Sunday, May 21, 2017

Apropros of the PC Forum reunion

In 2005, a rich patron sent me to PC Forum 2005.
The quid pro quo was a trip report.
One of my favorite writers had died just prior my departure.

Trawling through my files the other day, I found this.
The statute of limitations probably applies.


In memory of Hunter S. Thompson

The hot sun beat down on the Fairmont Scottsdale Princess and the polished concrete in the copiously- fountained courtyard felt like an Itanium processor without a heat sink. I figured I could find all the cold tequila I wanted once I got through the registration process for PC Forum 2005. PC Forum – a cloying combination of smug success and naked ambition that Esther Dyson’s been running for over 20 years as some fevered crossbreed between the Oprah Winfrey Show and a Stuart Smalley self-affirmation meeting. This year the conference theme was “The World-Wide World – IT Ain’t Just The Web Anymore!” OK, so Yahoo! donated! some! punctuation! but when was IT ever only about the World Wide Web? Just because the high-tech market went on some peyote-fueled binge a few years ago doesn’t erase 40 or 50 years of history. Or maybe it does – and now we get to read Mark Cuban’s revised version.

I navigated the maze of 50” Sony LCD high-definition televisions that would be used for software demonstrations later in the conference, found the registration desk, got my stinking badge, a tote bag that looked like it would be right at home on the shoulder of any Botswanan tourist, and some program material. Then I went to the front desk of the hotel to check in so I could dump the stuff in my room and hit the pool before things started.

I knew things were going bad when the chirpy front-desk clerk looked at me like her Zanax had just given out as I gave her my name, the conference name, the name of the person I was subbing for, Warren Harding’s name, and then a really dirty look. No record of me existed. Luckily I didn’t have to reach over and rip her lungs out because Brodie Crawford, Esther’s main man, intervened and then things were cool. I made a beeline for my room, changed into my bathing suit and flip-flops and did the rest of my prep work on a lounge chair by the bar at the main pool.

Sunday 3PM: The World Wide World

The Sunday session is typically where PC Forum wears its social conscience on its sleeve, so Esther welcomed us all (“us all” being about 60% of the attendees – more would arrive later to be there for Monday’s main event), told us that “IT is expanding”, and asked the audience to “focus outside of white engineers in silicon valley” (of which more later). Then we got to hear from Howard Gardner, Andy Stern, and Jerry Yang, a real one-of-these-things-is-not-like-the-other trio.

Howard Gardner, professor at the Harvard Graduate School of Education, is known (by certain strata of society) as the developer of the theory of multiple intelligences, which posits that (in humans, at least) individual intelligence is not uniform and can develop in specialized areas. Why this was surprising in 1994 to anyone exposed to cognitive science is of minor historical interest, but Gardner’s ideas did get some traction, so much so that he discovered a government project in Australia attempting to correlate intelligence type with racial and ethnic origins.

Not wanting to be associated with a possible new eugenics trend, Gardner has created a “good work project” – examining how people use intelligence in a “pro-social” way. This project has interviewed 1200 people (selection criteria not explained) to elicit their opinions on excellence, ethics and meaning and their desire and ability to do “good work” as defined above. One interesting common theme among young interviewees was that “I can’t do good work now, because no one else is doing it and therefore if I do it I will be at a competitive disadvantage (paraphrase mine)”. There was a clear implication by Gardner that this was an ethical or moral bad thing, with much head-nodding in the crowd.

Perhaps lost on a successful, tenured Harvard professor was the fact that some in the audience don’t know where their next months’ mortgage payment is coming from, and can’t figure out how they can afford to put their children through school or if they’ll ever be able to retire. Perhaps it was lost on a good chunk of the audience as well.

Gardner also discussed the issue of trust in society and the concept of “trustees”, publicly-acclaimed persons of stature who would hold the public trust and cited, interestingly, the recently late George Kennan as an example. Compare that with a recent poll in Cambridge, MA that named Alan Greenspan, Oprah Winfrey and Jon Stewart as current “trustees” in the eyes of those polled. He suggested that “good work”, say in an NGO, might help 200 or 2,000 people, but that bad laws can hurt 200,000 or 2,000,000 – the lesson being that those prone to good work build as big a power base as possible to counteract the effect of those in power with a propensity for “bad work”.

Next, Andy Stern, President of the Service Employees International Union, asked a truly important question: “How are we going to reward work in America?” Not for the Carly Fiorinas of the world (to use a timely IT example) who get $100M to decimate (or, arguably, deliver the coup de grace to) an American high-tech pioneer, but for the rank-and-file (increasingly defined as everyone beneath the highest levels of corporate management) who have to cope with an increasingly challenging environment to survive.

Sterns’ facts are compelling: thirty years ago, GM was the largest employer in the US, 1 in 4 private sector workers were union members, and one GM union job could support a family. Today, Wal-Mart is the largest employer in the US, 1 in 12 private sector workers are union members, and it takes two to three Wal-Mart jobs to support a family (how many of those workers do you think are of a mind to do Gardner’s “good work”?). To Stearns’ credit, he was forthright in his criticism of past (and current) union behavior focused solely on collective bargaining, declaring that, in the main, unions were “male, pale and stale”. However, he was not apologetic in claiming that unions were historically the most effective anti-poverty and wealth distribution system – without direct government expense.

Stern’s provocative closing suggestion was that, since the US is running an international trade surplus in services (and since services appear to be a growth segment of the US economy for the foreseeable future), we consider finding a way to use this surplus to implement job security programs for US workers. Needless to say, many audience eyes were glazed over at this point but a surprisingly large portion gave Stern a warm reception.

Jerry Yang, Taiwanese immigrant, raised by his grandmom, founder of Yahoo! – a guy who stuck his thumb in the Internet pie and pulled out a billion dollar plum – should have been a great segue from Gardner and Stern. Instead, he fielded some softball questions from Esther (who has always been a softball pitcher; however, she seems to have gone from fast-pitch to slow-pitch over the past decade). This yielded such wisdom as “In the next ten years (Yahoo!) can try to do what we really wanted to do ten years ago” and “(Yahoo! has to) strike a balance in China (regarding censorship)”. I don’t think that Esther’s approach was colored by Yahoo!’s announcement, that day, that it had acquired Flickr, in which she had invested. Not at all.

Sunday postscript: IAC announces it is buying Ask Jeeves for almost $2B. The search weenies are going to be impossible for the rest of the conference...

The alarm clocks in our rooms had the worst user interface ever conceived. I felt like putting one in a FedEx box and shipping it to Don Norman. At breakfast Monday, we all discovered that we felt the same way. Good. I knew I was drunk when I went to bed but I worried I had become stupid as well.

Monday is the big show at PC Forum. You can tell by the massive influx of CEOs, CEO wranglers and other PR people intent on wringing every last bit of positive spin from the audience, especially those on deadline. Great sport can be had by engaging one of the luminaries in a side conversation and then fending off the PR cleanup detail, usually represented by attractive young women oozing ambition.

Monday 8 AM: Tales From The Worldwide Trenches – How IT Companies Operate Globally

On paper, a great panel. Steve Ward, CEO-to-be of Lenovo is to lead off. But wait – didn’t Lenovo used to be Legend? And didn’t Legend used to be owned and run by the People’s Army? Now this spawn of Estridge and Mao is about to move its headquarters to New York and is talking about listing on the NYSE. What would George Kennan say about that?

Ward did his best to present the very image of a modern CEO, which is to say, he was boring as hell. We learned a) Lenovo will work in English, and b) that the two sides need “a shared vision”. Duh. Anne Mulcahy didn’t fare that much better. She dished out some more global management pablum and let slip one interesting factoid that Xerox’s acquisition of Tektronix revealed interesting differences in the business practices of Fuji Xerox when dealing with Tek versus Xerox – details not disclosed, of course. John Schwartz of Sun scored a few points by articulating some of what Steve and Anne had been groping for – that, to be global, a company has to immerse themselves in the local market, not view it as a colony (by merely chasing cheap labor, for example). I almost felt optimistic for Sun after John’s comments. Almost.

Monday 8:55 AM: “Write Your Own Ticket To PC Forum” Winner

The winner turned out to be Peter Glaskowsky, someone whose work I followed for years when he was a senior contributor to Microprocessor Report. Peter spoke for about five minutes about virtualization, laying out the advantages (which anyone who has studied computer architecture should know by heart) and some disadvantages (mainly that virtualization enables fascist DRM policies). While his talk sailed right by a good section of the crowd, he unwittingly placed a land mine for Scott Charney of Microsoft on the next panel. He also contributed a lovely anecdote: when he told his librarian girlfriend about his impending trip to PC Forum and the conference focus, she replied “if these IT folks are going to focus on my stuff, please ask them to fix my computers first”.

Monday 9 AM: Security And Identity: You Talking To Me?

We learned from this group that “security thinking is permeating all aspects of IT” and that “security is the fastest-growing segment of IT”. All of the panelists subscribed to the maxims that perfection is unattainable and that the eternal struggle between usability and security will persist. However, I fell off my chair when Scott Charney of Microsoft said “there will always be users who double-click and enable actions that disable their machines” – hello? Why are users to blame here? Isn’t this an operating system problem? Wasn’t he awake during Peter’s talk on virtualization? Oh, wait. He’s from Microsoft. Never mind.

Then John Thompson from Symantec compared pervasive computing to driving an automobile, and suggested that, just as the government imposed regulation in the name of auto safety, we might be better served with similar regulation in the name of computing safety. Charney chimed in and asked the crowd “how many people would favor an RFID mechanism that limited cars to the posted speed limit when traveling?” No hands went up – not one. Say, how’s that software registration project going in Redmond, Scott?

Was Thompson over the line when he compared computer security decentralization with the spread of democracy, and implied either that there was no turning back or that there were sinister motivations for a move to more centralization? I can understand the defensiveness of Scott and John – after all, one represents arguably the most pernicious monopoly created in the last century and the other has a business model that is based on cleaning up after it. Small wonder that Jayshree Ullal from Cisco appeared as if she were traveling at another flight level – she did get off a great turn of phrase, though, when she blamed part of the usability problem of security software on “too many nerd knobs”.

Monday 9:50 AM: The Brain: Prediction and Intelligence

Twelve years ago, Jeff Hawkins was the lunchtime speaker at PC Forum. We (yes, I was there...) heard him describe a novel theory of brain function that modeled intelligence as the ability to predict bits in serial bit streams. Fast-forward twelve years. The theory has progressed, and has started to be reduced to algorithms that can exhibit behavior associated with intelligence. According to this theory, there are four essential attributes of the non-reptilian part of our brain:
  1. The neocortex is a memory system
    (“You don’t need a neocortex to live but life is more interesting with one...”)

  2. The neocortex builds a model of the world through exposure to sensory input
  3. The neocortex predicts future events by analogy to past events
  4. Human behavior is a by-product of prediction
The concept has been prototyped using a hierarchy of conditional probability distributions and a belief- propagation system. Using a three-level hierarchy, the prototype system is capable of simulating visual recognition of a 90-symbol set of black-and-white line drawings and variants thereof. This is a very impressive result.

According to Hawkins, this Heirarchical Temporal Memory (HTM) is:
    - Broadly applicable to a wide-range of problems Fundamental technology
    - Can be made faster and deeper than human memory
    - Can be extended to “exotic” senses (SONAR, LIDAR, etc) Is non-threatening (it’s just memory)

There is a research institute (The Redwood Neuroscience Institute,, a book (On
Intelligence,  Jeff Hawkins, Times Books 2004, ISBN 0-8050-7456-2) and a start-up (Numenta, working to further develop these concepts. While I try to curb my enthusiasm about such things (and, if behavior is a by-product of prediction based on past events, then by what mechanism am I writing this? Is there, biologically speaking, truly nothing new under the sun?), HTM has the potential to take engineering work based on neural networks to a significantly higher level. You gotta root for it.

Wow. Something that might be mistaken for real technology at PC Forum – can we keep up the pace?

Monday 10:40 AM: Afternoon Overview: Company Presenters Present Themselves

Nope. If Esther was trying to get beyond “white engineers in silicon valley”, she only succeeded in the silicon valley part. Talk about pale, male and stale. Ten startups (well, nine startups plus Opera), ten male CEOs. Each given two minutes to set the stage for a 30-minute presentation later in the day. The first one, Jeremy Jaech, CEO of Trumba, did a pitch that was so bad that he (or more likely, his PR firm) should have been taken out to the courtyard, weighed down with stones and tossed into the fountain. I take that back. The PR firm should have been drowned for the pitch – Jaech should have been drowned for the business model – calendar consolidation. Maybe a nice feature, probably not a whole business. But what do I know?

Or how about EVDB, which has raised perfectly good venture capital to “become the de facto standard to help people discover events they might be interested in”? Like Dave Barry says, “I am not making this up”...or Grouper Networks, “a peer-to-peer file-sharing network with built-in community and privacy, and an operating plan that might help keep it legal”? And people wonder why the wheels are coming off the US technology car.

I noted three presentations that might be worth my time (well, the readers time, actually): Opera Networks, Rearden Commerce, and Brightcove.

Monday 11:20 AM: Health Care: No Patient Left Behind?

This panel got off on the right foot when Carol Diamond of the Markle Foundation noted that “Healthcare IT is automating things that don’t work well”. Caroline Kovac of IBM piled on by noting that, in a trillion dollar system (US healthcare, all in), there’s probably $450B of waste. Larry Augustin of MedSphere noted that 100,000 people die each year in the US due to preventable medical error – 7,000 due to illegible handwriting (there’s a case for Catholic schooling...).

Lonny Reisman of Activehealth Management weighed in with a timely comment on the Terry Schiavo case – what led to her initial cardiac arrest was a low potassium level, a very critical symptom that should have been, but was not, caught during prior examinations. Could better patient recordkeeping (abetted by IT) have prevented this whole legal mess and, incidentally, saved the woman’s life?

Augustin described his new business, which combines healthcare IT and the open source software model by taking a patient record system, VISTA, that was developed at taxpayer expense by the VA, and bringing it to market.

Much handwringing ensued. Dawn Lepore of was a no-op on the panel.

Monday 2 PM: Company Presentations

Rearden Commerce. I knew this company as Gazoo, and its CEO, Pat Grady, when I worked on the Street five years ago. Can’t say the new name is much better – it’s both polarizing (depending on your opinion of Ayn Rand) and unoriginal (Rearden Steel was Steve Pearlman’s name for WebTV while in stealth mode). Also, Pat’s personality is abrasive – but, he’s put $3M of his own money into this project, and tenacity counts.

Rearden may be on to something. In the time since I last saw them in a San Francisco storefront, they have developed a solution for enterprises to enable and manage employee purchases of services (travel, hotel, car, shipping, etc) based on an extensible service-oriented architecture. The initial solution is sold as a subscription, and has attracted the attention (and dollars) of several large customers including Whirlpool and Motorola, who replaced about a dozen home-grown applications with the Rearden solution.

Rearden has partnered with HP, which will resell Rearden Employee Business Services (EBS) applications as part of HP’s business-process outsourcing product line. The Rearden Commerce framework is also being evaluated by several partners as a means to develop applications beyond EBS. Rearden itself has the opportunity (and strategic challenge) to take this technology wider (as a connectivity and commerce platform) and deeper (as a developer of additional vertical applications).

Opera Software. The publicly-traded, Swedish supplier of web browsers, viewed as a contender for number two in the US before Firefox released last year. Jon von Tetzchner, Opera’s CEO, did a good job positioning Opera against the competition, and highlighted its key differentiator of comparable behavior across platforms ranging from desktop PCs to cell phones. Opera can probably hold share in the embedded browser segment, but it’s hard for me to see how, without substantial marketing expense, the company can significantly increase its share in the US market. Especially since it costs $29 and Firefox is free.
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Brightcove. Jeremy Allaire parleyed a mediocre web database product (Cold Fusion) into a small fortune, got his company acquired by Macromedia and took the CTO job after Norm Myerowitz moved on. Now he’s raised capital from General Catalyst and Accel to create what is effectively an iTunes video store for independent content producers. So, no major-label content? Hmm...

We saw a mock-up of the service, which featured a selection of Warren Miller ski videos. Allaire asked who in the room knew of Warren Miller, and most of the pale, male hands shot up (mine included). We were treated to a barrage of Flash eye candy as we were taken through a purchase and got to watch part of the video. Yawn. I think that Apple, Direct TV, Comcast, Time Warner, Disney, Viacom, the rest of the cable MSOs and my daughter’s guinea pigs are all working on similar projects.

So, from the back of the room, I asked Jeremy if he intended to exercise editorial control over content, or let this system find its natural market, that is, porn. Answer: no porn. Prediction: no business. The big guys are going to have major studio content. Without porn, Brightcove gets Warren Miller films. If I went to a street corner in downtown Phoenix, and I asked 1,000 people if they’d heard of Warren Miller, maybe I’d get about 5 positive responses. So Brightcove is going to have to work very hard to aggregate a large enough collection of marginalized content (Lithuanian language lessons, curling videos, etc) to break even.

The good news is that Brightcove’s VCs, if they come to their senses in time, will only flush $5.5M. Or maybe Jeremy is hoping that Dan’l Lewin, who was standing behind me, will snap this turkey up for Microsoft before anyone figures out what kind of bird it really is.

Monday 6:30 PM: Cocktail Reception and Dinner, Emily Levine

I needed several drinks to wash some of the howlers I’d heard throughout the day from my mind. But that still couldn’t dull the persistent yammering of the PR folks and startup CEOs trying to pitch their deals to anyone who looked like a potential investor. I finally found a guy who had enough empty glasses in from of him to indicate the seriousness of his intent, and we enjoyed a fine dinner together. He turned out to have attended every PC Forum, and we began to trade stories. He also turned out to have been Regis McKenna’s first general manager, and did a lot of work for Apple in the early days. Here’s my favorite excerpt from his side of our well-lubricated dialogue:

When Apple was planning to run their first full page ad in the Wall St. Journal, the original version only featured Steve Jobs as the inventor of the personal computer. When shown the mock-up, Mike Markkula, CEO of Apple at the time, turned white, and said, “there is another Steve you guys should meet”. And so Steve Wozniak was added to the photo and body copy, and the ad ran featuring the two Steves. A few days after the ad ran in the Journal, my new-found friend’s phone rang at work. It was the receptionist telling him that “some old lady is on the phone yelling about the Apple ad”. Foolishly, my friend took the call and found himself talking with Mrs. Wozniak (as in ‘mom’), who proceeded to chew him out vigorously, saying “my boy did all the work and why is that Steve Jobs getting credit for it?”

And that, gentle readers, made the day entirely worthwhile.

After dinner we were entertained by Emily Levine, best described as a cross between Bette Midler, Lilly Tomlin and Wallace Shawn. She did a good job recapping the days’ events and pointing out the humorous inconsistencies therein. This was followed by the traditional PC Forum jam session, which was an unassailable argument against that particular tradition.

Back at my room, there was that stupid alarm clock again. The wake-up call desk was jammin’.

Tuesday 8 AM: Friction Can Be Good!

If you’ve been around the block more than a few times, you’re familiar with a style of management book writing that takes a current phenomenon and tries to spin it into a story for the ages. So when I saw that
John Hagel (the third) and John Seely Brown (the first) had written a new book (The Only Sustainable Edge, John Hagel III and John Seely Brown, Harvard Business School Press 2005, ISBN 1-591-720-0), I had a good idea of what to expect from this session (thank you, neocortex...).

Turns out that both John’s have been spending time in what we used to call the Far East, with Toyota and, of more novelty, the Chinese province of Chongqing (nee Chungking), home to 10.2 million people. Chongqing now accounts for over 50% of worldwide motorcycle production, having reduced the export price of motorcycles from $700 to $200 in the last ten years. The bulk of the session was goggle-eyed reporting of the methods used to achieve this.

One cannot argue with the success of Chonquing (certainly not Honda, which has been forced out of the Asian motorcycle market as a result), and one has to admire the ingenuity of the Chinese in organically developing a design style and a manufacturing and supply network that has taken advantage of the current Chinese environment to achieve an optimal result. But many of the John’s “requirements for productive friction” are not all that revelatory: the need for performance metrics, highly-motivated people with relevant skills, focused action points and pattern recognition are all concepts that been used and taught for many years. Furthermore, anyone who tried to transplant the Chongqing model to another culture will immediately bump up against problems in infrastructure – labor laws, intellectual property laws, cultural differences, etc. In fact, the Chinese themselves will erode the efficiency of Chongqing as its society continues its (cultural only, we hope) march toward the West. Wasn’t it Norman Augustine who once said that the best way for the US to compete was to export lawyers?

A memorable term did surface: innovation blowback. This is what happens when, say, a US company treats an emerging country as merely a market rather than a source of innovation. Then the smart people in that country take the products or services, improve them, and export the improvements back to the US to the detriment of the original supplier. Sound familiar? Now we have a good name for it.

Then came the more entertaining metaphors including the Chongqing “motorcycle reference implementation” as another example of the open-source concept in action, and the prescription that the key to IT is SOA plus virtualization plus social software, all coming together to create a shared virtual collaborative workplace. I don’t know if this prescription will kill anybody, but at least the handwriting is legible.

Tuesday 8:40 AM: Presence In The Enterprise

By 8:40, the three cups of coffee I’d downed to jumpstart my consciousness had begun to kick in, so I was particularly attuned to the message of the next panel. And the message was: Me! Me! It’s all about Me! I want others to know where I am! I want others to know what I’m doing! So that they can find ME! But only when I want, because my schedule is Mine! And no one is more important than Me!

Or are they? Richard Schwartz, CEO of SoloMio, justifies his business model by noting that it increases the number of billable events to a wireless carrier. So instead of a non-answered call which costs me nothing, I can look forward to a SoloMio mediated call, which costs me something. What part of me is that about, exactly? My wallet, I guess...

The other members on the panel, Charles Digate of Convoq and Johannes Ernst of NetMesh, discussed their respective technologies and benefits at length, but what struck me was the inordinate complexity and cost to manage something that is probably better managed by turning one’s cell phone or PDA or PC off. Digate managed to get in a howler: “...Flash, which as we all know everybody has...”.

I suppose that the escape clause in my argument is the word “Enterprise” in the session title. And I won’t argue that business communications is sometimes frustrating. But I would argue that these and other proposed solutions are, like healthcare IT, automating things that don’t work well. And yesterday’s enterprise technology seems to become today’s consumer technology.

This panel was all the more ironic thanks to The New York Times Magazine, which on March 20 published a piece titled Bad Connections by Christine Rosen, where she argues persuasively that “personal technologies like our cells (sic) and TiVos have put us out of touch with the manners and mores of public life.” She would have enjoyed observing the behavior of the gadget-laden at this conference.

Tuesday 9:30 AM: Fast Data In The Enterprise

Disclaimer: Stan Zdonik and are old acquaintances and better friends after this conference. It turns out we’ve led eerily parallel lives. Please note, however, that if he dished drek it would have been duly reported.

StreamBase Systems was formed out of research Stan did with Mike Stonebraker at MIT and others to apply familiar SQL approaches to real-time streaming applications. StreamBase has developed a stream- processing engine that provides low-latency, fault-tolerant SQL operations on data from trading systems, credit transaction processing systems, communications networks and other sensor arrays, allowing optimization of the kind and amount of data that must be stored. They also provide a graphical development environment to model the data streams and the operators thereon.

There are several very neat tricks employed to make this work: one is to break up the continuous stream of data into “time windows” of fixed length and apply operations on the window. Of course, the results have to be correlated and relations that cross window boundaries have to be accounted for. A storage hierarchy is employed to maximize performance – nothing completely new here except that it’s economically feasible to think about terabyte in-line databases, which certainly helps.

As you might imagine, the financial and intelligence communities are all over this. I suspect that other organizations involved in electronic commerce will be enthusiastic supporters as well. Stonebraker is a known quantity to VCs, so StreamBase quickly attracted investment from Accel, Bessemer and Highland, and should have the resources needed to prove their business model hypothesis.

In our conversations over drinks later, I suggested to Stan that moving to operations on time-based data might be like the motion from arithmetic to calculus was for numbers, which leads naturally to the question of what new operators (beyond SQL) will emerge from this development. He said he’d think about this, but first he had to go to a meeting in Nashville, in his role as President of the International Bluegrass Music Association.

So, the “potentially important new stuff at PC Forum” count goes to 2.

Tuesday 9:50 AM: Strategy In Practice – Interview With Ann Livermore

The only question that need be asked about this session: would HP’s stock price go up after it was done? Answer: not in my book, and apparently not in the market either. Here was a room full of people that were arguably more knowledgeable about HP’s situation than most, and Ann was serenely justifying the HP/Compaq merger by citing their server volume leadership. This is like captain of the Titanic serenely observing the part of the horizon that wasn’t sporting any icebergs.

Now, I understand that, as a senior executive in a major US corporation, you can’t air dirty laundry in public, but to not acknowledge that the company is, at least, undergoing a period of uncertainty is equally irresponsible. On the other hand, Ann didn’t have to dodge any hard questions, because they weren’t asked. Esther wasn’t throwing softballs, she was lobbing Nerf balls.

After this dismal performance, one person in the audience told me “I just spent seven figures on storage products from EMC because I couldn’t get HP to sell me anything. And HP is our preferred provider.”

The 10:15 break was welcomed by all.

Tuesday 10:45 AM: Open Source: A Working Model, Not A Movement

Open source might not be a movement, but according to Mitchell Baker of the Mozilla Foundation, “proprietary software is an evolutionary aberration”. That certainly got the audience’s attention, and so began a discussion of trends in open source.

Larry Augustin, not on the panel, actually did the best job of describing the phenomenon (my paraphrase): First, open source was only games, and people said “that’s fine but those open source zealots will never make a compiler”. Then everyone started using gcc, and the naysayers said “that’s fine, but those open source zealots will never build an OS”. Then Linux started gaining ground, and the nattering nabobs of negativism said “that’s nice, but open source will never be used to make applications”, and now we have Apache, Sugar (an open-source CRM tool), Firefox and VISTA, to name a few.

So, maybe, when an application becomes generic enough, its evolutionary destiny is to become open source. If so, then what is the future of the software industry? One obvious implication is that new software businesses will be nichier, and therefore smaller. No more Microsofts (even without the Justice Department being asleep at the switch) or Oracles. The big companies will look more CA, gaining their size from aggregation, not million-unit software licenses. There will also be services businesses that add value to generic open source applications by performing customization, installation and training. But that’s a 40% gross margin business, not a 90% one.

Then there’s the issue of testing. Even if you assume that an open source mechanism can deliver adequate functional testing (a topic of some debate), it’s very hard to imagine an open source community with the resources to do comprehensive compatibility testing.

Enter SpikeSource. Its business model is to offer the resources, on an outsourced basis, to anyone needing such testing. SpikeSource can also manage patch distribution, which evokes images of Marimba’s “push” technology, which evokes images of Kim Polese, Marimba’s photogenic CEO...and guess who’s running SpikeSource? That would be Kim.

I’m thinking: is there a giant meta-neocortex running the Universe that recognized a pattern and predicted this? Or, maybe I’m just getting hungry...

Tuesday 11:25 AM: Contest Winner

Oh, the contest. Haven’t mentioned that yet. See, we were all supposed to vote on the company most deserving of $50,000 in CNET advertising, based on their presentations Monday afternoon. And the winner is...Endeca, which enables focused searches through large databases. Endeca’s running $10M quarters, so I question the impact of their prize. Was the voting influenced by the IAC news Sunday?

Tuesday 11:30 AM: New Directions in Search: Mirror Mirror On The Wall

Endeca’s win provided a great segue into the final panel. Representatives from several search companies discussed the direction of search technology and the search business. An issue was the evolving definition of “relevance”, from just page counts to results based on personalization and context (and if you are leaping ahead to thinking about a potential problem, that too much personalization and context can lead to narrow result spaces and the creation of “personal silos” of information, then blame your own neocortex, not mine...). Another was presentation, both on the traditional desktop and in portable devices. I am personally interested in the non-traditional desktop, but that is another story...

As this panel ran long and my stomach began to garner more of the focus of my autonomous nervous system, I headed for the door but remember thinking “who would have predicted that PC Forum 2005 would end with a discussion of Library Science? And why weren’t any librarians on that panel?”

Tuesday 6:00 PM: Joint Dinner Reception With Flight School

You may have noticed a gap in the timeline from noon to 6 PM. I admit it, I couldn’t bring myself to participate in a discussion of either a) Education, or b) User-Generated Metadata. I knew that (a) would degenerate into well-meaning bloviating and I had done enough metadata generation of my own in the past two days to avoid (b). I opted instead for the non-judgmental company of the waitress by the pool.
Flight School is Esther’s attempt to leverage some of the energy (and wealth) generated by IT to other purposes, in this case aviation and “mobility”. There were some conference attendees overlapping, and the idea of a joint dinner was a good one.

Our dinner speakers were Bruce Holmes of NASA Langley Research Center and George Butler, producer of Shackleton’s Antarctic Adventure and Pumping Iron, among others. George gave us a sneak peak of a new film he’s made about the Mars Exploration Rovers, coming soon from a major studio whose name we all promised not to tell. It’s awe-inspiring, and makes you proud to be a geek.

Bruce talked about current NASA issues. He shunted questions about Hubble aside laying all the blame on Congress. He talked about interplanetary issues, including creating public-sector and private-sector spaces in Earth orbit and beyond. I asked him how this zoning plan for the solar system would play out if, by the time we got back to the moon, the PRC was there as our welcoming committee. No good answer to that one either. Most of the conversation then turned to private aviation, a topic of obvious interest to the entrepreneurs and pilots in the audience. A lot of the conversation focused on personal aviation, and what could be done to make personal aviation faster, safer, and more flexible.

The entertainment portion of the dinner program continued during the question-and-answer session when a long-time PC Forum denizen, co-creator of a seminal application, a nice guy, but noted for his ability to become almost mind-numbingly incoherent in conversation, asked a question that veered off course into the semantic troposphere and was simultaneously shot down by both participants and Esther, all claiming microphone trouble.

After the dinner session broke up, I found myself talking to Cameron Burr, son of Donald Burr, founder of People Express. He’s working for his dad, who has partnered with Robert Crandall, former CEO of American Airlines (and RI native) to create a new non-scheduled, point-to-point air taxi business called Pogo using the next generation of low-cost very light jet aircraft (VLJs) that are in development now from companies like Adam and Eclipse.

Bruce Holmes, Cameron and I ended up (where else?) at the bar trading airplane stories and wrestling with the finer points of strategy for Pogo. I probably learned more than I was supposed to, but isn’t that the point?

Postscript: Wednesday 7AM Breakfast

I ran in to Esther at breakfast. She was prepping for her Flight School debut, but managed to pop her head up from her laptop to be sociable. I told her about the previous night’s conversation, and then opined that, if private aviation follows the paths described, we were likely to end up with a bifurcated travel system in the US akin to “taxis and buses” on a national scale. I suggested that an unintended consequence of this bifurcation could be reduced flexibility, and perhaps opportunity, for those only to afford “bus” travel. This in turn could have a negative impact on travel and location-based entertainment businesses, like Disney.

Esther looked at me and said “well, we can’t all be rich”.   Certainement, mademoiselle Antoinette... 


Sunday, February 12, 2017

Why Are They Twittering? A Modest Proposal.

Twitter just reported another in a string of 'disappointing' financial reports showing:
   - year-over-year revenue growth below 1%
   - effectively flat user growth (4.5% yer-over-year vs 3.3% 3Q year-over-year)
   - average revenue per user (ARPU) fell 4%
   - global ad revenue flat, US ad revenue down 7%
   - stock-based compensation up1%, marketing expenses up
   - operating loss on $771M

TWTR is hitting new lows on the news, but the company still has an $11B market cap.

This valuation reflects classic "there must be a pony in here somewhere" thinking - shareholders are generally loathe to watch their investment (or stock options) burst into flame, so it is not surprising to see intense amounts of flailing and bloodletting while players scramble to patch the leaks in this Titanic.

Just before this report, I had the opportunity to explore Twitter's future with a bunch of undergraduate business majors.  Not one of the 30 or so students (who should be squarely in the company's target market) claimed to be a regular Twitter user.  Not one of them said they would pay a subscription for the service.  When asked to imagine what Twitter might do differently, their responses were not much different from what Twitter management is proposing - but when I asked how successful any of those moves might be, I got shoulder shrugs.

One brave soul suggested that Twitter close down, not unlike Michael Dell's approach to Apple during that company's darker days.  While I can see the merits in that option (it's certainly better than watching the company's cash pile shrivel to zero), I think there is something about Twitter that keeps everybody from just throwing up their hands.  But that something may not be, as they say, "monitizable".

Where Twitter has consistently shown value and differentiation is as a lightweight, organic, slippery communications conduit for transient social events - from fluff like the latest Kardashian antics to
more meaningful events, like Arab Spring.  This makes sense given its embrace of lightweight clients built around SMS messaging.

Twitter has tried to get celebrities to pay the freight with 'promoted' tweets, and there is probably a niche market in the PR industry for this that is sustainable, but not at the scale dreamed by Twitter investors.  Likewise, there may also be a news industry niche as a headline aggregator.  Both of those niches, however, are coming under more intense fire from competitors.

One Twitter response is video.  Not only is Twitter late to this party, but stuffing a Twitter feed with video a) requires a bigger client that is harder to make ubiquitous), and b) gums up the lightweight, casual Twitter interface that is one of its key differentiators.

So, Twitter may ultimately be one of those good ideas that is not a good business.  If the world values the original idea, a non-shutdown option presents itself:  turn Twitter into a non-profit.

Making Twitter a non-profit organization would preserve the parts of Twitter that society seems to value, while freeing it of the constant struggle to justify its existence to Wall St.

It is possible?  Maybe.  What if:
    - A majority of Twitter shareholders agree that this is a good idea (or at least a way to salvage
      something from their investment)
    - The IRS lets shareholders contribute their TWTR stock to a new tax-exempt non-profit
       foundation and take a deduction (at their basis, not an inflated value)?
    - Substantial additional reductions in headcount get operating expenses to a level that
      can be supported by interest on Twitter's existing cash (around $3B) plus some donations
      from foundations interested in freedom of speech and communications around the world?
      This would imply some R&D to make messages hard to stop.

That organization would have a comprehensible mission, and the hope of a sustainable future.
As opposed to Twitter, which has an incomprehensible mission, and a dubious future.

Full disclosure:  I'm an extremely casual (a few times a year) Twitter user.  It doesn't work on my dumb phone.  I tried on my desktop, and the content wasn't compelling compared to my Facebook feed.  I get my stupid Presidential tweet fix from Facebook re-posts.  I'm not trying to build a business based on "followers", so that aspect is also irrelevant.  After this experience, I am reminded of nothing so much as Biggus Dickus's query in Monty Python's Life of Brian:  "Why are they twittering"?

Thursday, August 16, 2012

Found while following Apple/Samsung antics

A long, long time ago, I put my feet up and imagined what could happen given the trajectory of several technologies.  I'm not claiming anything, but I continue to be chagrined about the dysfunctions of the US patent system and the definitions of "novelty", "obviousness", "prior art", and "skilled practitioner".

This was published in 1998 (click near the page number for larger view):

Now, back to my popcorn.

Tuesday, June 19, 2012

Scratching the Surface

It requires a certain critical mass for me to emit a blog post.  Yesterday's unveiling of the Microsoft Surface devices has prompted copious product commentary, but I think the big story has little to do with speeds and feeds, or competition with Apple.

The Surface announcement is the best demonstration of the systemic weakness of the Wintel ecosystem, ever.  While multiple sources of pressure have been building to strain this long-standing duopoly, Microsoft's decision to manufacture its own tablet device may well push the water over the edge of the dam.

In addition, as a Microsoft shareholder, I'm concerned about the impact of this announcement on the company's overall performance.  More on that later.

First, the industry impact.  If we set the wayback machine far enough, we can go back to a time when personal computer manufacturers actually added substantial value beyond the semiconductor components supplied by Intel and its competitors.

A company called Compaq, for instance, distinguished itself in the business market by spending significantly on R&D to make Intel-based hardware reliable and serviceable enough to be taken seriously by enterprise customers.  They were able to charge a premium for their work.

Compaq's competitors, like Dell, were happier to take Intel reference designs, which were not quite as robust, bend some metal around them, and compete on price.  Intel and Dell responded by labeling Compaq solutions "proprietary" and simultaneously adding features into their reference designs, reducing their value to commodity levels.  Dell and its ilk won.

Intel was also working hard to migrate more and more value of a PC into its chips.  They were fairly successful at this, ultimately capturing most of the value in a PC and leaving table scraps of margin for their OEM partners.  Years ago I imagined that Intel might just go ahead and put the OEMs out of their misery, but it dawned on me that Intel was brilliant in outsourcing the misery - why would they want it?

The other winner at the head of the PC food chain was, of course, Microsoft.  They basically collected a tax on every Intel-based unit sold by every company except Apple.  Life was good in Redmond.

Meanwhile, at the end of the value chain. PC companies were fighting over increasingly smaller scraps.   The shakeout killed Micron, Gateway, and, ultimately, Compaq.  IBM had the good sense to see the handwriting on the wall and rebuild its company around services.  Now HP and Dell are trying to catch up.

Meanwhile, Wintel-based product design has suffered from a combination of consumer malaise and OEM fear, resulting in underspending in R&D.  Above the chip level, Intel has maintained a leisurely  R&D pace, with the ultrabook reference design a recent example.  But, as we all know, Apple spoiled the party by creating a new category and nailing it with the iPad and its app ecosystem.  Android tablets piled on.  Wintel OEM response has been ham-fisted at best, partially because neither Intel nor Microsoft was ready with a fast response.

But Wintel OEMs are also fighting for their survival, are being pulled in multiple directions from external and internal forces, and are shedding resources like clothing on a hot day.  Microsoft must have felt that, left to their own devices, it would take so long for OEM partners to come around that it would be impossible to play catchup.

In addition, Microsoft could do the same bill of material arithmetic everyone else was doing and conclude that, for some devices, ARM had a place and an Intel premium was not worth paying.

The result - Microsoft takes matters into its own hands.  It uses an ARM processor to compete on price, and an Intel processor to ride its Office monopoly.  These are not dumb moves.

But,  Microsoft has hit its OEM partners squarely in the face.  This is not a Zune. nor is it a Microsoft mouse, each of which could have complemented an OEM product.  If successful, Surface devices will take lots of dollars away from mainstream OEM products.

Intel probably views the ARM-based Surface as a minor annoyance.  They have seen Microsoft move to other processor architectures before (NT on Alpha, anyone?), and know they can usually play the long game and win business back.

But the PC OEMs are a different story.  I'd hate to be at HP while I watch the last vestiges of any proprietary advantage in tablets with WebOS walk out the door.  I'd like to think that Google might use this event as a reason to really woo PC OEMs with a non-balkanized version of Android, but I'm not holding my breath.  Besides, Google would have to come up with a unified Android app marketplace that OEMs could white label, and share revenue.  That could happen.  And pigs could also fly.

It's no sure thing that Microsoft will make Surface work.  But let's suppose they do.  As a MSFT shareholder, I can therefore look forward to some increased revenue, and lower gross margins as hardware gross margins become a more significant part of the Microsoft product mix.  And I'm wondering, why in heck isn't there a new arms-length company being formed to do this, so margins aren't diluted across the enterprise?  Intel continues to outsource value chain misery, and here is Microsoft jumping to take it on.

For an outside observer, the new array of moving pieces created by this announcement is awe-inspiring in its complexity and unpredictability.  The Surface announcement party may be over, but the real fun in Wintel-land is just beginning.

Tuesday, April 17, 2012

Rational Economic Behavior and the Internet: Why You Want to Pay Per Packet

Originally published in 2010.
Verizon has raised my rates since then.  Grrr.
This bolsters my argument.

It’s always dangerous to give me spare time, an Internet connection, and a calculator.  I have been thinking about this particular issue for many years — any kind of “all you can eat” model has always struck me as suboptimal, and my reaction to the growing popularity of flat rate Internet connection pricing based on connection speed is the same as my reaction when offered free shipping on 50-pound bags of dog food back in the day: buy all you can, ‘cause this deal can’t last.

Internet customers (at least in the US) seem to have figured this out.  Their usage of bandwidth continues to grow at very high rates while flat-rate pricing is the norm. This is rational producer and consumer
behavior; there is neither disincentive to produce “fat” content or applications nor disincentive to consume them. This has been a lurking but invisible problem in the wired world, where bandwidth is relatively cheap. But the problem has become visible recently in the wireless world, where bandwidth is more expensive (because it is more scarce). We have all seen reports of wireless carriers struggling to keep up with network demand created by the latest smartphone or media application.

It costs real money to upgrade networks to keep pace with this demand, and those costs are ultimately borne by the subscriber. So in the US, we have carriers trying to raise their rates to offset increases in capital and operating expenses to the point where consumers are beginning to push back, and the shoving has come to the attention of the Federal Communications Commission, which has raised the possibility of treating Internet network providers as common communications carriers subject to regulation.

I believe that flat-rate pricing is a major source of problems for network carriers and consumers. In the carrier world, the economics are known but ignored because marketers believe that flat rates are the only plans consumers will accept. But in the consumer world, flat rates are rising to incomprehensible levels for indecipherable reasons, with little recourse except disconnection. Consumer dissatisfaction is rising, in part because consumers feel they have no control over the price they have to pay. This is driven by their sense of pricing inequity that is hard to visualize but comes from implicit subsidies in the current environment. The irony is that pay-per-use pricing solves the problem for carriers and consumers.

The Current State
Let’s do some arithmetic. I went to the statistics page on my router, where it reported that in the past 47 days I had sent and received around 15 million Internet packets. I rounded that up to 20 million,
then derived the following:

         - 20 million packets in 47 days
         - 425,532 packets/day
         - 12,765,597 packets/month

How big is a packet? Like many questions, the answer is, “It depends.”  After a little research, I determined that my average packet size was somewhere between 557 and 1,500 (an average rich-media packet size) bytes. Then I made some assumptions about my traffic:

         557 bytes (60% of traffic)
         - 1,500 bytes (40% of traffic)
         -  934 bytes (weighted average packet size)

Now I had an average packet size, and I had my packet traffic per month. So how many bits is that?

         - 7,474 bytes (weighted average bits/packet)
         - 12,765,957 packets/month
         -  95,412,765,957 bits/month

Whoa, that’s a lot of bits. Let’s scale it down to manageable significant digits:

         - 90,993 Mb/month
         - 11,374 MB/month
         - 11 GB/month

This exercise revealed that, in a typical month, I shipped about 11 GB over the Internet (the vast majority was downloaded but for this discussion we will focus on total traffic). Verizon, my provider, charges me about US $64.99 per month, or about $2.17 per day for 25 Mb/sec download speed.2 Some of you might say, “Hey, $2.17 per day is cheap.”  My response is “Compared to what”? Let’s take a look on what I actually consumed:

         - $64.99/month
         -  $2.17/day
         -  $5.85/GB transferred (actual)

Is $5.85 per GB a good or bad deal? Let’s compare that price based on actual usage to the theoretical price I could be paying if I used all of my monthly bandwidth:

         - 26,214,400 bytes at 25Mb/sec peak rate
         - 3,276,800 bytes/sec
         - 11,796,480,000 bytes/hour
         - 11,250 MB/hour
         - 11 GB/hour
         -  0.0107 TB/hour
         -  0.2575 TB/day
         - 8 TB/month

Now, all the carriers disclaim their peak performance numbers; they can be degraded by traffic congestion, phases of the moon, whatever. Let’s pretend that I could actually see the above (and, to be fair, my FiOS service has been generally reliable). That would mean I could transfer 8 TB in a month, compared with the 11 GB that I actually transferred.  That changes the transfer price dramatically:

         - $64.99/month
         -  $5.85/GB transferred (actual)
         - $0.008/GB transferred (theoretical)

Clearly, I should be consuming more. Even rounding up, the price gap between $5.85 per GB and $0.008 per GB is substantial. And herein lies the problem. Since the rate I pay is flat, everything in the gap between 11 GB and 8 TB looks free to me. But I assure you it does not look free to Verizon. If every FiOS subscriber tried to download 8 TB a month, cries of panic would echo throughout the land. A similar exercise for wireless data plans would show higher prices but a smaller gap between actual and theoretical because the theoretical limits are lower.  Some wireless carriers explicitly prohibit extended peak bandwidth use for just this reason.

A Monthly Bill I’d Like to Get
What if, instead of increasing the maximum download speeds for a flat rate, a carrier tried this: pay $0.0000025 per packet — period. The resulting bill would be:

          - $31.91 for 11 GB transferred/month
          - $63.82 for 22 GB transferred/month
          - $22,979 for 8 TB transferred/month

A pricing strategy like this might lower the monthly bill for an average customer as well as allow for some increased consumption without breaking the bank. It would provide the consumer a way to lower costs just by reducing consumption. There would be a substantial disincentive for order-of-magnitude increases in consumption; if the data were really that valuable, this would prove it. Otherwise, consumers would have to think of options:

         1. Do without.
         2. Find a way to make the data more efficient.
         3. Find a cheaper substitute.
         4. Get someone else to pay.

All these options are used by producers and consumers today and form the basis of advertiser- and business-supported messaging. There is no reason to suspect that a motivated advertiser wouldn’t pay to transmit its car ad to a serious prospect. Web site and content creators would be obliged to consider data transmission costs and build more efficient products — or offset their higher costs with direct payments, advertising, or some other explicit subsidy. Carriers could use variable pricing per packet to adapt consumer usage to network capacity variances and expansion.

This past June, AT&T, wireless provider for Apple’s iPhone, became the first major mobile phone company to stop offering new smartphone customers a single monthly price for unlimited Internet access.3 That may signal an industry shift to charges based on how much people use their phones to access videos, music, and data. AT&T expects the new pricing to boost sales. Verizon followed in July.  Newcomers to AT&T can pay $15 per month for 200 MB of data or 2 GB for $25. AT&T says 65% of its smartphone customers use fewer than 200 MB per month, and 98% use fewer than 2 GB. Just 3% of AT&T’s smartphone customers account for as much as 40% of its data traffic. With the limited airwave spectrum available for wireless broadband, other providers may switch to usage-based pricing, including Sprint and T-Mobile. Other businesses may be getting the message as well. Silicon Alley Insider recently reported on the rumored new Apple iTV with the headline, “Apple's New iTV Could Finally Force ISPs to Give Up on All-You-Can-Eat Internet Access and Jack Up Your Bandwidth Bill.”

In short, rational economic behavior would prevail in a pricing environment free of implicit subsidies. This would prove beneficial to content producers, content consumers, and the infrastructure providers that move the bits around. When I look at the problems created and looming by current flat-rate pricing — and consider the advantages of usage pricing — I believe it’s only a matter of time before usage pricing becomes the standard.

In the meantime, use all the bandwidth and transfer all the bits you possibly can. 
This deal is too good to last.

1 - Slaptijack. “Average IP Packet Size.”  
      Facebook Note, 18 March 2010 (
2 - Verizon offers Web mail and other services for this price. For simplicity, I have ignored all bundled 
      services in this example.
3 -3  Lieberman, David. “New AT&T Smartphone Users Won’t Get One-Price Net.” USA Today
     4 June 2010.
4 -Frommer, Dan. “Apple’s New iTV Could Finally Force ISPs to Give Up on All-You-Can-Eat
     Internet Access and Jack Up Your Bandwidth Bill.” BusinessInsider/Silicon Alley Insider, 
     23 August 2010 (