Comcast Labs

comcast-truck-cmcsa-cmcsk_largeIt’s easy to think of all of the big ISPs in the industry as roughly equivalent in terms of services, technology, and customer experience. But Comcast has invested in Comcast Labs, a research and development branch of the company that is starting to distinguish Comcast from the rest of the industry.

Comcast Labs has branches in Silicon Valley, Seattle, Philadelphia, Denver and Washington D.C. The Lab employs 40 PhDs, 10 Distinguished Fellows and hundreds of engineers and active inventors, all very focused on telecommunications and product research.

The lab is different than the more familiar Bell Labs, which has always done a lot of pure research and not just telecom research. Comcast Labs is very focused on developing specific products for the company as well as looking for ways to improve the Comcast networks.

The impact from Comcast labs is pretty easy to see. They developed the X1 settop box platform which is regarded as the most innovative box in the industry. The platform includes an easy to use navigation system and cloud-based DVR and can be used to control up to five TVs in a home. They are constantly developing new features and during the recent Olympics they rolled out a remote with voice control (you talk to the remote).

They have also developed a fully integrated set of home automation features marketed at Xfinity Home. Comcast Labs developed a custom hub, rather than relying on a hub made by somebody else. The company so far has integrated a number of home automation features into the platform which includes security, thermostat, water sensors, cameras, door locks, etc., all controlled from a smartphone or from a TV.

Comcast Labs doesn’t only develop consumer devices and you can read about some of their other research on their blog. The company has adopted the concept of moving network control to open source software and is heavily invested in OpenStack and GitHub development. They are also researching a future migration to IP video, which would free up more of the network for delivery of data.

http://labs.comcast.com/

The company and the Labs are also researching areas that will have a long-term benefit to the company such as finding network solutions that use less energy and moving towards a software defined network to be more flexible and to more quickly implement solutions nationwide.

A high-level Comcast executive recently bragged that the company through Comcast Labs could solve problems and deliver solutions within weeks that would take other companies in the industry many months or years.

I find it interesting that the company doesn’t talk a lot about Comcast Labs. There are very few articles on the organization outside of the Comcast websites and I assume that they dissuade those at the Labs giving interviews to outsiders.

But it’s clear that Comcast Labs provides the company with a lot of solutions that would not come from off-the-shelf electronics and solutions. This puts the company on par with Google, Facebook and AT&T as companies that have largely withdrawn from the normal industry vendors and taken their own path by developing their own equipment and solutions.

Of course, the company doesn’t operate in a vacuum. For instance, the FCC is currently strongly considering a requirement that the industry develop a standard solution to allow customers to buy off-the-shelf settop boxes. The custom X1 box that Comcast Labs has developed goes in the exact opposite direction of what the FCC is looking at and the company would probably have a hard time complying with such an order.

But overall Comcast Labs provides the company with a resource that other telcos can’t match. The company is constantly rolling out new features and products that companies without a research arm will not be able to match. I’m sure the reason for this research is to create more loyal customers by providing features and services that they can’t get elsewhere. I guess time will tell how good this strategy is, but it’s hard to argue with success, and as much as people like to complain about the company they are growing faster than anybody else in the industry in terms of new customers.

Give the Customers What They Want

I have a friend Danny who is a CPA and he is doing something that I think is brilliant. He has taken over the accounting practice from his 72 year-old father and he also has a number of other older accountants who help him during tax season. (And I don’t use the term “older” accountant nonchalantly, being one of them myself).

For several years he has tried to force the older accountants into learning new tax and accounting software and they have resisted vehemently. Their arguments are that they had multiple years of tax returns from their clients in older legacy programs and they also were just not interested in learning yet another new program. In fact, his father told him that if he was forced to learn a new system he would just stop helping him. And the clients all love his father.

And so my friend Danny did a brilliant thing. He went out and set up his own private cloud network. He put all of the new software into the cloud that he and most of the staff use, but he also sent the various older legacy software that the older accountants wanted to use into the cloud. And he chose to use a cloud so that anybody could work with any of the software packages from anywhere.

He would have preferred to do this with an existing cloud computing service, but none of them were interested in helping him set up the legacy software, some so old that they are DOS systems. There are a number of cloud services that support new accounting software. In fact, one of the major selling points of most of the cloud service providers is that a customer will never again have to worry about having software that is out of date and the cloud providers tout how they will introduce every update from the software provider when it becomes available.

Accountant upstairs ↑

Accountant upstairs ↑ (Photo credit: jah~)ems. 

And the cloud providers are completely missing the point. Real life people don’t want software that is always up to date. My worst nightmare is to log onto a cloud server with a project with a deadline and find out that the program I use every day has changed and that I will have to spend hours figuring out the differences. People don’t mind upgrading software over time and we have all migrated through the many versions of Microsoft Office. But people are creatures of habit and our relationship with software has become almost intimate. Danny’s father is a perfect example. He won’t use anything newer than Office 2007. And this is his right – he paid for it and it still works. Upgrading software you use every day can be unnerving at best and traumatic at worst and is always a bit disruptive.

And so the cloud providers have some big lessons to learn if they really want to be successful with the average customer. The cloud providers have chosen to stress the benefits of always having the most recent version of software. And from an operational perspective this makes sense for them. They only have to maintain one version of the software which makes it easier on them in a number of ways. But this doesn’t make sense from the perspective of what their customers want.

In the telecom business we have a long history of offering a handful of standard products to businesses. And from the perspective of the telcos this makes sense for the same reasons that the cloud providers want to push one version of software – it’s easier on the telco in terms of staff training, operations and billing. Selling standard products is what Ma Bell did for a century.

I would argue that selling only ‘standard’ products is not in the long-term best interest of a telco. If your company only sells standard products then you have turned those products into a commodity. In a competitive world, customers have no reason to be loyal to you if they can get that same commodity from somebody else for less. But if you are willing to listen to your customers and give them a custom product that they want, then you have created a loyal customer who is likely to stay with you for a long time. I don’t think most telecom providers add in the cost of churn when looking at profit margins. It is worth spending more up front to get a customer who will stay with you than to sell standard products to customers who will always be price shopping.