Texting Out, Skype In?

I like to text. Short, sweet, to the point. And minimal time involved. But as the above article states, texting is not as popular as before. "Experts said that the rise of broadband Internet meant the end of SMS as consumers could use it to send messages for free." I'm not sure I agree with the assessment.

Certainly the rate of growth has slowed but that typically happens as a product or service becomes ubiquitous. But texting is still growing. Wireless industry trade group CTIA found that in the last six months of last year one trillion texts were sent in the U.S. - but that was the smallest gain since a decade ago." Yet, texting still remains a useful tool for communication.

Still, the web has given rise to other communication tools and each will find their useful niche depending on the level or intimacy of communication needed. Skype
will also grow, especially as smartphones enable mobile video communication. And as far as texting not being cool; perhaps not, but always useful.

iTunes Makes No Profit! Really?

Within this NY Times article this morning about Apple giving Publishers a break comes this little gem, "As the largest distributor of music, for example, Apple generates a hefty stream of revenue for major labels. But the iTunes store accounts for just a sliver of its own revenue, and the company has said in the past that it generates virtually no profit from the store. In the most recent quarter, Apple said the sale of apps, music and content combined brought in just $1.6 billion of the company’s $24.6 billion in revenue." As they say on Saturday Night Live, "Really?"

So it makes just over 5% of Apple's quarterly revenue, what iTunes really does is make all of it's manufactured devices invaluable. Yes the iPhone, iPad, and iPod are great products, but consumers purchase them because of what they do and the content available. Content is King and the iTune store delivers the content that makes these products run. It is the little engine that could. These Apple products would not be nearly the hit they are without the iTune store. It's like a car that needs gas to run. And it is the iTunes quantity of content, wide assortment of apps, and ease of use that makes their products the more preferable purchase choice.

So don't underestimate the profitability that iTunes truly generates for Apple. It is the engine that drives it's products success. And it is why the iPad, iPod, and iPhone are the respective leaders in their category. Makes no profit, Really!

Microsoft Mulls Messing With The iPad

Microsoft has done many things well, but has also missed too. While they have captured the PC market, they have missed in the mobile space, most notably with the KIN and Zune. So the latest rumor has Microsoft trying again in the tablet space to compete again with Apple. "Microsoft is reportedly considering to launch an own-brand tablet PC that features Windows 8 by the end of 2012 with cooperation from Texas Instruments and Taiwan-based OEMs/ODMs, according to sources from the upstream supply chain." With the exception of the XBox, Microsoft's recent track record has not been good.

Other tablet makers get close to the iPad, but no one has yet to surpass it. And truthfully, it is not just the device. Apple's real rainmaker is it's iTune store. With it's apps, songs, videos, ringtones, and other content, the iTune Store is the engine that makes the iPad and Apple's other mobile devices so special. Relying on the Google Android store is not the best solution for Microsoft. It is time for their uniquely branded solution. Unless Microsoft truly commits to a strategic plan, their rumored tablet will likely not succeed.

Comcast To Offer Quadruple Play And It Isn't Cellular

It may not be a sexy business, but it seems to have a lot of synergy for cable. You have a wired home, you have remote connection to it, why not extend it beyond content. "Comcast Corp is adding home security to its package of services for homes where it already delivers cable television, broadband and phone. The largest U.S. cable provider sees security technology and home management technology as another way to enter new markets and tighten its relationships with existing customers." I love this idea and hope that Comcast and other cable operators pursue this farther.

But given that Comcast has no expertise in this field, I might suggest either an exclusive partnership with an existing security firm or better yet, buy one and rebrand it. This is great opportunity for both internal and external security. For families employing a Nanny, a chance to check in from work; for vacationers, an easy way to remotely adjust the HVAC system, and for security from intruders, more chance to protect and identify robbers.

Obviously safeguards need to be built in against power outages and battery limits, but these can all be figured out. With all the competition in the online space, cable operators may have just found a new business that will bring a nice revenue stream while piggybacking on the current infrastructure. Well done!

Content Platforms Shifting Online

What are the big content creators going to do; ABC, CBS, Turner, Scripps, and others have been very comfortable with a two stream revenue model of subscription and ad revenue. The cable operators have paid monthly license fees to content companies for the right to carry on their channel line-up. But the consumers want mobility and flexibility to watch what they want, where they want, when they want, and how they want.

And content makers have made separate deals with Hulu, Netflix, Apple, and others to offer programming on line. Where the cable operator can try to differentiate itself is by providing their live channel line-up content on line as well. "As the line between traditional TV and web video blur, it will no longer make sense for networks to distinguish between TV and every other video-capable device. This means migrating not only single programs to the web—along the lines of what Hulu, Apple, and others do now—but also letting viewers access traditional linear television from mobile phones, iPads, and of course computers." Slowly, apps are being offered to offer live feeds although the consumer is restricted to watching inside the home. That is not what the consumer ultimately wants. They want complete freedom, untethered from their cable line and cable settop box. For those with a Slingbox, mobility already exists, but it still requires a devoted settop box not being used at the same time in the home.

Online right fees for live network carriage adds another wrinkle to the cable operator. Ultimately, live content mobility is a game changer in the cable industry. Will franchises still be required or will cable companies actually start to compete with each other as consumers get the opportunity to select their mobile cable carrier? Will programming networks think to bypass operators to offer a direct subscription to the consumer? Or will Apple or Amazon come and offer themselves as the platform to sell subscriptions to networks? If so, the cable operator business changes from being a network platform to a broadband platform and they will change their pricing models as well to reflect usage fees.

"Executives from Disney, Turner, and Comcast were in unanimous agreement that we are only two years away from 75 percent of TV content being available online and on mobile devices." On demand content yes, live content, not so fast. And as you can see, it will only lead to many more questions and many more new opportunities.

Goodbye Settop, Hello XBox

So many boxes eager to help you cut the cable cord and enjoy web-based programming. And Microsoft, who in the late 90's invested heavily in Comcast, seems to be rethinking its relationship to push its own platform. "The company also unveiled plans to allow Xbox users to control live television feeds, search YouTube and play video games with voice commands." Should Comcast and the other cable operators be concerned with this news?

"Perhaps one of the biggest entertainment additions to the Xbox will be UFC. Starting this fall, Xbox Live Gold Members will be able to subscribe to UFC to access live pay-per-view matches, classic fights, interviews and behind-the-scenes bonus features. Microsoft said Live TV would be offered by domestic and international broadcasters, but had no other details at the time of the announcement. While Live TV for Xbox 360 is offered in other countries, the service will unveiled Monday would be the first such offering for a game console in the US. Xbox 360 already has the ability to stream and download movies and shows, however." So now Microsoft is competing with cable for a share of their PPV audience. And reaching directly to broadcasters to enable digital access through their device. I wonder, would NBC ever agree to distribution through the XBox or would Comcast try to prevent it? Certainly a question that one day could find itself in front of the FCC.

The cable platform continues to take many hits from the CE industry. Once cable operators refused to play nicely, they continue to find ways to bypass the settop box to directly touch the consumer. The XBox Live platform may one day be the architect of how consumers watch programming and simultaneously interact with it and other viewers. For now, it looks like a good start.

It's Cloud Illusions I Recall

"I've looked at clouds from both sides now, From up and down, and still somehow, It's cloud illusions I recall, I really don't know clouds, at all." Who would have expected that Joni Mitchell got it so right in her song Both Sides, Now. But with the big Apple announcement today, the question for consumers is, Do you know clouds, at all?"

"Apple’s highly anticipated iCloud is expected to make it easier than ever before to listen to your own music anywhere you have an Internet connection." But consumers may want more. Not just music, not just video, but every scrap of data, from address books to spreadsheets, word documents to recipe cards, accessible everywhere and anywhere, at the touch of your finger. Why clutter your own device, when it can be reached remotely, yet securely.

Ahh securely. Now that is a key issue. With Sony getting repeatedly hacked, and others leaving hard drives with sensitive data stolen from their cars, it is hard to feel safe when it comes to personal information. Safety concerns exist on many levels, from the music industry enabling their songs to be protected to consumers worried about their social security and credit card numbers. While the cloud offers many conveniences, can the risk issues be successfully minimized.

Joni's song gets to the heart of the problem. There is still so much we don't know about clouds. The sensitivity of what is placed in the clouds and the protection from being stolen. "It's cloud illusions I recall, I really don't know clouds, at all."

Music In The Clouds

No big secret that Apple wants to be our connection to music and video. And we now know what Apple is doing with their cash. "Apple will fork over between $100 million and $150 million in advanced payments to the four major music labels in order to get its iCloud off the ground, three separate sources told The Post." That means that Apple will have put together a plan in time for it's big announcement next week. And it adds one more feather to the iPhone, iPod, iPad family; all your music available without needing to fill up your hard drive.

"One executive explained that the cloud service will initially be free to people who bought their music from Apple's iTunes store, but Apple is said to be considering a $25 a year charge in the future." Is Cloud access worth a $25 annual subscription? Or do we feel that purchasing the song or movie should entitle us to availability regardless of where it is stored? If consumers buy in to the iCloud as a subscription service, it means that Apple has uncovered another important revenue stream and has beaten their competition to the punch. Certainly Google must be worried that, despite announcing first, they couldn't get their cloud service out quickly.

Anytime Apple announces, devotees wonder what else will be released. While the early PR has all been on cloud computing, some are hoping for more news on their hardware products. Regardless, Apple continues to capture the public's attention with their eye focused squarely on future opportunities.

Time Warner Cable Sees Broadband Only Opportunity

Yesterday's blog talked about the loss of the "all you can eat" broadband consumption model and cable's hope to retain it's triple play business. It also touched upon new competition that could face cable in a broadband only model. And of course, once you hit send, there is an article about Lightsquared, Inc. hoping for approval to compete in this space. But where some cable companies may be fearful of a broadband only world, another seems to embrace it.

"Time Warner Cable Inc. Chief Executive Glenn Britt said Wednesday his company has an opportunity to win more broadband-only customers as broadband replaces TV as the cable industry's anchor product." Changing times require changing strategies and Time Warner Cable seems to get it. Like Netflix changing its model from DVD rental to streaming, TWC is taking its first steps to grow its broadband business as it's linear cable model is slowly declining. And like Netflix, TWC recognizes that this change takes time, but must be embraced. Otherwise, they begin to look like Blockbuster, late to the game, and hard to remain in play.

With Lightsquared planned release early next year, TWC and other cable companies need to redefine their business strategy to remain ahead of other competitive entrants. Knowing that these companies may try to underprice cable companies to encourage cord cutting, cable must strategize and market its competitive differences and push a pricing model that retains and grows subscribers. A usage pricing model is not the answer; TWC is trying hard to retain with its TV Essentials cable package as a way to keep consumers connected. Cablevision has used Optimum Rewards as a strategy to retain its best, triple play customers.

Cable Companies must understand that broadband access has become an important service for the consumer, even ahead of phone and cable. Strategies must continue to evolve to find the next consumer need. Yesterday was triple play, but not anymore. It is a broadband world and cable needs to build mobile accessibility to it and rethink its pricing models. Or like Blockbuster, this may be the start of their decline.