A few thoughts on the Bing/Yahoo deal - it’s been about a week now since Carol Bartz decided outsource searches to Microsoft, effectively steering the company away from the technology business and (presumably) more towards the media and content/aggregation business.

For a few years now, the two companies have been attempting to join forces in one manner or another.  How did it finally happen?  Microsoft built a compelling product - their Bing search engine works well, has some interesting features, and has gotten generally good reviews.  The takeaway?  While previous unsuccessful Microsoft attempts to partner with Yahoo! depended on cash as a lever, this successful deal was based on the lever of product quality.

For all involved, I would like to think this would be (to use a currently fashionable buzzword) a “teachable moment”.

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You’ve heard about their growing popularity, you’ve seen them on airplanes -  in this challenging economic climate, the rise of the ‘netbook’ is one of the few recent bright spots in the computer hardware space.   We’ve written about netbooks before - optimized for portability, low price,  and long battery life, these smaller, less expensive laptop computers fill a niche between the smartphone and the full-powered notebook - and they’ve have had that market pretty much all to themselves.

Until now, that is - witness the emergence of a entirely new category of machine (with accompanying acronym): the “MID” (Mobile Internet Device).

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The other day I read about the very first box out of the gate running Intel’s very promising (and much anticipated) CE 3100 ‘System on a Chip (SoC) processor (aka ‘Canmore’).   This was news worthy of further investigation, and so within a few clicks I found similar mention on Slashgear, and soon ended up at the personal blog of the OEM Product Manager from the Netherlands who worked on the project.
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The 2009  NAB convention ended yesterday in Las Vegas.   With 25% of this year’s attendees coming from outside the US, and with terrestrial/cable /satellite television organizations together only representing 24% of this year’s exhibitors, maybe the name “National Association of Broadcasters” is a bit misleading - but nevertheless, the NAB show remains a major perennial media event.

Like this year’s Consumer Electronics Show (also held in Las Vegas), NAB 2009 saw attendance down about 20% due to the current economic climate - still, almost 84,000 people attended.  On the internet video front, Adobe’s announcement concerning its intention to get its ubiquitous Flash web video platform onto consumer electronics devices such as televisions and set-top boxes seems to be the big story.  In my opinion, though, while these analysts were covering the right company, they were covering the wrong story: by limiting their focus to the frankly old news (already mentioned several times here on digitalmissive) that Adobe had plans to embed Flash onto CE chip sets, they missed the gradual transformation of Adobe into an open source software  company.
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As an IT consultant/network administrator a few years ago, one of my clients was a small but fast-growing retailer with several remote locations spread across the country.  Having no trusted technicians available in some of these cities, it was a clear win when I chose to go with WYSE thin client terminals on many of these remote seats (I wrote a bit about that here).   While the idea of such simple and lightweight “web appliances” dates back to the late 90’s, despite a few short stints as The Next Big Thing, the devices never proved quite as popular as promised - but conditions now are more favorable than ever:

• Increasing functionality in the cloud mitigates much of the need for heavy client-side application installations (and the RAM/processor power/data storage they require)
• The current global economic climate certainly favors less expensive (and often computationally redundant) devices

There’s a third (and crucial) factor, though: now that wireless internet access has become nearly ubiquitous, we all place an increasing premium on portability (consider that by most accounts, laptop sales actually surpassed desktop sales for the first time during 2008).  What do you get, then, when you take all the innate advantages of thin computing and add today’s need for mobile computing?

The “netbook” - a small (8″ or 10″ screen) laptop with a lightweight operating system, long battery life, (and often) solid state disk (SSD) storage.  As with good bread, the Beatles, and text messaging, it’s Europe that’s been out in front on this, but that’s expected to change as US acceptance of the netbook grows.  In fact, while industry analysts at Gartner expect overall 2009 PC sales to decline by almost 12% (a historic high), they see netbook sales doubling.

To date, the low-power Intel Atom has been the netbook CPU of choice, but AMD and Motorola have each recently released new processors of their own aimed at this growing market.   As for what operating system runs on those chips, for now it’s come down to a battle between Microsoft and the Linux community (Apple having not yet demonstrated much interest in this lower-end market).  Google’s Android cell phone operating system has even been ported over to a netbook - an interesting possible future platform for the open source OS.

Many of the first netbooks ran a specialized Linux kernel, a trend that only looked to gain more momentum once Microsoft stopped stopped selling XP last June.  However, with the netbook trend starting to pick up, Vista proving too resource-hungry for many desktops (let alone netbooks), and with Windows 7 still months away, Microsoft had a change of heart - and recently decided to bring back XP Home, giving the OS a second life as their unofficial interim netbook operating system (until Windows 7 arrives, that is).  It’s an easy decision to justify: while netbooks are by definition leaner and meaner than traditional PCs, users still expect them to be more than mere terminals: in other words, people like their applications (and chances are pretty good the ones they’re used to are not going to be available for Linux).   Furthermore, despite (or maybe because of) the fate Vista met in the marketplace, many users still like XP - and in any event, to a less technical user, that oh-so familiar Microsoft desktop would have to look more reassuring (and less toy-like) than a Linux desktop - even if only on a purely emotional level.  Lastly, even if Vista was able to run on a netbook, licensing costs for the new OS would tend to put the machine well beyond the price point of the average netbook.

So, not surprisingly, the decision paid off for Microsoft: XP Home lives on and has beaten Linux out to ship on the majority of netbooks now sold (in a telling sign, HP recently stopped even offering Linux netbooks in otherwise penguin-friendly Europe).

Either way, in addition to all the other advantages, at only $200 to $400 each, these devices (much like smart phones) are inexpensive enough to be subsidized by long-term internet service agreements - so going forward it’s hard to imagine a scenario in which netbooks do not figure in heavily.   Microsoft, for one, agrees, and is committed  to releasing a lightweight version of Windows 7 optimized for netbooks (despite the economics of the netbook market dictating substantially lower license fees than Redmond is used to charging).

I think there might be one in your future too.

I know I want one - so it’s got to be cool, right?

Televisions and set-top boxes with embedded network interfaces are coming, that much is agreed upon.  What’s up for discussion, though, is just what the user interface is going to look like - an “internet video-only” implementation that places a premium on simplicity and system stability, or a full-featured “browser for the couch” allowing full unrestricted access to the internet.

Gordon Campbell, a 30+ year veteran of the semiconductor design and marketing industry with stints at Honeywell, Motorola, Intel, and several start-ups under his belt, calls the former approach “hogwash.”   According to a recent article, his current company Personal Web Systems (no web site yet)) plans to bring a device to market later this year allowing full unrestricted access to the web (the company also has plans to subsequently offer that same functionality to CE manufacturers on a single chip).

“This generation doesn’t want their hands tied behind their backs. They want the same experience as with a PC (on their TV)“, Campbell states.

I think he is precisely wrong.

Television web browsing has been tried many times before, with little or no success - and although today’s increased broadband penetration and (more text-friendly) HD screen resolutions suggest perhaps it’s time again to make yet another pass at it, the bottom line is that average folks just do not want a lean-forward PC experience on their TV, thank you very much.  And even if they did, there would be user input device issues to solve (keyboard on your coffee table, anyone?), challenging security issues to deal with,  and (in contrast with computer users), zero tolerance for crashes and restarts.

I could go on and on - but in short, I feel it’s a mistake to assume that internet access necessarily dictates a full PC/web browser paradigm - for example, consider twitter, skype, IM, even iTunes - all examples of succesful non-browser/non-PC dependent internet applications, none of which “this generation” would consider “hogwash”.

Once you explain to them what the word “hogwash” means, that is.  

To sum up, the consumer electronics industry has discovered the internet - and these new devices are not going to need (or look anything like) a PC or a web browser.

For better or worse, the TCP/IP protocol (and the internet it makes possible) will not remain the exclusive turf of the computer industry for very much longer - a point some in the industry are slow to see.

I’m looking over some recent numbers from nielsen online and I’m struck by something: while hulu may indeed be a big fish, long-form internet video is still a pretty small pond.  Consider:

Of the four major broadcast networks, hulu partners Fox and NBC saw the largest month-over-month increases in October 2008:  Fox was up 165%, while NBC (helped by Tina Fey’s triumphant if temporary return to SNL as America’s favorite eye-winking, Russia-seeing hockey mom) saw a whopping 312% increase (by contrast, ABC was up 105% and internet video laggard CBS was only up 38%.)

312 % and 165 % increases over the course of one month? Let’s celebrate - professionally produced long-form video has finally come into its own, right?

Wrong.

From that same Nielsen report, here’s another statistic: during October, YouTube had almost 82 million unique visitors to hulu’s 6.3 million - that’s a factor of fifteen (even with Tina Fey’s Palin sketches driving users to hulu).

A direct comparison between the two by total streams delivered would skew unfairly towards YouTube due to the shorter running time of the average user-generated video - but what the heck, let’s do it anyway, just for fun…  because the difference between those Nielsen numbers is even more stark than you might imagine: YouTube delivered almost 38 times the total number of streams delivered by hulu.

That’s thirty eight times more streams from YouTube than hulu.

Granted, hulu is one well-executed website.  Yet clearly, long-form premium video over the internet still has a long way to go.  What’s the takeaway here?  In my opinion, the answer is somewhat obvious: people don’t want to sit alone in front of their computers for a half hour or more at a time to view long-form video - in other words, the effectiveness of the personal computer as a video-viewing device is inversely proportional to the program length of the video being viewed.

The numbers in this report clearly put Hulu and YouTube in stark contrast against one another in terms of actual usage.  However, it would be a mistake to fail to take into account the fundamental differences between the short form/long-tail (user generated) and long form/short-tail (professionally produced) video viewing experiences - or the fact that we don’t have a truly compelling lean-back device for delivering long-form internet video viewing just yet.  Therefore, it would be a mistake to infer from reports such as this that internet video will remain primarily a short-form UGC medium.

For long-form premium video over the internet, it’s going to take a new generation of device that offers content directly from the couch before we can make any such comparisons.   The user interface on these devices will not be a web-browser, instead it will be simpler and optimized for lean-back media. Companies such as boxee (at left) and Yahoo/Intel are working on just such user interfaces. While I’ve already written a bit on the Yahoo initiative here, Boxee is more recent development. Right now it’s just a Windows/Mac application that aggregates disparate video sources (including Hulu) into a cohesive whole. While that’s pretty cool in itself, what makes Boxee really interesting is that the company plans to bring dedicated set-top Boxee hardware to the market within the next year or so - and in ther meantime, the software can be installed on the Apple TV device today. As I’ve said before, I think the prospect of Boxee on - well, a box - changes everything.

We shall see - but in the meantime, a quick reality check is in order: while well-suited to workplace video snacking, the computer and web browser are inappropriate (and ultimately intermediate) solutions for viewing long-form video - no matter how well-implemented a given website (such as Hulu) happens to be.

The Holy Grail: internet video directly from the TV.

While the primary challenges would seem to be hardware-based,  there are equally significant (and equally daunting) software challenges to be met as well, because no computer = no OS = no web browser.   Traditional operating systems aren’t appropriate for a lean-back passive viewing system on any number of levels, and studies repeatedly show that nobody really wants a full-featured browser on their television (and a keyboard on their coffee table) anyway, so in one sense it’s no great loss.  However, forgoing all that standardized functionality leaves one with a lot of design and development work to do: what about an operating system?  What should the user interface(s) look like?  Can we get by with the current button-laden remote as an input device, or should a Wii-like pointing remote be developed?  And how does the type of input device dictate what type of functionality can get built into the system itself?  All in all, a pretty heavy lift - because what we’re talking about here is the creation of an entirely new interface to the internet (potentially every bit as important as the web browser).

Into the void step Yahoo and Intel.  Just announced at last week’s CES is the Connected TV Widgets Channel, a ‘software foundation’ for internet-enabled television hardware built around a new generation of specialized Intel processors.  While the framework will be open to 3rd party software developers (according to Yahoo’s Patrick Barry, “We get a nice advantage, knowing the ins and outs, but we will not limit the platform to being addressable by us”), it’s worth noting that Yahoo and Intel are going with a lightweight “widget” model rather than a heavier-weight application model.   Running a widget on a modified JavaScript engine rather than an installed application down on the operating system itself tends to protect the OS from poorly-behaved software and also allows for more generalized control of what the software can and can’t do.  Much like the Apple App Store model, the widget model represents an attempt to strike a balance between encouraging open and innovative software development, while at the same time providing appropriate “guard rails” for what are, after all, consumer electronics devices rather than computers (look for this trend to continue as cloud computing and the overall “CE-ization” of home computing continues).

Initially at least, the Widget Channel appears to be primarily about adding ancillary features on top of the traditional cable/satellite television you already have – in other words, imagine being able to call up feeds from fan message boards or team websites in a dock at the bottom of your TV screen while simultaneously watching the big game on cable…   Or having a dashboard of specialized weather, news, or twitter feeds available while watching “Madmen” via satellite dish…

• On a purely technical level, though, there’s nothing to prevent a Connected TV widget from streaming video, either (bandwidth permitting).  At that point, things get interesting - as the innocent little ‘widget’ starts to eat into existing television distribution models.

• In fact, the terms “Widget” and “Channel” are both misleading, because the Intel/Yahoo initiative is not about merely adding additional incidental functionality -  it’s about (cue the thunderclap and the dry ice) letting internet video into your television.  In other words, that local weather report or eBay quote on the bottom of your screen is really something of a Trojan Horse (a point already probably not lost on the cable industry).

Connected TV is, um, well-connected: on the hardware side, CE manufacturers such as Samsung, Sony, and LG are already on board, and for web content, deals have been inked with traditional heavyweights such as eBay and the New York Times (among others).  For the video over IP scenario to play out, though, what Connected TV needs are video content partnerships - and there too, Yahoo and Intel seem to have things well in hand: agreements have already been signed with CBS, Netflix, Amazon, Blockbuster, and Showtime

It’s been a while since we’ve seen much good news coming out of Yahoo, but they seem to be getting a lot of things right here.

Yahoo intends to monetize the Widgets Channel through advertising, but in an effort to reach a critical mass of users as quickly as possible, will reportedly go easy on the advertising initially.  So who knows, maybe in a few years from now, Yahoo stockholders could actually be thanking Mr. Yang for turning Mr. Ballmer down at $31 per share….

On the eve of the 2009 CES show, perhaps it’s time for a few more thoughts on what should prove to be The Big Story at this year’s show: televisions and set-top boxes with internet access baked in, for direct internet video access.

For the last few years, numerous companies in the ‘computer’ business (on either the hardware or software side) have made repeated attempts to market solutions involving the PC as viable long-form internet video delivery platforms - with little to no success. Lately, though, perhaps enough anthropologists and/or behavioral scientists have been hired to finally convince at least a few of these companies that despite all the bells and whistles, a computer might never be a television after all (as they say in the south, “you can put a brick in the oven, but that don’t make it a biscuit”).

So while certain companies might have enjoyed a substantial technological head start in internet video, through a stubborn insistence on leveraging the home computer, the opportunity was missed. But no matter: here comes the CE industry - as of Thursday in Las Vegas, it’s their market now.

Apple undertook a conscious expansion into the CE industry several years ago with the iPod (in fact, dropping ‘Computer’ from their corporate name) - is it too late for other computer-centric companies to make a similar move? 

The recent Intel/Yahoo initiative is a particularly interesting case in point.  Both companies, as Yahoo Connected TV vice president Patrick Barry poetically puts it, “emerged from the ocean of the PC”.

Intel Intel has been especially forward-thinking regarding the convergence of the home computing and consumer electronics industries for some time now, having launched the Intel Digital Home Group several years ago.  The interdisciplinary Digital Home Group, active in both processor design and standards development, is particularly close to my heart, as it’s made up of social scientists as well as computer scientists.

Yahoo We’ve been pretty hard on Yahoo lately, but they do have some heavy OEM hitters lined up to implement their embedded internet TV ‘widgets’ system: Sony, TiVo, and Samsung. Also worth noting, the Connected TV initiative intends to follow a purely advertising-supported model, and studies routinely show consumers prefer advertising to subscription fees.  Lastly, yet another issue (and one that holds true for all internet video contenders) is the remote: as Netflix CEO Reed Hastings recently noted, a Nintendo Wii-like pointing remote will likely be required as internet-enabled television hardware matures.

At any rate, given their recent setbacks, this could be Yahoo’s last best shot at redemption - so look for them to bet the farm (or “throw the long ball”, for you American football fans) on this one.

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)!