Thu. May 12, 2005
ET Phone Home
Microsoft's Bill Gates says the raging popularity of Apple's iPod player is "unsustainable." Gates Sees Mobile Phones Overtaking iPods [Reuters.com].
Yeah, right. Just like the "Tablet PC" was going to make laptops extinct and Microsoft's "Media PC" is going to take over the family room entertainment centers of the world. Can I have some of what he's smoking?
Posted by glenn at Tue. March 15, 2005
You Can't Hide
As predicted here, this afternoon a federal jury in New York, on its eighth day of deliberations, convicted Bernie Ebbers on the criminal charges that he helped mastermind an $11 billion accounting fraud at WorldCom, now known as MCI. Ex-WorldCom CEO Ebbers Found Guilty on All Counts [CNNMoney.com]. The conviction completes a staggering fall for Ebbers, who took a small long-distance company in Mississippi and merged with or acquired ever-larger companies, earning him accolades and the nickname Telecom Cowboy. "He was WorldCom, and WorldCom was Ebbers," the prosecutor told jurors. "He built the company. He ran it. Of course he directed this fraud."
Six senior WorldCom executives were indicted for fraud and the company was forced to file for bankruptcy protection in 2002. But Bernie was the only one of those executives to plead not guilty. He gambled again, and this time lost big. Way big. Up to 85 years in prison. And it could not have happened to a more contemptible human being.
A charismatic businessman who went from Wall Street superstar to untouchable almost overnight, Ebbers turned a folksy demeanor and by-the-bootstraps biography into central exhibits in his unsuccessful defense against the charge that he inflated WorldCom's books when his personal fortune ($400 million in WorldCom stock used as collateral for extravagant loans) was tanking during the dot.com and telecom bust of 2002. It is refreshing to realize that juries usually see through smokscreen defenses and get things right. Have a nice stay in Leavenworth, Bernie!!
Mon. March 7, 2005
Western Samurai
Last week's observations here that Sony has lost its way must have been heard in Tokyo, because the Japanese consumer electronics giant has picked an American as its new CEO. But I still think seppuku is probably the better answer.
Thu. March 3, 2005
Just a Dumb 'Ol Country Boy
Bernie Ebbers' defense to criminal charges of accounting fraud that brought down WorldCom -- the multi-billion dollar telecom conglomerate he built with a string of hundreds of complex financial mergers -- is that he didn't know anything about acounting. Prosecutor: Pressure "Corrupted" Ebbers [USAToday.com]. "I know what I don't know," Bernie testified, claiming he relied entirely on his CFO and chief accuser, Scott Sullivan, to manage financial matters.
That's like the late Senator Sam Ervin, who chaired the Watergate hearings, famously saying in his folksy way that he was just a "simple ol' country lawyer." You don't get to become CEO of a Fortune 50 company in America without understanding -- and playing a key role -- in corporate finance. Chief Executive Officers live and die (literally) by "hitting the numbers" Wall Street expects. I suspect the jury will see through Ebbers' charade and send him to the slammer for a long time. At least, I hope they will. And it's heartening that 74% of respondents to a CNBC poll agree with me.
Tue. March 1, 2005
Lost in Translation
Twenty years ago Sony was the king of consumer electronics. No more. Thus, it was rather surprising to find this headline in a UK online publication. Say Goodbye to Your iPod [ThisisLondon.com].
Seems that Sony will soon introduce a cellphone that can hold (wow!!) 12 whole CDs of music. Ah, folks, that's hardly 1GB, which the tiny iPod Shuffle does for $99. Maybe Japanese teenagers want their phones to hold a few songs, but any serious music fan knows that carrying one's whole music library in a small, white container is WAY better than some second-rate cellphone gadget. The company that invented the Walkman has lost its way. For the Londoners to say Sony has developed "the phone that could mean the end of the iPod" is just plain crazy.
Mon. February 14, 2005
Long Time Coming
When one works in an industry, it's somewhat amazing how wrong the press -- including those frequently praised as erudite -- can be about the issues of the day. Take the current wave of mergers in the telecommunications industry, like SBC-AT&T and Verizon-MCI. Verizon to Acquire MCI for $6.75 Billion [Forbes.com].
The usually thoughtful Forbes opined that the MCI deal "is the latest example of how regulatory changes in Washington are continuing to transform the telephone industry." That's hardly the case. Despite the Telecommunications Act of 1996, there have been very FEW regulatory changes in Washington (i.e., the Federal Communications Commission) because the local telephone monopolists -- who years ago were granted permission to merge the "Baby Bells" down from seven to four -- used the courts to overturn almost every regulatory change commanded by the FCC. (Indeed, the basic telecom regulatory and policy issues are the same now as they were two decades ago.) Meanwhile, fundamental technological changes continued to make dramatic cuts in the cost of long-distance, which in turn meant that the source of AT&T's and MCI's earnings was being vaporized by low margins, cell phones and the like. Combine that with huge overcapacity in long-haul fiber optic networks, available post-bankruptcy for pennies on the dollar, and one has all the makings of a classic market glut followed by shakeout.
These deals are not happening because of regulatory changes, rather despite (or maybe even because of) the lack of regulatory change in Washington.
Sat. February 12, 2005
Accounting Fluff
So the trial of Bernie Ebbers, former WorldCom CEO, for fraud is beginnning, and the chief witness against him is the company's former CFO. Scott Sullivan testified this week that Ebbers was told quarterly that in order to "make the numbers" demanded by Wall Street, the green eyeshade accountants had to add "fluff" to WorldCom's revenues and understate expenses. Ebbers Told of 'Accounting Fluff' [USAToday.com].
This is very damning evidence and (as in Martha Stewart) more than enough to convict the slimebag Ebbers. WorldCom went down in an $11 billion accounting scandal because someone booked expenses as assets, thus artifically inflating revenues and understating costs in order to maintain false EPS reports. Bernie either knew about it or directed it -- matters not. He's going down, and it could not happen to a more rotten guy.
Wed. December 8, 2004
Death of the IBM PC
Tom Krazit notes in Computerworld that "perhaps it isn't quite as surprising as if Ford suddenly decided to sell its Mustang sports car brand to Hyundai." Well, it is. IBM has sold its personal computer business to a Chinese company. This is the same IBM that launched the PC revolution -- and cemented Bill Gates' monopoly -- by creating the "IBM-compatible" computer based on Intel microprocessors in the early 1980s. So the death of the IBM PC, which has been long in coming, is nothing to mourn about. But it marks the end of an era nonetheless.
Mon. November 29, 2004
Product Life Cycle
iPod Adoption Rate Faster than Sony Walkman. This isn't really news, considering that the iPod, one of my personal favorite devices, has become a social icon in itself. But they will be studying this in B-schools for years, as the accelerating rate of "early adopters" for Apple's iPods outpaces anything about the product life cycle witnessed in American marketing before now. Seems like the iPod is one of the very few successful examples of the viral growth phenomenon talked about so often during the days of the Internet bubble.
Mon. November 8, 2004
Whimpering To a Close
The headline says it all. Microsoft Ends Decade of U.S. Antitrust Litigation [Reuters.com]. With the last deadline for an appeal to the Supreme Court now over, Microsoft has settled with its opponents and only the European Union case is left. The real question, though, is whether Redmond has changed its stripes? Otherwise the past will be mere prologue.
Wed. October 27, 2004
iPod Photo
I don't know precisely what this means, but Apple's annnouncement yesterday of a new iPod Photo, with 60GB and the ability to store, sync and display 25,000 photos, surely means yet another revolution in personal digital multimedia. If the iPod changed music listening from albums to playlists -- which it most definitely has -- what will this new device do to snapshots, photography and slide shows? Wait and see, but I believe it will be significant and perhaps unexpected.
Thu. September 30, 2004
Free Falling
For those who thought the excesses of the dot.com boom all got washed away in the subsequent bust, the optical fiber telecommunications industry has some disappointing news. Prices for access along the vast expanses of long-haul fiber optic networks built in the late 1990s and 2000 haven't finished falling to earth. Wired News: Bandwidth Glut Lives On.
Mon. September 27, 2004
Wi-Fi Everywhere
You probably know already that the City of Philadelphia plans to build the largest, municipal-owned wireless Internet system -- a 135-square-mile "hot spot" to serve 1.5 million people -- so that residents and vistitors alike can surf the Web wirelessly. E-Commerce Report: Big Wi-Fi Project for Philadelphia [NYTimes.com]. What you may not know is that this move has sparked a raging debate about whether all of this should be left to private-sector ISPs.
In New York, the city government recently awarded contracts to six wireless contractors, who paid a total of $23 million for the right to use 3,000 city light poles as bases for cellular and, possibly, wireless Internet service for paying customers. In contrast, Phildelphia says that government cannot just "let the market do this because there are societal needs that aren't inherently part of the capitalist system. We need to be sure no communities n Philadelphia are excluded, whether there's an ROI [return on investment] or not."
This mirrors the debate over municipal ownership of telcos generally, something to which conservative think tanks and the local monopolies (like SBC and Comcast) object vehemently. Yet USA Today headlined recently that "Small Towns Tired of Slow Rollout Create Own High-Speed Networks." I tend generally to agree that government should stay out of competition with private firms and that the market will produce more and better products than a government-run cooperative. But where the market is not responding, why should economic theory or idealogy stand in the way of the people giving themselves what they want? If Philadelphia is wrong, about demand, or costs, or otherwise, it is entitled to make its own experiment and mistakes, since no one else will be footing the bill.
Besides, having ubiquitous Wi-Fi would be way cool and would solve the perplexing question of whether, and if so how, private-sector Wi-Fi providers -- like T-Mobile at Starbucks -- can create a sustainable business model. Since the market ain't happening, at least just yet, more power to Philly!!
Mon. September 20, 2004
Windows and Open Source
It's hard to believe that anyone would be fooled by this miniscule Microsoft change, but many have. The press trumpeted that Microsoft was making a major policy shift towards open sourcing the code for its Office suite. Microsoft's Open Sesame Moment [washingtonpost.com]. In fact, all they are doing is allowing some federal government agencies one-time access to look at the code for security purposes. Open source and Microsoft are at the far ends of the economic spectrum; it's going to take far more than just a few lost government sales to get Redmond to change its stripes.
Thu. September 9, 2004
One Device Nirvana
I still don't think they've got the combined phone-PDA-camera "all in one" device right, but this one looks like it's getting closer.
Tue. September 7, 2004
Newton Anyone?
Newton Nuts Show How It's Done [wired.com]. I was once an Apple Newton fanatic, owning the original and every subsequent model Apple shipped from 1993 through 1997. This is a little much, though. Give it a rest!
Long Live Floppies
Like the penny, the floppy drive is hardly worth the trouble, computer makers say. Dell stopped including a floppy drive in new PCs in spring 2003, and Gateway has followed suit on some models. Floppies are available on request for $10 to $20 extra. Floppy Disk Becoming Relic of the Past [Yahoo.com].
Well, tell me something new. Apple stopped using floppy drives way back in in 1999 with the original iMac. Tiny USB drives have made floppies, Zip catridges and all sorts of external storage devices all but irrelevant. The march of technology goes on. Floppies are dead; long live floppies.
In many ways this is history repeating itself. Twenty years ago, PC users laughed at Mac users about those tiny, incompatible 3.5" floppy disks. "Still no 5.25" floppy drive." And they laughed about SCSI, which wasn't as "standard" as all those MFM and RLR drives and proprietary hard cards known in the DOS world. Eventually the Windows world embraced the 3.5" floppy. And many of the best performing PCs of only a few years ago used SCSI for best throughput, not the poky old IDE drives that had become dominant on less expensive clones.
I think they just don't like change -- especially if Apple invents it.
Wed. August 4, 2004
What Took Them So Long?
With millions of spam messages each day peddling fake Viagra (usually spelled V!agr.a or some such nonsense to try and get around email filters), Pfizer is finally going after online peddlers of counterfeit versions of its market-leading ED medication. Pfizer to Sue Online Sellers of Fake Viagra [CNN.com]. This activity has been going on for at least 5 years, during which Viagra has seen new competition emerge and Pfizer has seen its stock price and profits relatively flat. So what has the company been waiting for? Any CEO who just sits around while pirates are burying his leading product in piles of fake junk should be retired, lynched or both.
Mon. August 2, 2004
Music Going Wireless?
The technology has been around for awhile, but the clebration of convergence between cell phones and MP3 players is way overblown. The Cellphone's Next Makeover: Affordable Jukebox on the Move [NYTimes.com].
People said the same thing about cell phone cameras and games. Yes, they're cute and sometimes fun. But the inherent limitations of the cell phone form factor makes these multi-function devices either larger than useful (see Treo and BlackBerry PDA/phones) or far short on quality (see most Sprint phone cameras). That won't stop folks from trying them out, but I think the idea of a single, portable device that does everything is destined to failure because the devices don't do anything WELL.
Wed. July 28, 2004
Apple and Interoperability
Well, here we go again. Two decades after losing out on the Macintosh due to proprietary technologies that Steve Jobs refused to license, Apple Computer now has a dominant share of the digital music market -- both for downloaded songs (iTunes Music Store) and players (iPod). Many are claiming that if it refuses again to license, Apple will lose this advantage to "open standards." Meanwhile, competitors like Real Networks are already trying to crack or hack the Apple code in order to sell protected music files that play on iPods.
But I prefer to think of this like Peter Burrows of BusinessWeek, who writes that "the market for legal digital music may be an exception" to conventional wisdom that open standards are better economically. To my mind, if a company wants to keep its technology proprietary because it thinks it has built a better mousetrap, it is entitled to a marketplace test of that proposition. Recall Beta v. VHS. No one says Sony will die just because it keeps the formats for its MediaStick proprietary, instead of using open-standard digital storage devices.
More importantly, open standards really only work in markets with "network effects," where the more people on a platform -- whether a telephone network or a computer operating system -- the more valuable it is for any individual user. (It's actually more complex than that, because network effects markets will only "tip" to a single standard or provider if there are scale economies, but leave that economic theory aside.) There's nothing in digital music that makes it seem like a network effects market -- and most digital files use the open MP3 format anyway -- so Apple may become the "Windows" of AAC, its DRM-encoded product that finally convinced the major record labels to make their libraries available for online sales.
Oh, and Microsoft has done pretty well with Windows, which for sure is not an open standard. And it's nowhere with the WMA format (also prorietary), like Real itself, which pioneered streaming Internet audio and still maintains a proprietary standard. We can and should ignore the hypocrisy of Apple's rivals. But perhaps the analysts are right that Apple is poised to become the "Microsoft of music."
Mon. July 26, 2004
Games for Girls
A New Player at The Video Screen [TechNews.com]. Another in a long series of pesudo-exposes about why there are so few video and computer games oriented towards girls. Well, since 61% of all gamers are boys and young men, like Willie Sutton, that's "where the money is." No different than network TV advertisers going after the 18-34 male demographic. They may not like it, but chicks don't count very much in the computer gaming market. That's capitlailsm. Get over it.
Thu. July 22, 2004
CoorsMolson
They are two of the best breweries in North America. Will the combined entity be known by one word, like DaimlerChrysler? Coors, Molson Sign Merger Deal [MSNBC]. The difference here, of course, is that in the car industry, Mercedes is a leader and Chrysler is a dog. Both Coors and Molson are way cool.
Tue. July 20, 2004
iPod Nation
I haven't had a chance to read the article yet, but this week's Newsweek cover story about Apple's iPod MP3 player has a simply wonderful title -- "iPod, Therefore iAm." Go Steve!
Thu. July 15, 2004
iPod Mastery
As an iPod owner since the first version came out three years ago -- and before then a denizen of Nomad Jukebox MP3 players -- I am thrilled to see that Apple's music devices and online iTunes music store have lifted the company's profitability. As Cythnia Webb writes, "Apple has been transforming itself into an entertainment company from a pure computer maker." Apple Thanks Its Lucky iPods [TechNews.com]. This is a shift that has been years in the making, and is a great development. The "digital hub" is becoming reality.
Wed. June 30, 2004
Can't Win 'Em All
Much as last week's judicial decision on media concentration was a great victory, today's ruling by the U.S. Court of Appeal for the D.C. Circuit -- upholding the government's 2001 antitrust settlement with Microsoft -- was a terrible loss. Microsoft Prevails in Antitrust Appeal [InternetNews.com]. Not only because I was counsel to the appellants, as "third fiddle" behind former Judges Robert Bork and Ken Starr (renowned lawyers whether one agrees with their rather extreme politics), but more importantly because the court just failed to grasp the significance of the issues it was dealing with. For instance, even though Microsoft was found to have unlawfully monopolized the PC operating system market by bundling Internet Explorer into Windows, the court ruled that a decree (i.e., a remedy) that does NOT require unbundling is adequate and in the "public interest."
This is really bad news for antitrust enforcement and utilmately for consumers. The market has moved far beyond the "browser wars" between Netscape and Microsoft that gave rise to the case in 1995, but an end result that allows a convicted monopolist to do the same things to other upstarts -- and thus squelch competition -- that it did to drive Netscape from the market is inexplicable.
Thu. June 24, 2004
Media Concentration
Court Rejects Rules On Media Ownership [WashingtoPost.com]. The U.S. Court of Appeals for the Third Circuit today reversed an effort by the Bush Administration to liberalize rules allowing for increased broadcast media consolidation, including common ownership of newspapers and television stations in the same market. I was privileged to argue the appeal for Consumers Union and the Consumer Federation of America. A big win in an important case.
Fri. June 4, 2004
Tiananmen Square
Today marks 15 years since the Chinese communist government cracked down on democracy protesters in Tiananmen Square in Bejing. The New York Times reported then that "[b]y ordering soldiers to fire on the unarmed crowds, the Chinese leadership has created an incident that almost surely will haunt the Government for years to come."
Surely true, but it seems that commerce and consumer goods have moved China into a more modern political position, something the democracy movement could not do successfully. Cell phones and cars -- the Chinese "economic miracle" -- may just be better at spawning political change than the famous student who bravely faced off PRC tanks in 1989. Of course, the Bejing government is heavily censoring satellite TV news reports on the Tiananmen anniversary. So what has really changed?
Thu. April 1, 2004
P2P Lawful In Canada
According to Toronto's The Globe and Mail, a federal court up north has ruled that peer-to-peer file sharing is lawful. "The mere fact of placing a copy on a shared directory in a computer where that copy can be accessed via a P2P service does not amount to distribution," concluded Justice Konrad von Finckenstein. Hey, this is a better reason than the Vietnam War to move to Canada, eh?
Thu. March 25, 2004
Hyperbole and Antitrust Politics
Readers of this blog know that I am an antitrust lawyer and that I've worked on the United States v. Microsoft antitrust case -- for the competitive side of the software industry -- for years. Well, now we have a situation in which the European Union has accomplished something that the U.S. government failed to do in its nearly decade-long prosecution of Microsoft: it issued a meaningful punishment to the Redmond monolith. Microsoft was found to have violated the U.S. antitrust laws by bundling Internet Explorer (IE) into Windows in order to prevent competition from then-insurgent Netscape. Yet American antitrust officials squandered that judgment in favor of a sell-out settlement that allows Microsoft to continue the same practice of integrating new functions into Windows -- backed by no technical or efficiency justifications, rather only to stifle competition -- that the government's landmark case had proven was intended only to maintain the Windows PC monopoly.
By forcing Microsoft to unbundle Media Player from Windows, the European Union is doing just what the United States tried (but then lost the balls to stay the course) when it fought to force divestiture. So, what is the reaction of the U.S. Justice Department to the EU's remedy? On an objective basis, they should applaud it, saying that the EU hung tough and persevered to a conclusion that achieves the very results the U.S. case sought. Instead, the Justice Department's antitrust czar releases a statement calling the EU decision a threat to innovation, because "[i]mposing antitrust liability on the basis of product enhancements and imposing 'code removal' remedies may produce unintended consequences." Yet as Paul La Monica cogently observed for CNN, "if Microsoft no longer can rely on bundling, isn't it reasonable to argue that Microsoft would need to work harder in order to build a product that's truly better than the competition? If anything, Microsoft would need to be more innovative, not less."
The Bush Justice Department, some might say like the White House itself, is riddled with double-speak and hyperbole. Well, repeating myths may work in electoral politics, but it doesn't suffice for antitrust. The EU is not a threat to innovation; monopoly surely is. Just as they like fat-cat lobbyists and haven't met a billionaire they didn't want to curry favor with, the Bushies now pretend that monopolies are good for innovation and benefit consumers. The worst part is that, just two months ago, the federal judge overseeing the U.S. Microsoft settlement found on-the-record that it wasn't working at all as the Bush DOJ had promised. Like Rick's bristo in Casablanca, I am shocked to learn there's gambling going on here!@!
Wed. March 24, 2004
Internet Gambling OK
Despite years of efforts by federal and state prosecutors in the U.S. to apply antiquated old laws against use of "wires" (i.e., telephone service) for betting to try and outlaw Internet casino and sports wagering -- and to adapt those old paradigms to offshore betting operations conducted over the Net from foreign countries -- the World Trade Organization is prepared to rule these efforts violate international trade laws and treaties. [Los Angeles Times]. This is just another example that the square peg of pre-Internet law and policy does not fit into the round hole of globally networked e-commerce. The system is broken, boys and girls, and no amount of tinkering can fix it. We've got to fundamentally rethink the application of legacy law to Internet-based activities in this brand new environment.
Societies that use the law to fight against technological change always lose. And those that do so, like here, in paternalistic efforts to protect citizens against the moralistically "harmful" effects of victimless conduct are figthing a rear-guard and quixotic action against human nature. Every other civilized Western nation except the U.S. permits casino and sports betting. If Americans want to do so via the Internet, what business does government have trying to stop them? The answer -- the Christian Right notwithstanding -- is NONE.
Mon. March 22, 2004
More Convergence
In another sign that packet-voice convergence is really here, leading ISP EarthLink announced today it will start offering wireless voice services to go together with its Blackberry-based mobile email service. [USAToday.com]. While convergence is not news anymore, some day we may actually end up with a useful device!!
Tue. March 16, 2004
Corporate Criminals Beyond Martha
Lee Drutman writes in TomPaine.com that last week's conviction of Martha Stewart is just a pinprick compared to the far more serious and damaging corporate abuses engineered by executives at Enron, WorldCom, Tyco and the like. Stewart is merely "a tiny tiny drop in a big big bucket. If government prosecutors are really serious about sending a message on corporate crime, it seems they've got a whole ocean to fry."
Drutman is of course right. But prosecutors need to start someplace. Ebbers, Skilling and others have all been indicted in those larger corporate fraud scandals. The Sarbanes-Oxley Act is beginning to make it tougher for corporate directors to pretend they don't know what's going on and for the SEC to complain it lacks resources to investigate and punish corporate misconduct. Yes, it is going to take a long time, but the culture of permissiveness -- very much like the liberal, leftist sentiments that Republican corporate executives love so much to parody -- infecting America's corporations is indeed starting to change.
Mon. March 15, 2004
Europe Squares Off Against Gates
In less than two weeks, barring a last-minute settlement, the European Commission -- the EU's enforcement arm -- is expected to declare Microsoft an abusive monopolist, impose a fine of $100 million to $1 billion and order the company to make fundamental changes to the way it sells software in Europe. Europe Supports Antitrust Ruling Against Microsoft [NYTimes.com]. So once again -- read GE-Honeywell, etc. -- EU antitrusters are doing the job that American antitrust officials have declined or botched.
Sun. March 7, 2004
Martha's Web of Deceit
As predicted here last Thursday, Martha Stewart was convicted for fraud and obstruction of justice as a result of lying about her stock sales of ImClone. The jury reported that the queen of home decorating was done in by a "self-spun web of deceit." And in an interesting note, one juror added that "[i]f they can introduce something new at the appeal, I would be very surprised. I don't see how an appeal will work." Martha, you've been nailed, solidly. Close the books on this one.
Thu. March 4, 2004
"Martha Stewart Living," Behind Bars?
Yessiree, looks like Martha is going down. Martha Stewart Jurors Focus on Testimony of SEC Attorney [sfgate.com]. I don't like the fact that the government sued her for perjury instead of directly for securities fraud (insider trading), but lying is lying. She and her broker pal Bacanovic seem to have made up an incredible story, a whopper the jury is set to disbelieve. We should know by the end of the week.
Wed. March 3, 2004
Nailing Slime
With yesterday's indictment of former WorldCom CEO Bernie Ebbers on securities fraud charges, the final chapter in the long, sad story of MCI will be written. Now it is becoming clear that -- far from a "hands off" executive who knew little about accounting -- Ebbers was obsessed with small matters (like free coffee and whether employees were using too many pencils) and directed WorldCom's deception of investors from the start. WorldCom Prosecutors Say Ebbers Began Fraud Long Before Debacle [bloomberg.com]
That's the key. Bernie was a Wall Street darling if he "met his numbers." The only way to keep the stock moving up with demand and revenue falling during the telecom sector meltdown that started in 2000 was to cook the books. Nothing is too little punishment for this sort of corporate slime. I've got scores of former MCI friends and clients who lost fortunes, and now are scrambling just to make ends meet, because of this bastard.
Bernie, your days as a free man are numbered. Hallelujah!!
Sun. February 8, 2004
A Real Mickey Mouse
"[I]t's no secret that Apple is running circles around Microsoft when it comes to pushing the digital entertainment envelope." So the news that Disney -- after having been jilted by Steve Jobs' Pixar animation studios (of Finding Nemo fame) -- has now cut a deal with Microsoft to "improve the quality and security of digital content which can be delivered to homes over the Internet" rings a little hollow. Sort of like two wallflowers dancing with themselves at the prom. They're made for each other.
Tue. January 27, 2004
Feeding Cows
To stem fears about Mad Cow disease, the FDA has implemented a ban on feeding cow blood and chicken wastes to cattle. [nytimes.com]. Well I did not know that cows were so keen on drinking each others' blood and chewing on chicken shit. These things are herbivores, guys. What the hell are ranchers and feed lot operators doing feeding them animal parts in the first place?
Tue. January 13, 2004
Digital Revolution Complete
This is a telltale sign that the digital revolution is over. The company that basically invented the camera for popular photography will no longer sell film cameras, limiting its product line to digital devices. Kodak to Stop Selling Traditional Cameras in U.S. [YahooNews.com]. That's a major sea-change in the digitization of America and, in all likelihood, the end of a brand that was once synonymous with photography itself. Polaroid went bankrupt when 1-hour photo shops made their instant prints obsolete, and now even Kodachrome itself is largely a thing of the past.
Sun. January 4, 2004
The DVD Eats Hollywood
According to The Hollywood Reporter, in 2003 domestic theatrical revenue fell for the first time in 11 years. If this suggests that Americans are going to the movies less frequently, I certainly agree. Forget about the price, poor service and surly refreshment clerks, the simple fact is that there are only a handful of movies released every year that justify going out to see. Not when DVD and home theater technology have progessed to the point where most films are better viewed in the living room, rather than the movie theater. In short, 2003 was "the year when DVDs ate Hollywood."
Jack Valenti and the MPAA are worried about Internet file-sharing eroding the movie industry. I would think that Hollywood needs to be concerned more about the movie theater experience itself becoming a relic of history.
Mon. December 29, 2003
Mad Cow Mistakes
Seems that two of the major assumptions the Bush Administration is peddling about the Mad Cow disease found in a Washington State cow that was slaughtered are both wrong.
First, it has been determined (at least tentatively) that the animal was imported as a calf from Canada, making the point that international rules to prevent transfer of diseased livestock do not work. Second, while the U.S. Agriculture Department was adamant that the carcass was not delivered into the human food suppply, the fact is that the infected cow's meat reached retailers in eight Western states.
Japan, the EU and lots of other countries have banned US beef imports, for the same reason Canadian beef was banned last year and British beef before that. The US does not help its case by lying. And making pronoucements based on incomplete or inaccurate information that no infected meat was sold to humans is about as close to lying as one can come. That the truth only came out a week later just compounds the problem.
UPDATE: The government did a major about-frace yesterday, leading to this disturbing conclusion. "It seems almost inevitable that some part of the cow was eaten." It was killed on Dec. 9, and ground up with about 20 others to make a batch of 10,000 pounds of hamburger that was shipped to groceries in eight states and Guam, although 80 percent went to Oregon and Washington, the Agriculture Department says.
Mon. December 1, 2003
Downloadable Music Coming of Age
The New York Times ran a story this morning, titled "Music At Your Fingertips," discussing how online music distribution -- legitimized by Apple's iTunes Music Store -- is changing the business models of the record companies. Says the Times, "music labels and retailers [will] compete more aggressively online, offer[ing] more obscure titles and recordings of live performances that could find a paying audience through downloads but make no financial sense to distribute on CD's." As one who has been ripping CDs for five years now, this is a very welcome development, but it remains true that if "You've got a portable music player that can fit 10,000 songs on it . . . [n]o one will spend $1 a track filling it.'' Well, maybe if they chart this course the labels won't become extinct after all.
Sat. November 29, 2003
Black Friday
Retailers call it "Black Friday" because it has traditionally marked the day of the year when they get out of the red and start to profit. Others call in insanity and a crass reminder of the commercialism pervading American culture. But I've got to say that one hasn't really lived until you've braved the mall crowds in the early pre-dawn hours on the morning after Thanksgiving in suburban America.
I paid tribute to the shopping gods at 6:30 a.m. yesterday in Alparatta, Georgia -- surrounded by good old boys, SUVs and a surprisingly diverse mix of racial and ethnic groups. Oh yeah, we bought a few things, too.
Thu. November 20, 2003
Warner-EMI Deal
IHT: Time Warner Weighs 2 Bids for Unit. This story ran today in both the International Herald Tribune and the New York Times, quoting me on the antitrust viability of an acquisition of EMI by Warner Music.
Mon. November 3, 2003
Not Google, Too!
While Google continues exploring an IPO, Friday's business press indicates that Microsoft has been making overtures to buy the Internet search leader. I agree with this opinion piece from The Mac Observer, titled For The Love Of Everything That Is Good, Let It Not Happen. Let's go back 6 years and ask how the software market would be different if Microsoft had succeeded in acquiring Intuit and thus taking over Quicken -- perhaps the single best piece of consumer software on the market today. We all should shudder at the mere thought.
Tue. October 7, 2003
Rational Thinking On Telemarketing
Starting in late September, the federal courts completely screwed up the law on privacy and telemarketing, deciding that the Federal Trade Commission's "Do Not Call" registry was, first, unauthorized, and second, in violation of the First Amendment. Today the 10th Circuit stayed those decisions, holding that "there is a substantial likelihood that the FTC will be able to show ... that the list directly advances the government's substantial interest and is narrowly tailored." [yahoonews.com]. Finally, a little sanity is brought to the law.
The Washington Post calls the situation "Do-Not-Call Recalled," which is cute but a little misleading. What's been recalled are the asinine decisions by decrepit old judges hand-picked by the Direct Marketing Association to assure stupid rulings favoring local calling center business over the privacy rights of consumers nationwide. DMA says the court of appeals "appears to allow" the FTC to proceed with its plans. So, these guys can't read either!! What "appears" true is that the telemarketers still refuse to admit that consumers hate them and that their entire business depends on being so obnoxious and misleading that people are bullied into submission. The courts have closed them down, at last.
Labels Are Important
In another stunning example of judicial myopia, the U.S. Court of Appeals for the Ninth Circuit has held that cable modem service is "telecommunications," and thus subject to sharing with independent ISPs. Big Win For Brand X [Forbes.com]. The issue here is not that the court reversed the Federal Communications Commission -- which happens all the time, with good reason -- but rather that the Communications Act bases regulatory treatment on the categorization of services. If the court had found, like the FCC, that cable modem services are "information" services because they connect users to the Internet, that would have led to the opposite result.
This illustrates that the rules governing communications, written before the Internet explosion of the mid-1990s, hardly make sense in an era of technological convergence. In short, the rules are broken. For a more in-depth examination, see the presentations I have made on this subject, as long ago as 1996. Then I called this penchant for labels and the conflicting technolgoical and regulatory histories of circuit switched (telephone) and packet switched (Internet) networks a "war of two worlds." Some things never change!!
Tue. September 30, 2003
RIAA's Nazi Tactics Are Winning
Today's news indicates that P2P file sharing has dropped 45% since the RIAA started suing indiviuals a few months back. That is despite that fact that only 261 lawsuits were filed and that settlements accepted have been just a few thousand dollars each. Settling in With the RIAA [TechNews.com].
I think the lesson here is that the legal process can and often is used solely for purposes of intimidation. RIAA is not even covering its legal fees, and certainly not giving anything back to the artists who may lose royalties where songs are traded instead of bought. But from the user perspective, the randomness of being sued may overpower the relative anonimity of the Internet, where 261 folks out of the many millions utilizing P2P technology are surely just a drop in the ocean. It looks like alot of them are afraid of drowning!!
Wed. July 9, 2003
Eliminating Options or Raising The Sea Level?
The headlines read "Microsoft Drops Stock Options," but the real news is that Redmond is concerned that options are no longer the employment lure they once were now that so many high-tech options are "underwater" after the stock market collapse of 2000-02. The small print in the story is that Microsoft is also devising a way that employees can sell underater options -- where the exercise price is greater than the stock's market price -- for cash to an investment bank. So while the press clamors on about the debate on expensing stock options, they're missed the point.
Wed. July 2, 2003
Victims of Love
Commenting on Monday's dismissal of a class action lawsuit against Merrill Lynch for pushing Internet stocks recommended by analyst Henry Blodgett, Paul La Monica writes for CNN.com that "[t]he next time an Internet stock you bought for more than 100 times earnings plunges, it's your fault, not Wall Street's." That's great news, since it is manifestly true that ordinary investors got caught up in the hooplah of the Net bubble and -- like the professionals, too -- wanted to make a quick buck. Responsibility for investment decisions should be personal unless fraud or deception is involved.
The irony is that, at the same time the federal courts are reinforcing the concept of personal responsibility (see also the recent dismissal of a suit against McDonalds, for allegedly "causing" obesity), private industry is running scared. Kraft announced yesterday it is reformulating its mass-produced food products to make them leaner and more healthy, in part to avoid potential liability in tort. Kraft fears that the food processing industry may follow the tobacco industry in getting hammered by the legal process. And Congress has jumped into the controversy with the "Personal Responsibility in Food Consumption Act," pending in the House of Representatives.
Stick to your guns, Kraft. Change your manufacturing and marketing strategies because it's the right thing to do, and good for business, not because of some wacko class action threats. A failed lawsuit has already been launched against Kraft by a man in California, seeking a ban on Oreo Cookies, one of America's favourite snacks. The law won't countenance ordinary decisions being turned into torts by "victims" trying to shift personal responsibility to third parties.
Thu. June 12, 2003
Spreading Bernie's Slime
Several long-time exeuctives of MCI and WorldCom resigned yesterday after being singled out by Richard Thornburgh, appointed to investigate WorldCom's mega-collapse, for not ensuring directors paid closer attention when signing off on acquisitions and approving multi-millon dollar loans to former Chief Executive Bernard Ebbers. WorldCom Says General Counsel, Criticized in Report, Resigns [Bloomberg.com].
The funny thing is that the GC, Mike Salsbury, is someone I worked for long ago (15+ years). I won't comment on his reputation, but resigning in disgrace under the cloud of investigation in the world's largest corporate scandal is certainly not the way anyone wants to go. (Sure beats "the perp walk" though!!) Bernie lost his ranch and now faces possible indictment. How far will his slime spread? The only way to answer that question is to see how far the culuture he brought to WorldCom infected other high-ranking executives.
Fri. May 30, 2003
Microsoft Does It Again
Microsoft settled its antitrust lawsuit with AOL for $750 million and the promise of a future technology partnership. [washingtonpost.com] Four years ago AOL bought Netscape for $10 billion. At the time, Microsoft was embroiled in the trial of the U.S. government's monopolization prosecution, and argued that "AOL-Netscape" would be a fierce competitor across the spectrum of software and media. Of course, nothing of the sort transpired. AOL never tried to resuscitate Netscape -- never even replaced Internet Explorer as its default browser -- and now whimpers away with a handful of cash. And pittance it is. Microsoft has $46 billion in cash reserves, so this settlement will not put even a small dent in its monopoly coffers.
Thu. May 29, 2003
Convergence Is Not News Anymore
OK, so Sprint has started replacing some of its circuit-switched local loops with newer packet-switching technology, like that used on the Internet. Sprint Begins Converting Network [InformationWeek]. But convergence between telecom and the Internet has been a reality for years. I've been representing clients and speaking on that topic since at least 1996. So there's nothing new here at all. Maybe a little in scale, but hardly a newsworthy event. Reveals the power of the Press Release, apparently.
Fri. May 23, 2003
The PVR Revolution Is Real
When they burst on the scene three years ago, digital video recorders, also known as personal video recorders (PVRs), were a novelty that many said could not last. But now that TiVo has far exceeded market expectations and is aproaching cash-flow positive performance (TiVo Exceeds Estimates as Loss Narrows), there's good reason to believe that a fundamental shift is occuring in entertainment. Just as iTunes and MP3 players have changed audio from an album-based business to a playlist-based business, so too has TiVo made it possible to watch only the shows one wants when one wants to watch them. 
There's no such thing in a PVR world as "tuning in" to a particular show, as everything you want is on the hard disk. Advertisers say they don't like it, but I think that, like VCRs, this technology will increase viewership by making the broadcast schedule irrelevant. If you watch more shows because you don't need to be tied to the clock, you will inevitably watch more commercials, too.
Thu. May 22, 2003
What's In A Name Reprise
Is America the home of the free but not the brie? So asks the Washington Post, observing that WTO is promoting an EU-centric scheme to circumvent trademark laws and enforce national restrictions against use of geographically-derived product names (like "Brie" and "Champagne") outside of the "approved" local area. This may be less important from a civil libertarian perspective than the TIA, but if they're going to be watching my e-mail and bank transactions I damn well want to be able to call whatever I decide to eat by whatever name I want to call it!!
Fri. May 2, 2003
Listen To The Lawyers
Rambus Trial Opens With Incriminating Documents. The Federal Trade Commission continues it's long-running antitrust case against Rambus Technologies for "gaming" a standards-setting body into adopting its proprietary technology, without disclosing the underlying Rambus patents. In the trial's first day, FTC lawyers introduced documents showing that Rambus' outside counsel instructed the company to withdraw from the standards group and stop suing other chip manufacturers for infringement.
Hey, not all lawyers are like those clowns who covered up Enron's accounting fraud! Just sometimes we are worth listening to.
Thu. May 1, 2003
Four Tracks Per Second
Apple's iTunes Music Store sold 275,000 downloaded songs in its first 18 hours of operations. That's four songs per second. So as Michael Malone of ABC News points out, this suggests that Steve Jobs has done more than create a legal means of distributing "untethered" music online, he's also rung the death knell of the recording industry.
How has the music industry responded to the threat from MP3 and digital distrubution, now estimated at 10 percent of its revenues? Like all dying industries: with more of the same, plus armies of lawyers. They're dinosaurs who just don't realize that the comet has already struck. They're walking extinctions.
Tue. April 29, 2003
Apple's Music Store
Forbes.com - Apple Tunes Up. Not a bad start to a new online music download service from the folks who began the "rip, mix and burn" revolution. 
I tried out the iTunes Music Store last night. At $0.99 per song and seamless integration with iTunes 4.0, it's a real winner. Plus, the DRM features do not limit a user's ability to burn CDs, backup files or share among computers, so the music is virtually the same as MP3s -- and better if Apple is right about the AAC format.
Fri. April 25, 2003
Ballmer Says Linux Is "Cancer"
Microsoft's Steve Ballmer, once again on an anti-open source crusade, now says that Linux is a "cancer" but that the new Windows Server 2003 product can compete with free software because is it "innovative." [CNET.com]
All this from the company that brought us a desktop GUI in 2000 that Apple made available in 1987, that specializes in buying technology developed elsewhere (DOS, PowerPoint, IE, etc.) and that still cannot fugure out how to put a laptop computer to sleep. Eat your Cheerios, Steve, you're going to need them. All you have is monopoly power; in the long-run, that's not enough to save the company.
Tue. April 22, 2003
Was It All A Joke At AOL?
SEC Probing More AOL Advertising Deals. The Securities and Exchange Commission is investigating "millions of dollars of advertising deals" involving America Online that "go significantly beyond the scope of problems already disclosed" by AOL Time Warner Inc., sources familiar with the probe said yesterday. What this suggests is that even during the "bubble" years, AOL's earnings were overstated by realizing revenue on Enron-like deals. They fooled a lot of folks into investing, particularly after the Time Warner merger. As the epitome of the "new economy," AOL's continuing accounting irregularities only underscore that there was not much real value to the "value propositions" these Internet-centric companies touted.
Fri. April 18, 2003
.NET Is .NOT
Microsoft announced yesterday it is abandoning the ".NET" brand for its Web services product line, re-christening them "Windows Server System." [The Register]. That's a long-overdue admission that servers are best described as "servers," not some amorphous blob of language, runtime or webservices. ".NET" clearly meant a lot of things to a lot of people at Redmond, but very little to the outside world.
Mon. April 14, 2003
WorldCom Is Dead
So Bernie's fiasco is finally over. They've taken his ranch and now are mothballing his corporate name. It's just a shame that the once-proud MCI brand will apply to the sad remnants of such a sordid band of scum. [Washington Business Journal]
Fri. April 11, 2003
End Of An Era - The Concorde
The Concorde may prove to be not only the world's only supersonic commercial aircraft, but also its last. It's being retired by Air France and British Airways.
A sad day for technology, a great day for the tree-huggers, but overall just another change in fashion. With the economic collapse of the airline industry, airlines are switching focus from fast to cheap, and from big to efficient. See Why economists don't fly Concorde. As if we needed to be told that there's no more romance in flying. Duh!!