What Customers Want

A Few Lessons from Big Companies

Text-messageI spend a lot of time reading about corporations and I think there are some lessons to learn from them that are relevant to small companies.

Selling Product versus Building Relationships. There are many  large companies that sell products without developing relationships with their customers. In our industry the large cable and telcos come to mind. They are all rated among the worst of all corporations in delivering customer service and they even antagonize many of their customers. This works fine for them until they get competition, and then the customers who don’t like them quickly jump ship to the new competitor.

But there are large businesses that go out of their way to build customer relationships because they believe that loyal customers are their most important asset. Consider car manufacturers. They realized a long time ago that they were not going to be good at customer service, so they created a network of dealers who are local businesses with ties in each community and these dealers have built trust over generations. And there are many other companies that deliver great customer service. Tech firms like Amazon, Apple, and Google have been consistently rated among the top ten in customer satisfaction for the last few years – showing that tech firms can put an emphasis on customers and still thrive.

My most successful clients build relationships with their customers and as a result have built a loyal customer base. Many of them are or were monopolies, and there was a time when most of my clients could not tell me who their ten largest customers were. But I rarely see that today and small telcos and cable companies have learned to build loyalty through building relationships.

Growing Fast versus Growing Deliberately. Many large companies need to grow fast to be successful. Once you have taken venture capital money or gone public then the pressure is on to grow profits quickly. But growing too fast almost always changes a company in negative ways. It’s really common to see companies go into the growth mode and then forget who they are. Most tech companies, for example, started with a small core of people who worked hard as a team to develop the core company. But when it’s time to grow, and companies hire mountains of new people it’s nearly impossible to maintain the original culture that made the company a great place to work.

Growth can be just as hard for small companies. It can be as hard economically and culturally for a small company to grow from 5,000 to 10,000 customers as it is for a large company to add millions. Small companies are often unprepared for the extra work involved with growth and find that they overwork and overstress their staff during a growth cycle. Growth creates a dilemma for small companies. If you hire the people needed to staff the growth period your company will be overstaffed when growth stops.

And so a lesson about growth can be learned from large companies. They will often staff growth through temporary employees, contractors, and consultants rather than take on people that they may not need later. Companies of any size are hesitant about hiring employees that they might not need a year from now.

High-Tech versus High-Touch. A lot of large businesses are trying to feign a good customer service experience by electronically ‘touching’ their customers often. I recall last year when Comcast introduced a texting system to communicate with customers. After they sent me half a dozen text messages in the same week, I disconnected the texting function because I really didn’t want to hear from them that often. But there are large companies who are convinced that if they electronically reach out to customers often that they are engaging in relationship building and proactive customer service.

And perhaps they are with some customers. But I am more appreciative of a business where I can talk to a person when it’s needed. Not that I mind electronic communications. I like to know that AT&T has auto-billed me and I like knowing when charges hit my credit cards. But I don’t want to be bothered by a business when they aren’t passing on information I want or need.

The important point here is that you have to touch your customers sometime and whether you reach out electronically or in person it’s better than no-touch and not talking to your customers. I know telecom companies that call every customer at least once a year to ask them if they like the service and if everything is okay. Such calls are welcomed by most customers and this is a great tool for businesses to build relationships. But just be prepared that if you ask your customers how you are doing that you need to be ready to deal with negative feedback. That is how to build happy customers.

The Industry

To Encrypt or Not to Encrypt

We are seeing a major policy tug-of-war about privacy on the Internet. On one side are law enforcement and national security agencies that want to be able to monitor everything that happens on the web. On the other side are those that value privacy the most. This is not a new debate and has been going on since the 90s.

Encryption has been around for a while, but it’s generally believed that agencies like the NSA have cracked most existing encryption schemes and are able to readily decipher communications between most parties on the web.

Recently, Michael D. Steinbach, assistant director of the FBI’s Counterterrorism Division, testified to Congress that the FBI has no problem with encryption as long as the government still has access to the underlying data. He thinks that encryption between people is a good thing to keep personal data from being intercepted by bad guys on the web, but he still thinks that there are law enforcement and national security concerns that are more important than individual privacy concerns. The real concern is that encryption will allow criminals and terrorists to go ‘dark’ and evade detection or monitoring.

But the revelation that the NSA is spying on everybody has really upset the technology community that run the Internet. The  vision of the Internet was to be a place for the free exchange of information and many technologists believe that widespread surveillance squelches that. And very few people like the idea that the government knows your every secret. And so we see companies that are working to find ways to make communications private from snooping—including from the government.

Apple is the largest company to take a stance and they have initiated end-to-end encryption on the iPhone. The way they have done this only the sender and receiver of a communication can unlock a given message and Apple is not maintaining any way to crack the encryption themselves. This means that Apple is unable to reveal what is inside customer communications even if served with a court order. I am guessing that one day this is going to be put to a legal test and I can picture laws being passed that stop companies like Apple from doing this. And I am sure Apple will fight back, so ultimately this might have to be determined by the Supreme Court.

But there are other groups working on a privacy solution that even laws might not be able to touch very easily. One such company is Ethereum. This is a crowd-funded group in Europe who is building upon the early work with bit coins to build a decentralized communications system where there is nobody in charge because there is no centralized network hub – there is no company like Apple at the core of such a network. In such a hubless network it’s much harder for the government, or even companies like Google and Facebook to spy on you.

This requires the establishment of peer-to-peer networks that is a very different way of structuring the web. Today the basic web structure is based upon software sitting at specific servers. Things are routed today because there is a massive database of DNS addresses that list where everything can be found.

But Ethereum is taking a totally different approach. They have built apps that find space on millions of customers’ computers and servers. Thus, they are located everywhere, and yet at no specific place. Ethereum is using this distributed network and building upon the block-chain technology that underlays bit coin trading. The block-chain technology is so decentralized and so secure that nobody but the sender and receiver can know what is inside a communications chain.

Ethereum isn’t really a company, but rather a collective of programmers that intend to disband once they have established the safer communication methods. And they are not the only ones doing this, just one of the more visible groups. This creates a huge dilemma for law enforcement. There is a huge amount of web traffic dedicated to nefarious purposes like drug trafficking and child pornography, without even considering terrorists groups. Governments have had some limited success in shutting down platforms like Silk Road, but the systems Ethereum and others are building don’t have a centralized hub or a place where the system can be stopped.

I have no doubt that the government will find ways to crack into these systems eventually, but for now it seems like the privacy advocates are one step ahead of them, much in the same way that hackers are one step ahead of the web security companies.

I don’t know how I feel about this. Certainly nobody benefits by enabling huge rings of criminals and terrorists. And yet I get angry thinking that the government is tracking everything I am doing online. I’ve read all of the sci-fi books that explore the terrible consequences of government abuse due to surveillance and it’s not pretty. I am sure that I am like most people in that I really have nothing to hide. But it still makes me very uneasy to think that we are all being watched all of the time.

The Industry

Selling Our Personal Data

Recently, the CEO of Apple, Tim Cook, has been making speeches in multiple forums that contrasts Apple’s privacy practices to those of other large consumer-based companies like Google, Facebook, and Yahoo. Cook says that his company is selling superior products and that they are not in the business of gathering or selling information about their customers.

Certainly he can’t say that Apple doesn’t use customer information, because they do. I have a Macbook and there are tons of ways that Apple uses my data to make my experience better. If I travel, the Mac will display the right time and local weather, for example. And various Apple software products will get to know me and make customized suggestions for me over time. But Cook’s point is that Apple doesn’t sell that data to others.

Of course, the companies that Cook is comparing himself to do not sell electronics like Apple but rather software. Probably the closest analog to Apple is Samsung and they can’t make the same claim as Apple. Late last year it was discovered that Samsung smart TVs were capable of listening to customer conversations all of the time. It’s not clear that Samsung gathers data directly from its smart phones, but they have chosen Android and one can imagine that part of that arrangement is to let Google gather data from Samsung smartphones.

Companies like Facebook and Google have a hard time not using your data, because that is really the only way they can generate value. It’s wonderful to have millions of loyal users on your platform, but both companies make most of their money from advertising. Certainly Google’s search engine advertising doesn’t require any data from users and that revenue is driven from the companies who want their products to be at the top of the list in a search. But Google and Facebook also sells web advertising, and the name of that game is to know the user in order to direct the most relevant ads to each customer.

I think if using our information stopped with advertising that most people would be fundamentally comfortable with having these companies invade their privacy. I know I find it eerie when I do a Google search and for the next three days I see ads that are related to for something I searched for. But I can personally live with that, because most of the time Google is wasting their time on me and I wasn’t looking to shop. I find it funny that I will look up the latest information about smart cars and then get flooded with car ads (because I exclusively drive Ford trucks and I buy one every twenty years, whether I need a new one or not).

The real rub is that these companies do a lot more than build advertising profiles on us. They know all sorts of other personal data about us and they associate that data with our name. While I am not bothered by getting car ads for vehicles I am never going to buy, I frequently hear about people getting bombarded with ads or even mailings and phone calls about far more personal topics like rehab centers or the latest diabetes treatments. That is going over the line in my opinion.

The invasion of our privacy seems to be going even further. Facebook, for example, is the world leader in facial recognition technology and they are building a huge database of every time you show up in somebody’s picture. They not only know about you, but they are learning where you go and who you associate with. That is a bit unnerving.

But to me the real scary thing is that these companies then sell this data to others. And there is no telling how that data is used. Even should the large companies have some sense of morality and responsibility (and many believe they do not), the companies that buy this data can do anything with it they please. It’s very easy these days to buy a data dump about other people, and that kind of information can be a powerful tool in the hands of an ex-spouse, an employer, or a scammer.

The problem that we all face is that it’s too easy to use the services that watch us. Google has a spectacular set of software products. And for my generation there are a ton of friends and relatives on Facebook. If you don’t want to be spied on you have to make a very conscious effort to wall yourself off from these sorts of data-gathering web activities, and that is hard to do. And no matter what you do online, your ISP or the government might be gathering all of this data anyway.

These large companies sometimes hide behind the fact that they mostly sell ‘metadata’ which is data that has been scrubbed to hide the identify of individuals. But numerous articles point out that with data mining it’s only necessary to know a few facts about you in order to pull out facts about you from metadata files.

We may come to a day when there is massive pushback against these companies that are collecting, using, and selling our personal data. It will probably take a string of tragedies and disasters for this to become a worry for the average person. And if that happens, then either the large companies will stop spying on us or somebody who promises not to will take their place. But it is extremely profitable today for the big companies to spy on people, and until there is more pain than profit from using our data, one has to imagine that this is going to continue.

What Customers Want

The Demand for Energy Monitoring Services

The energy monitoring business is getting interesting to watch. I looked a few years ago and found dozens of companies offering some kind of energy monitoring services. On top of that, within the last year a lot of large companies like Apple, Google (Nest), Samsung, Verizon, ADT, and Wal-Mart have entered the market. I have a number of smaller ISPs clients that offer the service in rural markets, but that is quite an array of big names to compete against.

Let me start by defining what I mean by energy monitoring, specifically. The traditional kind of monitor is a whole-house monitor. This is a device that is installed near to your electric meter and it records your energy usage over time. These devices let you see both usage and cost at different times of the day, which gives you the ability to look around your home during the times of expensive usage to see what is costing you the most money. These devices normally need to be installed by an electrician because they are on the main power feed of the home. People who use them say that they help them to curtail electricity usage.

The next step up in energy management is to install a smart thermostat. Since heating and cooling are generally a major bill for many households, a smart thermostat can help you use energy wisely. For example, you can program your system to supply less heating or cooling at different times as appropriate, like when you are sleeping. And you can tie these into a burglar alarm system to curtail electricity when you are not home.

The final step in sophistication for home monitoring is to put additional monitors on specific high-energy appliances such as a washer/dryer, pool pump, dehumidifier, hot water heater, etc. These device-specific monitors can help you save money on the devices that use the most juice in your house.

The various companies in the energy monitoring business offer a wide array of services. Some simply sell the smart devices, which are often linked to your smartphone, and then monitoring and modifying usage is up to the homeowner. But a number of these businesses are now selling monitoring services where they will look at your usage for you and make recommendations on how you can save money. Again, there is a wide range of both services offered and prices charged and there is not yet any standard way today of selling energy management services.

I saw the results of a nationwide survey published a few months ago by Parks Associates of Dallas, Texas. This survey asked people a wide range of questions energy management services. One of the most interesting results of the survey was the number of households willing to pay for monitoring services. The survey showed that 25% of households were interested in an overall energy monitoring service. 22% of households said that they were interested in an appliance monitoring service of the biggest electricity users in the home. And 26% said specifically that they were interested in a heating/air conditioning monitoring service.

Those are huge potential penetration rates for such a new industry and one would expect those to grow over time as more people attest to the benefits of watching and controlling energy consumption. However, the survey was not all good news; over 50% of homes interested in the services said that they would not be willing to spend more than $2.99 per month for all three services.

Our firm has given surveys to households for years and so we understand that when it comes to price-related questions that what people say is often different than what they do, and ideally people want things for almost nothing. But not many of the big companies going after this business are going to find a revenue that low to be attractive.

To put into perspective, according to a National Home Builder’s Association study, the average monthly electric bill in the US in 2013 was $110 per month. The estimates are that the bills in 2015 are probably slightly lower than that figure. If energy monitoring can help people save between 10-20% on their electric bills, which is the claim often made, then that average savings is $11 to $22 per month. On top of that there is a savings on the heating bills for people that heat with something other than electricity. The real question is how much are people willing to pay for those savings?

Of course, electric rates vary widely by state, which is a factor both of the cost per kilowatt hour, and also of how the electricity is used. For example, as one might expect due to the summer heat, the highest electric bills are in the southeast while the lowest are in the northwest, which has milder weather, as well as a lot of hydroelectric generation.

If you are thinking about getting into this business you need to not only look at what your local Wal-Mart is offering, but also make sure you understand what people in your area pay for electricity and heating.

Current News

Europe Attacking Our Tech Companies

It’s clear that the European Union is attacking American technology companies. Evidence is everywhere. Consider the following examples or recent crackdowns against US technology in Europe:

  • Last year stringent rules were imposed on Google and other search engines to allow people to remove negative things from searches – these rules are being called the “right to be forgotten”.
  • The European Union is getting ready to file a massive anti-trust case against Google for the way that it favors its own search engine over others. The estimates are that the fines they are seeking could be as high as $6 billion.
  • Last year the EU voted in favor of making Google divest into multiple companies.
  • Numerous countries in Europe have blocked services from Uber.
  • The EU is going after Apple’s fledgling music business saying that they have the market power to persuade labels to abandon ad-sponsored sites like Spotify.
  • A decade ago there were several major antitrust cases filed against Microsoft.

There are numerous reasons for the antipathy that Europe seems to have towards American companies. President Obama said in an interview last month that the negativity was largely driven by economic competition and that Europe wants to find a way to support its own burgeoning tech companies over the behemoth tech companies like Google, Facebook, and Microsoft. He thinks a lot of the complaints by the EU are due to lobbying by European tech companies. He said that “oftentimes what is portrayed as high-minded positions on issues sometimes is designed to carve out their (European) commercial interests.”

But the president also admitted that some of the reaction to American tech companies is in reaction to the European history of suppression of freedom by dictators. For example, Germany just spent decades merging with East Germany and their history of oppression from the Stasi, the secret police. This makes some of these countries very sensitive to the recent revelations of the extent of the spying by the NSA. This one revelation might eventually be the beginning of the end of the open Internet as numerous countries are now building countrywide firewalls to shield them from such spying. It’s natural that this mistrust carries over to companies like Google and Facebook, which clearly have a business model based upon profiling people.

Another reason for going after American companies is tax revenues. The American tech companies have become adroit at claiming revenues in jurisdictions where they pay little or no taxes. Of course, this means that they avoid claiming profits in European countries which have fairly high tax rates. (This also means they avoid paying taxes in the US as well).

Finally, there might be an even more fundamental reason for the apparent European distrust and dislike of American technology. In this article published by Business Insider UK there is a look at the fundamental differences between the way that Europeans and Americans view entrepreneurship, technology, and uncertainty avoidance. The article shows the results of a survey and study done by the European Commission looking at how citizens in various countries look at certain issues. I think there has been a natural assumption that since both places are democratic and share a lot of first world values that we naturally think the same about technology. But the study shows some major differences between Europe as a whole and the US. Interestingly, England is very similar to the US in attitudes and perhaps our Yankee ingenuity and willingness to take risks is really part of our British heritage.

Here are some of the findings of that study:

  • Over 90% of Americans think that individualism is more important than compliance with expected social values. In Europe only a little less than 60% of people value individuality first. And in some places like Russia and Denmark less than 30% valued individualism more than compliance with social expectations.
  • When asked to agree or disagree with the statement, “entrepreneurs exploit other people’s work”, only 28% of Americans agreed with that statement (and the American dream is largely to own your own business), while the results in Europe spanned from only 40% agreeing in France, to 50% in the Netherlands, and over 70% in parts of southern and eastern Europe.
  • The US has a much lower threshold of uncertainty avoidance (unwillingness to take a chance on new ideas and new technologies). In the US only a little over 40% of people view themselves as risk adverse while in Europe it’s over 70%.

This means that to some extent the European Union is representing the will of its people when they crack down on US technology firms, which are viewed negatively as entrepreneurial and high risk. These kind of cultural gaps are very hard to bridge and US companies might have problems in Europe for decades – if they’re even resolvable at all.


Are Smartphones Bad for Us?

I saw that last week was the eighth anniversary of the day when Steve Jobs introduced the iPhone at MacWorld in San Francisco. Smartphones are so ubiquitous today that it feels like it’s been longer than eight years and it’s already hard to imagine a world without smartphones. Certainly something may come along to be even more amazing, but this so far is the transformational technology of the century.

The iPhone certainly transformed Apple. In 2006, the year before the iPhone was introduced they had revenues of $19 billion with the largest product being the iPod at $7.7 billion. Last year Apple had revenues of $182.8 billion with the iPhone producing revenues of $102 billion. iPods were still at a surprising $2.3 billion (who still buys iPods?).

There were smart phones around before the iPhone from companies like Palm and Blackberry. But the packaging of the iPhone caught the eye of the average cellphone user and the smartphone industry exploded. One of my friends bought an iPhone on the day they came out and I remember being very unimpressed. I asked him what it did that was new and the only thing he could come up with FaceTime – but he didn’t know anybody else who had an iPhone at the time and we couldn’t try it. The original iPhone didn’t have many apps, but that void was quickly filled.

Now that smartphone usage is ubiquitous in the US, we are starting to see studies looking at the impact of using them. Not all of these studies are good news.

Researcher Andrew Lepp at Kent State University looked at how smartphones affect college students. Lepp’s study found that frequent smartphone usage can be linked to increased anxiety, lower grades and generally less happiness. Students who are able to put down their phones are happier and have higher grades. Lepp’s study also showed, unsurprisingly that students with the highest smartphone usage have worse cardiovascular health – meaning they are in worse physical shape.

Researchers at Michigan State found that work-related smartphone use after 9 PM adversely affects a person’s performance the following day. They found that not taking a break from work results in mental fatigue and lack of engagement the next day. Researchers at Florida State found similar results and postulated that the smartphone backlighting interferes with melatonin, a chemical that regulates falling asleep and staying asleep.

The statistics from various surveys on smartphone usage are eye-opening:

  • 80% of all smartphone users check their phone within 15 minutes of waking.
  • Smartphone users with Facebook check Facebook an average of 14 times per day.
  • A scary 24% of users check their smartphone while driving.
  • 39% of smartphone users use their smartphones in the bathroom (I have no idea what this means).

My own theory is that smartphones do so many different functions they can feed into many different versions of addictive behavior. People can use a smartphone and get addicted to playing games, or addicted to texting their friends, or addicted to using FaceTime, or addicted to reading sports scores and stories.

It’s not like addiction to technology is new. We all remember people who got addicted to early computer games. Perhaps there is still somebody today in their basement addictively playing Pong. There are many stories of people before smartphones who texted thousands of times per day. These early studies don’t surprise me and I am sure that many more studies will describe even more woes that can be added to the list of how technology can be bad for us.

Okay, I admit I use my smartphone in the bathroom – it’s a good chance to catch up on tech news. But that’s it. I swear!

Technology The Industry

Who Will Own the Internet of Things?

Yesterday’s blog talked about the current Internet that is falling under the control of a handful of large corporations – Apple, Amazon, Facebook, Google and Microsoft. This leads me to ask if the upcoming Internet of Things is also going to be owned by a handful of companies

This is not an idle question because it has become clear lately that you don’t necessarily own a connected device even though you might pay for it. As an example, there was recently an article in the New York Times that reported that a car company was able to disable cars for which the owners were late in making payments. The idea of Ford or General Motors still having access to the brains of your vehicle even after you buy it is unsettling. It’s even more unsettling to think access is in the hands of somebody at your local car dealer. Imagine them turning off your car when you are far away from home or when you have a car full of kids. But even far worse to me is that if somebody can turn off your car then somebody else can hack it

The car companies are able to do this because they maintain access to the root directory of your car’s computer system. Whether you financed the car with them or paid cash, they still maintain a backdoor that lets them get remotely into your car’s computer. They might use this backdoor to disable the vehicle as in this example or to download software upgrades. But the fact is, as long as they have that ability, then to some degree they still have some control over your car and you. You have to ask if you truly own your own car. As an aside, most people don’t realize that almost all cars today also contain a black box, much like the recorder in airplanes that records a lot of data about your car and your specific driving habits. It records data on how fast you drive or if you are wearing your seatbelt – and this data is available to the car companies

Perhaps the car is an extreme example because car is probably the most complicated device that you own. But it’s likely that every IoT device is going to have the same backdoor access to the root directory. This means that the company that made an IoT device is going to have a way to gain access. This means every smartphone, appliance, thermostat, door lock, burglar alarm and security camera can be controlled to some degree by somebody else. It makes you seriously ask the question if you entirely own any smart device

Over time it is likely that the IoT industry will consolidate and that there will be a handful of companies that control the vast majority of IoT devices just like the big five companies control a lot of the Internet. And it might even be the same companies. Certainly Apple, Google and Microsoft are all making a big play for the IoT

I’ve written before about the lack of security in a most IoT devices. My prediction is that it’s going to take a few spectacular failures and security breaches of IoT devices before the companies that make them pay real attention to security. But even should they tighten up every security breach, if Google or Apple maintains backdoor access to your devices, then they are not truly secure

I think that eventually there will be a market for devices that a buyer con control and that don’t keep backdoor access. It certainly would be possible to set up an IoT network that doesn’t communicate outside the home but where devices all report to a master controller within the home. But it’s going to take people asking for such devices to create the market for them

If people are happy to have Apple or Google spy on them in their homes then those companies will be glad to do it. One of the first things that crossed my mind when Google bought Nest was that Google was going to be able to start tracking a lot of behavior about people inside their homes. They will know when you wake and sleep and how you move around the home. That may not sound important to you, but every smart device you add to your house will report something else about you. With the way that the big companies mine big data, the more they know about you the better they can profile you and the easier it is for them to sell to you. I don’t really want Google to know my sleep habits and when I go to the bathroom. To be truthful, it sounds creepy.

Current News

Something New

I often report on new scientific breakthroughs, but today’s blog is about a few new technological applications that will benefit our industry.  I rarely go a day without seeing some new innovation, and I thought the following were the most interesting ones I’ve seen lately.

First, Apple is working on a fuel cell for portable devices. This would be a big breakthrough for laptops, tablets and other sizable portable devices because fuel cells have some distinct advantages over the batteries we use today. For one thing, the fuel generating chemicals in a fuel cell can be refilled and so the battery could theoretically be kept going for a long time.

This is important because laptop batteries today are considered as toxic waste. Fuel cells would cut down on pollution by eliminating some of the nastier metals used in today’s batteries. By  lasting longer they would cut down on the huge number of batteries we are burning through as a society. For instance Apple could develop a universal tablet battery that you would keep as you move through newer generations of devices. Our devices today are not particularly green and disposing of our devices is creating a challenge for landfills and groundwater, mostly due to the batteries. So the small fuel cells will be a big step towards greener devices.

Next, the Korean manufacturer LG has announced a TV screen that can be rolled up like a poster. There have been flexible TVs around for a few years, but LG has made a screen that can be rolled up into a 1.5 inch tube. This will drastically change the supply chain for TVs. They are expensive today to ship and store due to the large sizes and they often get damaged in transit. But TVs this flexible can be sent by UPS in a tube.

The LG technology can also produce transparent TVs. This opens up a whole new world of applications for TVs and monitors. For instance you could put TVs on bathroom mirrors to watch while you brush your teeth. They could go on any window or on any wall and would disappear when not being used as TVs. I remember reading science fiction books many years ago that predicted that there would be TVs everywhere in the future, and with this technology that might be finally possible. These screens also advance the trend for separating the TV electronics from the screens. We will be able to put screens anywhere controlled by the same centralized smart box.

LG says they will be able to make a transparent 60-inch flexible TV capable of 4K quality by 2017. But the promise of this technology is not just for giant TVs, but also for little TVs screens that can be put anywhere – in the bathroom, kitchen, shop, garage – wherever somebody wants to watch a screen. The biggest outcome of cheap TVs everywhere would be an explosion in the demand for bandwidth. It’s not hard to picture households wanting to have ten football games on at the same time on Sundays.

Google has announced a new feature for Android that allows devices in proximity to each other to automatically connect. They are calling this technology Nearby. Any device using this technology would seek out and find any other nearby devices and would connect to enable communication. This has a lot of applications. For example, when friends or family meet their phones could automatically synch up and update calendars or whatever else they want to share.  This technology might be the platform to let stores contact shoppers as they pass through the store to offer specials or point out items of interest. And for the Internet of Things this is a handy way to make the smartphone the controller of other devises. Whenever you walk into a room in your house your phone would be instantly talking to all of the Nearby devices there.

Nearby would do this by automatically turning on the Bluetooth, WiFi and microphones as needed. There are some privacy concerns about this capability and certainly there will be apps to let each user set the degree to which they are willing to be open to others, and to also control who might be able to connect to you. But Google is counting on most people wanting to have an interactive shopping experience and that is probably what they see as the biggest commercial application of the technology. Google has been looking for a way to compete with Amazon in he shopping arena, and this might be that platform. Where Amazon dominates the online shopping experience Google could come to dominate the in-store shopping experience.


Current News The Industry

The Battle for the Integrated Car

Google is expected to unveil a smart car operating system later this month at its upcoming developer’s conference. This follows upon an announcement at the beginning of this year of the creation of the Open Automotive Alliance which consists of Google, chipmaker Nvidia along with General Motors, Honda, Audi and Hyundai.

This system would be obviously Android based and would allow for the full integration between an android phone and your car. The car software would automatically recognize and integrate with your smart phone so that you could perform phone functions without having to look away from the dashboard.

This is direct competition with Apple’s CarPlay which is also supposed to be available sometime this year. Apple has said that their software for IoS phones would let your car do things like send and receive emails and texts and use GPS navigation from applications on the phone. Apple has allied with Ferrari, Honda, Mercedes Benz and Hyundai.

A lot of cars already have software that allows the same basic functions. For example, my wife’s Toyota has a Bluetooth system that lets her sync with her music or to sync with Siri and do all of the things Siri can do. And my Ford truck has something similar, although it has reset itself three times in six months and leaves a bit to be desired in terms of ease of use.

Today’s platforms are largely proprietary and both industry groups are trying to bring a standard platform to the industry, because the real end game and the big dollars come from the ability to develop and sell apps that can be used specifically for driving. For instance, today my wife can use her Siri for navigation, but she cannot activate a separate navigation app should she choose to use something different. For example, I can envision specialty navigation apps that might be used by vacationers, truckers or business travelers, all who have different travel goals.

So these two industry giants are going to battle it out, mostly with car manufacturers, to become the de facto smart phone integration platform. Google has the early lead, just due to having signed up General Motors, but the battle is far from over. And as can be seen by noticing that Honda and Hyundai are working with both groups, perhaps they both win and cars can come equipped with one or both systems.

This is very different than Google’s self-driving car project which is still moving steadily forward. Earlier this year Google described how they make this work, and it is a solution that only Google could pull off.

Today Google’s cars are driving successfully around Mountain View California. The company has put in hundreds of thousands of miles of driving on those City streets. I always thought that Google would make self-driving cars work by having them learn all of the little nuances of what it takes to drive a car. But as it turns out, that is going to require something very akin to self-aware artificial intelligence and nobody is very close yet to having achieved that.

Instead Google has done the brute force solution where they have thoroughly mapped every inch of Mountain View. Thus, the car already knows what to expect. The car is not completely dumb, of course and is very good at recognizing other cars, and bicyclists and pedestrians. But by taking away the need for it to understand the streets, Google has vastly reduced the computational need of the system.

So a Google car in Mountain View already knows every inch of the streets. If it comes across something unexpected, say construction, it will alert the driver to take over the driving task if it feels unable to navigate the unexpected phenomenon. This is a solution only Google could do, because to take this technology outside of Mountain View they will have to completely map other towns. And that doesn’t scare Google. They would look at the project of mapping all of the streets in major towns in the country as an opportunity to update their maps and to learn more about the world.

One can envision Google cars that are really good at getting back and forth to work, to the grocery store and to a friend’s house. But if you wanted to visit your mother in the country the car would hand the driving back to you. Google sees this as an economically feasible product up until the point one day when cars really can learn the streets on the fly.

The Industry

Who Will Be the Cable Killer?

It’s a given these days that people are dropping cable subscriptions in favor of other sources of content. For now the exodus from cable is a trickle, but as we have seen with other industries, things can change into a flood quickly if there is a widely-acceptable alternative to an older technology.

This leads me to speculate about what company might be the one to break the cable monopoly. My crystal ball is no better than anybody else’s and this is just speculation. But it is not purely a mental exercise, because the odds are that somebody is going to be the cable killer.

One can first look at the characteristics that any cable killer must have. Number one is that they are going to need to have access to large number of potential customers. Today there are only a handful of companies that can make such a claim, although we have seen that when something new comes along that a new industry entrant can attract millions of customers in a very short period of time. The cable industry has a handful of large providers including Comcast with 23 million, Time Warner with 12 million, Direct TV with 20 million and Dish Networks with 14 million. And Charter would join this group if they are able to buy Time Warner.

So who can compete with those kinds of numbers? I can think of several that already have more customers than Comcast. Netflix is one, with over 33 million subscribers. It is not much of a stretch to see NetFlix as a cable killer if they can get enough additional programming to lure people permanently away from cable.

Interestingly, the company that has quietly built a huge pile of potential customers is Apple. They have sold over 20 million Apple TVs. And worldwide they have sold over 170 million iPads, many of them in the US. It’s been rumored for years that Apple was on the verge of announcing a programming blockbuster, and perhaps they have just been waiting to get enough Apple hardware platforms into the marketplace before trying to lure the programmers. This company destroyed the music industry in just a few years and perhaps they can do it again with cable.

And we can’t forget Google. Google has been rumored to be thinking about bidding on the NFL Sunday Package when it comes up for renewal. One thing that Google has that nobody else has is the ability to throw billions at launching a new effort in a hurry. Sports programming is one thing that could lure people off of traditional cable and it is not too hard to imagine Google outbidding everybody else for the NFL and a few other sports networks and then also swinging a deal with ESPN.

There is also the upstart Aereo. Assuming the courts don’t stop them, they will be in every medium and large tier market within a few years and building up a big customer base that is already spending money for alternate programming. While they are only streaming a limited line-up today, they already have the technology in place to support a huge line-up through the air.

It seems to me like it is going to be very hard for programmers to keep ignoring some of these companies. Now that traditional cable is losing customers every quarter it is going to become easier and easier for programmers to do the math and to see that they could get revenues from both the traditional cable operators and the new upstarts. There is no love lost between the programmers and the cable companies and the programmers will make new deals when the math looks right.

If I had to pick a winner from that pile of candidates it would be either Google or Apple. Google is capable of buying the sports market and luring away the many sports fans. Apple could begin offering alternate programming in a hurry through its huge embedded hardware base. And perhaps, the real answer is – all of the above. Once a few programmers decide to break the traditional monopoly they are likely to make a deal with anybody who will give them money for their content. If that happens, the traditional cable companies are toast in terms of keeping any cable monopoly. But they will always be relevant as the largest ISPs in the country.

Exit mobile version