Technology, Business & Cool Toys

Is Windows a Broken Window?

by on December 12, 2006 · 2 comments

Joe at Techdirt spots another example of every libertarian’s favorite fallacy:

Back in September, we noted that Microsoft had commissioned a study that tried to demonstrate how much of a boon the release of Vista would be to the European economy. The company bragged about the thousand of IT jobs that would be “created” due to people working on Vista installations. Of course, this was precisely the opposite of what the company should be touting. It would be far more impressive if they could anticipate how many existing positions in IT could be eliminated, freeing up workers to do jobs that produce more value than installing an operating system. Well, it sounds like the US is in for even more fun once Vista is released here. The company says it will create 100,000 jobs, and $70 billion worth of business. Put another way, companies will have to bring on 100,000 more people and spend another $70 billion to deal with the launch, if the figures are accurate. Why are they bragging about this again?

I think the basic insight here is correct, although it depends on what the workers are doing. If most of those 100,000 people are needed just to get Vista up and running, that’s clearly not something Microsoft should be bragging about. On the other hand, if most of those workers are engaged in (for example) creating new software products that rely on new features in Vista, then the number of workers employed might be a reasonable proxy for the amount of wealth created. In either event, Joe is clearly right that the number of workers required to administer a piece of software doesn’t tell us very much about how valuable it is.

Nintendo’s Wiivenge

by on December 9, 2006

If you release a new game console, this is the kind of press you want to get. Check out this warning statement:

Even while wearing the wrist strap, make sure you don’t let go of the Wii Remote during game play and do not use excessive motion. For example, in Wii Sports bowling, the proper way to let go of the ball while bowling is to release the “B” button on the Wii Remote–DO NOT LET GO OF THE Wii REMOTE ITSELF. If you are having so much fun that you start perspiring, take a moment to dry your hands. If you use excessive motion and let go of the Wii Remote, the wrist strap may break and you could lose control of the Wii Remote. This could injure people nearby or cause damage to other objects.

Here is a whole website with pictures of things people have broken with their Wiimotes.

No word yet on whether there will be Congressional hearings about the problem–this seems at least as important as steroids in baseball.

I want to put a bit of meat on the bones of my previous post about ads and content by sketching out a hypothetical future YouTube product that could make Google a big pile of money. This also relates to the discussion Jerry and I had about whether the Internet will kill broadcast TV.

People in the future are not going to want to watch TV at their desks. Couches will be as comfortable as they are today. So imagine Google sells a $99 “YouTube TV” set-top box that plugs into an ethernet jack and streams video from the Internet. It would probably look something like Apple’s forthcoming iTV set-top box.

You would have a YouTube account, and you’d have a variety of ways to select content that you want to watch. you could subscribe to a television show or video podcast (which will likely be one and the same), so that each week’s episode automatically appeared in your queue. As you were browsing the web at work, there’d be a little button at the bottom of every YouTube video (including embedded ones) allowing you to place a video in her queue for later viewing. The system might use collaborative filtering to suggest new programs you to watch, as TiVo does today. You might also give certain friends permission to add videos to your queue.

When you sat down on the couch and turned on your YouTube box, it would automatically start playing the first program in your queue. The remote would have three buttons that were green, yellow, and red. Pushing the yellow button would signal to the machine “this looks interesting but I don’t want to watch it now. That would put it back in the queue for viewing at a later time. The red button would say “This sucks. Never show it to me again.”

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Ads Are Content, and Vice Versa

by on December 6, 2006

Matt Yglesias wonders how YouTube is going to turn a profit:

To actually turn all those viewers into money, you need to sell ads. But it’s hard to sell ads on YouTube. For one thing, lots of YouTube streams don’t even come through the YouTube site. For another thing, there are lots of other sites that also do video hosting, so if YouTube gets all ad-heavy, people may switch away to other services…

To me, at least, this is the real moral of the story. Peer-production of digital media probably will produce a fair quantity of awesome popular stuff lurking amidst the vast pool of dreck. And well-designed services will let the awesome stuff rise to the top and the dreck fade to the background, rendering those services awesome and popular. But–and here’s the rub–having something awesome and popular just may not prove to be especially lucrative. In the past, a popular television show or a popular album or a popular film or a popular distribution channel guaranteed you vast sums of money. In the future, that just may not be the case. The very most popular things will generate some income, enough to live off of and continue financing new projects, but not the sort of gigantic windfalls associated with 20th century media hits. And lots of other things–including reasonably popular ones–will only generate trivial levels of income. And they’ll continue to be made. Made by people who think its fun, or who derive some benefit from their work other than direct monetary income.

To some extent this is clearly true: it’s harder to monetize your content when there’s more competition. But I think Matt underestimates the profit-making potential of category-leading websites. Matt’s commenters correctly point out that you could have made the same argument about Google itself, which in 2000 was a fantastic search engine without a business model to speak of. Then they figured out how to make money on ads, and now they’re a publicly traded company worth a hundred billion dollars. This is quite correct, but I think there’s more to be said about why Google’s ads have been so lucrative.

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I have come across some very silly applications of antitrust principles in my time, but this one has just moved up to the top of my list. Over on Business Week.com, Jason Brightman argues that video game retailers such as Game Stop are “forcing” consumers to commit to expensive product bundles in order to get their hands on a new PlayStation 3 or Nintendo Wii gaming console.

Mr. Brightman apparently thinks there is some sort of grave cosmic injustice at work when retailers bundle together gaming consoles with games or other products and require that users agree to purchase that bundle in order to be one of the first people to get their hands on a hot new console. He argues:

“Unfortunately it’s become all too common in recent years for retailers, particularly specialty stores like GameStop/EB, to pull a fast one on consumers who are all too eager to get the newest consoles at launch–remember last year’s $1,000+ Xbox 360 bundles? While it’s true that pre-order campaigns for brick-and-mortar locations allowed customers to pre-order nothing but the console, why should online consumers get the shaft? And is this even legal?… [U]nfortunately, it looks like this ‘predatory packaging’ is legal, but why the heck are consumers getting these console bundles shoved down their throats?”

Oh, come on! You have got to be kidding me. This is called capitalism, buddy. You know… supply-and-demand… rationale pricing of scarce goods… efficient market allocation, etc, etc. In fact, I want to make the exact opposite point that Brightman makes: I think the folks that are selling these consoles on a conditional basis or for a large mark-up are doing society a great service because they are ensuring that those of us who really want these scarce consoles the most can get are hands on them right away.

Unless he wants to make the argument that video game consoles have suddenly become life essential goods on par with food and water, his argument is just plain silly. After all, would anyone die if they had to wait a few weeks before they bought a stand-alone video game console at regular retail prices? How spoiled are we as a culture when we’re even having a debate about fair video game console allocation!?!

Incidentally, what about all those people on eBay selling the extra consoles they bought for major mark-ups? Should they all be in jail? Or perhaps the DOJ or FCC should regulate the video game console marketplace to determine fair prices and efficient distribution of video game consoles to the masses. Perhaps the rallying cry for this new regulatory movement can be “From each according to his [gaming] abilities, to each according to his [gaming] needs.”

Ridiculous.

I’ve been neglecting my blogging over the past week since my free time has been occupied with setting up my latest high-tech toy–Sony’s “Location Free TV.” To keep pace with the increasingly popular Slingbox, which also allows consumers to space- or place-shift their TV and other video signals, Sony has just released a new box (the LP-20) that retails for $250 bucks and has more features than their first generation Location Free boxes. As I was setting it up and troubleshooting various connection problems (and I had quite a few), I kept wondering about whether or not this new Sony device would raise any copyright issues.

Like the Sling, Sony’s Location Free box allows you to watch your home TV signals on your personal computer anywhere you want via an Internet connection. An added bonus with the Sony box is the ability to also watch TV remotely on your PlayStation Portable (PSP) gaming device. It’s a very cool feature but my experience with it so far has been a mixed bag. The PSP suffers from more latency issues (probably due to its more limited wireless networking capabilities) and picture quality really becomes unbearable at times as a result.

But watching TV remotely on my laptop looks pretty good and the desktop software that Sony provides makes it very easy to program in my cable set-top box codes and special buttons (like the button I use to call up my PVR archive so I can watch recorded TV shows while I’m on the road). And I can also use the Location Free box to control another video source, such as my DVD player. So, when I’m stuck in an airport trying to keep my kids from melting down, I can remotely access an animated movie sitting in my DVD tray back home. Very, very cool.

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Last week I wrote about how excited I was to learn that Microsoft would soon be announcing an eagerly awaited movie / video downloading service for its XBOX 360 gaming console. And now we have the details of their new business model. And, in my opinion, it looks like a winner for MS, content developers and consumers alike.

Beginning on November 22nd–the second anniversery of the XBOX 360 launch–XBOX users will be able to use their “Microsoft Points,” which can be earned or purchased on the XBOX Marketplace, to download movies and TV shows from affiliated partners. The first round of deals MS cut were with CBS, MTV Networks, Paramount Pictures, Turner Broadcasting System Inc., Ultimate Fighting Championship (UFC), and Warner Bros. Home Entertainment.
xbox_vod_16.jpg
More deals are sure to follow, but that’s quite a bit of content already. I look forward to downloading Comedy Central and VH1 shows in particular, in addition to all the movies they’ll be offering. And my kids will love all the Nickelodeon and Nicktoons stuff that is on there. (A list of all the content companies involved in the deal can be found here).

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Here’s what I’ve been waiting for since the day I bought my Microsoft XBOX 360. If these rumors are true, Microsoft could soon be making downloadable high-definition movies available via its XBOX Live / XBOX Marketplace service. You’ll need a pretty fast Internet connection, of course, but luckily I do via Verizon’s outstanding FIOS (fiber) service. I currently download all sorts of HD movie trailers and game demos via the XBOX Marketplace and they look great and work perfectly. I can just leave my XBOX running overnight and order up a bunch of content and it’s all sitting there when I wake up in the morning. Or I can just download that content while I’m playing games and the system notifies me once the clips and demos have finished downloading.

So, it’s only natural that Microsoft would want to take the next step and allow users to download entire movies at some point. This would be a welcome alternative to the somewhat cumbersome MovieLink and CinemaNow systems that I’ve looked into. They don’t have much HD material on their services.

Microsoft will also be willing to work with the studios to ensure secure delivery and proper compensation, so I don’t see any copyright concerns here. Importantly, however, the XBOX 360 does not have HDMI or DVI digital outputs, only analog component video connections. Consequently, some users are still concerned that studios might down-res HD video content in the future via the “image contraint token” copy protection scheme. So far the studios have not felt the need to do that, however. But they might in the future if illegal redistribution of copyrighted content becomes a bigger concern. Right now, it’s just too hard to pirates to move big high-def files around on current generation networks, so it’s not a big deal yet. Read this IGN.com story for more details.

Regardless, I hope Microsoft makes this happen, and soon. I have already pre-ordered Microsoft’s upcoming HD-DVD sidecar ($199) from Amazon and it is due to be delivered in a few weeks. It will play next-generation movies of the HD-DVD format, but that still doesn’t give me a Blu-Ray solution. So, I’m hoping that I’ll be able to download all my HD movies via my XBOX Live connection in the future instead of having to purchase a Blu-Ray player.

Now it looks like I’ll next need to go buy that rumored 100GB hard drive for the XBOX if MS makes it! That 20-gig drive I’ve got now won’t be able to hold too many HD movie downloads.

A Series of Tube Lawsuits

by on November 2, 2006 · 2 comments

Apparently UTube is suing YouTube for causing their website to have too much traffic. Jason Schulz is on the case:

Now I’m definitely sympathetic to Universal Tube’s plight. They’re a small business that mostly operates in an off-line world. This much traffic shutting down its servers is not something it asked for or deserves. But to respond by suing YouTube for it doesn’t make any sense. YouTube didn’t ask those people to go to the wrong website. In fact, YouTube wants nothing more than for all those people to find the right website. (Okay, maybe not the child pornographers, but everyone else).

Moreover, the fact that Universal Tube is suing primarily under trademark law and the old property doctrine of “trespass to chattels” is particularly disingenous. I mean, the company isn’t even called “utube”–it’s called Universal Tube & Rollform Equipment. They just picked the domain “utube” as a shorthand.

Trademark law is about companies in the same field using similar marks to confuse consumers not about blaming companies for the mistakes of Internet searchers who can’t find the right websites. No consumer looking for videos on the Internet is going to mistakenly buy used tubbing or visa-versa (unless of course, they’re looking for a series of tubes ;). What Universal Tube is trying to do here is right a wrong by squeezing a square peg in a round hole. There is no “trespass” here or trademark violation and they shouldn’t try to trick a court into finding one.

The only way this lawsuit makes sense is if it’s a negotiating tactic. After all, Mike says they’ve already turned down a million dollar offer for the domain–it surely doesn’t cost a small business a million dollars to change its web address. So they can’t honestly feel they’ve been injured. More likely, they’re expecting Google to buy them out, and they’re hoping a lawsuit will give them more leverage in the price negotiations.

Party of Death

by on October 29, 2006

I’m in DC and attended Julian’s annual halloween party. This year’s theme was the “The Party of Death,” but although Ramesh Ponuru was invited, he was, alas, not able to make it. You can see pictures here.

I was Waldo. You can also see a snowflake baby and a dead stem cell, two Steve Irwins, and Hugo Chavez high-fiving Mahmoud Ahmadenijad. The most tasteless costume of the evening–the dead Amish girl–appears not to have been captured on film. Which is good, because that would probably prove Ponuru’s point about liberals.

I think it’s really cool how Flickr makes the photos page I linked to above possible. Julian just suggested that everyone tag their photos “partyofdeath,” and a bunch of people who attended the party did so. As a result, we automagically get a single page that displays everyone’s pictures in one place.