Terabyte PC Coming

It's just a data point, but note that Asus, the Taiwanese computer maker, is planning on bringing to market a notebook PC with two 500 GByte hard drives from Hitachi Global Storage Technologies.

That's a terabyte. Those of you familiar with enterprise storage, think about it: a terabyte per user. Those of you who have to do your own backups, think about it: losing a significant portion of 1 Tbyte of data if your hard disks crash.

The upside is that such a user can 1,000 hours of video, or more than 350 feature length movies, or 250,000 four-minute songs. The downside? If those files are not backed up someplace, huge collections of audio or video can vanish.

The point is that storage continues to emerge as a function that is becoming harder to manage. It is harder to backup, harder to restore, harder to secure, index and retrieve. Part of the reason is that simply is so much more information to store. This graphic from searchstorage.com simply makes the point that storage and backup requirements grow steadily.

Which makes the argument for storage in the cloud ever more compelling. If one's authorized copies of music, video or other material are stored in the cloud, local hard drives can crash with little threat of losing the content. Not to mention that the files can be used on any number of endpoints (I didn't say downloaded to those endpoints).

4G: It Isn't Really a Technology Issue

As service providers start placing their bets on WiMAX or High Speed Downlink Packet Access (HSDPA) technologies, it is easy to fall into the trap of "technological determinism," the notion that the technology determines adoption or commercial success. Nothing could be further from the truth.

Commercial decisions, not the technology, will be the decisive factor. Business decisions almost always are. One can make a technology either way for WiMAX or HSDPA. But that won't be key. Operational issues, backwards compatibility, installed base, manufacturing volumes and even voice compatibility will turn out to be hugely important.

Some might argue that building a new broadband mobile network with a view to voice performance is nuts. The countervailing argument is that no matter what other "data things" users frequently do, talking will be one of them. And poor voice performance is objectionable in a way that OS instability and Web page unavailability are not. People routinely tolerate lower quality of service for their Web browsers, Internet connections and PC operating systems than they will their voice or video services.

Don't believe that? Watch what happens when movie download services become more prevalent. Every degradation of isochronous service disturbs users more than any non-real-time service. Users are unforgiving of voice or video service hiccups that would not faze them when the hiccups affect a non-real-time data service.

In fact, that's the point: user experience is not degraded by packet loss or some amount of jitter or latency when the application is not real time. User experience is visually or aurally affected in a highly visible way when the application requires predictable, sequenced delivery of the packets. Voice and video, to be specific.

Netflix Download -to-TV Service Coming

Netflix is working with LG Electronics to market a set-top-box=based movie download service for TVs, Business Week reports. The move is not unexpected, but is significant in terms of its timing. Netflix has over the last few years modified its statements about the DVD rental business, moving from a "consumers don't want to mess with downloading" to "we'll do it when it's the right time" stance.

The move now means it is "time." The transition from physical distribution of movie content to electronic download to TVs is underway, Netflix is signaling. The service, which extends the Netflix download service beyond "movies to your PC," is expected to begin service in the fall of 2008.

And though Apple TV has not gotten much traction, Business Week expects Apple to unveil its own download-to-TV service as well.

Netflix has been offerings downloads to PCs for about a year. But just about everybody who thinks about the matter agrees that downloads directly to TV screens is what is needed to really jumpstart the business.

Amazon.com, TiVo and Blockbuster also have decided they no longer can wait to enter the nascent business.

Again, what is important about the Netflix move is the timing, not the move itself. Netflix has concluded that even if revenues from online-to-TV downloading will not eclipse DVD rentals for some time, one tipping point has been reached. Netflix has to get into position now if it wants to maintain leadership in the movie rental business of the future.

By some reckoning, that business already is entering its 3.0 phase, having started with retail store rentals, followed by mail delivery and now starting the download phase.

And it is worth noting that if cable TV "pay per view" or "on demand" efforts had been quite a bit more than a niche, the video rental business and Netflix would not have developed. Cablers will note that studio licensing rules and release windows account for the rise of the independent video and DVD rental business.

That is true. What also is true is that studio profit margins and gross revenues control the availability of product. Once studios decide they can make as much, or more money, by switching to online distribution, they will do it.

In that regard, a recent slowdown in growth rates for DVD sales in retail outlets is another important market indicator. Consumer fascination with DVD purchases might be waning, overall. Legally or illegally, online-delivered content might be a contributing factor.

So legal alternatives such as Netflix will provide should have a shot at success. What remains to be seen is how widespread adoption will be. Consumers are quite fickle about special-purpose electronics devices. If the value is high enough Netflix will not find there is a problem. "No late fees" and "no drive to the store" have proven to have high consumer value.

But Netflix also seems to be pursuing the integration of the decoder circuits into other Internet-connected devices. The decoding software might reside into a TV, a game player or media reader, for example. That would alleviate the "one more box" barrier, as some consumers just don't want another device, with cords and cables, around their entertainment center.

On the other hand, Netflix then encounters the "only available on one model or one brand" problem. Consumers generally don't want to bother with "this flavor of access on this device" issue.

And though on-demand video should in principle provide even more convenience, the problem has been the content release windows, which essentially dictate that by the time an on-demand movie is available, consumers have had lots of other opportunities to view the content.

For the moment, at least, Netflix should continue to have an advantage over cable, satellite or telco on-demand content. The studios aren't going to disrupt the profitable DVD window just because online delivery now is possible.

Providers of broadband access services face a more complex business challenge. Demand for download speeds should get a boost if the download services take off. The issue is how much actual profit might exist. The problem with video is that it offers scant returns on a cents-per-bit basis compared to voice.

Put another way, video necessarily "commoditizes bandwidth." For those of you who are Bellheads, think of it this way. A two-hour movie delivered in widescreen format essentially requires bandqwidth equivalent to a DS-3 with a holding time of two hours(45 Mbps). True, we compress and pre-process now so only 4 Mbps to 6 Mbps is needed.

But the point is that the value of a 4 Mbps to 6 Mbps circuit used continuously for two hours or so is "worth" what a consumer deems a fair price for watching a two-hour video event. Call it $3 to $7, depending on what the content is and when it can be viewed.

All bits are not valued equally. On a cents-per-bit basis, text messages represent the highest return, with voice someplace in the middle and video at the very low end of the revenue continuum.

It might not matter so much whether "streaming" or "downloading" is the delivery technique, though analysts at the Yankee Group so far think streaming will get more volume. Most consumers won't care. But downloading offers more opportunity for managing bandwidth.

$588 Billion in Information Overload Costs?

Interruptions from phone calls, e-mails and instant messages eat up 28 percent of a knowledge worker's work day, resulting in 28 billion hours of lost productivity a year, say analysts at Basex. That might be considered a $588 billion cost, assuming a salary of $21 per hour for knowledge workers. Basex argues that information overload has become a significant problem for companies of all sizes, with some large organizations losing billions of dollars each year in lower productivity and hampered innovation.

That's the sort of argument providers of unified communications and presence solutions will point to as arguments for such solutions. Others, such as Stowe Boyd, disagree with that thesis. Stowe argues people are not drowning in information, but ignoring most of the information, and reacting only when the information flow suggests something actually is important.

It is true that there is a lot more "information" streaming past any person these days. But people are smart. They don't actually pay close attention to most of it. In fact, people just selectively tune out most of it, like they tune out advertising that isn't relevant. Only some information gets a close level of attention. In fact, most of the "overload" is simply ignored.

So how can busy people safely ignore most information, most of the time? The environment, the people one works with and various information sources will signal what is relevant.

Multitasking is an example of this. People in meeting pay partial attention to what is going on while they check email on their mobiles. People remain connected while listening to conference panelists. Mobiles are set on vibrate while in both of those settings. TVs can be on, CDs can be playing while people are responding to instant or text messages and doing their homework.

That isn't to say people are not bombarded by a richness of information. It's just that they adapt by ignoring most of it, pay partial attention to some of it, and focus on just some of it.

Some of the multitasking, such as things people do in cars, is not entirely safe, though!

Newspaper, Long Distance: Same Story

The market value of the American newspaper publishers entering 2008 as independent, publicly traded companies has fallen by $23 billion, or 42 percent, since the end 2004, the year before the wheels started coming off the industry, says Allen Mutter, managing partner at Tapit Partners.

The change is akin to similar changes happening in the global telecom business. Some legacy products are in irreversible decline, be that newspapers, wired access lines used for voice, dial-up Internet access or expensive, high-margin stand-alone long distance.

That doesn't mean people aren't "calling," or "reading" or "communicating." But products built on those activities are assuming new form. Newspapers won't disappear tomorrow.

As long distance prices have been in continual descent for decades, so newspaper readership and revenues will simply drift lower. The issue that must be faced is a transition of the assets to new formats and services.

Newspapers are both media--content creators--and a distribution format. Distribution clearly is changing more than the value of content creation. Voice is both an application and a driver of "access lines" or distribution. In both the newspaper and voice cases, the applications remain important. The distribution is becoming less relevant.

The issue is when a tipping point is reached, and decline becomes a problem executives no longer can manage. Something might be happening in the newspaper area, in that regard. One can fairly safely say the voice tipping point already has been reached, in many respects.

Nearly half the slide in the market capitalization of newspaper stocks came in 2007, when the shares lost a collective $11 billion, or 26 percent, of their value, Mutter notes. Newspapers lost nearly as much value last year as they did in the two prior years put together.

EchoStar, Dish Now Separated

EchoStar has completed the spin-off of its set-top box business into a new a company called EchoStar Holding Corp. The parent company, which now consists primarily of its satellite TV broadcasting business, will change its name to DISH Network Corp., and keep DISH as it stock symbol.

The transaction makes Dish a pure-play video entertainment provider, and arguably a cleaner asset for an acquirer or merger partner. There has been much speculation about an at&t purchase, but that seems unlikely given at&t's recent decisions about its stock buybacks, acceleration of its U-verse deployment and dividend increases.

The earlier proposed merger of Dish with DirecTV didn't pass regulatory muster, in part because the market was defined as "satellite TV" rather than multichannel video entertainment. At some point, as telcos gain more video market share, that argument might not be so compelling, and Dish and DirecTV might be allowed to merge.

Given that the consumer market increasingly is dominated by triple play, dual play and quadruple play providers, and where each of the services markets increasingly are saturated, regulators might take a fresh look at allowing the two satellite providers to merge.

The Dish Networks separation from the the EchoStar set-top manufacturing operations will help.

at&t Naked DSL Available

As part of its obligations as the acquirer of BellSouth, at&t was required to offer naked DSL--DSL sold without the requirement to buy a phone line--before the end of 2007. It appears to have done so, offering $19.95 DSL-only service on December 20.

The service is referred to as DSL Lite, and must be made available for the next 2.5 years. The company probably will not go out of its way to let consumers know it is available, or how to get it. And there are no assurances the product still will be availabe when the 2.5 year period is over.

Given the likely state of broadband access penetration by that point, at&t will have to keep doing so. In a couple of years, about the only way any service provider is going to get a broadband access customer is to take one away from another provider.

In Europe, where stand-alone DSL services are more readily available, penetration ranges as high as 30 percent.