I, Cringely @ PBS.org

I, Cringely is the blog of Robert X. Cringely. Copyright 2006 PBS Online.

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  • Antisocial

    Do you remember Citizens' Band radio? Though established by the Federal Communications Commission in the 1950s, CB radio didn't become an overnight sensation until the 1970s when Moore's Law brought down the cost of radios to where it was economically viable to buy them solely for the purpose of breaking speed-limit laws. President Nixon, who liked to wear a blue suit and keep a cozy fire burning in his White House hearth year round no matter what the outside temperature or impact on his (our) air conditioning bill, had decided we all should drive 55 miles per hour or less to save fuel following the energy crisis of 1973. So, being true Americans, which is to say cranky and prone to complain, we en masse set out to break this new law using as our primary tool CB radio technology to warn us where Smokey was or had recently been or whether there was an eye in the sky. Criminals bound by a criminal code, we flaunted CB license restrictions (you were supposed to use your Federally assigned call sign from that license you were also supposed to have but never got) and operated under handles like "Thunderchicken" and "Boot-licker." I was "asciiboy." CB radio sales went from zero to tens of millions of units in under two years -- the highest rate of technology adoption ever seen in the U.S. before or since. Soon there was CB lore and a CB culture. CB was everywhere. When not breaking the law with it we were using CB as a huge social network to find the cheapest gas, the best hamburger or even a date for the prom. And then, quick as it started, CB was gone, worn to the bone from overuse and abuse and left to the truckers as it should have been all along. What killed CB radio was that moment when its annoyance factor exceeded its utility -- a utility already driven down by low traffic conviction rates and the eventual understanding that if everyone were a speeder then most cops wouldn't stop anyone.

    I am beginning to think that Internet social networking is another CB radio, destined to crash and burn.

    Social networking has a lot of problems as both a business and a cultural phenomenon. To start with there is generally no true business model. This can vary a bit from application to application but most are vying simply for eyeballs and hoping for Google ads to pay the bills until Time Warner or News Corp make them an acquisition offer they can't refuse. That might be okay for Facebook or MySpace and maybe Linked-In, but there are more than 350 general-purpose social networks out there and I will guarantee you that no more than 5 percent of those will be still operating two years from today.

    If you are a social networking entrepreneur and your operation isn't among the top 10, I'd be either looking frantically for an acquirer or turning your site into a social networking aggregator, linking to many others in exactly the way the chat networks appear to be merging while still retaining their individual identities.

    Then there is the annoyance factor, which for me is rapidly accelerating as the major social networks try to establish themselves as hosts for third-party applications. This would appear to be a no-brainer tactic for the two or three social networks that are likely to survive. In fact I could argue that what is more likely to survive than most social networks are the truly compelling applications that run upon them, eventually subsuming their hosts. But in the meantime there is all this annoying crap. How many groups do you have to join, how many causes do you have to support, how many silly applications do you have to run until you come to realize that you are being included TO DEATH?

    My idea for the perfect Facebook app, for example, is one I call "I've Fallen and I Can't Get Up!" It's a variation on Twitter that is activated ONLY when one participant needs other participants to call 9-1-1 on his or her behalf. Maybe it could be linked to a panic button or to your cardiac pacemaker. The perfect Facebook application, then, is one you hope you'll never have to use. This is far better than the typical Facebook app, which is overused to the point where people withdraw or simply stop noticing.

    It's not that I don't see value to social networks, it's that I generally don't see ENOUGH value. Yes, keeping my address book synchronized with reality is nice, but isn't that likely to be shortly absorbed into the operating system or perhaps into networked applications like Gmail and Yahoo Mail?

    This trend has happened over and over as hundreds of portals came and went, leaving a few survivors. Same for hundreds of search engines, hundreds of free e-mail services, etc., etc.

    Marshall McLuhan argued that obsolete communication technologies survive as art forms. This is true, I'd say, for Morse code and movable type printing and perhaps even for your venerable Rolodex or typewriter. But it isn't yet true for CB radio, nor for most Internet technologies. Maybe they aren't old enough yet to be appreciated. In the case of CB I think range of reception limits the possible population of players to something less than an artistic critical mass.

    What will likely happen to social networking is that some applications will survive on a more modest basis than now (used by the trucker equivalents), others will morph into some new Next Big Thing as their more compelling sub-applications take over, and true hard-core social networkers will jump to more advanced technologies that eliminate the riff-raff. In the meantime, 70 percent or so of most social networking functionality -- the really useful functionality -- will be sucked into the dominant portal/search/e-mail/chat/social networks like MSN and Yahoo.

    This next transition will happen faster than most people realize. Part of this is because Internet product cycles have been shortening for the past several years, so each generation is shorter than the one before. This hasn't mattered much because the audience has continued to expand. And even now as Internet growth in terms of new users is slowing, that's more than made up for by the shift of advertising budgets from print and broadcast to the net. So while the growth in users is decreasing, the growth in total revenue PER user is increasing. But so is the competition, hence the shorter product cycles.

    The tip-off that we're nearing the end of a cycle is the flight to quality we're seeing from some of the bigger players. At Facebook, for example, you can no longer register using an e-mail address from an anonymous mail site like Mailinator, Operamail, or Countermail. Facebook demands that you take an extra three minutes and get a Yahoo Mail or AOL mail address for example. This is clearly the company pruning its subscribers in anticipation of an acquisition in the next couple quarters. There is no other reason to do it. MySpace isn't doing it despite a very real sex offender scandal, but then MySpace has already been sold and Facebook hasn't yet.

    Once Facebook has been taken and one or two others, the golden era of social networking acquisitions will be over and the entrepreneurs will be headed for that Next Big Thing.

    "Breaker Port 80! Do you have your ears on?"


    Fri, 07 Mar 2008 13:15:00 -0500

  • Azul Means (Big) Blue

    In a triumph of PR right up there with suggesting that Intel executives ever badgered Microsoft executives into doing anything, IBM this week introduced a new generation of mainframe computers. The IBM System z10 is smaller, faster, cooler, has more memory, more storage -- more of everything in fact -- and all that is crammed into less of everything than was the case with the z9 machine it replaces. Touted as more of a super-duper virtualization server than traditional big iron, the only problem with the z10 is that every bit of its superior performance can be easily attributed to Moore's Law. The darned thing actually should be faster than it is. There's a mainframe revolution going on all right, but it's not at IBM. The real mainframe revolt is taking place inside your generic Linux box, as well as at an outfit called Azul Systems.

    I'm perfectly happy for IBM to introduce a great new mainframe computer. It's just that the 85 percent faster, 85 percent smaller and a little bit cheaper z10 is coming three years after the z9, and Moore's Law says sister machines that far apart ought to be 200 percent faster, not 85 percent -- a fact that IBM managed to ignore while touting the new machine's unsubstantiated equivalence to 1,500 Intel single-processor servers.

    Where were the hard questions? Did anyone do the math? The tricked-out z10 that's the supposed equivalent of 1,500 beige boxes costs close to $20 million, which works out to $13,333 per beige box -- hardly a cost savings. Even taking into account the data center space savings, power savings, and possibly (far from guaranteed) savings on administration, the z10 really isn't much of a deal unless you use it for one thing and one thing only -- replacing a z9.

    So the newfangled mainframe is really just an oldfangled mainframe after all, which I am sure is comforting for folks who like to buy oldfangled mainframes.

    But those sketchily described IBM benchmarks are, themselves, dubious. IBM never fully explains its own benchmarks nor does it even allow others to benchmark IBM mainframe computers. So nobody really knows how fast the z10 is or how many Intel boxes it can replace if those boxes are actually DOING something.

    Remember the stories folks like me wrote a few years back about an earlier IBM mainframe running 40,000+ instances of SUSE Linux under VM on one machine? I wonder how many of those 40,000 parallel Linux images were simultaneously running Doom? My guess is none were.

    Far more interesting to me is the vastly increasing utility of Linux as what I would consider a mainframe-equivalent operating system, primarily due to the open source OS's newfound skill with multiple threads that goes a long way toward making efficient use of those multi-core processors we all are so excited to buy yet barely use.

    As I wrote a few weeks ago in a column on semiconductor voltage leakage of all things, all this multi-core stuff is really about keeping benchmark performance up while keeping clock speeds down so the CPUs don't overheat. Unlike the benchmark programs, most desktop applications still run on a single processor core and have no good way to take efficient advantage of this extra oomph.

    But that's changing. Linux used to be especially bad at dealing with multiple program threads for example -- so bad the rule of thumb was it simply wasn't worth even trying under most conditions. But that was with the archaic Linux 2.4 kernel. Now we have Linux 2.6 and a new library called NPTL or Native POSIX Thread Library to change all that.

    NPTL has been in the enterprise versions of Red Hat Linux for a while, but now it is here for the rest of us, too. With NPTL, hundreds of thousands of threads on one machine are now very possible. And where it used to be an issue when many threads competed for data structures (think about 1,000 threads all trying to update a hash table), we now have data structures where no thread waits for any other. In fact, if one thread gets swapped out before it's done doing the update, the next thread detects this and helps finish the job.

    The upshot is superior performance IF applications are prepared to take advantage.

    "My e-mail application runs on a four-core Opteron server," says a techie friend of mine, "but I've seen it have over 4,000 simultaneous connections - 4,000 separate threads (where I'm using "thread" to describe a lightweight process) competing for those four CPU's. And looking at the stats, my CPUs are running under five percent almost all the time. This stuff really has come a long way."

    But not nearly as far as Azul Systems has gone in ITS redefinition of the mainframe -- extending further than any other company, as far as I can tell, models for thread management and process concurrency.

    Azul makes custom multi-core server appliances. You can buy a 14u Azul box with up to 768 processor cores and 768 gigabytes of memory. The processors are of Azul's own design, at least for now.

    But what's a server appliance? In the case of Azul, the appliance is a kind of Java co-processor that sits on the network providing compute assistance to many different Java applications running on many different machines.

    Java has always been a great language for writing big apps that can be virtualized across a bunch of processors or machines. But while Java was flexible and elegant, it wasn't always very fast, the biggest problem being processor delays caused by Java's automatic garbage collection routines. Azul handles garbage collection in hardware rather than in software, making it a continuous process that keeps garbage heap sizes down and performance up.

    Language geeks used to sit around arguing about the comparative performance of Java with, say, C or C++ and some (maybe I should actually write "Sun") would claim that Java was just as fast as C++. And it was, for everything except getting work done because of intermittent garbage collection delays. Well now Azul -- not just with its custom hardware but also with its unique multi-core Java Virtual Machine -- has made those arguments moot: Java finally IS as fast as C++.

    But for that matter there is no reason to believe that Azul's architecture has to be limited to Java, either, and can't be extended to C++, too.

    To me what's exciting here is Azul's redefinition of big iron. That z10 box from IBM, for example, can look to the network like 1,500 little servers running a variety of operating systems. That's useful to a point, but not especially flexible. Azul's appliance doesn't replace servers in this sense of substituting one virtualized instance for what might previously have been a discrete hardware device. Instead, Azul ASSISTS existing servers with their Java processing needs with the result that fewer total servers are required.

    Servers aren't replaced, they are made unnecessary at a typical ratio of 10-to-one, according to Azul. So what might have required 100 blade servers can be done FASTER (Azul claims 5-50X) with 10 blade servers and an Azul appliance. Now that Azul box is not cheap, costing close to $1,000 per CPU core, but that's comparable to blade server prices and vastly cheaper than mainframe power that isn't nearly as flexible.

    And flexibility is what this is all about, because Azul's assistance is provided both transparently and transiently. Java apps don't have to be rewritten to accept assistance from the Azul appliance. If it is visible on the network, the appliance can assist ANY Java app, with that assistance coming in proportion to the amount of help required based on the number of cores available.

    Now imagine how this would work in a data center. Unlike a traditional mainframe that would take over from some number of servers, the Azul box would assist EVERY server in the room as needed, so that you might need a big Azul box for every thousand or so servers, with that total number of servers dramatically diminished because of the dynamically shared overhead.

    This is simply more efficient computing -- something we don't often see.

    There are other concurrency architectures out there like Appistry (which I wrote about back when it was called Tsunami before we unfortunately HAD a Tsunami -- what sort of marketing bad luck is that?). But where Appistry spreads the compute load concurrently across hundreds or thousands of computers, Azul ASSISTS hundreds or thousands of servers or server images with their compute requirements as needed.

    Bear Stearns runs its back office with Azul assistance, but many customers use Azul boxes to accelerate their websites.

    Since I am not a big company guy who cares very much about what big companies do, what I see exciting about Azul's approach is how it could be applied in the kinds of data centers where I am typically renting either virtual or dedicated servers. If an Azul box were installed on that network, my little app would instantly and mysteriously run up to 50 times faster.

    Cool.


    Fri, 29 Feb 2008 11:42:24 -0500

  • Leadfoot

    If you have ever seen my show Triumph of the Nerds well then you've also seen my car, a 1966 Ford Thunderbird convertible very similar to the car used in the movie Thelma & Louise (I play the role of Thelma). It is in almost every way a fabulous car. It's going up in value, for one thing. It looks cool. It goes like hell with its 428 cubic-inch V-8 engine. It is heavier than anything else on the road, so in a collision with anything less than a dump truck I win. And thanks to analog technology that handily predates the Clean Air Act, it somehow manages to do all this while getting 22 miles per gallon on the highway, 16 in town. Everything is good about my T-Bird, in fact, except for its wires. My car has bad wires. And shortly YOUR car will have bad wires, too, as will everything else you own that has soldered electrical connections. Everything. Prepare to share my pain.

    My T-Bird was built at the absolute apex of 20th century electromechanical automotive technology. A convertible, it has a fully automatic electric top that relies on eight electrical relays firing in sequence to put the top up or down. Here's the typical (and inevitable) failure mode. I'm at the beach with the top down. It starts to rain. Quickly I run to the car, start it, and hit the button to raise the top. First the suicide trunk lid opens until it is fully vertical. Next the electric tonneau cover opens until it is vertical, too. Then the canvas top begins to retract, raising until it, too, is vertical, at which point everything grinds to a halt and I drive my car home in the pouring rain at five miles per hour, traffic honking behind me, and all three broken parts sticking eight feet into the sky.

    Victim to a succession of good and bad mechanics, some well-intentioned but all in it for the money, I have spent thousands of dollars over the years replacing electrical parts -- window motors, switches, relays for both the top and the sequential tail lights -- all to little avail. New parts failed as quickly as old parts. Eventually I abandoned all hope of viewing my car as a restoration and replaced the relays with brilliant little computers from British Columbia. Now the hydraulics worked beautifully but all it really meant was that the top no longer failed in mid-sequence: it would either work fine or not at all.

    When you've replaced everything else the problem has to be with what's left, which in the case of my car was the wires, themselves. Over the years the wires had somehow corroded inside their insulation and the terminals had lost their mojo. I had been replacing perfectly good switches and motors (and knowledgeable folks had been selling me switches and motors) that would have been helped more by simply replacing the terminals or, better still, the wires. Some experts think Ford just got a bad batch of wire back in 1966 -- that this problem is isolated -- but I don't care. So what if my car is two years older than my wife? All her parts seem to be working just fine, why shouldn't my T-Bird?

    Which brings me to you, or rather to all of your soldered devices that are two years old or less. Most of these are now assembled using solder joints that have no lead in an effort to save our groundwater and our health. The fact that the lead has been generally replaced with silver or bismuth, both of which are actually greater health risks than lead, well we'll leave that one for Ralph Nader if he decides not to run for President. The longer-term trend is toward all-tin connections, anyway, but they don't work very well, either.

    I wrote a column about this back in 2004 (it's in this week's links) that was heavy on information and therefore low on readership. Everything in that column has come to pass and more. Where's my Pulitzer Prize?

    Costs have gone up, mean time between failures (MTBF) has gone down (accelerated MTBF tests, which are the only MTBF tests we do anymore, don't reliably pick this up, by the way), and reliability has suffered. Since we don't fix things anymore, it’s hard to say whether your gizmo failed because of bad solder or not, but the problem is becoming worse as a greater percentage of total circuits in use have lead-free solder. The military was especially concerned, even before the whisker crisis.

    We're talking about tin whiskers, single crystals that mysteriously grow from pure tin joints but not generally from tin-lead solder joints. Nobody knows how or why these whiskers grow and nobody knows how to stop them, except through the use of lead solder. Whiskers can start growing in a decade or a year or a day after manufacture. They can grow at up to nine millimeters per year. They grow in any atmosphere including a pure vacuum. They grow in any humidity condition. They just grow. And when they get long enough they either touch another joint, shorting out one or more connections, or they vaporize in a flash, creating a little plasma cloud that can carry for an instant hundreds of amps and literally blow your device to pieces.

    Since 2006 we have been exclusively manufacturing soldered connections thousands of times more likely to create tin whiskers than previous generation joints made with tin-lead solder. Because of the universal phase-in of the new solder technology and the fact that the solder technologies can't reliably be mixed (old solders mess with new solder joints in the same device through simple outgassing) this means that it is practically impossible to use older, more reliable technology just for mission-critical (even life-critical) connections. So we're all in this tin boat together.

    Some experts confidently say that the disparity of joint reliability we are seeing today will go away and that the new joints will become as reliable or even more reliable than the old tin-lead joints as we gain experience with the new processes. What's disturbing, though, is that these experts don't actually know how this increased reliability is likely to be achieved. Just like extrapolating a Moore's Law curve to figure out how fast or how cheap technology is likely to be a decade from now, they have no idea how these gains will be made, just confidence that they will be.

    What if the experts are wrong?

    Tin whiskers can take out your iPod or your network. They can stop your car cold. They can take down an entire airport or Citibank. They are much more common than most people -- even most experts -- think. The reason for this is that most tin whiskers can't even be seen.

    "Maybe it is worth adding," said one expert who prefers to remain anonymous, "that whisker diameters range from 0.1 um to 10 um, while the diameter of a human hair is 70 um to 100 um --- so the largest whisker is only some 15 percent of the diameter of a thin hair, and most are less than 5 percent. A good fraction (of these are) so thin that light waves just pass them by, scattering a bit but not reflecting. So the optical microscope images that (typically used to illustrate whiskers) show only a small fraction of what is really there. Scanning electron microscope (SEM) images are a bit better, but only show a small zone of the sample; also, not many folks are able to acquire SEM images of their equipment. So all too many folks have the idea that whiskers are something that happens to someone else, but never to them. This is an expensive misconception."

    What I wonder is whether a cost-benefit analysis of this solder technology changeover was ever done? I haven't seen one.

    And if you think this problem is minor, I have been told that just the cost of changing to lead-free solder stands right now at $280 BILLION and climbing. That cost is borne by all of us.

    Maybe dumping lead solder was absolutely the right thing to do. Maybe it was absolutely the wrong thing to do. The truth is we haven't the slightest idea the answer to that question and anyone who claims to know is wrong. We didn't know what would happen when we started this and we don't know what we'll get out of it, either, or whether it will be worth the cost. All we know for sure is that a bumpy ride lies ahead.

    Fortunately I have new shock absorbers (and a new wiring harness) on my T-Bird.


    Thu, 21 Feb 2008 19:25:31 -0500

  • Plan B

    Last week I presented my best guess why Microsoft would want to buy Yahoo. What was it that made Yahoo worth $44.6 billion to Bill Gates? Based on what I believe is a pretty profound understanding of the innards of each company, I said it came down less to competing with Google and more to transforming Microsoft into a new company operating under new rules and successful in a new era. Anything else simply didn't make sense to me. Ganging up on Google might sound good, but combining corporate cultures is difficult and in the short term -- which is all that matters to most companies today, seeing their trajectories simply as a succession of short terms -- it could only help Google and hurt Microsoft/Yahoo. If Microsoft was serious about its bid for Yahoo, then there had to be some bigger prize for Redmond that went beyond simple market share.

    But what if Microsoft wasn't serious about its offer? Well then things start to get REALLY interesting.

    Certainly Microsoft's offer for Yahoo has thrown that company and several others into a tizzy. Yahoo can't be getting much work done, that's for sure. And if you believe the press reports, AOL and News Corp have been dragged into the strategizing, too, and are subject to disruption. For Yahoo, as the primary target, overall efficiency in the company will have dropped instantly by 20 percent just because people will be talking at the watercooler rather than doing their work. And Yahoo wasn't a very efficient place to begin with. This alone has some value for Microsoft, where I will guarantee you the distraction is far less.

    Screwing with the minds of Yahoo has value to Microsoft and screwing with AOL and News Corp, too, well that's just a bonus.

    You can see that Yahoo is concerned about Microsoft's real intentions in its response to the Microsoft bid. The Yahoo board said the bid undervalued the company, but Yahoo spokesmen (not the board) carefully added that regulators might block the deal and Microsoft was offering no financial guarantees.

    If Microsoft were to come back to Yahoo with a sweetened bid nearer to $50 billion and a guaranteed $1 billion termination fee if for any reason the deal should be blocked or fall through, I'm guessing Yahoo would respond much more favorably.

    It's up to Microsoft now to prove its intentions.

    There is good reason to believe, however, that Microsoft's intentions are anything but good. Redmond's real goal may be simply to poach people from Yahoo, and this deal could help them do just that.

    There is plenty of historical precedent for such behavior. Back in the 1990s, for example, Microsoft made many approaches to Borland, a company that was giving it fits in the programming languages business at the time. Borland's products were simply better (and a lot cheaper) than Microsoft's. Bill Gates had also been stung by the defection of an important Microsoft executive, Rob Dickerson, to Borland. Failing to buy Borland at a good price, Microsoft took to recruiting Borland employees, sending limousines during lunch hour with Microsoft signs in their windows to Borland's Scotts Valley, California headquarters to pick up techies for job interviews.

    Microsoft reportedly took this technique to an even higher level around the same time when it tried to buy Intuit, which at that point was primarily known for its Quicken home finance application. Microsoft wooed Intuit and won the company in 1994 with a $1.5 billion all-stock offer. Another reported incentive to Intuit was Microsoft's threat to throw $1 billion into development of competing products if Intuit didn't sell out.

    Already in antitrust trouble with the Department of Justice, Microsoft eventually dropped the offer, paying Intuit a $46.25 million termination fee. But according to at least one Intuit techie who jumped to Microsoft shortly thereafter, the primary purpose of Microsoft's bid was actually to get information on Intuit's programmers, NOT to buy the company.

    Unlike Borland, where Microsoft paid a PR penalty (and later scored a lawsuit) for sending limos to the parking lot and interviewing anybody who would get in, by entering a formal due diligence period with Intuit, Microsoft got access to many details, including Intuit’s product plans and employee records. By the time they bailed on the deal, Microsoft had a very good idea exactly which Intuit employees to recruit to both improve Microsoft Money and to hurt Quicken, QuickBooks, and TurboTax.

    It is a testament to Intuit that the company survived.

    Now jump to Yahoo, where exactly the same process could be in effect. At a minimum Microsoft is forcing competitors to act when they would rather not. If Yahoo succumbs Microsoft will gain exactly the sort of inside information they got from Intuit. Yahoo is a huge company plagued with pockets of inefficiency (pockets of efficiency?). A failed Microsoft bid, even one involving a termination fee, could lead to horrific results for the company. Remember that Yahoo is staggering here while Intuit was at the top of its market and its game.

    I'm not saying this is what's happening, by the way, just that it concerns me. I guess we'll have to wait and see.

    And while we are waiting, most of the technology world has been hanging out this week in Barcelona, learning about the future of mobile technology at the 2008 Mobile World Congress, which sounds like a government agency but is really just a trade show for cellphones. Google is there announcing a new version of its Android open source software developers kit for building Linux-based mobile phones that will work well in the Google ecosystem. But unless it is happening behind closed doors and I am unaware of it, nobody in Barcelona is looking at a true Google Phone or gPhone, which won't hit the market until later this year.

    The whole concept of the gPhone is problematical both for the market and for Google, itself. I'm making a distinction here between Android phones introduced by any number of vendors and a true GOOGLE phone — a gPhone — actually sold under its own brand by Google.

    Microsoft doesn't sell PCs, you may notice, because to do so would step on the toes of their hardware OEMs. Okay, the xBox 360 is a lot like a PC, but it is still a lot more like a video game and Microsoft was around for 25 years before it dared sell an xBox. So conventional wisdom says Google won't sell a gPhone, preferring instead to see the world repopulated with Android phones, instead.

    But Google is not like other companies, which means they are sometimes bolder and sometimes more foolhardy, because a Google-branded gPhone — two of them, actually — is on the way.

    Here is what little I know, dropped in my lap this week by a loyal reader (you know who you are). There are two gPhones slated for release with the first coming in September and the second probably not appearing until after Christmas. Given that the first is the high-end model and the second is cheaper, Google will probably expect to make as much money as possible on the higher-margin units at Christmas before revealing the budget model even exists. How Apple-like, eh?

    Both will include WiFi, which makes me wonder if a VoIP client will be there, too. The high-end phone will look somewhat like a Blackberry Pearl, but the screen flips up and there is a keyboard for texting. No word on pricing for the high-end phone, but the second model is intended to be less than $100 — AFTER Christmas.

    The actual manufacturer of these gPhones will be Samsung (rumors to this point had indicated HTC, so this is a change) and Google is still talking with both T-Mobile and Verizon as potential carriers (rumors also said Verizon had passed — not). That means there are both GSM and W-CDMA versions in the works. Given AT&T's success with the iPhone I can't imagine Verizon will let the gPhone pass, but it will be interesting to see if Google will be able go with a nonexclusive deal and get both U.S. carriers.

    Nah.


    Fri, 15 Feb 2008 14:16:19 -0500

  • The Men Behind the Curtain

    It's a challenge for a journalist coming late to a story like Microsoft's proposed acquisition of Yahoo. I had literally just pressed the SEND key on last week's column when news hit the wire. What to do? The way things are structured at PBS I couldn't just pump out another column (that structure may be changing by the way), so the big question was whether the passage of seven days would make pointless anything I would have to say. So I waited and waited, and it is a testament to the shallowness and endless repetition of both the tech and business media that there is still plenty to say about the deal, the true nature of which few people yet understand.

    Pundits and industry analysts have been holding forth on whether the $44.6 billion merger will go forward and what it will mean to the Internet, while financial markets have been answering the same questions through the changing price of each company's stock and that of their competitors. Yet nobody seems to be explaining why these two outfits need each other, which has little to do with market share or Google and everything to do with corporate psychology.

    Were they cast as characters in The Wizard of Oz, Yahoo would play the Cowardly Lion and Microsoft the Tin Woodman. No Scarecrow would be required since there are plenty of brains at each company to go around.

    Yahoo has been adrift, the story goes, unable to compete with Google, its search provider in earlier days. Tim Koogle, the company's first professional CEO, couldn't steer the ship, so he was replaced with Hollywood stalwart Terry Semel, who built an empire but didn't do much to change the company's course. Now Semel is gone, replaced by company co-founder Jerry Yang, who isn't moving fast enough for Wall Street, that's for sure. But what is it that all these very smart executives at Yahoo have actually been fighting against? Though they probably don't realize it, their boogeyman is Mark Cuban, the billionaire owner of the Dallas Mavericks NBA team, the HDNet satellite and cable TV channels, and many other toys.

    The basis of Cuban's considerable fortune was his 1999 sale of Broadcast.com for $5.7 billion in Yahoo stock that Cuban and his partner Todd Wagner rapidly converted to cash and moved on with their lives before the dot-com meltdown of 2000. Broadcast.com was an Internet start-up that intended to bring television and movies to the Net, laudable goals that we now know are only becoming technically feasible in 2008 and were hopelessly infeasible in 1999 if you recall the infamous Victoria's Secret streamed lingerie show of that year that brought the Internet to its knees.

    Yahoo, which probably shouldn't have bought the company at all, overpaid for Broadcast.com in such an epic manner that the deal quickly became a Silicon Valley joke.

    Nerds are sensitive and Yahoo, stung by the deal, resolved never to make such a mistake again, and they haven't. But this determination has come at a cost. Where Yahoo used to shoot from the hip, post-Broadcast.com the company became a model of hard-nosed business analysis, which also meant they couldn't make up their minds. Business development decisions at Yahoo can take months or years and every deal is required to be the antithesis of Broadcast.com. Companies used to want to be bought by Yahoo, but now they don't. Whenever fast action was required it didn't happen and the company fell further and further behind, not because it wasn't smart, but because it wasn't brave.

    Like the Cowardly Lion, Yahoo needs to learn to be brave. $5.7 billion -- especially $5.7 billion in stock circa 1999 -- wasn't really a terrible loss for a company like Yahoo. Koogle paid for that mistake with his job but Yahoo has been paying in a different way ever since -- a way imposed by Jerry Yang, who clearly isn't in a position now to lead the company out of a culture that HE created.

    The only way for Yahoo to succeed on its own is by becoming wild and crazy again, which Yang isn't and never will be. Ironically, what the company needs now is another Mark Cuban.

    Microsoft, on the other hand, is plenty smart and plenty brave but clearly lacks a heart. More than a decade of antitrust litigation showed the company to be cynical and cruel, capable of going to almost any lengths to destroy competitors. While it can be argued that Microsoft's killer instincts are probably responsible for the company's amazing success, it has also held back the company's stock in recent years and probably won't serve the company as well in this century as it did in the last, a fact that has begun to dawn on Gates and Ballmer.

    The problem is how to change. Bad habits run deep and bad reputations deeper still. The decision just last week to continue federal court oversight of Microsoft's internal operations for another two years is an indication that even with the retirement of founder Gates from day-to-day responsibilities, dirty tricks are still being played in Redmond.

    I hope that Harry Saal, who has been overseeing Microsoft for the court, is planning to write a book about his experiences when he is finally finished.

    The only thing that will truly change Microsoft, insiders have long felt, is a huge injection of foreign DNA in the form of a large acquisition. Yahoo is big enough, the company feels, that maybe with the right PR spin Microsoft will start to be seen as a YaSoft or a MicroHoo, the feds will go away and the stock will start to soar again. That's the hope.

    Yes, Google is the enemy and acquiring Yahoo will buy market share. Yes, Yahoo has more style than Microsoft ever could. But the assimilation of 14,000 bodies and attempting to don a new style aesthetic will take time and will probably hurt the merged company more than they will help for the first year or two, so the real winner here is probably Google, which Microsoft investors have been starting to realize.

    The key to this deal for Microsoft is Yahoo's strong identity and large size. That the deal is expensive is good, too, as I will shortly explain.

    The line I keep reading in the press is that Microsoft is buying market share and exciting new technologies with Yahoo. But if you look at the search market it becomes clear that Microsoft could achieve the same market share for less money by buying not Yahoo, but EVERY OTHER YAHOO OR GOOGLE COMPETITOR. Half a dozen little companies would be easier to swallow than one big one, and each of those companies would come with its own secret projects, giving Microsoft actually a higher probability of coming up with a Google-killer.

    BUT KILLING GOOGLE ISN'T THE POINT FOR MICROSOFT.

    What we have here at Microsoft is a generational transition like we've seen in many other industries as leading companies go from robber barons to industry stalwarts. Look at railroads and oil in U.S. business history and you'll see the same thing. And just as in those industries, Gates and Ballmer know that Microsoft's style has to change with the times, but even more importantly to them Microsoft has to change because they simply lack confidence that any successor can do as well at playing hardball as Gates and Ballmer did.

    Think of it like the generational change in command of an organized crime family. Tony Soprano wants the best both for his gang and for his son A.J., but does Tony really think he can count on Anthony Jr.'s ability to put a cap in some future rival? Not likely. So Tony will push A.J toward investment banking and away from loan-sharking.

    Same for Microsoft, which with its Yahoo acquisition will quite consciously try to convert itself into the next General Electric, a company that uses its sheer economic power to make most of its money. All those golf games with Jack Welch were for a purpose. That's why Microsoft is assuming debt to buy Yahoo. It is a logical thing to do and will be accepted by Wall Street much more easily than if Ballmer explained that Microsoft was restructuring and acquiring debt to make it possible for the company to not just pay $44.6 billion for Yahoo, but probably another $100 billion for the other acquisitions that will shortly happen to position Microsoft in the GE space, where it will be protected from bad guesses on technology shifts.

    Bill Gates is no fool. His company's pirate days are waning and a bold move is required to prove that to the world. Yahoo has no choice at all and can do little but quibble over price. Notice, too, that an all-cash deal gives Yang and Filo no stake in the combined company. They are gone.

    Yahoo will give in, the Bush Administration will rubber-stamp this pact in record time, and these dysfunctional corporate characters will be off, together, down that yellow brick road.


    Fri, 08 Feb 2008 00:09:04 -0500

  • End of Life

    As my son Cole, who is three years old, explains it, nothing lives forever except for vampire robots, a particular obsession of his. While I can't speak to vampire robots, when it comes to computer and networking equipment there typically is a finite life span after which vendors don't usually provide much, if any, support. It's not that the old stuff suddenly goes bad, it's that we're supposed to buy new, whether we want to -- or even need to -- or not. They call it EOL -- End of Life -- and it represents to the sales department a giddy combination of possibility and peril where, like passing Go in Monopoly, everything is suddenly new again but there is always the risk that new stuff will have on it the label of your competitor.

    This week, then, Cisco Systems announced a new class of enterprise switches called the Nexus 7000 intended to replace its Catalyst router family, which is reaching its End of Life. To me the Nexus 7000, which costs from $75,000-$200,000, looks a heck of a lot like a mainframe computer. To Cisco it looks like a frigging gold mine.

    These chances to tell customers they should throw out their perfectly fine equipment come along rarely, and in this case the opportunity to throw out the old and replace with new is particularly huge and gratifying because there is so much of the old stuff to get rid of. The equipment that will be replaced with Nexus 7000 racks was generally installed during the glory days of 1999-2000, when dot-coms and V.90 modems ruled the world, there was little streaming video, and we didn't really buy all that much stuff over the Internet. In anticipation of future growth back then (and just because they could), companies like Cisco pushed so much network hardware into the sales channel that it has taken until now for most of that equipment to finally become obsolete. So now they can push a boatload of new equipment into data centers in exactly the same way.

    I'm not saying the Nexus 7000 is not needed or that it is bad in any way. Quite the contrary. Cisco has spent four years and $1 billion building a new generation of routers with new capabilities that are intended to be so compelling they'll keep customers from jumping to Juniper or some other competitor. And along with ensuring customer loyalty, the Nexus 7000s that start rolling out shortly will eventually enable whole new kinds of data services, most importantly robust IP multicasting as I described in this space a few weeks ago.

    One huge difference between the Nexus and Catalyst lines, for example, is that Nexus comes with IP multicast turned "on," while Catalyst came with multicast turned "off" as a default. A Nexus 7000 chassis can pump up to 15 terabits per second, which is a heck of a lot of bits. Just for example, if we imagine a DVD-quality H.264 video stream running typically at one megabit per second, that Nexus 7000 could seemingly support 15 MILLION such data streams. In practical service, however, where the Nexus 7000 would be providing bandwidth for storage and network management in addition to pure file service, it is more reasonable to expect a fully tricked-out Nexus 7000 to support more like one million or so concurrent users. It is difficult at this point to even estimate the total cost of that tricked-out Nexus loaded with 10-gigabit-per-second network cards and hundreds of terabytes of storage, but it will undoubtedly set a new low cost point for per-subscriber hardware. Cisco is going to sell a lot of these puppies to telephone companies upgrading their DSL plants to offer IP TV.

    What strikes me from reading the Nexus specs and that of the associated NX-OS operating system is how this new switch reminds me of an old mainframe. Nearly all services are virtualized, with multiple copies of the OS starting and stopping as needed. Everything is redundant, isolated, and intended for nonstop service. It is hard to imagine when, if ever, you'd even need to reboot. And while the Nexus supports network connections up to 10 gigabits per second, the really fast networking takes place in parallel between cards over a passive backplane. The Nexus 7000 is a data center in a rack, only with dramatically reduced cooling and power requirements which suggest to me that Cisco has a growth strategy for this architecture that will, over time, make it look more and more like a big computer and less like a router. Throw on a virtualized AIX or Solaris and the Nexus will eventually reveal that its true competition is less likely to be Juniper than it is IBM, HP, and Sun.

    Remember this new platform has to last for a decade. From today's perspective making it still attractive 10 years from now requires subsuming as many computing services as one can imagine, not just undermining cable TV.

    And speaking of undermining, many readers have been asking me to put in context IBM's recent move to cut pay for almost 8,000 service and support employees. I have resisted commenting to this point mainly because I see my job here as covering stories that AREN'T being handled well (or at all) elsewhere. But in the case of this story the Associated Press and others have done a good job of explaining the problem from the perspective of the employees, so I haven't had to.

    But readers keep asking and there does seem to be an arm's length view of the situation that hasn't been well explained to date, so here goes.

    If you aren't familiar with the story, IBM was sued several years ago by employees who were classified as exempt and therefore not entitled to overtime pay, yet those employees felt that had they worked at some other company their duties would have been considered non-exempt. IBM lost the case, paid a $65 million settlement in 2006, but took until now to decide that it ought to reduce by 15 percent the base pay of the affected employees in order to keep the settlement revenue-neutral for the company. If IBM had to pay overtime, it would tie that overtime to a lower base pay, thus keeping its costs steady.

    While this probably makes total sense in the IBM accounting department, the change was a surprise to the affected workers, who say they are hurt by the lower base since it also cuts their vacation pay and IBM's contribution to their 401K. It might be easy to point to that $65 million settlement as making up for some of this, except that many IBM employees who were eligible to participate in the settlement for some reason didn't sign up for it and no longer can. Now there's a communication problem that needs exploration.

    What the big picture shows here is the apparent end of IBM's tradition of respect for the individual. For most of its corporate history IBM has been a pioneer -- a model -- for corporate responsibility, but that era seems to be over. Maybe there is no more fat left to trim so the company is cutting muscle, instead. But I think there is more to it than that. I think this is a logical eventuality of IBM becoming a truly global corporation, not just an American company that does business abroad.

    Despite the dark stories I have written about IBM over the last couple years, the company's latest financial reports were very good and the earnings guidance it gave to Wall Street was positively glowing. This makes little sense looking at the company from a U.S. perspective, where customers are upset and profits appear to be fleeting. Cutting through the recent IBM financials shows, in fact, that the company makes little or no money in the U.S. and quite a bit of money internationally. Nearly all of IBM's current profit, in fact, can be attributed to a single condition -- the weak dollar. International sales and profits are bigger mainly because the dollar is so much smaller than it used to be -- a condition that is likely to continue, hence the glowing earnings forecast.

    Maybe what IBM is doing is turning itself into a business that is mainly NOT in the U.S. Those rosy forecasts could be based on an active plan to essentially abandon the bottom of the U.S. market in favor of the top of every international market. It hurts the U.S. employees (especially those in services) but makes sense in so many ways. The model it scarily reminds me of is Tyco, which went so far as to switch its incorporation to Bermuda.

    And what if this strategy fails or the dollar recovers? Then they'll ramp up production of those vampire robots, I'm sure.


    Thu, 31 Jan 2008 14:12:25 -0500

  • Repeal Denied

    When will Moore's Law be repealed? For the 30+ years I have been in and around the computer industry I have heard that question asked. The reason is obvious: this seemingly magical doubling of computing power per dollar every 18 months has been taking place since the early 1960s and surely has to stop sometime, right? Not yet, it doesn't. Thanks to some clever new ways of making CMOS chips, it looks like Moore's Law will remain in effect for at least another 15 years. This week's column is my attempt to explain why this is so and to give some idea what it means to us all.

    Cranky writer's note: this column has a global audience that includes high school kids and Nobel laureates. From time to time in columns like this one I attempt to explain technical issues in broad terms that are understandable by most readers. This inevitably means that some readers (you know who you are) will think the content is simplistic, obvious, already well known to everyone in your PhD program, or simply stupid. Much as it might surprise you, I can live with this and hope that you can, too.

    Now back to Moore's Law.

    We used to think what would repeal Moore's Law was the simple inability of photolithography to etch ever thinner lines on each silicon wafer. Now that we are well into nanometer feature sizes, though, it is clear that problem has been solved. What hurts us today is heat. The smaller they get the hotter our chips run. So we end up either with elaborate cooling systems or deliberately hobbled performance, or a little of both.

    Today's move to dual- and multi-core processors is in direct response to nothing more than the need to effectively increase die size to keep temperatures down. Multi-core chips can also be run at lower clock speeds to keep down heat while relying on more than one core to recover from this apparent performance disadvantage.

    This is, of course, in complete defiance of conventional chip company marketing, which says that the smaller you make a chip the less power it consumes and the lower voltage it requires -- that multi-cores are simply multo-fast. However the truth is that lower voltages tend to be a requirement for keeping CPU temperatures down as much as anything and multiple cores are often just a way of gaining increased heat sink area.

    This extra chip heat comes generally from four sources. The first is simply reduced surface area; yes the voltage is lower, but if the ratio of old voltage to new voltage is less than the ratio of old surface area to new surface area from the previous product generation and manufacturing process, well then the chip simply has to get hotter, since it is dramatically smaller yet doing the same work. Voltages drop linearly while surface areas decrease as a far more rapid square function.

    The second reason chips -- especially microprocessors -- are getting hotter is the demands of keeping various clocks in sync. Using synchronous logic, some significant percentage of transistors is required simply to keep all the clock signals aligned on a 400 million transistor chip. Asynchronous -- clockless -- logic can do away with the need for that extra, power-wasting circuitry, as I wrote about in this space many years ago (it's in this week's links). As such companies including Sun and Intel are trying to make more and more of their chip circuitry asynchronous, but that is a long and crooked path toward chips that consume no power at all in the milliseconds they aren't being used.

    But the greatest producers of heat are relatively new on the scene: two forms of current leakage that are especially prevalent at feature sizes substantially below 100 nanometers. The smaller we go the tougher it gets.

    The first type of current leakage is called "gate leakage," which is a quantum effect in which electrons mysteriously migrate through materials they aren't supposed to be migrating through. Gate leakage is active, meaning it takes place only when the chip is actually running. Any leakage consumes power and creates heat without doing usable work, so of course we hate it unless, like I did with my old PDP-8, you are relying on your computer to heat your house.

    The other form of leakage is called "sub-threshold" and actually takes place when the chip ISN'T doing any work, when it is off. Sub-threshold leakage is generally attributed to very thin layers that don't do a very good job of insulating, as they are SEMI-conductors.

    The big problem with gate leakage is that it doesn't scale. You can make the chips smaller by going to a new manufacturing process (from 65 nanometers down to 45 nanometers, for example) and everything scales down EXCEPT the gate leakage, which remains about the same for similar voltages. Since the gate leakage is the same but the chips are a lot smaller, well you can see the problem, which is why you need that liquid cooling system on your over-clocked game PC.

    For 45 nanometer processors these two forms of current leakage consume 70 percent of the power used to run the chips. That is unless you do something to reduce the gate leakage. There have been a variety of techniques used to reduce gate leakage and the best known are "strained silicon," in which the gates are put under compression or tension that somehow inhibits leakage; Silicon-on-Insulator (SOI), in which an insulating layer under the silicon inhibits current leakage and high-K (usually hafnium) metal gates, which are less prone to current leakage. If you are a chip designer intent on reducing gate leakage, you ultimately use all three of these techniques in the order I have presented them because that is from least- to most-expensive.

    Intel's new Penryn family of 45 nanometer processors announced at the end of last year uses all three techniques.

    But there is a new technique on the block for reducing gate leakage from British inventor Robert Mears, best known for leading the team that developed the erbium doped fiber amplifier that has allowed in situ fiber-optic cables to massively increase their ability to carry data by simultaneously using multiple wavelengths of light to carry parallel data streams. This guy made today's Internet possible. Mears has been working since 2001 on Mears Silicon Technology (MST), which is a new kind of semiconductor coating with unique and tunable qualities.

    In one sense MST is like Silicon-on-Insulator in that it is a special layer laid down on the entire silicon wafer before further processing. But where SOI solely inhibits leakage down through the underlying insulator layer, the custom MST layer does that and more. MST inhibits vertical current flow where you don't want it and improves current flow in the horizontal plane where you need it for higher performance. And unlike high-K gates, MST is cheap to implement, requiring no exotic materials or new manufacturing equipment. Using MST alone, the two forms of gate leakage can be reduced by 60 to 80 percent while also making the chips run faster. The result is faster, cheaper chips that consume less energy and run cooler.

    As always I am too stupid to own stock in Mears Technologies or any of the other companies I write about.

    Just because you use MST doesn't mean you can't also use strained silicon, silicon-on-insulator, or high-K gates. This new technology is just another tool for modern process engineers and can be used in any combination to fine-tune performance, energy consumption, or both.

    As CMOS fabrication processes get ever smaller (Intel is right now sampling 32 nanometer processors), it becomes possible to use a new gimmick called Thin Field Effect Transistors (Thin FETs), effectively 3-D transistors, which can further reduce the real estate of each transistor. And with a billion transistors on a chip, that size reduction, which goes beyond the traditional feature reduction, can lead to yet further performance improvements. But the problem with Thin FETs is they are difficult to strain, so current leakage goes back up again. Fortunately, according to Mears Technologies, MST works well in 3-D and can save the day for Thin FETs, which we'll see in 32 and 22 nanometer chips coming in the next 3 to 7 years.

    But wait there's more! Take the process down to below 10 nanometers and MST can be used for devices using spintronics, where the gate action is based on the controllable spin of a single electron that can be polarized one way or another to either allow or inhibit the passage of current. MST will reportedly allow spintronic devices to operate at room temperature, creating devices like magnetic memory that operate hundreds of times faster than present technologies, turning even Moore's Law on its head.

    Look for Mears Technologies, whose American headquarters is in Waltham, Massachusetts, to shortly announce its first licensee, which will likely be a fab plant in Asia.

    Now what does all this mean for you and me? It means Moore's Law will remain in effect for at least another 15 years, which is long enough for most of those scary predictions of Ray Kurzweil to come true. You know, predictions like desktop computers with 10,000 times the processing power of my brain.

    Though if you put it that way, maybe it's not so impressive after all.


    Fri, 25 Jan 2008 14:41:21 -0500

  • The Big Picture

    Up or down? That's what this week's Macworld show came down to for most news organizations. Would the new Apple products make the company's shares go up or down? They went down. Macworld was a bust, we were told repeatedly, as if it really mattered. I don't own Apple stock so I couldn't care less whether it goes up or down, nor could most customers. Apple was supposed to introduce another iPod or iPhone, or iSomething that would sell four million or 10 million copies in the next 200 days, driving share prices higher. But it didn't happen. Apple introduced some cool stuff, but nothing that would sell four million units this year, hence the letdown.

    Hogwash.

    A bunch of day traders that used to making a quick 10 percent on their money during Macworld week didn't make that 10 percent this year, so they were disappointed. A bunch of reporters eager to write about those day traders making their 10 percent were disappointed, too. Meanwhile, the rest of us who don't care about day traders were left without much perspective on what any of these announcements actually mean. So I'll do the heavy lifting here and gratefully get back to something non-Apple next week.

    First let's look at the MacBook Air, which is a cool product with a bad name, though I guess it worked well for Michael Jordan, so what the heck. It is very doubtful that Apple will sell a million Airs in the next year. It is doubtful Apple will sell even half a million Airs and Steve Jobs knows this. What's important here is not the subnotebook computer but the bits of it that will likely make their way into much more interesting Apple products to come.

    Take that specially packaged Intel CPU, how did that come about? Steve Jobs didn't beat the heck out of Intel CEO Paul Otellini to get a little CPU that would go into fewer than half a million boxes. Steve did what he always does. He beat the heck out of Paul Otellini with the promise that this little CPU -- for which we can expect Apple will hold some exclusive for the next six months -- will end up in millions and millions of Apple products, nearly all of them costing a lot less than a MacBook Air.

    Apple is very important to Intel. Though nobody says it out loud, Apple is the last of the major computer companies that uses 100 percent Intel processors. And Apple's ability to do more with less has to be a continual inspiration to its competitors. As Apple slides further and further into the consumer electronics and networking markets, Intel will be right there, too. I still expect we'll see an Apple tablet this year, for example, and it will use this same Intel CPU.

    How about that new trackpad with the multi-touch interface? Could that be the first look at that mouse replacement I predicted would be coming from Apple this year? Maybe. You can be sure we'll see a lot more of that baby.

    What about the Air's lack of an optical drive? It's hard to find a place for an optical drive in such a thin computer, but isn't Steve Jobs the guy who when he returned to Apple railed against notebooks without removable media, like the PowerBook 100 and 2400 and the various PowerBook Duos? Why did Steve change his mind now? Because Steve wants to replace optical drives of any sort with bits provided over the network, preferably from iTunes. That's also why we didn't see an Apple Blu-ray announcement this week and -- if Jobs has his way -- we'll never see one.

    Let's turn now to the second-generation Apple TV and the question I seem to be the only one asking: why did they drop the price to $229? Had they dropped the price to $99 I'd say, "Okay, they've decided to lose money on this thing to grow the rental market." But why $229? Did some focus group tell Apple there was price resistance to the Apple TV above $230? It's a set-top box! People don't want to pay anything for a set-top box and if they do pay something they sure don't want to pay $299 OR $229.

    The entire Apple TV category is a minefield for Steve Jobs. It's a tiny Macintosh, remember, though with its innate Macness carefully hidden. Steve COULD HAVE blown the doors off Macworld if he had simply allowed the Apple TV to BE a Mac, albeit limited to HDMI displays. If you could buy a Mac that attaches to your HDTV for web surfing as well as all the other Apple TV functions, even at the original $299 price, it would have been a HUGE hit. But it might also have hurt Mac Mini and iMac sales, so Steve couldn't bring himself to do it.

    In the long run I think the whole Apple TV product category will be subsumed into the television, itself. Here, too, is another minefield because people replace their computers a lot more often than they replace their televisions, so Apple going into the TV business (like Dell and HP have) might help sales at first but later hurt. The more likely move for Apple, therefore, is to eventually create the Apple TV Nano, which is an Apple TV built into a CableCard. This is technically feasible right now and 18 months from now it will be a no-brainer. The big HDTV vendors would jump on that one like crazy since it would drive CableCard-equipped HDTV sales, which have been less than stellar.

    Apple's movie rental service offers a lot to talk about, too, though the part I find most interesting is simply the likely impact on broadband ISPs. It's not just Apple, but also Amazon, Netflix, and others that will drive this impact, though those competing efforts are accelerating right now because of Apple.

    The broadband ISPs are already jostling for advantage, talking about limiting throughput and making people pay $30 for the bandwidth to download an HD movie. They simply don't want to pay for the additional backbone capacity required to support this level of traffic. But the even bigger reason why the ISPs are moving right now is they perceive a perfect storm that will allow them to RAISE PRICES. Whether we are talking about a cable company or a phone company, these ISPs make more profit from selling broadband than they do from selling their original service, whether it is phone or TV. Cable prices keep going up, true, but nearly all of that goes for increasing costs for content. Internet content costs an ISP nothing, but that doesn't mean they won't try to charge us more if they can.

    What's crazy about this is that most of the HD content we're getting upset about is static. It is perfectly reasonable to put every movie ever made on a server and put just such a server in every cable company or DSL machine room and never have to touch the Internet backbone for that content, which is exactly what I've explained the big ISPs are already starting to do through IP multicast. But now they'll want to be paid for it. The dark horse here is Google, which has spent a couple years positioning itself to offer to handle this service on behalf of ISPs and consumers alike in exchange for us watching some commercials. If it is up to consumers, Google will succeed.

    And Steve Jobs knows this, because with their interlocking boards, Apple and Google have to know precisely what the other is up to.

    So Macworld was just another step in a very measured plan to establish global media dominance for Apple and probably for Google, too. But it's a plan that requires patience, which the press can't -- or doesn't want to -- understand. So it is up to us as individuals to decide whether this is good or bad. I'd say the jury is still out on that one.


    Fri, 18 Jan 2008 14:18:26 -0500

  • End Game

    With CES over and the San Francisco Macworld Expo set to begin on Monday, we pundits are turning our attention to Apple, the big technology business success of not only 2007, but of the entire decade. Steve Jobs has his Macworld keynote address coming and will no doubt deliver to us a few of the products we've all been predicting, presented with a level of showmanship simply not seen elsewhere in the industry. But my job this week is to look beyond products, to take a step back and give a long view of where Apple is headed. And the centerpiece of this analysis is my conclusion that Apple will inevitably buy Adobe Systems.

    About 18 months ago an Apple employee at an internal meeting asked Steve Jobs about Apple's positioning in the enterprise market. Jobs told the employee that IT wasn't really Apple's business and that he should go work at a company like IBM or HP if he wanted to pursue that line of work. Jobs said Apple was in the "content creation" business with the consumer iLife applications as well as professional apps like Final Cut Pro. While Apple doesn't see itself as an enterprise IT vendor, it sees its technology powering particular types of enterprises, notably those in graphics, media, and entertainment.

    Some readers may know what a dongle is. For those who don't, a dongle is a sort of electronic key that plugs into a PC to enable the use of some expensive software application like AutoCAD. Each copy of the app comes with a single dongle so you can put the software on as many computers as you like but only one -- the one with the dongle installed -- can function at a time. Dongles, which are rarely used today, were an early and quite effective form of copy protection. Apple uses a variation of the dongle technique for its professional applications, but in Apple's case the dongle IS the computer. Yes, the software is a good value but you have to buy a computer from Apple -- a dongle -- to run it on. So Apple runs its professional application business effectively at breakeven, making its profit on the associated hardware.

    Last year, for example, Apple bought an application called FinalTouch from Silicon Color that was essentially video color correction on steroids. They changed the product name to Color, added a couple features, then rolled it into Final Cut Studio, Apple's top-end video application suite. Though FinalTouch sold for up to $25,000, Color is included in Final Cut Studio FOR FREE, which is a kick in the head to Apple competitors like Avid that don't have hardware sales to count on for profitability. This hardware-software one-two punch is how Apple has come to dominate media creation and is the main reason why those who think Apple will license Mac OS X to other hardware companies are simply wrong.

    Of course content creation has been the heart of Apple's business ever since the original LaserWriter and the invention of desktop publishing, so this is nothing new. What IS new, however, is Apple's role in content distribution as well. QuickTime enabled Apple to be in the video creation business but iTunes put Apple in the potentially much larger video distribution business. This shift from creation to distribution is vital to understanding Apple's current strategy and involves a counterintuitive feedback loop to those professional applications. Where Final Cut Pro was useful to Apple as a driver of hardware sales, it is now becoming MORE useful as a driver of content to be distributed through iTunes.

    Here is an example of what I mean. Apple has long been a member of the Blu-ray camp when it comes to which high definition DVD standard to support, yet for some reason Apple has yet to ship ANY computers with Blu-ray drives, or HD DVD drives, for that matter. What the heck is with that? How can Apple, as the dominant maker of video creation systems, ignore both Blu-ray and HD DVD? It's because Steve Jobs sees the logical distribution format for HD as being via iTunes, not on a disc of any sort. Now that Toshiba and HD DVD appear to be on the ropes, Apple may be forced to offer a Blu-ray option on build-to-order Mac Pros, but I haven't heard any rumors to that effect. Steve would prefer that there be no optical video distribution at all and he has warped Apple to that purpose, probably at the expense of some sales.

    Now let's take this another step and consider how Apple might further optimize itself in its role as enabler of content creation to fuel iTunes. Given this new focus for the company, what might Steve Jobs propose to do with some of that $15 billion in cash the company has on hand that last year earned it a dismal (in VC terms) 5.27 percent interest?

    Folks a lot smarter than I have wondered over the years about potential Apple mergers and acquisitions driven by Steve's bloodlust. Apple-Disney, Apple-Google, Apple-TiVo, even Apple-Sun come to mind, but the only one that makes any sense to me at all is Apple-Adobe.

    Owen Thomas at Valleywag made the point recently that overlapping boards mean that Google has great influence over Apple. He went so far as saying that Google CONTROLS Apple. Hardly. It's an interesting idea, but goes just as well (or better) in the other direction. Google has had far less of a game plan than Apple. There is no Steve Jobs equivalent at Google, for example. Eric Schmidt's failure at Novell came down to the fact that he wasn't a strong leader like Jobs, so he built Google as a company that can succeed with a weak leader. That's fine for Google now, but what happens when the company comes under the influence of a strong leader, though one with patience? We're seeing that. Jobs will entice Google into painting his fence up to the point where Google needs another fence to paint and looks to Jobs to find it for them. Apple has no need to merge with Google because Apple is already getting everything it wants from Google and Steve wouldn't be the largest shareholder or even in the top three, for a combined Apple-Google. Forget that.

    Apple-Disney is just as unlikely, though for a completely different reason. Apple is about facilitating the creation and distribution of content to consumers. Disney is about the creation and control of content as intellectual property. At the end of the day it all comes down to changing the world and increasing Steve's wealth. For these reasons, then, I DON'T see Apple ever merging with Disney, because that would corrupt the purity of Disney/Pixar's task.

    What I DO see happening is Apple buying Adobe, which would give it effective dominance of digital content creation and distribution on a global scale. Bruce Chizen suddenly stepped down as Adobe's CEO without warning: why? A caretaker CEO (my characterization -- no slight intended) is in place. Steve has always viewed Adobe co-founder and co-chair John Warnock like a father. Warnock and co-chair Chuck Geschke are losing interest in Adobe day-to-day as they move on with their lives. Acquiring Adobe would make Apple much more of a cross-platform company. The combined professional applications could be placed in the Adobe division of Apple where they could go up in price for some markets, becoming VASTLY more profitable. But most important -- keeping in mind the whole purpose here is driving content distribution -- merging Flash and QuickTime would make any other video standards (like Windows Media) simply immaterial.

    If such an acquisition were to take place it would have to be in 2008 while Avid and Microsoft still present credible competition to keep the Department of Justice and the Federal Trade Commission from opposing such a merger. It would go easier, too, on W's watch. I knew he was good for something.


    Fri, 11 Jan 2008 12:33:04 -0500

  • Always Certain, Sometimes Correct

    A new year has arrived and with it another predictions column, possibly my last. As longtime readers know, the routine here is that I first review my predictions from a year ago and either revel in my brilliance (good luck, actually) or admit my failure (all failures are real, nothing is simulated and no special or computer effects are used). Then I get to go on and make 15 more predictions for what will happen in high tech during the coming 12 months. Let's get to it!

    A year ago I predicted that Apple would release something I called "iTV," that actually turned out to be the Apple TV. That part was correct, but I also predicted a bunch of flat-panel MacTVs that didn't happen. So I get this either half right or half wrong but let's be tough and say I got it wrong. Ouch.

    I said that Apple would settle with Burst.com, taking a license to Burst's patents. This was correct, though not for the dollar amount I would have liked to see, but still correct.

    I said Apple would drop Akamai in favor of a different edge-serving CDN (content delivery network) -- possibly Apple's own or one Apple-labeled but Google-owned. This was clearly wrong though I still see it coming, probably this year.

    I said no one DRM technology would emerge as the winner and no Internet-only song would win a Grammy or even be recognized as existing. This was correct.

    I said AMD and Intel would continue to beat the crap out of each other with customers gaining but wondering why there is no software that supports those new 8-way processors, as both compilers and third-party developers failed to keep up. Correctamundo.

    I said Sony would solve its Blu-ray laser diode problem but suffer production difficulties with the Cell processor. This one is hard to call since Sony actually got out of the Cell processor business entirely, selling its production facilities to Toshiba. But since PS3s are not out of stock at my local Best Buy, I guess I got this one wrong.

    I wrote that Microsoft would ship Windows Vista SP1 despite the fact that Vista structurally wasn't supposed to even require service packs. SP1 shipped, so I was right.

    I wrote that Microsoft's Zune 2.0 would appear, wouldn't be brown, but people still wouldn't buy it in volume. I got that right.

    Here is one I got wrong, though it came closer than a lot of people realize. I labeled 2007 as the year the net crashed in the USA, with video overwhelming the Internet as we all learned that the broadband ISPs have been selling us something they can't really deliver. We stumbled through, though, thanks to ISPs blocking ports, capping bandwidth, shaping traffic, and imposing local multicast while claiming they were doing none of these. Why the lie? Because we came closer to a breakdown than ISPs wanted to admit. Still, it didn't happen so I got this one wrong.

    I wrote that we would see two kinds of large cap tech and media companies: those that destroy shareholder value quickly by acquiring companies (eBay buys Skype) and those that destroy shareholder value slowly by not acquiring them (Best Buy passes on both MySpace AND Facebook). This is vague enough that I'll claim it.

    I said some company (possibly Yahoo or Google) would buy Feedburner. Google did for $100 million so I was right.

    I wrote that there would be more venture money than good deals to spend it on and a decided lack of IPO activity -- both correct -- leading to malaise on Sand Hill Road.

    I wrote that the tide would begin to change for outsourcing and offshoring because a new class of CEOs would say the old class of CEOs was filled with idiots. This was wishful thinking on my part. It will still come to pass but didn't happen in 2007 so I was wrong. Idiocy continues to reign.

    Though there were 15 predictions listed last year only 13 were real predictions. One was rhetorical and another was just me being a smart-ass. Of the 13 actual predictions, I got eight correct for a dismal 61.5 percent score. I am ashamed.

    But I'm not so ashamed that I won't still take my shot at predicting events for 2008. I hope some of these really surprise you. Like my mind, they are in no particular order.

    1) The personal computer will decline (or continue its decline) as our key IT platform, replaced slowly by Internet-centric devices of all kinds from phones to TVs to PDAs. Everything will BE a PC of course, but we won't call them that.

    2) This one is really for 2009 but I know we'll see the effects in 2008. The DTV conversion, where U.S. analog broadcast television stations are turned off in February 2009 and we all have to switch to digital TVs or to cable or satellite or buy those DTV converter boxes, well this whole conversion thing is going to be an absolute disaster. I don't expect technical problems at all, but the public won't understand it, the government will blow it, and at the last moment some politicians will even try to cancel it. But it's still only TV, right?

    3) Cisco will acquire Macrovision, though what they'll do with TV Guide I can't imagine.

    4) Venture capitalists will become disillusioned with their investments in technology companies that make all their revenue from advertisements. It's not that these companies will fail, they just won't make enough profit to justify their insane valuations. Think Facebook.

    5) Here's a risky one. Google will bid billions and win the upcoming 700-MHz wireless spectrum auction, which is an auction for frequencies that are actually much more useful for a voice network than for a data network. Then Google will impose its open access rules on the frequencies before either TRADING them to Sprint or simply ACQUIRING Sprint to get that company's WiMax licenses, which are what Google really wanted all along.

    6) IBM will have several quarters of bad earnings, will try to sell Global Services to private equity firms who don't really want it, then end up financing the transaction itself to save Sam Palmisano's job.

    7) Microsoft will indefinitely extend the life of Windows XP, acknowledging the failure of Windows Vista, which will require another generation of hardware (and another $5 billion in R&D) to finally look good three years from now.

    8) Not only will Bill Gates be retiring from Microsoft in 2008, CEO Steve Ballmer will, too. No word yet on his successor.

    9) As part of its transition from a PC company to a consumer electronics and content company,

    Apple will introduce -- and trumpet in a huge media show -- its replacement for the mouse. Really.

    10) A 3G iPhone is coming. I know the CEO of AT&T already blurted this out, but I had it first so it goes on my list.

    11) Apple will introduce a subnotebook/tablet computer/media player.

    12) Along the same lines look for OS X to bifurcate clearly into two lines -- Mac OS X and plain OS X (for devices like the iPhone) with Apple licensing (non-Mac) OS X to a few companies, including Sony.

    13) Here's one that will totally blow your mind: Apple will build into some Macs support for the Windows API, allowing Mac and Windows apps to run side by side with no need for virtualization software except to run Linux. This fits with Apple's surprising new role as a competitor to HP and Dell for the business workstation market. But what's REALLY surprising about this is it will all be with the permission of Microsoft, which will still get a license fee from Apple, though in this case it is for just licensing the API and promising not to keep any of the APIs secret. Therefore, could the logical successor to Windows Vista actually be OS X? Only if Apple licenses Mac OS X to other companies, which I don't see happening.

    14) I still see Apple dumping Akamai for a Google-based content distribution network.

    15) Season 2 of NerdTV will finally premiere.

    What do you think will happen?


    Fri, 04 Jan 2008 12:34:14 -0500

  • Leaner and Meaner Still

    Last May I wrote a column titled "Lean and Mean" (it's in this week's links) that was all about the deteriorating situation at IBM Global Services where contracts were being lost for poor performance, jobs were being stupidly underbid, the workforce was demoralized, and huge layoffs were imminent. I wrote that up to 150,000 workers might lose their jobs in the coming year. That column caused a frenzy so great among IBM workers and the local press in IBM towns like Rochester, Minnesota, that Big Blue actually issued a press release denying it was true. My column was wrong, they said. IBM doesn't even have 150,000 U.S. workers to lose. Life was still good in the world of IBM.

    Really?

    I don't take any satisfaction in forcing companies to come clean or to go underground, but IBM did the latter. They simply stopped issuing press releases concerning U.S. layoffs or force reductions. It's not that the company didn't continue to lose U.S. workers, just that they stopped talking about it.

    And it might have worked, because frankly I didn't want to write about this topic again. I find it depressing. But in the past week I have heard from a number of readers asking for an update. These readers seem equally divided between men (they are all men) who want me to admit I was wrong all along and other men who seem to be expecting even more layoffs, yet another shoe to fall. Ironically many of these readers claim to be IBM employees, even though they are on different sides of the argument. You'd think that as insiders they'd have a common experience, but no.

    So I reluctantly took another look at IBM and what I saw was not pretty. Things are not better. If anything they are worse.

    First let's look at the layoff and force-reduction picture. Too many readers are fixated on that 150,000 number and on next week being the start of 2008. I get no joy from predicting large numbers of lost jobs, and reading the old column I'm not sure it wouldn't be just as correct to put the end date in May, a year after I wrote the original piece. But no matter. It would appear from my research that IBM is well on track to meet that job loss estimate if we include U.S. contractors in the number.

    How can that be? Did we miss the memo?

    IBM has been adding jobs like crazy this year in Argentina, Brazil, China, India and Russia -- all low-cost, low-benefit operations. In India alone, for example, the company says it has hired 20,000 additional employees in the last year, bringing IBM's Indian employment to 73,000 workers.

    Curiously, IBM seems incapable, however, of producing a number for either its current U.S. employees or total world employment. How is it the company can know how many workers it employs in India yet not know how many it employs in the United States?

    An old boss of mine once explained that it is always cheaper to get people to quit than to lay them off. Layoffs involve severance payments, retraining, and placement assistance, while quitting requires only accepting an ID badge and locking the door behind the departing employee. More employees have quit IBM this year than have been laid off. And it is not hard to see why. The work conditions are poor and the benefit situation is deteriorating to the extent that for many workers it may not be worth sticking around. IBM's pension plan dies next week, for example, to be replaced by a 401K plan.

    One supposed IBM employee who wrote to me this week claimed his pension was untouched, yet all it takes is a Google search to give public details of the pension conversion that has been in the works for more than a year and not at all a secret. A possible answer to this paradox is that the IBM employee in question is from Europe, where local laws make it difficult to fire employees for cause, much less strip them of their retirement benefits. Or maybe he's lucky enough to participate in a second IBM pension plan that isn't being converted, a plan the company doesn't like to talk about because it implies that some IBMers are better than other IBMers.

    What's most interesting about the IBM pension plan conversion is something that has not yet been announced -- how much money the company will deposit in the new 401K plan to cover its obligations under the old pension plan to workers who have yet to retire. IBM's pension plan has been dreadfully underfunded for years and next month we'll get an idea how bad "dreadful" really is.

    IBM retirement health care benefits also appear to be going in the tank. Apparently the company changed the plan this year but made no significant public announcement because recent retirees have been quite surprised to learn that it may be cheaper for them to buy private health insurance than to go with the IBM plan for retirees. This is not retroactive, by the way, or we would have heard an outcry from the tens of thousands of happily retired IBMers from the good old days.

    There is one more aspect of IBM's medical insurance that is worth mentioning. IBM is not a good negotiator of its major business contracts. IBM does not get its various services at especially good prices. Many of IBM's contracts are usually part of a business exchange -- IBM provides hardware, software, and/or services in exchange for services from a company. On the surface it looks like a good deal. However, if you look at what IBM is actually getting and its price, it is usually not such a good deal. I suspect IBM's retirees are not getting the best possible price for their medical insurance.

    And changing retirement health benefits is a good way to encourage older employees to leave the company. Why stay?

    So IBM is getting rid of tens of thousands of U.S. jobs yet escapes public attention. Since most of these are experienced IT workers, one would assume they can get good jobs. WRONG! Thanks to the H1B visa program they can't. Or if they can, it is with terrible pay. The USA has more than enough IT workers for its needs. H1B shuts them out of those jobs.

    I have a friend in the Midwest who runs a small job placement service specializing in programmers. He has an engineering degree and is good at spotting talent. A few years ago the people he placed made about $70,000 a year, but no more. Last year he placed someone at a big firm. This person had 20 years of programming experience and was really good. The job paid $21,000. Then the employer laid this worker off during his first week on the job, bringing in an H1B replacement. That employer was MasterCard.

    In an election year this ought to be a powerful issue, but only if politicians take the time to understand it. This goes WAY beyond IBM.

    But IBM is the poster child for bad management. IBM's leadership appears transfixed on two things -- selling and cutting costs. They are pushing their sales force very hard and squeezing commissions at the same time. They are cutting everyone and everything. What IBM does not understand is how to run a business well. Everything and everyone in the company should be generating income for the corporation. The leadership should be coaching and facilitating this effort. Every line of business should be constantly monitored and there should be constant adjustments to ensure its short- and long-term success. IBM really doesn't do this. All decisions come from the top. There is no delegation of authority. Business units can flounder for years from neglect. When their financials begin to fail, they then get lots of help from the top -- the wrong type of help.

    Sadly there are many IBMers in Europe, Asia, and South America who think they are the future of the company. They see the big USA job cuts as proof THEY are better. But they aren't better, just cheaper -- and with the dollar falling maybe not cheaper for long. IBM management isn't going to listen to them either. In the end it is the CUSTOMER who pays IBM's bills and everyone's paychecks. It is not IBM or Wall Street. Business is about keeping customers happy, a trick the guys in Armonk seem to have forgotten. Or maybe they never knew.


    Fri, 28 Dec 2007 16:28:08 -0500

  • The Once and Future King

    Twice each year the top 100 or so television critics in the U.S. lock themselves in a Los Angeles hotel for a couple weeks to meet all the producers and stars of TV shows being offered in the coming months. In January and July this ritual takes place, supplying content for thousands of newspaper columns and websites. But not this January, because the Writers Guild of America strike has crippled most of the (non-PBS) winter TV schedule and gloom reigns in Hollywood. Had the meeting been held (it was cancelled just last week) I was supposed to make a big presentation about New Media, explaining to America the future of TV. But now I get to explain some of it to you, instead. And the future of TV in America, my friends, is multicast.

    IP Multicast is the not-so-simple carriage of the same digital signal to thousands or millions of people at the same time. This is as opposed to unicast, which can also serve millions of people but requires millions of parallel video streams to do so. Multicast was built into the structure of the Internet from the very beginning but was generally not turned on because net admins hate it as a resource hog. But one man's resource hog is another man's chance to sell a lot of new equipment, so Cisco has long been a huge supporter of multicast because it requires ever bigger and more powerful routers to implement. Years ago Cisco bought Judy Estrin's Precept Software and its IPTV product primarily to have an application that would drive the adoption of multicast in the enterprise and beyond. Only that didn't happen because net admins weren't giving in, there was no YouTube, and the x386 computers of the era really weren't capable of handling much video anyway.

    IP Multicast, while it has been around forever, has mainly been a buzzword more than a reality even to companies that supposedly used it. Tibco, for example, used to proudly proclaim that it was using multicast for real-time data feeds from stock tickers or oil refinery safety valves, but I don't really think they were. Instead they were using IP tunneling to carry multicast traffic through places where multicast addressing wasn't supported. IP tunneling was a stopgap that has long justified multicast's resource hog reputation because it layered multicast atop another service, making everything between here and there do even more work just so we could pretend we were using multicast.

    But the funny rule about IETF RFCs (Internet Engineering Task Force Request for Comments) is that if you wait long enough just about every one will eventually be required and that's finally becoming the case with IP multicast.

    Here's a very simple explanation for the way that IP Multicast is supposed to work. Seinfeld episode #60, The Junior Mint (which happens to be the third most popular Seinfeld episode of all time according to some Internet poll) is assigned the Class D multicast address of 224.1.2.3. If you want to watch that episode you click on it in some client application that "subscribes" to that address. When the show is made available on a server anywhere on a part of the net that supports multicast, you will start to receive it. All the routers between here and there look for multicast subscriptions and enable them. If no other customer at your ISP wants to see The Junior Mint, then the video isn't carried on your subnet nor is any of it cached locally. No bandwidth is used. But if one person does want to see The Junior Mint, then it is held to some extent in a local cache and available for all local subscribers.

    See, multicast IS a resource hog.

    But to more and more ISPs multicast is looking like the best answer to a huge bandwidth problem, while also being a sneaky way to take back control of the Internet.

    The first problem ISPs are facing is that they are running out of IP addresses. Many, including Comcast (my ISP), are already reusing IP addresses on subnets and are rapidly moving toward IPv6. The second problem these ISPs are facing is they are running out of bandwidth at layers 1 and 2 of the OSI protocol stack. We're not talking so much about Internet bandwidth here but Intranet bandwidth -- bandwidth within the ISP's own cable plant -- and this loss they blame primarily on P2P file-sharing services.

    In order to lower their bandwidth bills, ISPs are trying to take greater control of the way we, their customers, use our "unlimited" bandwidth. So Verizon and a lot of other DSL and wireless data providers are placing download caps on their monthly service while Comcast has been traffic shaping to limit the growth of P2P file-sharing services like BitTorrent. This is all intended less to slap us around and more to keep ISP costs in line so they can -- big secret coming -- CONTINUE TO MAKE NEARLY ALL THEIR PROFIT FROM PROVIDING INTERNET SERVICE. You think your phone company makes a lot of profit on voice and long distance or that your cable company makes a lot on carrying video channels? Think again. Comcast barely breaks even on video and makes a killing on Internet and VoIP. If cable company Internet subscriptions fall, those companies are in real trouble.

    Why, then, would they risk alienating us, their customers? Because they think we are stupid, for one. And because they intend to offer us alternatives, like IP Multicast.

    Both Comcast and Verizon are rapidly rolling out IP multicast, as I am sure most big cable and telephone ISPs are. Even Verizon's fiber-to-the-home service, FiOS, is moving to multicast because it was architected in a dumb way that sorely limits what should be a lot of throughput.

    Let's look at the issue from the perspective of a cable company or MSO (Multiple System Operator, an operator of multiple cable television systems), which typically has 750 MHz of available bandwidth on their cable plants. They have to support analog video service since the bulk of their customers don't have digital cable service (they want that coax coming out of the wall to plug directly into their TV).

    Typical analog video service is a 70-channel package. Each analog video channel consumes 6 MHz of the plant spectrum. That's 420 MHz of their 750 MHz of capacity consumed already. We'll be dead and buried before analog video service is retired, so that 420 MHz is unlikely to be recovered.

    And if you're thinking the FCC decision about going all digital on February 17, 2009 is going to change this, think again. In fact, it will probably increase analog cable subscription numbers since the MSOs will have to take the digital-only signals coming from local broadcasters and convert them back to analog signals so customers can receive them. The FCC order doesn't affect cable or satellite companies.

    As for digital video on cable systems, each 6 MHz analog channel devoted to digital use is good for anywhere from 28 to 40 megabits per second of bandwidth depending on the QAM implementation on that cable system. Newer or upgraded cable plants implement the newer QAM-256, and thus can pack in more data (and more digital video channels) per 6-MHz analog channel.

    The cable guys are stuck with MPEG-2 video for a few more years due to the millions of set-top boxes currently deployed that are only MPEG-2 capable (no MPEG-4). This means higher bandwidth consumption for quality digital video on older systems. That will change over time but not quickly. The same goes for older satellite systems.

    The folks at ESPN demand as part of their contracts that a lot of their programming on MPEG-2 systems be delivered at 5-8 MBps (SDTV resolution) compared to the 2 MBps used for most other channels. Same for pay cable services like HBO, Showtime, etc., though they are willing to accept slightly less bandwidth than ESPN because they don't have the motion issues associated with sports programming.

    So replicate the current video offerings of a cable company on the digital side (70 channels for basic+), add in some analog premium channels (HBO, etc.), add some packages that entail multiple premium channels (HBO, HBO Family, HBO Signature and others), pay per view, adult, etc., on top of the analog video, and you're looking at 600+ MHz of the 750 MHz available spectrum JUST FOR VIDEO.

    With everyone and their grandmother signing up for broadband plus wide use of P2P applications, these companies are honestly running short of intranet bandwidth.

    For Comcast part of the answer to this problem is to move toward IP delivery of video using MPEG-4. This will allow them to reduce the amount of bandwidth required per channel PLUS implement IP Multicast. Internal audience studies at Comcast have shown that 90 percent of the customer base watches 10 percent of the available channels AND NOTHING ELSE. But Comcast can't easily dump the underutilized channels people don't watch because programming contracts with the studios require carriage and having a bunch of channels available that you never watch is part of the perceived value of the service we are paying for. Would you pay $50 per month for the seven channels you actually watch? Me neither.

    Multicast solves this problem because it allocates no bandwidth to channels that aren't being watched. Multicast also solves (from the cable company's perspective) the "problem" of P2P because they'll give multicast addresses to paid content and content from movie studios and traditional TV networks that PAY for this privilege, saying that this is a preferred alternative to P2P, which will continue to be traffic shaped.

    There are only two ways for today's ISPs to carry tomorrow's Internet video traffic. They can embrace wide-open P2P or they can implement IP Multicast. Which do you think they will do?

    Merry Christmas.


    Fri, 21 Dec 2007 14:33:31 -0500

  • Revolution, Not Evolution

    A couple months have passed since I announced Team Cringely, my plan to win the Google Lunar X Prize by landing a rover on the Moon and driving it around. This week the first of the GLX contestants formally registered with more to follow, including Team Cringely, so it would seem that an update is in order. Mostly, though, I want to cover what has emerged as the primary motivation behind Team Cringely, which is literally preserving the entire idea of going to space, an idea that -- at least for America -- is near death.

    When this adventure began it was a lark, a no-brainer (who wouldn't want to send a rover to the Moon and make a lot of money?), but I could hardly call myself a space expert in any regard. And two months of research isn't enough to make me a space expert today. But as a guy who has been evaluating technologies and technology programs for 30 years, the nature of the space culture is beginning to emerge.

    On the government level, which is to say NASA, the space culture is one of risk aversion and budget preservation: all budgets are spent but most projects are cancelled. Space technology is moving forward at a very slow rate, with propulsion systems, for example, little changed from 40 years ago. Moore's Law has described many things, but serious space advancements aren't among them. The result is that hard-won knowledge has retired with the men and women who developed it and we are substantially LESS able to go to the Moon today as a nation than we were 30 years ago.

    There may be other nations doing great work in space, I simply don't know.

    Private space exploration has become a great hobby for Silicon Valley tycoons who bring to it fresh money, some fresh ideas, and by their sheer number compared to NASA a greater pace of change through accelerated natural selection. Yet I worry that this is a fad, that it will fade over time as space enthusiasts lose the 10 percent of their fortunes their wives will allow them to risk, then go back to building big boats or big houses, or whatever they would otherwise have done with that money.

    Against this the Google Lunar X Prize is refreshingly different yet also sadly the same. Each of the teams I know about (there are many others I don't know about, so this generalization may be weak) is building a little Apollo Program, spending a LOT of money to launch an ambitious lander and rover with the promise of cracking open space, starting whole new industries, getting in on the bottom floor for a whole new economy. Only it won't, for the most part, work out that way.

    The Google Lunar X Prize is $20 million. I haven't heard of a team other than Team Cringely planning to spend less than $50 million and many are in the $100 million range. This is both laudable and dangerous. It is laudable that there is so much capital available yet dangerous if that capital doesn't result in some truly significant advance in both space science AND space industry. If $1 billion is spent on Google Lunar X Prize entries, most of which can't win (there is only one first prize) and many of which will never even fly, does it help space exploration or hurt it? I suspect that it will hurt space exploration as mad money that could have been put to better use gets burned in little or no use at all.

    You won't find, for example, any traditional space companies lining up to compete for this prize. Lockheed Martin and Boeing will gladly work for any team, but they "know better" than to vie for the prize themselves, because they are profit-making enterprises and they could never win the prize at a profit despite all the knowledge they would have coming into the contest.

    But this doesn't at all mean I am down on the Google Lunar X Prize. Just the opposite. I think it is a fabulous gesture that will ultimately have positive results IF somebody actually wins.

    Whether Google realizes it or not, they have taken a revolutionary step with this prize, because the only way to win it -- the ONLY way to win it -- is by taking a completely new approach. The safer route would have been for Google to offer a $100 million prize rather than $20 million. That would have made practical the efforts of these other teams and would have pulled one or more traditional space contractors into the race. There would be a winner and that winner would look like any one of these teams.

    But for whatever reason Google decided to offer only $20 million for the first prize, giving us what will emerge over the next few months as half a dozen or more America's Cup-sized teams with America's Cup-sized budgets, each pinning its hopes on a single rover and arguing that there is a business case for investment here, somewhere, if only you squint just right.

    Then there is Team Cringely. Our budget to win the Google Lunar X Prize has grown from $3 million to $5 million, where it will stop. That's because (controversial statement coming) I am firmly convinced that we can win the prize with $5 million, but if we spent $10 million we probably couldn't.

    So far we have raised $500,000, with the biggest single investment being $100,000 from a guy whose motivation is to share an adventure with his nine-year-old son. It's a lot of money, sure, but this is money that will never be regretted by those who invested it because it isn't enough to have any impact on their lives -- that is unless we win the prize. It's true mad money. One Team Cringely investor is also bankrolling the iPhone Dev Team hackers group simply to pull Steve Jobs' chain.

    We'll raise more money over time from similar folks and add to that some corporate sponsorships that will eventually reach our $5 million goal, I am sure. The goal is modest and within reach.

    And the pitch is simple: win the prize, make money, save the future of space exploration.

    The method is simple, too: build smaller, cheaper rovers and send a bunch of them to the Moon.

    If you have 20 shots at hitting the Moon for $5 million versus one shot for $100 million, it changes your whole day.

    And the idea is appealing to more than just giddy amateurs. Without making any effort to recruit them, Team Cringely has begun attracting real rocket scientists who are drawn by the simple idea that winning this prize at a profit could change completely the way entrepreneurs and governments look at space. The symbolism of what we are doing is as important as the work, itself.

    So Team Cringely now has a Program Manager, a role I gladly hand over so I can go back to evangelizing and raising money. Our Program Manager is Tomas Svitek, who has a PhD from Caltech, was a systems engineer at the Jet Propulsion Laboratory on the NASA Mars Scout, Mars Surveyor, Mars Sample Return and various Discovery Missions. He was the Principal Scientist for Orbital Sciences Corp., Project Leader for the BlastOff Lunar Lander project and AeroAstro's miniature spacecraft project. He has managed and completed projects for NASA, the U.S. Air Force Research Lab, Microcosm Inc., and SpaceX Corp.. He was lead engineer for Jeff Bezos' Blue Origins crew capsule and has long run his own space consulting company in California.

    With the help of Tomas and the rest of Team Cringely we will within 18 months land on the Moon and claim the Google Lunar X Prize. Doing so -- and doing it at a profit -- will show the world there is another way to explore space, drawing new players with new rules into this exciting future.


    Fri, 14 Dec 2007 10:28:41 -0500

  • Kindling

    When I started writing this column in the spring of 1997 Apple was on the skids. It was the era of Gil Amelio, still several months before the return of Steve Jobs. Apple's products were a confused mish-mash, with product planning coming more from CompUSA than from Cupertino. There was no long-term vision and the company was clearly for sale with no buyers. Sun had taken a look and passed on the deal, simply seeing nothing worth the couple of billion it would have cost to buy the company. In terms of market cap that was more than $160 billion ago, as Apple has gone up by more than 80X since the return of Steve Jobs in the summer of 1997. Jobs and Apple are now on top of the personal computing and consumer electronics worlds, "firing on all cylinders" as Wall Street analysts like to put it. That means it is time for a more nuanced look at the company and where it is headed. Is it really that valuable?

    Yes.

    Apple is used to setting styles and inventing platforms, but at the risk of undercutting next month's 2008 predictions column, let's first look at where the product line could use some help. If there are obvious gaps (there are) then they probably need filling, and soon.

    1) A new form factor for the Mac Pro towers.

    2) Better LCD displays. Apple's are big but expensive and the specs are no longer better than the competition -- or even close. Where are the HDMI ports and the built-in iSight cameras?

    3) Blu-ray or, for that matter ANY HD optical storage. This was promised years ago.

    4) H.264 hardware support.

    5) Black or dark gray MacBook Pros.

    6) And of course the now-leaked-by-AT&T 3G iPhone.

    One product I believe WON'T be coming soon from Apple is a Flash plug-in for the iPhone. Though this was at one time promised, it is hard to say how real that promise ever was because of the strategic importance of Apple's WebKit -- the basis of the Safari browser on Mac, Windows, and now the iPhone and iPod Touch.

    WebKit, an open source web browser engine (not a web browser in its own right but all the parts you'd need to build a web browser), is key to Apple's vision for devices like the iPhone and the iPod Touch that live somewhere between computers and phones and define where Apple is headed with its mobile strategy.

    Not much is said about WebKit and this is a surprise to me since it is such a big hit. Google's Open Handset Alliance Android smartphone software platform uses WebKit as its web rendering engine, and the open source KDE and GTK+ projects both use KHTML, on which WebKit was based.

    The point of WebKit for Apple was to define an open source standard for rendering web pages on all sorts of Internet-enabled devices. This also explains why Apple used KHTML instead of Gecko or its own web engine for Safari -- even though KHTML was terrible at rendering web pages that were optimized for Internet Explorer. KHTML is the only rendering engine that can pass the Acid2 web-rendering test, and following a standard was more important to Apple than correctly rendering poorly written web pages.

    Which brings us back to the lack of a Flash player or plug-in for the iPhone, which is the single greatest reason why we do not yet see true third-party iPhone applications. Had Apple allowed a Flash player on the iPhone, it risked having Flash -- rather than the Apple-preferred Ajax -- become the dominant iPhone web application development environment.

    Apple sees much of its future in Internet-enabled consumer appliances. It's the third or fourth rebirth of the whole Network Appliance concept, only this time mobility and media are added and the mix may finally be right. But this strategy won't work as well if Apple has to depend on a third party to bless its platform. These days the options are to embrace Microsoft (.NET and Silverlight), Sun (Java), or Adobe (Flash), but Apple wants to control its own destiny, zigging and zagging as it likes to crush competitors, hence WebKit. It's a huge success for Apple that people just aren't talking about.

    I'm not saying that a Flash player or plug-in won't eventually appear, but Apple won't allow it to happen until Cupertino feels the WebKit/iPhone/iPod Touch platform is established well enough to stand on its own.

    The next logical WebKit product for Apple, it seems to me, is a much larger version of the iPod Touch. It would be Apple's first tablet computer and, while they'll still claim it runs OS X, Apple WON'T call it a Mac.

    I'm not the only person thinking like this. Here's more from an old friend who is much smarter than I. He sees an Apple tablet coming in January for five simple reasons:

    1) Because MacWorld in January is when Apple stuns the world with improvements and innovations. A well-designed tablet could be a great innovation. An SDK for February 2008, not for just iPhone but for multi-touch devices in general, including a newly available iTablet-- that would be stunning.

    2) Because a multi-touch tablet would provide a patent-protected interface for a new class of communication and computer device that Microsoft and its hardware partners would be hard-pressed to clone. The question now is does one get a Mac or a PC? There would be no PC analog to a well-designed Mac tablet, so if an iTablet is compelling, the question then becomes more like, when can I get one?

    3) Because a nice form-factor tablet could be a significant addition to a video-viewing ecosystem. Apple's success in music is not just about well-designed music players, but the way iPods work with iTunes, and the fact that people could easily move their CD collections over and play them on these new portable devices. A nice iTablet could be great for viewing videos. It's not clear that Apple can build in DVD ripping ala Handbrake, but if they did (on the legal grounds that people can make a copy of what they already own, like a CD), then that would be another significant video ecosystem factor. Add good video-storage options on local disks, home networks, and "the cloud," sprinkle in the option for HD viewing, and then mix all that with being able to view videos on iPods and iPhones, Macs and PCs, big screens via Apple TV, and then sleek, portable iTablets... Well, then we'll watch the major studios start to provide their video libraries, all but Disney kicking, screaming, wringing hands, and gnashing teeth.

    4) Because an iTablet with a camera built in could potentially have the power and bandwidth to enable portable video communication. Video communication is another ecosystem for which I believe Apple is laying the groundwork.

    5) The fact that an iTablet could be a great e-book reader, too, is not a driving reason for such a device, I don't believe. But it's a nice capability. Read the book and watch the movie. Then watch Amazon's new Kindle go up in flames.

    To this I might add a sixth reason for an iTablet intro, which is because AT&T last week stole the thunder from an Apple 3G iPhone announcement. Jobs sorely needs something even better to announce.

    Frankly, I wasn't fully convinced until reaching point five. Killing the Kindle and deflating Amazon.com's Jeff Bezos -- now that's something worthy of Jobs and Apple.


    Fri, 07 Dec 2007 13:16:52 -0500

  • When Networks Collide

    AT&T CEO Randall Stephenson this week said what I have been saying since last July -- that Apple and AT&T would soon introduce an iPhone that works with AT&T's faster 3G wireless data network. I said it because I had heard last summer that AT&T was already testing 3G iPhones in Florida, but the better question is why Stephenson said it and why now? For AT&T, his announcement looks, frankly, stupid.

    Here's a guy who is head of the largest telephone company in America and its largest mobile phone company. He has a five-year iPhone exclusive giving AT&T the number one selling U.S. smart phone and a huge generator of primo subscribers mainly poached from other carriers. Christmas is a month away and 1-2 million Americans have been planning to give -- or hoping to get -- an iPhone. So what does the guy do? He lets it slip that next year Apple will release a faster iPhone that will make the existing model obsolete. The only impact this can have on current iPhone sales is to stop them in their tracks, unless Apple offers a free 3G upgrade, which believe me they never intended to offer and may not.

    So what's up? Was it a simple slip? Or is the guy so out of touch with reality that he doesn't realize that with a few words he has probably deferred -- maybe forever -- at least a million new customers worth to Wall Street at least $1 billion in market cap for his company?

    I don't think Stephenson's statement was by accident and I don't think he is out of touch with reality. I think, instead, he was sending a $1 billion message to Apple CEO Steve Jobs.

    It is no coincidence that Stephenson made his remarks in Silicon Valley, rather than in San Antonio or New York. He came to the turf of his "partner" and delivered a message that will hurt Apple as much as AT&T, a message that says AT&T doesn't really need Apple despite the iPhone's success.

    It's one thing to have a private disagreement between companies but quite another to take it public in a way that costs real money.

    What I believe is troubling the relationship between AT&T and Apple is the upcoming auction for 700-MHz wireless spectrum and AT&T's discovery that -- as I have predicted for weeks -- Apple will be joining Google in bidding. AT&T thought its five-year "exclusive" iPhone agreement with Apple would have precluded such a bid, but that just shows how poorly Randall Stephenson understood Steve Jobs. Steve always hurts his friends to see how much they really love him, so AT&T probably should have expected this kind of corporate body blow.

    To his credit, Stephenson took the dispute to the streets this way, showing he isn't intimidated by Jobs. It was a bold and rare response for big business and was definitely unexpected by Cupertino, which won't underestimate AT&T again.

    I'm not privy to any inside details here, but there are two ways I can see Jobs rationalizing his auction position and they aren't necessarily exclusive. He could claim to intend the 700-MHz auction participation as a pure investment, just a good use for the $30+ billion Apple has squirreled away.

    Nah.

    Or Jobs could tell AT&T that Apple is investing solely in a DATA network for which it has no voice ambitions. Maybe all MacBooks will soon get 700-MHz access cards.

    This excuse rings truer, but of course it would still be a scam on Steve's part.

    It would not surprise me at all if this were the case and when the 700-MHz network is finally up and running Jobs claims astonishment that the most popular data application is Voice over IP, a direct competitor to AT&T Wireless. This may be part of the reason why Apple has been so slow approving third-party iPhone applications. Wouldn't your first application be a VoIP client?

    Of course to this point Apple hasn't even said it will participate in the 700-MHz auction. Apple has said nothing at all on the subject. I said it and still believe it to be true. And I'd say Randall Stephenson's remarks this week pretty much confirm I was correct.

    Now AT&T is going to have to decide whether it is worth $10+ billion to fight Apple, Google, and probable third and fourth partners by bidding, itself, for the spectrum, which it wouldn't otherwise have done.

    A similar decision will have to be made by Verizon Wireless, which this week applied ITS reality distortion field to trying to make us believe the second-largest U.S. mobile operator actually intends to open its wireless network to non-Verizon devices and services.

    Yeah, right.

    Verizon's move is straight from the playbook of the old AT&T back in the 1970s, when that company was trying to keep third-party telephone handsets from being connected to its network. If you are old enough you may remember AT&T expressed great fear back then that telephones not from its Western Electric subsidiary (now Alcatel-Lucent) would somehow "damage" the telephone network. It was the same excuse used to keep old guys like me from wearing jeans in high school.

    We will, no doubt, see similar behavior from Verizon as it slowly releases network interface specifications then embarks on a certification program that will surprisingly reject as incompatible a lot of perfectly fine mobile phones. But this is months or even years away. The company's intent right now is to show the appearance of motion.

    The appearance of motion: it's sad, wouldn't you say, when this is what American business has come to.


    Thu, 29 Nov 2007 19:01:07 -0500

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