Technology, Business & Cool Toys

Again, It’s Really Hard to Bottle Up Digital Generativity / Openness

by on April 8, 2011 · 17 comments

There’s a nice piece of reporting from Ian Shapira in today’s Washington Post entitled, “Once the Hobby of Tech Geeks, iPhone Jailbreaking Now a Lucrative Industry.” In the article, Shapira documents the rise of independent, unauthorized Apple apps (especially tethering apps) and points out that what was once a small black market has now turned into a booming, maturing business sector in its own right.  In fact, Sharpia notes, there are already “market leaders” in the field:

At the top of the jailbreaking hierarchy sits Jay Freeman, 29, the founder and operator of Cydia, the biggest unofficial iPhone app store, which offers about 700 paid designs and other modifications out of about 30,000 others that are free. Based out of an office near Santa Barbara, Calif., Freeman said Cydia, launched in 2008, now earns about $250,000 after taxes in profit annually. He just hired his first full-time employee from Delicious, the Yahoo-owned bookmarking site, to improve Cydia’s design. “The whole point is to fight against the corporate overlord,” Freeman said. “This is grass-roots movement, and that’s what makes Cydia so interesting. Apple is this ivory tower, a controlled experience, and the thing that really bought people into jailbreaking is that it makes the experience theirs.”

In another sign this black market is now going mainstream, advertisers are apparently flocking to it:

In what might be the ultimate sign that the jailbreak industry is losing its anti-establishment character, Toyota recently offered a free program on Cydia’s store, promoting the company’s Scion sedan. Once installed, the car is displayed on the background of the iPhone home screen, and the iPhone icons are re-fashioned to look like the emblem on the front grill.

Interestingly, however, some people now complain that Cydia is getting too big for its britches and has come to be “as domineering as Apple is in the non-jailbreak world.”  What delicious irony! Yet, I do not for one minute believe that Cydia has any sort of “lock” on the “unlocking” marketplace. This is an insanely dynamic sector that is subject to near-constant fits of disruptive technological change. Continue reading →

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Getting to Know Your RFID

by on March 23, 2011 · 0 comments

Kinda cool.

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App Store Wars: Apple, Amazon, Google, Microsoft & Dynamic Platform Competition

by on March 23, 2011 · 1 comment

Venture capitalist Bill Gurley asked a good question in a Tweet late last night when he was “wondering if Apple’s 30% rake isn’t a foolish act of hubris. Why drive Amazon, Facebook, and others to different platforms?” As most of you know, Gurley is referring to Apple’s announcement in February that it would require a 30% cut of app developers’ revenues if they wanted a place in the Apple App Store.

Indeed, why would Apple be so foolish? Of course, some critics will cry “monopoly!” and claim that Apple’s “act of hubris” was simply a logical move by a platform monopolist to exploit its supposedly dominant position in the mobile OS / app store marketplace.  But what then are we to make of Amazon’s big announcement yesterday that it was jumping in the ring with its new app store for Android? And what are we to make of the fact that Google immediately responded to Apple’s 30% announcement by offering publishers a more reasonable 10%-of-the-cut deal?  And, as Gurley notes, you can’t forget about Facebook. Who knows what they have up their sleeve next.  They’ve denied any interest in marketing their own phone and, at least so far, have not announced any intention to offer a competing app store, but why would they need to? Their platform can integrate apps directly into it!  Oh, and don’t forget that there’s a little company called Microsoft out there still trying to stake its claim to a patch of land in the mobile OS landscape. Oh, and have you visited the HP-Palm development center lately?  Some very interesting things going on there that we shouldn’t ignore.

What these developments illustrate is a point that I have constantly reiterated here: Continue reading →

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An update on the evolving e-book market: Kindle edition (pun intended)

by on March 1, 2011 · 4 comments

[Cross-posted at Truth on the Market]

[UPDATE:  Josh links to a WSJ article telling us that EU antitrust enforcers raided several (unnamed) e-book publishers as part of an apparent antitrust investigation into the agency model and whether it is “improperly restrictive.”  Whatever that means.  Key grafs:

At issue for antitrust regulators is whether agency models are improperly restrictive. Europe, in particular, has strong anticollusion laws that limit the extent to which companies can agree on the prices consumers will eventually be charged.

Amazon, in particular, has vociferously opposed the agency practice, saying it would like to set prices as it sees fit. Publishers, by contrast, resist the notion of online retailers’ deep discounting.

It is unclear whether the animating question is whether the publishers might have agreed to a particular pricing model, or to particular prices within that model.  As a legal matter that distinction probably doesn’t matter at all; as an economic matter it would seem to be more complicated–to be explored further another day . . . .]

A year ago I wrote about the economics of the e-book publishing market in the context of the dispute between Amazon and some publishers (notably Macmillan) over pricing.  At the time I suggested a few things about how the future might pan out (never a good idea . . . ):

And that’s really the twist.  Amazon is not ready to be a platform in this business.  The economic conditions are not yet right and it is clearly making a lot of money selling physical books directly to its users.  The Kindle is not ubiquitous and demand for electronic versions of books is not very significant–and thus Amazon does not want to take on the full platform development and distribution risk.  Where seller control over price usually entails a distribution of inventory risk away from suppliers and toward sellers, supplier control over price correspondingly distributes platform development risk toward sellers.  Under the old system Amazon was able to encourage the distribution of the platform (the Kindle) through loss-leader pricing on e-books, ensuring that publishers shared somewhat in the costs of platform distribution (from selling correspondingly fewer physical books) and allowing Amazon to subsidize Kindle sales in a way that helped to encourage consumer familiarity with e-books.  Under the new system it does not have that ability and can only subsidize Kindle use by reducing the price of Kindles–which impedes Amazon from engaging in effective price discrimination for the Kindle, does not tie the subsidy to increased use, and will make widespread distribution of the device more expensive and more risky for Amazon.

This “agency model,” if you recall, is one where, essentially, publishers, rather than Amazon, determine the price for electronic versions of their books sold via Amazon and pay Amazon a percentage.  The problem from Amazon’s point of view, as I mention in the quote above, is that without the ability to control the price of the books it sells, Amazon is limited essentially to fiddling with the price of the reader–the platform–itself in order to encourage more participation on the reader side of the market.  But I surmised (again in the quote above), that fiddling with the price of the platform would be far more blunt and potentially costly than controlling the price of the books themselves, mainly because the latter correlates almost perfectly with usage, and the former does not–and in the end Amazon may end up subsidizing lots of Kindle purchases from which it is then never able to recoup its losses because it accidentally subsidized lots of Kindle purchases by people who had no interest in actually using the devices very much (either because they’re sticking with paper or because Apple has leapfrogged the competition).

It appears, nevertheless, that Amazon has indeed been pursuing this pricing strategy.  According to this post from Kevin Kelly,

John Walkenbach noticed that the price of the Kindle was falling at a consistent rate, lowering almost on a schedule. By June 2010, the rate was so unwavering that he could easily forecast the date at which the Kindle would be free: November 2011.

Continue reading →

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Just How Dynamic is the Mobile Internet Marketplace?

by on February 21, 2011 · 7 comments

To believe some of the worrywarts around Washington, we find ourselves in the midst of a miserable mobile marketplace experience. Regulatory advocates like New America Foundation, Free Press, Public Knowledge and others routinely claim that the sky is falling on consumers and that far-reaching regulation of the wireless sector is needed to save the day.

I hope those folks are still willing to listen to facts, becuase those facts tell a very different story. Specifically, I invite critics to flip through the latest presentation by Internet market watchers Mary Meeker and Matt Murphy of Kleiner Perkins Caufield & Byers on “Top Mobile Internet Trends” and then explain to me how we can label this marketplace anything other than what it really is: One of the greatest capitalist success stories of modern times. Just about every metric illustrates the explosive growth of technological innovation in the U.S. mobile arena. I’ve embedded the entire slideshow down below, but two particular slides deserve to be showcased.

Continue reading →

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Terrific Visualization of Digital Information Explosion

by on February 11, 2011 · 11 comments

Here’s an amazing graphic that appeared in today’s Washington Post depicting how digital information has grown exploded over the past two decades. It’s better viewed on a large monitor from this link on the Post website. And here’s the accompanying Post article. The underlying data come from a new study by Martin Hilbert and Priscila Lopez of the University of Southern California, which is entitled, “The World’s Technological Capacity to Store, Communicate, and Compute Information.” It appears in the latest issue of Science but is not available without a subscription.

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Digital Sensors, Darknets, Hyper-Transparency & the Future of Privacy

by on January 28, 2011 · 3 comments

A headline in the USA Today earlier this week screamed, “Hello, Big Brother: Digital Sensors Are Watching Us.”  It opens with an all too typical techno-panic tone, replete with tales of impending doom:

Odds are you will be monitored today — many times over. Surveillance cameras at airports, subways, banks and other public venues are not the only devices tracking you. Inexpensive, ever-watchful digital sensors are now ubiquitous.

They are in laptop webcams, video-game motion sensors, smartphone cameras, utility meters, passports and employee ID cards. Step out your front door and you could be captured in a high-resolution photograph taken from the air or street by Google or Microsoft, as they update their respective mapping services. Drive down a city thoroughfare, cross a toll bridge, or park at certain shopping malls and your license plate will be recorded and time-stamped.

Several developments have converged to push the monitoring of human activity far beyond what George Orwell imagined. Low-cost digital cameras, motion sensors and biometric readers are proliferating just as the cost of storing digital data is decreasing. The result: the explosion of sensor data collection and storage.

Oh my God! Dust off you copies of the Unabomber Manifesto and run for your shack in the hills!

No, wait, don’t. Let’s instead step back, take a deep breath and think about this. As the article goes on to note, there will certainly be many benefits to our increasing “sensor society.”  Advertising and retail activity will become more personalized and offer consumers more customized good and services.  I wrote about that here at greater length in my essay on “Smart-Sign Technology: Retail Marketing Gets Sophisticated, But Will Regulation Kill It First?”  More importantly, ubiquitous digital sensors and data collection/storage will also increase our knowledge of the world around us exponentially and do wonders for scientific, environmental, and medical research.

But that won’t soothe the fears of those who fear the loss of their privacy and the rise of a surveillance society in which our every move is watched or tracked. So, let’s talk about what those of you who feel that way want to do about it.

Continue reading →

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Are we doomed by The Great Stagnation?

by on January 28, 2011 · 0 comments

Have we technophiles utterly deluded ourselves? Worse, instead of enjoying an Age of Innovation, are we actually stuck in a technological Dark Age? One that explains our stagnating living standards and general economic “disarray”? This is the possibility economist Tyler Cowen (George Mason, Marginal Rev, Mercatus) raises in The Great Stagnation, a pithy and provocative  new e-book essay. Here is my Forbes column on the topic: “Tyler Cowen’s Techno Slump.” I don’t know how much I agree with Cowen, but I think he’s given a big boost to an important conversation.

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Obama Admin’s “Let’s-Be-Europe” Approach to Privacy Will Undermine U.S. Competitiveness

by on January 5, 2011 · 2 comments

Reading through the respective December 2010 privacy reports from the Federal Trade Commission (FTC) and Department of Commerce (DoC), one cannot help but be struck by the Obama Administration’s seeming desire to make America’s tech sector — and the regulatory regime that governs it — more closely resemble Europe’s.  The push for an ambitious new “privacy framework” and set of “fair information practices” is just a riff borrowed from the EU data directive.  And although the Obama team stops short of calling privacy a “dignity right” as many European policymakers are prone to do, it’s clear from both the FTC and DoC reports that that’s were they want to take us.

It’s interesting to me, though, that the Obama Administration relies on two fundamentally flawed rationales for the “European-ification” of American privacy law.  In this regard, I’ll reference some passages from the DoC’s report that appear in the section on “The Economic Imperative” for a new regime, which appears on pages 13-16 of the report.

Myth #1: Privacy Regs Are Needed to Get More People Online or Using Digital Technology

First, the DoC pulls out the old saw about the need for expanded privacy regs to ensure greater online trust and, as a result, promote increased online interactions.  The report claims that “maintaining consumer trust is vital to the success of the digital economy” and that “an erosion of trust will inhibit the adoption of new technologies” (p. 15)  The problem with the theory that online commerce or consumer interactions online are somehow being thwarted by a lack of more privacy regulation is that it is plainly contradicted by the facts.  Continue reading →

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More on Facebook’s “Private IPO,” Securities Regs & Unintended Consequences

by on January 5, 2011 · 6 comments

In my essay yesterday, “How Federal Accounting & Securities Regs Screw Up Your Chance to Invest in Facebook,” I noted how America’s counter-productive accounting, disclosure, and governance regulations are increasingly thwarting the ability of average Americans to invest in some of the leading capitalist innovators of the Digital Age. In this case it’s Facebook, but there are plenty of other innovative companies out there sticking with private shareholders so as not to trigger burdensome securities and accounting regs.  In my essay, I also noted how this represented another prime example of well-intentioned regulation having profoundly unintended, anti-consumer, anti-competitive consequences.  America’s convoluted and onerous securities regulations are choking off capital infusions into innovative companies and denying average investors a chance to own a share a piece of the American dream.

So, what does the Securities and Exchange Commission (SEC) plan to do about this fine mess?  Regulate more, of course!  As The Wall Street Journal reports today:

The Securities and Exchange Commission has begun examining whether disclosure rules for privately held firms need to be rewritten as a result of recent deals allowing investors to buy shares in Internet companies such as Facebook Inc. and Twitter Inc., according to people familiar with the situation.  The review is at an early stage, these people cautioned, and SEC officials looking at the recent deals haven’t concluded that any of them run afoul of the 47-year-old rules governing private companies. The rules require firms with 500 or more shareholders of record in a given type of stock to publicly disclose certain financial information. The requirement is designed to protect investors from risking money on companies that say little about their operations and performance.

Yes, but that requirement can also trigger an onslaught of new regulatory burdens, as the Journal story continues on to note: Continue reading →

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