Particle Debris (wk. ending 9/16) High Tech Wishful Thinking

| Particle Debris

Now that NBC, TBS and TNT have introduced iPad apps, I’m beginning to wonder if Apple isn’t slowly laying the groundwork for something that’s larger in scope. For example, currently you must be a subscriber to one of the carriers that carries TNT in order to receive TNT content on the iPad app. What if Apple worked a deal that you could be billed on iTunes in lieu of being a cable subscriber? What if Apple developed support for all the networks this way? What if AirPlay folds into this with your TV and a miniature dongle (Apple TV 3) that plugs into your HDMI input? The possibilities are intriguing.

For all you investment geeks, here’s a very thorough analysis of Apple’s worth: “Analyzing Apple’s Valuation: Expecting Further Upside.” Here’s a salient quote: “The best measure of a firm’s ability to create value for shareholders is expressed by comparing its return on invested capital (ROIC) with its weighted average cost of capital (WACC).” If you grok that, you’ll love the article at Seeking Alpha.

I have refrained from saying anything snarky about Windows 8 because I haven’t had a chance to play with it yet. My take, so far, however, is that PC/Windows fans are feeling like this is salvation — though I haven’t heard of any writers being raptured — leaving their spouses suddenly alone in a speeding car.

Advanced technology, indistinguishable from magic*, is hard to size up. It used to be that a guy from Consumer Reports could play with a toaster, wring it out, and write a report. “Yup. It’s a good toaster. A good buy.” Nowadays, with OSes having 40 millions lines of code and plugged into massive infrastructures like iTunes and iCloud, you can’t really assess a new OS just by looking at it. But some have tried.

Win 8 tablet

 Credit: ThisIsMyNext.com

To me it’s like having a girlfriend gone bad. She says terrible things about you to your boss. She maxes out your credit card. She injures your cat with a sick joke related to the garbage disposal. You dump her. The next day, you see a beautiful contestant in the Miss America contest and decide she’s going to be your wife. Riiiight. It’s going to take a long time to wring out Windows 8, both versions for desktop and tablets, and there’s no guarantee at all that it will resonate with customers. None.

Worse, Microsoft believes it has a year to get Windows 8 for tablets right, and then all will be well.  They’ll have the rest of the century to compete with Apple.  Hewlett Packard, after 49 days, found out that’s not how it works.

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What if, by some cosmic, accidental connection, your name became associated with a terrorist group in Google’s search engine. How would that affect you and how would you deal with the issue? Danah Boyd had some interesting thoughts on all all that this week in, “Guilt Through Algorithmic Association.” Scary stuff.

On the other hand, here’s something to drool over. Belkin is jumping on the Thunderbolt bandwagon with a USB/FireWire/gigabit Ethernet port dock. Price and availability are still TBD, but you can bet I’ll be all over it with a review.

Recently, I’ve talked about how important it is for a company to cast important financial decisions in the right light. Netflix didn’t do that, and ended up in trouble with subscribers who didn’t like the recent price hike. “Netflix subscribers who threatened to cancel their memberships after the 60 percent hike increase are making good on those threats,” according to Steve Crowe at CEPro.Netflix Loses 1 Million Subscribers, Shares Tumble 19%.” As a result, Netflix shares are in a nose dive. Here’s your moment of Zen: “At a press conference on Thursday, Sept. 15, 2011, Netflix chief content officer Ted Sarandos admitted the company underestimated customer reaction.” Well, duh….

It was more like a head in the sand approach: we’re gonna do what we’re gonna do, and because our customers love us, we can get away with it. Didn’t work. In this assessment, Netflix Management is out of touch.

Sometimes dying products hang on by a thread. Some camps, writers and websites continue to prop up a product, hoping for success for emotional or techno-political reasons. The executives remain delusional. Then, along comes the brave soul who calls it like it is. Today, Brian White with Ticonderoga said it. “We believe the [RIM] PlayBook is poised to follow HP’s TouchPad as the next casualty of iPad’s tablet dominance.”

Touchpad-PlayBook-RIP

Adding PlayBook to the list…

There you go. The PlayBook is officially dead to us. I need to make a list of all the tablets that have met their death in the competition against Apple. Let’s make a list in the comments below.

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* Authur C. Clarke, of course. We bow to his wisdom.

Comments

Lee Dronick

That Start screen looks like a TV screen from the movie Idiocracy

jfbiii

What if Apple worked a deal that you could be billed on iTunes in lieu of being a cable subscriber?

I don’t see this happening, at least not until cable companies manage to acquire the ability to offer al la carte channels. Small networks want this, but larger networks do not.

mhikl

John M says: Worse, Microosft believes it has a year to get Windows 8 for tablets right, and then all will be well.  They?ll have the rest of the century to compete with Apple.  Hewlett Packard, after 49 days, found out that?s not how it works.

Apple took ten years to figure out their pad to get it right and MicroSoft has taken at least that much time to get it wrong. Another year would sound about right had the last iteration looked promising. I got a headache watching the W8 tablet video but was elated seeing the first pad in action at its introduction.

As an optimist, I’d like to see another kind of computer device like the tablet enter the field, but my practical side says that what I saw isn’t very likely to work well.

I leave the rest of PD till tomorrow morning coffee.

Paul Goodwin

LOL Harry. It looks like it was designed by someone who had a lobotomy on the right half of their brain. What kind of people thought that would attract anyone? It looks like Windows 2

Paul Goodwin

I thought the article was good John. The Netflix example was a good one. I bought some Netflix stock about 15 months ago, and it was doing great until their customer debacle. Other than allowing you to post problems related to a particular disk, or streaming video, that company has literally shut themselves off from their customers. There’s no feedback links anywhere on their site-I looked for a long time when I first heard about their planned rate hike. I wanted to give them some advice as a stockholder. Ii finally found some VP’s email address buried many layers down in a path that had nothing to do with customer help, or feedback. I never heard back, and I know he (she) probably rarely got external email. They’re about as isolated from customers as you can get. Their product is pretty good, but their real strength was their pricing. Bozos at the top.

skipaq

Paul, I’m with you on Netflix. We are still using it; but probably will review this after the winter months pass. We like to watch old TV shows and movies. We may just drop the DVD mailings.

As for network TV; we could care less. As long as we have access to local news and weather not much else interests us. However, I believe there is a wide open door for someone to bring content into the home via the internet without cable or Dish/DirectTV. Perhaps someone will come along to develop an online network to provide a-la-carte content. Netflix has just such an opportunity before it.

emozion

Windows xp = Fisher-Price
Windows 8 = Lego

Paul Goodwin

Yeah skipaq. We had bot the disk and streaming package so our price hike wasn’t as bad as the 60+ % number. It was still pretty big (like 33% maybe), and enough to stir me up but not drop the product.

Netflix’s prices are still very low compared to the cost of most others, so I’m not selling my stock. I expect they’ll rebound after a while, but so much for my short term hot shot stock gambling. I think many people left just because the percentage was so big. The dollar amount wasn’t huge, but Netflix’s arrogance was. And the people let them have it.

I dropped all of the Time Warner movie packages, and am down a pretty basic set of stuff like you mentioned (news, ESPN, TCM, a few networks my wife likes, and stuff for the grandkids). I don’t miss anything either (except maybe the humor on Inside the NFL).

Paul Goodwin

John - thanks for the tips on the new iPad apps. I just got an iPad yesterday and I hadn’t heard about those.

My wife just got back from a business trip. She said she didn’t even need the hotel TV to go to sleep to. She dialed up Netflix on her iPad.

Paul Goodwin

And what if Apple spins of it’s own communication company, and starts sending their own communications satellites into space, bypassing all the cable companies? That spinoff could also come about by buying a present phone carrier company and renaming it, fixing their dropout problems, and selling the phone/service plan that actually performs all the time. The Gov’t probably wouldn’t allow it, even though it would amp up America’s telecommunications industry like Apple has done with the computing device market.

Lee Dronick

I dropped all of the Time Warner movie packages, and am down a pretty basic set of stuff like you mentioned (news, ESPN, TCM, a few networks my wife likes, and stuff for the grandkids).

Same here, basic cable and the second tier so I can get Turner Classics and a few others. I do miss the original HBO programming, they had some good stuff. However, I can rent many of the shows. That leads to the NetFlix situation.

Blockbuster Video has reopened several stores here in San Diego, one of them in my neighborhood. I like going in there and browsing better than squinting at the Redbox screen. Also the City Library has quite a collection of classic, documentary, and instructional DVDs.

wab95

John:

The valuation of Apple piece is an excellent example, I believe of the thorough metrics analysis one needs for assessing a complex system, such as Apple. It is what scientists do when buiding models and making projections biological, epidemiological, planetary and quantum physics particle systems, in recent times. The practically two dimensional analyses one sees from many financial analysts can be more than disappointing, but incomplete to the point of being wrong. These authors’ take is refreshing.

Regarding Windows 8, and that MS seem to feel that they have another year to work out the tablet version, I take a cautious view. They both do and do not have that time, depending on the reference frame. In staking a long term claim to the early adopter market in its formative age, I would argue that that boat has left the harbour.

This illustrates one of the major cultural differences I see between these two companies in particular. I go back to an earlier analogy of vessels (boats), in which I argue that Apple cn be likened to a fast-attack submarine; sleek, fast, silent, deadly, its whereabouts unknown until it strikes with devastating impact, leavings its competition’s fiscal quarterly statements reading like damage reports. MS on the other hand is more like a luxury liner, cruising the seas with ‘everyone’ on board, so long as they’ve paid, and basically carrying their clients over deep waters to their destinations in relative safety and comfort, largely unperturbed by choppy seas, and moving with ponderous, even if at times, inconsistent, determination.

These two companies grow increasingly dissimilar, which has implications for their supposed competition.


Alas, duty calls.

wab95

Allow me to finish my thought above.

Where I think MS do have time, and what they may be banking on, is the incredibly massive momentum (due more to their mass than to their velocity) they have built up for their platform, and that there remains substantial and dedicated loyal base for that platform.

In this scenario, there is time, certainly one year’s worth and more. Even if that base were only one in four MS clients, the number is measured in millions and the potential sales in billions.

Given the fate of their competitors’ rush-to-market induced implosions, MS may be taking that longer term view, and in a page from Apple’s own playbook, in which Apple are playing the long game, MS may be doing the same; not playing for the next quarter or even the next year, but for the next generation. If so, then they need to get this one right and avoid, at all costs, being seen as yet another company whose tablet exploded on the launch pad. Thus far, those failures have been non-recoverable, and could well end MS’s bid to be taken seriously as a tablet software and/or hardware (if they so choose) producer.

The algorithmic piece, by the way, is too short a piece on a very complex topic, but sobering nonetheless. It illustrates yet one more actionable discussion point that society and industry need to have sooner than later.

Lee Dronick

As much as I like to joke about MicroSoft they are a big business that still has cachet with products that appeal to large demographic. Office is the standard in business and education, they will have OfficeMetro apps and that will help sell the OS.

webjprgm

even though it would amp up America?s telecommunications industry like Apple has done with the computing device market.

FYI, Apple doesn’t do well with every business they try. E.g. Xserve and MobileMe (and Final Cut X, and Cube).  So although we want an Apple-like revolution in the telecom sector, there’s no guarantee that Apple would succeed at it just because they are Apple.

Someone needs to do it though.  My current media approach is the small selection of DVDs I own + the public library + I buy my one favorite new TV show on iTunes (this would not be cost effective if I had two favorite shows) + Hulu + YouTube.

I miss ESPN for the occasional college football game (but my team is doing embarrassingly bad this season, so I’m kinda glad I don’t get to watch it).  I miss a few other things too. But mostly this works.  Especially because I don’t do only TV with my spare time, I also have books, video games, and hobby programming.

So, just like I never had a landline, going straight to the cell phone, similarly I intend to never pay for cable.  Unfortunately the thing-after-cable doesn’t really exist yet.  It’s all in a state of flux.  Recent Netflix events prove this.

webjprgm

I think wab95 and Sir Harry Flashman are right, MS has time because they are huge with a huge following and a few really great products. 

People want MS to succeed, including people who have been pro-MS and anti-Apple for years. So they just need to get something that’s about as usable as WinXP or Win7 (but not have another Vista), and there will be a sufficient following to keep MS alive for a while longer.  I think they’ll do it.  I don’t think it will be as good as iOS, because it is MS after all. But every once in a while they surprise me with something good.

Lee Dronick

I don?t think it will be as good as iOS, because it is MS after all. But every once in a while they surprise me with something good.

Office 11 for the Mac is pretty good. I don’t use it much for my own stuff, but I mess with it because both my wife and son are back and college and they use it. I am their tech support, their IT, not to mention their Chief Cook and Bottle washer.

Now if you will excuse me I need to finish the dishes, then finish the wine.

Paul Goodwin

I agree Webjprgm. There’s no guarantee they’d be good at it. I personally hope they don’t diversify too much and dilute what they do best. Although you don’t have to be particularly good to be successful in the phone/telecommunications industry. All you need is a lot of commercials with big maps full of red dots.

I also think MS will be around for a long time. There’s a whole generation of IT people working in corporations that don’t know anything but NT and Windows. Not all of them, but a lot of them. I’m not trying to be insulting here, it’s all they were taught. This alone will keep MS healthy. And that in turn will keep a lot of people buying MS based home computing equipment.

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