LG TV-to-Mobile Platform Coming

LG Electronics Co. says it has developed a low-cost way for North American TV stations to transmit digital signals to cellphones and other portable gadgets.

LG's technology, which it calls MPH for mobile-portable-handheld, requires TV stations to buy relatively inexpensive add-on devices to their digital transmitters and the makers of cellphones and other portable devices to install a reception chip. The reception technology can also be incorporated into other chips in portable device.

Embracing Failure

"We're not afraid of occasionally falling flat on our face," says Richard Branson, Virgin Group CEO. And therein lies a noteworthy difference in thinking about innovation that obviously has implications in the global telecom business. One of my business associates at Verizon would react in horror if anybody suggested Verizon itself should be more venturesome in trying new things. "We have a reputation to protect," he constantly says.

Of course, so does Virgin Group. But that's one reason why innovation is going to come from outside the ranks of the tier one global carriers, though some carriers are showing themselves more amenable to working with innovators.

Virgin, like Google, has a culture that values experimentation and risk-taking. And if the game is innovation, as I suspect virtually everybody in the global telecom business would acknowledge is the case, then the likes of Virgin and Google, which also isn't afraid to try things that don't work, is the way forward. on the innovation front.

What the incumbents can do is figure out how to work with Google. That's heresy in some quarters, but the conclusion seems logical enough. If innovation is essential, and if one knows one cannot innovate quickly, or take many risks, as a matter of policy, then one has to have partners who will do that on one's behalf.

And as the graphic suggests, even successful and important innovations ultimately can run out of steam. Dell turned the PC distribution business upside down at one point. But its competitors have long since caught up, leaving Dell the contestant that has to change.

Motorola Launches Mobile Video Device

Motorola has developed a stand-alone media player, the DH01 device that works with the DVB-H mobile video standard and also plays on-demand video clips and programs saved on digital video recorders. Motorola, Nokia, Samsung Electronics and LG Electronics already make phones that can receive live TV streams. What is different here is that Motorola wants to gauge demand for a stand-alone video device.

At some point, the user desire for simplicity will outweigh the desire for multiple functions in a single device, even as designers work to simplify inherently-complex devices so they will support multiple applications.

Up to a point users seem to enjoy having multiple functions in one device. Email and text plus voice is one example, while voice plus text plus music provides another example. What is less clear is what happens when users are offered devices that add Web services, enabled by Wi-Fi as well as mobile broadband, as well as video. At some point, the cost of a "do everything" device starts to get pretty high, while the functionality has to be balanced, possibly decreasing user satisfaction as a multi-function device will tend to perform less elegantly than a purpose-built device.

The issue is that the range of applications people want to access is growing all the time: gaming, navigation, video, audio, radio frequency identification and sensor network access. At some point, the complexity overwhelms the user experience, which has to be kept as simple as possible.

The other issue is how much tolerance end users exhibit for higher device prices when those devices break, get lost and wear out fairly frequently. It might be one thing to expect replacement or loss of a $100 device. It might be quite another to risk the loss and replacement of a $700 device. With volume and time, the issue arguably becomes less pointed, as features found in $700 devices migrate down the product lline.

Still, some point likely will be reached where users simply find "do it all" devices less desirable than carrying a couple devices that are highly optimized for the applications those people want to use most.

Is Mobile Substitution at the Tipping Point?

Something interesting might be happening in the mobile-only household segment. Wireless-only households, especially households including only a single resident or multiple young adults, have been increasing for some years.

But there is now some indication that mobile-only usage is higher in the general population than it is among more technologically-savvy users. If that trend holds up, it indicates that cutting the landline now has reached a possible tipping point.

In the first six months of 2007, 13.6 percent of households did not have a traditional landline telephone, but did have at least one wireless telephone, according to the National Center for Health Statistics.

Now here's the other bit of interesting data: The Harris Poll, which surveyed Internet users only, found that 11 percent of those respondents were mobile-only. Going only slightly out on a limb, let's assume Internet users are more open to new technology-use behaviors.

Indeed, the Harris Poll shows that two percent of Internet users only have VoIP services, and do not use mobile or landline phones. Another five percent say they use mobiles and VoIP.

Adding the "mobile only" users with the "mobile and VoIP" users gives you 16 percent of users who do not use a landline. Add the two percent who use only VoIP and one has 18 percent of Internet users who do not have a landline. So it still appears that Internet users are "different" from the general population.

That is as many of us would expect. Still, it is startling that "wireless only" usage seems to higher in the general population than among the arguably more-advanced Internet users.

Overall, the percentage of adults living in wireless-only households has been steadily increasing since 2005. In the first six months of 2007, one out of every eight adults lived in wireless-only households. One year before that just one in 10 adults did.

What might be new is some new spread of such behaviors beyond what we have tended to see, up to this point.

Last Music Domino Falls: Sony Drops DRM

Sony BMG has been the last of the major music labels to insist on the use of Digital Rights Management for sales of its music in digital form. Apparently even Sony now has thrown in the towel, according to Business Week.

Sony is expected to start offering some portions of its catalog in a no-DRM format sometime in the first quarter, probably using Amazon.com's download store. Oddly enough, though music labels earlier insisted on DRM as a way of deterring piracy, DRM arguably accounts for Apple iTune's dominance of the download business, as DRM means songs can be downloaded only to specific devices.

Presumably, the announcement will helpl boost sales of downloaded music, as this projection by Enders Analysis suggests.

What Does Music Model Imply for Communications?

There are all kinds of music business models developing these days, including donations, music as loss leader, music as a "free razor," live performance, pay service, merchandising and so forth. People still consume in the old ways as well. Some people listen to radio, buy CDs or singles. People still go to live performances. But lots of people simply download single songs they like for 99 cents, or do so illegally.

The point is that the music ecosystem is developing lots of business models. My kids insist that 99 cents is the right price for a song, based on what a CD costs, and the number of songs on it. But they don't generally buy many CDs, unless an artist manages to pack so many songs on a collection that the incremental cost of buying the CD is quite low. But the business model behind 99-cent songs is the sale of hardware called iPods.

For Target or Wal-Mart, selective deep-discount sales of audio and video are loss leaders for the business model called "retail." Some acts have tried a donations model, with results being that 15 percent or fewer people actually donate.

Madonna, though, illustrates the shift as well as anybody. She last year signed a historically unusual recording and touring contract with concert promoter Live Nation. No record label: a concert promoter.

Traditionally, companies like Warner Music Group have focused on recorded music, while other firms have arranged tours, managed artists and sold merchandise. But shrinking CD sales have led artists and entertainment companies to consider wide-ranging deals that bring all activities under one roof, helping cross-promotion and boosting profit margins.

She is the first major star to choose an all-in-one agreement with a tour company over a traditional record deal. The point is that all albums, tours, merchandise, websites, DVDs, sponsorship, TV shows and films now are seen as parts of the business model.


"The paradigm in the music business has shifted," she is reported by BBC to have said.

In the old days, a musician would go on tour to promote a new album. The new model is more likely to take the form of albums being released for free or very low cost, to promote higher-priced tickets for live performances and other forms of monetization. In the past, promotions such as concerts were intended to sell records. In the future, records might be merchandising to build a reputation to sell concert tickets, create TV shows and sell merchandise.


It isn't immediately clear how changes in the music business might one day filter over into the video business, or how the basic principles might be applied to the communications business. But there's something to be learned here.


Among the insights is that the value users place on something change over time. What is the value of a car radio for someone who does not commute 60 minutes to two hours a day? What is the value of a car radio for somebody who can use an MP3 or CD player in the vehicle? The point is that the value of different types of music listening, as well as the cost, vary from mode to mode.


The "cost" of listening to the radio is virtually free (the radio came with the car), but maybe unsatisfying and rare. The cost of listening to MP3s is the cost of the content purchased and the player (unless the player came with the car), and might cost a bit more, but get used more, both inside and outside the vehicle.


In other cases the cost of music might be a satellite radio subscription and the cost of the receiving hardware (again, unless the hardware was built into the vehicle), but used only inside the car.

Also, the value of the ecosystem surrounding a product can produce more revenue than the actual tangible product. Let's say you buy a $250 phone (subsidized by the carrier to the tune of $200) and purchase a $5 a month insurance policy on the device, on a $55 recurring monthly plan. Say you never actually lose or break your phone, and you use it for three years.

Say a carrier's gross margin on services is about 30 percent (after paying employees, operating and marketing expenses, but before taxes, depreciation or debt service). Before subtracting the handset subsidy, the gross profit would be $16.50 a month on the service, or $198 a year and $594 over three years. Back out the $200 handset subsidy and one derives $394 as the gross profit on service.

Assume the insurance policy has a 90-percent gross margin, equating to $4.50 a month, $54 a year or $162 over three years. In that case, the $5 insurance revenue stream produces 29 percent of the gross profit, compared to the $55 revenue stream for service.

New business models for music are evolving. The issue is whether new business models for communication also might evolve.

Google Enhances Presentations

I have to admit that I have not tried to use Google Presentations, though I do use Google Docs & Spreadsheets. The reason simply has been that normally, if I am creating a presentation, it is for use at a speaking engagement of some sort, and that means I want to ensure that it runs on the projection system and PC that will be on the dais, and that it can be copied and viewed by attendees later, in a format I think they will use. Microsoft PowerPoint, in other words.

But Google coders have enhanced the Presentation application in ways that immediately made sense to me. Presentations now can be saved in a file format that allows them to be embedded directly into Web sites. Now that is something one cannot really do with a Microsoft Powerpoint.

In fact, there is now a new use case. If I want to create content in that format for Web distribution only, I don't have "native application" issues. I can simply embed the presentation directly onto a blog or other site. Cool.