• 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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    12 Responses to “Newsletter Issue #481”

    1. […] Story continued in this week’s Tech Night Owl Newsletter. […]

    2. Bill R says:

      Blu ray as a storage medium. A much lower price on discs, then watch it take off.

    3. NoBlu says:

      The two problems with blue ray 1) can’t burn them to our media server as the drm is too strict. 2) the price of media is too high. The biggest DVD seller Wal-mart sells DVD’s for $5, $10, $13, and new releases at $20. BluRay is off the chart.

      As a family we don’t buy movies for ourselves, as who wants to watch a movie over and over? But we do purchase them for our kids, as they will watch it 50 times. $10 seems plenty.

    4. Lawrence Rhodes says:

      Finally bought an HD TV (Panasonic, 1080 resolution), and hooked up my ~decade-old DVD player, purchased as soon as DVD player prices dropped below $200. The difference between my DVD picture and an actual HD channel is subtle rather than dramatic, even without upconverting (I did upgrade the DVD-TV connection to component).

      I agree. Blu-Ray needs to be much cheaper.

    5. hmurchison says:

      Blu-ray looks and sounds fantastic. I know cuz I bought an HD DVD player which was its equal. However my findings are.

      Unless you have a 50″ or larger TV and have the ideal viewing range the differences in HD versus 720p are very hard to see IMO. Upscaled DVD can look quite good and Toshiba and others are bringing out the next generation of upscaling tech which purportedly offers an improvement. There is long life still in these DVD.

      Download services like iTunes and VUDU will continue to make inroads as broadband pricing/mbps improves and consumers get accustomed to the easy access of downloadable movies.

      I’d say that Blu-ray will probably peak by 2013 or so and then begin a rapid decline. By then we’ll likely be downloading movies with a new codec (H.265 perhaps which offers a %80 reduction is datasize).

      So looking into the crystal ball ….downloads will improve in efficiency mated with faster broadband will creative a *cough* Perfect Storm *cough* and downloads will assume the mantle as chief media format.

      $24 Blu-ray movies just aren’t going to cut it. We’ve seen this before.

      Incumbent technology is a commodity with little profit. Vendors create new higher priced standard in hopes of wooing consumers and profitability. New standard laden with DRM fails to usurp former tech.

      See CD – SACD/DVD Audio transition
      See Cassete- Minidisc, DAT, DCC transition
      See DVD- HD DVD/Blu-ray transition

      Odds are Blu-ray does well but fails in the end under the burden of too much DRM, too many licensing fees and the dubious nature of burning optical discs when uploading HD content to Vimeo or YouTube is being done “today”

      Enbrace the future folks and spare a landfill another generation of discs that don’t degrade.

    6. Neurotic Nomad says:

      Two links:

      1. DVD’s Assination is BluRay’s Only Hope

      2. Before Getting Into Retail, Someone Should Tell Microsoft That They Don’t Make Computers.

    7. mikhailovitch says:

      It’s really not the price of the players that’s the problem, it’s the media. I almost never buy new release, full price DVDs, but sale or even ex-rental dvds. How often are you really going to play an individual DVD when you’ve built up a bit of a collection? Even most full price DVDs are not good value, so BluRay disks are way out of the ballpark.
      Does it really cost the manufacturers significantly more to produce BluRay disks?

    8. Neurotic Nomad says:

      mikhailovitch wrote:

      Does it really cost the manufacturers significantly more to produce BluRay disks?

      The difference in pressing the plastic disc is marginal, and getting smaller every day. The problem comes in negotiating for the rights to the content on that disc.

      Music Rights
      Remember how no John Hughes movie had the theatrical music until the release of the DVD? That’s because the rights to put them on VHS cost too much after they paid for the cable rights.

      Heavy Metal was considered a lost cause of a movie. It took two decades to show up on home video, then it cost $45 because of the music rights.

      Writer’s Fees
      Remember the writers strike about a year ago? That was a result of the screwing that writers got from the switch from VHS to DVD. They wanted a raise from the 0.006% to 0.06% and the producer’s had a fit. They caved and suffered from 1997 unto 2007.

      More content = more royalties.
      Special Content is produced and directed, just like a movie… and those people expect to get paid, too.

      Multiple Soundtracks = Multiple Actors = Multiple Royalties.
      Those Spanish and French voice-over actors aren’t royalty-free.

      However, in spite of these potentially higher costs – that is not the reason for the price increase. DVDs were cheaper to produce and distribute than VHS, but they always cost more. Why? Because in the Supply-and-Demand market of entertainment a DVD disc is more desirable than a VHS cassette and therefore “worth” more. Cost was irrelevant. Price was determined by market forces.

      The same thing is happening now. A BluRay disc is more desirable than a DVD disc, therefore “worth” more.

      Want cheaper BluRay discs? Stop buying them at full price. Frequent discount retailers. Rent. Wait.

      They’ll cave, eventually.

      Of course… the studios are also looking at this as an opportunity to screw small artists who can’t afford to sue them for payment because their contract (written in 1994) doesn’t name BluRay, specifically, as a reason to get paid… so they aren’t.

    9. Ed Waldrup says:

      Here is a link to an article that projects sales of Blu-ray hardware and software. It is on videobusness.com website and is titled: Blu-ray player sales to peak in 2013


      I am a big fan of Blu-ray. Netflix/Blockbuster rentals are my way of addressing the costs of the software. I challenge anyone to listen to the uncompressed DTS master audio and Dolby True audio on Blu-ray and compare it to what is downloaded off the web. I suggest that the special features that Blu-ray discs have are not available on the web. I agree that Blu-ray discs are expensive. I can recall paying as much for Laser Discs in the 80s. Didn’t DVDs cost a lot when they first came out?

    10. Ed Waldrup says:

      Here is another article you might find interesting: High-def video streaming services: Are they really HD?
      This is at ConsumerReports.org article:


      You can draw your own conclusions. Mine are that downloading and streaming are not mature and it will be some years before they are. Do you have fiber connection to use to download HD? because that would help. Quality is not for everyone and not everyone can afford it. We have better quality than ever and it is on Blu-ray. The music alone is enough to persuade me.

    11. Neurotic Nomad says:

      Ed Waldrup wrote:

      Mine are that downloading and streaming are not mature and it will be some years before they are.

      Downloading and streaming are not tied together. They are separate solutions, developing at separate rates, and neither are designed to 100% replace physical media.

      BluRay may be better for watching an Ocsar Winner, Big Budget Blow ’em Up, or Concert… but it’s overkill for my daily episode of The Price is Right or my weekly episode of The Big Bang Theory and it’s certainly good enough for guilty-pleasure crapfest movies like The Karate Kid and Howard the Duck

      There is no “one ring to rule them all”. That’s a tech press invention.

      Internet Delivery will be divided between downloads and streams, and Physical Media will be divided between two physical formats. BluRay stands to inherit the throne from DVD for “mainstream optical disc”, and USB Drives are looking like the dark horse for SSD delivery.

      Streaming, although not up to videophile/audiophile exacting standards, has reached a quality level and dependability that was unthinkable 7 months ago. I know, that was when I began my Great Experiment by giving up cable, satellite, and broadcast for 52 weeks and went 100% internet delivery (Netflix is my “grey area”. It’s snail-mail delivered but the streaming stuff from Netflix gets more of my viewing hours).

      Of course, I only stream sitcoms, game shows, and stand-up comedy. I download all hour-long programs. The loss of instant gratification is a fair trade-off for 720p/1080p and I even occasionally run across 5.1 DD sound (which, for an episode of Fringe or Lost, is overkill).

      The money I’m saving over cable/satellite more than makes up for the higher internet bill. A comparison of my old monthy bill and my new one can be found @ http://replacetelevision.wordpress.com/why-switch/

    12. Ed Waldrup says:

      @ Neurotic Nomad:

      I agree and think you make some very good points. I am grateful to have fios and Netflix. We live in a fantastic age. Our ancestors would be jealous.

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