I recently attended an event in New York presented by videonuze (a highly recommended resource for all things internet video, by the way).  The  evening’s panel discussion tended to focus primarily on three issues:

• Monetization
• Content aggregation
• Whether overall video consumption will continue to grow to accomodate increased internet video usage, or will terrestrial television (cable and broadcast) start to lose market share

Listening to the panelists, I found myself increasingly struck by fact that they all appeared to be laboring under the assumption that as a technology, internet video is necessarily a function of the personal computer and the web browser (and perhaps someday the smartphone).   It wasn’t until moderator Will Richmond explicitly addressed the issue in his final question that what I consider to be the elephant in the room was even mentioned: internet video on the television.

That the subject sat so low on the panelists’ collective radar screen was interesting, only because there happens to be such a major CE push underway right now: a slew of network-enabled hardware was just announced at CES, Adobe’s got Flash running a chip, and several noteworthy cross-industry partnerships have been struck between some pretty heavy hitters – I’ve commented previously on a few of them:

• zillion tv
• yahoo connected tv
• tivo search

The question was put to the panelists: “Do you see internet video coming to the television in two years?”  Answers ranged from a clear “no” to a hedged “it’s a ways off” to an interesting prediction (from a cable executive) that users will likely be frustrated attempting to connect such devices themselves without the high level of customer care they’re used to receiving from their cable company.

The consensus?  That ‘killer app’ internet television solution you’ve been waiting for is probably closer to five years away than two.  While I’m of the opinion that it will come sooner than that (and sooner than might be comfortable for many in the industry), the one thing everyone agrees on is that it is coming.  There are not ‘ifs’ in this conversation – only ‘whens’.  Here then is my take on how it will impact the three core issues listed above:

Monetization: Internet video on the television will mean the high-CPM targeted ads of the internet, and (due to the lean-back, social nature of the television viewing experience) an audience finally willing to tolerate a more traditional (i.e. heavier) ad load.  From the perspective of the advertising industry, this long-awaited combination represents the best of both worlds – and so in the long run, I’m optimistic that internet video on the television will more than solve the monetization issues many industry analysts and executives have struggled to address so far.

Content Aggregation: This is a very interesting topic.  The web (and the web browser) are arguably the killer apps of at least the last several decades (happy 20th birthday, btw), but a wide-open browser paradigm (with all the accompanying complexity, security, and instability issues) is not really an appropriate solution for a CE device such as a television or set-top box (nobody wants to have to worry about their television crashing).  In place of all that convenient web standardization, though, there will be some heavy lifting needed to create more appropriate dedicated solutions.  Unlike the web, the system architecture will be closed and centralized: in other words, the hardware will present the viewer with a user interface containing all necessary controls and content meta data, and upstream communication will be limited to a single service-providing host – even if the actual video data streams are then streamed from an assortment of asset-owning partners and their optimized CDNs.  The goal is an elegant and cohesive user experience that still solves the tricky problem of allowing content search, discovery, and delivery across multiple sources and multiple video formats (TiVo, for one, recognizes the challenge and is taking an interesting search-based approach to solving it).

The Size of the Pie: The prospect of a disruptively successful lean-back internet video experience eating into terrestrial broadcast and cable viewership (and the resulting impact on traditional advertising and cable/satellite subscription revenue models) is on a lot of people’s minds these days.  For example,  note how quickly (and how thoroughly) joint owners Fox and NBCU recently forced hulu to shut down access from the boxee application after it became clear the small startup had plans to release a set-top hardware device (and that people were already installing boxee on their Apple TVs).  To insulate the incumbents from such zero-sum viewership concerns, several recently-announced initiatives (Time Warner’s TV Everywhere and Zillion TV) have announced they plan to require customers maintain at least one concurrent cable or satellite television service contract.  Of course, there’s no technical reason for this policy – it’s just there to prevent viewers from canceling their cable subscription and going “over the top” with only their broadband internet connection.  Long term, such an arbitrary restriction will prove unsustainable in the marketplace, but in the short term it’s a smart move: in a nascent market such as internet-enabled CE, first-mover advantage is huge, and any insurgent internet television solution that makes the cable companies feel at least a little less threatened (even if only for the time being) is going to have an advantage gaining traction quickly.

All in all, aside from the realtively short shrift given to the CE industry’s recent discovery of the internet by the panelists, it was an excellent discussion – and once again, if you’re at all curious about the future of internet video, I highly recommend videonuze.

Who knew? Barack Obama, of all things, now as Microsoft Office Clip Art!

With almost half a billion copies of the software giant’s Office application suite installed around the globe, anyone featured here is likely seen more often than Kim Kardashian on Dancing With the Stars ever will.

Clearly, Microsoft’s clip art has the reach most media outlets crave – a real asset, especially in today’s increasingly disintermediated world.

Which brings up the question, who at Microsoft decides over who’s in (the library) and who stays out?

In lieu of an answer, I was curious enough to check what other contemporary or past celebrity made the cut according to Microsoft’s Clip Art staff.

Turns out, neither George W. Bush nor Bill Clinton are included.

Neither is Adolf Hitler. (Thought I’d check, just to be sure).

But Mahatma Gandhi is.

And so is Abraham Lincoln.

Which brings us right back to Barack Obama, who has recently received much (self-induced) comparison to the iconic 16th US President.

Is someone in Redmond having fun channeling the travails of current-day politics via cliché PC clip art?

It’s time to talk about Zillion TV.  Announced a week or two ago and slated for a 2009 Q4 launch, this set-top box streaming initiative has already received quite a bit of coverage. Here’s our quick take:

What They Got Right

• Investors – One impressive thing about Zillion TV is the stature of the companies behind it:  Visa is a major investor (and will implement the back-end billing transactions for purchasing streams), and content providers Disney/ABC, Fox, NBC Universal, Sony Pictures and Warner Bros. Digital Distribution are all also investors/partners.  In fact, while I’ve read Zillion TV described as the “Hulu” of set-top boxes (due to the innovative cooperation between otherwise competing companies Fox and NBCU), Zillion TV goes Hulu one further, having Sony, Warner Brothers, and even long-time Hulu holdout and rival Disney/ABC on board as primary stakeholders as well.

• Revenue Model – Although television viewers and web browser users have consistently expressed a preference for “free” (ad-supported) content over paying subscription or per-view fees, Zillion TV itself will be agnostic as to which monetization model individual content owners choose, and will be able to support either.  One thing Zillion seems to understand, though, is the game-changing impact targeted advertising will have, given a lean-back audience willing to tolerate the heavier ad-loads typical of traditional TV.  I touched upon this a few weeks ago here – and as Zillion TV’s initial press release puts it: “Gone are the days of mass market, untargeted television commercials.  Through the ZillionTV Service, advertisers clearly will reach a more highly-targeted and engaged audience.  This is a major boon for the advertising industry.”

• User interface - We believe that in the absence of a keyboard on the coffee table (which studies show nobody really wants), the problem of the remote control and the user interface will have to be solved.  One way or another, the current remote paradigm (dozens of never-used dedicated buttons) is going to go away – to be replaced by either a touch-screen iPhone-like device or a Wii-like pointing remote (something I touched upon a few weeks ago here).  While Apple’s been quietly filing for patents on the laser-recognition pointing technology necessary for such remotes, Zillion TV will be the first internet video device to market that actually features one (which, come to think of it, is probably why the Zillion TV “box” has to hang over the top edge of the screen – see image).

• Zillion TV and the Service Provider – Easily the most noteworthy aspect of Zillion TV is that like Time Warner’s “TV Everywhere,” access will be limited to customers with current cable and/or ISP contracts from selected vendors already in place (more on TV Everywhere here).  Could this be an emerging trend – internet video services sharing monetization with carriers?  Possibly – in Zillion TV’s case, the device will be marketed as a hardware value-add available through (as yet unnamed) service provider partners.  The decision to Include the carrier in the revenue stream is huge, because instead of an insurgent over-the-top internet video service threatening to dramatically increase user bandwidth consumption while simultaneously making cable TV access less valuable, Zillion will instead be a business partner.  Of course, as the issue of monetizing internet video remains up for grabs, incumbent service providers remain (to put it mildly) “concerned” over what services running “over the top” could ultimately mean to the business models they’ve come to know and love – but from the service provider’s perspective, Zillion TV will likely be seen as the lessor of several evils, because at least some participation is better than none.  And the arrangement works for Zillion TV, too: the company plans to install caches of video content at your local ISP.  The technical innovation of expanding the content delivery network one step closer out to the user (from the edge of the internet onto the user’s local service provider) is potentially huge- and yet another step in one of our favorite topics, the privatization of the internet (something I touched upon a few weeks ago here).   Which brings us to…

What Could Be A Problem

• Net Neutrality - With Zillion TV content caches sitting out there in ISP data centers, look for this to come up when Zillion TV launches later this year – and look for the issue to be ongoing, because If I’m a Vudu, Roku, TiVo (or any other 4-letter box making company) – or if I’m a Yahoo Connected TV, Amazon VOD (or any other television/set-top streaming service), even if I lose a legal challenge to the Zillion TV business model, I’m going to be out there doing continuous comparative testing to see if there’s any hint of Zillion TV-partnered ISPs slowing down my packets – in other words, it’s going to be a good couple of years to be a media (or antitrust) lawyer.

Conclusions

In short, I’m impressed with Zillion TV – the big players are clearly onboard, I think including the service providers is a smart business move, and I like what little I know about the user interface.  A few things to watch:

• As the year progresses, which MSOs and ISPs will announce they’ll be partnering with Zillion TV?
• WIll the hyper-localized ISP/CDN model offer dramatically enhanced performance over competing solutions using CDNs external to the carrier?
• If so, will the net neutrality/anti-trust challenges be equally forceful?
• Will Zillion TV expand from television content into film as well?

Having a blog is a lot of work – even if we hadn’t customized our template to the point we ended up knowing a little more about CSS and PHP than we ever cared to, there’s always a post to write, spam comments to delete, and readership to try and grow.

So when we get something right months before it happens, you’ll have to forgive us if we rub it in a bit.

Last September I speculated about the prospect of Howard Stern coming to an iPhone near you – not only due to Sirius’ troubles, but also due to the troubles of the auto industry, which the satellite radio business model was seriously (sorry about that) dependent on.

Well it took a little longer than I had thought, but this just in (from a Sirius conference call earlier today): Howard Stern is coming to an iPhone near you (this spring).

What’s strangely missing from all the press coverage, though, is whether Sirius will be available from iTunes as well from the iPhone.  That would be huge, because I don’t know about other iPhone owners, but the new NPR radio app drains my full battery in no time at all – in fact, the real world usefulness of every iPhone radio app I’ve tried so far is severely limited by the battery drain issue.

Still, it’s good when the future behaves itself and matches our predictions.

Mel, call me.

Time Warner CEO Jeff Bewkes in a recent BusinessWeek article:
“We believe in TV everywhere, that consumers should have access on broadband to the same channels they see on television. But the online model has to support, not undermine, the distribution fee and advertising arrangements between programmers and distributors. Those with a subscription to a video service would also get access to shows online.”

“We believe in TV everywhere…” – it happens that TV Everywhere is also the name of a new cross-network, cross-industry initiative Bewkes announced several days earlier in an Ad Age interview. In short, TV Everywhere is designed to enforce the vision of the future Bewkes describes in the BusnessWeek article: to make internet access to cable network content possible only if you can prove you also happen to have a multi-channel  (i.e. cable, satellite or fiber) television account.

To the technical purists among us, this might seem a bit like limiting the availability of the Model T to those who can prove they already own a horse, but it’s worth remembering that an awful lot of money flows from the consumer to the cable carrier and on to the cable network: in fact, it amounts to 50% of the networks’ income.  In other words, the cable networks need the carriers – and they won’t make a truly comprehensive move onto the internet without bringing them along for the ride.

Conversely, the availability of cable network content is the primary value proposition of the cable/satellite industry, especially now that terrestrial networks are broadcasting in HD over the air.  In other words, since good reception of a local affiliate’s broadcast is less dependent on that cable connection, the cable carriers need the networks, now more than ever – and so are doing the heavy lifting of putting the “TV Everywhere” initiative together.

It’s a very lucrative (and interestingly circular) business relationship – and one that both parties have an interest in protecting from the wild-wild-west of the internet.

So, which major players are  on board?  On the network side, we have Viacom and (Hulu co-owner) NBCU, while (Hulu’s other co-owner) News Corp. and (Apple-friendly) Disney are said to be in talks.  On the carrier side, DirecTV and Dish Network have yet to officially announce, but Bewkes clearly intends to include the satellite carriers.  Comcast, meanwhile, plans to stick with their “Fancast” service for now, but has made some friendly remarks about the two services possibly becoming compatible.  Of course, the prospect of an ISP such as Comcast (the largest MSO in the country) selling both their own proprietary internet video walled garden while simultaneously selling internet access raises issues of net neutrality – so in Time Warner’s case, it’s interesting that the conglomeorate that includes cable networks Turner Broadcasting and HBO) will be splitting off the Time Warner Cable subsidiary on March 12th – just one week after announcing the TV Everywhere initiative.

So what exactly is “TV Everywhere” going to look like?  Evidently an identity-based access system running over the top  at “no extra cost”  to the user.  I imagine the pledge to make the service free is based on the fact that recent election-related spikes in internet streams of The Daily Show and SNL clips did not appear to cannibalize broadcast ratings and that all-important symbiotic relationship between the carrier and the cable network.   There’s something most coverage of TV Everywhere misses, though:

The most interesting thing about TV Everywhere is that it’s still only about the PC/web browser/mobile device – conspicuously absent is any mention of network-enabled televisions and set-top boxes.

The next generation of internet-enabled television hardware is the elephant in the room – and the content owners know it: how else to explain NBCU and Fox suddenly forcing Hulu to back out of Boxee once it became clear the service was ultimately aimed not at the (lean-forward) PC but at the (lean-back) TV?  (I would’ve thought the prominent placement of the letters ‘b-o-x’ in the company’s name would’ve been a red flag, but that’s just me.)

The whole TV Everywhere model is intended to preserve the current carrier/cable network revenue stream.  To that extent, it’s intended to prevent (or at least slow down the progress of) access to internet video from the television. That’s going to be difficult, though, because while users really don’t care whether their programs arrive at the TV via a cable stream or via IP packets, what they ultimately will demand is the same freedom from program schedule tyranny they enjoy over on a website – in other words, it’s not about “TV Everywhere” – it’s about “TV Anytime.”

CeBIT, held each year in Hannover (Germany), is the biggest technology show in the world.  What makes it larger than CES is that rather than limit itself to consumer electronics, it includes both home and office technology – in other words, all things digital.  I’m not at the show, but having read a few of the articles starting to show up online (the show’s currently running until March 8th), one company stands out as having at least a few good ideas:  Asus.

I’ve already written about how the time is right for netbooks – Asus has a 60% share of the European market and a 30% share of the worldwide market – so they’ve been doing something right.  In addition, the company has some serious plans for bring the Google Android operation system to the netbook.  It’s worth noting that while Android has had the iPhone headwind to fight in the smartphone market, no such incumbant hands-down winner exists in the netbook operating system market.  In fact, with netbooks gaining traction, Android evolving, and a lightweight netbook version of Windows 7 on the horizon, the netbook OS market could prove to be a major front in the epic battle between you-know-who and you-know-who.

But I digress.  Let’s talk some gizmo. At left is an Asus “concept netbook.”   It starts with the tablet computer concept from a few years back and takes it a step or two further – a completely touch screen-based interface, and a second monitor.  Although not yet commercially available, a few thoughts do come to mind:

• The clamshell design nicely solves the problem of maximizing screen real estate while at the same time protecting the portable device’s touch screens.
• To the extent a touch screen Netbook interface becomes popular, XP Home becomes obsolete as a netbook OS, forcing Microsoft’s hand in getting a Windows 7 Netbook OS out there quickly.
• Is this the perfect Kindle platform, or what??



Speaking of touchscreens – here’s an interesting device, looking very much like the result of crossing a computer keyboard with an iPhone.  While adding a touchscreen to a keyboard is a cool enough idea in and of itself (and as the most cost-effective way to enjoy the next generation of touch-enabled operating systems, probably something we’ll see a lot of), there’s more here than meets the eye: this is actually a netbook running XP Home! With an 802.11g wireless interface and a wireless HDMI interface (that’s a new one on me), you’ve yourself got a cable-free internet streaming solution, as well as a computer for the coffee table and the couch.  It’s my feeling users would be more interested in the former than the latter, but either way, a pretty cool device – and another idea that’s hard to imagining not becoming popular.

Germany’s Rhine Valley, 1439: the movable type printing press comes to western Europe, making the renaissance (and much of what came after) possible.

It took over 500 years for another technology to come along with that kind of impact on the dissemination of information and knowledge, but here we are, in the age of the internet – and Google is now working with several major libraries to digitize their collections through its Google Books Library Project and make them available online via one free terminal at any library that requests one.  The company has also reached a tentative settlement with the Authors Guild and the Association of American Publishers concerning compensating the copyright holders, and in June the settlement goes up for approval by the US District Court of New York.  Carefully reviewing such a complicated issue can be a lengthy process, to be sure – but to the extent one believes in the judgment and impartiality of the courts to assess any public interest  issues,  the system would appear to be working (so far at least) – right?

Not so to Robert Darnton, director of the Harvard Library, who in a recent New York Times Review of Books article and in a recently NPR interview laments that it was Google and not the government that undertook the digitizing process.  Darnton expresses concern over what he describes as the “wizardry” of the internet making it possible for one private entity to gain a monopoly over the printed word, and is of the opinion that in terms of copyright law,   “Congress got it better in 1790 than in 1998.”

A few thoughts:

• It’s the individual libraries’ prerogative as to whether or not to opt in to the Google project -  of course, Harvard is free to decline to make their impressive collection available for scanning.
• Similarly, the copyright fee settlement itself concerns only Google and the copyright holder organizations – if academic library directors were not offered a seat at the table for a business negotiation that didn’t directly involve them, is that necessarily a sign of conspiracy?
• Having arrived at a copyright fee settlement, it’s important to remember that it’s still not a done deal – it remains subject to a thorough hearing an an open court of law this June.  I would hope any valid issues raised by Darnton (or any other concerned citizen, for that matter) concerning the public good would be duly considered and debated at that point.
• As to the threat to the traditional library, it’s very likely the project will increase visitor traffic – and if some people will have some time on their hands as they wait their turn at the one computer, that would seem to be a perfect scenario for traditional book browsing and borrowing (ironically, the banks of multiple Google computers Darnton feels each library is entitled to would ultimately be far more threatening to the traditional library model).
• Lastly, what the Google venture promises is nothing less than access to the immense “long tail” of  five centuries’ worth of the printed word.  To the extent one is of the opinion that information tends to want to be free, the Google initiative is just part of an ongoing larger natural progression – a disruptive progression, to be sure, but one sometimes difficult to manage or thwart.

Personally, I like paper – I don’t think Kindles or computers will ever become my personal ‘medium of choice’ for reading.   However, I do look forward to the option of accessing that otherwise inaccessible long tail.  Granted, there are monopoly concerns, and it’s not going to be a trivial issue to build in the necessary safeguards – but let’s not risk paralysis by (to paraphrase the very Google-searchable Voltaire) making the perfect the enemy of the good.  Let’s figure it out.

The basis of Darnton’s arguments have to do with the commercial nature of  Google, but would he prefer that the Google/library project be absolutely free?  Again, one can easily imagine that if it were , the treat to the traditional library model would only be only that much greater (and it’s also worth noting that putting information under state funding and control is no simple panacea either – ask China).

In any event, will the library’s role as gatekeeper change?  Yes, but that’s unavoidable – and the fact of the matter is that the wizardry of the internet, much like the wizardry of the printing press before it (which incidentally made libraries themselves possible), is going to be with us for quite a while.

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.

What’s going on? 

Of the ten or so people sitting immediately around me on the New York subway from 14th to Wall Street, an impressive seven riders actually read a book!

Yes, actually reading hard and soft cover books, one page at a time, without the help of an iPod, or Kindle, or any other digital hand-held device.

Although completely anectodal (and statistically irrelevant, I know), behind my impromptu mini sample of “analog” readership, is there more than meets the eye?

Hey, it’s probably just a push back by a few, against the omnipresent popularity of overly slick and shinny digital rich media players packaged in 21st century form factor and UI.

Or maybe it is a case of “it’s the economy, stupid”.

People reading relatively inexpensive physical books today may be an indicator that previously released Zunes and iPods are now considered way to pricy.

My money, though, is on a different point: My seven fellow straphanges have either re-discovered the age-old value proposition of printed paper, or never actually abandoned their love for it.

To them I guess, when reading a real book, the tactile experience is unqiue and remains unmatched compared to any digital e-reader counterparts.

There’s also a certain emotional bind to turning pages manually, one by one. 

Oh, and if you are into dog-ears, try that with an Amazon Kindle – can’t be done.

Long story short, companies have long started working on e-paper and e-readers to recreate similar effects, but none seemed to have cracked the code on sufficiently simulating the organic experience of holding and reading an actual book. 

Until there is a similarly satisfying “touch and feel” reading experience with e-reading devices, I’d like to assume my seven subway mates probably are the equivalent of vinyl record fans amidst a sea of DVD owners.

Nothing major. Nothing to be concerned about. It’s interesting though, as the e-reader industry seems to still have ways to go.

PS: For those of you interested in “the latest and greatest” innovation in e-books, e-reading, and the like, check out these items:

In case you missed the first one, Amazon Kindle II is coming out

Amazon to offer e-books on Apple devices

Sony going next-gen with its own e-Reader, too

The bookworm project now supported by O’Reilly

Stanza, a prominent e-reader iPhone app

Google Books now officially online

Samsung has genuine interest in actual e-paper

The trend is unmistakable: the consumer electronics industry has discovered the internet, and activities that have until now always involved a “computer” (such as internet video viewing and mobile internet access) will be increasingly done using a new generation of leaner and meaner dedicated CE devices instead.  This is all well and good: arguably, the modern home computer – more flexible and powerful but also more complicated and (let’s face it) maintenance-intensive than ever – is clearly overkill for such activities.  But as the computer justifiably loses the battle to convince us it’s also a CE device, CE devices are in turn left to grapple with an issue of their own: how much and how best to emulate the computer.

I’m talking software deployment.  You buy a computer, it includes a license for an operating system, and you’re free to go and install whatever software (or malware) you want – in other words, “you buy it, you break it” (in a way, an inversion of the “Pottery Barn rule ” invoked by Colin Powell over the war in Iraq).  But what about a smartphone, or that internet-enabled television you’ll be buying within the next year or two?  While the availability of a rich selection of high quality 3rd party applications is in the best interest of both the device maker and the user, a wide open ”no guard-rails” software deployment policy is in both parties’ worst interest: poorly written applications can harm both the user  as well as the brand, and (news flash) the average home user is a lot less interested in taking on that kind of responsibility than many companies in the computer industry have ever really understood.

For their upcoming line of internet-enabled televisions, Yahoo/Intel have addressed the issue by going with a “widget” rather than “application” model: lightweight software running on a JavaScript engine rather than the OS itself.  Taking another approach, Apple (which in terms of revenue has been a CE company with a side business in computers for a while now) has come up with the iTunes App Store: applications for the iPhone (and likely for the Apple TV in the near future) are installed on the OS itself, but must be first vetted by (and subsequently purchased through) Apple.  This offers the best of both worlds: the developer base for the device is virtually unlimited, but nothing’s going to break, and apps are guaranteed to be secure.  In fact, the “app store” model is currently being imitated by other smartphone makers such as Nokia because it’s been so successful and popular with users.

Well, 98% of us, that is – there’s also a growing geek subculture out there that believes they have the right to do whatever they want to with something they’ve purchased, thank you very much – and they’re dedicated to removing the iPhone’s software restrictions – “jailbreaking”, as it’s called.  Although the practice is in direct violation of the iPhone EULA (software license agreement), it’s gotten so widespread now that a Google search of “jailbreak” and “iPhone” currently yields 3.6 million results -and so the two sides (the Electronic Frontier Foundation and Apple) are set to face off this spring.

Apparently, this dispute is subject to the Digital Millennium Copyright Act , originally meant to fight piracy of copyrighted “works” such as film and music – therefore, it will ultimately fall upon those famously tech-savvy folks at the Library of Congress to decide the issue.  A case can be made for either side – but although I have to admit I’d love the ability to put my iPhone on a network that covers the NYC metro area better than AT&T , I tend to side with Apple on this one – not only because I feel the iPhone EULA puts them on a pretty strong legal footing, but also because I feel that it’s “good and right” to treat software for CE devices differently than software for computers.

One thing is for certain, though – just as developers will continue to write great App Store applications for Apple, others will continue to hack open the system.  What’s unknown is whether Apple go to the length of actually suing users – a tactic that didn’t work very well for the RIAA .