The groundswell of interest in finally getting internet video over to the television in such a way that avoids the clunky computer-centric workarounds we’ve seen to date is picking up steam - just in time for next month’s CES show.

While this is much as we expected, a more surprising (and related) development is the resilient strength in game console sales:

• As of October, the video game industry is up 18% year-over-year, and remains on track for a record year.
• Microsoft reports November was its biggest xBox month ever in Europe, with sales up 124% over last November.
• According to a recent Pew Internet & American Life Project survey, more than half of American adults play video games, and 20% play every day.  More importantly (because after all, this is the future we’re talking about here), a full 81% of respondents between the ages of 18 and 29 are home video gamers.  And the gender gap is less than one would think: while 55% of adult males play, surprisingly, 50%of adult females report playing as well.

Needless to say, given the current economic climate, numbers like these are quite impressive – and suggest the game console could be a much more viable solution to that pesky internet video ‘last yard’ problem than previously thought.  With that, a brief overview of the three competing platforms:

Sony Due to an ongoing price war, Sony now loses money on each PS3 it sells, according to Macquarie Securities analyst David Gibson.  However, the company is firmly committed to the PS3 as an integral part of their long-term internet video strategy, and just rolled out a newly revamped Playstation Network direct video download service for the PS3.  What’s unique about the PS3?  Sony is able to leverage its unique position as both a CE manufacturer and a major film studio, and recently made Sony Pictures’ summer Will Smith vehicle ‘Hancock’ available via download prior to the DVD release.

Microsoft The complex and expensive prospect of upgrading the home PC to Vista Premium or Ultimate just to get internet video to the television has unsurprisingly proven less than compelling to most consumers.  In contrast, over the recent Thanksgiving weekend Microsoft reports a 25 percent increase over last year’s already robust sales of 310,000 xBox units - in short, it’s clear where the growth is.  Like Sony, Microsoft has a direct video download service for their game console (and like the Playstation Network, the xBox Live Marketplace offers a large number of titles in HD).  What’s unique about the xBox 360?  The Microsoft download library is larger than the recently launched Sony service’s, and in addition, the xBox can now also stream content from your Netflix ‘Watch Instantly’ queue (in other words, but an xBox, get Roku functionality for free).  While (like Roku) titles must be added to the queue from the Netflix website, the ability to both stream and download (and the better selection for both) gives the xBox an edge over the PS3 in terms of internet video functionality.

Nintendo Here we have a bit of a wild card.  Thanks to their groundbreaking motion-sensing remote control (and a unique selection of games made possible by it), the Nintendo Wii is the market leading game console in the US, selling 34.6 million units for 2008 Q3 (compared to 16.8 million for the PS3 and 22.5 for the xBox).  The company has been remarkably circumspect regarding its plans for internet video, though – so look for some kind of announcement shortly, perhaps at CES in January.  What’s unique about the Wii?  With no hard drive, any internet video solution would be streaming-based – which is just as well, since the Wii has only 480p (DVD) resolution anyway (although it’s worth noting that real-world demand for HD video has proven surprisingly low).   But perhaps the most interesting aspect of the Wii is the motion sensing remote – as user interfaces get more advanced to support direct internet video access from the TV, we expect this point-and-click technology to replace the cluttered button-filled remotes of today.

Who knows, Apple TV and Vudu have certainly gotten a lot of things right, but neither has yet made a meaningful impact on the market – perhaps the Trojan Horse of online mutli-player video gaming will be just the added value proposition needed to make for a compelling ‘Last Yard’ solution.

Granted, we’re not big Yahoo fans here at digitalmissive - at least not of Yahoo! Mail: recently, several years’ worth of email was lost from Andreas’ personal account, and since early 2007, the search function on mine started returning messages only from the last month or so.   Yahoo’s response to both issues was of the “Known-Issue,-Our-Engineers-Are-Aware-Of-It” variety, but both issues have remained unresolved over the past few months.

Concurrently (as you might have heard), things have gotten a bit bumpy around here economically lately - but for Yahoo the news has been even worse: in October, the company announced the intended layoff of 10% of their workforce by year’s end,  and after turning down a buyout offer from Microsoft earlier this year at $31 per share, today the company’s stock dipped below $10.

Perhaps to entice Microsoft to make another offer (and perhaps to avoid submitting himself to what would’ve been a memorably contentious 2009 shareholder’s meeting), in November CEO Jerry Yang agreed to step down once a replacement can be found.   But despite the imminent departure of the initial $31 offer’s main opponent, and despite Yahoo’s obvious (if somewhat humiliating) interest in winning back the software giant’s affections, Microsoft has not been enticed to return to the table with a reduced offer.

Most recently, Yahoo Senior VP Toby Coppel (head of operations in Europe and Canada) has announced his departure from the company as well (although Yahoo insists Coppel’s decision is unrelated to Yang’s departure and Microsoft’s lack of renewed interest).  While I was admittedly frustrated with Yahoo Mail, it is with no schadenfreude that I witness the company’s troubles - especially not for the 1000+ Yahoo employees to be let go by 2009.  But it is interesting to note that how well a company executes on the small stuff (such as the mail accounts of two guys from New York) often has a way of being predictive of its longer-term prospects.

It’s not clear whether Microsoft’s apparent disinterest in Yahoo is genuine or whether it’s a tactical stance given Yahoo’s continually weakening negotiating position – but either way, as unhappy as Yahoo shareholders must be these days, Microsoft owners should be showing Steve Ballmer the love for walking away at $31…

One of the most daunting technological challenges we face is scaling up this old internet of ours to meet the bourgeoning consumer demand for bandwidth-intensive applications such as streaming media, telecommuting, and cloud computing - and as internet video demand moves from short-form/long-tail/low quality content to long-form/short-tail/high quality content (i.e. from YouTube to Hulu to movies), internet video only becomes a larger and larger part of this equation.

Just a heads up: as of now, the public internet will cease to be able to meet bandwidth demand by 2012, according to an excellent study by research firm Nemertes (if you read just one of the external sources linked to from this blog, make it this one).  Citing independent research from the University of Calgary, the study finds that the three largest US content providers (Microsoft, Google and Yahoo) have already “built out dedicated infrastructures” in advance of just such as scenario - in Google’s case, as evidenced by their recent pursuit of ‘dark’ (unused) transcontinental fiber.

In short, a trend towards content providers “investing in technologies to accelerate traffic to their sites ahead of that on the regular Internet” over higher-performing paid or private “overlay” networks.  Put another way, the egalitarian net-neutral internet we of today will become just the lowest rung of a multi-tiered system composed of competing proprietary networks – nothing less than the commercialization albeit by technical necessity) of the internet.  “The oligarchy, in other words, is devolving into individual city-states” is how the Nemertes study puts it.

So that’s what’s up on the content provider side – what about the service provider?

It turns out ISP industry recognizes the trend as well, and moves are well underway.  Because they lack the resources of a Google or Microsoft to implement their own parallel physical internet backbone data links, proprietary  CDNs (content delivery networks) are the direction they’re going in instead.  What’s a CDN? Through both network optimization/caching software and the brute-force deployment of multiple content-caching servers placed at strategically positioned and geographically diverse locations along the edge of the internet, CDNs are networks designed to circumvent the increasingly messy core of the publicly routed internet to provide the higher bandwidth, lower latency and increased scalability required to meet the challenges of the future.  The third-party wholesale CDN market is relatively mature (industry leader Akamai now maintains over 34,000 servers located in 70 countries), but several large ISPs have recently opted to ‘roll their own’: in June 2008, AT&T announced it was building out a CDN of its own using  software licensed by several smaller firms (ExtendMedia, Qumu and Stratacache), and just last week at a conference, I was handed a press release from Verizon announcing a CDN partnership with UK CDN firm Velocix.

Why have two of the largest US carriers now decided to buck the outsourcing trend and create their own CDNs, especially during such challenging economic times?  There are several reasons:

• While most residential ISP customers are on (ostensibly) all-you-can-eat plans, CDN usage is metered – so while the ISP’s per-user revenue has remained largely static, their costs from the 3rd party CDNs they’re currently contracting with have been steadily going up.  This makes the prospect of cutting out the middleman increasingly attractive.
• On a technical level, the synergy of an integrated CDN/last mile solution offers potential performance advantages an external wholesaled CDN would have difficulty matching – and as the last mile becomes faster due to increased presence of fiber (i.e. FIOS) and/or Docsis3.0, the integration of the CDN with the last mile makes even more sense.
• To the extent an ISP is able to build a demonstrably better mousetrap on their own, the quality of that company’s proprietary CDN could well become a primary competitive differentiator driving subscription growth – especially if, as expected, long-form internet video usage continues to grow.
• Unlike AT&T, Verizon is planning to leverage the price/performance advantages of their new proprietary CDN on the content owner side as well, and has already contracted directly with Starz Entertainment to offer Starz content to Verizon customers (in this way, the in-house CDN could very well resuscitate the largely failed ‘walled-garden’ model).

Are 3rd party CDN wholesalers Akamai and Limelight losing sleep?  Probably not – deploying an effective CDN is an incredibly huge undertaking, and as such will be a realistic option only for the AT&Ts, and Verizons of the world.  But for the combined residential CDN/ISP, does being in both businesses concurrently present some interesting antitrust/conflict of interest issues?

Regardless of how it plays out between content providers’ pivate backbones and service providers’ private CDNs, what is clear is that the landscape will likely look profoundly different in five years – the internet as we know it could well become the equivalent of the public post office - while the equivalent of a parrallel  higher-performing ‘Fedex’ internet emerges, for the sole purpose of getting you that HD internet video stream or workplace desktop session you require.

On a purely technical level, it remains an exciting future – but will the incorporation of the internet (and the de facto end of net neutrality) happen at the expense of innovation?

I’ve long been of the opinion that longer-form (professionally produced) internet video will happen on a truly widespread scale only when the problem of getting that content over to the television is solved – and that current discussion of internet video (and how to how to best monetize it) is often based on two false premises:

1. The personal computer will continue to be the primary internet video delivery device.
2. Internet video is about short- and mid-form content.

Such discussions often completely fail to adequately recognize how profoundly game-changing direct access to the internet from the next generation of TVs and set-top boxes will be.  In other words, while short form internet video (user-generated or otherwise) will always be a workplace diversion, the main event has not happened yet - we’re still in merely a transitional, evolutionary phase of the process - a process which will end at the couch, not the desk.

Where are we now?   Several major CE manufacturers are currently offering their first generation of standalone internet-enabled devices (each partnered with one or more internet video services):

Hardware:                                Service:

• Sony Bravia, PS3               Sony Playstation Network, Amazon on Demand
• Roku                                   Netflix, more to come…
• LG                                      Netflix, more to come…
• AppleTV                             iTunes
• TiVo                                   Amazon, Netflix
• HP MediaSmart                  CinemaNow, including others
• Microsoft xBox360            xBox Live Marketplace, Netflix

The problem with the above scenario is that no computer means no web browser, which means no Flash – so each OEM wishing to offer multiple services directly via their network interface-enabled hardware (TV, DVD, PCR or set-top box) has had to implement the interface to each service partner individually – a tremendously inefficient reinventing of the wheel.

Therefore, I’ve long felt that what’s needed is a standardized technical protocol for CE hardware to interface with these multiple video services.  Last week, Reed Hastings of Neflix expressed a similar view, noting that in the absence of standardization, “Everyone’s going to have to do customer interfaces for each device”, and further, that it’s “slowing down the market tremendously.”

While the web standards we now take for granted were developed in the shelter of academic and government agency environments, there’s a huge amount of money (and an equal amount of competing agendas) at stake in the internet video space – so the development of a new standard from the ground up at this point seems highly unlikely.  Instead, an embedded web browser running Flash (and/or Microsoft’s Silverlight) sounds like the better idea (Sony has already moved in this direction, embedding the highly-regarded Opera browser into its Bravia line of network-enabled TVs).

Admittedly, though, web on the TV leaves a bad taste in the mouth – previous attempts suffered from three major issues:

• Bandwidth
• Screen resolution
• User interface

Of these three, two are already solved: most broadband connections are now capable of streaming at least SD video, and increased resolution of HD TV makes web text quite readable. The third issue alone remains: the user interface.  Recognizing this, Hastings predicts a new generation of Nintendo Wii-like pointer/motion remotes to replace the primitive up/down/left/right arrows (and four dozen other never-used buttons) on today’s remotes (interestingly, Apple has recently filed for a patent on some technology for just such a device).

Look for this to be the big story at the CES show this January…

As nice as the device is (and the more I use it, the more I like it), I’ve again found myself once again with a few thoughts on what could make the iPhone even better…

a (ahem) better network In a previous life, I wrote a fair amount of music for television commercials.  Once I was called back to do some alterations on a spot for an aerosol carpet deodorizer because of changes required by legal at the ad agency - in the commercial, the effectiveness of the product was illustrated using a (somewhat silly) ‘odor-smelling wand’ prop.  However, it was discovered that the number of (entirely fake) beeps coming from the prop didn’t accurately match the (entirely real) numbers coming from the focus group, so the spot needed to be reedited – such is the attention paid to truth in advertising and potential litigation.    How then does Apple get away with showing 3G web pages loading this quickly in their iPhone 3G ads?  (I mean, whose little blue Safari browser bar moves across that quickly?)

Good old-fashioned voice coverage is even more of an issue, though - I (along with an informal sampling of my fellow NYC iPhone users) are still occasionally suffering from the AT&T dropped call syndrome, and what’s worse is that despite having all the latest firmware upgrades, I still have to stand in the far corner of my living room to get enough bars to make a phone call from my apartment - and this is a 7 minute subway ride from Manhattan (i.e. not exactly the boondocks).   Even in the middle of New York City, coverage can be spotty:  I recently stood on the corner of 14th St. and University Place (Union Sq.) and had no voice service whatsoever (incredibly, I had to walk west along 14th St. past 5th Ave. before I had any bars).  The AT&T cell network needs some work, at least in the New York City area.

system-wide ‘undo’ It’s a little surprising the iPhone is missing a global ‘undo’ command at the operating system level, but I’m guessing it’s the result of a conscious design decision to keep the iPhone OS as lean and mean as possible (in computer science terms, a global undo requires a certain degree of ’statefulness’, but the iPhone is largely a stateless device).   However, as iPhone Apps get more interesting and powerful, the lack of an ‘undo’ command is only going to become more of an issue (and meanwhile, what if you delete an SMS conversation by mistake?)
One cute idea would be to leverage the iPhone’s onboard accelerometer (which makes how the device itself is held a user input for flipping the display axis and for certain games) - because a rapid physical shaking of the iPhone would make a neat ‘undo’ command, wouldn’t it?  (reminding us all of our childhood Etch-a-Sketch…)

system-wide text ‘copy’ and ‘paste’ Again, a pretty basic function, but one the iPhone doesn’t support.  Here’s a great mockup of how this could work – from vimeo, a video sharing site I like a lot.

axis flipping for the mail app Again, back to the accelerometer – I get a fair amount of HTML emails. While the iPhone does a good job displaying them, it would be nice to be able to hold the device lengthwise and view what are essential web pages with the wider horizontal aspect ratio - as I’m already able to do with the browser, camera roll, and video player apps (and since the functionality is already in place for those apps, it would be very easy to implement).

In general, though, while the AT&T network is a disappointment, the device itself certainly is not – and recent sales figures reflect just how popular the iPhone has become: during the last quarter, Apple sold 6.9 million units, more than were sold during all previous quarters combined. In fact, over the last quarter, the iPhone sold more than any other mobile device (smart phone or not), beating out both the (often free) Motorola Razr in the consumer space and the RIM Blackberry line in the enterprise space.  Further evidence of the iPhone’s success can be found reading between the lines of a recent blog post from a Microsoft blogger concerning the new Office 2008 web apps and cross-platform cloud computing – iPhone compatibility is given top billing, over even Mac OS compatibility.

So the iPhone is a hit - as a believer in the importance of good product design, I’m glad to see it.

The AT&T network, though, remains a work in progress - at least in our neck of the woods.

I’ve been thinking lately about how business issues (the shifting landscape of allegiances between companies) affects what (and when) technologies become available.

Not for nuthin’ (as they say here in New York) - here are a few thoughts…

no Flash on iPhone’s Safari browser
I think Adobe would be more than happy to write an iPhone Safari Flash player, but Apple is probably hoping the growing number of iPhone users will drive wider adoption of their Quicktime platform for streaming.  More on that here.

no Hulu-iPhone app
OK, so no Flash - but at least we get a bundled YouTube iPhone App that streams via QuickTime - because despite YouTube’s parent Google being behind the competing android smartphone platform, the two companies get along quite well, thank you (witness the iPhone’s rock solid gmail support).   Why not, then, a similar Flash-workaround Hulu iPhone App?  I imagine Hulu would love to see the swelling ranks of iPhone owners use their service (batteries permitting),  but don’t hold your breath: AT&T would have a major problem with that, because of the additonal bandwidth required (the average Hulu program is a lot longer than the average YouTube snippet).  This, by the way, is also the reason you won’t see an approved iPhone App any time soon allowing you to use the camera to shoot rudimentary video - as cool as that would be, AT&T doesn’t want us emailing anything that big around…  (although ‘jailbroken’ apps are out there if you’re brave and/or foolhardy enough to go off the Apple reservation and unlock the thing).

no Disney/Pixar content on Amazon’s ‘Video on Demand’ service
As a result of selling Pixar to Disney in 2004, Steve Jobs became Disney’s largest individual stockholder, and was given a seat on the Disney board.  iTunes video (via Apple TV) happens to compete directly with Amazon Video on Demand (via TiVo and the Sony Bravia).  Although Jobs has described Apple TV as nothing more than a ‘hobby’, could Apple have influenced Disney/Pixar not to play ball with such a direct internet video competitor?

no NBC/Universal content on Sony’s ‘Video Store’ service
NBC/Universal is the only major studio absent from the recently launched Sony Video Store service - since NBC is partnered with Microsoft on MSNBC, could NBC be a little reluctant to sign a deal with Microsoft’s game console arch rival Sony?

I’m just sayin’….

The New York Times has discovered (or rediscovered) thin computing: a small simple device (or ‘terminal’) with just enough under the hood to send mouse & keyboard clicks to a server doing absolutely everything else.  Initially hyped as a challenge to Microsoft’s domination of the workplace desktop, the concept had its 15 minutes as The Next Big Thing a few years back, only to fall from favor due to network performance issues (while it’s acceptable if an application’s a teensy bit slower over the network, sluggish mouse and key response is a non-starter for most users).

But look at the advantages, though: rather than a $1000 workstation with Windows and Office installed, we’re talking about a simple paperback-sized box and monitor for $400, all in.  Granted, MS Terminal Server (and especially Citrix) licenses do cost, but on the other hand consider that there’s no fan noise, no hard drive failures, no long boot-up time, no virus susceptibility, no user-installed malware, space savings, power consumption savings – the list goes on and on.

And I speak from experience – several years ago, as the network administrator for a small business with half a dozen retail and office locations spread across  the country, I moved a good portion of my remote users to these devices.  This not only solved my problem of how to install and maintain remote these workstations, my client (who was growing quickly at the time) loved the immediate savings compared to the workstations they had been buying (even taking the cost of terminal server licenses into account).  I was a hero; life was good (in a keep-the-trains-running job like network administration, you tend to savor those win-win moments). 

While I chose devices from Wyse, as the NY Times article points out, thin client computing is becoming The Next Big Thing all over again - so there are more and more manufacturers out there.  So many, in fact, that it begs the question:

What about the home market?

What I’m getting at is the return of the web appliance.  Like thin clients, this is another concept from a few years back that never quite took off – the only difference being the addition of an onboard web browser of some sort (maybe the well-received Opera browser, since Sony is already embedding that into its new Internet Video Link hardware).  Because in a world of Hulu, Flickr, and Google Docs (services which, unlike Windows Terminal Server or Citrix, are generally free), a simple little box with a browser and a handful of drivers for peripherals would about do it for a lot of folks, wouldn’t it?

Clearly, cloud computing is The Next Big Thing now – at least Google thinks so, and Microsoft thinks so too.   The potential reliability and privacy issues of cloud computing might be a little easier to take if one also imagines potential upside of being able to radically simplify things for the home user.

So thin computing is back. Who knows, maybe the time is finally becoming right again for the web appliance too; maybe the browser is the new operating system.

“Apple will announce Sirius/XM satellite radio support on September 9th”, I wrote back on September 5th.

OK, I was throwing the long ball there and it didn’t work out that way (at least not yet…)  - my bad.

Instead,  Apple’s much anticipated press event was somewhat less earth-shattering: new iPod Nanos and Touches with marginal improvements:

• New iPhone firmware.
• The introduction of HD television content on iTunes (the increased data transfer required for HD being Less of an issue given Apple’s non-streaming service).
• The return of NBC/Universal content to iStore (one prediction I did get right).

However, I remain convinced that since satellite radio is particularly well-suited to mobile users, an iPod/iPhone agreement (along the lines of Apple’s audio book partnership with Audible.com) remains an interesting possibility – and since Sirius/XM still needs a new way to grow quickly (new car sales are way down, the economy is affecting discretionary spending, and their stock price has been hammered), Apple would have substantial negotiating leverage.
“Yahoo mail search broken”, I wrote back on August 8th.

Well, another month has gone by and still is.

Add to that the continued lack of IMAP support and the queasy feeling one gets reading about Andreas losing 5 years’ worth of Yahoo email, and I’m finally off the Yahoo reservation, for good. It’s actually a bit baffling to me - both how cavalier they’ve been about their technical shortcomings and also how little adverse press coverage they’ve received - still, I wonder if the brand is in the slow process of becoming the next AOL or Radio Shack…


Anyway - speaking of IMAP, if you have a smartphone/PDA and a Gmail account, that’s the way to get your email (for more on why it’s superior to POP3, read this).  While Gmail and the iPhone play very nicely via IMAP, I’ve always wanted Google calendar sync as well, though – and I’ve recently found a very nice way to do that: nuevasync.com, a new service (still in beta) that can sync Google contacts and calendars to mobile devices without requiring any client-side software.  It does this by making the Google (and Plaxo) services available via Microsoft Exchange ActiveSync.  In other words, nuevasync acts as the conduit between these two corporate rivals (in fact, the nuevasync.com home page avoids explicitly mentioning ActiveSync, referring only to using “synchronization protocols that are already built in”).  This begs the question: how does Microsoft feel about all this?  Since Nuevasync also makes the Google/Plaxo services available to Windows Mobile devices, to the extent there’s demand for that, it would tend to help drive sales of the Windows Mobile platform - and anything that makes Exchange compatible with more mobile devices could also be a net positive  – but these benefits come at the expense of letting Gmail users (such as myself) avail themselves of a Microsoft protocol.  For free.  For now, though, Microsoft seems to have no problem with Nuevasync, but that could change…

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.