the smartphone wars

Just yesterday I wrote about how last year I began a TECHNOLOGY RANKINGS: DINOSAUR WATCH list. This included cable television.

Today, I notice that Business Insider has an article on how cable television has to start following the lead of Apple and Netflix and offer improved search, so we can find a particular show, and a cheaper price for their content; undercutting iTunes and Netflix, for example.

The cable (and satellite and telco) TV faction still has a strong grip on how you watch TV in your living room. They own the pipe that's running into your house, they own the set-top box that's already hooked up to your TV, and they have great, long-lasting relationships with content providers. That's all crucial.

But video entertainment today is increasingly relying on the Internet and mobile devices. And that's where the cable and satellite guys are mostly lost

This is bad advice. It seems to suggest that perhaps cable MSOs can start pumping Disney Channel or ESPN events to our smartphones and all will be good. This is not the case. Getting content onto our smartphones, or iPads or web-connected television is one part of the equation. And, in fact, it's the really really easy part. The hard part? Surviving when your entire business model can no longer exist.

Cable television has long been able to leverage content for both ad sales and subscription sales. In fact, they get the highest score possible in my 'INFORMATION WANTS TO BE MONETIZED' category in the Technology Rankings. The problem is where this reality meets head-on with the spread of smartphones. In fact, given the current pace, Apple's new iTV doesn't need to succeed. Google TV doesn't need to succeed for cable television to go extinct in a few short years.

Because the rapid spread of smartphones are choking off and killing the very ecosystem cable television thrives on. When it comes to 'television' content, the new reality is simple and stark: I want to watch what I want when I want where I want on the device I want.

Simple, right? A technical fix, albeit a massive one, for cable companies is all that's required for them to succeed, then?

Wrong.

Because, not only can their disparate pipes, billing systems, content contracts and delivery infrastructure not make this happen, even if they could spend the tens and tens of billions of dollars for it to become a reality, they would still die off. Think about what I said above about content: watch what I want when I want where I want on the device I want. That places a premium on content, yes, and an even greater premium on the present. This very moment in time. Cable television cannot live in such a world. Everything they do is built on a different enviroment. They make us pay for content we never want just to get the content we want. They make us pay for content we periodically want, only, they make us pay for it always, even if we're not watching it. And charge $100 a month for the privilege.

Why in God's name would I pay for something I don't want? Why would I pay for a program, today, when I won't watch it til next week? Next week, I'll open up my browser, or turn on my iPhone, or turn on the 'television' and watch it then. The only way cable makes money is by requiring us to pay over and above for what we do not want. And that is a business model doomed for extinction. Sure, given the current contracts and systems in place now, individual bits of content may be priced too high. That will take care of itself in the due course of time (and a short time that will be). Cable television will be virtually non-existen by 2016.

In a few years from now, younger people will stare at us with incredulity, the way we do when our parents tell us about life without remotes or 100 channels. They will be shocked when we tell them we used to pay even if we weren't watching. They'll thnk we were stupid. The way we think about those people we see from the 1980s music videos in those ridiculous clothes and with that hideous hairstyle.

The children are right. We are stupid.

But to the cable industry's regret, we are getting smarter every day.

I'm a believer. I believe that the smartphone, social media, the mobile web, location-based services, hyperglobal connectivity; all that good stuff will radically change the world. Everything. New wealth will be generated. New cities will thrive. Old ways will die.

But I'm not stupid.

YouTube, apparently, thinks otherwise. For they are floating an idea of having me pay $5 for the privilege of streaming Hollywood movies. While it is true that one of my rules for content is that: we want what we want when we want it on the device we want it, I never thought of adding a corollary that this doesn't happen through magic. We actually have to build services, innovate, improve broadband, improve access. Or another corollary: just cause Google wants to make money off YouTube (finally) doesn't mean YouTube viewers will open up their wallets.

$5 a movie. Streamed. Who is that desperate to see a Hollywood film? Better question, who is that stupid to believe that there would be a market for this? Let's look at the top 10 reasons why this Google plan will fail worse than Google Wave:

1. Everyday I drive past a Redbox vending machine out front of the nearby Walgreens. What, you too! I know! And they charge $1. That's four less than five for those keeping score at home.
2. Google Checkout. How can this still exist. It sucks. Paypal is radically superior. Hell, whatever Yahoo uses is better and I don't even know what that's called. 
3. Google Checkout, part 2. Doesn't Google have enough of our personal information, already? What? Now we give them our credit card information, home address, billing address, mother's maiden name and a record of our purchases?
4. Netflix
5. iTunes
6. Amazon
7. Streaming. I had a pretty decent WiFi connection and still that 30-second Charlie bit my finger video made me wait while it buffered.
8. The fifty million alternative free YouTube videos that will amuse, entertain, uplift and/or teach me; all for free.
9. Where's the porn?
10. Google actually knows gaming and social media better than charging for content and we know how bad they suck at those!

Your suggestions?

One of the business models I track is labelled 'mind the gap':

Mind the Gap.
Sure, old people may control the vote, but children own the future. And the present. Right in their hands. The smartphone. There are over 2 billion children in the world. In the developed world, the very tools that we now use to expedite business, commerce, buying, selling, culture, creation, influence; namely, mobile connectivity, smartphones, the Internet, vrituality, are becoming *equally* accessible to children as to adults.  In fact, children are more intuitively capable of manipulating, leveraging, distributing and enhancing these tools than are adults.

This is unprecedented in all of history in all societies. And it is spreading to all areas of the planet. Children will connect, and have the power to shape economies, businesses and policies. And, no, your concerns are not at all like their concerns. Their wants are not like your wants.

I think of this now because I heard there's some worldwide outrage over a teacher in Thailand who caned several of his students (the act of which was caught on mobile phone camera, ha!).

Outrage?

Shit, I'm not that old and I got paddled numerous times (and, no, I'm not really that awful). The shop teacher and Learning Labs teacher (that was the class for us delinquints) paddled us at least once a term. Outrage? Hell, the parents seemed to encourage this level of discipline.

So what does all this mean? I have no clue. Of all the trends I study, of all the potential pathways our technology is leading us, of the many battles still to be fought in the smartphone wars, this is the one that is most vexing. Simply because it is completely without precedent in human history. Unfettered access to the very same resources and knowledge bases as adults. A more intuitive understanding of the technology. And, innovation. An easier route to leveraging social media, low-cost bandwidth, video, free/low-priced calls. The ability to use the crowd to start a business. Or a movement. The eradication of our current educational-industrial complex. Crappy television.

On this one, the possibilities are nearly endless. And no amount of caning will stop it.

Wasn't Facebook Places supposed to destroy Foursquare?

When Facebook launched its new service, I wrote:

Foursquare has nothing to fear. Not even Facebook itself.

The size, scope and daily use of Facebook means that Facebook Places, which combines user location (check-in) with their Facebook friends and social graph, will destroy lesser location-based services. Not Foursquare. I expect Foursquare to actually benefit from Facebook Places because it's going to be much easier for Facebook users, which number in the hundreds of millions, to learn about, sign in and use the very well-made, well-positioned (I make joke) Foursquare.

Facebook continues to wisely leverage its user base, its understanding of its user base, and its infrastructure to not only make itself even more important in our daily lives. They are leveraging all their strengths to, wisely, build a massive, real-time, hyperlocal-hyperglobal ecosystem that supports other services. Foursquare need never be as big as Facebook (it won't ever be), but it can thrive in a Facebook world. And this new chart helps prove the case. Since the launch of Facebook Places, Foursquare's rate of growth has increased.

They just signed their 3 millionth user.

Listen to the tech bloggers and you'd think that having full control over the software and hardware is certain doom for smartphone makers. Nokia is written off for dead. Blackberry, not far behind. Few have written off Apple, however many are taking glee in the fact that in not licensing their iOS, they are REPEATING THE SAME MISTAKES FROM THE GREAT PC WARS!!!

Perhaps not. We hear so much about the reasons for licensing your OS, such as Google has with the Android, such as Microsoft is (sorta kinda) about to do with the Windows Phone 7. Let's compile a list of all the obvious benefits of having total control. Yes, I'll need your help for this:

1. Easier, more trustworthy payments
2. Reliability of all apps and content purchased
3. Latest & greatest version of the operating system
4. Processor, battery and all other hardware optimized for the user interface
5. Potential for higher margins
6. Less likelihood of being victimized by spam, by spit (essentially, spam calls), malware, sypware and other bad things
7. Superior user experience (since the UI and hardware are more tightly integrated)
8. Non-scalable innovation (yes, at first glance this appears to be an oxymoron; however, as much as I'm a fan of innovation and scale, the less focused on volume-based improvements, the more you can be focused on particular markets, users, demographics, regions)
9. Stronger carrier relationships. This may not be the case, but I'm going to assume that by controlling everything, you can provide more pricing flexibility and more reliable shipments. For now, Android is selling extremely well. However, running low on EVO, or not having enough AMOLED screens could be a real bitch if you are a carrier and have spent some of your own resources on marketing these products.
10. Lower app development costs (this may be a bit of a dodge but I'll shoot. How many versions of Android are floating out there? How many handset makers have slapped on their own services/apps/UI on top of that? Who is cheating on the hardware side? As a developer, I definitely will appreciate potential sales volume, but I do not want an app that has problems over something I have no control over).

This is a first pass. What are the others?

• Stability
• Improved marketing (do you want this one to even count?)
• Better product roadmap (possibly; by having a more complete understanding of their users and controlling both hardware and software)
• Less likelihood of being used to somehow harm the wireless network (which could happen)
• an integrated solution would offer inherently better security and management in a corporate environment

I may have to keep a running list going...

Ryan contacted me via a referral from JLG, which was much appreciated. Having been on the other side of this (that is, the third side, the dark side, the corporate side, the one seeking publicity), I was not at all surprised that my interview yielded but one quote.

Having read a lot of Ryan's recent stuff, he's more like a reporter than a tech journalist, so he covers the bases. The full article is here: 

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/08/30/BUJG1F4J0F.D...

I'll pull out my quote:

"I think the iOS operating system is so powerful for Apple, it's generating most of their revenues, between the iPod Touch, iPad, iPhone, iTunes and the App Store," said independent mobile analyst Brian Hall. "Clearly, I think Apple realizes that they want to continue down this path."

Who would draw a bigger crowd on a hot, August Saturday on the Mall in Washington, DC?

U2? Obama? Bill Clinton? Madonna? Not sure. Doubtless, any of them would talk about burning bushes.

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