Technology, Business & Cool Toys

Wired has a story about Tesla Motors, a company that’s been getting a lot of buzz lately, and is likely to get even more press when its cars launch next year. They’re launching an electric sports car. Whereas most electric cars in the past have been “punishment cars” focused on efficiency and cost at the expense of range and performance, Tesla has gone in the opposite direction, targeting wealthy buyers and focusing on building an electric car that can compete with hgih-end sports car. It can apparently do 0-60 MPH in about 4 seconds.

Their plan is to build the sports car first, and then if that’s successful they’ll branch out and make lower-cost, family-oriented vehicles. They seem to believe that Detroit has largely focused on squeezing an electric motor into a gas-powered car, and that you can squeeze considerable efficiency out of an electric car if you design it from the ground up to run off of batteries. Given the incredible improvements in laptop battery life over the last decade, it seems like this might very well be true.

I’m not convinced that they can make the things competitive with traditional gas-powered cars, though. I see three problems, all related to fundamental properties of gasoline as opposed to batteries. First gasoline has phenomenally high energy density. That is, a kilogram of gasoline contains far more energy than an equivalent weight of even the best batteries. As a result, a lot more space in your electric car has to be taken up by batteries than the volume of the gas tank in an ordinary internal combustion engine car. You can see the batteries in their diagram of the Roadster: they run the width of the car and appear to take up as much room as a row of seats.

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The Wall Street Journal has a write up of Craigslist, the online classified site that is steadily taking over the world. The author seems bewildered by the Craigslist phenomenon, seeming to think there must be some kind of trick or hidden agenda at work:

“The Internet at large, and free classifieds in particular–and even beyond that, Craigslist free classifieds in particular–certainly pose challenges to the newspaper industry as far as being able to raise their profitability over time.” Many in newspaper publishing would consider that an understatement. But Mr. Buckmaster is sanguine: “The demise of the newspaper has been overstated.” Phew. I expel a nervous chuckle of relief. In Mr. Buckmaster’s view, newspapers would be better off being a little more Craigslist-like: Go private, eschew Wall Street’s demands for continually “goosing profitability” and give your readers what they want. Much trouble in the world comes, in Mr. Buckmaster’s view, from losing sight of that essential goal. After we’ve retired back to the living room for coffee, Mr. Buckmaster allows that the world is perhaps not quite that simple. When asked whether there’s a Craigslist model that other companies could emulate, the unflappable Mr. Buckmaster, his eyes once more fixed firmly on the horizon out the window, waxes lyrical for a moment: “It’s unrealistic to say, but–imagine our entire U.S. workforce deployed in units of 20. Each unit of 20 is running a business that tens of millions of people are getting enormous amounts of value out of each month. What kind of world would that be?” Before I have time to object, Mr. Buckmaster comes back to our world. “Now, there’s something wrong in the reasoning there,” he admits. “You can’t run a steel company in the same way that you run an Internet company”–more points for understatement. “But still, it’s a nice kind of fantasy that there are more and more businesses where huge amounts of value can flow to the user for free. I like the idea, just as an end-user, of there being as many businesses like that as possible.” As an end-user, I suppose I do, too. But there are no free lunches, even if Craigslist–and the meal Mr. Buckmaster and Ms. Best provided for me–sometimes seem to come close.

The oft-repeated (especially by libertarians) view that there’s no such thing as a free lunch is actually nonsense. Civilization abounds in free lunches. Social cooperation produces immense surpluses that have allowed us to become as wealthy as we are. Craigslist is just an extreme example of this phenomenon, because it allows social cooperation on a much greater scale at radically reduced cost. Craigslist creates an enormous amount of surplus value (that is, the benefits to users vastly exceed the infrastructure costs of providing the service). For whatever reason, Craigslist itself has chosen to appropriate only a small portion of that value, leaving the vast majority to its users.

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Following up on Sonia’s and Andrew’s recent posts on reports of the PDF spat between Adobe’s and Microsoft. What’s interesting in all of this is that Microsoft wants to implement PDF into its product offering. But what is it implementing? Is it a closed standard dressed up like it is an open one? Or is the version that Microsoft plans to offer (now via a free download, not as a part of Office or Vista) an open standard? When it comes to PDF, what’s the difference? The problem is that there are many different versions of PDF. Time for a little history lesson:

The PDF 1.4 specification is used in the AIIM created, and ISO approved ISO 19005-1 PDF/A and PDF/X standard. The PDF/A is generally considered the “archive” standard, PDF/X a focused subset of PDF designed specifically for reliable prepress data interchange. They are application standards, as well as a file format standard. In other words, it defines how applications creating and reading files should behave.

The PDF 1.5 specification was first a part of Adobe Acrobat 6.0, which was introduced in April 2003

PDF 1.6 was released in November 2004 and is supported by Adobe Acrobat 7.0, the current version. The AIIM committee has begun work on ISO 19005-2 based on PDF Reference 1.6.

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Joe at TechDirt debunks a reactionary column about the need for tech workers to unionize:

Historically, a powerful union tool has been the ability to exclude non-members from the workforce. This is why unions are so vehemently against “right to work” laws, or these days, outsourcing labor overseas. Closely related to this is opposition to technologies that reduce the need for human employees, like in the example of the plumbers that were against waterless urinals. Though such a mentality is completely anathema to the tech world, it’s not surprising to see it at a column called The Luddite–the fear that technology would take jobs away from humans was the same fear that the original Luddites had. Even more important, perhaps, is that the delineation between labor and management–central to the union ethos–doesn’t hold at most technology companies. Often, company equity is part of an employee’s compensation package; so even if their wages seem to stagnate due to competition from Indian programmers, they benefit when their company saves money.

Indeed.

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It seems that Steve Jobs has once again won his battle with the music industry:

Record labels have for months been calling on Apple Computer (nasdaq: AAPL – news – people ) Chief Executive Steve Jobs to reform the pricing of songs on his online music store iTunes. In particular, they want the billionaire to jack up the price of newer hits from the regular flat rate of 99 cents. But alas, it all seems to have been to no avail. On Tuesday, we learned that after finally renewing its contract with Warner Music Group, EMI, Bertelsmann and Sony joint venture Sony BMG, and Vivendi’s Universal Music Group, Apple Computer has had the final say on pricing–and it’s staying at 99 cents.

I wonder if it’s beginning to dawn on the music industry that they created a monster when they insisted that Apple develop a DRM scheme. As more and more music fans become locked into Apple’s proprietary platform, Steve Jobs will be able to dictate terms to the labels, and may be able to cut them out of the loop entirely by dealing with artists directly.

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Apple’s Wednesday announcement of Boot Camp, a utility that allows users to run Windows on their Intel-based Macs, may be the final chapter in the decades-long commodification of the PC industry. “Wintel” PCs were commodified by the rise of “IBM clones” in the early 1980s, and the release of Pentium clones and LInux in the 1990s. By the mid-1990s, virtually every component in a Wintel PC was a commodity with vigorous intra-platform competition.

Apple began joining the commodity hardware party in earnest with the release of the iMac, which abandoned several Apple-only hardware components in favor of PC equivalents. Over the subsequent 8 years, they gradually phased out virtually all of their Mac-specific hardware, culminating in the adoption of Intel processors early this year. And this week they put to rest any notion that a Mac is anything but a glorified PC by giving users an easy way to install Windows on their Macs if they want to.

This is surprising because Steve Jobs is a control freak. When he rejoined Apple in 1997, he killed off the Macintosh clone program, which was beginning to allow third parties to build Mac-compatible computers. Five years ago, it would have been crazy-talk to predict that Jobs would soon transform Macs into glorified PCs with pretty cases.

What has happened, though, is that economies of scale have became such a powerful force that no one, even a closed-platform zealot like Jobs, could resist them. In the last few years, Intel and AMD together have sold more than ten times as many chips as did the PowerPC manufacturers who supplied Apple. As a result, they could afford to spend ten times as much on R&D. No amount of ingenuity or superior processor architecture can make up for such a lopsided funding advantage.

In addition, I suspect the iPod experience has changed Jobs’s perspective. It’s hard to fathom today, but the iPod was originally conceived as a loss-leader to sell more Macs. Only after it became obvious they had a huge hit on their hands did they release a version that would work with Windows. And it took them even longer to release a Windows version of iTunes. Today, the iPod and iTunes are arguably more important to Apple’s future than the Mac is. Tying the iPod to the Mac held back its potential for success. By making it as widely compatible as possible, Apple allowed it to achieve much greater success.

Jobs may have realized that Mac hardware and the Mac OS may be holding each other back as well. There may very well be a lot of customers who love Apple’s superb industrial design but need to run Windows to get work done. There might also be people who would like to try out the Mac OS but don’t want to drop several hundred dollars on a new computer. By de-coupling the two–allowing Windows to run on a Mac and (I hope soon) allowing Mac OS X to run on PCs–Apple allows each to survive on its merits. Perhaps Mac OS X will grab significant market share away from Microsoft. Or maybe Macs will steal market share from HP and Dell.

Either way, the bottom line is that network effects are an irresistible force in the computer industry. No matter how innovative your product might be, it’s not likely to succeed if it’s only used by a small cadre of technological elitists. Bill Gates figured this out in the 1980s, and it made him the richest man in the world. Perhaps Steve Jobs is beginning to figure it out as well. Better late than never.

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