Some Progress on Music Front, Unless You are Apple

Warner Music has decided to offer its complete catalog, free of digital rights management, through Amazon's new MP3 store. EMI, Universal, and Warner now offer their catalogs in DRM-free digital formats, leaving Sony BMG the lone major music giant still clinging to the DRM approach. Amazon now claims to offer for than 2.9 million songs in MP3 format from over 33,000 unique labels.

Now, with the move to MP3, the labels that have chosen to open their music have a way to encourage multiple download services to flourish, keeping labels safe from being dominated by any single digital distributor, namely iTunes.

HDTV Slingbox: More Stress on Upstream Bandwidth

Sling Media has announced a new version of its Slingbox Pro set-top box that has its own HD TV tuner and can send out a 1080i HD picture over the network. The Slingbox Pro-HD will be initially aimed at the U.S. market.

So forget about what P2P is doing to the backbone and access networks. Now users will be streaming HDTV from their homes, stressing the entire network at its biggest chokepoint: the upstream. Ouch!

Opera Upgrade

Opera Software has released Opera 9.5 software developer kit for Devices. The release will include a new beta visual effects layer that will give users an emotionally heightened Web experience with fluid transitions, panning, zooming and interactivity.

Opera 9.5 SDK will also include an improved evaluation kit that allow device manufacturers to quickly experience the potential of a product aimed to deliver the latest end-user experiences for Internet browsing, Web applications and Web-based user interfaces.

Vertical Search Salvation?

It appears lots of online publishers think vertical search is one way to survive the Google assault and prop up their walled gardens. It's too early to tell. It won't hurt. Not so clear to me that it helps much.

The ARPU Gap is the Issue

One might quibble with the precise Yankee Group numbers indicated here for voice and data average revenue per user. What remains incontestable is that there is a revenue gap between voice and data services, on either the wired or wireless business segments. So as broadband starts to become the foundation service upon which other applications and revenue streams are built, there is immense work to be done. I suppose everybody knows this, by now.

iTunes Dominates Downloads

Much as Google dominates search and search revenue, Apple's iTunes dominates legal music downloading. Aside from ringtones, it isn't so clear to me how well mobile service providers will do with their own music-selling efforts. Every little bit helps, I suppose. But music doesn not look anything like a "killer app" for mobile service providers.

Carphone Warehouse in Play?

Shares of Carphone Warehouse Group, Europe's largest mobile handset retailer, rose the most in more than five years in London trading on speculation the company may receive a takeover offer, says the Bloomberg news service.

"Rumors about bid interest from Vodafone and Best Buy have been doing the rounds for some time," says Jimmy Yates, a London-based trader at CMC Markets.

What is interesting is the strategy context driving some of the rumored suitors. Best Buy has a small stake in Carphone Warehouse, which operates 2,400 stores across Europe. Best Buy also is collaborating with the U.K. chain to boost sales of mobile products in the U.S. Best Buy stores.

So you might argue that Carphone is simply a way for Best Buy to expand its footprint in its current business.

But keep in mind that Carphone also has 2.5 million Digital Subscriber Line customers. It also has a backbone network. Consider that Best Buy's Geek Squad is in the technology services business.

And recall that Best Buy owns Speakeasy, a provider of business-class broadband access and voice services in the U.S. market. Sure, Best Buy can grow its retail footprint. But by acquiring Carphone Warehouse, Best Buy makes an even bigger bet to become a more-significant provider of broadband access, business voice and mobile services.

For Best Buy, its core business is more than acting as a retail distribution channel. It is a service provider. Owning Carphone Warehouse would only deepen that commitment.

Now consider the possibility that Vodafone might acquire Carphone Warehouse. The idea there is not so much that Vodafone wants to become a mass market electronics retailer. Vodafone, long a dominant wireless service provider, now must also become a multiple-services provider, and broadband-based services provided over wireline networks are part of the vision.

Carphone Warehouse would give Vodafone much more heft, in that area. It might not strike you as significant that wireless and wireline services are converging. It might be a bit more surprising that retailers are moving from simple channel partners into the service provider business.

Google Can Index Test in Images and Video

A patent application lodged by Google in July 2007 but recently made public seeks to patent a method where by robots (computers) can read and understand text in images and video, notes Duncan Riley at TechCrunch. That would be a big step forward in indexing visual media, since there would be no need to manually attach tags to such visual media.

Basically, the patent covers a method whereby any visible text in an image--a street sign, for example--can be automatically indexed. Obviously, as with any of the developing Web-based technologies, there are privacy issues. As someone who has to work with lots of images, and spends lots of time wading through images that a search suggests are appropriate, and aren't, this is really helpful.

Does Music Industry "Get It"?

as someone who arrogantly and wrongly has accused whole industries of "not getting it" at points in the past, I never like to presume I understand executive thinking better than they themselves do.

What sometimes appears as "cluelessness" often has more to do with deliberate timing. and rational calculations about how long to let one revenue model atrophy before heating up a replacement revenue model that will cannibalize the older model.

So let me be charitable. Perhaps U.S. music executives do have a plan for changing their business model and packaging. Perhaps they are executing on that plan even now.

Album sales declined 9.5 percent last year, while digital song sales grew 45 percent, according to Nielsen SoundScan. Physical product sales were down 15 percent, including sales of "singles."

So maybe the issue is simply figuring out better ways to handle digital rights that aren't unfriendly to consumers who have paid for their music, nor damaging to copyright holders. It's a tough problem, to be sure.

And the problems extend far beyond copyright issues. As someone who has made a transition to iPod as my primary music playback system, and as someone whose PC-embedded hard drives need to be replaced once a year or so, the issue of storing and managing the music collection is a serious problem.

The reason, of course, is that each iPod syncs with just one hard drive. Lose that hard drive and one has two options: completely erase the contents of the iPod, or never change the data already on the iPod.

So now I have to take two paths to make sure the music isn't lost: store the copies on an external hard drive that hopefully "never" dies; and then keep the compact disk as well, since the external hard drive will ultimately fail, forcing me to restore or simply forget about the music stored on it.

As a simple music customer, this is a problem. Unless I have physical media backup, the music always is at risk of loss, for mechanical reasons. But keeping those CDs is not ideal, either. And the process of restoring lost music is time-consuming. So music storage "in the cloud" seems promising, at least to me.

OS Shift?

Amazon's top-10 "Most Wished For in Computers & PC Hardware" list includes, in order or popularity:
1. Asus Eee PC 8G
2. Asus Eee 4G
3. Asus EEE 4G
4. HP Pavilion DV6662SE
5. Nokia N810 Portable Internet Tablet
6. Nokia N800 Internet Tablet PC
7. Apple MacBook
8. Apple MacBook Pro
9. HP Pavilion DV6626US
10. Apple MacBook MB062LL

A couple of things strike one about this list. First, the prevalence of Linux-powered machines at the top three spots. Second, the prevalence of smaller form factor, highly portable devices among the top 10. Third, the prevalence of operating systems other than Windows in the top 10. Fourth, the prevalence of devices optimized for Web and Internet use.

On Amazon's "Bestsellers in Computers & PC Hardware" list, five of the top 10 devices use operating systems other than Windows. On Amazon's "Most Gifted" list, six of the top 10 devices use operating systems other than Windows.

Here's the other angle: some people carry smart phones with them when traveling, and leave their PCs behind. Top management and sales personnel are more likely to do so than people who have greater needs for text entry and Web app access. The point is that at least for shorter trips, the smart phone goes, the PC stays.

Almost everybody who owns a smartphone takes it, not a PC, when traveling locally, because email and text communications that otherwise would require a PC still are available.

To the extent that this trend continues, and more-mobile PC style devices also get traction, as the Amazon data tends to indicate, what does it mean? Web. Remote computing and storage. Need for better interfaces.

Small devices almost have to lean more heavily on applications in the cloud rather than local processing and storage. And several of the new devices plow new ground in the form factor/power/price equation, banking on Web apps to reduce price footprint, for example.

Navigation on a small device also is more problematic, so devices get an even-bigger push for new input options. Speech and touch, for example. Finally, taking all notebook PCs and smart phones together, and looking at them as a single market, not separate markets, one can observer that there already is more diversity in operating systems than has been the case in the desktop PC market.

Open Source Trend for 2008

Without proclaiming 2008 the "year of" anything, open source seems to be getting traction in the enterprise computing environment in server farms and on desktops and mobiles. Open source is preparing for additional traction in the consumer mobile markets. Linux has grown its presence in the consumer mobile area, and Google's Android initiative will start to bear fruit sometime after 2008.

Motorola Unveils WiMAX Endpoint

Motorola has announced the latest addition to its portfolio of WiMAX customer premises equipment, the CPEi 100, a single data port, 2.5 GHz “plug-and-play” WiMAX solution designed to sit on a desktop and serve as the interface between a computer and the WiMAX network.

It is expected to be available in 2008 for WiMAX operators who have systems in the 2.5 GHz band.

Motorola’s family of wi4 WiMAX solutions support15 WiMAX contracts and more than 57 WiMAX engagements in 38 countries worldwide, including 44 active trials, the company says.

Eee, gOS Rocket, Linux, Computing in the Cloud

Things are looking up for Linux PCs (even though its share in the OS market still is small) and "computing in the cloud." Good OS, the open source startup that introduced gOS, a Linux operating system with Google and Web applications, on a $199 Wal-Mart PC last November, now says announced that gOS Rocket will be introduced January 7. Think of gOS Rocket as a low-cost Linux-powered notebook that is optimized as a Web device.

Note also that the Asustek Eee PC--also a Linux machine-- was among the top-ten notebook PCs sold by Amazon over the Christmas season, and was ranked at the top of wish lists compiled by Web site CNet. Asustek executives say demand was so strong forthis Christmas season that virtually all available units were bought just about as soon as they were put on the shelves.

“In the two weeks since its launch in the US, the Eee PC has already sold ten thousand sets,” says Sunny Han, ASUS director. Asustek fully expected to finish 2007 by meeting its sales goal of 350,000 units, and is planning for sales in 2008 of three to five million.

Rocket comes with Google Gears, the online-offline synchronization technology from Google that enables offline use of web apps.

gOS Rocket also features gBooth, a browser-based web cam application with special effects, integration with Facebook and other Web services; shortcuts to launch Google Reader, Talk, and Finance on the desktop; an online storage drive powered by Box.net; and Virtual Desktops, an intuitive feature to easily group and move applications across multiple desktop spaces.

At the center of Rocket's new desktop is a gorgeous Google search box, enabling users to perform Google searches directly from the desktop. This new feature launches Google search results in Firefox, the leading, open source web browser. Surrounding the Google search box is an attractive desktop environment comprised of new wallpaper, icons, digital clock, and other new desktop elements.

"Like most of our customers, we absolutely love the gorgeous design and simplified navigation that gOS provides," says Paul Kim, director of marketing for Everex. "With the release of Rocket, the gOS team has once again shown the industry how to make a great looking operating system intuitive and easy to use."

Rocket includes Google Gears to enable offline use of web apps. Google Reader, which allows you to read all your news and blogs in one place, is the only Google application to currently work offline with Google Gears and has been added to the gOS desktop. Launching Firefox will reveal a new custom gOS homepage that prominently features a continually updated list of web apps that work with Google Gears to allow offline access.

Separately, researchers at Informa predict that, by 2012, Linux will ship annually in 128 million mobile phones, or about 8.8 percent of all handsets sold. The report also forecasts a bright outlook for other open source mobile technologies, including Java, WebKit, and others.

According to the report, Linux in 2006 was the second most popular OS for smartphones sold worldwide. During that year it shipped in about 11.7 million handsets, the "vast majority" of which went to customers in Asia. Uptake in Europe and North America during 2007 is forecast to drive overall shipments close to 20 million, or about 17.3 percent of the smartphone market. From there, shipments are expected to nearly quadruple by 2010, reaching 27 percent of all smartphones by 2012.

Blu-ray for Macs?

Apple Inc. is expected soon to announce concrete support for Sony Corp's Blu-ray DVD format as opposed to Toshiba's HD-DVD, according to AppleInsider.

American Technology Research analyst Shaw Wu says his sources say Apple will start shipping Blu-ray-equipped Macintosh computers. At some point, every PC manufacturer shipping DVD drives will have to make similar choices.

Disney, for which Apple chief executive Steve Jobs is a Director, is a firm supporter of Blu-ray, while rival Microsoft Corp. has placed most of its eggs in the HD-DVD basket.

Still, there is "a smaller chance Apple may use a combo Blu-ray/HD-DVD drive to ensure full compatibility and not get involved in the format wars, AppleInsider notes.

U.K. Mobile Market Consolidation

The U.K. mobile market is saturated, analuysts at Ovum essentially have concluded. A bruising retention and acquisition war seems no longer to be producing adequate results, as mobile penetration has reached 118 percent.

Ovum researchers predict a shift to longer contract terms of 18 months as operators try to stabilize customer revenues, replacing the 12-month contracts that have been more typical.

Mobile operators also will shift attention to postpaid rather than prepaid additions, as two quarters of flat or negative prepaid connection growth suggest that market also is saturated.

Mobile operators also will shift focus to revenues (including value-added services) and average revenue per user (ARPU) rather than customer growth, Ovum believes.

And though the U.K. market now is dominated by top-tier operators O2 and Vodafone, more mobile virtual network operator contestants are expected.

Despite being saturated and highly competitive, the U.K. mobile market has avoided the fate of the German, Danish, Dutch and Belgium markets as ARPU and revenue still are relatively high, Ovum says. That's quite a trick!