with few exceptions has been offered unmemorable racing-related products to buy by the American Big Three) but of the street-racing subculture central to "The Fast and the Furious." Honda, Mitsubishi, and Subaru have sold inexpensive cars that have serious upgrade and customization potential, and while some offerings such as the Dodge Neon SRT have come from U.S. badges, they're clearly late to the game. The difference between car as finished artifact and car as a platform for creativity was grasped first by some astute observers of Asian-American teenagers.
-Rupert Murdoch recently told the U.S. newspaper industry convention that paper news is in danger missing the key young adult demographic: circulation numbers are off, so badly that many big papers have been caught padding them to maintain ad revenue. TV news is also in decline: viewership is off by a third since 1993. In contrast, the most comparable online sites are either highly opinionated and interactive, or else highly selectable: Yahoo and Google News are growing far faster than any mainstream online news operation.
-Keeping with the TV theme, TiVo may have made it out of the woods with the Comcast deal. The future of TV ad revenues is being reshaped not by the remote control, which was frequently used to skip advertising, but by an automated device that does the same thing. Broadcasters are accustomed to control over the viewing experience: even mighty Microsoft has its logo disappear at bootup, as do cellular carriers and handset makers, so people can display any pictures or colors they choose on their computer and mobile phone screens. The networks, meanwhile, are fighting time-shifting and time-compression even as they find new ways to insert logos, promotional announcements, and other reminders of whose interface we're watching. Viewer annoyance with Jim Nance during the NCAA basketball tournament reached new highs, for example. By contrast, the cellular industry has supported customization and is profiting: U.S. ringtone sales were $850 million last year, double the 2003 total.
-One of the most powerful trends in electronic gaming is the creation and maintenance of virtual worlds. SimCity originally went nowhere among distributors because there was no winning and losing. Now, there is a cottage industry of Sims furnishers, not to mention players: in a hot industry, the Sims 2 was 2004's top-selling PC title. In racing games, players often configure their own cars. The examples go on from there.
-Burger King has had over 30 ad slogans, and the chain recently adopted the second, most memorable one: "Have it your way." Returning to that message was part of a turnaround that took average annual franchise sales from $970,000 to $1.3 million.
-At the top of the digital camera mass markets are "prosumer" models that mimic the functionality of the top 35mm film cameras. Canon's Digital Rebel was the first to market at the $1,000 price point, and it has sold 1.2 million units; Nikon's D70, released slightly later, sold over a million units between March 2003 and February 2005. These single-lens reflex cameras allow the photographer to compose the picture based on what the lens "sees," and, significantly for our discussion, to interchange lenses. These cameras also support file formats that better facilitate complex manipulation software like Adobe Photoshop. The range of possibilities is a long way from taking film to the neighborhood drugstore for processing.
-The music industry has yet to adjust to a model in which listeners choose what they play and in what order, as opposed to embracing the album or CD as the unit of consumption. Playlists are a textbook example of user customization, and unlike the old Uplister business, which only published playlists, Apple has integrated playlist publishing into the iTunes operation.
-Under the radar, Creative Memories has become a substantial business. Never heard of it? The Minnesota-based company began in 1987 as a spinoff of a photo album-manufacturing company and now uses 90,000 "consultants" to help people build personalized scrapbooks. 2004 sales were roughly $425 million; for comparison in the direct-sales industry, the Longaberger basket company made $1 billion in 2000, at which time it employed 8,000 people - a figure cut in half since then as demand fell with the economic slowdown.
-Not-so-random facts: Do-it-yourself (DIY) has helped drive Home Depot and Lowes to strong, sustained growth. As we discussed in February, O'Reilly Media has tapped a nerve with MAKE magazine, aimed at people "who don't mind voiding the warranty." Home entertainment digitization is being led by hobbyists building PCs to serve as music and video servers. One of the most popular campus and young adult activities is reported to be knitting; celebrity knitters include Julia Roberts and Cameron Diaz.
What does this batch of widely-ranging examples suggest? Companies that fail to understand and market to the customization mentality will face an uphill climb: General Motors and Ford, the paragons of mass production, are in deep financial trouble. Toyota and Honda serve more niches more profitably and are thriving. Subway, where each sandwich is made to order, has severely dented McDonalds' industrial model. Dell's dominance of the PC market begins with customization. Financial services companies that rely on brokers and brokers' commission structures like Merrill Lynch have had to respond to the Schwabs of the world - but now that firm is fighting a two-front battle against lower-cost low-service brokerages and established firms like Fidelity that provide a range of interaction options.
As I noted at the outset, it's difficult but important to separate and identify a number of forces. Daniel Bell identified "The Coming of Post-Industrial Society" thirty years ago, but it took the Internet for us to feel what it's like to transcend factories the way factories had trumped farming roughly a century before Bell. As information about stuff becomes more valuable than stuff, the activities of creation and individualization take on a new shape in both tangible and intangible realms. First, in an economy largely devoted to non-essentials there exists some [essential?] desire to make meaningful stuff, not just ideas and decisions. Secondly, we can see a broad-based quest to differentiate oneself by differentiating one's stuff. Finally, there's a sense of entitlement, related to the "affordable luxury" trend embodied by Starbucks, itself a primo customizer: I want the best (of something) made for me because I'm worth it.
The digital world both contributes to the desire for and enables the fulfillment of customization, but, returning to the theme of last month's "Being Analog," we still have a lot to learn about the boundaries, permeable and otherwise, between the worlds of ether and of earth and its offspring.
Friday, April 22, 2005
April Early Indications I: Convergence Management
Since as long as ten or twelve years ago, observers at the bleeding edge of technology have predicted the coming of something called convergence: as long as "bits are bits," television and computing, voice and data, and gaming and the Internet can somehow combine. Convergence was implied to be an end state, the logical extreme of which would be a master device capable of informing, educating, communicating with, and entertaining the owner at his or her whim.
The verdict on convergence is mixed. NTSC television, a standard over 50 years old, remains America's dominant medium. The most successful consumer electronics product of the last five years, the iPod, performs a single function elegantly. Fear and some would say ignorance on the part of content owners like movie studios and record labels has led to a lot of money and energy being devoted to inhibiting convergence through legal, technical, and other means.
On the positive side of the convergence ledger, the tendency toward content and device independence continues to increase. The daily newspaper can be read in a number of forms. Music is available streaming or by download, and on radio transmissions coming via analog airwave, internet, satellite, or digital airwave. Voice can be sent through a wide variety of technologies.
What does this tendency hold in store? Verizon and SBC have been aggressive in challenging the cable companies with fiber near (SBC) or to (Verizon) the premise. In both cases, Microsoft has announced it will supply the operating system for the set-top box, which can include Tivo-like digital video recording. Verizon has announced content partnerships with the likes of HBO, Starz, and other mainstream programmers, meaning that the same company might be collecting for a household's voice, Internet, mobile, and video connectivity.
A mere 15 years ago, a typical American household had as few as four monthly "utility" bills: electricity, telephone, water/sewage, and fuel. It's now possible to have as many as nine: Internet, mobile, local voice, long distance voice, electric transport, electric generation, water/sewage, cable or satellite, and fuel. How people choose to manage the communications components of this portfolio will shape the financial future of some of America's largest companies, including AOL/Time Warner, GE, Viacom, Disney, Motorola, and Comcast, as well as the aforementioned Microsoft, SBC, and Verizon.
One factor in that decision will result from choices as to platforms: how will people manage convergence? Will the model tilt predominately toward a single master device, possibly a Microsoft/Dell PC+TV? (Check out what Dell is doing to TV monitor pricing, by the way: their efficient supply chain is radically undercutting the likes of Sony, and on the global market, flat-panel manufacturers like Samsung and especially Philips are suffering from oversupply, selling at prices below the cost of production.)
Or will the U.S. follow other countries into increasing reliance on a mobile platform? As I pointed out on Bloomberg radio last week, Apple feels justifiably proud of moving about 5 million iPods per quarter. This year, though, we'll start to see phones with hard drives: even if 3% of global units impinge on the Apple domain, that's about 20 million units right there. Steve Jobs is skating along the edge between running a tech stock and running a consumer electronics company. Once he moves the company into the latter markets, volumes can get frighteningly big.
Apart from consumer preference, the other factor to watch will be the fight over who "owns" the customer. Is it really immaterial to Disney whether a viewer watches ESPN over satellite, cable, telco fiber, or on a cell phone? AOL used to be more vertically integrated than they became after selling off the cable properties: will they regret having to buy their way into people's houses on someone else's wires? And what of Microsoft: once they build the OS for the set-top box and maybe the smartphone, will the company be content to run "under" SBC's Cingular and Lightspeed logos? Everyone remembers the outcome when IBM let them do a similar thing on PCs 25 years ago.
Regardless of who ends up on which tier of the pecking order from a vendor perspective, the potential combinations will be fascinating to watch. Some people may opt for a single supplier (Google? Microsoft? Yahoo? SBC?) to eliminate the confusion and tedium of managing multiple logins or information repositories, for example. Others may pledge allegiance to a device (like the Danger Hiptop) regardless of which network it runs on. Finally, a customer's primary task may lead to a particular platform: convergence may mean little to someone who places high value on mobile text messaging.
Convergence implies tradeoffs. Just because you can watch TV on your computer, or read e-mail on your TV, doesn't mean the experience is completely fungible. Maybe the most popular convergence will be two-way rather than an n-way rollup into the "master" device. After all, you can open cans, uncork wine bottles, peel carrots, and cut meat with a Swiss army knife, but very few kitchens subsist on that one tool. Being able to carry voice and e-mail has made the Blackberry quite popular: it's unclear whether playing music would make it more so. The sales of cameraphones don't seem to be displacing standalone cameras, but that could change. Looking forward, will the mobile phone emerge as a serious gaming, wayfinding (GPS), image-capture, voice, messaging, data display, and music platform? Just from a user interface standpoint, it's hard to imagine how one would "naturally" use such a device for such different functions.
So there will be a lot to watch in the next few years. Verizon wants to connect 3 million homes with fiber by the end of this year. Samsung will be shipping 3 GB hard drives on cell phones this year, based on what they showed at CeBIT. Intel and Fujitsu will both sell WiMax chipsets in the near future, making fixed broadband wireless a further element in the connection mix. Handset manufacturers are relentlessly improving, and sometimes innovating. The next-generation DVD will arrive soon once the standard is finalized; HDTV is already here. In short, the technology landscape, particularly in the consumer markets, remains highly volatile, and the stakes look to be higher than ever.
If a company can turn convergence into economic consolidation, the payoff looks to be handsome -- which explains the ambition of the plays being made by most of the companies already noted: Motorola has Canopy, Verizon has FiOS, lots of folks have huge investments in search, and the list goes on. These are bet-the-business investments in most cases, so punishment for the also-rans will be harsh. Fortunately for most of us, it's plenty rewarding watching the story unfold.
The verdict on convergence is mixed. NTSC television, a standard over 50 years old, remains America's dominant medium. The most successful consumer electronics product of the last five years, the iPod, performs a single function elegantly. Fear and some would say ignorance on the part of content owners like movie studios and record labels has led to a lot of money and energy being devoted to inhibiting convergence through legal, technical, and other means.
On the positive side of the convergence ledger, the tendency toward content and device independence continues to increase. The daily newspaper can be read in a number of forms. Music is available streaming or by download, and on radio transmissions coming via analog airwave, internet, satellite, or digital airwave. Voice can be sent through a wide variety of technologies.
What does this tendency hold in store? Verizon and SBC have been aggressive in challenging the cable companies with fiber near (SBC) or to (Verizon) the premise. In both cases, Microsoft has announced it will supply the operating system for the set-top box, which can include Tivo-like digital video recording. Verizon has announced content partnerships with the likes of HBO, Starz, and other mainstream programmers, meaning that the same company might be collecting for a household's voice, Internet, mobile, and video connectivity.
A mere 15 years ago, a typical American household had as few as four monthly "utility" bills: electricity, telephone, water/sewage, and fuel. It's now possible to have as many as nine: Internet, mobile, local voice, long distance voice, electric transport, electric generation, water/sewage, cable or satellite, and fuel. How people choose to manage the communications components of this portfolio will shape the financial future of some of America's largest companies, including AOL/Time Warner, GE, Viacom, Disney, Motorola, and Comcast, as well as the aforementioned Microsoft, SBC, and Verizon.
One factor in that decision will result from choices as to platforms: how will people manage convergence? Will the model tilt predominately toward a single master device, possibly a Microsoft/Dell PC+TV? (Check out what Dell is doing to TV monitor pricing, by the way: their efficient supply chain is radically undercutting the likes of Sony, and on the global market, flat-panel manufacturers like Samsung and especially Philips are suffering from oversupply, selling at prices below the cost of production.)
Or will the U.S. follow other countries into increasing reliance on a mobile platform? As I pointed out on Bloomberg radio last week, Apple feels justifiably proud of moving about 5 million iPods per quarter. This year, though, we'll start to see phones with hard drives: even if 3% of global units impinge on the Apple domain, that's about 20 million units right there. Steve Jobs is skating along the edge between running a tech stock and running a consumer electronics company. Once he moves the company into the latter markets, volumes can get frighteningly big.
Apart from consumer preference, the other factor to watch will be the fight over who "owns" the customer. Is it really immaterial to Disney whether a viewer watches ESPN over satellite, cable, telco fiber, or on a cell phone? AOL used to be more vertically integrated than they became after selling off the cable properties: will they regret having to buy their way into people's houses on someone else's wires? And what of Microsoft: once they build the OS for the set-top box and maybe the smartphone, will the company be content to run "under" SBC's Cingular and Lightspeed logos? Everyone remembers the outcome when IBM let them do a similar thing on PCs 25 years ago.
Regardless of who ends up on which tier of the pecking order from a vendor perspective, the potential combinations will be fascinating to watch. Some people may opt for a single supplier (Google? Microsoft? Yahoo? SBC?) to eliminate the confusion and tedium of managing multiple logins or information repositories, for example. Others may pledge allegiance to a device (like the Danger Hiptop) regardless of which network it runs on. Finally, a customer's primary task may lead to a particular platform: convergence may mean little to someone who places high value on mobile text messaging.
Convergence implies tradeoffs. Just because you can watch TV on your computer, or read e-mail on your TV, doesn't mean the experience is completely fungible. Maybe the most popular convergence will be two-way rather than an n-way rollup into the "master" device. After all, you can open cans, uncork wine bottles, peel carrots, and cut meat with a Swiss army knife, but very few kitchens subsist on that one tool. Being able to carry voice and e-mail has made the Blackberry quite popular: it's unclear whether playing music would make it more so. The sales of cameraphones don't seem to be displacing standalone cameras, but that could change. Looking forward, will the mobile phone emerge as a serious gaming, wayfinding (GPS), image-capture, voice, messaging, data display, and music platform? Just from a user interface standpoint, it's hard to imagine how one would "naturally" use such a device for such different functions.
So there will be a lot to watch in the next few years. Verizon wants to connect 3 million homes with fiber by the end of this year. Samsung will be shipping 3 GB hard drives on cell phones this year, based on what they showed at CeBIT. Intel and Fujitsu will both sell WiMax chipsets in the near future, making fixed broadband wireless a further element in the connection mix. Handset manufacturers are relentlessly improving, and sometimes innovating. The next-generation DVD will arrive soon once the standard is finalized; HDTV is already here. In short, the technology landscape, particularly in the consumer markets, remains highly volatile, and the stakes look to be higher than ever.
If a company can turn convergence into economic consolidation, the payoff looks to be handsome -- which explains the ambition of the plays being made by most of the companies already noted: Motorola has Canopy, Verizon has FiOS, lots of folks have huge investments in search, and the list goes on. These are bet-the-business investments in most cases, so punishment for the also-rans will be harsh. Fortunately for most of us, it's plenty rewarding watching the story unfold.
Thursday, March 31, 2005
March 2005 Early Indications II: Information Gumbo
The world of data has entered a notably rich period of evolution. Search technologists at a variety of startups and deep-pocketed incumbents are engaged in an arms race, with new tools and capabilities appearing almost weekly. (Examples include A9's Open Search, Ziggs, Picasa, Browster, Oodle, and EVDB.) RSS is expanding beyond news and blog feeds. Tagging and other bottom-up classification methods, including wikis, are growing at a phenomenal rate.
Why do these matter? Taken in the aggregate, they reflect a new set of assumptions about people and what they do with information. Depending on how things unfold, we might get much closer to wide usability than the hard-coded obtuseness of a relational database or enterprise application typically allows. Rather than having to know some arbitrarily defined, precise syntax to get from A to B, for example, people can both name and define something themselves and then trust new search and display techniques to learn what they need to know.
In no logical order, here are some areas of innovation:
1) Data and applications can now interact in new ways. In public examples such as Google Maps and Gmail's spellchecker and lookahead address book, it's easy to see that browser windows can deliver surprisingly rich functionality without plug-ins. The buzzword to describe this is Ajax: Asynchronous JavaScript and XML. I won't dive into technical explanations here, but suffice it to say that Ajax avoids the lag associated with an HTTP call back to the server across an unpredictable network. Instead, Ajax embeds scripting that allows the browser to change what the viewer sees - instantaneously. One of many relevant outcomes: dynamic visual representations of information (like Musicplasma) become more feasible. (For more, see this explanation.)
2) Information we look for and information we want to find us generally differ in size, timeliness, and need for context. The need for so-called "glanceable" information drove Microsoft's SPOT watch initiative, and the same kind of information is also now available in a more elegant fashion on glowing cubes and eggs from Ambient Devices: the orb's color indicates the overall health of a stock market or portfolio, with green being healthy and red being dangerous.
The weather cube works exactly like the old John Hancock building spire in Boston on which glowing blue means a nice day in the forecast; by contrast, flashing red means snow.(1) Glanceable information like the time, temperatures, or sports scores needs little context, whereas what might be called "intentional" information - things one looks for - usually requires some scaffolding for it to be meaningful: which analyst rated the stock a "buy"? What's her track record? What's today's stock price? How does that stack up with yesterday or a year ago, or with the sector generally? With a nod to Les McCann and Eddie Harris, this is the "compared to what?" issue.
Once that context is in place, new categories can grow more amenable to glanceable representation. For example, once we get accustomed to a given news or opinion source, it can be nice to have it pushed to a newsreader with RSS so when I ask "what did blogger X have to say about the State of the Union Address?" I can pluck the entry out of a list rather than mount a more traditional surf or search. Thus intentionality and glanceability are unstable and personalized categories of information. It's very early, but RSS is evolving into an enterprise tool with uses beyond automating the distribution of corporate communications. Consider sales forces: RSS can be used to push price changes out to Blackberries in the field, or to aggregate inbound orders and lead reports into a format far easier to manage than faxes or e-mail. More convenient access can make formerly cumbersome query data glanceable: the technology can change the usefulness and ease of integration of the information.
3) Traditionally, organizing information has been a top-down affair; we've previously discussed the Library of Congress cataloguing scheme as an example. Another source of context for data can come from the bottom up as people who know something about that datum under discussion contribute what they know. The Flickr photo service provides one example, Wikipedia another. Yet another current buzzword - folksonomies - differentiates bottom-up from top-down information architectures.
The open-source model shows that groups can in fact be organized, and self-organize, to do amazingly large amounts of work on an ad hoc and often volunteer basis. It's also worth asking, however, how voluntarism translates to commercialization: the Gracenote database that helps make iTunes so easy to use began as a volunteer effort, but the early contributors received nothing from the commercial success of the company. What will happen with Wikipedia when the expenses and perhaps the profit potential of the effort outstrip the donation model? Servers and bandwidth aren't free even if the content is, so when might commercial apparatus like lawyers, bankers, and managers alter the project?
4) The iPod illustrates a complex information dynamic: sometimes what we want isn't amenable to formulation in a search string. As a friend pointed out, Apple brilliantly turned the iPod Shuffle's lack of a display into a feature, selling randomness as a benefit. Serendipity matters for many kinds of information: there are times when the next song in a randomized playlist is "right" for reasons the listener could not have specified beforehand, or the webpage you found while looking for something else can have a major impact.
Another class of information relates to things for which either there is no name (industrial parts known mainly through numbers which do not appear on the part itself, for example) or the name is unavailable to the person who needs to find the thing that bears the name. Here, folksonomies hold both promise and peril: right now the process by which a term becomes standardized is, in Google VP of Engineering Adam Bosworth's term, "sloppy." That's good, in that committees don't have to form for work to get done, but bad in that the sloppiness introduces the prospect of s-p-a-m and other externalities of an open, networked process.
Right now, the numbers and more important the culture of the wikipedia community are manageable, with rare exceptions like the trauma of the George W. Bush entry, which was constantly redacted by editors with opposing viewpoints. If I need to find the name of something before I can search for it, and the name is unnecessarily arbitrary and/or fluid, it's going to cause problems. There's also the question of scalability: is there a threshold of participation past which there are just too many chefs in the kitchen? At the same time, if search looks more for keywords and semantic context as opposed to precise textual or numerical matches a la SQL, the noise in a community-driven system will aid processor- and algorithm-intensive search engines in steering people to what they need - which may or may not be what they articulated in the search bar. The contrasting strengths and weaknesses of folksonomies and XML namespaces are probably educational.
All in all, it's hard to project where the co-evolution of wikis, tags, XML, search, and databases will lead. Google has shown that relational databases don't scale infinitely, but indexing and search just might. In the other corner of the heavyweight boxing ring, Yahoo's purchase of Flickr gives it access to new technologies and not accidentally a way of looking at the world that will certainly bear fruits in the future. On the client side, new technologies in cell phones have the potential to add location to the context equation, with huge implications for both privacy and relevance. Having end-user appliances that are simultaneously a sensor (whether fixed, like the A9 search history, or mobile) and an input/output device changes the game still further.
To a greater degree than in the past few years, the technology market's "buzzing, blooming confusion" (to crib from William James, himself no slouch in the human-use-of-information department) leaves room for some new entrants to make a potentially enormous impact. It's hard to imagine IBM, Oracle, or Microsoft creating the ''next big thing" from this emerging toolbox, precisely because they're accustomed to avoiding the very sloppiness that drove its invention in the first place.
(1) Fineliving.com includes a mnemonic for the Boston weather spire with some relevant addenda:
Steady blue, clear view
Flashing blue, clouds due
Steady red, rain ahead
Flashing red, snow instead.
Remember, however, that in summer, a flashing red light means that the upcoming Red Sox game has been canceled. And if the lights flash blue and red simultaneously, as happened for the first time October, 2004 it means the Red Sox won the World Series.
Why do these matter? Taken in the aggregate, they reflect a new set of assumptions about people and what they do with information. Depending on how things unfold, we might get much closer to wide usability than the hard-coded obtuseness of a relational database or enterprise application typically allows. Rather than having to know some arbitrarily defined, precise syntax to get from A to B, for example, people can both name and define something themselves and then trust new search and display techniques to learn what they need to know.
In no logical order, here are some areas of innovation:
1) Data and applications can now interact in new ways. In public examples such as Google Maps and Gmail's spellchecker and lookahead address book, it's easy to see that browser windows can deliver surprisingly rich functionality without plug-ins. The buzzword to describe this is Ajax: Asynchronous JavaScript and XML. I won't dive into technical explanations here, but suffice it to say that Ajax avoids the lag associated with an HTTP call back to the server across an unpredictable network. Instead, Ajax embeds scripting that allows the browser to change what the viewer sees - instantaneously. One of many relevant outcomes: dynamic visual representations of information (like Musicplasma) become more feasible. (For more, see this explanation.)
2) Information we look for and information we want to find us generally differ in size, timeliness, and need for context. The need for so-called "glanceable" information drove Microsoft's SPOT watch initiative, and the same kind of information is also now available in a more elegant fashion on glowing cubes and eggs from Ambient Devices: the orb's color indicates the overall health of a stock market or portfolio, with green being healthy and red being dangerous.
The weather cube works exactly like the old John Hancock building spire in Boston on which glowing blue means a nice day in the forecast; by contrast, flashing red means snow.(1) Glanceable information like the time, temperatures, or sports scores needs little context, whereas what might be called "intentional" information - things one looks for - usually requires some scaffolding for it to be meaningful: which analyst rated the stock a "buy"? What's her track record? What's today's stock price? How does that stack up with yesterday or a year ago, or with the sector generally? With a nod to Les McCann and Eddie Harris, this is the "compared to what?" issue.
Once that context is in place, new categories can grow more amenable to glanceable representation. For example, once we get accustomed to a given news or opinion source, it can be nice to have it pushed to a newsreader with RSS so when I ask "what did blogger X have to say about the State of the Union Address?" I can pluck the entry out of a list rather than mount a more traditional surf or search. Thus intentionality and glanceability are unstable and personalized categories of information. It's very early, but RSS is evolving into an enterprise tool with uses beyond automating the distribution of corporate communications. Consider sales forces: RSS can be used to push price changes out to Blackberries in the field, or to aggregate inbound orders and lead reports into a format far easier to manage than faxes or e-mail. More convenient access can make formerly cumbersome query data glanceable: the technology can change the usefulness and ease of integration of the information.
3) Traditionally, organizing information has been a top-down affair; we've previously discussed the Library of Congress cataloguing scheme as an example. Another source of context for data can come from the bottom up as people who know something about that datum under discussion contribute what they know. The Flickr photo service provides one example, Wikipedia another. Yet another current buzzword - folksonomies - differentiates bottom-up from top-down information architectures.
The open-source model shows that groups can in fact be organized, and self-organize, to do amazingly large amounts of work on an ad hoc and often volunteer basis. It's also worth asking, however, how voluntarism translates to commercialization: the Gracenote database that helps make iTunes so easy to use began as a volunteer effort, but the early contributors received nothing from the commercial success of the company. What will happen with Wikipedia when the expenses and perhaps the profit potential of the effort outstrip the donation model? Servers and bandwidth aren't free even if the content is, so when might commercial apparatus like lawyers, bankers, and managers alter the project?
4) The iPod illustrates a complex information dynamic: sometimes what we want isn't amenable to formulation in a search string. As a friend pointed out, Apple brilliantly turned the iPod Shuffle's lack of a display into a feature, selling randomness as a benefit. Serendipity matters for many kinds of information: there are times when the next song in a randomized playlist is "right" for reasons the listener could not have specified beforehand, or the webpage you found while looking for something else can have a major impact.
Another class of information relates to things for which either there is no name (industrial parts known mainly through numbers which do not appear on the part itself, for example) or the name is unavailable to the person who needs to find the thing that bears the name. Here, folksonomies hold both promise and peril: right now the process by which a term becomes standardized is, in Google VP of Engineering Adam Bosworth's term, "sloppy." That's good, in that committees don't have to form for work to get done, but bad in that the sloppiness introduces the prospect of s-p-a-m and other externalities of an open, networked process.
Right now, the numbers and more important the culture of the wikipedia community are manageable, with rare exceptions like the trauma of the George W. Bush entry, which was constantly redacted by editors with opposing viewpoints. If I need to find the name of something before I can search for it, and the name is unnecessarily arbitrary and/or fluid, it's going to cause problems. There's also the question of scalability: is there a threshold of participation past which there are just too many chefs in the kitchen? At the same time, if search looks more for keywords and semantic context as opposed to precise textual or numerical matches a la SQL, the noise in a community-driven system will aid processor- and algorithm-intensive search engines in steering people to what they need - which may or may not be what they articulated in the search bar. The contrasting strengths and weaknesses of folksonomies and XML namespaces are probably educational.
All in all, it's hard to project where the co-evolution of wikis, tags, XML, search, and databases will lead. Google has shown that relational databases don't scale infinitely, but indexing and search just might. In the other corner of the heavyweight boxing ring, Yahoo's purchase of Flickr gives it access to new technologies and not accidentally a way of looking at the world that will certainly bear fruits in the future. On the client side, new technologies in cell phones have the potential to add location to the context equation, with huge implications for both privacy and relevance. Having end-user appliances that are simultaneously a sensor (whether fixed, like the A9 search history, or mobile) and an input/output device changes the game still further.
To a greater degree than in the past few years, the technology market's "buzzing, blooming confusion" (to crib from William James, himself no slouch in the human-use-of-information department) leaves room for some new entrants to make a potentially enormous impact. It's hard to imagine IBM, Oracle, or Microsoft creating the ''next big thing" from this emerging toolbox, precisely because they're accustomed to avoiding the very sloppiness that drove its invention in the first place.
(1) Fineliving.com includes a mnemonic for the Boston weather spire with some relevant addenda:
Steady blue, clear view
Flashing blue, clouds due
Steady red, rain ahead
Flashing red, snow instead.
Remember, however, that in summer, a flashing red light means that the upcoming Red Sox game has been canceled. And if the lights flash blue and red simultaneously, as happened for the first time October, 2004 it means the Red Sox won the World Series.
Friday, March 18, 2005
March 2005 Early Indications I: Being Analog
The march of digital processes and devices to fill spaces formerly occupied by analog technologies proceeds apace. Some examples follow:
-paper memos to e-mail
-"regular" cable to digital cable
-VHS to DVD and TiVo
-film to digital photography
-VGA and component video to DVI and HDMI
-LPs and cassette tapes to CDs and MP3s
-circuit-switched voice to Voice over Internet Protocols
-AM and FM radio to terrestrial digital and satellite services.
Many observers make the mistake of classifying a digital technology as "better" if only by the virtue of modernity. It's more useful, however, to treat any technology comparison as a contrast between different sets of costs and benefits. Furthermore, every development has unintended consequences that its creators could not have predicted, and these need to be considered as well.
A key factor in any digital technology is the ability to move artifacts over a wire. Compared to physical postage or even fax, various services on the Internet can move music, text, and images quickly and at high levels of fidelity. This capability in turn can be regarded as desirable or not. Is digital photography "better" than film? Artistic control over the final image, portability, and cost and speed of print turnaround are pluses, while film may have an edge in equipment cost, image quality, and privacy. (As for the last aspect, run a Google image search on DCP000[fill in a number - it's a default Kodak numbering scheme] then consider how many people want complete strangers viewing their snapshots? What happens when a) the hosting service goes out of business or b) the hosting service leaves up your images after you quit?)
Another core aspect of digital artifacts is their ability to be manipulated. In the case of Voice over IP and e-mail, encryption gives the bad guys an advantage over the law enforcement types who want to be able to monitor them. Digital cable TV, meanwhile, is most noteworthy not for image quality but for compression, which increases the providers' usable bandwidth substantially. Subscribers can get more channels over the same wire, but image quality (until HDTV) was limited primarily by the 50-year-old NTSC standard. Analog signal processing is an entirely different kettle of fish, with fewer possibilities.
As numerous executives have discovered to their dismay, e-mail is not secure, controllable, or ephemeral. Harry Stonecipher's departure from Boeing is difficult to imagine in a paper memo scenario: few people would use a workplace communications medium for romantic correspondence, and tipsters would not have automated (or other) access to it even if they did. In this instance, analog has clear benefits and can be the medium of choice when privacy matters.
For a variety of reasons, analog and digital options often aren't equally available. Music companies did what they could - closed LP pressing plants, for example - in the late 1980s and early '90s to make customers repurchase music they liked. The CD format's limited copy protection, however, made duplication and distribution extremely easy. Now, as the studios want to spur a new age of multi-channel audio, both Super Audio CD and DVD-Audio formats have highly effective copy protection. The tension between improved sound quality and inconvenience - and a competing standard - plays a role in the pathetic adoption rates.
We can see a similar transition in photography. Kodak will no longer process its legendary Kodachrome slide film, for example. Great film cameras are available in the secondary market - you can get a Hasselblad with lens for about $1000 - but the question is how long processing will be cost-effective and convenient. Processors are in a tough spot: as volumes decline, their assumptions about economies of scale have to be refigured, and the true cost of toxic waste disposal gets more explicit every year.
VCR sales are dropping worldwide, and several major electronics retailers have stopped carrying them. The content providers talk about "plugging the analog hole" - links in the chain of components where unencrypted signal can be digitized buy "unauthorized" parties. Thus the market dynamic is gladly accelerated by content providers only too happy to try to close the barn door before all the horses escape. The lack of backward compatibility means that dual-drive VCR+DVD machines are still offered, but the gap in image quality between analog and digital video, not to mention the greater permanence of polycarbonate over mylar and ferrous oxide, means that analog VHS has limited appeal.
In consumer markets, the easy mobility of digital artifacts has led to copy protection and encryption being primary engineering criteria for the manufacturers and copyright holders. Customers for such equipment have little choice but to pay for expensive functionality that does nothing to improve - and could possibly impair - the experience of using the equipment. It's obvious that Sony has impaled the fate of the company on the horns of this dilemma, but if anyone can resolve it, Howard Stringer is the guy.
Behind the scenes, the analog-digital transition is in some ways profound. Without consumer-grade copy protection to consider, digital tools are remaking medicine, music recording, and architecture, to name but three fields.
-To take only one area of medicine, digital mammography uses hardware (in which lower radiation doses are needed), software (image manipulation to increase contrast or zoom in), and data storage (including data mining) to improve on the performance of film. It's also easier to movie digital files, albeit large ones, than physical films, which is part of the process of outsourcing radiological readings to India and elsewhere. At the same time, merely capturing pictures of physicians' notes or orders means little without metadata to facilitate indexing, searching, and retrieval. Some digital systems are actually harder to use and less reliable than paper files in this phase of their evolution.
-Recording studios (including the Hit Factory in New York) are closing, in part because hard-drive-based editing systems allow musicians to make their own demo and even master tapes using software like Digidesign's ProTools. Even though it is favored by many respected engineers and performers, analog magnetic tape is getting scarce: Quantegy, the last manufacturer of pro-grade audio tape, shut down operations late last year. As studios convert to digital, pro-grade gear from such manufacturers as Studer and Otari is readily available - but with what future?
-The work of architects and designers has been reinvented. Just as word processors allowed writers numerous opportunities to edit and move text without the tedium of retyping, CAD tools make erasing and redrawing tasks of the past. 3D renderings of finished spaces and structures have become incredibly realistic. Construction documents and specifications have also become more automated.
The undeniable benefits of every digital technology raise important follow-up questions. Do we have better buildings because of AutoCAD? Are breast cancer detection and cure rates changing as a result of different diagnostic technology? Does getting copied on thousands of communications that would be impossible to distribute in paper make anyone more efficient or effective? Finally, it would appear that there are digital technologies with nearly unalloyed benefits (such as mammography), while many (e-mail, voice over IP, digital audio) are more complicated in their impact.
As the tools change, it's a fact of anthropological life that the tool-users will change along with them, but this is something we're less good at studying. Nicholas Negroponte deserves plenty of credit for the thinking that culminated in Being Digital (which is ten years old!), but now we have the far more difficult task of untangling what it meant to live in analog when it was the only option, and what it now means to be hybrids between the worlds of bits and atoms.
-paper memos to e-mail
-"regular" cable to digital cable
-VHS to DVD and TiVo
-film to digital photography
-VGA and component video to DVI and HDMI
-LPs and cassette tapes to CDs and MP3s
-circuit-switched voice to Voice over Internet Protocols
-AM and FM radio to terrestrial digital and satellite services.
Many observers make the mistake of classifying a digital technology as "better" if only by the virtue of modernity. It's more useful, however, to treat any technology comparison as a contrast between different sets of costs and benefits. Furthermore, every development has unintended consequences that its creators could not have predicted, and these need to be considered as well.
A key factor in any digital technology is the ability to move artifacts over a wire. Compared to physical postage or even fax, various services on the Internet can move music, text, and images quickly and at high levels of fidelity. This capability in turn can be regarded as desirable or not. Is digital photography "better" than film? Artistic control over the final image, portability, and cost and speed of print turnaround are pluses, while film may have an edge in equipment cost, image quality, and privacy. (As for the last aspect, run a Google image search on DCP000[fill in a number - it's a default Kodak numbering scheme] then consider how many people want complete strangers viewing their snapshots? What happens when a) the hosting service goes out of business or b) the hosting service leaves up your images after you quit?)
Another core aspect of digital artifacts is their ability to be manipulated. In the case of Voice over IP and e-mail, encryption gives the bad guys an advantage over the law enforcement types who want to be able to monitor them. Digital cable TV, meanwhile, is most noteworthy not for image quality but for compression, which increases the providers' usable bandwidth substantially. Subscribers can get more channels over the same wire, but image quality (until HDTV) was limited primarily by the 50-year-old NTSC standard. Analog signal processing is an entirely different kettle of fish, with fewer possibilities.
As numerous executives have discovered to their dismay, e-mail is not secure, controllable, or ephemeral. Harry Stonecipher's departure from Boeing is difficult to imagine in a paper memo scenario: few people would use a workplace communications medium for romantic correspondence, and tipsters would not have automated (or other) access to it even if they did. In this instance, analog has clear benefits and can be the medium of choice when privacy matters.
For a variety of reasons, analog and digital options often aren't equally available. Music companies did what they could - closed LP pressing plants, for example - in the late 1980s and early '90s to make customers repurchase music they liked. The CD format's limited copy protection, however, made duplication and distribution extremely easy. Now, as the studios want to spur a new age of multi-channel audio, both Super Audio CD and DVD-Audio formats have highly effective copy protection. The tension between improved sound quality and inconvenience - and a competing standard - plays a role in the pathetic adoption rates.
We can see a similar transition in photography. Kodak will no longer process its legendary Kodachrome slide film, for example. Great film cameras are available in the secondary market - you can get a Hasselblad with lens for about $1000 - but the question is how long processing will be cost-effective and convenient. Processors are in a tough spot: as volumes decline, their assumptions about economies of scale have to be refigured, and the true cost of toxic waste disposal gets more explicit every year.
VCR sales are dropping worldwide, and several major electronics retailers have stopped carrying them. The content providers talk about "plugging the analog hole" - links in the chain of components where unencrypted signal can be digitized buy "unauthorized" parties. Thus the market dynamic is gladly accelerated by content providers only too happy to try to close the barn door before all the horses escape. The lack of backward compatibility means that dual-drive VCR+DVD machines are still offered, but the gap in image quality between analog and digital video, not to mention the greater permanence of polycarbonate over mylar and ferrous oxide, means that analog VHS has limited appeal.
In consumer markets, the easy mobility of digital artifacts has led to copy protection and encryption being primary engineering criteria for the manufacturers and copyright holders. Customers for such equipment have little choice but to pay for expensive functionality that does nothing to improve - and could possibly impair - the experience of using the equipment. It's obvious that Sony has impaled the fate of the company on the horns of this dilemma, but if anyone can resolve it, Howard Stringer is the guy.
Behind the scenes, the analog-digital transition is in some ways profound. Without consumer-grade copy protection to consider, digital tools are remaking medicine, music recording, and architecture, to name but three fields.
-To take only one area of medicine, digital mammography uses hardware (in which lower radiation doses are needed), software (image manipulation to increase contrast or zoom in), and data storage (including data mining) to improve on the performance of film. It's also easier to movie digital files, albeit large ones, than physical films, which is part of the process of outsourcing radiological readings to India and elsewhere. At the same time, merely capturing pictures of physicians' notes or orders means little without metadata to facilitate indexing, searching, and retrieval. Some digital systems are actually harder to use and less reliable than paper files in this phase of their evolution.
-Recording studios (including the Hit Factory in New York) are closing, in part because hard-drive-based editing systems allow musicians to make their own demo and even master tapes using software like Digidesign's ProTools. Even though it is favored by many respected engineers and performers, analog magnetic tape is getting scarce: Quantegy, the last manufacturer of pro-grade audio tape, shut down operations late last year. As studios convert to digital, pro-grade gear from such manufacturers as Studer and Otari is readily available - but with what future?
-The work of architects and designers has been reinvented. Just as word processors allowed writers numerous opportunities to edit and move text without the tedium of retyping, CAD tools make erasing and redrawing tasks of the past. 3D renderings of finished spaces and structures have become incredibly realistic. Construction documents and specifications have also become more automated.
The undeniable benefits of every digital technology raise important follow-up questions. Do we have better buildings because of AutoCAD? Are breast cancer detection and cure rates changing as a result of different diagnostic technology? Does getting copied on thousands of communications that would be impossible to distribute in paper make anyone more efficient or effective? Finally, it would appear that there are digital technologies with nearly unalloyed benefits (such as mammography), while many (e-mail, voice over IP, digital audio) are more complicated in their impact.
As the tools change, it's a fact of anthropological life that the tool-users will change along with them, but this is something we're less good at studying. Nicholas Negroponte deserves plenty of credit for the thinking that culminated in Being Digital (which is ten years old!), but now we have the far more difficult task of untangling what it meant to live in analog when it was the only option, and what it now means to be hybrids between the worlds of bits and atoms.
Monday, February 28, 2005
February 2005 Early Indications II: Make Magazine review
Tim O'Reilly has always been an atypical technical publisher,
beginning with his training: a bachelor's in classics from Harvard.
For over 25 years O'Reilly Media has been in the vanguard of
computing, and it helped launch the open-source software community.
This was not altruism: O'Reilly both helped get the name into common
usage and demonstrated that there was a viable economic model
associated with Apache and Linux. The company's guides to everything
from Google to Python to .net illustrate both a technical agnosticism
and the commercial realization of a simple fact: people want to make
technology work, preferably on the human's terms. For some, this
means rewriting an operating system kernel, for others, getting a
printer to stop spitting out gibberish.
And then there is the hard core of hackers, in the MIT sense of the
word: people who create "an appropriate application of ingenuity."
The open-source ideal -- that anyone associated with a technology can
see into its workings and non-maliciously modify them -- is not really
new, either in connection with software or with the American made
environment in general. (I won't generalize about other countries and
cultures because I lack context to do so, but clearly there are many
places where hacking is practiced and even venerated.) While hacking
everyday objects in some ways gets harder in the digital age, the
practice builds on centuries of curiosity, adaptiveness, and
creativity.
American publishers have appealed to this impulse for decades. The
early PC magazines, by necessity, helped users untangle the
intricacies of command-line interfaces and often maddening device
driver issues. Before that, the market supported magazines devoted to
modifying everything from radios to cars to guitars to hi-fis. Such
titles as Popular Science (founded in 1872), CQ (for ham radio),
Mechanix Illustrated, Car Craft, and countless others were premised on
a readership that wanted to understand and modify its technologies.
But proprietary connectors, voidable product warranties, and
non-intuitive technologies such as engine-management chips curbed many
customers' desires for tinkering, and DIY readership plunged as some
publications migrated toward gadget worship if they survived at all.
Which brings us to Make, O'Reilly's new quarterly publication.
Combining old-fashioned re-use of everyday materials (a self-timer for
a disposable camera suspended from a kite for aerial photography is
made from Silly Putty) with serious but understandable computer
science, Make sets a high bar with its first issue. Reasonably simple
projects answer both "I've always wondered about that" and "hey that's
really clever" impulses in the reader. The common thread is access:
the magazine is devoted to the premise that users of technology are
makers rather than "mere consumers" of it, as the publisher's note
puts it. It's no accident that Make devotes significant attention to
tools for unscrewing non-standard fasteners: getting under the hood is
harder than it used to be, but can be accomplished as a more than
symbolic first step.
The editors have open-source sympathies in that reader involvement is
invited, or perhaps even mandated, if the enterprise is to succeed.
Make has no standing team of experts, no labs or test kitchens; it has
instead a network of people who are both capable and eager to share
their competence. A long section of the magazine is quite similar to
Kevin Kelly's Cool Tools blog: what are the essential, offbeat, or
otherwise noteworthy tools you particularly value? Examples here
include a Delta benchtop sander, a $160 mil-spec LED flashlight, and a
CO2-powered drain plunger. Fittingly, a supercharged Swiss Army knife
also makes an appearance. Elsewhere, such commonplace artifacts as
iPods, Airports, and Excel are enhanced with clever tricks.
The quality of the contributors is outstanding; the trick will be to
maintain it at that level. Neil Gershenfeld from MIT discusses his
work in small-scale fabrication labs set up in rural India, Norway,
Ghana, and Boston's South End. Bunnie Huang, who made his fame
reverse-engineering a Microsoft Xbox, explains how to create,
electronically, the same effects made by a dancer whirling around in
the dark holding glowsticks. Science fiction icon Bruce Sterling
explains the various schools of thought among modern re-creators of
Stone Age flint tools.
The flagship article on kite-borne aerial photography evokes both
sides of the Make duality: the Everyman "I could do that" and an
awe-struck "wow he's good" admiration. Kites are universal icons (as
evidenced by the recent prize-winning novel set in Afghanistan, for
example, not to mention their popularity from Cape Cod to Brazil to
Japan), and the eye-in-the-sky whimsy of the project combines with the
author's skill, on display in a gallery of professional photos, to set
up a lovely dynamic in the do-it-yourself instructions for using a
disposable camera. The stakes are low, the appeal intuitive, and the
results potentially addictive.
For me, one of the foremost contributions of Make is its reconnection
to the hands-on, project-centric literature that has for a variety of
reasons lain fallow for the past decade or two. Websites devoted to
hacking Furbies, Roombas, or TiVos (or Xboxes for that matter) have
never attracted wide emulation, and the over-clocker community --
today's inheritors of the hot rod legacy -- has failed, probably by
design, to escape from the lunatic fringe. What Make should do is
drive people to their parts drawers, to eBay, and to the workbench,
emboldened by a notion that the made environment is plastic. Knowing
that they can grasp a range of tools both analog and digital, hard and
soft, readers can reclaim their share of the creative identity that
has birthed multiple waves of technical progress. Hats off to the
O'Reilly team for a great launch of a valuable publication.
beginning with his training: a bachelor's in classics from Harvard.
For over 25 years O'Reilly Media has been in the vanguard of
computing, and it helped launch the open-source software community.
This was not altruism: O'Reilly both helped get the name into common
usage and demonstrated that there was a viable economic model
associated with Apache and Linux. The company's guides to everything
from Google to Python to .net illustrate both a technical agnosticism
and the commercial realization of a simple fact: people want to make
technology work, preferably on the human's terms. For some, this
means rewriting an operating system kernel, for others, getting a
printer to stop spitting out gibberish.
And then there is the hard core of hackers, in the MIT sense of the
word: people who create "an appropriate application of ingenuity."
The open-source ideal -- that anyone associated with a technology can
see into its workings and non-maliciously modify them -- is not really
new, either in connection with software or with the American made
environment in general. (I won't generalize about other countries and
cultures because I lack context to do so, but clearly there are many
places where hacking is practiced and even venerated.) While hacking
everyday objects in some ways gets harder in the digital age, the
practice builds on centuries of curiosity, adaptiveness, and
creativity.
American publishers have appealed to this impulse for decades. The
early PC magazines, by necessity, helped users untangle the
intricacies of command-line interfaces and often maddening device
driver issues. Before that, the market supported magazines devoted to
modifying everything from radios to cars to guitars to hi-fis. Such
titles as Popular Science (founded in 1872), CQ (for ham radio),
Mechanix Illustrated, Car Craft, and countless others were premised on
a readership that wanted to understand and modify its technologies.
But proprietary connectors, voidable product warranties, and
non-intuitive technologies such as engine-management chips curbed many
customers' desires for tinkering, and DIY readership plunged as some
publications migrated toward gadget worship if they survived at all.
Which brings us to Make, O'Reilly's new quarterly publication.
Combining old-fashioned re-use of everyday materials (a self-timer for
a disposable camera suspended from a kite for aerial photography is
made from Silly Putty) with serious but understandable computer
science, Make sets a high bar with its first issue. Reasonably simple
projects answer both "I've always wondered about that" and "hey that's
really clever" impulses in the reader. The common thread is access:
the magazine is devoted to the premise that users of technology are
makers rather than "mere consumers" of it, as the publisher's note
puts it. It's no accident that Make devotes significant attention to
tools for unscrewing non-standard fasteners: getting under the hood is
harder than it used to be, but can be accomplished as a more than
symbolic first step.
The editors have open-source sympathies in that reader involvement is
invited, or perhaps even mandated, if the enterprise is to succeed.
Make has no standing team of experts, no labs or test kitchens; it has
instead a network of people who are both capable and eager to share
their competence. A long section of the magazine is quite similar to
Kevin Kelly's Cool Tools blog: what are the essential, offbeat, or
otherwise noteworthy tools you particularly value? Examples here
include a Delta benchtop sander, a $160 mil-spec LED flashlight, and a
CO2-powered drain plunger. Fittingly, a supercharged Swiss Army knife
also makes an appearance. Elsewhere, such commonplace artifacts as
iPods, Airports, and Excel are enhanced with clever tricks.
The quality of the contributors is outstanding; the trick will be to
maintain it at that level. Neil Gershenfeld from MIT discusses his
work in small-scale fabrication labs set up in rural India, Norway,
Ghana, and Boston's South End. Bunnie Huang, who made his fame
reverse-engineering a Microsoft Xbox, explains how to create,
electronically, the same effects made by a dancer whirling around in
the dark holding glowsticks. Science fiction icon Bruce Sterling
explains the various schools of thought among modern re-creators of
Stone Age flint tools.
The flagship article on kite-borne aerial photography evokes both
sides of the Make duality: the Everyman "I could do that" and an
awe-struck "wow he's good" admiration. Kites are universal icons (as
evidenced by the recent prize-winning novel set in Afghanistan, for
example, not to mention their popularity from Cape Cod to Brazil to
Japan), and the eye-in-the-sky whimsy of the project combines with the
author's skill, on display in a gallery of professional photos, to set
up a lovely dynamic in the do-it-yourself instructions for using a
disposable camera. The stakes are low, the appeal intuitive, and the
results potentially addictive.
For me, one of the foremost contributions of Make is its reconnection
to the hands-on, project-centric literature that has for a variety of
reasons lain fallow for the past decade or two. Websites devoted to
hacking Furbies, Roombas, or TiVos (or Xboxes for that matter) have
never attracted wide emulation, and the over-clocker community --
today's inheritors of the hot rod legacy -- has failed, probably by
design, to escape from the lunatic fringe. What Make should do is
drive people to their parts drawers, to eBay, and to the workbench,
emboldened by a notion that the made environment is plastic. Knowing
that they can grasp a range of tools both analog and digital, hard and
soft, readers can reclaim their share of the creative identity that
has birthed multiple waves of technical progress. Hats off to the
O'Reilly team for a great launch of a valuable publication.
Friday, February 18, 2005
February 2005 Early Indications I: Demo trip report
Demo trip report
The mood in Phoenix was celebratory this year as the Demo conference put on a party to mark 15 years of innovative product launches. The final dinner honored industry deities including Dan Bricklin of Visicalc fame, Donna Dubinsky and Jeff Hawkins of Palm, conference favorite Kai Krause (Kai's Power Tools), and Demo founder Stewart Alsop. Before that, however, the 700 people in attendance got a close look at over 70 new products, many of which were both exciting and substantial, and few of which could be clustered in the same sector.
These two factors made the conference noteworthy in my view: I witnessed little "just out of beta" bugginess, and it was refreshing to see everything from cell phones to explosives detection and video production to haptic interfaces represented. Thus the combination of quality, breadth, and outright cleverness, along with the march of the legends at the final ceremony, made this a Demo that stood apart.
To begin, let me tip my hat to the four products that stood out for me as extraordinarily slick and/or important. In no particular order they were the following:
-MDA is a Canadian aerospace contractor that builds among other things robot arms for the space shuttle. They demonstrated an infrared camera to detect wing icing at airports, as well as a stereo camera that captures a scene and generates a 3-D graphical model of, in the case of their demo, a crime reconstruction or an underground mine. What would have required long renderings on a Silicon Graphics box not that many years ago showed up in seconds off a laptop. Demo crowds are anything but naive and can be pretty hard-boiled, but this was one of the few technologies that has generated an audible gasp from the audience in my years of attendance. The products aren't for sale - the company seeks commercialization partners.
http://www.mdrobotics.ca
-Digital Railroad is attacking the entrenched powers, namely Corbis and Getty, in the stock photography market. In a clear case of disintermediation (remember that?), the company uses RSS as part of a push and pull combination to connect photographers with editors, who can request feeds of low-resolution images for review based on rules, themes, or keywords. Photographers in turn have electronic storefronts where the high-rez images can be purchased. It was invigorating to see such an apt combination of technology and business-model innovation - it's been a while.
http://www.digitalrailroad.net
-Another nice piece of business-model innovation came from Smart Online. Their OneBiz Conductor is a one-stop ASP model for small businesses. One reason they've got a quiet brand despite being around for over a decade is that their software and services power big-name sites: JPMorgan Chase, Union Bank of California, and Inc. magazine under a private-label model. Such key functionality as audit trails, access control, and internal and regulatory reporting is now available to small and medium business who don't want to be distracted from their main mission in life, which is rarely to be a systems integrator.
http://www.smartonline.com
-The one product that for me has the most potential to define a whole new market is Streambase. The company has devised and implemented a feed-based model for data handling: the goal is to react to time-based data, not to store it. To this end, Streambase can handle 100,000 messages per second on commodity hardware, using a model that eschews input/output for sophisticated caching: cheap memory is a boon for this company. In addition to stock ticker feeds, the technology is envisioned for network traffic analysis, manufacturing systems, and credit card fraud monitoring. Lest anyone question the company's pedigree, the CTO is Mike Stonebraker, who merely invented key variations of the relational, object-relational, and federated database.
http://www.streambase.com
An education breakthrough
As a former professor, I get tired of many well-meaning but uninformed discussions of how computers are going to transform education, and have seen few technologies that showed much promise of improving on well-executed classical pedagogy. A stunning exception is an Australian spinout from the Adelaide Symphony Orchestra called In the Chair. It's a video game format for classical musician students that blends a "follow the bouncing ball" score with a video of a conductor and feedback on the musician's performance: timing, pitch, volume can be compared to those of a professional player. Theory, composition, and reading can be taught through layers of information embedded in the score. The original In the Chair was a physical program for music students that's been hugely successful, and the Digital Monkey web design firm has done a nice job creating a software version.
http://www.digitalmonkey.com.au
http://www.inthechair.com
Consumer stuff
Demo producer Chris Shipley noted that this was a particularly expensive Demo in that she wanted to buy many of the technologies. I concur.
At the top of the list is Novint, which is bringing the same touch-based technology used in $15,000 surgical simulators to the gaming market for about $100. Being able to have visual elements push back and possess the elements of mass and velocity through your fingertips is amazing, and the company's demo station was constantly busy. VKB uses Bluetooth and laser projection to put a virtual keyboard anywhere there's a flat surface - and the big news is that it will be available at Radio Shack sometime soon.
http://www.novint.com
http://www.vkb-tech.com/
AutoXRay is the first Demo product I've seen whose channel is Autozone and Pepboys. The OBD II diagnostic port on every car manufactured in the past decade or so can now be read by mere mortals rather than by $100/hr mechanics. The suggested retail for the hand-held device is about $150, which will sell well, I imagine. The other unlikely channel for a Demo technology is Macy's. Intellifit makes a body scanner that derives a clothed person's fit information while they stand in a 6-foot cylinder. The company gave everyone at the conference a free pair of custom-fit (not custom-tailored) Levis, and the response was overwhelming: there was a line all the time for people to get measured. It was fascinating to hear how people trusted or doubted the system: several attendees I polled said that they over-rode the scanner measurements on the website where you place the order, while I took it at its (disappointingly generous) word and will see how well the technology works.
http://www.autoxray.com
http://www.intellifit.com
Photoleap is the best picture-shaping application I've ever seen. Based on an e-mail client metaphor, it compresses big files then unzips them upon receipt through a similar interface on the other end. It's dead easy and so appealing that it's prompting a new digital camera purchase in this household. Mirra isn't a new company, but was showing (as a sponsor) an extremely simple and reassuring network backup server: you just plug it into a Windows environment and it takes case of automatic backup, secure remote file access, and file versioning.
http://www.photoleap.com/
http://www.mirra.com
Motorola seems to be on a tear under new CEO Ed Zander. The Razor cell phone is selling well, and the company showed a somewhat mysterious music service that connects home, car, and walking modes via the cell phone. The presenter smiled but said nothing except "I've seen some amazing things in our labs" when I asked about the iPod agreement Moto signed last year, as well as the prospect of cell phones managing miniature hard drives later this year. iRadio certainly looked appealing: digital Internet radio (whether wired, terrestrial, or satellite wasn't clear) connected by Bluetooth to whatever player you chose, including TiVo-like pause and resume across devices: park the car, walk into the office, and pick up the same song where you had stopped it.
http://www.motorola.com/mediacenter/news/detail/0,,5178_5172_23,00.html
Finally, in the web client enhancement department, Browster pre-loads list results: imagine mousing over the first entry of a Google list, having the page pop up, seeing that it didn't apply, then rolling off the image and having it disappear. Pluck and Onfolio (JJ Allaire's new company) are designed for researchers - supercharged bookmarking, filing, and sharing tools. XFire is a tool for gamers that allows in-game instant messaging as well as managed patch and upgrade deployment: they asserted that gamers download 500 MB a month, so there's a lot of bandwidth consumption to optimize if that's the case.
http://www.browster.com/
http://www.pluck.com/
http://www.onfolio.com/
http://www.xfire.com/
A brief tour of enterprise offerings
Elliott Spitzer was the unspoken presence for several demonstrations: the Enron e-mail evidence is somehow available, and two companies used it to demonstrate products aimed at curtailing messages that could get a company in trouble. Fortiva and Inboxer both had products in the e-mail security neighborhood; Cloudmark demonstrated a community-based approach to identifying phishing attacks. Cenzic and IPLocks test and monitor web-based applications for security, the former from the outside in and the latter from the inside out. Satori Labs has a nice PDA-based handwriting capture system for doctors who resist kiosks and other intrusions on the patient care process. Adomo lets telecom administrators manage voice services with tools like LDAP that are typically more robust and automated than conventional PBX technologies - e-mail and voicemail are integrated (good) within Exchange (questionable from a security standpoint).
Stan Davis has long argued that the currency of the 1980s and 90s -- words and numbers -- would be joined by sounds and images as richer tools for business communications in the new century. Several tools aim to accelerate that process. Infomersion facilitates live graphing within Powerpoint with interactive sliders to allow "what if" assumption testing. Blazent maps enterprise hardware and software assets so CIOs can manage important things (like software licenses or antivirus updates) that are usually poorly measured. Impact Engine and Serious Magic both ramp up Powerpoint's look and feel. NewTek's Tricaster is a $5000 miniature video production truck with stills, fades, B-roll, audio, and many other pro-grade tools that can be easily ported to webcast, projection, or video (hence the name). Similarly, Serious Magic also showed a $99 production suite for video blogging that was fun and easy, using a variety of imported backgrounds and a teleprompter metaphor to synch graphics and audio.
In terms of social software, I continue to have major skepticism about the prospects for mass adoption of enterprise blogging, particularly in industries undergoing Spitzer-like scrutiny. But Jotspot, about which I wrote in October, is getting better every time I see it. The tool uses wikis, e-mail, and very clever scripting to create a lightweight, flexible management platform for many types of projects. While Groove has its place (particularly in high-security distributed projects), my sense is that Jotspot will suffice in most settings.
If you have further questions, don't hesitate to contact me.
The mood in Phoenix was celebratory this year as the Demo conference put on a party to mark 15 years of innovative product launches. The final dinner honored industry deities including Dan Bricklin of Visicalc fame, Donna Dubinsky and Jeff Hawkins of Palm, conference favorite Kai Krause (Kai's Power Tools), and Demo founder Stewart Alsop. Before that, however, the 700 people in attendance got a close look at over 70 new products, many of which were both exciting and substantial, and few of which could be clustered in the same sector.
These two factors made the conference noteworthy in my view: I witnessed little "just out of beta" bugginess, and it was refreshing to see everything from cell phones to explosives detection and video production to haptic interfaces represented. Thus the combination of quality, breadth, and outright cleverness, along with the march of the legends at the final ceremony, made this a Demo that stood apart.
To begin, let me tip my hat to the four products that stood out for me as extraordinarily slick and/or important. In no particular order they were the following:
-MDA is a Canadian aerospace contractor that builds among other things robot arms for the space shuttle. They demonstrated an infrared camera to detect wing icing at airports, as well as a stereo camera that captures a scene and generates a 3-D graphical model of, in the case of their demo, a crime reconstruction or an underground mine. What would have required long renderings on a Silicon Graphics box not that many years ago showed up in seconds off a laptop. Demo crowds are anything but naive and can be pretty hard-boiled, but this was one of the few technologies that has generated an audible gasp from the audience in my years of attendance. The products aren't for sale - the company seeks commercialization partners.
http://www.mdrobotics.ca
-Digital Railroad is attacking the entrenched powers, namely Corbis and Getty, in the stock photography market. In a clear case of disintermediation (remember that?), the company uses RSS as part of a push and pull combination to connect photographers with editors, who can request feeds of low-resolution images for review based on rules, themes, or keywords. Photographers in turn have electronic storefronts where the high-rez images can be purchased. It was invigorating to see such an apt combination of technology and business-model innovation - it's been a while.
http://www.digitalrailroad.net
-Another nice piece of business-model innovation came from Smart Online. Their OneBiz Conductor is a one-stop ASP model for small businesses. One reason they've got a quiet brand despite being around for over a decade is that their software and services power big-name sites: JPMorgan Chase, Union Bank of California, and Inc. magazine under a private-label model. Such key functionality as audit trails, access control, and internal and regulatory reporting is now available to small and medium business who don't want to be distracted from their main mission in life, which is rarely to be a systems integrator.
http://www.smartonline.com
-The one product that for me has the most potential to define a whole new market is Streambase. The company has devised and implemented a feed-based model for data handling: the goal is to react to time-based data, not to store it. To this end, Streambase can handle 100,000 messages per second on commodity hardware, using a model that eschews input/output for sophisticated caching: cheap memory is a boon for this company. In addition to stock ticker feeds, the technology is envisioned for network traffic analysis, manufacturing systems, and credit card fraud monitoring. Lest anyone question the company's pedigree, the CTO is Mike Stonebraker, who merely invented key variations of the relational, object-relational, and federated database.
http://www.streambase.com
An education breakthrough
As a former professor, I get tired of many well-meaning but uninformed discussions of how computers are going to transform education, and have seen few technologies that showed much promise of improving on well-executed classical pedagogy. A stunning exception is an Australian spinout from the Adelaide Symphony Orchestra called In the Chair. It's a video game format for classical musician students that blends a "follow the bouncing ball" score with a video of a conductor and feedback on the musician's performance: timing, pitch, volume can be compared to those of a professional player. Theory, composition, and reading can be taught through layers of information embedded in the score. The original In the Chair was a physical program for music students that's been hugely successful, and the Digital Monkey web design firm has done a nice job creating a software version.
http://www.digitalmonkey.com.au
http://www.inthechair.com
Consumer stuff
Demo producer Chris Shipley noted that this was a particularly expensive Demo in that she wanted to buy many of the technologies. I concur.
At the top of the list is Novint, which is bringing the same touch-based technology used in $15,000 surgical simulators to the gaming market for about $100. Being able to have visual elements push back and possess the elements of mass and velocity through your fingertips is amazing, and the company's demo station was constantly busy. VKB uses Bluetooth and laser projection to put a virtual keyboard anywhere there's a flat surface - and the big news is that it will be available at Radio Shack sometime soon.
http://www.novint.com
http://www.vkb-tech.com/
AutoXRay is the first Demo product I've seen whose channel is Autozone and Pepboys. The OBD II diagnostic port on every car manufactured in the past decade or so can now be read by mere mortals rather than by $100/hr mechanics. The suggested retail for the hand-held device is about $150, which will sell well, I imagine. The other unlikely channel for a Demo technology is Macy's. Intellifit makes a body scanner that derives a clothed person's fit information while they stand in a 6-foot cylinder. The company gave everyone at the conference a free pair of custom-fit (not custom-tailored) Levis, and the response was overwhelming: there was a line all the time for people to get measured. It was fascinating to hear how people trusted or doubted the system: several attendees I polled said that they over-rode the scanner measurements on the website where you place the order, while I took it at its (disappointingly generous) word and will see how well the technology works.
http://www.autoxray.com
http://www.intellifit.com
Photoleap is the best picture-shaping application I've ever seen. Based on an e-mail client metaphor, it compresses big files then unzips them upon receipt through a similar interface on the other end. It's dead easy and so appealing that it's prompting a new digital camera purchase in this household. Mirra isn't a new company, but was showing (as a sponsor) an extremely simple and reassuring network backup server: you just plug it into a Windows environment and it takes case of automatic backup, secure remote file access, and file versioning.
http://www.photoleap.com/
http://www.mirra.com
Motorola seems to be on a tear under new CEO Ed Zander. The Razor cell phone is selling well, and the company showed a somewhat mysterious music service that connects home, car, and walking modes via the cell phone. The presenter smiled but said nothing except "I've seen some amazing things in our labs" when I asked about the iPod agreement Moto signed last year, as well as the prospect of cell phones managing miniature hard drives later this year. iRadio certainly looked appealing: digital Internet radio (whether wired, terrestrial, or satellite wasn't clear) connected by Bluetooth to whatever player you chose, including TiVo-like pause and resume across devices: park the car, walk into the office, and pick up the same song where you had stopped it.
http://www.motorola.com/mediacenter/news/detail/0,,5178_5172_23,00.html
Finally, in the web client enhancement department, Browster pre-loads list results: imagine mousing over the first entry of a Google list, having the page pop up, seeing that it didn't apply, then rolling off the image and having it disappear. Pluck and Onfolio (JJ Allaire's new company) are designed for researchers - supercharged bookmarking, filing, and sharing tools. XFire is a tool for gamers that allows in-game instant messaging as well as managed patch and upgrade deployment: they asserted that gamers download 500 MB a month, so there's a lot of bandwidth consumption to optimize if that's the case.
http://www.browster.com/
http://www.pluck.com/
http://www.onfolio.com/
http://www.xfire.com/
A brief tour of enterprise offerings
Elliott Spitzer was the unspoken presence for several demonstrations: the Enron e-mail evidence is somehow available, and two companies used it to demonstrate products aimed at curtailing messages that could get a company in trouble. Fortiva and Inboxer both had products in the e-mail security neighborhood; Cloudmark demonstrated a community-based approach to identifying phishing attacks. Cenzic and IPLocks test and monitor web-based applications for security, the former from the outside in and the latter from the inside out. Satori Labs has a nice PDA-based handwriting capture system for doctors who resist kiosks and other intrusions on the patient care process. Adomo lets telecom administrators manage voice services with tools like LDAP that are typically more robust and automated than conventional PBX technologies - e-mail and voicemail are integrated (good) within Exchange (questionable from a security standpoint).
Stan Davis has long argued that the currency of the 1980s and 90s -- words and numbers -- would be joined by sounds and images as richer tools for business communications in the new century. Several tools aim to accelerate that process. Infomersion facilitates live graphing within Powerpoint with interactive sliders to allow "what if" assumption testing. Blazent maps enterprise hardware and software assets so CIOs can manage important things (like software licenses or antivirus updates) that are usually poorly measured. Impact Engine and Serious Magic both ramp up Powerpoint's look and feel. NewTek's Tricaster is a $5000 miniature video production truck with stills, fades, B-roll, audio, and many other pro-grade tools that can be easily ported to webcast, projection, or video (hence the name). Similarly, Serious Magic also showed a $99 production suite for video blogging that was fun and easy, using a variety of imported backgrounds and a teleprompter metaphor to synch graphics and audio.
In terms of social software, I continue to have major skepticism about the prospects for mass adoption of enterprise blogging, particularly in industries undergoing Spitzer-like scrutiny. But Jotspot, about which I wrote in October, is getting better every time I see it. The tool uses wikis, e-mail, and very clever scripting to create a lightweight, flexible management platform for many types of projects. While Groove has its place (particularly in high-security distributed projects), my sense is that Jotspot will suffice in most settings.
If you have further questions, don't hesitate to contact me.
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