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  • Newsletter Issue #481

    February 15th, 2009


    Up till now, outsourcing has meant that companies fire their American workers, and hire people in other countries, often India or the Philippines, to perform the same functions for much lower salaries. But IBM has a different idea, one that we discussed on this week’s episode of  The Tech Night Owl LIVE, where the Night Owl entered “The David Biedny Zone.” Our Special Correspondent talked extensively on  IBM’s peculiar plans to ship their workers to other countries, which is surely a unique take on outsourcing.

    While all this is going on, it appears as if Adobe might be hiring, and David examined where, and what sort of positions were available. He also discussed e-books and reality, and whether the newest version of the Amazon Kindle reader can make this product segment finally take off. He also offered, as usual, information about some  great third-party software that has been largely undiscovered by the tech media. Except for us of course.

    In addition, Macworld Editorial Director Jason Snell presented his individual observations about Amazon’s new Kindle, news and views from the Apple universe, and his opinions about the future of TV networks and some of his favorite shows.

    Coming February 19: PCMag.com’s Lance Ulanoff talks about putting a TV set on a contact lens. Yes, this is no joke. It may not occur this year or the next, but some day you, too, might not need to buy a huge, heavy box to get an eye-filling viewing experience.

    On The Paracast this week, veteran UFO and paranormal investigator Stan Gordon discusses the classic Kecksburg, Pennsylvania case and ongoing waves of paranormal activity on that state.

    Now available! The Official Paracast T-Shirt. We’re taking orders on The Paracast home page, where you’ll find a convenient pop-up menu so you can begin the ordering process. They come in white, 100% cotton, and feature The Paracast logo on the front. The rear emblem states: “Separating Signal From Noise.” You can get them for $14.95, each, plus shipping and are available in most popular sizes.


    Sometimes it seems that Apple and other companies can’t produce products or services that Microsoft won’t try to imitate. Take the recent reports about plans to create a “Microsoft Store,” in a lame effort to duplicate the success of The Apple Store.

    Now instead of hiring someone familiar with the sophisticated inner-workings of a retail chain that will provide a superior user experience, they select someone who had spent 25 years working for Wal-Mart.

    Now despite Wal-Mart’s undeniable success as the number one retailer in the U.S., you can hardly call the shopping experience elegant. Serviceable, yes. Efficient, too, I suppose. But I would hardly call their marketing strategy adequate to provide a comfortable environment where Microsoft users can hang out and buy the cutting-edge gear they crave.

    I’d think that if Microsoft’s erratic CEO, Steve Ballmer, would maybe spend a few days hanging out at an Apple Store, taking notes, and digital photos, he’d learn a lot more about the buying experience than what he might discover from someone who cut his retail teeth at a discount chain.

    But that’s just me.

    It may very well be that a discount or even warehouse setting is the best place for Microsoft to sell Zunes, Xbox’s, input devices, and, naturally, the latest versions of Windows and Office. However, just what sort of target audience is Microsoft striving to reach?

    It’s not the Mac user who ditched Windows. An Apple Store knock-off isn’t going to make them regret their decision. Better to spend money making Windows a better operating system that is actually easy to use, and performs reliably. Yes, that would be the trick, but one that has eluded Microsoft so far.

    The problem, as I see it, is that Microsoft feels that offering an 80% solution and pouring a ton of cash into marketing is sufficient for them to become a dominant force in a product segment. True, that worked with PC operating systems and office suites, but it also required pulling a few nasty tricks along the way, and telling downright lies about the direction of their future technology.

    They managed to fool most of the people most of the time, but that’s not something they appear capable of replicating now that their customers have been exposed to better products from other companies.

    Take the Zune. The other day, I read a story that some dealers actually put iPods atop unsold boxes of Zunes, and the former continued to sell in record numbers. The Zune? It was a joke and remains a joke, and even if Microsoft sells it for another decade, I see little reason to think that they’ll discover the magic formula for success.

    Apple got into the digital media player market early on, found the right direction, and have managed to retain their number one status despite the maturing of the market, and the economic downturn. Rather than trying to predict the direction such products might take next, Microsoft can only call upon their monkey-see monkey-do philosophy.

    Now when it comes to the Xbox, I suppose they are doing well enough, although the profits appear to be coming from the software rather than the hardware. It also seems the tech media gave Microsoft a pass over being forced to take a write-down of over a billion dollars to cover the repair and replacement of millions of defective game consoles.

    However, it doesn’t seem as if the game marketplace is going to deliver the revenue and profit margins that Microsoft’s core business continues to provide, even though PC sales (other than Macs) are flattening.

    While I don’t pretend to have the answers to Microsoft’s dilemma, I do think that they aren’t going to solve their problems by simply attempting the imitate the success of others.  That may have worked for them from the 1970s through the 1990s, but clearly they are no longer regarded as unstoppable.

    Take a look at the browser market, where their once overwhelming market share is down to just a tad over two thirds. After letting Internet Explorer languish for several years, they delivered version 7 and are now working on version 8. For the latter, they are even providing the option to deliver a browsing experience that adheres to Web standards, rather than their own. That’s innovation?

    For operating systems, their market share just dropped below 90% for the first time in years. Now the erosion might seem like a trickle in the scheme of things, but every percentage point growth is monumental for the Mac OS. More to the point, rather than attempt to provide a superior user experience, Windows 7 comes across as simply Windows Vista with a shave and a haircut, along with the decision to ape Mac OS X’s Dock . That’s innovation?

    I continue to maintain that Microsoft is in serious trouble, though it may take years for them to realize it, and for sales and profits to decline to the point where they see a trend they have to reverse. That won’t happen with a Microsoft Store, which sounds to me as misguided as those failed TV ads with Bill Gates and Jerry Seinfeld. Then again, you have to thank Seinfeld for ripping off Microsoft to the tune of $10 million for a few day’s work. Way to go! 


    I’ve made it quite clear in recent months that I’m highly in favor of Blu-ray DVD. Being able to see a movie with true 1080p resolution can be an incredible experience, particularly on a large screen flat panel TV.

    The question that arises, though, is whether the high definition DVD format arrived a little too late to really catch on. It may have just been greed, but I can’t say the battle-to-the-death with HD-DVD and Blu-ray really helped matters any. Indeed, I feel for the people who were burned early on by buying the wrong players, because now they have a product for which DVDs are no longer being produced, and I can see where people don’t want to invest in something that won’t survive for at least a few years.

    The other problem is the price of the Blu-ray player. While you can find a handful of models priced from $150 to $200, that is still way above the sweet spot to encourage volume sales, particularly when the economy is in the tank.

    You see, Blu-ray has competition. It’s called “upconverting,” and that player uses regular DVDs, but the 480p picture resolution is interpolated and translated to 1080p. It doesn’t quite look like the real thing. From close up, the picture is not as sharp as Blu-ray, and the colors might seem somewhat muted, but at the normal viewing distance of eight to ten feet, the differences just aren’t so significant.

    The comparison is nowhere near as certain as between VHS and DVD. Worse, the subtle improvement of Blu-ray comes at a price. A brand name upconverting player can be had for $75 or less, so where’s the attraction with Blu-ray? Worse, after paying extra for the hardware, you’ll find the Blu-ray DVDs can cost $10 extra, or even higher for special packages.

    Let’s forget, for the moment, the extras that are supposedly so attractive, such as BD-Live. Most of you buy into this format simply for the actual movies and other entertainment and less so for the extra features, other than, perhaps, a director’s cut.

    Now some of the tech pundits are suggesting that the biggest competitor to Blu-ray is not necessarily price, but online downloads. That may be true some day. But not yet. For now, though, I think the only chance Blu-ray has to survive is to get the cost of the players down below $100 as quickly as possible, and to bring pricing of the software to parity with regular DVDs. Indeed, I’ve heard of some Blu-ray packages that ship with both versions, so you can safely upgrade without having to buy a new copy. The time has long since past where the entertainment industry should expect you to repurchase your entire movie collection every few years because of a format revision.

    Meantime, I’ll continue to enjoy my Blu-ray player. But I mostly rent new movies, via Netflix, and I’ve purchased very few. I’m not rolling in cash, and I expect this dilemma will continue to hurt this format’s growth. Maybe things will turn around, but it’ll require a few sacrifices on the part of the consumer electronics and movie companies to make Blu-ray truly soar.


    The Tech Night Owl Newsletter is a weekly information service of Making The Impossible, Inc.

    Publisher/Editor: Gene Steinberg
    Managing Editor: Grayson Steinberg
    Marketing and Public Relations: Barbara Kaplan
    Worldwide Licensing and Marketing: Sharon Jarvis

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