Category Archives: Technology

Technology focused posts.

Data caps can we get rid of them?

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Changes are afoot in the mobile industry. We’ve been seeing a sea change with how T-mobile looks at their customers. They’ve been changing the contracts and potentially even eliminating them. They’ve separated the phone payment plan from the monthly access fees which is an imortant first step in completely separating the purchase of a phone from the carrier that provides the services. This will eventually reduce the amount of junk files installed because  the carriers can’t force the providers to install them. I think that the reason why the Nexus 7 isn’t on Verizon Wireless is that they are refusing to install the bloatware that the Verizon is trying to force upon Google. I think this is a good thing. Google has also filed a suit against VZW to force them to allow the Nexus 7 on their network. This is going to break the carriers power over the user. Carriers don’t want to be dump pipes for the internet. The wired and cable companies are actively fighting against this by puttng data caps on downloading content. At the same time they’ve experimented with this, the wireless providers have been much harsher. However, these caps weren’t a problem in the past. According to BGR a website that focuses on mobile issues has noted that the amount of data that wireless users has begun to regularly break the data caps. T-mobile has also offered all of their plans without datacaps. This will likely push many data users on verizon and AT&T to switch over to these networks. This will likely put more pressure on the carriers than they have experienced in over a decade. I look forward to this increase in competition especially since I refuse to go over my data caps and greatly limit the amount of data that I use over the wireless networks. I believe we’ll see some interesting changes in the future.

I think that these changes will also preclude the merger of T-mobile and sprint as the US market needs additional competition not less. I think that there will be changes in all of the companies marketing and product offerings, but likely T-mobile will be the largest winner with Sprint in second.

Bitcoin, what’s the point?

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Digital currency is the biggest new thing on the market. It’s not a new idea at all, however the fact that someone was able to get it up and going is something new. The first time I’d heard of a cyrptocurrency and the potential impact it could have on the economy was in the Cyrptonomicon a 1999 book written by Neal Stephenson, but the idea is clearly much older than that. In fact, Paypal likely was something of a precursor itself to cryptocurrency. It filled a whole for money transferring on the internet, which was difficult in many cases. Paypal and eBay co-evolved as Paypal became the default transaction tool on the site – otherwise every seller would have needed to be able to accept credit cards. Paypal offered a safe way to transfer money directly from one account to another without messing with banks or credit card companies.

After the crash in 2007 and Paypal and other services refusing to transfer funds to Wikileaks people felt it was important to have another option. Fortunately, for those folks Bitcoin was already on the market, having been created in 2009. Bitcoin is essentially a digital version of gold in that users of the currency mine the coins and there is a set limit of 21 million Bitcoins. This has lead to a massive explosion in both awareness and usage of the currency. Currently, many locations accept Bitcoin as a currency so you can buy stuff with it.

Yesterday, Paul Krugman, wrote an op-ed arguing that Bitcoin, like gold, is a foolish standard to adhere too. Essentially, we mine gold and then bury it in a safe and never use it. According to Krugman, Keynes argued that the government should bury printed money and then let private enterprise mine the money – as it’s more desirable to allow private enterprise to spend money rather than government. However, in times where demand is low there’s no incentive for private enterprise to spend that money, unless they can spend it to pull it out of the ground. He then goes to argue that we’re essentially doing the same thing with a Bitcoin mine in Iceland.

This got me thinking a little bit last night. I’m not really sold on Bitcoin, I think that if anything it really points out that the only value in any thing is what people assign to it. Either paper currency, digital, or “precious” metals. Diamonds are artificially high in price because of a cartel. For instance, you can buy a set of lab created diamond earrings weighing in total 2.5 carats for $482 (12/24/2013) but if you were to buy two 1.25 carat diamonds to make those earrings it would put you back over $30,000. There’s a lot of diamonds out there and it’s impossible to tell the difference between lab created and those pulled out of the ground. Yet we put more “value” on the “real” diamonds from the ground. There is nothing intrinsically valuable about diamonds or gold. What both of them are though, are standards for trade, similar to the dollar and Bitcoin.

There is one cyrptocurrency that does have a more altruistic motive though. That one is called Primecoin and it’s encryption algorithm is based upon prime numbers. As the number of Primecoins increase in the market the number of prime numbers eventually discovered will increase. However, this was is mined differently from the other cryptocurrencies so it’s not as easy to switch to this cyrptocurrency. This coin does have an underlying value as every new prime number discovered typically has some sort of prize associated with it as it provides value to the mathematical and scientific communities. What they do with it from there is anyone’s guess. However, it provides value completely disconnected to it’s “value” in the market place.

Could we develop a cryptocurrency that instead of requiring increasingly complex solutions to an encryption key, but one that solves difficult problems at the same time? There are a large number of places where this would be useful such as SETI, Fold.it (folding proteins for science), and researching molecules for big Pharma. I’m sure there are many more options. However, then we take Bitcoin a digital gold and convert it into something more useful to everyone than Primecoin and potentially solve problems as well as mine usable moneys.

Edit: Originally said 40 Million Bitcoins, actually 21 Million

Content is king, but if you build it will they come?

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In yesterday’s blog I wrote a lot about the different operating systems and what differentiates them. However, I didn’t answer the question around how to build a user base or even more importantly the app base. For all operating systems there is a chicken and egg problem, which comes first the apps or the users – you can’t get users with out apps and no users will go with your system with no apps!

I think a look at how two companies have worked to overcome this is crucial to provide a path forward for the other operating systems. First of all, Google entered the mobile market in exactly this position. I wrote a paper on this while I was in my Master’s (written 2011) the really details this if you want to read that. Google decided to approach the app issue from a very different direction than Apple. First, Google offered a good deal of money for developers to begin making apps for the operating system. Second, Google create a different reimbursement structure for their purchases of apps that provided incentive for developers to develop apps for them. Apple would essentially take ~30% of the total price the developer charged for their apps. This rent seeking behavior of Apple means that the developers could make more money on Android if they sold the same number of apps in both ecosystems. Both of these provided incentives for developers to develop – free money and more money for development. Furthermore, Google made it extremely easy to port an app from iOS to Android which increased the app development rate – Apple of course worked to eliminate this benefit. Finally, Google had different payment schemes than Apple for ad revenue and is a significantly better company for dealing with ads than Apple to this day. All of these provided a great deal of incentive in addition to the fact that there have always been anti-Apple developers and consumers.

The second case (which I didn’t do a research paper on) is of course Amazon. As I mentioned in yesterday’s post Amazon rarely makes a profit on any of their Kindle sales. Amazon’s current foray into tablet’s was not a serious surprise to me. The Kindle was clearly an effort to learn about their users and their consumption habits. Amazon first targeted their most loyal customers, book readers. Tablets weren’t really on the horizon at this point as anything beyond a novelty that Microsoft was pushing and eReaders had a questionable spot in the market when Amazon came out with the Kindle (the same year as Apple’s iPhone – I feel that the Kindle was a bigger step for Amazon than the iPhone for Apple). It was widely successful. I personally bought a second generation Kindle in 2009 (and have since upgraded to Paperwhite 1st gen). Amazon over time continually refined the Kindle and looked for more content to bring to the users. Amazon began to experiment with browsers, apps, and other features. Even at this point the Kindle was Android based, but their own custom version. This marked on of the first forks in the operating system. Amazon also developed applications for iOS, PC, Chrome, and Android for Kindle users. This helped to increase adoption and encourage Amazon that digital content is extremely valued by consumers. When Amazon introduced the Kindle Fire line of tablets they continued to focus on content. This is apparent from the design of the operating system. Content is first and foremost. Books, TV shows, and Movies are easily accessible and essentially the default view for the device. Through a different type of content Amazon has attracted users, furthermore, they are likely attracting a different set of users than the iPad or Nexus market. These users are very consumption focused and less engaged with applications.

Amazon has continued to push the quality of their products and can now compete spec to spec with any top of the line Android or iOS device. Their advantage is the Amazon ecosystem (which many tech writers scoff at), which is more accessible and connected with prime on their devices.

How can other operating systems learn from these cases? The owners of new operating systems need to provide an easy development platform. Many of Android’s applications are developed in HTML5 which should make it easier for porting from one OS to another. Another option is to partner with a third party company (if you know about it or not) like Microsoft did with Blue Stacks where it is possible to play any Android app on a computer. Google is doing something similar with the Chrome App store and browser, essentially turning any Win8 machine into a Chrome OS computer. Firefox OS could go this route on any computer and help to encourage developers to think multi-platform like this. Of the two problems, I believe that the app problem is the easier one to solve assuming it’s easy and there are the right incentive for developers. There are many platforms or tools that can even the playing field. Including marketing that users are able to use other platforms on your platform.

The more difficult type of content to pull is the licensed content from the RIAA and MPAA type organizations. I think that there could be a way for this content to gain the same feel as the Amazon experience. A mobile OS could partner with either Hulu or Netflix to provide an exclusive or personalized experience for the app that allows tighter engagement, then partner with B&N and build a strong app presence for the Nook. The next step would be to develop a seamless transition between the Nook application and Netflix/Hulu so that on one hand you knew when you switched, but it felt painless and enhanced the experience. Such as recommending books or movies based on your consumption of the other.

Finally, I think the crucial step is to find the right market. There are tons of under served markets especially in the smart phone/tablet sector. Firefox OS is going after the extremely low budget market, while it’s likely that both Ubuntu and Cyanogenmod are going to be going after the extreme high end market. I think those two are going to have more competition with the Nexus line up of devices and the extra support Google is providing to non-Samsung manufacturers like ASUS and LG. Google is doing everything they can to keep the market competitive and not owned by a single manufacturer. Cyanogenmod and Ubuntu could also work those same manufacturers to help them develop other markets that aren’t served by Google.

I think that the battle is going to be on the low budget space. Amazon is working hard to capture that with powerful but affordable tablets that are subsidized by ads. While Motorola is going after a similar market with the Moto G, a high power phone that is affordable. However, if a company looks at the base of the pyramid they are likely to find a huge untapped market that will never even own a laptop. They will go from a phone only capable of texting directly to smart phone or tablet. Developing tools that these underserved users can exploit will create a huge market that will catapult the operating system past all the others in global market share. It’s just a matter of figuring out how to survive on little to no margin.

Content is king, but if you build it will they come?

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We are in a time when the number of operating systems are growing incredibly rapidly. This is essentially a throwback to the time when every company that made a Mainframe or Minicomputer developed their a custom operating system for that line of systems. This was because it was difficult to translate operating systems from one system to the next, each system had such radically different components that were hand built by the engineers designing the system, and the OS was a differentiator on the market that would increase sales based on its capabilities.

As it is the mobile operating system market has already gone through at least one round of expansion and contraction. Blackberry is on the brink, Palm was bought by HP and then sold to LG, Windows Mobile replaced by Windows RT (or just Windows 8), Nokia’s Symbian, Nokia’s MeeGo, Samsung’s operating systems Pre-Android Bada, and there are likely others. In general these have contracted down to two primary operating systems: iOS and Android on mobile. Windows is still trying to threaten with Windows 8 (the ARM version) but their market share is very limited (4.5% in August of 2013). Which essentially puts it down with all the other new operating systems that have recently come to market.

In my opinion there are two front runners for OSes not based on Android that have a chance to take market share. The first is Firefox OS, which has just begun shipping phones. I would argue that Firefox OS is actually more similar to Chrome OS than to Android because it’s very webcentric and focuses on apps that can be developed for Firefox and HTML5. I believe this does allow for a great deal of flexibility as Firefox is a great brand and already has a set of applications for the browser. These, hopefully, will be easily transferred to Firefox OS from the browser.

The second OS that I find especially interesting is Ubuntu mobile OS. This operating system I believe offers the future path that all OSes need to be considering. While running purely on battery it enters a scaled down operating system and power consumption, but when the phone or tablet is plugged in it converts to a full blown Linux operating system with a significantly higher level of processing power behind it. I believe that in the long run this type of operating system and processor combination will ultimately be the future (Samsung is doing some of this with their 10.1 2014 edition), because we will want to eliminate as many of our computing devices as possible. Tablets are already beginning to do this, and with the Phablet tablets are being replaced in some sizes. The lines will continue to blur and I think Ubuntu will be in a unique position to take advantage of that in the upcoming year.

There is one other dark horse OS that I know very little about, it’s Samsung and Intel’s joint venture. It is Linux based like Ubuntu and Android and it’s called Tizen. This has little to no adoption, but could be a player in the very low cost market. Which is where Firefox OS is positioning itself, while Ubuntu is putting itself at the high end market.

As for the Android derivatives, the most successful and largest threat to both iOS and the general Android platform is Amazon’s Fire OS. Amazon has had a long practice of pushing content over the cost of the product. In fact with most of their Kindle products they are barely breaking even or making pennies on each one sold.

The other derivative is also wildly popular but with a specific type of user. Cyanogenmod has offically become its own company and recently raised $23 million from venture companies. This is going to be a change for Cyanogenmod because they will not longer be able to use the Play store, which may not be that big of a problem because they’ve had an underground app store for some time.

There are others, I’m not trying to display an exhaustive list of mobile operating systems. What I’m trying to display here is that there’s a lot of competition in the mobile operating system space that is only going to become more difficult.

For a mobile operating system to be successful they need two things, applications and content that is viewable in those applications. This is the number one thing that most tech pundits talk about when discussing which platform is better between iOS, Android, or Amazon. In fact, they argue that Amazon’s weakest because of the limited number of apps partially because they do not have access to Google Play. Currently, Android and iOS are well over a million apps each. Which essentially means that they both have a huge number of apps and most of them are never used. It will take years for Amazon to come close and even longer for the other OSes to reach those numbers.

How can the other operating systems over come this limitation? I’ll answer that question in my next blog (published on 12/20/2013).

Disrupting Mobile Phones – Google’s taking the lead and Apple is going to lose

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http://news.phonebloks.com/

Photoblok’s high level picture of their design

For some people, Motorola’s Project Aria, in partnership with Phonebloks, is going to be a game changer, while others are kind of like, meh. I think that the end result of this phone will actually be a game changer, but not everyone will switch to this format of phone. Many people will continue to buy phones that have been designed for the full experience. However, I do think that theses phone will significantly impact in how many people think of phones.

These phones represent a disruptive shift for the phone industry. Why are these disruptive when I said that Kayak isn’t disruptive? Well, in the book Innovator’s Dilemma Dr. Christensen argues that when new industries are formed the leaders are companies that are able to combine all the pieces that are needed for producing that good under one roof. In the case of airline travel all the booking used to take place through the airlines, eventually this was outsourced to Travel Agents which were something of an extension of the airlines. The first disruption came when other groups were able to use the internet to book reservations. The act of reserving a seat on a plane became decoupled with the actual flight and service.

So, in the case of mobile phones, specifically smart phones of course, the most successful firms were the ones that were able to combine everything you needed for the phone to be useful. Blackberry did this, but Apple was clearly the best at it. The original iPhone was basically an iPod with a cell antenna in it. This was an amazing thing though. Apple had disrupted the music distribution industry with iTunes and was able to leverage that innovation into smart phones. This of course was a disruption in that industry because everyone was focusing on productivity first, Apple approached it from a content perspective. Content always beats out productivity. In a very real sense, the market changed over night. Apple owns everything in their cell phone, the OS, the design of the chip, the distribution network for apps, music, movies, etc. This is a very classic example of fully integrating as much of the supply chain as possible.

This is exactly how computers started. Large companies like DEC and IBM built everything for a computer. The boards, the operating system, the software, and the interfaces. These companies were large and structured in a way to make money from extremely expensive mainframes which had a very small market. Between Xerox and IBM the personal computer as we know it today was invented.

Our PCs today are modular, which means that every portion of the computer can be built and designed by different firms. This allows a lot more innovation across the platform because it doesn’t rely on one firm to create everything. It allows specialization and diversification for an assembly company. It was because of this modular nature that Intel, Dell, and Microsoft became successful. They were able to leverage the platform that IBM delivered with the PC and grow and develop new capabilities.

This modularity also allowed just about anyone that wanted to the capability to built their own custom made computer. This has become less so with laptops – you can’t buy an empty laptop but you can customize it from a company. This just isn’t the case with smart phones – which are essentially mini computers. The new tablets coming out are as powerful as computers from the early 2000s.  The modularity of PCs offer an additional benefit, you have the ability to easily fix them. If your processor dies or your graphics card does you can buy another and simply pop it in. Even if the motherboard goes, you can still replace that and plug all your existing components into the board. The case is the only thing you don’t have to change if you don’t want to.

With phones the screen is like the case. You don’t really need to upgrade your screen every time. Especially with how hard the screens are unless you drop the phone and crack the screen you don’t need to replace it. Furthermore, we’re getting to the point we are with TVs that the resolution of the screen isn’t going to make much of a difference. Yes, we’re in a DPI battle between Amazon, Google, and Apple but we’re getting close to the point where we can’t tell the difference. Which means that the screen is a perfect thing to act as the phone’s “Case” for modularity purposes. The modularity will help immensely with repariability, which current scores pretty low, if you’re interested in those scores check out iFixit.

So, how does Phonebloks come into all of this? They are essentially pulling an IBM by creating a system that can be modular. Google’s Android will be the operating system of choice, but it’s likely that even this could be flexible in the manner that PCs are today. It’s unlikely that iOS will be on these phones legally, although I’m certain someone will figure out a way to install the operating system on these phones. This will hurt Apple in the long run as people will not be using their operating system will leave their ecosystem and prevent them from making as large of revenues in the future. People will still buy their products, but there will be much less sales. Apple could be repeating history if they don’t offer to sell their operating system for phones like this.

Why do I think that these phones are going to be winners? Well, it will increase the longevity of the phone. With phones costing upwards of $600 for the top of the line phone anything that can increase the length of time that a person is using one is a good thing. Secondly, as Android and other OSes evolve they require more capabilities from the phone which means older phones aren’t able to use the latest operating system. Buying a much cheaper CPU to install would be a lot better for end customers. This will also disrupt the supply chain as companies like Qualcomm aren’t used to selling directly to customers. Finally, as long as the design is good, then it won’t seem as much of a burden to have the same phone year in and year out. It will require people to think differently, but that’s something that I believe Motorola and PhoneBloks can over come.

These phones are going to change the industry and possibly enable other companies to develops phones in the same way. Hopefully they pick one standard interface like the Motherboard that all companies conform to. This will allow companies like Google and Microsoft to go back to innovating on operating systems and to get out of the phone building business.