Facebook Is Expected to Unveil Media-Sharing Service - NYTimes.com

Facebook is expected to unveil a media platform that will allow people to easily share their favorite music, television shows and movies, effectively making the basic profile page a primary entertainment hub. In other words, Facebook will become a content distributor in a more active way, if not a direct way, at the moment.

Facebook, which has more than 750 million users, has not revealed its plans, but the company is widely expected to announce the service at its F8 developers’ conference.

Facebook to Unveil Media-Sharing Service

Netflix’s DVD business: Does Qwikster have a future?

Most, perhaps all of the commentary about the Netflix decision to create separate streaming and DVD by mail businesses seems to be negative. Netflix says the separation will provide an easier user experience, but a fair-minded person might question that position.

Creating two separate billing entities, with different and distinct commenting and rating systems, with the need to update two different sites when personal or billing data changes, is hard to envision, as an enhancement.

Some users will gladly trade off selection for immediacy. As Netflix moves toward offering more TV content, that could change. Netflix users might find they have a wider selection of TV content to choose from, compared to Qwikster users. For TV-centric viewers, that could be the tipping point. For movie-centric users, the tipping point might be quite some time away.

Perhaps most think the separation, which could result in better management of each entity, might speed the demise of the DVD operation. The transition is likely to be more gradual than many expect. The reason is the value proposition. Right now, the streaming operation simply does not offer the content richness that the DVD by mail option can offer. And in a content business, breadth of content matters.

Does Qwikster have a future?

Google Wallet Launch Largely Symbolic?

Google might be launching its Google Wallet service soon, a move some would say is more of a "private beta" than a "public beta," given the small number of people equipped with devices featuring near field communications, and the relatively small number of retail locations where those phones can be used to shop.

Changing consumer behavior could prove challenging in the near term, many would say. Using plastic cards is comfortable and familiar to most people and many users will seen no reason to alter their behavior, unless there are deals or other incentives to get them to adopt mobile payments.

That last point is why some of us think "daily deals," social shopping, promotion and marketing apps must be part of the emerging mobile payments and mobile wallet business. If the payments system isn't broken, there is no driver for a "fix." What could alter the value-hassle or value-price equation is significant new value.

Google Wallet Launch Largely Symbolic

Netflix Splits in 2: Why?

Netflix says it is separating its DVD by mail and streaming operations into two separate business units, with Netflix retaining the current brand name, while a different "Qwikster" brand being created for the DVD by mail business. Netflix splits in 2

"Streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently," says Netflix CEO Reed Hastings.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies.

Qwikster will add a video games upgrade option, similar to the current upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games.

Hastings says the separate, non-integrated websites will offer greater simplicity for users, though that might be a point of contention.

Each website will be focused on just one thing (DVDs or streaming), and will be even easier to use, Hastings argues. But a negative of the separation is that the Qwikster.com and Netflix.com websites will not be integrated.

Since about 60 percent of Netflix subscribers appear to pay for both streaming and DVD access, the implication is that 60 percent of users now will get two separate bills, have to use two different sites, and see partial sets of recommendations and reviews on each site. If you rate or review a movie on Qwikster, it doesn’t show up on Netflix.

"If you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places," Hastings says.

What is clear is that it will be better for Netflix. The price move was not a “decision,” so much as a “reality” presented to Netflix from the content owners in Hollywood, argues Bill Gurley, a venture capitalist at Benchmark Capital. The first sale doctrine  likely is involved. Basically, under U.S. law a product (a DVD) can be purchased and then lent or sold without further payment of royalties to content owners. 


The key point is that "first sale" does not apply to streaming services. If you want to know why content owners prefer streaming to DVD rentals, that's the reason: they make more money. 


Netflix must negotiate for each and every streamed title, and the price of the right to stream that digital title is up to the whim of the content owner. If an owner says "no," no distributor can get access. Copyright rules under "first sale"

If you assume Hollywood stuidos wanted a price per month per user to license streamed content, there is an economic problem for Netflix. Netflix obviously would prefer to pay only for content that users actually watch. 

By separating the two businesses, Netflix actually pays less (if the scenario is correct) because the number of potential subscribers is less. Though susceptible to the charge it has made a bit of a kludge out of its business, Netflix might have been forced to do so for financial reasons beyond its control. 

Android and iOS apps combined hit 1 million

Android and iOS combined for a total of one million applications, according to app tracker Apps Fire.

This number shows all applications that have been developed on both platforms, but doesn’t mean that today you’ll find exactly one million apps if you combine the two largest mobile app stores, since some apps run on both platforms.

It isn't always so easy to figure out what it all means, though.

Some apps are helpful for branding or marketing, while others actually represent new products and categories. A million Android and iOS apps

Large brands use apps to create or support major ad campaigns, for example. In other cases, such as mobile gaming, apps arguably represent a new category of "games" that increasingly compete with console gaming.

In the former case, apps are helpful in the same way that other channels are helpful; in the latter case the foundation for whole new revenue streams or business segments.

In a third set of cases, mobile apps are more about user engagement, making it easy for users to interact with content sites they also use when in tablet or PC mode. In yet other cases, mobile apps create a capability that might have indirect or direct monetization potential, but are important for the displacement of other apps that represent a revenue stream.

Facebook Mobile Messenger, for example, could disrupt mobile service provider text messaging revenue. Facebook Mobile Messenger

Google Wallet to Launch Sept. 19, 201?

Will Google Wallet launch this month, perhaps even on Sept. 19, 2011?

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Google Wallet

Much Google+ Activity is Hidden

It's hard to remember that Google+ is still in "private beta." It hasn't even gotten to "public beta" yet. Nor is it really possible to determine how much engagement Google+ is getting.

Private posts will not show up in any third party statistic reports and so it instantly skews the results. According to ManageFlitter’s statistics, Google public posts have dropped by 41 percent in the past two months. While it could indicate a decrease in Google usage, it could just as easily indicate a choice to have more control over who sees your posts.

Also, my subjective use of Google+ does not revolve around public posts, or even posts. I use it every day, typically multiple times a day, for content consumption. None of that will tend to show up in posting activity. That might not be what most people do, or what Google intended. But my activity has grown over time. Only Google knows what is happening across the breath of its user base.

Google+ activity is hiddenGoogle:

Consumers Are Not Tired of Deals

A survey of nearly 1,000 U.S. online users by Utpal Dholakia, professor of management at Rice University finds that they are not yet tired of daily deals. Quite the opposite: Shoppers who tend to purchase the most daily deals continue to remain enthusiastic about them.

Only 13 percent of experienced and heavy daily-deal users agreed with the statement: "I buy daily deals less often than I used to," according to the study, published in conjunction with Cornell University. Only eight percent agreed with the statement: "I have lost interest in daily deals over time."

BAI/Kelsey, a local media and ad research firm, also has raised its forecast for daily deal revenue. U.S. consumer spending on deals, including daily deals, instant deals and flash sales, will grow to $4.2 billion in 2015 from $873 million in 2010. While the bump in its 2015 projection is only up slightly, the projection for 2011 revenue was revised to $2 billion, up 66% since the March estimate.

Think Consumers Are Tired of Deals?

Social Media Conversion Rates Low, But Worth It?

Marketers continue to believe that Twitter and Facebook are worth the effort. A new report from RichRelevance states that online retail shoppers who click through from Facebook only convert 1.2 percent of the time. If you think that’s bad, Twitter’s number is only 0.5 percent.

But Twitter shoppers actually spend more money when they do order.


Online conversion rates—the ratio of purchase sessions to shopping sessions—has remained relatively unchanged between 2010 and 2011, based on a year-on-year comparison of mass merchants. This rate was 2.1 percent in August 2010 and remained 2.13 percent in August 2011.


Overall online average order value has dropped from $128.27 to $116.58 in this period. The decline may be attributed to several factors, including increased cost consciousness and increased shipping efficiencies that encourage smaller purchases.


Shoppers behave very differently depending on how they arrive at the retail site. For example, while fewer shoppers come from Twitter than anywhere else, they spend more per order once they are on the site.

Twitter Conversions, Spending

A Look at Mobile Commerce

If you take a look at all the things that are happening in the mobile space, it should be clear that a developing "mobile commerce" ecosystem is developing that is bigger than advertising, promotion, payments, loyalty, credentials, gaming, shopping and mobile applications.

What Apple Knows, and Why "Choice" is an Issue

"Too much choice" can be as bad as "not enough choice." Ironically, having some choices generally is viewed as a positive by most consumers. But overwhelming choice is paralyzing. Those of you familiar with the Class 5 switch, and the modern business phone system, know something of the matter. Both types of switches offer hundreds to thousands of discrete features. But most end users, business or consumer, use only a handful of features.

You might wonder why suppliers both to add all those generally unused features. The reason is that a few key customers say they "need them." See Choice can be a problem or choice can paralyze

Apple always has taken one approach to features, while Microsoft and the "open source" communities generally have taken a different approach. For decades, developers have argued for and against unlimited choice or "openness." At the moment, it appears Apple's choices might be winning the argument.

When Google Android developers complain of "fragmentation," that's a downside, or problem, with "open" approaches. Apple always has taken the other view. It limits openness, limits choices, in order to enhance user experience. Where an open source or Microsoft approach is "you can do that," Apple essentially asks "why do you need to do that?" 

With so many projects, if the customer is willing to go without a small subset of the functionality they think they need, it can save a massive amount of effort, cost, and complexity and result in a much more elegant, hassle-free solution that makes them much happier in the long run, some would now argue.

Apple’s customers are often the sort of people willing to make these tradeoffs, because that’s how most of Apple’s products are designed: if you can compromise on some of the features and capabilities you think you need, you can get a product that works better and makes you happier with far less aggravation. And for most people, the benefits will outweigh the missing features.

Granted, there are trade-offs, as there always are in all engineering projects. “We know what’s best for you," Apple essentially says.

People who aren’t willing or able to compromise on their needs regularly are much more likely to be Windows customers. The Windows message is much more palatable to corporate buyers, committees, middlemen, and people who don’t like to be told what’s best for them.

But the world seems to be moving a bit more in Apple's direction. 

Apple might have it right

No Matter What Happens with AT&T Bid, Consolidation Continues

The issue at hand for antitrust regulators at the Department of Justice, when evaluating the consumer impact of an AT&T acquisition of T-Mobile USA, is whether the deal would exceed a rule of thumb about market concentration. Some would argue that, no matter what happens with this particular deal, that concentration in the mobile business will continue. See DoJ guideline or more on the algorithm.

“The gap between the haves — AT&T and Verizon — and the have-nots, which is essentially everybody else, is only getting wider,” said Kevin Smithen, an analyst for Macquarie Securities.

Craig Moffett, an analyst at Sanford C. Bernstein, agreed, saying: “This market is going to consolidate one way or another.”

Will Consumers Benefit if T-Mobile Stands Alone?

Netflix Lowers Subscriber Estimates

In the consumer markets, price increases virtually always have the effect of reducing demand, as economists predict will happen. When Netflix decided to "entice" customers to shift from DVD rental to streaming, a significant price increase for some consumers, particularly those that wanted both unlimited DVD rentals and unlimited streaming, was part of the strategy. Consumers who only wanted unlimited streaming or DVD rentals, but not both, actually saw bills drop. Plan changes to cost one million customers

Netflix now says it expects to lose about one million customers because of the pricing plan changes. The company, which split its streaming and DVD-by-mail services two months ago, now expects a total of 24 million subscribers in the third quarter, down from the 25 million it forecast in July 2011.

Netflix expects 21.8 million people to subscribe to its streaming service, either with or without also getting DVDs in the mail. That's down from an expected 22 million it forecast earlier. And Netflix expects 14.2 million people to subscribe to mail-order DVD rental service, with or without streaming. That's down from its July forecast of 15 million.

Some will fault Netflix for making a risky move. Others might say the move is a bold signal that Netflix is about to get into a new business, not simply based on streaming instead of DVDs, but a change of business from "movie rentals" to "television."

That is the big change, not the pricing shift. Netflix is betting it can primarily become a provider of streamed TV content, instead of a provider of movie content. Some might say the difference is that where Netflix used to compete with Blockbuster Video, in the future it will compete with Hulu. At a secondary level, where Netflix used to compete with premium cable TV networks such as HBO, in the future it might start to compete with cable TV.

Netflix chief content officer Ted Sarandos says the company ran into trouble with its forecasts for streaming video and DVD rental subscriptions because it’s still adjusting to the decision in July to turn them into separate products. “Being able to precisely forecast and predict the behavior of that many people on a fairly radical change is something we’ll get better at all the time.” Forecast miss

The key point is that Netflix is about to embark on a business model change much more substantial than simply "how" movie content gets delivered to its customers. Netflix now will try to become a substantial provider of TV content. Some would argue that is the real challenge.

Although “the DVD business has a long life in middle America,” Sarandos says “it’s just not part of our future.” That's a clear signal.

Metaswitch "Perimeta" is a Classic Business Case Study

The entry by Metaswitch Networks into the session border control business has been described by some as a move “into a crowded market.” "Crowded" market

Metaswitch would describe it as a move into a rapidly-growing market where customers are asking for choices. According to Infonetics Research, service providers are spending $350 million a year buying SBCs. By 2015 (just four years) they will be buying $1 billion a year worth of SBCs.



Acme Packet furthermore reports gross margins of about 82 percent. Huge gross margins

“Candidly, service providers are asking for alternatives,” says Patrick Fitzgerald, Metaswitch Networks VP.



Acme Packet has for years pointed to its dominant market share. Infonetics estimated that Acme Packet had 52 percent of the SBC market in 2009,  almost four times that of any competitor. Dominant market share Dell’Oro Group in 2010 estimated hat Acme Packet had 55 percent of the SBC market.



Metaswitch says Acme Packet has 65 percent to 70 percent share of the service provider and enterprise markets for SBCs.



Some 38 Metaswitch customers already have placed orders for “Perimeta” devices, says Fitzgerald. Perimeta



In many ways, the move into the SBC market illustrates some enduring issues in business strategy. In recent days, as intellectual property lawsuits have escalated in the mobile handset business, we have gotten a reminder of the potential importance of patents and intellectual property ownership. Patent lawsuits proliferate


In fact, some believe the older pattern, where many device manufacturers simply licensed operating systems, might be changing. Some believe it is possible that the dominant pattern will be “essentially proprietary” strategies where each major platform consists of bundled OS and device, on the Apple model.



Keep in mind that Metaswitch Networks has, for many years, been a supplier of the underlying original equipment manufacturer software at the heart of an SBC. In other words, as Microsoft powers many PCs, and Android powers many smart phones, Metaswitch already powers many SBCs.



That isn’t to say the smart phone or PC OS model will develop in the SBC market, but only to suggest that intellectual property ownership confers strategic advantages that are not always immediately obvious in the earlier stages of some markets, but can emerge as strategic advantages later.



Some might note that the move into SBCs illustrates another enduring business issue, namely “channel conflict.” There are many instances in the telecommunications business where a supplier has to make difficult choices. Where a supplier operates in both the wholesale and retail parts of a business, there always is some potential for conflict between a firm’s wholesale partners and the supplier’s own retail efforts. Channel conflict


The analogy is the growing suggestion that device manufacturers ranging from HTC to Samsung might have to develop or acquire their own operating systems as other significant portions of the market evolve.



Android now has a “special” relationship with Motorola Mobility. Microsoft has a favored relationship with Nokia. Apple is Apple. Research in Motion always has used its own proprietary OS.



Some would note that Metaswitch now faces channel conflict in a way it has not, in the past. But that’s part of the enduring business strategy discussion. What should any firm do when it is an OEM supplier, and end users start asking it to develop its own retail products based on the underlying intellectual property?



It is easy to say a firm should avoid channel conflict. But there often are cases where end users (the market) asks or demands that an OEM supplier also supply retail products. There might be other cases where an OEM simply sees strategic value of such scope that some amount of channel conflict is the price to be paid for some important strategic step.



In fact, Microsoft and Google both face some degree of risk in developing favored relationships with a particular contestant in the smart phone market, even as the advantages also are clear. The point is that Metaswitch faces classic business issues of the case study sort.



The analogy is that Metaswitch supplies an operating system the way that Google or Microsoft do. Both those firms have important business models built on supplying “open” software to many partners. But both those firms also have significant relationships with a single retail brand in the end user market. Metaswitch now will have that same sort of relationship in its OEM business and as a supplier of the “Perimeta” line of SBCs.



No firm would casually risk such channel conflict were the potential rewards not large enough to offset the risk. In this case, Metaswitch is making strategic moves on a number of fronts to reposition its business. Virtually all of those moves carry some degree of risk.



But it is hard to ignore 82 percent profit margins in a retail business where the firm already supplies the intellectual property, nor a business where Metaswitch routinely has sold and installed SBCs on behalf of its retail customers for quite some time, giving it a view of the real world deployment issues and perspectives of its retail customers, in the SBC space.



It is hard to ignore a product whose value is such that sales volumes could triple in four years. And it is hard to ignore getting into a business when a firm’s customers say they want the firm to do so. Channel conflict is one sort of issue. Ignoring the clear requests of a firm’s customers is another sort of danger.



It’s a classic business case study.

New Verizon Policy on Heavy Users, Congested Towers

Verizon Wireless has instituted a new network management policy that some will call “throttling,” while others might say simply represents a more-nuanced way of managing network congestion.

The new plan affects what Verizon says is about five percent of Verizon’s user base, specifically those users of 3G services that use 2 Gbytes of more of data each month, from congested cell sites. The rules do not apply to users of the new 4G network, though. The easiest solution is simply to use 4G. It’s a better experience anyway. New Verizon usage scheme

One suspects that users are capable of making rational choices about their services, and also will rapidly adopt the “default to Wi-Fi strategy.” Most people already seem capable of quickly grasping the advantages.

Some 64 percent of smart phone consumers surveyed by Devicescape use Wi-Fi hotspots at least once a day. Most smart phone owners who use Wi-Fi also use it on the road.  The study showed 90 percent of those users report accessing Wi-Fi both at home and on the road. Smart phone users use Wi-Fi often

Of those who use Wi-Fi outside their home or office, most (24 percent) connect at a cafe or coffee shop, 17.3 percent at a hotel, and 15 percent at a school campus. See Facing data caps, consumers keep turning to Wi-Fi.

Historically, mobiles haven’t been used excessively for data connections. Average mobile data consumption increased from about 90 MBytes per month during the first quarter of 2009 to 298 MBytes per month during the first quarter of 2010, according to Nielsen.

This represents a year-over-year increase of approximately 230 percent, though.  While this increase is substantial, in the first quarter of 2009 more than a third of smart phone subscribers used less than 1 MByte of data per month and usage has dropped to a quarter in the first quarter of 2010.

About 20 million current smart phone users are hardly using any data.

But there is a reason frameworks for managing bandwidth use are important. As mobile data consumption continues to grow, the usage pattern is starting to resemble fixed-line patterns, and that is a problem for all mobile service providers, as there is not now, and never will be any way for mobile providers to match the bandwidth, or cost of bandwidth, that a fixed network provider can offer.

There is a telling statistic in Cisco's Visual Networking Index, namely that as mobile broadband users have rapidly grown, their usage pattern rapidly has assumed the familiar pattern seen in the fixed-line part of the business.

Consider heavy usage patterns. The top one percent of mobile data subscribers generate over 20 percent of mobile data traffic, down from 30 percent just a year ago. That 29-point swing in just 12 months suggests that as more "typical" users adopt mobile broadband, they bring behaviors much different from those of early mobile broadband adopters, namely less-intensive consumption.

Cisco also reports that mobile data traffic over the last year also now matches the 1:20 ratio that has been true of fixed networks for several years (one percent of users generate or consume 20 percent of total transferred bytes). Visual networking index

Similarly, the top 10 percent of mobile data subscribers now generate approximately 60 percent of mobile data traffic, down from 70 percent at the beginning of the year.

All of those instances of "reversion toward the mean" are driven by the broader adoption by "typical" users of smart phone service. That noted, average smart phone usage doubled in 2010. The average amount of traffic per smart phone in 2010 was 79 Mbytes per month, up from 35 Mbytes per month in 2009.