Apple May Be Stealing Ideas From Star Trek

Sometimes I wonder where Apple gets all its great ideas.  Perhaps all the tech geeks are using Star Trek as their inspiration to turn science fiction into science fact.  "There's a chance Apple's new version of Mac OS X, called Mountain Lion, will allow voice dictation from Siri, reports 9to5Mac."  And so the next iteration of the Mac will be able to type reports without a keyboard.  


It reminds me of a scene straight out of Star Trek IV: The Voyage Home, when Kirk and the gang are in present day San Francisco, finding a humpback whale to save the future earth.  In one scene, Scotty attempts to dictate to the computer by speaking into the mouse.  When nothing gets typed and he has to resort to the keyboard, he responds, "How quaint".  As Siri becomes more embedded in all our Apple products, we may find ourselves saying the exact same thing.  I mean, why type when we can speak exactly what we need.

MSO Success Will Result From More B2B Engagements

That cable wire strung across communities, and initially aimed for residences and neighborhoods, might just make greater sense on main street, malls, and other business areas.  While consumers may be cutting the cord and relying more on their mobile phones, businesses need landline phones and web access to meet their business needs.  And cable companies are seeing the  benefits of marketing to the  business community.

"Cable operators' share of the business services market could double to as much as 21% in the next five years, according to a panel discussion at The Cable Show Tuesday."  Good news for cable operators coming in with a competitive product and more to compete with the current telco offering.  In some markets, online required a DSL or dial up, especially when connecting with credit card machines; cable brings an always on connection to improve processing speed to the transaction.  Add that broadband connection with a hard line phone connection and cable can bring more value to the business.  And for those companies that would also like a video connection, cable operators provide that, too. 

TiVo To Add Slingbox Feature

The Mercedes of DVRs is finally adding a very useful feature for the mobile consumer, a Slingbox-like feature to stream live and recorded programming to another device.  Do I sense a patent suit from Dish to follow?  Finally, an easy authenticated device that enables cable subscribers to watch their favorite shows or live sporting events when they are away from their home.  Cable MSOs should be embracing this new TiVo box as they promote their cable subscription, yet few have truly embraced TiVo.  Perhaps because they are an agnostic box, willing to work with any and all providers, cable, telco and satellite.  And that is why the big MSOs have not made it easy to add a TiVo box to the house or to enable it to also access the cable operators on demand features.

"TiVo will debut both products at retail, or through partnerships with multichannel TV service providers including DirecTV, Charter Communications, Suddenlink and the UK’s Virgin Media, later this year."  For those providers that do partner with TiVo, this new Slingbox-like feature is a great added value.

Is Online Video Consumption A Zero Sum Game?

As online video consumption grows at a double digit pace, one wonders if this growth is at the expense of other activities or specifically other television viewership activity.  Are these viewers bypassing traditional TV time for online or tuning in outside the window when they tend to watch TV?  For me, I don't yet believe it is a zero sum game yet.  With access to the internet, employees that never had TV access in their offices now can consume online video on their lunch breaks and other down times.

While some of that video consumption may be at the expense of TV, it is  not yet a 1 for 1 tradeoff.  In fact, some of the  growth by folks like You Tube are at the expense of other online video platforms.  "Music video giant Vevo, for example, saw its unique viewers plummet 10 percent to 49.5 million over the same period, while its average viewership time declined by 41 percent to 57.9 minutes. (The comScore report doesn’t track mobile usage, so it’s hard to tell how many viewers are migrating to mobile platforms.)  Also, Viacom digital, the leader among traditional media companies in the digital video realm, saw its average viewer time drop 27 percent to 58.9 minutes (unique viewers were flat year over year at 41.2 million)."

For content creators, the rise of online video consumption means that the content you create for one platform, television, needs to be accessible on other platforms too.  Where consumers once followed content, content must now follow consumers.  Whether that availability is a subscription experience, an authenticated one, or even free, is part of the broader video strategy a content company sets to fully monetize its video content.  And that is more than just cable license fees; it is also video ad revenue, syndication revenue, promotional support, e-commerce, and integrated banner and overlay revenue.

Today video consumption is not a total zero sum game, but it is certainly leading to that level.  There are only so many hours in the day and only so much time that can be devoted to watching videos.

MSOs Add Another Benefit To Their Broadband Subscription

While cable subscription growth continue to evade the MSOs, broadband subscription has been rising.  To add incremental value to an ever increasing mobile population, the major MSOs will now be sharing access to their WIFI hotspots.  "Under the banner 'Cable WiFi,' Bright House Networks, Cablevision, Comcast, Cox Communications and Time Warner Cable will be able to access WiFi hotspots outside their home market." And as these MSOs cover most of the major DMAs, this shared access is certainly good news for its subscribers.

So a quick look at the list and the notable missing MSO is Charter Communications.  Was Charter even approached to join the group or purposely excluded?  And what about the smaller MSOs, fighting hard against the same competitiors as these major entities.  Will folks like Mediacom, Atlantic Broadband, and others get an invite to this WIFI table?

Certainly, for this initial group of 5, a shared WIFI approach is a smart marketing move to compete against its rivals.  As we utilize more mobile devices, access to WIFI is critical; especially, as cellular data usage plans causes us to seek WIFI alternatives so as to not go over our plan limits.  And with profit margins high on broadband subscription, this added value should be actively marketed to assure even more consumers subscribe.

Microsoft Follows Apple Into Retail

Microsoft seems to have Apple envy.  While Apple leads and innovates, Microsoft seems to follow and do things second.  When Apple decided to open retail stores, Microsoft must have been chuckling at such an expensive and off brand goal.  Apple proved wrong and turned their retail business into another strong revenue stream.  So now Microsoft is following the Apple playbook and opening stores as well.

As I've learned, Microsoft tried a decade or so ago to enter retail but didn't succeed and the business closed.  "Two years ago, Microsoft decided to get back into the brick and mortar retail business. Now, it is preparing to open its first New Jersey location on the second floor of the Bridgewater Commons mall, right down the corridor from an Apple Store."  Can they get it right the second time around, who knows.

I also wonder, why open locations when your recent investment in Barnes & Noble offers an opportunity to bring Microsoft stores into well trafficked locations.  I see great synergy should this model prove effective.  Microsoft's other challenge is that they are software, not really hardware.  While Apple is a closed technology, Microsoft puts their software into multiple product lines.  Hopefully Microsoft can find the magic to make their locations inviting and profitable.

Could You Tube Replace Cable TV?

The competition for viewer eyeballs continues to ramp up. Programming is moving off TV and being watched across multiple platforms via IP streams.  And the long tail of broadband programming is growing, not just with user generated content, but with professionally produced, high quality, long form shows.

Both Hulu and Netflix have announced original programming to bypass linear TV and go  directly to the web.  You Tube has been busy building original channels that follow the classic cable niche model with web networks devoted to specific interests.  "Which is why the Food Network and Cooking Channel veteran has checked out of network TV to oversee the launch of YouTube's latest original content channel, HUNGRY. The channel, which goes live on July 2, is expected to feature a freewheeling blend of how-to and celebrity-driven food videos."

Cable, as well as broadcast, programmers have noticed a drop in aggregate viewership.  Viewers are spending more and more of the video watching time on the web.  While some of it may be shows that originally aired on TV and other views are still with viral UGC content, more time is being devoted to watch professionally produced web channels.  Should Scripps be worried that their Food Network viewership could fall as consumers move to these competing channels?  Is that enough motivation to make sure that cables's linear and on demand product is accessible off the set and on the web?  Or will costs of cable subscription hurt the authenticated, TV Everywhere model, as cord cutting shifts off cable subscription to web subscription?

As more professionally produced content with more known talent invade the web space, a shift of viewership seems inevitable.  For pioneers in the web video space, this could just be the next web "golden age".

Does Facebook Offer A Strong Revenue Model?

With Facebook's IPO happening while simultaneously General Motors is pulling out their advertising dollars raises an interesting question.  Does Facebook have a long term growing revenue model?  GM says their ads didn't work on FB and so they are being pulled off.  "GM will continue to promote its products on Facebook, but without paying the social-media company, the GM official and other people familiar with the matter said. Many companies maintain free Facebook pages."  But will other companies follow suit or are they seeing a ROI that GM could not?

At the same time, FB announced that Q1 revenues declined this year from the previous quarter, although they are higher than Q1 of last year.  Personally, I can't say I recall any ads on FB although I sometimes chuckle when I see one of my friends saying they "Like" a product or company.  Should ads get more intrusive on FB, it may cause users to seek alternative social media sites.  One must wonder if an ad revenue model is enough to keep FB a long term "buy".

With its IPO, FB should be flush with cash and might consider acquisitions that expand its reach.  As the editorial in the WSJ suggests, they could consider entry into other businesses.  "The bold approach would be to buy a bunch of media properties as an outlet for targeted ads that the Facebook engine makes possible."  Another push might be into more e-commerce businesses and to be the central place to both buy and share your feedback about certain purchases.

Should consumers prove fickle and grow tired of FB, the concern may be that this is simply another example of the internet bubble.  Premature excitement but not enough tangible results.  As an investor, I am staying on the sidelines, as a FB user, I have watched my usage shift as I've grown weary of some of the changes to the site.

LightSquared Loss Means Less Competition

If only LightSquared could have solved the problems with GPS interference.  If only the FCC actually wanted more competition.  If only more could be done to encourage competition in the broadband and wireless space.  It seems that we have a limited number of choices for broadband and wireless providers.  While not a monopoly, there are clearly only a handful of choices for communication and data.

So it was with great hope that another entrant to the space could shake up the incumbents and provide high speed service to the masses.  But with LightSquared entering Chapter 11 bankruptcy, their time gets less and less.  Can they rebuild or simply sell off assets?   "Bankruptcy 'is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network,' Chief Financial Officer Marc Montagner said in a statement. Reaching agreements with U.S. agencies may take as long as two years, he said in court papers."

For now, there is less competition in the space.  Can LightSquared rise from the ashes or will another emerge to take its place?  For the sake of competition and a free economy, more competition is better for the consumer seeking faster wireless and broadband speeds at lower prices.