A recent issue of Barron’s pointed out (see my recent fan mail on Barron’s here), times are tough for the US telcos: in Q2 2008, Verizon lost 1.7 million lines while ATT&T lost close to 1 million lines.

Ouch.

Evidently, following trends elsewhere in the world, a new generation of Americans is happily going without POTS (plain old telephone service) in favor of using the cell phone at home.

What’s left as a compelling reason for a residential phone line? ADSL broadband access? Maybe not anymore – for the first time ever, a major US telco reported a quarterly loss of DSL subscriptions: Verizon losing 171,000 accounts. What Barron’s somewhat grim article fails to point out, however, is that rather than representing a net loss, this number is undoubtedly due to the continuing rollout of Verizon’s FIOS fiber service: during the same quarter, Verizon signed up 187,000 new FIOS customers (for a net gain of 16,000 new broadband subscriptions).

Clearly cable has been taking residential broadband market share away from the telcos for a while now. Add to that the ongoing paradigm shift away from land lines to cell phones and/or VOIP, as well as the advent of fiber (FIOS or U-verse), and there’s even less of a compelling reason to maintain that twisted-pair of copper coming into your home. In other words, while the telcos see continued potential in residential fiber, clearly they must recognize that the sun is setting on their residential land line business.

The big advantage of fiber is that it allows telcos to sell television – that elusive third component of the type of ‘triple play’ bundles they’ve jealously watched cable companies sell for years now.

Evidently not getting that memo is small Massachusetts startup Sezmi – although details are scant, they’re developing a unique hardware solution they hope to lease as CPE (consumer-premises equipment) through DSL partner providers. Although transparent to the user, video is delivered in 3 different ways:

• Local Broadcast Channels The Sezmi solution is clever in that it takes advantage of the imminent FCC mandate to broadcast local channels digitally - included is modular HD antenna.
• Cable Television Content Sezmi hopes to negotiate agreements with content providers and lease unused OTA digital broadcast spectrum and get popular cable programming into the home via that same antenna.
• On Demand/LongTail Content Lastly, Sezmi will include the capacity to stream video over IP via a… DSL broadband connection.

And therein lies the rub – with the accelerating loss of DSL lines and the concurrent rise of (already television-capable) fiber, Sezmi’s business model of being the solution for DSL carriers looking to finally get into the television business may be fatally flawed. We’ll see.

Interesting approach?

A couple of weeks ago, Blockbuster, the country’s largest video rental service announced testing of 50 or so DVD vending kiosks in preparation for a massive 10,000 store roll-out in the next 18 months.

The company certainly lacks neither scale nor resources to put this good plan to work.

But somehow - in the age of ubiquitous, super-”liquid” consumer video - Blockbuster’s push into the stationary DVD vending business seems somewhat “backwards” I thought.

Maybe afraid to miss the boat again - especially Netflix’s DVD mail-order success comes to mind - Blockbuster may have decided it could simply not cede any more business to others.

Among those, there’s Redbox of course, operating at least 8,000 kiosks each filled with 500+ DVDs. Currently one-night rentals run at $1 per DVD. For all titles, reservations can be made online and any of Redbox’s kiosk accepts returns.

Fair enough. Both Netflix and Redbox are certainly siphoning off consumers’ video dollars away from Blockbuster stores. Obviously that must hurt.

But will simply replicating someone else’s stationary vending model be enough for the video store king to (re)claim lost market share?

By now, most consumers certainly have ample alternatives to quench their thirst for full-length commercial video without the need to drive to a local store.

Cable VOD is already available in at least 50 million US homes. Add to that a growing IPTV subscriber base (2 million and counting), plus Apple TV, Hulu.com, and soon-to-launch Amazon Video on Demand. Then there’s Sony’s internet-connected Bravia TV sets of course, pre-loaded with Hollywood hit movies and other popular fair.

The list goes on and on.

But wait. Maybe NCR can add much-needed differentiation to Blockbuster’s DVD vending idea. The former AT&T-owned company partnered with Blockbuster on its planned in-store kiosk deal but has more to offer than that.

Turns out, NCR is behind the predecessor to the 802.x WiFi standard, and knows all about RFID.

To that end, what if a Blockbuster / NCR combination lets you use your cell phones or other portables equipped to scan DVD packaging while browsing through Blockbuster stores? Or, for that matter, any other store carrying DVDs. (Similar to what Amazon.com has done for in-store books).

While you’re already heading for the door, behind that RFID system, a backend transmission network pushes your favorite Blockbuster hit straight to your residential network, and you’re ready for movie night by the time you enter your home.

No DVD kiosk required, no return date to adhere to; oh, and much lower delivery cost boosting margins on incremental sales.

Interesting approach?

When Andreas and I decided to start this blog project, we had a few rough guidelines on what we wanted to write about. Finance and economics were not high up on that list.

However, I want to write something of a fan letter for Barron’s, the business weekly published by Dow Jones. I’ve always been mildly curious about finance - in fact, the best learning experience I’ve ever had (in any subject) was the MBA economics course I took at the Stern School of Business as part of my NYU MSIS studies with Professor Navin Chopra (maybe not coincidentally, the best teacher I’ve ever had).

However, since then I haven’t followed economics very much, beyond maybe reading Gretchen Morgenson in the Sunday NY Times (she’s great too). So when I found an issue of Barron’s at the gym a few weeks ago, it was only out of boredom between sets that I picked it up and started skimming. I was immediately impressed with the writing: plenty smart, with just a whiff of irreverence, and incredibly readable - without watering things down to the extent the mass-market monthly financial magazines do.

Take this passage from the scathing article on the Fannie Mae/Freddie Mac crisis by Jonathan Laing that made the news recently:

“… the fair-value figures reported by the companies may overstate the values of their assets significantly. By some calculations each company is around $50 billion in the hole. But more on that later.”

…now if that isn’t a page turner, what is?

And this:

“Come May, Fannie kept its side of the bargain by raising $7.2 billion in mostly common equity. But Bush officials were shocked when Freddie failed to follow suit on an announced $5.5 billion equity raise.”

These two mis-managed firms have lost about 90% of their value over only the past year, and Mr. Laing clearly believes it’s only a matter of time before the government is forced to either manage their liquidation or nationalization.

As such, it’s a big story - the intersection of capitalism (and risk) vs. socialism (and responsibility) - and Mr. Laing just does an excellent job of telling it.

So check out Barron’s, either on the new stand or (much more economically) by website subscription.

I’m not easily excited by gadgets-of-the-future, but this is potentially pretty cool - Intel is working on wireless recharging for mobile devices.

Imagine not having that ‘wall wart’ AC adapter/recharger for each of our laptops, cell phones, and PDAs - and imagine if a cross-platform standard was developed, such that you could buy a ‘recharging-enabled’ coffee table or desk pad that would recharge the battery of any compatible mobile device within range: in other words, just set your smart phone down on your desk (or work on your laptop) and they’re recharged! (of course the mobile device would have to announce its particular electrical requirements in terms of good old volts and amps, but that seems workable…)

Until the current smartphone boom we find ourselves in started up, the telcos and cell phone manufacturers had been struggling to find compelling reasons for you to re-up on a new phone - while better cameras, infrared data sharing, and music download partnerships all fell short, maybe 4-5 years out, *this* could the next big reason to upgrade… (that is, once we’re all bored with email, web browsing, and GPS)!

Need any more proof it’s not your father’s internet anymore? This just in, from ZDnet – Microsoft is populating the new data centers it’s been heavily investing in lately not by the rack full of servers, but by the (wait for it…) shipping container full of servers. That’s right, trucks pull up and unload a shipping container chock full of pre-configured, pre-networked servers. Connect power and air conditioning to the shipping container, and you’ve just brought a serious amount of additional server capacity online. Enough failures, and the container is shipped out for repair.

Also from the ZDnet article, an astounding statistic: it’s unclear how many are additional and how many are replacements, but Microsoft adds approximately 10,000 server per month.
Ten. Thousand. Servers. Per. Month.

What’s behind numbers like that? In addition to web search, it also reflects Microsoft’s move towards a more vertically integrated approach towards cloud computing – and there’s not only Hotmail/MSN, but there’s also the recently launched (Google Apps competitor) Online Suite with hosted Exchange (rather than just sell the software, Microsoft clearly feels there’s a future in selling the service as well).

Another reason for the big push is the anticipated explosion of media over IP – as Microsoft’s general manager of infrastructure Arne Josefsberg puts it, “One of the big drivers for us that I see is the move to IP-based delivery of rich video.”

Besides insanely quick scalability, it should be noted that the shipping container scheme allows for more efficient cooling – and Microsoft is also working closely with its hardware vendors to eliminate all unnecessary ports and motherboard circuitry to further reduce power consumption. More on Microsoft’s green data centers here. Kudos.

Business Week recently ran a telling article about the state of the German dailies industry.

The magazine argues - despite dropping ad sales overall - “special interest”-focused print media seems to do reasonably well in an otherwise hotly competitive marketplace for news.

Compared to many of its ailing US peers, popular dailies such as Berlin-based Bild apparently knew to focus on exclusive content, and embrace (rather than fight) innovation early enough to succeed. 

What’s more, Bild and other dailies managed to benefit from German readers’ somewhat slower flight to online media alternatives. Turns out, in an increasingly crowded field of German dailies publishers, readers seem to find solice in established print media brands they have known for years.

Still, competition remains tough; with increasing pressure not just from semi-professional and user-generated news sites, blogs, and online video, but also from at least 600 branded online editorials trying to compete for diminishing audiences and a shrinking ad revenue pie.

In the US a similar “doom-and-gloom” scenario persists, but the “pain” of market share loss felt by state-side newspapers seem more urgent compared to their German peers.

Seeking a solution to the mess, the Newspaper Association of America recently published its own state-of-the-industry stats, and, along with that, recommended 8 steps towards dealing with its own challenges of dropping circulation and ad sales.

Meanwhile, over in Germany, Bild intuitively took some of these recommendation to heart, yet went beyond its US peers’ 8-step plan.

Among other things, it partnered with Germany’s #1 consumer online portal, Deutsche Telekom-owned t-online.de, and later, started selling pre-paid mobile phone services at newsstands, right where its dailies sell.  (The service affords customers unlimited online access as long as they are reading bild.de online).

While the former provided instant traffic boost to its first branded online site, the latter helped to make up for revenue losses from ad sales moving to the Web. 

Of course, Bild is infamous for its daily coverage of sex and crime. Unlike in the US, nudity not a problem to the extend shown (think topless models on the cover looking for a date), maybe its the oldest trick in the book that does the trick for Bild.

I doubt this would be an option for Bild’s US newspaper publishing peers.

UPDATE:

What’s good for the goose is good for the gander. Today, the New York Times reported about BusinessWeek’s planned launch of BusinessExchange.

The Wiki-meets-social networking sites seeks to amalgamate professional and user-generated news into a new and (hopefully) successful online news experience.

Clearly this is BusinessWeek’s own attempt to fight off lagging ad sales from ongoing audience fragmentation and ubiquitous “anytime, anywhere” content competition.

“We want to hire the geek.” “We’re looking for people who are in touch with their inner nerd.”

By now, this is taken as gospel: HR 101 for the tech industry.  But while I’m not going to dispute the advantages of having a passion for your job, I would make the case that there’s often more involved in creating truly effective technology than software development and electrical engineering - too often, clarity and simplicity in product design (especially at the UI level) are given short shrift, even in the CE space (where one would expect to see a premium placed on such concerns).  That this somehow remains the case despite the spectacular successes of conspicuously elegant and user-friendly products such as the  iPod and google baffles me - of course I can understand how a self-reinforcing corporate ‘geek culture’ can take root at a technology company, but it’s equally clear that a lot of companies building consumer-facing products would be better served by letting a few more ’soft science’ types into the room when defining their use cases and user interfaces.

In other words, consumer software and CE hardware firms should continue to place a premium on hiring smart people - clear-thinking, logical people – but perhaps a few less technical fetishists, at least in areas that aren’t purely technical (in other words, Toyota doesn’t have the team responsible for engineering the automatic transmission design the dashboard).

Another chronic problem is feature-bloat - solutions looking for problems that are often the result of too many developers going unchecked, all looking make their territorial mark on the product in advance of their next review (a good example of this syndrome is the ever-expanding MS Word application…)

The bottom line: engineering and design are separate (and often mutually exclusive) talents – and should be treated as such. Consumer hardware and software companies should feel as much of a responsibility to design well as to code well.

Some companies in the video over IP sector are getting it right – hulu.com and the Netflix Roku set-top box come to mind (although due an extremely limited selection of available titles, the Roku box will ultimately amount to not much more than a proof-of-concept exercise - with a core competency in DVD rental, Netflix is understandably reluctant to do much more than stick their toe in the digital delivery business for right now – but I digress…)

To put it in quasi-empirical terms - “Brian’s Theorem of Design”, if you will:

• simplicity times (power + quality) = elegance
• elegance squared = user buy-in

Check out Mattathias Schwartz’s rather powerful article about the popular online message board /b/ and a subgroup of its netizens, so-called “trolls”, that have turned into serious pranksters both online and off.

While largely unharmful, a number of past troll posts and activities have had serious, even deadly consequences - at least for some of the message boarders.

Think pseudonymous posters publishing violent fantasies about female college students.

Think humiliating details about people’s online dating activities publicly revealed to cause some to loose their job.

Think what seemed to have been the mother of a girlfriend posting unnamed online messages ultimately leading to the suicide of a young girl unable to cope with the public humiliation caused by the claims made online.

My questions: Do any of these troll activities happen because of or despite the Internet’s popular existence? Is the Internet as a “public square” at all capable, let alone intended, to prevent certain social interaction from occurring online.

My take on this: The Web is a ubiquitously public “application” residing on the Internet itself.

As such it was never designed to regulate human behavior. Asking the Web to begin vetting engagement, under the current structure, it wouldn’t work. Not to mention the implications for basic civil liberties such as free speech.

Instead, attempting to curb personal behavior online would be as if anyone taking the railroad or public highway would have to adhere to specific moral, intellectual, or cultural code outside ones own in order to qualify for its regular use.

Ubiquitously available public platforms are just not set out to perform that task.

Good for pranksters everywhere, this is probably why there’s no “thou shalt not humiliate” signs posted anywhere.

Not at one’s local train station, nor shoulder-side down the highway, or anywhere on the World Wide Web.

This is because if such signs existed, they certainly would neither change pranksters’ behavior nor would they make it any easier to catch them after the fact.

Instead, when using any of our shared and (fairly) organized public systems, the large majority agrees to certain ground rules.

Some are rather obvious (such as basic societal laws), other require added sensibility and discretion. Never intended to be foolpoof, that “system” mostly works.

As to the Web, Schwartz, in his article, points to Postel’s Law: “Be conservative in what you do; be liberal in what you accept from others”.

Originally intended as a fundamental ground rule for all of us online, it seems a pretty good guideline for other public platforms as well.

This is from my favorite video sharing site, vimeo.com - the bitrates are much higher (and generally the videos are more interesting) than what’s up there on other sharing sites.

This particular video is a good example of how good Adobe’s Flash HD content can look.

Vimeo (like Hulu) is serious about HD content, and if you have Flash Player 9 (Flash Player 10 is currently in beta), check it out. At the time, I was getting 2.5 Kbps down with 124 ms latency from the Los Angeles Speakeasy speed test server (not great) and I had good stream.

I’m curious about how HD flash is working for other folks…

Use Firefox?

Ever close a tab by mistake?

Ever wish you could go back to the site on the tab you closed 15 minutes ago?

Then this is for you: command-shift-T (Apple OS) or control-shift-T (Windows). Not only will this reopen the last closed tab, there appear to be an unlimited levels of undo within a given cached session (at least up to a dozen or so tabs, which is as far as I’ve cared to test). This is something I use every day, and I’m always surprised how many people don’t know about it.

Convenient? Youbetcha. I know there’s a lot of people out there tricking out Firefox with <a href=”https://addons.mozilla.org/en-US/firefox/ “>add-ons</a>, but I’m one of the vast majority for whom Firefox is fine pretty much right out the box (although I do use the OPML plug-in for getting certain RSS feeds into Google Reader).

But then again, maybe this handy little shortcut is too convenient: the other day I noticed that (unless or until a server-side inactivity timeout occurs) cmd-shift-T takes you right back into your authenticated SSL sessions, too… (!) And since it will also take you to pages you’ve deleted from the browsing history, deleting just that isn’t enough (actually, the browsing history is less dangerous than the cache, because since it’s just a URL string, any SSL sessions would have to be reauthenticated).

So let this be just another warning to delete that cache on public or semi-public machines! (I can just picture someone up to no good hitting repeatedly using this shortcut on any running instance of Firefox they come across …)

And backup your local data.

And eat your vegetables.