Book Review: The Blind Giant

A while back I read (and subsequently reviewed) Angelmaker by Nick Harkaway. I loved it so much I looked into what else he'd written. I found out that he had a non-fiction work about the impact of technology on business and culture, and so gave it a read.

It's hefty piece of work, talking about the impact of technology on a very wide range of subjects, from the publishing business, to our ability to learn and concentrate, to the impact on politics and life in the public eye. His view of the impact of tech on the publishing business is especially well done, as he's grown up in and around that industry as one of the 'disruptees', and yet is also a technology proponent.

Through the book, the author takes a nuanced, even-handed look at most of these areas of controversy, showing both sides as having some merit. He also tackles it in a way that is entertaining, and still goes deep enough to show that he's done a fair amount of research and thinking on the subjects.

The down side is that he covers broad ground without really reaching a hard conclusion. that might be OK though - as the point is to show that we are evolving in our relationship with technology, and that we don't necessarily know where it will end up, and that it's neither all good nor all bad, but somewhere in between, as will be our end destination.

Project Cafe Speculation

Since we're a couple days away from Nintendo's presser at E3, I'm calling last chance to speculate on what Nintendo has up their sleeves with "Project Cafe" that hasn't already been leaked.

The most fervent rumor discussion is around the controller, which is supposed to be some kind of tablet with a 6 inch screen, buttons and a d-pad on the side, and tilt sensors and the like.

Anyhow, here's my prediction:

- Nintendo will claim the controller can also play stand-alone games.

- They will position the controller as being a "tablet that comes free with your console" and will show some entertainment functions for it

- The 'comes free' is a bit of a ruse, as buying a second controller will have a hefty price tag

- They will put on a brave face about the 3DS and that business being alive and well

Over time, though, I believe they see the writing on the wall about their hand-held businesses being commoditize and subsumed by phones and tablets, and so this is their attempt to in turn commoditize those businesses. I think its a weak attempt to do so, but there's some logic to the strategy and should allow them to circle the wagons with their core base.

It'll be interesting to see whether Nintendo can pull off yet another hail-mary pass (like they did with the Wii and the DS).

Splitting the iPhone vs DS argument in two

There have been a number of posts about Nintendo vs Apple, the 3DS vs the iPhone, and "99c games vs $40 games". The summary of these posts revolves around two different issues. They get muddled together, and as a result, cloud the argument. This post is an attempt to distinctly break apart the two arguments, such that we might look at each cogently.

Argument A: "Will Apple's 99 cent games destroy the market for Nintendo's $40 games?"

This is indeed a good question, and one to which the answer seems obvious.

On the 'Yes' side, one have only to look at Apple's recent numbers, the excitement around iPhone, and the challenges some have had in trying to maintain traction around higher price points in the app store on that platform.

but...

On the 'No' side, there's an argument that a large development budget can give a deeper, larger, experience. There's also the fact that Nintendo has continued to have success with some titles on the DS. There's also another version of the No answer along the lines of "if you want Mario, he costs $40", in other words, Nintendo's IP is something to consider.

The answer is probably somewhere in between. Undoubtedly the bar will be raised for what people expect to get for more than $0.99, so it will be a challenging sell.

The second argument is distinctly different than the first though. So let us suspend belief for a second, and imagine a world in which all iPhone games cost $40 (or one in which all DS games cost $1 - your call, as long as argument A goes to equal footing)

Argument B goes as follows: "Will 'portable game console' join the list of devices who have been subsumed by the Smartphone?"

Once again, there are arguments for and against, but in my opinion, the arguments are more one-sided.

On the No side: Nintendo continues to innovate (dual screens, stylus, 3D-stereo screen, etc) to stay ahead of the capabilities of the phones (or at least different, if you want to take issue with 'ahead'). Also, there's value to the quality, curated experience a closed, vertical platform like a console provides. And once again, there's Nintendo's IP. Finally, while Nintendo doesn't appear to do this currently, as a closed platform they could choose to sell their hardware below cost as a path to customer acquisition. (Of course phone vendors do this, and there's nothing saying that the same could hold true for an iPod-touch-like device provided it was sufficiently tethered to an app store or iTunes like service.

On the other hand or 'Yes' side of the question, the evidence pointing to an eventual subsuming of the function-specific portable game console by the general-purpose Smartphone doesn't look good for the portables.

When looking at other function-specific devices competing with the general-purpose device, the pile of bodies is pretty high, and growing.

The first category to go was dedicated PDA's. Never more than niche to begin with, these devices begged for communication to begin with. It could be argued that this was less about phones integrating the functionality, and more about the devices lacking the requisite functionality to begin with.

One category of device people started talking about suffering from this phenomena was the GPS. (See here, here, or here's a graph of a couple top GPS vendors where you can see the precipitous drop - even beyond that of the market due to recession, in green - which lines up with Apple's 3GS launch).

GPS is still alive as an electronics category, but it seems clear that the device manufacturers are suffering here and running for high ground in the way of either added niche-valued functionality and automobile OEM sales. whether these run out of runway as well is TBD.

Another category of device with some compelling evidence is that of digital cameras. The following post discusses some data posted from the Flickr blog, about usage statistics for posted photos to the site, as marked by what camera type took them.

The first graph shows the increase in iPhone 3 and 4 uptake vs photog staples at the high end like the Canon... The SLRs hold their own, but the increase in iPhone usage is clear.

The chart further down the page shows the decrease in leading point-n-shoot camera usage in the same period. There's a pretty clear correlation here. This is a classic case of the "Christensen Effect" at work.

I don't know how this will play out. It certainly will be interesting to watch from the sidelines. Developers should be interested, certainly if they are thinking about targeting either platform.

In trying to game it out though, its worth distinguishing what I believe are these two key questions at play. When looking at both together, Nintendo certainly has their work cut out for them. I can speculate about what that might lead to... but that's the subject of another post.

Revolution-era pragmatists

Recently when I reviewed "The Best in Technology Writing 2010", I mentioned that Clay Shirky's piece on the radical revolution/reformation of the newspaper industry, 'Thinking the Unthinkable' was one of my favorites.

I revisited it recently, and really liked the observation made in the following passage:

Revolutions create a curious inversion of perception. In ordinary times, people who do no more than describe the world around them are seen as pragmatists. While those who imagine fabulous alternative futures are viewed as radicals. The last couple of decades haven't been ordinary, however. Inside the papers, the pragmatists were the ones simply looking out the window and noticing that the real world increasingly resembled the unthinkable scenario. These people were treated as if they were barking mad. Meanwhile the people spinning visions of popular walled gardens and enthusiastic micropayment adoption, visions unsupported by reality, were regarded not as charlatans, but saviors.

When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of their most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.

He is writing about newspapers, but the above passage could be speaking about any large incumbent (or group thereof) in any industry undergoing radical change. I've seen it at Intel and Microsoft dozens of times, and I confess to having played the role of accuser and accused at different times.

A couple digital distribution points of interest

Sighted today, two different - but related - items on digital distribution:

1. Amazon noted today that Kindle sales of books have surpassed hardcover.

"While our hardcover sales continue to grow, the Kindle format has now overtaken the hardcover format. Amazon.com customers now purchase more Kindle books than hardcover books--astonishing when you consider that we've been selling hardcover books for 15 years, and Kindle books for 33 months "Bezos says

Different than games you say? High price premium at launch - check, hit driven - check, most titles consumed once - check, atoms resellable buts bits are not - check, etc.

Still think people won't give up their shiny DVD?

2. Gamasutra had this story on Gamestop looks to Netflix for Online Business Cues.

Of course the last retailer with a boat-anchor of retail outlets that looked to Netflix for cues was Blockbuster, and it didn't work out for them so well. So good luck to you, Gamestop!

And the money quote:

"...The world won't be all digital tomorrow, even though that's what people are claiming. In this business, users still want physical content." said CEO Paul Raines.

Hey Paul. See item #1 above. KTHXBAI!

"It's complicated" - or - Beating Facebook made easy

Occasionally, I'll see this on someone's Facebook profile and it always gives me a chuckle:

I find it ironic that FB gives this as an option to describe your 'relationship status', while they give no such distinction for relationships themselves, and relationships (aka 'friends') are the currency upon which FB is built. For that matter, this is true of all social networks.

Relationships are indeed complicated, and yet they aren't treated as such by these services.

I preface this post by saying that I have never worked for a social networking service, nor have I designed or built one, nor have I ever had source code access to one's inner guts.

Despite this, I have the intertube blogger bravado to state that (a) all of today's social network services are fundamentally broken, and (b) I know how to fix them. I'll also explain why I think this is going to come to a head over the coming year or two.

First, the problem. There are three components to it, two of which really just complicate the first primary issue.

First: Relationships are things, not properties of things.

I believe today's SNs are defined with connections between people being just that, connections. In database parlance, you have a table of properties describing an individual, one of which is a link to a table of 'friends', where this is a list of pointers/IDs of other individuals in the SN.

What that means is that the relationship itself is just a pointer connecting two people. But relationships are more complicated than that aren't they? As a hint, when we discuss relationships we often use nouns, not only adjectives. More on this in a minute.

Second: Not all relationships are created equal.

They certainly aren't all "friends". Of course, if all you've got is a pointer, then you've limited how much you can differentiate between relationships. At least LinkedIn uses the more generic and neutral "Connections". At least this is a term that comes with less baggage.

Third: Having this flaw in the initial design results in kludgy solutions to resulting problems that may cripple the SN.

Software design flaws are, like many things, easier to see in hindsight. In the case of database design, one clue is the amount of bandaids. We see this happening today with FB's kludgy filtering tools. I want this person to be part of this list or that list, etc.

The current 'lists' approach that FB is using is basically a kludge that lets you segregate 'friends' into a couple different groups (e.g. personal friends vs work friends). I'd imagine that each pointer now has an added field of 'type' and this is used to filter functionality ('what kind of friend is this? the kind that receives only this kind of spam but not that kind').

This will only work so long though, and the more people want to overload functionality (what if I want another type, or I have friends I want to be in both lists, etc), the more the bandaids will become cumbersome to handle and for users to manage.

The solution:

As I hinted above, I beleive there are some clues in the grammar used.

For starters, Treat relationships as nouns, which means they are entities and constitute another table in the database design of the social network.

Relationships have attributes. They have a history, a beginning and end, different properties describing what they do/don't entail, and those evolve over time. e.g. Bob and Susan went to school together but only met in their 4th year, became co-workers later, belong to the same church, etc. These are the 'adjectives' that describe the relationship. Relationships can also be assymetrical.

There are verbs too. Certain actions or activities that are part of a relationship.

I'd imagine there'd be a couple ways of implementing this. Tables for different relationship types, or a huge table sparsly populated at the outset. The choices of how to implement this will present tradeoffs between complexity, storage requirements, possibilities, etc.

At the end of the day, there will be some sweet spot in the tradeoffs that will provide the right mix of expanded functionality vs ease of use and storage/compute burden.

I'll also guess what the main pushback is going to be:

(1) The compute and storage requirements will explode! The answer to this one's easy. Tough! Both are getting cheaper, so pick the right entry point and run with it. (Remember when everyone thought Gmail was crazy for offering unlimited storage?)

(2) It will be difficult and cumbersome for people to manage: Agreed. One approach might be to pre-populate defaults people can override, or to start with a basic 'connection' and a peel-the-onion approach through both management over time and learning through history.

It may be complicated, but that doesn't mean people don't want to make sense of it.

There are three reasons why this is going to come to a head.

First the collision/connection of social networks is going to lead to a need for additional filtering/segregating, and this is going to result in a lot of bandaids for SNs that aren't built to handle this need. We've all read stories about someone's FB photos being seen by coworkers, etc. This is only going to get more complicated as people's FB feeds get seeded with their Xbox gameplay achievements or their WoW guild's political chat. The bandaids may snap.

Second, this connection of social networks is only entering its first phase, a phase where individual identities are linked (e.g. My Xbox Gamertag and my FB profile). I beleive this will enter a second stage where other entities in the SN may be shared, like the relationships themselves.

For example, today (or when the FB/Xbox integration ships anyway), I have to belong to both SNs and then tell them both that this gamertag is linked to that FB profile. However, what if I want to be friends with someone on FB when I don't have a FB account at all, but DO have an Xbox Live account? Not possible with the current bandaid solutions, but possible if relationships are tracked separately.

There's a third reason this is going to come to a head, one that arguably going to be an issue sooner than the above one. This is that people will desire more than a 1:1 mapping between identity and persona. Today, most SNs assume that your persona is your online representation of your identity. (In fact, one can argue that one reason FB stole a lot of thunder from MySpace is that it had a looser coupling between identity and persona but thats the subject of another post). However, on some MMOs, someone (one identity) may have multiple characters they play (personas).

The clash between identity and persona is going to messy on a number of fronts. In some contexts (FB, linkedin, paypal, etc) we look for identity to be real-world concrete. In others (say, playing a frilly kitten-girl in a korean MMO) someone may be looking for anonymity. Worlds collide, etc. All the more reason we provide people with tools to manage these things, rather than just labelling everyone 'friend'.

Anyhow, as these three reasons become real issues, there's an opportunity to offer a better type of SN, and beat Facebook at their own game, by being the 'next-gen social network'.

Claiming that there's an opportunity to stop the Facebook juggernaut seems like blasphemy, but people's loyalties are fickle on the Internet. The list defeated undefeatables (MySpace, Everquest, Friendster...) is long. FB is no more immune than any of them were, and the coming problems and opportunities as SNs collide may be the disruption that allows someone else to better serve people's needs.

I'd like everyone to just get along as much as the next guy, but the first step toward that might be in admitting that we're not all friends. It's more complicated than that.

Reading into Radiohead's Results

There has been what looks like some rigorous analysis of the Radiohead move (which I blogged about here, here, and here) to make their album available online at a pick-your-price, no-DRM format. This comes to us from paidcontent.co.uk.

The results are astonishing. An estimated 1.2M copies of the album were downloaded, with 38% of downloaders chosing to pay, and of those, the average was $6 per copy paid (Americans paid a more generous average of $8).

Back of the envelope math says 1.2M * 38% *$6 = a little under $3M. I have no idea of the distribution arrangement, but lets say they give up 10 points for billing, bandwidth, etc, andanother 10 points to someone to manage all this for them. That still leaves $2.5M.

Now the article linked to above comments about the number of copies circulating via bit torrent, etc, but that's beside the point, isn't it? That'd be happening if they were on iTunes. The real question is how many copies they'd have to sell on $10 - $15 plastic where they are making, say, 10 points. (I have no idea what rev shares are in the music biz, so I'm really blowing smoke here). At that point, they'd have to move 2M copies in order to reach the same level.

That's totally doable, but not *certain*. Their first four albums went platinum in both UK and US, so at least 2M units per album, but their last couple albums were between 500k and 1.5M-ish each.

So in this case, they (a) hit at least the minimum threshold they'd have done via the traditional channels, (b) now have a direct relationship with their customers, and (c) created a marketing vehicle for the album and the band that money couldn't have bought.

Sounds like a win to me!

The Onslaught of Toys-Featuring-Online-Games continues

I recently blogged about the wave of kids toys that are shipping with online games (in some cases multiplayer/mmo-ish games) as 'features' - a checklist item to help sell the game.

Well, here's another to add to the list:

Swypeout is a collectible card game that ships with a USB device with a bar code reader. Cards can be swiped through the reader, and then the car appears in an online racing game. Kids can then race their cars against others. Video trailer of gameplay below, and card example below that.

This is sort of Pod (dating myself) meets Motor City Online (dating myself again) meets Toon-town.

I include the Toon-town reference because like with that MMO, chat is via picking from canned phrases, and no path to lead to outside Internet, thus alleviating parents fears of card-swiping child molesters and the like.

This is an interesting one to keep an eye on for two reasons:

First off, it's more of a real-time 3D action game. The spend on the client (from screenshots & movies, I havent' downloaded it yet) looks to be bigger than that of UBFunkeys or the others.

Secondly, it skews older. The toy states "6 and up", but you look at the boys in the video on the site (whom I presume are representative of the target customer), and they look 10-13-ish. Now we are heading into the demographic that competes with (tongue firmly in cheek) 'real games'.

First the BNL and Radiohead, then Nine Inch Nails, now Madonna. Oasis and Jamiroquai too.

Seems ditching the labels in favor of direct-to-consumer (or in Madonna's case, signing a very different kind of disty deal) is all the rage the days.

Big labels are getting exactly what the deserve for putting up artificial barriers for too long, and bilking the customer for some time now (phasing out singles, forcing DRM, etc, etc). Sure would suck to be in their shoes, but I have to say I'm enjoying watching their towers crumble from the sidelines.

Game Industry folk: Should we be watching and learning? How long before the torch-n-pitchfork mob finds their next target?

Don't know much about History...

In researching some stuff for work, I ended up out in the weeds a bit and came across two fascinating (and unrelated) bits of history that I highly recommend reading.

If they share anything in common, it's an element of 'strange factors and events in history have had ramifications on the way things work today'.

First up:

This Q&A with the author of a book on the history of counterfeiting, which goes quite a bit into the history of currency and banking in this country. Really interesting.

And secondly:

This overview of the Berlin Airlift, a pivotal point early in the cold war, and a logistics effort that would spawn techniques and devices still used in modern manufacturing and shipping today. I can't beleive this was never made into a movie!

What should World of Warcraft and David Copperfield both fear?

...someone giving away what they charge for, and tanking their business in the process.

Wha-wha-wha-what?!

I'll explain. But first a commercial interlude. Please watch this very short video. It's brief, and it's entertaining.



OK, so this is one of a series of clever little commercials (series of them can be seen here - thanks to boingboing for the link) for a company doing technical support. Very catchy. "See how simple it is when we explain how it's done?".

Now, if that series of commercials takes off, it could be a real thorn in the side of a busking street magician that makes his living doing these exact tricks. Of course, that's not going to bother Belgacom. After all, whats a couple street magicians compared to a successful ad campaign of a large corporation. Casualties of War. Can't make a cake without breaking a few eggs and all of that.

OK, so where am I going with this?

There've been few posts as of late (Techcrunch, Raph Koster, etc) about the new Barbie Virtual World. Some see it as a response to Webkinz, which in one way is true, but it's not the most interesting way to look at it.

Barbie and Webkinz are loss leaders. They are giving it away to sell dolls or plushies or whatever. MyCoke (FKA Cokeworld) is giving it away to build brand affinity only. You don't even need to buy a can of diet/vanilla/lemon/zero coke to play this version of Habbo, you just need to not mind hangin' with the red'n'white.

Developing games costs money. Developing virtual worlds/mmos costs even more money. Building the next Wow is going to be a 50-100M affair. Building a small high-quality 2.5d casual mmo is, what, maybe $1M-$2M (of course, some are hoping to lower that, but that's another story). Blowing a couple million on development of a game title means you are going to have to do a fair number of subs/item-sales to get into the black.

But if you are selling plastic dolls nationwide at Toys-R-Us, and trying to differentiate yourself in a crowded market, then 1-2M is an efficient spend on a differentiating feature.

And if you made $26B last year selling sugar water at a healthy profit, then a couple million bucks is, my guess, a blip on the screen of the marketing budget.

At Casual Connect this year, there was a lot of talk about the big media companies (e.g. MTV/Viacom) coming into the space. What I don't think people grokked though, is that not only will they come in and compete for the same customers, but they may completely upset the apple cart in an effort to get those gamers interested in their IP (and thus watching the shows, buying the dolls, eating up all the hollywood soup and washing it down with a sugary, fizzy dose of free-to-play branded mmo.

"Free" as a business model will certainly mix things up a bit.

Now, back to my analogy.

David Copperfield isn't worried about those videos. They aren't showing us how to make a buick disappear or anything like that. Same goes for WoW. No one's giving away THAT level of experience, so Blizzard doesn't have to worry.

Yet.

Thing is though, that this combination of Christensen effect ("not good enough" creeps up on you until you find that "good enough" is way cheaper than you and nipping at your heels) and big media money are going to make for a volatile and interesting mix in the MMO/VW space over the next couple years.

This is somewhat analogous to the America's Army game a few years back. Giving away a multi-million dollar FPS as a marketing tool, they didn't put Epic or Valve out of business, but there were a few less B-level FPS's sold as a result, I'd wager.

So the thought exercise for you (as I try to bring this in for a landing), is what do you do when your competitors business model suddenly is "free"?

Joost the facts, ma'am

Sorry, couldn't resist the pun.

I just got on the Joost beta and holy cow. It's WAY slick.

This weekend it's moving ot the living room to try and co-exist with Media Center. We'll see how that goes.

Crowdsourcing: New name, same old story

Robin posted a link to this Wired story on "Crowdsourcing". While the word is a clever portmanteau and play on 'outsourcing', after reading the article, I don't really feel there's anything all that new here.

This is yet another story of disruptive technology (in this case, the internet & online community technologies) allowing new business models to rapidly displace incumbents.

The first example they discuss is iStockphoto. In this case, it's Internet + online community + cheap professional grade digital photography combining to disrupt the stock photography business. (More on this in a minute)

The second example include user-created video content. America's Funniest Home videos was perhaps the advent of this; with the proliferation of cheap camcorders. The current 'wave' of sites and soon network shows taking advantage of this have just added Internet + community to the disruptive technology brew.

The also look at examples of 'crowdsourced' R&D and menial problem solving. But in all cases, it's the same thing: The internet solves the distribution of labor problem, and the community tech solves the 'how to connect to the right person on the internet' problem.

New name, but its the same old thing. No different than when the word processor displaced the typewriter, or (to use my favorite Guy Kawasaki example) when the advent of refrigeration displaced the ice harvesting business.

Now, back to the iStockPhoto example, there's another interesting lesson here. From the article:

"In 2000, Harmel made roughly $69,000 from a portfolio of 100 stock photographs, a tidy addition to what he earned from commissioned work. year his stock business generated less money – $59,000"

And they are implying that the stock-photo side of his business will eventually go to zero. Note though, that his commissioned work business, at least as far as we know, is unaffected.

There's still value in the service side of his business. It's the product side that's been commoditized.